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STUDY OF CASH FLOW MANAGEMENT ABSTRACT Cash is the crucial for every business.

Every company has to have cash on hand or at least access to cash in order to be able to pay for the goods and services it uses, and consequently, to stay in business. As on simple it can be said that the company has to be viable of managing its day to day operations. The Cash management is on of the effective tool to maintain and manage the cash which is the king of business. Cash management can be effectively done using various cash management techniques which in practice. And In this project I have taken the advantage of studying about the cash management techniques of the NTC unit Sri Rangavilas ginning, spinning and weaving mills. This project will contain the working of various cash management techniques like cash flow synchronization, speeding up collections, controlling payments, cash flow forecasting and etc. In brief this project is to mainly study that the goal of cash management which is ensuring that the company has enough cash to perform its everyday operations and to cover unpredicted outflows , is achieved.


The Study of Cash flow management in The Unit of NTC Ltd deals with implying the importance of efficient cash flow management which leads the company to operate with effective cash inflows /outflows. The cash flow management deals with managing a companys short term resources in order to support and maintain its ongoing activities, mobilize funds and optimize liquidity

(Allman-Ward & Sagner, 2003, p. 2). This project clearly explains the need and importance for cash management. Sri
Rangavilas Spinning, ginning and weaving Mills, Coimbatore is a unit of NTC Ltd, which is the platform for this project. Various techniques which emphasizes the major aspects of the cash flow management like Optimum cash balance, Controlling payments, Speeding up collections, Investment of surplus and Cash flow forecasting are used in this project in order to effectively utilize the inputs form various external and internal sources to make the cash management a effective one.

INTRODUCTION In The business world it is always believed that Cash is King of all the other resources which is being used to run the business effectively and in the last two years of the business history it is accepted that cash management is necessary to be successful in the competitive business world. This acceptance came to the real field after the financial crisis and it has made all the people in the business world to think about cash and its management. The cash management is important as because when liquidity is scarce efficient cash management is vital for ensuring that every spare rupee has been fully utilized. Even in normal times, efficient cash management is crucial for the company, as lack of liquidity may result in inability to pay liabilities, increased costs, and worst case scenario, the company may end up in insolvency. Businesses fail for any number of reasons: Poor management, Poor product development, Weak marketing, and as evidenced by scores of accounting fraud cases, deliberate and egregious misuse of funds. But many companies still fail because of the poor management in the cash inflows and outflows. In other terms the importance of cash management is particularly pertinent at times when access to cash is difficult and expensive. A credit crunch creates extreme forms of both of these problems. When the real economy slips into recession, businesses face the additional risk of customers running into financial difficulty and becoming unable to pay invoices-which, allied to a scarcity of cash from non-operational sources such as bank loans, can push a company over the edge. As said the cash management is necessary for the business it is the management of cash inflows and outflows of the firm, as well as the stock of cash on hand (Fabozzi & Petersen, 2003,p.630). It consists of taking the necessary actions to maintain adequate levels of cash to meet operational and capital requirements and to obtain the maximum yield on short-term investments of pooled idle cash. Cash management can be categorized in to Short-term financial management and Long-term financial management. The Short-term financial management is otherwise called as liquidity or working capital management. And the Long-Term financial management deals with long term investments, as well as long term financing of the company in the capital market.

In an organization the Cash management is a part of the Treasury function which involves itself in financing, monitoring and controlling the financial resources of the company. Cash management can also be seen as part of risk management. And as in short to say about Cash management , it deals with managing a companys short term resourses in order to support and maintain its ongoing activities, mobilize funds and optimize liquidity (Allman-Ward & Sagner, 2003, p.2).


The National Textile Corporation Limited (NTC) is a Central public Sector Enterprise under the ministry of textiles which was incorporated in April 1968 for managing the affairs of sick undertakings, in the private sector, taken over by the Government. Starting with 16mills in 1968, this number gradually rose to 103 by 1972-73. In the year 1974 all these units were nationalized under the sick Textile Undertaking (Nationalization) Act 1974. The number of units increased to 119 by 1995 and 1 new mill purchased set up on land purchased by NTC in SEZ area in Hassan (Karnataka). These 120 mills were controlled by NTC(HC) Ltd with the help of 9 subsidiary Corporations, with an authorized capital of Rs10 crores which was raised from time to time and which is now Rs. 5000 crores and the paid up share capital of the corporation is Rs. 3062.16 crores as on 31.03.2011. BIFR approved 8 revival schemes for 8 erstwhile subsidiary companies of NTC and 1 revival scheme for 9th subsidiary company (not referred to BIFR then) was approved by GOI. Later, BIFR approved 2 Modified Revival schemes 1st MRS-06 in the year 2006 and 2nd MS 08 in the year 2008. Looking to the reduced number of mills and in line with the contemporary industrys trend all 9 subsidiary companies have been merged with NTC-HC making it into a single company w.e.f 01.04.2006.NTC has so far closed 78 mills and has transferred 2 mills in the State of Punducherry to the State Government of Puducherry and surrendered of 3 mills to Government of Maharashtra, under IDS. NTC has modernized 18 mills so far and is in the process of setting up 3 Composite Textile Units of which one is an SEZ area. NTC would be setting up 1 Technical Textile Unit and modernizing 2 more units taken out from the list of Joint Venture apart from going into Ginning & Garmenting by way of forward and backward integration to have a presence in all components of the value chain.

VISION: To be world class eco-friendly integrated textile company, catering primarily to the clothing needs of the nation through innovative ideas and technology. MISSION: To be a leading textile enterprise steadily improving capacity utilization, economy of operations, productivity, quality, brand image, market share & export.

THE SRI RANGAVILAS GINNING, SPINNING AND WEAVING MILL: Sri Rangavilas Ginning, Spinning and Weaving Mill is located in Peelamedu, Coimbatore. It is a Public Sector company established in 18.1.1992. It is one among the five Government run mills in Coimbatore, started by P.S. Govindasamy Naidu Family with an installed capacity of 40320 spindles manufacturing medium counts of yarn. They are producing various types of yarn in their company. The Mill was taken over by the Government of India in 16.1.1970 under the Industry Act, 1951 and was subsequently nationalised from 1.4.1974 under SGCK textile undertaking. The company consists of 420 permanent workers and 350 casual workers. At present, this mill is running with an installed capacity of 42188 spindles, 360 open end rotors, producing cotton carded yarn, combed yarn, blended yarn of various counts from 40s to 500s INFRASRUCTURE: One of our major strengths lies in our sound infrastructure. Apart from possessing the complete facilities required for a comprehensive manufacturing system, it also includes an army of men & necessary ingredients for execution of export assignments timely & efficiently. A special thrust is given on our state-of-art

machinery. The machines are kept under the vigilance of the senior technical experts to maintain their cost & time efficacy. PRODUCTS MANUFACTURED:

Carded Yarn Combed yarn PSF Yarn Blended yarn of Cotton and Polyester


India is a traditional textile producing country with textiles in general, and cotton in particular, being major industries for the country. India is among the worlds top producers of yarn and fabrics and the export quality of its products is ever increasing. Textile Industry is one of the largest and oldest industries in India. Textile Industry in India is a self-reliant and independent industry and has great diversification and versatility. The textile industry is broadly classified into two major categories, the organized mill sector and the unorganized decentralized sector. The organized sector of the textile industry represents the mills. It could be a spinning mill or a composite mill. The decentralized sector is engaged mainly in the weaving activity, which makes it heavily dependent on the organized sector for their yarn requirements. This decentralized sector is comprised of the three major segments viz., power loom, hand loom, hosiery.

The Indian Textile industry is the second largest in the world after China. It provides about 14% to the countrys industrial output and about 17% to export earnings. It provides employment to more then 35 million people. This industry contributes around 4% of GDP, 9% of excise collections, 18% of employment in industrial sector, and has 16% share in the countrys export.

STRENGTHS OF THE TEXTILE INDUSTRY: An Independent and self-reliant industry; Large and potential domestic and international market; Abundant Raw Material availability that helps industry to control costs and reduces the lead-time across the operation; Availability of low cost and skilled manpower provides competitive advantage to industry; Availability of large varieties of cotton fiber and has a fast growing synthetic fiber industry; Promising export potential.

WEAKNESSES OF THE TEXTILE INDUSTRY: The Industry is a highly fragmented Industry. It is highly dependent on cotton. There is lower productivity in various segments. There is a declining in Mill segment. Lack of Technological Development that affect the productivity and other activities in whole value chain. Infrastructural Bottlenecks and Efficiency such as, Transaction Time at Ports and transportation Time. Unfavorable labor Laws. Lack of Trade Membership, which restrict to tap other potential market.

TEXTILE SECTORS IN INDIA: The Man-made fiber/yarn and powerloom sector The Cotton Sector The Handloom Sector The Woolen Sector The Jute Sector The Sericulture and Silk Sector The Handicraft Sector


The Ministry of Textiles Advisory Bodies Export Promotion Councils Autonomous Bodies Statutory Bodies Textiles Research Associations Public sector undertakings 1. National Textile Corporation Ltd (NTC). 2. British India Corporation Ltd (BIC). 3. Cotton Corporation of India Ltd (CCI). 4. Jute Corporation of India Ltd (JCI). 5. National Jute Manufacturers Corporation (NJMC). 6. Birds Jute Exports Ltd (BJEL). 7. Handicrafts and Handlooms Export Corporation (HHEC). 8. Central Cottage Industries Corporation (CCIC). 9. National Handloom Development Corporation (NHDC).


India is the worlds 2 nd largest cotton producing country, after China. BT cotton was a major factor contributing to higher rate of production, from 15.8 million bales in 2001-02 to 31 million bales in 2007-08.

India accounts for: 61% of the global loomage. 22% of the global spindleage. 12% of the worlds production of textile fibres and yarn. 25% share in the total world trade of cotton yarn.

The market size of the Indian Textile Industry is expected to reach US $110 billion by 2012 and the domestic market is expected to reach US $60 billion by 2012.


The Indian Textile Industry is one of the largest industry that provides high exports and foreign revenue. Textiles exports, which were growing at a moderate pace till 2004-05, registered a sharp growth of 21.77% in 2005-06 to touch US $17 billion from US $14 billion in 2004-05, due to the scrapping of quotas. Readymade garments (RMG) are the largest export segment, according for 45% of total textile exports and 8.2% of Indias total exports. This segment has benefited significantly with the termination of the Multi-Fibre Arrangement (MFA) in January 2005.Readymade garments exports from India are expected to touch US $14.5 billion by 2009-10 with a cumulative annual growth of 18 to 20 %, according to Apparel Export promotion Council.


Aravind Mills Reymonds Reliance Textiles Vardhaman Spinning Bombay Dyeing Ltd (Composite and fully integrated) Welspun India (manufactures terry towels)

Oswal Knit India (Woolen Wear) Sharda Textile Mills (Man-made fiber) Mafatlal Textiles (Fully integrated composite Mill) LNJ Bhilwara Group (Diversified and vertically integrated denim producer with spinning and weaving capacity) Alok Textiles (Cotton and Man-made Fibre Textiles) Indian Rayon (Man-made Fibre) BSL Ltd (Textiles) Century Textiles (Composite mill, cotton & Man-made) Morajee Mills (Fully integrated composite mill) Hanil Era Textiles (Yarn , Cotton & Man-made Fibre) Filaments India Ltd (Man-made Textiles)

OPPORTUNITIES IN INDIAN TEXTILE INDUSTRY : The textile industry is undergoing a major reorientation towards nonclothing applications of textiles, known as technical textiles like thermal protection and blood-absorbing materials; seatbelts; adhesive tape, and multiple other specialized products and applications. These technical textiles are an emerging industry with a potential to reach a size of US $ 127 billion by 2010 and hold a great promise for Indian textiles industry. Indian textile industry phase-out of the quota regime of the multi-fibre arrangement (MFA) is upbeat with new investment flowing and various initiatives taken by the government. A Vision 2010 for textiles formulated by the government to capitalize on the upbeat mood aims to increase India's share in world's textile trade to 8% by 2010 and to achieve export value of US $ 50 billion by 2010 Vision 2010 for textiles envisages growth in Indian textile economy from the current US $ 37 billion to $ 85 billion by 2010 and modernization and consolidation for creating a globally competitive textile industry. High growth is expected in the domestic market as well as exports. The growth of the Industry is expected in the following areas: Cotton Jute

Ready garment Silk textile Handloom Textiles export Wool and Woolen textiles Handicrafts

OBJECTIVE The Study carries the primary objective as Effective Cash Management which can be achieved using various cash management techniques. And it has the following supportive objectives 1. Optimum cash balance 2. Speeding up collections 3. Controlling payments 4. Efficient short-term investments of cash surplus 5. Cash flow forecasting



The study in cash flow management can be categorized under Applied research because, Applied research is done to solve specific, practical questions; for policy formulation, administration and understanding of phenomenon. It can be Exploratory, but is usually descriptive. Descriptive research attempts to describe systematically a situation, problem, phenomenon, service or programme, or provides information about, say, living condition of a community, or describes attitudes towards an issue. Exploratory research is undertaken to explore an area where little is known or to investigate the possibilities of undertaking a particular research study. DATA COLLECTION METHOD: Here the data for the Analysis of the study is collected by means of secondary data collection method. Secondary data are collected from sources a

which have been already created for the purpose of first-time use and future uses. The secondary data collection involves less cost, time and effort. Some times more accurate data can be obtained only from secondary data. The sources of secondary data can be classified as internal sources and external sources. 1. INTERNAL SOURCES: Annual report Ledger Sales records Purchase orders/invoices/Bill. Journals Publication of trade association Books Magazines News Paper Research report in universities Industry handbook Bank statements