a project on garuda fashions by Atul Jain

CHAPTER -I

EXECUTIVE SUMMARY:

Organization requires many things in order to be effective such as a method of producing

a product or service, financial resources, a way of marketing what ever product or service

is created, human resources. While all are important to organizational effectiveness, the

only factor that represents a potential competitive advantage is financial resources and

how these resources are managed. Financial resources play a crucial role in the

development process of the organization. To be successful, cash management is very

important. It provides healthy working environment.

With due attention and importance of “cash management” a research study is done in

“Garuda fashions”. This gave an opportunity to work with an endeavor focusing on the

study of cash management system.

The introductory chapter gives an insight into the area of the dissertation i.e. an overview

of cash management. The objective of this study is to find out the benefits and applications

with regard to the existing cash management system. Also to find the relative

strength of the monetary and non- monetary system.

After the data analysis it has been observed that the existing system of cash management

in the organization was found good and it was also found that various types of services

are being used which makes the organization to be effective and make them to achieve

their needs. This research has facilitated the organization research to understand the

various factors of cash management & how the cash management is very vital in the

organization to grow in the perfect market & increasing funds and profits.

First and foremost, Cash Flow is all about generating the absolute highest level of cash

possible at month or quarter end. This is not done by luck, heroic effort, or secret method.

It is accomplished by passionately executing the most effective strategies, using

innovative systems and motivated people to generate cash. Additionally, we regularly see

CFO’s having no real option other than relying on, at best, well meaning but ill-equipped

internal departments to design, implement and execute strategies that maximize cash.

Organizations traditionally cannot consistently rely on internally driven improvements in

working capital as a means of gaining improved financial performance. They hire people

with the unique skills and personality traits for executing the pursuit of maximizing cash.

Driven by fast evolution in the money market during the past two decades, financial and

technological innovations, increasing competition, and internationalizing of businesses,

cash and treasury management has become an increasingly important function in most

firms. It is reasonable to expect that the role of financial transactions in the cash

management process in adding to firm value has increased its importance and changed

the cash management behavior of firms.

The main purpose of this study is to investigate this potential behavioral change in cash

management by examining the cash management practices behind the models explaining

the cash management behavior and to test the stability of some of these models. It is

hypothesized that the environmental changes have been remarkable enough to change the

cash management behavior, which can be seen as a structural change in the cash

management function.

The study concludes that during the research period firms have achieved a significant

technological progress and significant behavioral changes concerning cash management

practices, referring to opportunities for more effective cash management operations. The

stability tests of cash management models indicated that a structural change in cash

management behavior occurred after the deregulation years in the money market.

STATEMENT OF THE PROBLEM

Study of Cash Management as a important tool in Organizations.

Organizations need to adopt a package of cash management

techniques to create funds and increase the profits.

This research aims at finding the relative strength of the cash

management services which are provided by the organizations.

What are the perceptions of company employees towards cash management system

being used by the company?

How does the company manage the employees benefits and services program.

OBJECTIVES OF THE STUDY

Recognize key concepts, terminology, goals and tools used in the management of corporate cash

Examine the cash conversion and operating cycles of a company and methods used to

forecast cash flows

Identify objectives and methods used to collect receipts quickly and control

disbursements

Identify basic borrowing and investment techniques used to ensure adequate liquidity

Explore fundamental techniques specific to cross-border cash management

Define interest rate and exchange rate risk and review instruments used to manage

financial risk

Identify methods used to compensate financial institutions and understand the account

analysis statement

To understand the management perspective towards cash

management.

To make appropriate recommendations to determine a package of

monetary and Non-monetary cash management services to help in

increasing working capital.

To study employees attitudes towards monetary and non-monetary

benefits.

SCOPE FOR FURTHER RESEARCH

From this research investigation, the following areas for further

research emerge:

A study on “a set of principles for successful management of cash.

A study on the” Impact of cash management systems on the

productivity of employees. "

“Linking cash management system to performance management

system effectively”

Cause and effect relationship of cash management towards the

organization position.

To find out a number of different cash management products and systems available

these days from banks and other financial services companies.

To analyze it and generate accurate predictions about the future cash needs of the

business and pass these findings along to the cash management services in order to

produce the best business cash management plan possible.

Interpret key concepts and terminology of the U.S. financial environment

Describe financial instruments, payment methods and mechanisms that comprise key

cash inflows and outflows, and how to manage them

Use excess cash effectively and guard against cash shortfalls

Manage cash across international borders

Identify how e-commerce affects cash management strategies

METHODOLOGY FOR PRIMARY DATA COLLECTION AND

Research method

Survey method has been used to do this research.

Research technique

Interactions with employees and management of the organization

have been used to do this research.

Data collection sources

Primary data has been collected for the purpose of the survey. Secondary

data has been used to review the literature. Employees Attitude towards

Monetary and Non-Monetary Rewards

Data Gathering Procedure

Data has been gathered by interviewing the employees and through

interpreting the collection of data.

RESEARCH LIMITATIONS

The research investigation has the following limitations:

The research investigation is confined to a limited level.

Time and resource constraints

Management is not ready to give the data because of

confidential problems.

The concept is highly abstract and difficult to study because

there are 300 employees working and I felt it difficult to interact with

them.

CHAPTER SCHEME:

To ensure clarity and to give a clear picture on the entire project .this has been divided into six chapters

1. the first chapter deals with the subject, objectives methodology and limitations of the study

2. the second chapter gives a brief description of the company profile

3. the third chapter deals with cash management and objectives of cash management

4. The fourth chapter deals with Mc Kensy’s 7s Frame Work

5. the fifth chapter deals with SWOT Analysis6. the sixth chapter deals with the findings and

suggestions of the company

CHAPTER -II

Company profile:

Background of the company:

Garuda fashion was founded by Mr. M.G.Reddy in 1993 with the brand Independence.

He believes that building good relationships with employees, suppliers & wider society is

the best guarantee of long term success. This remains backbone of our approach to

Corporate Social Responsibility. Right now Garuda fashions owns three distinguished

brands with a wide dominancy in market

Our brands have a simple, common purpose to make it easy for people to express their

personal style. We constantly evolve each brand to meet our customer needs through

innovative and inspiring design through convenient and engaging good shopping

experience and by communicating with a people in a way that connect to how they live,

work & play.

Garuda is not laid back for casuals. They have experimented the casual wear designs

enough to boost in all your fun and frolic days. These great casuals are made from 100%

cotton and traditional twills to enhance the durability.

A highly fashionable range offers you 30 shades to choose from, to suit all your moods.

Nature is just being yourself, at an unbeatable price of INR 495-995/-.The casuals are

stylish to foster the youth in you.

We have a strong tradition of corporate social responsibility (C S R) and we see it has

integral to how we do business. Our founders believe that building good relationships

with employees, suppliers & wider society was the best guarantee of long term success.

 Nature of the company:

The products are sarongs worn by men & woman and especially by men, and in particular

on special occasions and in ceremonies. In its further development, new variations of

colours and new motives were being introduced, and other fabric material is being used,

like silk. The use of batik has also broadened into woman, dresses, man, shirts, table

clothes, and other accessories.

Its competitive advantage lies in its innovative design, product development and flexible

service offering. Company is entitled to use the contents of messages, including ideas,

inventions, techniques and expertise contained therein, for any purpose, such as the

development, production and/or marketing of products or services

The priorities for the new team will be leading industry growth, enhancing customer

value by domain, business insights and proprietary frameworks, leveraging increased

market synergies from our technology business, and building empowered teams and

leaders. By widening and adding depth to our service portfolio, investing in sales and

marketing and focusing on training.

Vision:

 Team Garuda consist of extremely talented craftsmen, designers and workers with years

of expertise. At Independence, we believe in innovation. We create the right ambience

that nurtures talent, creativity and excellence, our comprehensive sales network staffed

by competent professional gives us access to market of every kind.

To be India 2019s best Garment Makers exceeding customers needs always to be the

market leader.

The Vision pleads for removing infrastructure constraints and whittle down transaction

cost, besides ensuring adequate raw material availability and an end to antiquated laws

such as hank yarn obligation, packaging obligation and textile committee cess.

The company to focus more on manufacturing value-added items since the higher growth

in value would flow from manufacture of more valued products and a rise in use of

diversified textile products such as technical textiles.

Mission:

The company is increasingly becoming focused on achieving scale and sophistication in

terms of management systems and processes to drive exponential growth. Our focus on

advertising strategies, promotions and effective marketing ensure fortune and prosperity

for our trade and channel partners.

The company 2019s production philosophy is built with the reliance on total quality and

unflinching commitment to using environment friendly materials. Today 2019s, the

popularity of Independence has spread countrywide.

Product quality policy:

Objectives of Policy:

To produce and provide good quality cloth in affordable price to fulfill different

needs of customers.

To increase the share of India in Global Textile Market.

To increase the contribution for employment and economic growth of country.

Increasing contribution of private sector through set up environment-friendly and

technologically advance textile units and complexes.

To improve the availability, productivity and quality of Raw Materials.

Improvement in quality of fiber/Yarn and its availability.

Product profile:

Garuda fashion textiles compete in the “better” priced category, and cater to the

successful, relatively affluent career man, who needs appropriate, fashion conscious attire

for their professional life, and prefers stylish, coordinated looks for their leisure activities.

This company has been stagnated for lack of local raw material (cotton) therefore, it has

been necessary to import it, resulting in a cost increase, which has make difficult to

compete with imported fabrics.

From several days ago up to date, this product has suffered several changes concerning

its quality, in order to offer a product that satisfies market and consumers’ demand. For

this reason, the company has been forced to renew machinery with ones of better

technology for the manufacture of a high quality product that also allows lowering costs.

Area of Operation

The information regarding the location of the unit in the industrial Area, Rajaji nager

Bangalore. This is more conducive for further improvement in their functioning and

technology up gradation.

The company operates its work in Karnataka, Andhra Pradesh, Tamilnadu& kerala.

Ownership pattern:

A unit under the ownership of a single individual is termed as Sole Proprietorship.

Business where two or more people share the risks and profits equally; registered or

unregistered is termed as Partnership. Private Limited is a company with a small number

of shareholders.

According to the above circumstances, the Garuda fashions units are single man owned

by Mr.Govinda reddy and/or assisted/part owned by his own family members.

Competitiveness:

The company has many competitors in this fast growing textiles industries.

Investments in the regional domestic industries have started picking up. It will force

down clothing prices further and will also help retail buyers to concentrate upon the most

competitive suppliers.

It will be a race and emerging winners would include companies who will be able to

deliver large volumes from integrated structures through partnership and other ventures.

Infrastructure facilities:

The company has pointed out that infrastructure, labour, fiscal levies, exim policies are

the main hindrances to growth, even as power, water, raw materials, are being tackled by

companies.

The textile industry does not look to be overly hampered by the various obstacles to

growth, and is going strong, making the most of what it has, and of the buoyant market

conditions.

Human resource development is also a focus area for the company. On the raw material

front, in anticipation of a tight yarn market in the years to come, the company is putting

up its own spinning unit.

Sales tax regulations are also a hindrance for the company. "Most of the states provide

subsidy in some form or the other to encourage/promote capital investments. Sales tax

regulations are made free/subsidised for a number of years.

The company also invests a lot in designing innovations. "We are not job workers for our

clients. Hundred per cent of our products are designed by us, based on the fashion trends.

We are not dictated to by our buyers in terms of the fabrics to be used, the colours to be

used, etc.

At the same time, we are well aware of the seasonal trends, and are in a position to offer

our clients what they are looking for. According to company officials, "Maintaining the

cost of production is a Herculean task and it involves, besides manufacturing engineering,

a well-planned financial engineering."

Customers:

Every week thousands of people in India shop with us, our ability to meet the needs of

others depends on how successful we are at serving the needs of our customers.

. Brand Communication:

Aiming to Bridge the gap between target audiences and the organization, product or

service. It is the ethereal connection between the physical entity, and the audiences best

suited to its purchase or promotion.

Future growth & prospectus:

The Garuda fashions is mainly looking to consolidate its position in the domestic market

and to enter in the international market. They are looking forward to have a profitable

growth in all the segments we are present in. Our brands have been growing at a rate of

20 - 30 % and we foresee the same to continue for the next few years.

We have plans to achieve this by strengthening our retail presence. Organized retail is

increasing its share and with more brands coming to India offering world-class retail

experience, retail has become one of the critical growth drivers of the company.

Our company is also focusing on making innovative product offerings to the market. The

future prospect for the company is bright, particularly in the post-quota regime. The

industry is in an expansion mode and is likely to benefit from growing demand both in

the domestic as well as global markets.

CHAPTER -III

CASH MANAGEMENT :

Definition:

The cash management is defined as the strategy by which a company administers and

invests its cash. The control of cash collections.

Cash, is the currency and coin the firm has on hand in petty cash drawers, in cash

registers, or in checking accounts at the various commercial banks where its demand

deposits are maintained.

Cash Management:-

Is the maintaining of liquidity of a firm to minimize the risk of insolvency. ( An

insolvent company is one where it is unable to meet its maturing liabilities on

time because it has inadequate liquidity to meet its debt obligation)

Cash Management is also about the proper balancing of keeping cash without

letting it idling around.

In United States banking, cash management, or treasury management, is a marketing term

for certain services offered primarily to larger business customers. It may be used to

describe all bank accounts (such as checking accounts) provided to businesses of a

certain size, but it is more often used to describe specific services such as cash

concentration, zero balance accounting, and automated clearing house facilities.

Sometimes, private banking customers are given cash management services.

Cash management is a broad term that refers to the collection, concentration, and

disbursement of cash. It encompasses a company's level of liquidity, its management of

cash balance, and its short-term investment strategies. In some ways, managing cash flow

is the most important job of business managers. If at any time a company fails to pay an

obligation when it is due because of the lack of cash, the company is insolvent.

Insolvency is the primary reason firms go bankrupt. Obviously, the prospect of such a

dire consequence should compel companies to manage their cash with care. Moreover,

efficient cash management means more than just preventing bankruptcy. It improves the

profitability and reduces the risk to which the firm is exposed.

Cash management is a broad area having to do with the collection, concentration, and

disbursement of cash including measuring the level of liquidity, managing the cash

balance, and short-term investments.

If at any time, because of a lack of cash, a corporation fails to pay an obligation when it is

due, the corporation is insolvent. Insolvency is the primary reason firms go bankrupt.

Obviously, the prospect of such dire consequence compels companies to manage their

cash with care. Moreover, efficient cash management means more than just preventing

bankruptcy. It improves the profitability and reduces the risk the firm.

Cash management is particularly important for new and growing businesses. As Jeffrey

P. Davidson and Charles W. Dean indicated in their book Cash Traps, cash flow can be a

problem even when a small business has numerous clients, offers a superior product to its

customers, and enjoys a sterling reputation in its industry.

Companies suffering from cash flow problems have no margin of safety in case of

unanticipated expenses. They also may experience trouble in finding the funds for

innovation or expansion. Finally, poor cash flow makes it difficult to hire and retain good

employees.

It is only natural that major business expenses are incurred in the production of goods or

the provision of services. In most cases, a business incurs such expenses before the

corresponding payment is received from customers. In addition, employee salaries and

other expenses drain considerable funds from most businesses.

These factors make effective cash management an essential part of any business's

financial planning. "Cash is the lifeblood of a [store]," wrote Richard Outcalt and Patricia

Johnson in Playthings. "Without cash for inventory, payroll, and other expenses, an

emergency is imminent."

When cash is received in exchange for products or services rendered, many small

business owners, intent on growing their company and tamping down debt, spend most or

all of these funds. But while such priorities are laudable, they should leave room for

businesses to absorb lean financial times down the line.

The key to successful cash management, therefore, lies in tabulating realistic projections,

monitoring collections and disbursements, establishing effective billing and collection

measures, and adhering to budgetary restrictions.

Motives for Holding Cash

The company holds cash for a variety of different reasons. Generally, cash balances held

in the company can be called considered,

Precautionary

Speculative

Transactional and

Intentional.

The first are the result of management anxieties. Managers fear the negative part of the

risk and hold cash to hedge against it. Second, cash balances are held to use chances that

are created by the positive part of the risk equation. Next, cash balances are the result of

the operating needs of the firm. In this we analyze the relation between these types of

cash balances and risk.

This also contains propositions for marking levels of precautionary cash balances and

speculative cash balances. Current models for determining cash management, assign no

minimal cash level, or their minimal cash level is based on the manager's intuition.

Presented in this article model avoid intuition and is based on calculation. Application of

this proposition should help managers to make better decisions to maximize the value of

a firm.

1. Transaction Motive

Arise in the ordinary course of doing business.

Maintaining cash for the purpose of meeting cash needs arising in the ordinary

course of doing business.

Includes regular payments like wages, utilities, acquisition of fixed assets and

inventories

The amount of cash needed for transaction requirements depends on the nature of

business and varies from industry to industry

2. Precautionary Motive

To satisfy possible, but as yet indefinite, needs. affected by the cash flow

predictability, and access to external fund the motive is met by holding a portfolio

of liquid assets

Maintaining of cash balance as buffer for UNEXPECTED needs that may arise.

Either holding in cash or marketable securities that can be liquidated easily

3. Speculative Motive

To take advantage of potential profit making situations

Holding cash for potential profit making situation like purchasing raw materials in

bulk in anticipation of a fall in price

Cash Collection and Disbursement

Cash collection systems aim to reduce the time it takes to collect the cash that is owed to

the firm (for example, from its customers). The time delays are categorized as mail float,

processing float, and bank float. Obviously, an envelope mailed by a customer containing

payment to a supplier firm does not arrive at its destination instantly. Likewise, the

moment the firm receives payment it is not deposited in its bank account. And finally,

when the payment is deposited in the bank account oftentimes the bank does not give

immediate availability to the funds.

These three "floats" are time delays that add up quickly, requiring the firm in the

meantime to find cash elsewhere to pay its bills. Cash management attempts to decrease

the time delays in collection at the lowest cost. A collection receipt point closer to the

customer, such as a lock box, with an outside third-party vendor to receive, process, and

deposit the payment (check) will speed up the collection.

For example, the firm collects $10 million each day and can permanently speed up

collections by five days, at 6 percent interest rates, then annual before-tax profits would

increase by $3 million. The techniques to analyze this case would utilize data involving

where the customers were; how much and how often they pay; the bank they remit

checks from; the collection sites the firm has (their own or a third-party vendor); the costs

of processing payments; the time delays involved for mail, processing, and banking; and

the prevailing interest rate that can be earned on excess funds.

Once the money has been collected, most firms then proceed to concentrate the cash into

one center. The rationale for such a move is to have complete control of the cash and to

provide greater investment opportunities with larger sums of money available as surplus.

There are numerous mechanisms that can be employed to concentrate the cash, such as

wire transfers, automated clearinghouse transfers, and checks. The tradeoff is between

cost and time.

Disbursement is the opposite of collection. Here, the firm strives to slow down payments.

It wants to increase mail delays and bank delays, and it has no control over processing

delay.

Optimal cash balance

Another aspect of cash management knows the optimal cash balance. There are a number

of methods that try to determine the magical cash balance, which should be targeted so

that costs are minimized and yet adequate liquidity exists to ensure bills are paid on time.

One of the first steps in managing the cash balance is measuring liquidity.

There are numerous ways to measure this, including: cash to total assets ratio, current

ratio (current assets divided by current liabilities), quick ratio (current assets less

inventory, divided by current liabilities), and the net liquid balance (cash plus marketable

securities less short-term notes payable, divided by total assets). The higher the number

generated by the liquidity measure, the greater the liquidity and vice versa. There is a

trade off, however, between liquidity and profitability that discourages firms from having

excessive liquidity.

Cash management is evolving with the increasing acceptance and use of electronic

payments, such as debit cards. Shifting from paper-based payments to electronic transfers

reduces the uncertainty in cash flow forecasting. The change in form of payment

decreases both float and per item transaction costs.

Stumbling blocks to the complete switchover to electronic payments include the initial

equipment investment for businesses and resistance by consumers who still prefer checks.

Nevertheless, the use of electronic versus paper payments is gaining, affecting the

importance of current cash management techniques.

Cash collection systems aim to reduce the time it takes to collect the cash that is owed to

a firm. Some of the sources of time delays are mail float, processing float, and bank float.

Obviously, an envelope mailed by a customer containing payment to a supplier firm does

not arrive at its destination instantly. Likewise, the payment is not processed and

deposited into a bank account the moment it is received by the supplier firm.

And finally, when the payment is deposited in the bank account oftentimes the bank does

not give immediate availability to the funds. These three "floats" are time delays that add

up quickly, and they can force struggling or new firms to find other sources of cash to

pay their bills.

Cash management attempts, among other things, to decrease the length and impact of

these "float" periods. A collection receipt point closer to the customer perhaps with an

outside third-party vendor to receive, process, and deposit the payment is one way to

speed up the collection.

The effectiveness of this method depends on the location of the customer; the size and

schedule of their payments; the firm's method of collecting payment; the costs of

processing payments; the time delays involved for mail, processing, and banking; and the

prevailing interest rate that can be earned on excess funds. The most important element in

ensuring good cash flow from customers, however, is establishing strong billing and

collection practices.

One of the first steps in managing the cash balance is measuring liquidity, or the amount

of money on hand to meet current obligations.

The higher the number generated by the liquidity measure, the greater the liquidity and

vice versa. However, there is a tradeoff between liquidity and profitability which

discourages firms from having excessive liquidity.

A Cash Flow Statement is typically divided into three components so that you can see

and understand both the internal and external sources and uses of cash.

Good cash management means:

Knowing when, where, and how your cash needs will occur,

Knowing what the best sources are for meeting additional cash needs; and,

Being prepared to meet these needs when they occur, by keeping good

relationships with bankers and other creditors.

Objectives of cash management:

Cash Management is part of the Financials family of applications.

Cash management involves forecasting, receiving, controlling, disbursing, and investing

funds from your company's operations. Besides helping to improve liquidity and increase

profits, effective cash management will:

Increase cash inflow.

Reduce cash outflow.

Increase the yield on idle funds

The company (Garuda fashions pvt Ltd) is maintaining very effective cash cash

management to reach the following objectives

Design collection and disbursement management systems

Develop cash flow planning models

Improve rate negotiations

Evaluate investment and financing options

Build sophisticated cash management models

Understand the effects of changes in technology

Cash Management is an enterprise wide solution for managing liquidity and controlling

cash. Cash Management gives you direct access to expected cash flows from your

operational systems. You can quickly analyze enterprise wide cash management cash

requirements and currency exposures, ensuring liquidity and optimal use of cash

resources.

The Importance of Cash Management

Business analysts report that poor management is the main reason for business failure.

Poor cash management is probably the most frequent stumbling block for entrepreneurs.

Understanding the basic concepts of cash flow will help you plan for the unforeseen

eventualities that nearly every business faces.

Cash vs. Cash Flow

Cash is ready money in the bank or in the business. It is not inventory, it is not accounts

receivable (what you are owed), and it is not property. These can potentially be converted

to cash, but can't be used to pay suppliers, rent, or employees.

Profit is not equating to cash flow. A highly profitable company might collapse if

without adequate cash flow due to the tying up of company’s funds with the accounts

receivable and worsen by the needs to make regular payments like wages, rent & utilities,

taxes.

Profit growth does not necessarily mean more cash on hand. Profit is the amount of

money you expect to make over a given period of time, while cash is what you must have

on hand to keep your business running. Over time, a company's profits are of little value

if they are not accompanied by positive net cash flow. You can't spend profit; you can

only spend cash.

Cash flow refers to the movement of cash into and out of a business. Watching the cash

inflows and outflows is one of the most pressing management tasks for the business. The

outflow of cash includes those checks you write each month to pay salaries, suppliers,

and creditors. The inflow includes the cash you receive from customers, lenders, and

investors.

Positive Cash Flow

If its cash inflow exceeds the outflow, the company has a positive cash flow. A positive

cash flow is a good sign of financial health, but is by no means the only one.

Negative Cash Flow

If its cash outflow exceeds the inflow, the company has a negative cash flow. Reasons for

negative cash flow include too much or obsolete inventory and poor collections on

accounts receivable. If the company can't borrow additional cash at this point, it may be

in serious trouble.

What Are the Components of Cash Flow?

A "Cash Flow Statement" shows the sources and uses of cash and is typically divided

into three components:

Operating Cash Flow :

 Operating cash flow, often referred to as working capital, is the cash flow generated

from internal operations. It comes from sales of the product or service of the business,

and because it is generated internally, it is under organisational control.

Investing Cash Flow .

 Investing cash flow is generated internally from non-operating activities. This includes

investments in plant and equipment or other fixed assets, nonrecurring gains or losses, or

other sources and uses of cash outside of normal operations.

Financing Cash Flow.

 Financing cash flow is the cash to and from external sources, such as lenders, investors

and shareholders. A new loan, the repayment of a loan, the issuance of stock, and the

payment of dividend are some of the activities that would be included in this section of

the cash flow statement.

The starting point for good cash flow management is developing a cash flow projection.

Smart business owners know how to develop both short-term (weekly, monthly) cash

flow projections to help them manage daily cash, and long-term (annual, 3-5 year) cash

flow projections to help them develop the necessary capital strategy to meet their

business needs. They also prepare and use historical cash flow statements to understand

how they used money in the past.

Cash Management Services generally offered:

The following is a list of services generally offered by banks and utilized by larger

businesses and also include the company Garuda fashions pvt Ltd:

Account Reconcilement Services:

Balancing a cheque book can be a difficult process for a very large business, since it

issues so many checks it can take a lot of human monitoring to understand which

checks have not cleared and therefore what the company's true balance is.

To address this, banks have developed a system which allows companies to upload a

list of all the checks that they issue on a daily basis, so that at the end of the month

the bank statement will show not only which checks have cleared, but also which

have not. More recently, banks have used this system to prevent checks from being

fraudulently cashed if they are not on the list, a process known as positive pay.

Advanced Web Services:

Most banks have an Internet-based system which is more advanced than the one

available to consumers. This enables managers to create and authorize special internal

logon credentials, allowing employees to send wires and access other cash

management features normally not found on the consumer web site.

Armored Car Services:

Large retailers who collect a great deal of cash may have the bank pick this cash up

via an armored car company, instead of asking its employees to deposit the cash.

.Automated Clearing House:

These Services are usually offered by the cash management division of a bank. The

Automated Clearing House is an electronic system used to transfer funds between

banks. Companies use this to pay others, especially employees.

Certain companies also use it to collect funds from customers (this is generally how

automatic payment plans work). This system is criticized by some consumer

advocacy groups, because under this system banks assume that the company initiating

the debit is correct until proven otherwise.

Balance Reporting Services:

Corporate clients who actively manage their cash balances usually subscribe to secure

web-based reporting of their account and transaction information at their lead bank.

These sophisticated compilations of banking activity may include balances in foreign

currencies, as well as those at other banks.

They include information on cash positions as well as 'float' (e.g., checks in the

process of collection). Finally, they offer transaction-specific details on all forms of

payment activity, including deposits, checks, and wire transfers in and out,

investments, etc.

Cash Concentration Services:

Large or national chain retailers often are in areas where their primary bank does not

have branches. Therefore, they open bank accounts at various local banks in the area.

To prevent funds in these accounts from being idle and not earning sufficient interest,

many of these companies have an agreement set with their primary bank, whereby

their primary bank uses the Automated Clearing House to electronically "pull" the

money from these banks into a single interest-bearing bank account.

Lockbox services:

Often companies which receive a large number of payments via checks in the mail

have the bank set up a post office box for them, open their mail, and deposit any

checks found. This is referred to as a "lockbox" service.

Positive Pay:

Positive pay is a service whereby the company electronically shares its check register

of all written checks with the bank. The bank therefore will only pay checks listed in

that register, with exactly the same specifications as listed in the register (amount,

payee, serial number, etc.). This system dramatically reduces check fraud.

Sweep Accounts:

These are typically offered by the cash management division of a bank. Under this

system, excess funds from a company's bank accounts are automatically moved into a

money market mutual fund overnight, and then moved back the next morning. This

allows them to earn interest overnight. This is the primary use of money market

mutual funds.

Zero Balance Accounting:

can be thought of as somewhat of a hack. Companies with large numbers of stores or

locations can very often be confused if all those stores are depositing into a single

bank account. Traditionally, it would be impossible to know which deposits were

from which stores without seeking to view images of those deposits.

To help correct this problem, banks developed a system where each store is given

their own bank account, but all the money deposited into the individual store accounts

are automatically moved or swept into the company's main bank account.

This allows the company to look at individual statements for each store. U.S. banks

are almost all converting their systems so that companies can tell which store made a

particular deposit, even if these deposits are all deposited into a single account.

Therefore, zero balance accounting is being used less frequently.

Wire Transfer:

A wire transfer is an electronic transfer of funds. Wire transfers can be done by a

simple bank account transfer, or by a transfer of cash at a cash office. Bank wire

transfers are often the most expedient method for transferring funds between bank

accounts.

A bank wire transfer is a message to the receiving bank requesting them to effect

payment in accordance with the instructions given. The message also includes

settlement instructions. The actual wire transfer itself is virtually instantaneous,

requiring no longer for transmission than a telephone call.

Controlled Disbursement:

This is another product offered by banks under Cash Management Services. The

bank provides a daily report, typically early in the day, that provides the amount of

disbursements that will be charged to the customer's account. This early knowledge of

daily funds requirement allows the customer to invest any surplus in intraday

investment opportunities, typically money market investments.

In the past, other services have been offered the usefulness of which has diminished with

the rise of the Internet. Cash management services can be costly but usually the cost to a

company is outweighed by the benefits: cost savings, accuracy, efficiencies, etc

Successful Cash Flow Management:

Cash management is ultimately about cash flow and very few small businesses are awash

in cash. Even successful, growing companies are vulnerable to cash flow problems

because they tend to add employees and inventory rapidly. This may quickly deplete the

company coffers and lead to cash shortages.

Because having cash at the right time is so important, entrepreneurs must pay close

attention to cash management.

Here are some tips for saving money and managing cash flow:

Make financial projections.

Forecast both expenses and anticipated revenues for at least the coming year. This will

help you predict when you're likely to have cash and when you're likely to need it. You

should also maintain a cash reserve if possible.

Create contingency plans.

Have several budget projections, including best case and worst case scenarios, and think

about how you might respond. In the event sales don't take off as expected or there's

some unforeseen problem, you'll be better prepared.

Keep a lid on spending.

One of the most common problems with new businesses is the owners' tendency to spend

freely. There's no need to have lavish offices or expensive furniture. Remember, you're in

this for the long haul: You should try to get as much value as possible out of every

transaction, whether you're leasing office space or stocking the company kitchen.

Keep inventory low.

Don't stock inventory based on your fantasy of what you think you'll be selling in six

months. Instead, stock only what you know you can sell in the short term.

Lease, don't buy.

Another good way to conserve cash is to lease equipment instead of buying it. Although

leasing can be more expensive in the long run, it helps you avoid laying out a lot of

capital all at once for things like office furniture, computers and copiers.

Delay hiring employees.

Try to improve the productivity of current employees (without burning them out), use

independent contractors and consider outsourcing certain nonessential functions.

Employees are expensive, so you should put off adding permanent hires as long as you

can or at least until you're earning the revenue to support them.

Go without a salary.

Some experts recommend stockpiling a year's worth of living expenses before going into

business. Admittedly, this may be difficult, but you should at least avoid paying yourself

an excessive salary. Too many entrepreneurs waste cash by paying themselves big

salaries without the revenues to justify them.

Speed up customer payments.

Try to get customers to pay on time or early, if possible. Offer incentives like discounts

or late fees, and adopt more effective collection techniques for deadbeat customers.

Don't be wasteful.

Recycle and reuse what you can -- for example, boxes, computer discs and file folders.

The savings may not be large on any given item, but they can add up over time.

Cash Management Services:

Cash Management Services provide structured, automated tools that give you maximum

flexibility to help manage your company's funds efficiently and profitably

This is why they have a wide array of cash management services to help firms

effectively collect and disburse money as well as optimize the cash flow of business. It

is a convenient way for the business to make large cash deposits and/or order cash.

Cash Management is the process of optimizing receivable and payables while ensuring

predictability in the cash flows. Efficient Cash Management is about getting funds in

time, quick transfers, quick realization of local and outstation cheques, easy

disbursements, account reconciliation, controlled processes and customized MIS. Thus

Cash Management Services (CMS) eliminates the inherent delays of a funds transfer

mechanism, thus enhancing liquidity and ensuring optimum planning and utilization of

funds

Cash Management Services include the following basic components:

1. Collection or Receivables Management

2. Payment or Payables Management

Benefits of Cash Management Services:

Financial Benefits

Collection & Disbursement products enable to reduce the interest cost on borrowings

by getting access to funds faster there-by reducing the borrowings. Additionally, it

helps to improve the liquidity position by realizing cheques earlier, there-by

improving the Balance Sheet and Financial Ratios.

Operational Benefits

Financing and Treasury functions can be managed with far less number of people as most

of the funds and liquidity management functions get outsourced to us as your Bank and in

addition will require lesser manpower for performing various payment related activities.

Control Benefits

CMS products allows you to maintain better control over the various Treasury related

activities, improve speed and ease of reconciliation and reduces the risk of fraud.

Cash management functions:

In Garuda fashions pvt Ltd the cash management department plays various functions.

These are the following

Short-term treasury forecasts, at least monthly

Establishment of an optimum cash level

Optimization of liquidity

Monitoring and optimization of the purchase-payment circuit

Monitoring and optimization of the sales-cash circuit

Monitoring of company positions at the value date

Day-to-day control of organization positions

Maximization of returns on treasury surpluses

Minimization of costs of short-term borrowing

Coverage of interest-rate risk

Coverage of exchange-rate risk

Forecast cash flows in any currency and in multiple time periods

Streamline the reconciliation process

Monitor for exceptions and fraud

Forecast based on historical or future transactions

Manage the cash cycle efficiently and with control

Cash Flow Process:

1. Cash Inflows

Irregular

      - not daily or frequent

      - Bond sales, other debt contracts, P/S sale, C/S sale

      - sale of marketable securities

Regular

      - collections from A/R, cash sale, sale of inventory and fixed asset

2. Cash Outflows

Irregular

      - Payment of dividends, interest, principal on debt, Share repurchase, Taxes payment

      - purchase of marketable securities

Regular

      - investment in fixed asset (capital expenditure program)

      - investment in inventory

Cash Management: Concepts Included

Cash management can be seen from two different perspectives depending on how many

responsibilities it includes: treasury management (or basic cash management) and

advanced cash management.

Specifically, treasury management handles actual cash management at companies, and

one of its main functions is to establish the optimum cash level so that payments can be

made and received as necessary for the proper operation of the company. The second

concept includes not only treasury management per se but also other tasks such as

treasury forecasting, negotiation and establishment of relationships with financial

institutions and financial risk management.

However, if the profit opportunities available in the process of cash flow creation are to

be maximized, this scope must be broadened to take in more operational decisions, since

optimum cash levels are influenced by other factors outside the restrictive concept of

"treasury".

Basic cash management:

Treasury management or basic cash management propitiates the development of

administrative techniques conducive to optimizing the level of disposable assets to be

maintained by a company.

To prevent breaks or gaps in the trading cycle due to lack of cash, administrators must

calculate the cash amount best suited to their level of activity, plan the timing of the

relevant payments and collections and draw up a policy of investment in assets with high

liquidity that can be converted to cash at a low transactional cost to serve as support for

the treasury funds maintained by the company.

It is therefore essential to establish the right level of disposable assets to short-term

financial investments at companies. Holding the wrong amount in cash or cash equivalent

may interrupt the normal flow of business activities.

Moreover, the wrong safety margin may result in financial difficulties, with firms unable

to meet needs that may arise at any given time or unable to take advantage of unexpected

investment opportunities.

Maintaining a cash surplus thus has a number of advantages. On the one hand it enables

companies to carry on the normal transactions that arise in the course of their activities

and avoid any treasury gaps. On the other hand it helps them cover any unexpected needs

for cash by acting as a preventive balance. However, there are also disadvantages in

being too conservative, as reflected in the opportunity costs entailed by assets with little

or no profitability.

Advanced cash management:

Treasury management as a set of techniques that act on the short-term liquidity of a

company, and at the same time affect those factors and processes that translate

immediately into cash, with the ultimate aim of increasing the profitability of the

company and improving working capital management.

In this sense cash management as an overall, integrated service of which the customer

takes that part that best suits him or that he needs at any given time, served basically by a

computer or another online solution. All these responsibilities are interconnected, which

generates an overall model of cash management with a policy aimed at obtaining profits

or reducing costs to generate value for firms and, in short, help attain the general goals of

those firms.

Evaluation of Costs of Cash-Management Services:

Cash management services can be costly but usually the cost to a company is

outweighed by the benefits: cost savings, accuracy, efficiencies, etc.

A form of break-even analysis can help the financial officer decide whether a particular

collection or disbursement service will provide an economic benefit to the firm. The

evaluation process involves a very basic relationship in microeconomics:

Added costs = added benefits

If equation 19-1 holds exactly, then the firm is no better or worse off for having adopted

the given service. We will illustrate this procedure in terms of the desirability of

installing an additional lock box. Equation 19-1 can be restated on a per-unit basis as

follows:

P=(D)(S)(i)

Where P= increases in per-check processing cost it the new system is adopted

D= days saved in the collection process (float reduction)

S=average check size in dollars

i= the daily, before-tax opportunity cost (rate of return) of carrying cash

CHAPTER -IV

MCKINSEY’S 7-S FRAMEWORK: 

The profile of the company can be explained with the help of McKinsey’s 7-S model. The Mc-Kinsey’s 7-S Framework is as shown below

Strategy

Style

Skills

System

Shared value

Staff 

Structure  

Mckensy’s 7S frame work

The 7-S-Model is better known as McKinsey 7-S. The two persons who

developed this model are, Tom Peters and Robert Waterman, have been

consultants at McKinsey & Co at that time. They published their 7-S-

Model in their article “Structure Is Not Organization” (1980) and in

their books “The Art of Japanese Management” (1981) and “In Search

of Excellence” (1982).

Perhaps the most important element, which trigged the interest of

American managers in the issue of culture, was the emergence of

Japanese Competition. As Japan began to take a leading role in one

basic industry after another, the question of cultural difference emerged

as a casual factor to explain Japanese superiority.

There were those who signal the deterioration of sound cultural values

as the central reason behind the slipping of America as a world wide

industrial power.

They suggest that Americans have gotten too fat, demanding too much

from society without imposing any equivalent internal demands of

themselves, and that they seem to have a lost a sense of pride and self-

satisfaction derived from a job well done.

When contrasted with their Japanese counterparts, the gap seems to be

enormous and still growing. Somehow, there is basic erosion of

standards of excellence that seems to undermine the basic fabric of

American society.

The most notable exception, which might be the cause of its enormous

popularity, has been the book “In search of excellence” by Peters and

Waterman (1982), where they emphasize the lesson to be derived form

America’s best run companies. Mc. Kinsey’s 7S model reflects upon the

framework used to evaluate the best managerial companies.

Framework of Mckinsey’s 7 – S model

1. Shared value: The interconnecting centre of Mckinsey’s model is

shared value. What does the organization stands for and what it

believes in; central beliefs and attitudes.

2. Strategy: Plans for the allocation of firm’s scarce resources, over

time, to reach identified goals; Environment, competition, customers.

3. Structure: The way the organization’s units relate to each other.

Centralized, functional division (top down); decentralized; matrix,

network, holding, etc,

4. System: The procedures and processes that characterize how

important work is to be done.

5. Staff: Numbers and types of personnel within the organization.

Promoters of the company and the qualities of the key staff.

6. Style: cultural style of the organization and how key managers

behave in achieving the organization’s goals.

7. Skill: distinctive capabilities of personnel or of the organizations as a

whole

CHAPTER –V

SWOT analysis

Swot analysis of this company is as follows

Strengths:

A diversified manufacturing base having a capacity to produce quality Products.

Capability to produce World class end products.

Good R&D base and quality human resources

Major raw material component sources within the country

It has rich resources of raw materials of textile industry.

It is rich in highly trained manpower. The country has a huge advantage due to

lower wage rates. Because of low labor rates the manufacturing cost in textile

automatically comes down to very reasonable rates.

Experience and good penetration in regional markets.

Good managerial exporting capability. Export knowledge.

Existing renovation and expansion projects in progress.

Company has specialized in product lines.

Favorable climate for raw material production (cotton), throughout the year.

High flexibility:

Fast response

People’s creativity

Weakness:

Cost of Power: Very high cost of power, unreliability of supply and frequent

interruption. Transmission and distribution losses are very high.

Infrastructure: Infrastructure facilities are not of world class. Transport and

communications are complex resulting in delays and slow movement of goods. In-

adequate port facilities result in high demurrage costs.

Technology: In the days of sheltered economy, up-gradation of technology was not

critical. Bulk of the textiles Industry has grown by concentrating on processes

modification rather than basic research. Investment in R&D with a view to generating

intellectual property is absent.

Import and movement is not allowed freely by State Governments.

Lack of training programs: Middle management, machinery operators.

Difficulties in supplying raw material and capital goods. Customs obstacles.

Strong need for operation capital: difficult access to credit.

Weak technology for textile finishing process, both in knowledge and

Difficult labor relations. Labor code is old and inflexible.

Opportunities:

Value sharing by the Indian producers in the area of raw materials, manufacturing,

distribution and entering into collaboration arrangements with MNCs could be of mutual

advantage.

A decade of economic reforms has tested the resilience of the Indian textiles Industry.

Individual enterprises have realized their weaknesses and are gearing up to face the new

challenges.

The markets in the developed countries are opening up and India can take advantage of

this. A large number of products are going off Patent. India can pursue the possibility of

producing these on a more economic scale as compared to other countries. the confidence

to take on global competition squarely.

Cultural similarities with countries in the region.

Possibility of exploiting developed export knowledge.

High costs of imports have strengthened local market (temporarily).

There is unoccupied installed capacity in the tailoring sector.

Threats:

Movements of key raw material prices for the production of textiles in India are

influenced by political considerations rather than economic principles.

The banking system qualified the sector as “a high risk one”.

High financial cost . Lack of credit lines for these industrial sectors, specially for

small industry.

Lack of coherent and systematical Government policies, specifically for export

promotion.

Economic and legal political instability.

CHAPTER -VI

FINDINGS & SUGGESTIONS:

FINDINGS:

1. The sales of the company are in increasing trend. This is largely because of quality & prompt delivery.

2. The company should try to speed up the credit collection from its customers

3. The company is having good management & mutual understanding because of good management system the company turned the loss in making the profit making unit

SUGGESTIONS:

1. Debtors should be realized as early as possible so as to meet the company’s capital needs

2. Interest paid to the creditors should be reduced.

3. Cost of production should be tried to be reduced

Conclusion:

Garuda fashions has come a long way, for renovation & modernization of work, seems to

be a part of their vision. Garuda fashions and its promoters have long standing

relationship with banks like SBI, IDBI is the last 11years these institutions have extended

substantial support to the various expansion and modernization schemes of the company.

Wise management of cash is essential for the survival and success of any business

organization. They prescribe a set of principles for successful management of cash, a key

component of working capital but the least productive for the firm holding it.

The organizations need to develop a financial strategy that is how its

policies and processes should be developed so that it is mutually

beneficial to the employees and the organization. From this research

we can infer that any organization need to be constantly provided

opportunities for learning new skills so that they do not feel

monotonous and they are motivated to use the acquired skills on their

job.

Garuda fashions has earned a lot of goodwill in the textile industry in the past years, it is

also well known company in the textile industry a quality of clothes is assurance to

ensure good quality products for its costumers. HR & A department is ensuring for good

compensation policies for the worker and employees of the company. Marketing

department is stimulating sales and to get more revenues.

The development of the textile industry went backwards, starting from the downstream

consumer end products of fabrics, knitwear, to the upstream subsectors like spinning,

printing, finishing and man-made fibre manufacturing. The industry developed rapidly

with the fast growth in garment exports.

BIBLIOGRAPHY

Company Profile: Records & Reports of the firm Employee Handouts

Books:

Financial management I M Pandyen Khan & Jain Prasanna chandra

Website:

www.garuda fashions.com www.cashmanagement.com www.google.com

www.moneymarket.com