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Team Electra: Nikhil Menda Robin Aranha
Team Electra: Nikhil Menda Robin Aranha
Team Electra: Nikhil Menda Robin Aranha
Nikhil Menda
Robin Aranha
OVERVIEW
ECIL – Electronic Corporation India Limited
The above points help us address the first question with the help of
which we can restructure the organization leading to better cash
flows and better cash management.
FOCAL POINTS
Firstly increasing the number of Qualified and experienced of
engineers from 2000 to 4500
Backward integration
The above points addresses the second question which deals with the
internal procedures with regard to curbing growth of investments in
inventory and debtor component of cash which in turn reduce the operating
cycle.
FOCAL POINTS
Reduce internal financing in order enjoy tax incentive
Cost of internal funds as per recent statistics provided shows as
16.47 % , which is the area to be tackled
Thus improving shareholder value and increasing overall Net profits
More of external debt financing
To restructure credit policy of the company (Letter Of Credit)
FOCAL POINTS
Financing of working capital to be focused on bank finance more than
non-bank or internal finance
High Quality earnings which refers to free flowing cash flows
The above given points answers our third question regarding the
financial pattern of ECIL for cash requirements. We understand that it
is not advisable to mobilize cash through company deposits as we lose
the benefit of tax incentive.
FOCAL POINTS
As per earlier statistics , 2 issues can be seen :-
Work in progress & Raw Materials Congestion:
The statistics provided for the above two show 106 and 150
number of days respectively in the operating cycle. Which should be
reduced to increase working capital management
Debtors collection and Creditors payment:
Actual borrowing of 87-88 and 88-89 has remained more or less same which
in figures is 2805.01 and thus should be increased further
Working capital as per the budget estimates of 86-87 and 87-88 are 6220
and 6012.04 respectively , this should be reduced to ensure better inventory
management
Thus the working capital budget deviations are not within controllable limits
and the above points act as guidelines to bring it within controllable limits.
CONCLUSION