CASE STUDY : AMTREX APPLIANCES LTD

Amtrex Appliances Ltd (AAL) is a major player in air- conditioning industry. During the
ended 31st March 1997, AAL has achieved an operating income of Rs 10619 Lakhs
against Rs 8774 Lakhs during the previous year and has also maintained its market share.
During 1996 – 97, the consumers durables industry in India continued to show sluggish
growth in demand. However AAL, due to its strategic business plans, could do well even
in this situation. Favourable union budget for 1997-98 reducing excise duty from 40% to
30% and general reduction in customs duty is expected to boost the demand for the
organized sector and will also have favourable impact on cost.

Continuing with its innovative launches, AAL has successfully established the entrant
advantage in ceiling mounted air- conditioner with QUADRA. At the high technology
end, intelligent air-conditioner for round – the – clock precision air-conditioning for the
sunrise industry of telecom was pioneered by AAL with SPACE MARKER.

The business process re- engineering which the company had upon during 1995-96
helped in taking the SPECE MARKER from concept to launch in record time. In the
commercial refrigeration segment, the success of ALL depends on the growth of,
business flowing from the soft drink fountains market, which is expected to grow at 10%
to 15% annually.

With the aim of optimizing its manufacturing operations, AAL has launched ‘Just- In –
Time’ (JIT) programme. It has been designed to integrate TQM measures introduced
during the past few months, and has yielded considerable improvement in manpower
productivity, quality and reduction in inventories.
All the above have led to a better cash position of the company. The cash and bank
balance which was Rs 434.73 Lakhs as on 31st March, 1996 had increased to Rs 456.04
Lakhs as on 31st March, 1997. the net cash flow from operations during the year 1996- 97
was Rs 635.63 Lakhs. The company had borrowed long term funds to the tune of Rs
1367.39 Lakhs during the year to partly finance a long-term investment requirement of
Rs 1568.99 Lakhs during the year. During 1996- 97 AAL had acquired 5,00,000 shares
of Arvind Mills Ltd. (a company under the same group) at Rs653.80Lakhs. AAL had
raised Rs 1064.27 Lakhs of unsecured loan during the year. The detail of cash flow
transactions of the company for the last two years are given below:

1996 – 97 1995 – 96
Acquisition of fixed assets 93158 36768
Acquisition of investments 66876 4008
Sales proceeds of assets 374 832
Dividend received 2761 309
Proceeds from issue of share capital 68 46426
Proceeds from long- term borrowings 136739 12323
Repayment of long- term borrowing 26762 9312
Dividend paid 14578 11281
Interest paid 36483 32020
Taxes Paid ---- 2000
Extraordinary receipts 960 324
Cash profit from operations 99086 38669
Cash & bank balance ----- 43473

(Source : Annual Report 1996 – 97 )

Prepare a summarised cash book and comment on the cash position of the company.