Professional Documents
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CCL
CCL
CCL
country in the world after China & U.S.A. The Coal India
Kingdom and South Africa was cheaper then the west coal.
rose to 22 million tons at the end of the First World War &
coal
Burdwan.
Ranchi.
at Nagpur.
Coal India
1975
0.86 bill tes
5 mines
Dankuni
Coal
Complex
NEC
1975
Central Central
Eastern Bharat Coalfields ltd Coalfields ltd
Coalfields Coking Coal 1975 1975
ltd 1975 Ltd. 1973
Western
Northarn South Central mine Coalfields ltd
Coalfields ltd Eastern Planning & design 1973
1975 Coalfields ltd institute 1975
1973
NOTE:
- Cash
- Debtors
- Inventories etc.
There are two concepts of working capital - gross & net working
capital.
Gross working capital - this refers to firm's investment in current
assets. Current assets include assets that can be converted into
cash within an accounting year, in this particular firm it includes
sundry debtor, cash & bank balance & work in progress.
While preparing material budget, the following factors are taken into
consideration:
1. Production target.
2. Requirement of material to achieve above targeted
production based on past consumption pattern.
3. Stock of material in hand, orders due in.
4. Buffer/safety stock required.
Once the quantum is assessed, two fundamental questions
normally arise thereafter to maintain steady flow of material
for production purpose. These are:
1. How much to buy a time?
2. When to buy this quantity?
1 .Requirements
2.Quantity in stock or on order
3.Lead-time
4.0bsolence
1. Perpetual stocktaking
2. Periodical physical verification of inventory
3. NL and PL reconciliation
4. Selective inventory control technique such as:
(f)F.S.N Analysis
FSN stands for fast moving, slow moving and non-moving. Here
the criterion is the rate of issue from stores.
The X items are those whose inventory values are high, while Z
items are those whose inventory value is low. This type of
analysis is useful to identify items, which are extensively
stocked. If such items are of high value efforts should be made to
reduce them.
Other than these are some other power production unit such as
NTPC etc. who also buy coal in large quantity.
- Disputed
- Undisputed.
Uses of cash: -
(i) Salary perks etc.
(ii) Stores
(iii) Power
(iv) Payment to contractors
(v) Interest to - a) CIL
b) Banks
(vi) Refund of balance to CIL (vii)
Statutory payment
a) P.F
b) Sales Tax
c) I .Tax
Managing the cash: -
1. Cash sales - When the customer directly lifts the coal from
the augmented area then it is known as road, sale for this
type of sale the customer deposits money at road sale center
located in Ranchi. Hence for such type of sale the cash is
collected in road sale center.
2. Credit sale - the collection of draft/cash from the credit
parties is deposited at the sale office located in different
cities & major localities. Provision has been made to
transfer this money within 24 hrs. In CCL Calcutta office.
A part of this money can be used by CCL Calcutta office for uses such
as
For monitoring cash budget as well as cash & bank balance, the
following tools &techniques are normally adopted: -
1 .Cash flow analysis & reporting - monthly/weekly/daily.
2.Cash & bank balance reporting - monthly/weekly/daily.
3.Periodic physical verification of cash & bank balance.
4.Periodic reconciliation of bank statements with cashbook.
5.Timely accounting of time - barred cheques.
6. Adequate internal cheque system to avoid the possibility of cash
defalcation. T. Monthly & weekly cash indent along with list of
pending bills.
OPERATING CYCLE
Smooth running of a business cycle has several stages from
procurement of raw materials to their conversion into finished
products; inventory stock pilling & creating debtors on credit sale of
such inventory, & liquidating the debts through realization over a
period. An ideal business cycle leaves room for including factoring
as a component for converting trade debts into cash & thus speeding
up/shortening the business cycle. The term factoring is related to
realization/liquidation of debts. It may be defined as an agreement
between a firm (which has sold its goods / services on credit & owns
debts) & a party (may be an individual or other wise) who is called
a factor by which the factor buy the debts of receivable invoices
of the firm under certain terms & conditions with the right to
realize the debts in lieu of some agreed fee & / or commission.
The firm has to invest enough funds in current Assets for the
success of sales activity. Current Assets are required because
sales do not convert into cash instantaneously. There is operating
cycle involved in the conversion of sales into cash.
Cash
Receivable Raw Material
s
Finished Goods
Operating Cycle
OC = ICP +BDCP
The inventory conversion period (ICP) is the sum of raw material
conversion period (RMCP) work in progress conversion period
(WIPCP)& finished goods conversion period (FGCP).
Fixed assets
progress
There are different methods to determine the working capital needs. The
most common approach in projecting in the working capital
requirements is to use ratio developed on the basis of prior year's
experience that relates inventory & receivable to cost of sales. The
second approach is calculation by percentage of sales. Requirement is
calculated by percentage of projected sales. The third approach to
fixed capital investment therefore is projected as percentage of fixed capital
investment.
Ratio analysis is the principle tool of financial statement analysis. It is
extremely useful for a firm to be able to meet its obligation as they become
due. In financial analysis ratio is used as benchmark for evaluating the
financial position & performance of a firm. The ratio analysis involves
comparison for a useful interpretation of the financial statements. A single
ratio itself does not indicate favorable or unfavorable conditions. It
should be compared with some standards of comparison may consists of:
(A) Post ratio: the ratios calculated from the post-financial
statements of the same firm.
(B) Projected Ratios: Ratios developed using the projected or
preformed financial statement of the same firm.
(C) Competitor's Ratios: Ratios of some selected firm's
especially the most progressive & successful competitor
at the same time.
(D) Industry Ratios: The ratios of the industry to which group
the firm belongs.
The easiest way to calculate the performance of the firm is to compare its
current ratios with the past ratios. When financial ratio over for a period of
time is compared then it is known as the time series analysis. It gives an
indication of change & reflects whether the firm's financial performance
has improved, deteriorated or remained constant over time.
ANALYSIS OF THE FUND FLOW STATEMENTS OF
C.C.L
Fund flow statement of 1996-97
Sources of funds: Rs.in Lakhs
(a) Addition to borrowed funds 54,310.57
(b) addition to cumulative deprecation 9,371.97
(c) addition to reserve 3,038.97
(d) decrease in accumulated loss 1,116.66
(e) decrease in expenditure capitalized _________818.41___
Total funds inflow during the year 68,656.58
Utilisation of Funds :
(f) addition to gross block 21,969.70
(g) addition to capital W.l.P. 12,201.62
(h) increase in working capital 34,485.26
Total fond Utilised during the year / 68.656.58
Fund flow statement of 1997-98
Sources of funds: Rs.in lakhs
(a) addition to borrowed funds 18,150.78
(b) addition to cumulative depreciation 18,578.99
(c) decrease in working capital 3,918.88
Total inflow of funds during the year 40,648.74
Utilisation of funds:
(d) addition to the gross block 27,469.78
(e) addition to capital W.l.P. 12,732.22
(f) increase in miscellaneous exp. 446.74
Total utilisation of funds during the year 40,648.74
Fund flow statement 1998-99
Utilisation of funds:
(a) Addition to gross block 34,410.24
(b) Increase in miscellaneous exp. 2,186.57
(c) Loss in operation 11,896.19
Total utilization of the fund during the year 48,493.00
Fund flow statement 1999-2000
SOURCES OF FUNDS (Rs.in crores )
(a) Funds for operation profit / Loss (-) - 1.43
For the year
Add: depreciation 146.86 145.43
(b) Decrease in working capital 248.61
Total 394.04
Sundry Debtors vis - a - vis sales in the last five year ending s
t
31 march 1997 - 2000 are as follow
Net Profit
7000
6000
5000
4000
3000 Series1
2000
1000 Series2
0
-1000 1 2 3 4 5
-2000
-3000
CONCLUSION AND SUGGESTION
Coal production in most of the C.C.L collieries is not satisfactory & not achieving
their target, it is not possible to full fill the demand of consumer, about 80% of the
total production of coal evacuated from open-cast mine & these mines are equipped
with modern technology but not efficiently utilized except in Piparwar area, where
modern technology has been established with the collaboration of Australia. This
type of collaboration is also needed in other areas also for achieving production
target. The main constraints are under utilization of mine equipmenents, land
acquisitions, excess manpower in few of the area, power failure & shortage of
imported spare parts for the heavy earth removing machines coal quality not to the
declared grade is also vital point.
CCL management cannot reduce the manpower to the required level due the
interference of trade unions. This surplus manpower can be utilized gainfully by
pulling them in jobs which is now being carried by contractors.
In coal industry it has been observed that the price of coal increases almost
every year. Where as the increase in current assets are affected by rate of
inflation. If the percentage increase in case of both sales and current assets
is not same, then the ratios will not give correct picture. I am confident that
CCL will over come its deficiencies and achieve its goal in coming years.