INTRODUCTION TO OCM INDIA LTDAND ITS WORKING CAPITAL ANALYSIS

Submitted to: submitted by:

Prof.Apar Singh Kirandeep kaur

Roll no.6387

MBA 2(E)

COMPANY PROFILE

An Overview: OCM is a leading men's apparel fabric retailer & manufacturer of India, with its integrated plant in Amritsar. The company has a 37-acre complex, with contemporary processes for manufacturing world class fabrics.

History: OCM India limited, popularly known as OCM , a leading multi National Company began its illustrious pursuit 80 years ago, with the manufacture of handmade carpets and carpet yarn.

The Ownership: The ownership of OCM is split between the US-based, WL Ross & Co. LLC, a global private equity fund management company and HDFC Ltd.

Management and Staff: The Company has its Corporate & Sales office in Delhi, while its manufacturing facilities are in Amritsar, Punjab. It has a strong employee base of 1020 people, who work relentlessly towards achieving customer satisfaction.

ABOUT WILBUR.L.ROSS

WILBUR.L.ROSS is an American investor known for restructuring failed companies in industries such as steel, coal, telecommunication, foreign investment and textile. WL Ross and company, a private equity firm made its first investment in India and acquired OCM, a textile company for $37 million in an all cash deal.

According to Reuters, “OCM establishes us in India's textile sector and further add to the resources and synergies of our textile holdings,” said Wilbur Ross, chairman and CEO of WL Ross&co. in an statement.”

. In 2005. Forbes magazine listed Ross as one of the world’s billionaires for the first time.

OCM’S MISSION

MISSON OF OCM is as follows and it is trying its very best in achieving that target is as follows:-

The company is committed to achieve, sustain and internally acceptable level of quality for its product, activity and service.

Satisfaction of our esteemed customers is our supreme goal.

All employees and all other supplier must relentlessly strive as a team for achieving our quality objective all the time.

DEPARTMENTS IN OCM

Finance department Marketing department Personnel department Production department commercial

FINANCE DEPARTMENT

Finance department looks into the cash inflow and outflow of the company .

Finance department headed by assistant vice president who responsible for three main activities like:-

Banking transactions. updating the books of account dealing with

the financial institutions short term financing of debtors after the sale

of goods on credit.

GENERAL ACCOUNTS

This department maintains all the books of accounts .It maintains the annual accounts that are audited secretly . It also looks into dues to the Government taxes excise duty etc.

MARKETING DEPARTMENT

Marketing department performs the following functions:-

Product range Distribution Demand fulfillment

Product range :- The OCM team presents regular market reports of trends as they develop and change and OCM buyers encouraged to contribute to the designing process.

Demand:- This is done on the basis of Past experience Dealer’s need Agents conferences Market research Demand by foreign companies and other

concerns

COMMERCIAL

F.S. advertising and contract advertising is

the formal advertising agency in Delhi to carryout strategies. 

The company holds regular fashion shows to exhibit production as per season. 

They depend on publicity office for their hoardings. 

PERSONNEL DEPARTMENT

The vice president is overall responsible for the functioning of department. The manager personnel is in for co-ordinates the function of assistant personnel officer, chief labor officer and the head time keeper.

It involved in the following main functions:- Recruitment Selection training Retirement welfare

PRODUCTION DEPARTMENT

Production deptt work’s based on the orders that are booked, a tentative raw materials requirement schedule is prepared by the department. According to the raw material is ordered as purchased.

The purchased raw material is sent to combers to converting it into continuous length of fibers called silver. These silvers are then converted into a continuous length of processing. The process of production starts with dyeing and ends with inspection of the finished product.

  

COMPANY’S PRODUCT LINE

Ceremonial collections Designers collections Tweeds Fancy jacketing

OCM’S COMPETITORS

Raymond Reid & Taylor Dig jam Siyaram Donear Vimal Arvind Oswal 

INTRODUCTION TO WORKING CAPITAL

Capital required for a business can be classified under two main categories:-

1. Fixed capital2. Working capital Funds that are needed for short-term

purposes for the purchase of raw material, payment of wages and other day to day expenses etc are known as working capital.

CONCEPT OF WORKING CAPITAL

There are two concepts of working capital : Gross working capital Net working capital

CLASSIFICATION OF WORKING CAPITAL

On the basis of concept On the basis of time

WORKING CAPITAL ANALYSIS

CASH

PARTICULARS 2007 2008 2009

CASH IN HAND&BANK

71,645 2,21,360 4,10,996

CURRENT ACCOUNT

45,55,244 27,39,552 4,53,968

FIXED DEPOSIT ACCOUNT

6,44,04,693 4,01,62,000 40,30,700

TOTAL CASH 6,90,31,582 4,31,22,912 4,50,71,964

STOCKSPARTICULARS 2007 2008 2009

RAW MATERIAL 2,53,81,734 8,31,70,729 14,84,82,706

WORK IN PROGRESS

3,58,45,838 7,06,24,168 6,82,23,731

STORES AND SPARES

3,03,69,654 3,32,84,652 4,19,61,494

FINISHED GOODS

13,84,97,501 10,34,58,859 15,82,05,410

OTHER STOCK 5,49,592 8,29,249 2,28,581

TOTAL STOCK 23,06,44,439 29,13,67,657 41,71,01,922

DEBTORS

PARTICULARS

2007 2008 2009

OVER SIX MONTH

5,56,39,817 81,44,44,414 9,33,36,658

OTHER DEBTORS

17,57,74,239 42,33,42,813 51,23,41,466

TOTAL DEBTORS

13,17,65,757 38,18,75,624 47,14,49,045

GROSS WORKING CAPITAL

PARTICULARS 2007 2008 2009

GWC 43,14,41,778 71,63,66,193 93,36,22,931

SALES

PARTIC-ULARS

2007 2008 2009

Sales 79,62,61,233

52,21,33,945

96,60,65,240

Growth Rate

110.7% 65.5% 121.3%

CALCULATION OF NWC

Particulars 2007 2008 2009

Current assets 43,14,41,778 71,63,66,193 93,36,22,931

Total current liabilities

17,35,54,360 18,84,80,460 26,55,73,692

NWC 25,78,87,418 52,78,85,733 66,80,49,239

The net working capital assures the firm’s reservoir of funds. It is that part of current assets which is financed through current liabilities. The net working capital of OCM has increased over the years although the growth rate is very poor.

ANALYSIS OF LIQUIDITY POSITION (2009) Current ratio = current assets/current liabilities

Current assets = 93,36,22,931 Current liabilities =26,55,73,692 Current ratio = 3.51 : 1 Thus, current ratio measures firm’s short-term solvency.

It indicates firm’s ability to cover its current liabilities with its current assets. In a more specific manner, it indicates the availability of current assets in rupees for every one rupee of current liability. A current ratio of 2 : 1 or more is considered satisfactory. But, whether or not a specific ratio is satisfactory depends on the nature of the business and the characteristics of its current assets and liabilities. OCM’s current ratio is 3.51 :1 which is satisfactory.

QUICK RATIO

Quick ratio is also known as acid test ratio. The formula is :

Quick ratio = current assets-inventory/current liabilities.

current assets = 93,36,22,931 inventory = 41,71,01,922 current liabilities = 26,55,73,692

Quick ratio = 0.19 : 1

This ratio serves as a supplement to the current

ratio in analyzing liquidity. This ratio is same ascurrent ratio except it excludes inventories –presumably the least liquid portion of currentassets. A quick ratio of 1 : 1 is considered asSatisfactory, but OCM’s quick ratio is 0.19 : 1.

It mean this industry cannot meet its current obligation with readily convertible ‘Quick’ funds on hands if sales revenue disappear.

CONCLUSION

By concluding the study about the working capital, it is find that working capital management of OCM INDIA LIMITED is good. It has sufficient funds to meet its current obligation every time which is due to sufficient profits and efficient management of OCM INDIA LIMITED.

THANK YOU!!!