on
KOTA FIBRES LTD.
Presented by :- Chandresh
Company Performance
Early Reassessment
Costnew
Operating
Addition
Two
Dividends
of goods
of
sales
of
expenses
a INR500,000
quality-control
sold
agents
would
would
per
run
be
department
quarter
at
about
73.7%
6%
toof
the
ofgross
sales
11 members
sales
Result
FAILURE..
Financial Ratios
Current ratio of 2000= 4684237/1443637
= 3.244
Quick ratio = 1
Forecasted current ratio for 2001
= 6690525/4440345
Conclusions
The proposal from Mr. A. Bajpai is good in
long term but it cannot satisfy the current
need of the company. Since the credit term is
of 80 days, it can put an unfavorable effect
on the business. They will have less cash on
hand, huge amount in bills receivables which
will not allow Kota Fibres to be able to pay off
the All-India bank before December
It may set up precedence for other customer
to demand for an increase in the credit period
RECOMMENDATION
Credit Term
Since the company has a huge
accounts receivable , it must check
out its credit term.
It may reduce its credit term from 45
to 30 days
Just-in-time concept
Hibachi Chemicals of Yokohama can
account for 35% of our raw - material
purchases
It would reduce the inventory of
pellets from 60 days outstanding to
only 7 to 10 days
Reduced Dividends
Since the company is providing a
huge dividend of Rs 500000
quarterly to Ms. Pundirs extended
family, it must reduce its dividend by
50% or go for half-yearly dividend in
place of quarterly payment
It will provide more cash in hand to
overcome the requirements in the
peak season
csf.xlsx
Level Production
Gross profit margin would rise by 2%
or 3%
Level production entails lower
manufacturing risk
Seasonal hirings and layoffs would no
longer be necessary