WCM (Final) Mohit 2

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In partial fulfillment of the requirement for the degree of Master of Business Administration (MBA)

Submitted by: Submitted to:

Mohit Sharma Anita Soni

RR1801A16 Head of Finance Dept.

MBA (II) Lovely Professional Univ.

WHAT TRAINING MEANS ?

T - TO BE IN TIME ON YOUR SEAT.

R - REMAIN ATTENTIVE ALL THE TIME

A - ACTIVELY PARTICIPATE

I - INTERACT FOR CLARITY

N - NOTE POINTS DIFFICULT TO MEMORISE

I - IMPROVE LISTNING HABITS

N - NEVER NEGLECT THE PERFORMANCE

G - GAIN AS MUCH AS YOU CAN

Acknowledgement

I take this opportunity to express my deep sense of gratitude towards all those individuals who provided a helping to me in making this summer training project.

The project report “working capital management” would not have been possible without kind assistance and guidance of many persons have possible who indeed were helpful, cooperative, kind and hospitable during entire course of my assignment. I am greatly thankful to Mr. S.S. Khera ( Manager of Personal department) who provided in OCM MILLS for summer training. I’m highly grateful to Mr. Rajan Kapoor (Head of Finance Department) and to Brig. J P S Ahluwalia (General Manager Personal and Administration) for his valuable guidance, constant and unconditional help that he offered during the training period.

Finally my whole hearted thanks to entire staff of OCM India Ltd. for their kind co-operation and assistance in order to take my training successfully.

Lastly, I would like to take this opportunity in expressing my deep sense of respect to my Parents to whom I m indebted for their blessing and love.

Mohit Sharma

Table of contents

1. INTRODUCTION OF OCM INDIA LTD.

2. HISTORY OF OCM

3. DEPARTMENTS IN OCM AND THEIR WORKING

4. OBJECTIVES OF STUDY AND RESEARCH METHODOLOGY

5. BALANCE SHEET OF OCM

6. METHODS OF RAISING CAPITAL

7. WORKING CAPITAL MANAGEMENT

NEED

IMPORTANCE

CONCEPTS

8. PERMANENT AND VARIABLE WORKING CAPITAL

9. METHODS OF WORKING CAPITAL

10. WORKING CAPITAL CYCLE

11. FINANCIAL MANAGEMENT

12. CASH MANAGEMENT

13. DEBTORS POLICIES IN OCM

14. RAW MATERIAL MANAGEMENT PROCESS

15. SWOT ANALYSIS

16. SUGGESTIONS

17. BIBLIOGRAPHY

Introduction

TOPIC INTRODUCTION:

A student undergoing a Master course needs to be exposed to the realities in the filed which puts to the test the class room learning. Knowledge can not be gain only on the basis of theoretical understanding from the book. A practice inside is necessary for the learning process to be complete and effective.

I took my training in very well known and well managed organization OCM India Ltd. where I got ample opportunity to give overall working of the organization. The Textile industry commands a unique and significant presence in the Indian economy by the virtue of its contribution to the national industry production employment and foreign exchange earnings.

Technically, Working Capital Management on which I did my Project is an important part of financial management. It is most powerful tool interpreting the financial health of organization.

In the forthcoming pages of the report, an attempt has been made to present a comprehensive report of my study conducted on WORKING CAPITAL MANAGEMENT of OCM India Ltd.

Objective of the study :

As my summer training goes on OCM INDIA LTD. It was great experience there. Every work is done for some objectives and main Objectives of the summer training are as follows:

Working Capital Management on which I did my Project is an important part of financial management. It is most powerful tool interpreting the financial health of organization.

To gain Practical knowledge and experience about the topic and the company

As related to the training, To know about the working and financial position of the company

To know about the Working Capital Management which helps to know about the Gross capital and Net capital of company

To know about thee internal policy improvements that are required in order edge part the biggest competitors and act by formulating and designing the strategies so as to earn profits and stand boldly against rising competitions in the market.

To study what are the main determinants of working capital and to analyze how and to

what extent they influence working capital requirements of the company.

To study how working capital policy followed in the company.

To study what are the various sources of finance employed by the company in order to

fulfill the working capital requirements.

To analyze working capital management from different angles e.g. Operating cycle.

To study different aspects used as tools for managing working capital e.g. Cash

Management.

RESEARCH METHODOLOGY & LIMITATIONS

Methodology is the proper use of different methods to collect the required data, which is to help us in the analysis and arrive at the ultimate conclusion. The research design constitutes the blue print for collection, compilations and analysis data Salter defined research design as “ The arrangement of condition for collection and analysis of data in a manner that aims to combine relevance to the search purpose with economy in procedure.

Hence, this part explains the blue sampling procedure, sample size, data collection, method analysis techniques and limitations the study.

Sampling techniques

Convenient sampling method was used .It was decided to consider the Amritsar customer and dealers. It includes all range of persons ,educated, uneducated, rich and poor resident of of different colonies of amritsar city and dealers from the cities AMRITSAR ,JALANDHAR, LUDHIANA and U.T (chandigarh).

Data collection

Data was collected by primilary survey from consumers and dealers. For this purpose, two questionnaires were prepared. In order to get all the information and view point required for research report both the questionnaires were formed in such a way. That it covered all the important information and hence attained our objectives.

The research methodology means the way in which we would complete our prospected task. I have adopted the following procedure in completing my report study:

1. Formulating the problem

2. Research design

3. Determining the data sources

4. Analyzing the data

5. Interpretation

6. Preparing research report

(1) Formulating the problem

I analyzed first the factors that are important for the banking sector. On the basis of the analyzed factors, I felt that the important issue right now as far as the credit facilities are provided by bank is non performing assets, I started knowing the basics of the NPAs and decided to study on the NPAs.

(2) Research design

The research design tells about the mode with which the entire project is prepared. My research design for this study is basically analytical. Because I have used number of data of the Banks.

(3) Determining the data source

The data source can be primary or secondary. The primary data are those data which are used for the first time in the study. However such data take place much time and are also expensive. Whereas the secondary data are those which are already available in the market. These data are easy to search and are not expensive too. For my study I have utilized totally the secondary data.

(4) Analyzing the data

The primary data would not be useful until and unless they are well edited and tabulated. When the person receives the primary data many unuseful data would also be there. So, I analyzed the

data and edited them and turned them in the useful tabulations. So, that can become useful in my report study.

(5) Interpretation of the data

With use of analyzed data I managed to prepare my project report. But the analyzing of data would not help the study to reach towards its objectives. The interpretation of the data is required so that the others can understand the crux of the study in more simple way without any problem so I have added the analysis that would explain others to understand my study in simpler way.

(6) Project writing

This is the last step in preparing the project report. The objective of the study was to report the findings of the study to the concerned authorities.

LIMITATIONS

1. The was conducted in only the major cities of Punjab and may not be representation of entire national market. No attempt has been made to get the views of customers outside these major areas because money resources were biggest constraints

2. Consumer may be personally biased.

3. Being based on random sampling the probability of error is susceptible .

4. The coverage of the study has been restricted to selected retailers and all types of retailers were not included in the study because as it would have lot of time, money and energy not feasible in present project report .So generalized conclusion cannot be derived with help of small size.

Perceived performance and expectations of customer with the preferred brands.

1. OCM:

Highly satisfied - 16%

Satisfied - 62%

Dissatisfied - 22%

2. RAYMOND:

Highly satisfied - 72%

Satisfied - 20%

Dissatisfied - 8%

3. SIYARAM:

Highly satisfied - Nil

Satisfied - 20%

Dissatisfied - 80%

4. REID & TAYLOR:

Highly Satisfied - 6%

Satisfied - 30%

Dissatisfied - 64%

FINANICIAL POSITON :

Bottom of FormFinancial Snapshot (Rs.in millions)Mkt. Cap 450.26P/E * -3.54Div 0.00EPS (TTM) * -1.85Book Value -10.01Debt Equity Ratio -3.01Return On Networth 0.00Current Ratio 1.56Quick Ratio 0.84

* Calculated on adjusted profit after extra-ordinary items

NETMarch2009

December2008

September2008

June2008

Sales 342.40 360.30 413.60 293.10

Profit 14.70 -43.60 -11.60 -30.80

TEXTILE INDUSTRY IN PUNJAB

Rising input costs and high taxes have pushed the textile industry in Punjab to the brink

of closure with many of them even facing the danger of winding up, which could render many

people jobless, an industry body said today.

Because of rising input cost and high taxes, the textile industry in Punjab is passing

through the most tough and difficult times in recent times. Punjab's textile sector mainly consists

of small and medium units with considerable noteworthy textile units consisting of stand-alone

spinning and fabric manufacturing units. Total textile output of Punjab is estimated at Rs 10,500

crore, including Rs 3,250 crore exports of knitwear, shawls, made-ups and yarns.

The direct and indirect employment of textile activity in the Punjab is estimated at 2

million people. The state produces approximately 1.8 to 2.2 million bales, about 11-12 per cent

of the country's output of cotton. But only 43 per cent of the cotton yarns produced in Punjab is

used within the state and rest is sold outside the state. Punjab can muster its economic strength

through consumption of cotton yarns within the state for value addition by encouraging

establishing down stream fabric manufacturing and procession units.

The textile industry particularly spinning units located in the state are suffering more

because of the higher taxes and levies, higher cotton cost and power shortage. The taxes and

levies in the state are much higher than other states. In Punjab various taxes (excluding VAT) are

10 per cent the highest, compared with Haryana 4 per cent, Gujarat 0.5 per cent, Rajasthan 1.6

per cent, Madhya Pradesh 2 per cent and Maharashtra one per cent.

The logistic costs have further increased the problems of the already burdened industry.

To offset this, the state government introduced the scheme 'Freight subsidy' to help industry to be

competitive; however, this was never disbursed to the Industry in last 4 years.

The industry is also suffering due to the rate of interest, which has gone up in such

difficult times. The state government has withdrawn interest subsidy on exports and with input

cost like fuel, power, transportation the burden is severe for the industry to bear.

.

COMPANY PROFLE

INTRODUCTION:

The acronym OCM stands for ORIENTAL CARPET MANUFACTIRERS. OCM began

its illustrious pursuit over 80 years ago, with the manufacture of handmade carpets and carpet

yarn and was gradually transformed to worsted fabric manufacturing.

One of the leading worsted mills, one of the leading worsted textile mills strategically

located in Amritsar (Punjab), the centre of prime north Indian market, with an annual capacity of

8.4 million meters, OCM utilizes the most modern equipment to produce some of the finest

technological innovations that the textile industry has to offer. From fiber to finished fabric, the

mill is completely vertical and offers customers a varied product range from the finest worsted

fabrics for tailored garments to diverse blends for a sportier look. The mill has a stellar

reputation for maintaining colour continuity - especially in the segment of suit separates -

empowering the end customer with the ultimate in buying flexibility.

On its sprawling 36-acre site, OCM has the distinct advantage of having; under a single

roof, the facility for every process - right from the fiber to the finished fabric and is the first

worsted mill in India to get the prestigious ISO: 9001 certification.

Earlier OCM was being run by the Birla Group under the name Birla VXL Textiles Ltd.

and none of the director of the company ever bothered to visit in Amritsar for the last three

decades. During the tenure of Birla Group employees were not getting regular salary and there

was no bonus increment for the last one decade as company was running in loss. Moreover, Birla

people never gave the management free hand to introduce new technology and new designs as a

reason company had become debt ridden. Now with the arrival of WL Ross & C. LLC of New

York this OCM has become debt free and running in profit.

ABOUT THE COMPANY:

Since its inception in 1924 as a manufacturer of hand-knotted carpets, OCM has come a

long way to become one of the largest worsted suiting producers, the first one to implement a

customized textile ERP solution.

A completely vertically integrated plant, OCM has in-house production facilities to

convert tops to finished fabrics through dyeing, spinning, weaving and finishing using state-of-

the-art machinery. All the materials and processes pass through stringent checks at every stage

and help in delivering outstanding quality.

At present the company’s capacity includes 34064 Spindles and 182 high speed shuttle

less Looms thereby giving spinning capacity of 12000 kgs yarn and weaving capacity of 25000

Mtrs of fabric per day. The spinning preparatory is from NSC, France, Spindles frpm Zinser,

Germany, Auto coners from Schlhafhorst, Germany, TFO’s from Leewha, Korea and looms

from Lindaeur Dornier, Germany, Sulzer, Switzerland and Picanol, Belgium. Apart from this,

colour continuity is tested on colour matching system from Gretag Macbreath, UK and fabric

gets final finish on KD from Biella Shrunk, Rotary Press of Mario Crosta, Italy, Continuous

Decatising from Speretto Rimar, Italy, Superfinish from M-Tec, Germany and Shearing

machine from Xetma Vollenweider, Switzerland.

TAKEOVER

Gone are the days when OCM Textile mill when it was badly debt ridden and

running in loss for the last one decade, now heading towards profit with new summer collections,

since February 2007 OCM is leaping towards huge profit after being this textile firm OCM India

Ltd. acquired by the American based company in $37 million in cash. (Rs. 170 crore). Turn

around specialist Wilbur L Ross Jr has made his first investment in India.

The acquisition has been carried out through The Asset Reconstruction Company of India

(ARCIL) as said by Mr. Rajeev Surana who is Chartered Accountant manages the Finance policy

of OCM. Sudhamoy Khasnobis, Managing Director & CEO of Arcil, said, "The OCM

acquisition is the first 100 per cent buyout of a major Indian enterprise by a global turnaround

fund.”

Surana said that now the turnover of the Amritsar based OCM is Rs. 125 crore and it

would touch Rs. 160 crore by next year. Now total employment in the OCM is eleven hundred

staff members.

Wilbur L. Ross, Jr., Chairman and CEO of WL Ross said, "OCM establishes us in India's

textile sector and further adds to the resources and synergies of our textile holdings.”

REASONS

As the company remains heavily leveraged, interest costs will continue to be a drag on

profitability in the immediate term. It might take a while before the company makes a complete

turnaround.

Birla VXL, part of the S.K. Birla group, is a manufacturer of worsted/woollen fabric and

sells under the brand name Digjam. The brand has a 10 per cent market share and has a brand

recall. The company also has a readymade garment unit. It exports about 40 per cent of its

production. At a capacity of six million metres, it remains a relatively small player compared to

market leader Raymond, which has a capacity of 30 million metres. BVXL expanded massively

in the mid-1990s; this did not yield results.

Surplus capacity, input pressures and a difficult demand environment affected

profitability. Accumulated losses completely eroded its net worth by June 2004. Shortly

afterward, ARCIL (Asset Reconstruction Company India) took over debt from some of

BVXL's lenders. The securitisation outfit, which now owns 54 per cent of the pre-issue share

capital, has begun to restructure its Rs 400-crore debt.

As part of the restructuring process, the Amritsar facility, which manufactured the

OCM brand of worsted fabrics, was carved out into a separate division, OCM India, as a 100

per cent subsidiary. Loans worth Rs 160 crore were transferred to the division.

BVXL's entire shareholding in OCM India was recently sold to US buy-out firm, WL

Ross, for about Rs 170 crore. The proceeds were to be used to pay off loans that had been

transferred to the division. BVXL has also divested its other subsidiaries Masuzawa Punjab silk

and VXL Technologies; it exited from its joint venture with Dormeuil Freres of France end of

September. About Rs 50 crore worth of debt will be paid off through the disposal of non-core

assets, which have been allocated to a separate investment division. About Rs 25 crore has been

converted into equity.

Post-conversion and the carving out of OCM India, the share capital of the company

stands reduced to Rs 43 crore from about Rs 100 crore. Long-term debt, even after the

restructuring initiatives, however, remains at about Rs 150 crore.

BACKGROUND OF WL ROSS & CO.

Talking about the Textile industry of WL Ross (Wilbur Louis Ross) & Co. LLC of New

York, It is a company of Rs 40,000 crore and Rs. 5000 crore of the company is already involved

the Textile business. Further majority owned by WL Ross is global diversified textile

manufacturer with annual revenues in excess of $1.0 billion.

The company was founded in April 2000 as a global private equity firm and since then

has created more than $4bn of transactions. WL Ross affiliates own approximately 90% of the

equity of International Textile Group.

In October 2005, W.L. Ross formed a joint venture with Housing Development Finance

Corporation Ltd (HDFC), India’s leading housing finance institution, to invest in corporate

restructurings and turnarounds. W.L. Ross (India) Pvt. Ltd, based in Mumbai, is a sub-advisor to

India Asset Recovery Management Ltd — which advises various private equity funds, including

the Mauritius-based $300 million India Asset Recovery Fund that W.L. Ross formed to invest in

sick companies.

W.L. Ross was formed by Mr. Wilbur L. Ross, Jr., an American investor specializing in

restructuring failed companies in industries such as steel, coal, telecommunications and textiles.

He specializes in leveraged buyouts. The company acquired Ohio-based International Steel

Group and sold it to the Mittal Steel Company in 2005 for $4.5 billion.

W.L. Ross is now part of Invesco, a leading global investment management company

with assets under management as of December 31, 2007 of $500 billion.

According to Invesco’s 2007 annual report, it acquired W.L. Ross & Co in October 2006

for an initial consideration of $134 million. The annual report further says that the assets under

management by W.L. Ross went up from $2.6 billion at the time it was acquired by Invesco to

$6.8 billion as of December 31, 2007. W.L. Ross now has about $7.9 billion of assets under

management. Business Line had reported in August 2006 that W.L. Ross was

interested in investing over Rs. 1,500 crore ($350 million) in the Chennai-headquartered ailing

fertilizer manufacturer Southern Petrochemical Industries Corporation Ltd. This deal did not go

through.

The investment by W.L. Ross & Co in Spice Jet is its second in India, after it bought 100

per cent stake in OCM Ltd, a worsted fabric manufacturer, for Rs 170 crore ($35 million) in

October 2006.

The countdown has finally begun for OCM India’s long-awaited sale. OCM, which has

been on the block for a while now, is likely to be snapped up by one of the three final bidders:

stressed-asset management fund WL Ross, global investment fund eight capital or Raymond.

Sources confirmed that (ARCIL), which owns majority shares in OCM’s parent company

Birla VXL, is expected to announce the outcome of the bid by September 30. OCM was spun off

as a separate entity from Birla VXL following the reconstruction of the SK Birla group company.

Though the Birlas still have management control of the company, Arcil has been in-charge of

finding a buyer for the suitings brand. The OCM India deal has been in the news because of

disagreements over the valuation of the company and protracted negotiations with the bidders.

The race for OCM has been a hotly contested one with most Indian textile majors and a couple of

foreign funds queuing up to acquire the company. S Kumars, Arvind Mills, Raymond, WL Ross

and some other global funds have all figured in the constantly-changing list of suitors. The fabric

manufacturing facility for the OCM brand in Amritsar, with a capacity to produce 8.4m metres

of suiting fabric, is being sold off as part of debt recast exercise.

However, the company’s valuation still remains a moot point, with Arcil expecting

around Rs 180 crore from the sale while most of the bidders stayed put in the Rs 120-150 crore

range. It is not known at what price the deal is likely to be sealed. OCM, along with the other

Birla VXL suitings brand Digjam, is considered to be among the top three suitings’ brands in the

country. OCM specialises in all wool worsted as well as wool-blended worsted suitings.

INTERNATIONAL TEXTILE GROUP

International Textile Group was formed by Wilbur Ross in 2004 and operates five

primary business units:

Automotive Group,

Cone Denim and Burlington Worldwide (Apparel Fabric),

Government Uniform Fabric,

Burlington House (interior fabrics and furnishings) and

Carlisle Finishing (Commission Finishing)

The company employs over 10,500 people worldwide with operations in the United

States, Mexico, China, Germany, Romania, Czech Republic, Poland, South Africa, Nicaragua

and Vietnam.

BURLINGTON WORLDWIDE AND OCM INDIA

A new commercial partnership was announced on 12 September,2007 between US fabric maker

Burlington WorldWide and Indian worsted wool fabric maker OCM India to provide an

additional source of suiting products for the US and European markets

Under the agreement, Burlington WorldWide will help OCM to develop new

manufacturing processes and woollen fabrics which can be exported to the US, European and

Asian markets.

In return, OCM, which is located in Amritsar, will be licensed to produce and sell wool

fabrics under the Burlington brand name to the domestic Indian market

According to Wilbur L Ross, chairman of International Textile Group (ITG) which owns

Burlington WorldWide, this is a tremendous opportunity to expand ITG's footprint into the

growing Indian market and provide an additional supply chain of products for the US and

European markets. Burlington WorldWide is the North American leader in worsted wool

products and its expertise in wool manufacturing and new fabric development will further

OCM's operations and breadth of product to grow a global wool platform for both companies.

According to Rajeev Surana, CEO of OCM India Limited, OCM is a trusted Indian brand

for worsted suiting. This alliance can contribute immensely in lending it an international edge.

The technological capabilities and global experience of Burlington WorldWide coupled with

OCM's core strengths will enhance the aspirational value of the brand and its products.

WINTER COLLECTION 2009

The winter range of ocm brings the rich blends of wools and poly wools in the form of the following new ranges:-

Mistico

Spectacular superfine all wool fabric with ultra soft feel ensures a lustrous look to this fabric.

Be a mughal of fashion with the attires created from this fabric which is available in hues of

navy, grey, black and brown. A luxurious fabric that epitomizes the opulence of hand crafted

masterpiece. Formal or evening wear is as impeccable to look at in this ensemble.

Gratiana

Think about her – the softness, the warmth, the caresses, ………………… feel the same in

these 52/48 Silk Wool combination of classical and geometrical designs where the softness of

silk with warmth of wool in various hues of grey, golden, blacks woven in checks, houndstooth

and geometrics will keep you stratling. The fabrics conceived and created while keeping in

mind round the year wear-ability. Don’t buy them, own them.

Checkmate

Our designers from the fashion capitals of the world have conceived and created this fabric for

the much aware and globe trotter fashion conscious Indians. All wool and poly/wool fabrics in

blend of 55/45 are majorly available in black and white. However, some shades of blues and

greys have also been thrown in. An ideal fabric for bottom weights will make you look

different and ensure no miss outs.

Marathon

We beg to differ with all those who felt tweeds were only for low temperatures of north and

north-east. This perennial classic is now available with a modern twist. Especially for those,

who are looking for tweed designs in light weight fabric, we offer a Poly/Wool blend of 65/35.

You will find designs in herringbone, glen checks, houndstooth in shades of blue, grey, green

and browns. It’s a fabric ideal for round the year wear ability.

Shetland

Timeless all wool classics from OCM design lab which are ideal for that sporty look and outer

wear. Slip comfortably in these cozy jackets in those chilly winters. To create this ideal fabric

in classical herring bone, hounds tooth, glen checks took designers to understand the equation

that is right for us without being over or under dressed.

SnazzyHere is a collection that is “Smart and Stylish”. Soft tweeds, in all wool fine weave, that drape faultlessly in garments created from this fabric. Herringbones and lock weaves designs are further accentuated in natural fibers like Angora, Alpaca and wool. Available in different hues of all shades, suits in this fabric live up to the promise of something extra in a completely new interpretation of style.

Estrella

This fabric exudes power, making it the perfect attire for boardrooms and presentations. This

blend of superfine wool and rayon with extra sheen is the epitome of understated excellence.

An ideal fabric for evenings and breezy tropical afternoons, it takes you from business to

pleasure with ease. So be it at work or at home, it ensures appreciation everywhere.

SUITINGS :

OCM is amongst few companies which provide a huge variety of fabric ranging from pure

wools to wool blends in 50/50, 65/35, 70/30, 75/25, 85/15. Wool is blended with various exotic

fibers like cashmere, silk, linen, cotton, mohair, viscose, bamboos, camel hair etc.

We produce more than 1000 design ranges for the domestic market every year. Each of our

ranges caters to the taste and style of highly evolved customer of today.

GOLD CLUB

Manufactured from 120’s wool and cashmere, a light weight fabric that makes the world feel

your presence. A luxurious top of the line all wool collection mixed with cashmere to give an

extra delicate and soft feel for the connoisseurs. A fabric which is presented in futuristic

designs while keeping our designer’s expertise in traditional weaves so as to get your suit

crafted as perfect as you are.

SOLID GOLD

An all wool premium range of suit and jacket material which is worth its weight in gold. We

use super 100’s extra fine wool mixed with cashmere to give a very soft handle and rich look

to pamper the soul within you. The colour and design range gives an edge to the whole gambit

which has no parallel in the region. Fabric for the people who yearn to reach at the top.

GOLD ORCHID

Indulge you in a wool rich poly wool fabric in 60/40 blend that has a unique luxurious feeling.

Crafted out of extra fine polyester and super 100’s extra fine marino wool blended with

cashmere to provide an extra smooth handle.

PURE GOLDA brilliant range to T/W suiting in 55/45 blend for occasions when you’d like to make a statement. Superfine polyester blended with super 100’s extra fine wool to give rich soft handle, comes in attractive solids/satins and classic designs.

GOLD OPULENCE

A T/W fabric in 60/40 and 55/45 blend that represents an evolution from traditional favourites

to pastel shades with soothing hues. Super 100’s wool blended fabric with superfine polyester

makes it stand apart from other fabrics in the category. Presented mostly in plains, this also

has some exquisite designs to complement the range.

24 Carat Gold

A T/W fabric mostly in 60/40 blend is a tribute to those who want nothing short of the best. A

light weight wool rich fabric having the finest microns which will make you afloat.

Smoothness of the fabric and the drape will make everybody envy. Contemporary designs

with a flash of modernity will enhance the wearer’s style statement.

Gold ‘n’GoldAn all wool fabric with a sprinkle of cashmere which makes it a wearer’s delight. Ample designs and shades make it difficult to make a choice. But lovers of Blues and Greys will have a feast of selection.

WINDSOR

The success of Gold Collection motivated our designers to come out with yet another

exquisite range in a very fine count, which is a blend of P/W mixed with cashmere gives an

excellent feel and finish. Competitively priced, this range is ‘Value for Money’. Comprising

of beautifully crafted designs in super micro effect, bold pin stripes, subtle stripes, mini chalk

stripes, herring bones and beautiful plains that surely is delight to the wearer.

ROYAL SALUTEThe collection is made out of the superfine polyester mixed with 100s wool. Keeping in view the rich taste of connoisseurs, we have developed this range in T/W blend of 55/45. The smoothness will give scotch a run for its money. The colour ways are sublime and classics. It consists of choicest of elegant designs and is a must for every wardrobe. The fine blend of fabric drapes the wearer elegantly giving a rare smoothness

SEIGNIOR COLLECTION

A T/W 60/40 collection with 100’s wool in fine count with polyester. A range which has

designing in normal and high twist yarn to give designs look different and class of their own.

This is ideally suited for formal wear.

BEAU MONDEA blends of P/W 55/45 having rich & luxurious collection in exuberant designs. This multifarious collection has been designed especially for young executives, who seek ‘value for money’

ESQUIRE

A fine T/W 55/45 suiting spun out of 80s wool. This comes in blissful designs i.e. pin stripes,

chalk stripes, herring bone coupled with orthodox stunning blues, greys, brown and traditional

salt & pepper effect. The fabric for people susceptible to grace. Weight of the fabric is just

right for the subcontinent and carries excellent drape.

RITZY CLUB

A wool rich fabric created out of 100s wool which is a blend of P/W 55 : 45 with an excellent

feel & finish. Competitively priced, it consists of choicest of elegant designs and is a must for

every wardrobe. The fine blend of fabric drapes itself elegantly to the wearer giving him/her a

rare smoothness.

PRISTINE

A party wear fabric T/W 55/45 fabric made out of 80s wool and superfine polyester. A fabric

for formal wear that is available in shades that are out of this world. A light weight fabric with

exquisite designs makes it an essential wear for all seasons.

HARVARD’s COLLECTION

A Super 100s, P/W blend of 55/45 reversible fabric, can give the designer’s look without

much of an effort when you use them as separates or a suit will look equally elegant. Crafted

in various hues of grey, blue and brown, translated in some of the most sophisticated designs

including pinstripes, micro-effects and with a soft luxurious feel thrown-in in good measure,

these fabrics are the ultimate statement in luxury. So be prepared to make heads turn when

you are on the move this season.

YuvrajA light weight fabric in polyester/wool blend in 55/45, for those who have taste for whites and

shades of white. A union of technological and stylistic innovation capabilities of OCM gave birth to this fabric. This versatile and premium fabric having different designs in self with soft and smooth touch would be an unusual traditional wear. A unisex fabric for all occasions.

JUBILEE COLLECTION

Launched on the occasion of platinum jubilee celebration of the OCM suitings, the range

became an instant hit. Ideal for formal, informal festive and wedding occasions. A truly

versatile suiting material developed by blending super fine polyester with super 80’s extra fine

wool in 55/45 blend. A range developed for both day and evening wear. We have expanded

this range and introduced new weaves like diagonal cords etc. in a wide spectrum of shades.

REGENCY CLUB

A party wear fabric made out of 70s wool and superfine polyester. Comes in more than 20

vibrant designs and colours. The fabric for formal wear that is available in shades that are out

of this world. A versatile fabric that’s ideal for parties, office, semi-formal wear and reflects

that mood for commemoration.

SUPERFINE CRYSTALOur designer’s have created this P/W fabric in 70/30 blend using extra fine Super 70’s wool having paper and salt effect. A truly special fabric with an extra ordinary feel.

SUPREME COLLECTION

A T/W fabric in 85/15 blend has been developed to provide better value for money to the

ultimate consumer, this range has been further expanded in different weaves & shades to cater

to the economy segment. This range has been an instant hit. The whole gamut includes variety

of designs in stripes, checks and solids to make a deep niche in market.

DEBONAIR

In the fine blend of 70 / 30 P/W, the finesse and the fall will lure you towards ecstasy.

Meticulously crafted and specially designed for that ultimate look – the Debonair range.

WAVES FASHION INSIGNIA

Keeping in view the copious opportunity arising out of transition of consumers mind shift

from plains to designs, our designers have conceptualized an exotic gamut in horizontal and

diagonal patterns using. The set of designs revolves around the geometrical theme. It is

specially designed for the young, who want to make a bold fashion statement.

MELODY COLLECTION

For those who intend to shine like a sunlight. A 70/30 blend T/W fabric in satin finish with

silvery designs. Developed in Super 70s, this range is paradise for people with taste bud of

satin. As the name suggests the designs are melodious and sweet to the taste of the consumer.

DESIGNER’S COLLECTION

Created by the designers with fancy yarns in poly wool in 70/30, the range has been super-hit

in the market for more than a decade and has fascinated the youngsters over the years. The

USP - Our competitors have tried to recreate this without success.

TIARAWhen the going gets tough, this P/W 70/30 suiting range gets you going. A light weight superfine wool fabric range from OCM, this fabric is ideal for suits & dress pants keeping you warm and comfortable at work even when the mercury is headed southwards. A soft feel and handle means that you are always in control of the elements. Available in a wide range of patterns in diagonal cords is truly a must-have this winter.

OXFORD

To keep abreast with the fashion, this excellent Polyester Viscose Fabric in a very fine count

with micro effect has been an instant hit & has been further expanded. This fabric is excellent

for round the year wear. It comes in solids, cross shades and classic designs like pin stripes

etc. Must for a fashion conscious wardrobe.

BLACK STALLION

For people having lust for black, this range is most apt. Having filtered the number of designs,

the range is compact and includes Bar-at-Law fabrics also. The fine Polyester Viscose

presently include 3 black beauties.

PREMIUM TERENE SUITING

Another collection of Polyester Viscose fabrics available in various weights in more than 30

colors to pick from. You can choose chord in diagonals and verticals, twill and plain weaves

to suit the occasion. A perfect fabric to keep you cools in that blistering heat.

WHITE PEARL

An efficacious fabric in white created by our designer’s for those special people with a special

taste. An exclusive Polyester Viscose fabric available only in shades of white ideal for making

a summer suit. Abundance of choice in twill, matty, picks n pick, herring bone and structured

weaves. Even she would look stunningly eloquent in a summer suit designed and stitched to

suit her style.

EXCELAn exclusive twill weave Polyester Viscose fabric manufactured out of yarn spun in worsted system. An innovation by our designers that makes unmatched light weight fabric to suit your style. You will have more than 10 shades to lay your hands on. Its perfect drape makes it all occasion favourite.

MARQUE

Stay attuned to time. This range of Polyester/ Wool blend of 55/45 created in Super 80s wool

in single weft is ideal for festive occasions and formal ensembles. Large option of colors

ranging from Black, Navy, and Brown to Grey, Fawn and Charcoal and the weaves, satin and

twill are suitable for all age groups. So don’t forget to take him/her along, you might find it

hard to shop alone.

FAUSTINE

A polyester/wool blend of 85/15 in light weight has been created after receiving an

overwhelming response to our Supreme Collection. The fabric is woven in plains and the

choice will be very exciting as the buyer will have 10 colors to choose from. So try a summer

suit in light and medium colors and flaunt with your style statement.

BIG BOSS

The name says it all! Our designers have given new flavor to P/V range by adding some linen

in it. Colors are all light tones of grey, brown, green in stripes, houndstooth and plain weave to

ensure comfort and designs all classy to make that perfect suit for summer. So take full liberty

with the creativity inside you as this fabric is suitable for suits, trousers, safaris and what not.

Don’t forget to take her along as the range has been created to complement both of you.

EURO CLUB

A fabric created in P/V for the consumers who want designs of worsted fabrics but are very

price sensitive. Full palette of colours in twill, satin, fancy and cord weave are irresistible. An

ideal fabric for summer; will create an impeccable suit and the trousers too will look great. An

exuberance of designs will give the buyer full value for money.

AMBIENCE

For those who want comfort of summer but at the same time look for that perfect drape of

worsted fabric, our designers have created this special fabric. A fabric with only 7 per cent

wool, so as to give that perfect drape. Woven in fancy, twill and rib, this fabric in black, navy,

charcoal and browns has the perfect weight for a summer suit or a safari. So the whole

ambience is suitably matched to your taste.

NOVACOTMultidimensional is the concept of this range. For the lovers of summer comfort our designers have given T/V blend in 65/35 woven in plain, fancy and twills. However for those who not only want comfort, but also want something made out of natural fibers so as to get the perfect drape, this fabric has been presented in Polyester/Wool/Cotton blend of 43/8/49. The blend has

been designed for the summer comfort and wool has been sprinkled to give that flawless drape.  So who says cotton and wool don’t look smart together!

EminentA hybrid blend of polyester, wool and cotton lustrous fabric birthed by combining soft Egyptian cotton with fine wool and microfiber to suit all your needs. Immaculate finish in various hues of summer shades is most suitable for a perfect suit while you are on your way for an important meeting. Clothing created from this fabric looks sophisticated enhancing your eminent personality.

SolitaireA Polyester Viscose fabric in structured, vertical chords and rib weaves is available in aura of colors to suit your summer requirements for all occasions. A unisex fabric available in different weights makes a style statement while keeping you cool in the summer heat.

PRODUCT LINES

BASIC

A revolutionary T/W fabric in 70/30 blend presented at a price which suits all pockets. An

unbelievable range in more than 40 colors to choose from in plains. The designs in S & Z are

hot picks in all markets. An ideal fabric for that perfect trouser.

CEREMONIAL SHERWANI

A T/W fabric in 70/30 blend exclusively designed for wedding & festive wear. This range has

no parallel in the desired segment. Looking at the overwhelming response in the past, more

jacquard designs have been added, ideally suited for Jodhpuri and Sherwani, especially aimed

at wedding & other functions.

SUPERFINE CRYSTAL

Our designer’s have created this P/W fabric in 70/30 blend using extra fine Super 70’s wool

having paper and salt effect. A truly special fabric with an extra ordinary feel.

DESIGNER’S COLLECTION

Created by the designers with fancy yarns in poly wool in 70/30, the range has been super-hit

in the market for more than a decade and has fascinated the youngsters over the years. The

USP - Our competitors have tried to recreate this without success.

DEBONAIR

In the fine blend of 70 / 30 P/W, the finesse and the fall will lure you towards ecstasy.

Meticulously crafted and specially designed for that ultimate look – the Debonair range.

EXCLUSIVE CO-ORDINATES

Young achiever wants something different. Specially designed for the young and for the

young at heart. Dictated by the trend of the day. Woven Solid Checks and textured jackets

with matching trouser. Super 70’s wool blended with extra fine polyester in T/W blend of

70/30 is a wearer’s delight.

MELODY COLLECTION

For those who intend to shine like a sunlight. A 70/30 blend T/W fabric in satin finish with

silvery designs. Developed in Super 70s, this range is paradise for people with taste bud of

satin. As the name suggests the designs are melodious and sweet to the taste of the consumer.

SILVER PEARL

Fabric in matty weaves having a blend of 70/30 in polyester and wool. An all time favourite

since its inception and hasn’t lost its charm even now. Available in plains as well as S & Z

designs.

DESIGNER’S FASHION CIRCLEExclusive light weight Terry Wool 70/30 fabric that’s made by blending super 70’s wool and flax (linen) with extra fine polyester. The range can be pitched for a perfect summer safari. Comes in light pastel shades ideally suited for summer.

WAVES FASHION INSIGNIA

Keeping in view the copious opportunity arising out of transition of consumers mind shift

from plains to designs, our designers has conceptualized an exotic gamut in horizontal and

diagonal patterns using. The set of designs revolves around the geometrical theme. It is

specially designed for the young, who want to make a bold fashion statement.

SPECIALITIES

FRESH ‘N’ FRAGRANT

A rich blend of poly wool that has been given special treatment to impart anti odorant

properties, by virtue of which the garments made out of this fabric will keep the wearer fresh

throughout the day. So no more perfumes required, just feel free when she is around.

COMFORT WEAR

A tasteful blend of poly wool with lycra gives the fabric a natural stretch and soft handle. Hey

girl in there, feel free to entice his feelings showing your contours. This fabric is a wearer’s

delight for the comfort it gives in the worsted fabric and an aura of colors to choose from. Our

designers strongly recommend this collection for a frequent traveler.

FLANNELS

A fine all wool fabric, smooth as silk comes in rock solid shades. Perfect for chilly winters,

can be draped for excellent overcoat or fit corporate suit for that important presentation. The

flannel has been OCM’s forte over the year’s uninsured till date.

VICUNAAn all wool fabric perfect for those who have the taste for black. An exquisite fabric woven in berthea weave is our designer’s favourite. Charcoal black is the only colour for this speciality collection which looks elegant in suits, but Bundgalas look awesome.

COOL ‘N’CLEAN

A P/W fabric with extraordinary properties. It absorbs moisture, which subsequently

evaporates and provides a cool feeling to the wearer. Moreover, stains can be effortlessly

released after normal wash. It’s a specialty collection for those rainy days when perspiration is

high and leaves the marks on light shade clothes. So, this fabric is our answer to those bad

stains and emanating body odours.

DEPARTMENTS :

PRODUCTION PLANINING AND CONTROL DEARTMENT

PURPOSE:-

Its purpose is to lay down the procedure for production planning to avoid any possible lapse & resultant loss of quality.

PROCEDURE:-

The procedure is as following in their:-

ESTIMATION OF RAW MATERIAL:-

The tentative gross plan for winter/summer is 6th months & 6th months respectively. The monthly raw material requirements ore worked out.

DESIGN WAS MANUFACTURING PLAN:-

The actual production plan is received from sales & export orders from export section. It is divided into months keeping in view the monthly capacities and the given targets.

YARN SPINNING ORDER:-

Designing through QC lab provides all the master cards related to the actual production program. The yarns, which remain unused are taken in fresh order. Indent is given to the worsted spinning recombing and dyeing house.

MONITERING YARN STOCK’INDENTS:-

Yarn received in the EPYS either from weaving or worsted spinning is weighted before storing. Monthly stock statement is prepared and copy of its given to costing department. With this, the left over yarn is also utilized. Report of yarn spun by worsted spinning is received from single yarn store.

ISSUE OPF WARP FABRIC PRODUCTION:-

On the basis of yarn received in the worsted store, wrap tickets are prepared from the master card.

MONITORING FABRIC PRODUCTION:-

Loom pieces are inspected by greasy perch is reported and the information is fed to computers. Fortunate variance report is taken out from the computers.

COMPUTERS PRINT MASTER SUMMARY REPORT:-

The master summary report quality and design wise are printed and a copy is sent to joint president and V.P(SALES)

DESIGNING PEPARTMENT

the outline of the produce For civil designing is as follows:-

BASIC DESIGN/PATTERN REQUIRMENT:-

Requirement of design patterns (quality wise) is received from sales before commencement of every range winter or summer.

YARN INDENT:-

Yarn indents are placed form seveloped & feeler making. New shades are selected for top dyeing & cone dyeing is running qualities. Count, blend and twist/inch are also decided.

BASIC DESIGN/PATTERN DEVELOPMENT:-

Procedure for basic design development includes blend composition, twists, count and shades as the inputs. To establish a basic design, feeler sample is made & after approval from sales, designs patterns are developed.

DESIGN PATTERN SELECTION:-

Design wise marked and cut samples made against basic designs are seen by V.P(SALES) & HOD(designing).

MASTER CARD:-

Master card of approved designs is made.

FEELERS MANUFACTURING:-

Feeler are made to feel, finish & performance of the cloth for basic design and the making sample folders, flappers etc for booking purpose.

DESIGN APPROVAL:-

Blanket sample is developed in the weaving dept. the weaving department weaves the department samples as per instruction. The the export flappers of the blankets are sent to customers/agent for approval.

ORDER:-

Order is received from customer/agent through V.P(export)

DYE HOUSE DEPARTMENT

Dyeing is carried out in following form:-

1. Fiber dying (loose fiber)

2. Top dyeing(silver form)

3. Yarn dyeing

4. Piece dyeing

The major fiber used is polyester and wool. In dye house top is obtained in ball from and yarn is obtained in cheese from. 9 machines of capacities from 6Kgs to 500 Kgs are used.

NEW SPINNING DEPARTMENT

Some important terns used in spinning are:-

ROVING:-

Continuous silver produced on rubbing frame or flyer rover for spinning into yarn.

BOBBING:-

A parallel tube on which the roving silver is wound.

WRAPING:-

Determining the weight or length of the silver or count of the yarn by measurement and weighting.

In spinning section, the roving is further drawn on the ring framne and the single yarn is made. The yarn is passed through the electronic yarn clearing m/c where the thickness faults such as fluff, thick or thin places are removed.

GILLING:-

The carded silver is processed on three gilling stages so that:-

1. The fibers are disentangled and laid parallel.

2. The silver wt/length is reduced to around 16gm/m suitable to feed the comb.

3. The silver is made uniform as possible in weight/length.

The process of gilling in three stages:-

1. GILLING NO 1:- 1 head, 1 delivery

2. GILLING NO 2:-1 head, 1 delivery with auto leveler nit

3. GILLING NO 3:-1 head, 2 deliveries

COMBING:-

The function of combing is to remove the short fibers of predetermined length as noil, to remove the vegeltable matter, to remove the naps formed in carding operation. The long silvers pass to form a silver called top.

RECOMBING:-

It is done to further improve the quality.

POST SPINNING DEPARTMENT

After new spinning, the yarn is sent to post spinning:-

AUTOCORNER:-

It winds the yarn from spinning cops on to cons or cheese and makes it a large package. It clears the yarn of all faults like slubs, naps, thick thin places. Join the ends by splicing.

ASSEMBLY WINDER:-

It winds two single yarns together on to a parallel cheese. It makes suitable packages of about 1.5 Kgs each to feed the TFO.

TWO FOR ONE TWISTER(TFO) :-

It twists the assembly wound yarn. It winds the twisted yarn into the cone or chesse.

YARN STEAMING:-

This is to set the twist and to avoid snarling. The also improves the strength in the yarn to some extent. The final is sent to auto corner.

AUTOCORNER:-

It is a big chamber form which air con be evacuated, steam can be injected, and temp at desired level can be maintained.

WEAVING DEPARTMENT

Weaving is basically placement of wrap ( the thread which runs down the length of the cloth) & weft ( the thread which lies at aright angle to wrap, crossing the fabric from salvage to salvage.

Following functions are being performed in the weaving department:-

SHEDDING:-

It means the vertical separation of wrap threads.

PICKNG:-

It is inspection of weft yarn through the warp sheds.

The speed of picking decides the speed of loom. It is done with the help of shuttle, projectile and rapier.

BEATING UP:-

It means the pushing the weft yarn into the fell of the cloth by means of read mounted on the oscillatory slab.

LETTING OFF:-

It is releasing the thread of wrap on the wrap beam.

Some important faults that can occur during weaving are:-

1. Missing end 8. Read mark

2. Broken end 9. float

3. Wrong end 10. Tight end

4. Missing pick 11. draft

5. Broken pick 12. Brunch

6. Wrong pick 13. Yarn bar

7. Temple cut 14. Abrasion mark

GREASY PERCH:-

The fabric is examined on the perch against light to detect the defects if any.

The defect may be either due to spinning or weaving.

MENDING DEPARTMENT

Basically 2 types of defects are being mended in mending department. These are :-

Defects generated from spinning or due to the raw material. Some of them are:-

1. Thick end

2. Slabs

3. Neps

4. Contamination

Defects generated due to weaving are:-

1. Missing pick

2. Wrong pick

3. Wrong drafting

All the work in this department is manual and there are 150 menders. I is important to note that this department has arrangement for music as it has been observed that music improves the efficiency of the worker to a great extent.

FINISHED DEPARTMENT

The various processes that place in this department are as follows:-

BRUSHING:-

the machine is used to remove any foreign particle on the cloth.

SINGELING:-

The cloth is passed at very high speed (120 mts/p min) over a flame to burn any projecting threads to smoothen the surface.

SCOURING:-

This process is to clean the cloth with same detergent and rinse it.

HYDRO EXTACTION:-

This is to remove 70% of the water in the cloth by high speed revolution in the machine.

DRY:-

The cloth is heated at 130-140 degrees to remove the remaining water in the cloth.

HEAT:-

In the process, the cloth is heated at 180 degrees (for dyed) or 200 (for white) in the stenter.

CROPING:-

The cutters of this machine cut the loose fibers on the cloth.

PAPER PRESS:-

The dalal irons the cloth to remove the creases.

INSPECTION DEPARTMENT

Here, first of all the cloth is put on the perch machine and viewed against light to detect any stain, pin, hole etc. for minor defects, a white flag is put on that area and the cloth is sold at a discount. If the defect id big. It is marked yellow and must be cut off. After this cloth arrives on the measuring and cutting table.

The material is cut according to its size and a card is attached on with following information:-

QUALITY NO

SHADE NO

PIECE NO

GROOSE Mts

FLAG ALLOWENCE

NET Mts

INSPECTED BY

Next the folding is done. For export it is done. For export it is done in rolls for civil orders it is done in thans. A stamp having information blended composition/ shade/quality/ month of manufacturing/ length in meters. Finally the computerized bar coding is done and a slip is attached on the card previously attached to the cloth.

QUALITY CONTROL LAB

this department maintains a check on quality of the output from each department. Any deviation is brought to the notice of the concerned department. Raw material is imported from Australia.

WAREHOUSE DEPARTMENT

The department lays the procedure for stock maintaining, allocation, and dispatch of material, segregation of material, production summary to sales department, allocations, preparation of challans, verification of challans, material of packing section, material dispatches to concerned transport, lorry receipt, and invoicing section for documentation.

THE COMPUTER NETWORK

As mentioned earlier, OCM engaged stands alone PC’s long time ago. They improved the functioning of the firm to a great extent, but the absence of a network was greatly felt. In 1998, the computer was physically laid.

PHYSICAL STRUCTURE OF THE NETWORK:-

The network is of mesh type and has two serves, IBM(12GB hard disk, 96MB RAM). These servers hold all the data and software for the network. The main backbone of the network is an optimal fiber cable that has been laid form one department to other. The various terminals are connected to the network by UTB cables at hubs on the main backbone.

Out of total of a 100 pc presently being used, 66 have been connected to the network and the rests are stand-alone. The client terminals used are Pentiums and Celerons of varying memory capacities as per requirement. Printers have also been installed wherever required.

OCM India Limited

Balance Sheet as at 31 March 2008

(Amounts in Rupees)

SOURCES OF FUNDS SCHEDULE As at As at

31 March 2008 31 March 2007

Shareholders’ funds 1a 1,103,000,000 133,163,630

Share Capital

Share application money 1b - 1,604,230,000

Reserve and Surplus 2 634,643,630 250,000

Loans fund

Secured loans 3 174,468,222 2,460,000

------------------ ------------------

1,912,111,852 1,740,103,630

-------------------- ------------------

APPLICATION OF FUNDS

Fixed Assets

Gross block 4 1,622,875,097 1,567,829,712

Less acc. Depreciation 421,070,311 324,343,688

------------------ ------------------

Net block 1,210,804,786 1,243,486,024

Capital work in progress 24,208,165 -

------------------ ------------------

1,226,012,951 1,243,486,024

Investments 5 2,500 9,956

Current assets 6

Inventories 291,367,657 30,644,319 Sundry debtors 381,875,624 131,765,757

Cash and bank balances 43,122,912 69,031,582

Loans and advances 33,635,982 22,907,167

--------------------- ------------------

750,002,175 454,348,825

less: Current liabilities 7

Current liabilities 235,642,678 158,830,695

Provisions 29,931,014 29,649,765

----------------------- ------------------

265,573,692 188,480,460

----------------------- ------------------

Net current assets 484,428,483 265,868,365

Profit and loss account 210,667,918 230,739,285

--------------------- ------------------

1,912,111,852 1,740,103,630

------------------- ------------------

METHODS OF RAISING CAPITAL

The company raises its capital by the following ways:-

Issuing Shares Debentures Loans

The company procures both secured and unsecured loans from:-

* IRBI

* IDBI

* IFCI

* LIC

* UTI

* GIC

Loans are also taken from Punjab State Industrial Development Cooperative and Gujarat Housing Board.

WORKING CAPITAL MANAGEMENT

Working capital, also known as net working capital or NWC, is a financial metric which represents operating liquidity available to a business. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. It is calculated as current assets minus current liabilities. If current assets are less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit.

WorkingCapital = CurrentAssets − Current Liabilities

A company can be endowed with assets and profitability but short of liquidity if its assets cannot readily be converted into cash. Positive working capital is required to ensure that a firm is able to continue its operations and that it has sufficient funds to satisfy both maturing short-term debt and upcoming operational expenses. The management of working capital involves managing inventories, accounts receivable and payable and cash.

Current assets and current liabilities include three accounts which are of special importance. These accounts represent the areas of the business where managers have the most direct impact:

accounts receivable (current asset) inventory (current assets), and

accounts payable (current liability)

The current portion of debt (payable within 12 months) is critical, because it represents a short-term claim to current assets and is often secured by long term assets. Common types of short-term debt are bank loans and lines of credit.

An increase in working capital indicates that the business has either increased current assets (that is received cash, or other current assets) or has decreased current liabilities, for example has paid off some short-term creditors.

NEED FOR WORKING CAPITAL

One of the basic objective of the financial management is to maximize the shareholders wealth and for this it is important to generate sufficient profits. The extent to which these profits can b earned depends upon the magnitutde os sales. Sales however do not convert into cash instantly. There is an invariable time gap between the sales of the goods and the receipts os cash. Therefore there is a need of Working capital in the form of current to deal with the situation arising of the lack of immediate realization of the cash against goods sold. There is an operating cycle involved in the sales and the realization of the cash. During this time lag Working capital is required for the following reasons:

Purchase of the raw material

To pay wages

To incur overhead cost such as fuel

To meet the selling cost like packing,advertising etc.

To provide credit facility to customers and so on

Operating or Working Cycle:

Operating cycle is the continuing flow from cash to suppliers to inventory to accounta receivable and back into cash. It involves Three Processes:

Acquisition of resources such as raw material,power,fuel

Manufacturing unit of the product that includes conversion of raw material into work in progress into finished products

Sales of product either for cash or on credit. Credit sales create book debts for collection

IMPORTANCE OF ADEQUATE WORKING CAPITAL

Working Capital is very essential to maintain the smooth running of a business. No business can run successfully without an adequate amount of Working capital. The main advantages of maintaining adequate amount of working capital are as follows:-

1. Solvency of the business2. Goodwill3. Easy Loans4. Cash Discounts5. Regular supply of Raw Materials6. Regular payment of Salaries, Wages and Other day-to-day commitments7. Exploitation of favorable market conditions 8. Ability to face crisis9. Quick and Regular return on Investment 10. High morale

CONCEPT OF WORKING CAPITAL

There are two concepts of working capital :-

* Gross Working Capital

* Net Working Capital

The Gross Working Capital is the capital invested in total current assets of the enterprise. It focuses on the following aspects of current assets management:-

Optimum investment in current assets Financing of current assets

Excessive and inadequate investment in current assets should be avoided. Excessive investment results on idle investment. On the other hand inadequate working capital may lead to solvency of the firm. If it fails to meet the obligations then the management needs to strike a balance between the two aspects.

Secondly whenever the need to work due to increasing level of business activity arises, it should be procured promptly. At the same time the surplus funds should be made available and should be immediately invested in short term securities.

Current Assets Current Liabilities

Cash in hand / at bank

Bills Receivable

Sundry Debtors

Short term loans

Investors/ stock

Temporary investment

Prepaid expenses

Accrued incomes

Bills Payable

Sundry Creditors

Outstanding expenses

Accrued expenses

Bank Over draft

One of the most important areas of finance to monitor is your company's working capital, which

is the difference between current assets and current liabilities. As a small business owner, you

must constantly be alert to changes in working capital and their implications; otherwise, you may

miss some warning signs that can lead to business failure. The most important component of

working capital is cash, far the most important asset of any business, particularly a small

business. Without it, the business will fail. So it is of paramount importance for you as the

business owner to control all cash transactions.

It is helpful for us, as a business owner, to think of working capital in terms of

five components:

1. Cash and equivalents. This most liquid form of working capital requires constant

supervision. A good cash budgeting and forecasting system provides answers to key questions

such as: Is the cash level adequate to meet current expenses as they come due? What is the

timing relationship between cash inflow and outflow? When will peak cash needs occur? When

and how much bank borrowing will be needed to meet any cash shortfalls? When will repayment

be expected and will the cash flow cover it?

2. Accounts receivable. Many businesses extend credit to their customers. If you do, is the

amount of accounts receivable reasonable relative to sales? How rapidly are receivables being

collected? Which customers are slow to pay and what should be done about them?

3. Inventory. Inventory is often as much as 50 percent of a firm's current assets, so naturally it

requires continual scrutiny. Is the inventory level reasonable compared with sales and the nature

of your business? What's the rate of inventory turnover compared with other companies in your

type of business?

4. Accounts payable. Financing by suppliers is common in small business; it is one of the major

sources of funds for entrepreneurs. Is the amount of money owed suppliers reasonable relative to

what you purchase? What is your firm's payment policy doing to enhance or detract from your

credit rating?

5. Accrued expenses and taxes payable. These are obligations of your company at any given

time and represent a future outflow of cash.

Working Capital policy

Estimation / forecast of working capital requirements

"Working capital is the life blood & controlling nerve centre of a business."  No business can be

successfully run without an adequate amount of working capital.

To avoid the shortage of working capital at once, an estimate of working capital

requirement should be made in advance.

But estimation of working capital requirements is not an easy task & a large no. of factors

has to be considered before starting this.

Factors requiring consideration while estimating working capital.

The average credit period expected to be allowed by suppliers.

Total costs incurred on material, wages.

The length of time for which raw material are to remain in stores before they are issued

for production.

The length of the production cycle (or) work in process.

The length of sales cycle during which finished goods are to be kept waiting for sales.

The average period of credit allowed to customers

Other factors.

PERMANENT AND VARIABLE WORKING CAPITAL

The need of current assets arises because of operating cycle. The operating cycle is a

continues process and therefore the need for the current assets is felt constantly. But the

magnitude of current assets need is not always same. It increases and decreases over time.

However there is always a minimum level of current assts which are always requireed by the

firm to carry on the business operations. The minimum level of the current assets is refered to as

permanent or fixed working capital. It is permanent in the same way as the firm’s fixed asseta are

depending upon the changes in the production and sales.

The need for the working capital over and above the permanent working capital will

fluctuate. For exzmple: Extrainventory and finished goods have to be maintained to support the

peak periods of sales and investment in receivable may also increase during such periods.

On the other hand investment in raw material, work in progress and finished goods will fall.

The extra working capital needed to support the changing production and sales activities are

called fluctuating or temporary or variable working capital. Both kinds of working capital-

permanent as well as temporary are necessary to facilitate production and sales through the

operating cycle.

But temporary working capital is created bt the firm to meet the liquidity requiments that will

be able to compensate only temporary differences between the temporary and permanent

working capital. The permanent working capital is believed to be stable over a period of time.

While the temporary working capital is fluctuating,sometimes increases and sometimes

decreases.

However, the permanent working capital line need not be horizontal if the firm’s requirement

for the permanent capital is increasing over a period of time. For a growing firm the difference

between the permanent and temporary working capital may be depicted.

METHODS OF WORKING CAPITAL

The methods of the working capital are as follows:-

1. Matching approach

2. Conservative approach

3. Aggressive approach

MATCHING APPROACH

The firm can adopt a financial plan which matches the expected life of assets with expected life

of sources of the funds raised to finance assets. Thus a ten years loan may be raised to be

finances with an expected life of ten years.

Stock of goods to be sold off in thirty days may be financed with the thirty days commercial

paper or bank loan.

CONSERVATIVE APPROACH

A firm in practice may adopt a conservative approach in financing its current as well as fixed

assets. Under the conservative plan the firm finances the permanent assets and also a part of

temporary assets with long term financing in the period when the firm has no need for temporary

current assets with long term financing.

In this period when the firm has no need for temporary current assets then the long term funds

can be invested in the tangible securities to conserve the liquidity.

AGGRESSIVE APPROACH

An aggressive approach policy is to be followed by the firm when it uses more short term

finances than warranted by the matching plan. Under the aggressive approach the firms finances

a part of permanent assets with the short term finance. Some extremely aggressive firms may

even finance a part of their fixed assets with the short term finance. The relative short term

finances make the firm more risky.

WORKING CAPITAL CYCLE

Cash flows in a cycle into, around and out of a business. It is the business's life

blood and every manager's primary task is to help keep it flowing and to use the cash flow to

generate profits. If a business is operating profitably, then it should, in theory, generate cash

surpluses. If it doesn't generate surpluses, the business will eventually run out of cash and expire.

The faster a business expands, the more cash it will need for working capital and investment. The

cheapest and best sources of cash exist as working capital right within business. Good

management of working capital will generate cash will help improve profits and reduce risks.

DEBTORS

(Received)

CASH FINISHED GOODS

SALES

PERMANENT AND VARIABLE WORKING CAPITAL

The need of current assets arises because of operating cycle. The operating cycle is a continues process and therefore the need for the current assets is felt constantly. But the magnitude of current assets need is not always same. It increases and decreases over time. However there is always a minimum level of current assts which are always requireed by the firm to carry on the business operations. The minimum level of the current assets is refered to as permanent or fixed working capital. It is permanent in the same way as the firm’s fixed asseta are depending upon the changes in the production and sales.

The need for the working capital over and above the permanent working capital will fluctuate. For exzmple: Extrainventory and finished goods have to be maintained to support the peak periods of sales and investment in receivable may also increase during such periods.

On the other hand investment in raw material, work in progress and finished goods will fall. The extra working capital needed to support the changing production and sales activities are called fluctuating or temporary or variable working capital. Both kinds of working capital- permanent as well as temporary are necessary to facilitate production and sales through the operating cycle.

But temporary working capital is created bt the firm to meet the liquidity requiments that will be able to compensate only temporary differences between the temporary and permanent working capital. The permanent working capital is believed to be stable over a period of time. While the temporary working capital is fluctuating,sometimes increases and sometimes decreases.

However, the permanent working capital line need not be horizontal if the firm’s requirement for the permanent capital is increasing over a period of time. For a growing firm the difference between the permanent and temporary working capital may be depicted.

RAW MATERIAL WORK-IN-PROGRESS

FINANCIAL STATEMENT ANALYSIS

In OCM woolen mill there are three main types of current assets:-

1. Stock

2. Sundry debtors

3. Cash

Stock consists of

* Raw material and components

* Stores and spare parts

* Stock in process

* Finished goods

Debtors consist of

Debt over six months Other departments

Cash includes

Cash in hand Cash current account Fixed account The total current assets available together constitute the gross working capital of a company. Therefore, the calculation of gross of working capital would be as follow

Stocks

Particulars 2006 2007 2008

Raw material 29541657 25381734 83170729

Work in process 39385321 35845838 70624168

Stores and spares 32494380 30369654 33284652

Finished goods 173344236 138497501 103458859

Other stock 331750 549592 829249

Total stock 275097344 2306444390 291367657

Debtors

Particulars 2006 2007 2008

Over six months 15159509 55639817 814444414

Other debtors 162317184 175774239 423342813

Total debtors 177476693 131765757 381875624

Cash

Particulars 2006 2007 2008

Cash 276837 71645 221360

Current account 745530 4555244 2739552

Fixed deposit 22000 64404693 40162000

Total cash 130569 69031582 43122912

Gross Working Capital

Particulars 2006 2007 2008

GWC 489363156 454348825 750002175

Growth rate 37.82% 92.8% 153.26%

GROWTH RATE OF GROSS WORKING CAPITAL

SALES

Particulars 2006 2007 2008

Sales 796261233 522133945 966065240

Growth rate 110.7% 65.5% 121.32%

Particulars Current Assets

Sales Percentage of C.A. to sales

Growth rate of sales

Growth rate of C.A.

2006 489363156 796261233 61.56% 110.7% 37.82%

2007 454348825 522133945 87.01% 65.5% 92.8%

2008 750002175 966065240 77.63% 121.32% 153.26%

The growth rate of current assets and sales in the year 2006 & 2007 is low as compared to the year 2008. In the year 2008 the growth rate of current assets and sales has shown remarkable increase.

NET WORKING CAPITAL

The net working capital assures the firm’s potential reservoir of funds. It is that part of current assets that is left over after the part of current assets financed through current liabilities. The net working capital of OCM has increased to a great over the years although the growth rate

is very poor. It has increased in the year of 1998 and 1999, but has decreased in the year 2000 and 2001. Again it is increased in the year 2002, but its growth rate was not so good.

CALCULATION OF NWC

Particulars 2006 2007 2008

Current assets 489363156 454348825 750002175

Total current liabilities

173554360 188480460 265573692

NWC 662917516 265868365 484428483

GROWTH RATE OF CURRENT LIABILITIES, NWC

Particulars 2006 2007 2008

Current liabilities 173554360 188480460 265573692

Growth rate 108.6% 153.02%

NWC 662917516 265868365 484428483

Growth rate 87.5% 159.55%

Cash Management

Cash is the most important current assets needed for the uninterrupted and efficient flow of various operation of a firm. Cash basically is the business at all times. It is also the ultimate output that is expected to be realized by selling of the product or service of a particular firm. In a narrower sense cash is used to cover currency and generally accepted equivalent of a cash. Such as cheques, drafts and demand deposits in banks. However a broader meaning of it includes near cash assets marketable securities and time deposits. In banks that are characterized as being reserve pool of liquidity that can be readily sold and converted into cash. They also provide a short term investment outlet for excess cash.

  Cash is money that is easily accessible either in the bank or in the business. It is not inventory, it is not accounts receivable, and it is not property. These might be converted to cash at some point in time, but it takes cash on hand or in the bank to pay suppliers, to pay the rent, and to meet the payroll. Profit growth does not always mean more cash.

Profit is the amount of money you expect to make if all customers paid on time and if your expenses were spread out evenly over the time period being measured. However, it is not your day-to-day reality. Cash is what you must have to keep the doors of your business open. 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 flow of cash into and out of a business over a period of time. The outflow of cash is measured by the money you pay every month to salaries, suppliers, and creditors. The inflows are the cash you receive from customers, lenders, and investors.

Positive Cash Flow

If the cash coming into the business is more than the cash going out of the business, the

company has a positive cash flow. A positive cash flow is very good and the only concern here is managing the excess cash prudently.

Negative Cash Flow

If the cash going out of the business is more than the cash coming into the business, the company has a negative cash flow. A negative cash flow can be caused by a number of problems that result in a shortage of cash, such as too much or obsolete inventory, or poor collections on accounts receivable. If the company doesn't have money in the bank or can't borrow additional cash at this point, it may be in serious trouble.

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.

1. Operating Cash Flow (Internal)Operating cash flow, often referred to as working capital, is the cash flow generated from internal operations. It is the cash generated from sales of the product or service of your business. Because it is generated internally, it is under your control.

2. Investing Cash Flow (Internal)Investing cash flow is generated internally from non-operating activities. This component would include investments in plant and equipment or other fixed assets, nonrecurring gains or losses, or other sources and uses of cash outside of normal operations.

3. Financing Cash Flow (External)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.

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.

The starting point for avoiding a cash crisis is to develop 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 gain an understanding about where all the money went.

CollectionCollect

Cash Management Cycle

Explanation :

Sales generate cash which has to be disbursed out. The surplus cash has to be invested while the deposit has to be borrowed cash management seeks to accomplish this cycle, at a minimum cost at the same time it also seeks to achieve liquidity and control.

In order to cash the uncertainity regarding the cash flow production an efficient cash management should follow following steps:

Cash Planning :

Cash inflows and outflows should be planned to project cash surplus or depict for each part of the planning period. Cash budget should be prepared for this purpose.

Managing cash flows:

The flow of cash should be so managed. The cash inflows should be

accelerated while, as far as possible, the cash outflows should be decelerated.

Collection

Payments

Information and control Borrowed and Invest

Optimum cash level:

The firm should decide about the appropriate level of cash balances. The cost of excess cash and danger of cash deficiency should be matched to determine the optimum level of cash balances.

Investing surplus cash:

The surplus cash balance should be properly invested to earn profits. The firm should be properly invested to earn profits. The firm should decide about the division of such cash balance between alternative short term investment opportunities such as bank deposits, marketable securities or incorporate lending.

MOTIVES FOR HOLDING CASH

The firm need to hold the cash may be attributed to the following three motives:

Transaction motive

Precautionary motive

Speculative motive

Compensation motive

Basic strategies of OCM to manage the cash:

1. Stretching accounts payable

This implies that the firm pay its accouts payable as late as possible without damaging its credit standing. However cash discount available on prompt payment should also availed off.

2. Efficient inventory production management

Another strategy is to increase the inventory turnover rate avoiding stock out for shorage of stock by increasing the rawmaterial turnover, decreasing the production cycle or increasing the finished goods.

3. Speeding collection of accounts receivable

This refers to the quick collection of receivables without loosing future sales. The average collection period of receivable can be reduced by changes in the credit terms, credit standards and collection policies.

OCM woollen mills has recently decreased the interest rates by 1% due to reduction in the RBI monetary policy.

The product manufactured in the OCM woollen mills is such that the sales is seasonal in nature. The lean season is from April to August during which the realization is comparatively less. Although during rest of the year, the realization averages of about 65- 70 lacs. To ensure speedy collection of receivables, firstly the firm grants a free of interest period to its customers. This is 15 to 20 days depending on the reputation of the customer. During this period, no interest is charged from the customers. Although, in case of delay in payment of the expiry of this period. The following rates are charged

22 – 45 days - 18%

45 – 65 days - 20%

60 – 75 days - 22%

90 onwards - 26%

Secondly cash discount is offered to the customers by the firm regularly. Sometimes the company announces some special offers to specify the debt recovery which is bound by a particular condition that the customer would be required to pay particular percentage of the total payment. Initially to be entered for the cash discount. Thirdly , the firm has increased the customer management services network. Earlier 20 banks offerings the facility of cash collection, now the number has increased to 27.

DEBTORS POLICIES IN OCM:

Material is supplied to the party when the parties pay the invoices. Invoices are paid by the suppliers by 2 ways. The two ways are as follows:

Through Bank

Direct Payment

THROUGH BANK: Suppliers can make the payment through Bank. This is a risky way of payment for the company. Through bank payment can be by two ways that are as follows:

DA (Documents against Acceptance)

DP (Documents against Payments)

In DA, bank give the documents to the suppliers and suppliers accepts the documents. He does not give the money at the time but he makes promise to pay the payment. Bank give the document on the bases of suppliiers promise to pay.

In DP, direct payment is made by the suppliers. Bank take payment from the suppliers and give him the documents.

DIRECT PAYMENT: In this mode, payment is made directly. It can be made by cheque,draft and the centres of OCM mills. The centers of OCM MILLS are HDFC Bank and Corporation Bank. Payment are received mostly by this method.

CREDIT NOTES: These are given to the customers. 10% discount is given to the items that have minor defects and the items having major defects are not sent for sales. Goods are taken back in the later case.

SALES POLICY:

FOI (FREE OF INTREST POLICY): These are for the suppliers of the company. The policy is different for different suppliers depending upon the partues. A specific time period is given to the suppliers to pay the payment of the goods. Time period given depends upon the amount os payment that suppliers have to pay. In this time period no intrest is charged from the suppliers.

Suppliers can make payment:

10 lac upto 30 days

10 to 15 lac upto 45 days

Above 50 lac a time period of 60 days

INTREST POLICY:

The parties that make late payment intrest is charged from them. Intrest is given to the parties that make early payment.

The parties that make Early payment intrest is given as follows:

If the parties makes payment within 15 days then 18% intrest is given to those suppliers

If the parties make payment after 15 days then 15% intrest is given to suppliers

The parties that make Late payment, intrest is charged from them as follows:

If the payment is made within 60 days after the due date then 15%intrest is charged from them

If the is made after 60 days intrest charged is 18 %

INCENTIVES:

To promote the sales, Incentives are given to the suppliers depend upon their amount of payment. It is between 1 to 5 %. It is as follows:

Amount(in lakhs) Incentives(in %)

upto 2.50 NIL

2.51-3.00 1.50

3.01-5.00 2.00

5.01-8.00 2.50

8.01-10.00 3.00

10.01-15.00 3.50

15.01-25.00 4.00

25.01-50.00 4 .50

Above 50 5.00

The suppliers have to pay 12% intrest per annum as a security deposit.

RAW MATERIAL MANAGEMENT IN OCM

Raw material is purchased from domestic & international market in the form of wool and polyester after getting requirement from the production planning department.

Wool is generally imported from Australia while polyester is purchased from domestic market.

Wool is having different qualities such as 22.5 micro, 21micro, 19.5 micro, 18.5 micro, 17.5 micro.

Polyester is having generally two categories 2.5 denier & 3.0denier.

REQUIREMENT FROM PRODUCTION PLANNING DEPART.

To call quotations from different suppliers as per requirement of procurement from raw material.

Accordingly, order is placed to the supplier as per agreed terms and conditions which are better for procurement.

The payment of term is under Letter Of Credit (L/C) or by cheque or directly. In case of L/C, the L/C is open for DA period that is 30 days, 60 days, 90 days, 120 days

& 180 days for making the payment of shipped concinement on maturity date. L/C bank inform to the supplier through their bankers The supplier will get the L/C and arrange shipment of the material as per order &

negotiates the documents through bank. The same will be delivered to the L/C opening bank.

L/C opening bank will receive the documents and inform to the buyer with request to accept the same. After this the bank will hand over the original document to the buyer. The buyer will collect the document forwarding to CHA (clearing house agent) to get the conginement clear from the customs. After clearance, the wool tops, the same will be return to the buyer.

Wool top supply to spinning department for conversion into yarn for making fabric.

SWOT ANALYSIS

STRENGTHS

The Biggest strength of OCMMILLS is its latest technology and imported machinery. Moreover, versatility is synonymous to OCM, since the company has diversified into production of carpets, yarn, blankets, tweeds and trousers making to become one of the leading names in the high quality fabrics.

In North India, the brand is perceived to be premium and reliable brand because of its presence in the market for ever eight decades.

The production capabilities of OCM are tremendous so as to meet the growing demand with ease. Its total current production is 12.9 million meters and can go upto 23 millions meters at full maturity. OCM will then be the fifth worsted mill at full maturity.

Another Major strength is that the company’s operations are fully integrated i.e. every operation is in house right from manufacturing of yarn to fabric production.

WEAKNESSES

The main weakness of OCM is a conventional distribution channel. The company relies mainly on the agents for the promotion. Thus, there is always a chance that the agents might neglect their work to earn better margins.

The plant is located in the city of Amritsar which is very far off for the people of south and west which makes then little hesitate to purchases.

The brands positioning is wrong. It is still perceived to be the older brand. This perception goes against it when compared with more known brands like Raymonds, Grasim and other foreign brands.

The company’s capacity is too high. Thus the fixed cost remains the same at any amount of production.

OPPORTUNITIES

The biggest opportunity in India and overseas is the growing popularity of Readymade units.

The company can set up its own readymade units to increase the utilization of its finished products.

In today’s phase of recession small units are rather lacking back. OCM can take advantages of this situation.

THREATS

The biggest threat to OCM Mills is the growing popularity of the cotton fabrics and thus the cotton producing units in India and abroad.

Raymond Suitings has always been the major competitor of the OCM. With the market share of 44% Raymond (turnover-1200 crores) today stands at the number one position in the Indian Worsted Market. It has achieved such popularity through its innovation, a strong distribution channels and a positive brand image.

The converters i.e. units establish exclusively to convert fabric into readymade garments pose the biggest threat to OCM since they usually buy cheaper material of not so known brand.

SUGGESTIONS:

For Cash Management, the company largely depends upon the short-term sources of fund. Instead there should be a more systematic procedure of investing in the short term securities. So far such decisions are centralized and lie in the hands of head office.

There needs to be a more de-centralization in this respect so that more could be invested in short term securities which can be realized at any time to pay the short term liabilities.

The company’s ratio analysis shows too much of surplus liquidity in the hands of company. This should not be left idle and should be invested.

The company should make disbursement from a centralization account so that smaller cash balance is needed at each branch and Secondly, the company would be able to convert the schedules tightly and it would be easier to make disbursement on the right day. In order to hasten the account receivable the company can adopt the lock box system which would ensure quick recovery of receivables/

The main advantage of the lock box system to OCM would be:

o The banks of OCM would be able to handle the remittances prior to

deposits at a lower cost.

o The processing time of such remittance is reduced since their collection

process becomes faster if OCM would have processed them for internal accounting purpose prior to their deposit in the box. This box can still be done the banks without delaying the collection.

The major advantage of accelerating the collection is to reduce the firm’s total financing requirement.

Also by transferring the clerical functions the firm can reduce it’s cost.

Another important strategy to speed up the accounts receivable could be that company takes advantage of the factoring technique. This would help in converting the receivables into productive assets.

BIBLIOGRAPHY

I. GUPTA, SHASHI.K - FINANCIAL MANAGEMENT

II. PANDEY I M, - FINANCIAL MANAGEMENT

III. BHATACHARYA S.K.- ACCOUNTING FOR MANAGEMENT

IV. WWW.OCM.IN

V. WWW.GOOGLE.COM

VI. FINAL ACCOUNTS OF OCM

VII. THE REAL THINGS- BUSINESS INDIA

VIII. http://money.rediff.com/companies/ocm