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Rakesh
Rakesh
Larsen & Toubro (L&T) IS THE LARGEST CUSTOMER OF TATA STEEL LONG PRODUCT
CREDITOR
On the basis of market performance and credit rating company decides the time period of payback of the amount. This time period is known as
CREDIT PERIOD
OS & OD
The total amount called as debt is called as OUTSTANDING. When this total outstanding is not paid within the credit period the amount remained to be collected is called as OVERDUE
Tata Steel has to continuously decide as to how much credit should be given to its customers and also the credit limit and their maximum exposure. Prior to given credit, the credit department analyses the credit worthiness of the customers based on their financial parameters.
Control Charts
The three standard deviations are sometimes identified by zones. Each zones dividing line is exactly one-third the distance from the centerline to either the upper control limit or the lower control limit Zone A is defined as the area between 2 and 3 standard deviations from the centerline on both the plus and minus sides of the centerline Zone B is defined as the area between 1 and 2 standard deviations from the centerline on both sides of the centerline Zone C is defined as the area between the centerline and 1 standard deviation from the centerline, on both sides of the centerline.
Benefits of using Control Charts in Daily Management Monitor process variation over time. Differentiate between special cause and common cause variation. Assess the effectiveness of changes to improve a process. Communicate how a process performed during a specific period.
X Sum of OS jul,aug,sep 11
Sum of OS 1500 1000 500 0 UCL CL LCL 1,083 604 125
mR Sum of OS jul,aug,sep 11
1000 800 600 400 200 0 UCL CL 588.3457537 180.0874667
Date/Time/Period
Range
Date/Time/Period
X Sum of OD jul,aug,sep 11
UCL CL LCL 123 72 20
Sum of OD
Date/Time/Period
mR Sum of OD jul,aug,sep 11
185 160 135 110 85 60 35 10 -15
Range
UCL CL
63 19
Date/Time/Period
L&T
X Sum of os MAY & JUNE 12
1000 800 600 400 200 0 Sum of os UCL CL LCL
703.7637283 392.1404473 80.5171663
Date/Time/Period
X Sum of os MAY
975 775 575 375 175 -25 Sum of os Sum of os
X Sum of os JUNE
773.1228387 479.7350955 186.3473522
UCL
CL LCL
UCL CL LCL
594.8391825
294.8130605 -5.2130616
Date/Time/Period
Date/Time/Period
L&T
mR Sum of os MAY & JUNE 12
500 400 300 200 100 0 Range UCL CL
382.7343079 117.1516094
Date/Time/Period
mR Sum of os MAY
500 400 300 200 100 0 Range Range UCL CL
360.3375027
mR Sum of os JUNE
400 300 200 100 0 CL
112.7917752
UCL
368.4907296
110.2961441
Date/Time/Period
Date/Time/Period
L&T
X Sum of od MAY & JUNE 12
Sum of od 73 23 -27 -77 UCL CL LCL
27.3975056 -16.8363832 -61.0702720
Date/Time/Period
X Sum of od MAY
48 28 8 -12 -32 -52 -72 69 UCL CL LCL
11.6746296 -20.2520951
X Sum of od JUNE
Sum of od
UCL 37.9561716 -13.0411477 -64.0384670
Sum of od
19
CL
-52.1788198
-31
LCL
-81
Date/Time/Period
Date/Time/Period
L&T
mR Sum of od MAY & JUNE 12
80 60 40 20 0 Range UCL CL
54.3278627 16.6292815
Date/Time/Period
mR Sum of od MAY
80 60 40 20 0 UCL CL
39.2122593 12.0025281
mR Sum of od JUNE
70 60 50 40 30 20 10 0 UCL
62.6346775
Range
Range
CL
19.1719245
Date/Time/Period Date/Time/Period
ANALYSIS
Red points on the control limit shows the abnormalities In the outstanding and overdues X bar control chart shows the daily outstanding and overdue Moving range chart shows the relation of two day varation such as 1&2,2&3,3&4 As compare to base line 2011.2012 is much better Moving range sum of outstanding is much better then the x sum of july,august,September 2011 In year 2012 compared sepretly may and june .june is better have low abnormalities
REASONS
Analyze the potential customer's credit Discounting High sales on credit The ratio should be of 70:30 .70 on cash and 30 on credit Recovery group
CONCLUSION
Outstanding and overdues is just cash cycle, is used in the financial analysis of a business. Each component of outstanding and overdues (namely receivables and payables) has two dimensions TIME and MONEY. When it comes to managing working capital, TIME IS MONEY
If you can get money to move fester around the cycle or reduce the amount of money tied up the business will generate more cash or it will need to borrow less money to fund working capital. Many businesses need to sell their goods on credit, otherwise they might find it difficult to survive if their competitors provide such credit facilities; this could mean losing customers to the opposition. Deterioration in credit control over time is a worrying trend in any business
So Tata steel and Larsen & Toubro has a great understanding regarding outstanding and overdues, both the companies have responsibilities towards each other and both are showing interest in doing business with each other for the long term. Analyzation of all another customer of Tata steel shows that Larsen & Toubro has much better transaction of outstanding and overdues being the largest customer Tata steel has given many preferences to the L&T such as 60 days credit is enjoyed by only L&T not by other customers. Well experts and experienced marketing managers are given responsibility to deal with L&T.
I have prepared Management System Chart for Overdues Management with the help of nitin chandra credit manager tata steel and saibal nandi head toc tata steel,rohni ghose ,
overdue
Yes
Invoices settoff.
Escalation to CSM
Yes
Escalation to COMS
Invoices settoff.
Invoices settoff.
No