Corporate Cash Management

Through
Streamlining of Bank Accounts

By:
Neha Aggarwal
16-MBA-05
 Indian Textile Industry
 Employs 35 million people (second largest in terms of
employment), 18 per cent of employment in industrial
sector
 Contributes 14% to the industrial production
 22% to total exports of India
 It contributes 9 per cent of excise collections
 Nearly 21 per cent of the country’s total export earnings
 Sector’s contribution to GDP is 6%
 Vardhman Group of Companies

LISTED COMPANIES
 Mahavir Spinning Mills Limited (MSML)
[Now Vardhman Textiles Limited (VTexL)]
 Vardhman Acrylic Ltd (VAL)
 Vardhman Holdings Ltd (VHL)

UNLISTED (Subsidiary) COMPANIES

 VMT Spinning Company Ltd (VMT)
 Vardhman Threads Ltd (VTL)
 Vardhman Yarns and Threads Ltd (VYTL)
 VARDHMAN - A VERTICALLY
INTEGRATED GROUP ….

Sewing Thread
*1982
Acrylic Staple Yarn/ Cotton
Fibre Blended
*1999 *1965
Fabric
Grey Fabric
Processing
*1992
*1999

Steel
*1973
 Recent Awards

Textile Export Promotion Gold trophy for

Council 2005-06 yarn exports
Textile Export Promotion Bronze trophy for
Council 2005-06 excellence in
global exports
 Objectives of the Project
1.To streamline the accounts maintained by the Group.

2. To study the nature of Accounts and reduce the number in order to

save cost.

3.To keep proper control and determine the resolutions governing the
Accounts.

4. To determine the nature of operations in the Accounts i.e., Operative,

Non- Operative, etc.

5. To determine the saving potential of the project.

6. Finally, to determine the efficiency of companies.

 Methodology

Population size: 5 companies

1. Mahavir Spinning Mills Limited (MSML) - 18
units
2. Vardhman Threads Limited (VTL)
3. VMT Spinning Company Limited (VMT)
4. Vardhman Acrylics Limited (VAL)
5. Vardhman Holdings Limited (VHL)
 Methodology contd…

 Information Consolidation
 Structuring of Information
 Analysis and Conclusions
 Information Consolidation
 Primary Sources

 Secondary sources
Accounting ERP System
Board Resolutions
 E-mail:
Kind Attention : All Concerned

We are undergoing a project on Streamlining of various Bank Accounts

maintained by the “VARDHMAN” Group. We are trying to identify the total
accounts maintained by the group and the possibility to reduce the number
of the same.
Therefore, we request you to provide us with the following information regarding
your unit (in the attached format).

1. List of Bank Accounts maintained by the respective unit.

2. Name of the unit reconciling that account.
3. Name of the unit using that account.
4. Names of the authorised signatories for that account.
5. Copy of latest board resolution governing that account.
6. Amount of limit allocated to that account.
Kindly provide the information at the earliest.

Thanks.
*This project is being coordinated by Miss Neha Aggarwal, who is undergoing her
summer training at Corporate Office and doing MBA from Jammu University.
Format for Data Collection
Analysis and Findings
 Banks dealt by different companies of the Group:

25

MSML 21 20

VTL 4
15
VMT 2
VAL 6 10

VHL 2
5

0
 Number of accounts maintained by Vardhman Group:

180
160
140
MSML 163
120 VTL 15
100 VMT 3
80 VAL 9
60
VHL 2
40
20
0
For MSML Units:
Corporate 30
45
VSGM 29
Anant 5
40
Arihant 8

35 Arisht 7
Vardhman Yarns 1
30 Vardhman Fabrics 4
MSML(Hsrpr,ST I, GMYU 42
25 ST-II 3
PERU 1
20 MSML-TD 1
VSGM-EOU 2
15 Auro Dyeing 1
Auro Textiles 3
10 Auro spinning 3
Auro Weaving 4
5 VSS 17
Delhi 1
0
 Types of Accounts:

Company Current CC CMS 120

Accounts Accounts
100
MSML 103 52 8
80
VTL 13 2 0 60

VMT 2 1 0 40
20
VAL 5 4 0
0
MSML
VHL 2 0 0
VTL

VMT

VAL

VHL
 0
5
10
15
20
25
30
35
40
45
C
or
po
ra
te

VS
G
M

A
na
nt
A
rih
an
t

ar A
ris
dh ht
m
an
rd Ya
hm r ns
Current Accounts

an
Fa
sr br
pr ic
),S s
T-
I,G
M
YU

ST
- II

-T PE
ex R
til
e U
D
iv
is
i on
VS
G
M
For MSML units:

-E
A O
ur U
o
CC Accounts

D
ye
A in
ur g
o
Te
xt
A i le
ur
o s
Sp
in
ni
A ng
ur
o
W
ea
vi
ng

VS
S
CMS

D
el
h i
 Accounts that can be closed:

Company Operative Accounts Accounts that can be Closed

MSML 126 37
VTL 13 2

140
120
100
80
60
40
20
0
Operative Accounts Accounts that can be
closed
 Authorised Signatories:

12

10

6
MSML
4 VTL

0
No. of people No. of people left
retired the company
 Saving Potential of Closing Desired Bank Accounts:

[Savings(in Rs.)]
In MSML,
Closing of 31 Current Accounts = 11,64,700 (Debit Amount)
Closing of 6 Cash Credit Accounts = 25,059 (Credit Amount)

In VTL,
Closing of 2 Current Accounts = 6,662 (Debit Amount)

This shows that if the unutilized amount lying in Current Accounts would have
been used earlier for repaying the amounts withdrawn from CC Accounts,
interest could have been saved.

Same is the case with amount in CC Accounts. If this had been transferred to
operative CC Accounts earlier, company had to incur less interest.

Total Savings potential: Rs.11,96,421

Efficiency
 Suggestions
 Periodic review

 Proper notice

 Resolution need to be passed urgently

 Regular notice should be given to the resolutions to find if

any of the authorized signatories have left the company.

 Most of the current Accounts of the Company are at

Branches