ON

AT

In partial fulfillment of the requirement for the degree of Master of Business

Administration (MBA)

Submitted by: Submitted to:

Mohit Sharma Anita Soni

RR1801A16 Head of Finance Dept.

MBA (II) Lovely Professional Univ.

WHAT TRAINING MEANS ?

T - TO BE IN TIME ON YOUR SEAT.
R - REMAIN ATTENTIVE ALL THE TIME
A - ACTIVELY PARTICIPATE
I - INTERACT FOR CLARITY
N - NOTE POINTS DIFFICULT TO MEMORISE
I - IMPROVE LISTNING HABITS
N - NEVER NEGLECT THE PERFORMANCE
G - GAIN AS MUCH AS YOU CAN

Acknowledgement
I take this opportunity to express my deep sense of gratitude towards all those individuals who
provided a helping to me in making this summer training project.

The project report “working capital management” would not have been possible without kind
assistance and guidance of many persons have possible who indeed were helpful, cooperative,
kind and hospitable during entire course of my assignment. I am greatly thankful to Mr. S.S.
Khera ( Manager of Personal department) who provided in OCM MILLS for summer training.
I’m highly grateful to Mr. Rajan Kapoor (Head of Finance Department) and to Brig. J P S
Ahluwalia (General Manager Personal and Administration) for his valuable guidance, constant
and unconditional help that he offered during the training period.

Finally my whole hearted thanks to entire staff of OCM India Ltd. for their kind co-operation
and assistance in order to take my training successfully.

Lastly, I would like to take this opportunity in expressing my deep sense of respect to my Parents
to whom I m indebted for their blessing and love.

Mohit Sharma

Table of contents
 1. INTRODUCTION OF OCM INDIA LTD.

2. HISTORY OF OCM

3. DEPARTMENTS IN OCM AND THEIR WORKING

4. OBJECTIVES OF STUDY AND RESEARCH METHODOLOGY

5. BALANCE SHEET OF OCM

6. METHODS OF RAISING CAPITAL

7. WORKING CAPITAL MANAGEMENT

 NEED

 IMPORTANCE

 CONCEPTS

8. PERMANENT AND VARIABLE WORKING CAPITAL

9. METHODS OF WORKING CAPITAL

10. WORKING CAPITAL CYCLE

11. FINANCIAL MANAGEMENT

12. CASH MANAGEMENT

13. DEBTORS POLICIES IN OCM

14. RAW MATERIAL MANAGEMENT PROCESS

15. SWOT ANALYSIS

16. SUGGESTIONS

17. BIBLIOGRAPHY

Introduction
TOPIC INTRODUCTION:

A student undergoing a Master course needs to be exposed to the

realities in the filed which puts to the test the class room learning. Knowledge can not be gain
only on the basis of theoretical understanding from the book. A practice inside is necessary for
the learning process to be complete and effective.

I took my training in very well known and well managed organization OCM India Ltd. where I
got ample opportunity to give overall working of the organization. The Textile industry
commands a unique and significant presence in the Indian economy by the virtue of its
contribution to the national industry production employment and foreign exchange earnings.

Technically, Working Capital Management on which I did my Project is an important part of

financial management. It is most powerful tool interpreting the financial health of organization.

In the forthcoming pages of the report, an attempt has been made to present a comprehensive
report of my study conducted on WORKING CAPITAL MANAGEMENT of OCM India Ltd.

Objective of the study :

As my summer training goes on OCM INDIA LTD. It was great experience there. Every work is
done for some objectives and main Objectives of the summer training are as follows:

 Working Capital Management on which I did my Project is an important part of financial

management. It is most powerful tool interpreting the financial health of organization.

 To gain Practical knowledge and experience about the topic and the company

 As related to the training, To know about the working and financial position of the
company

 To know about the Working Capital Management which helps to know about the Gross
capital and Net capital of company

 To know about thee internal policy improvements that are required in order edge part the
biggest competitors and act by formulating and designing the strategies so as to earn
profits and stand boldly against rising competitions in the market.

 To study what are the main determinants of working capital and to analyze how and to
what extent they influence working capital requirements of the company.
 To study how working capital policy followed in the company.
 To study what are the various sources of finance employed by the company in order to
fulfill the working capital requirements.
 To analyze working capital management from different angles e.g. Operating cycle.
 To study different aspects used as tools for managing working capital e.g. Cash
Management.

RESEARCH METHODOLOGY & LIMITATIONS

Methodology is the proper use of different methods to collect the required data, which is to help
us in the analysis and arrive at the ultimate conclusion. The research design constitutes the blue
print for collection, compilations and analysis data Salter defined research design as “ The
arrangement of condition for collection and analysis of data in a manner that aims to combine
relevance to the search purpose with economy in procedure.

Hence, this part explains the blue sampling procedure, sample size, data
collection, method analysis techniques and limitations the study.

Sampling techniques

Convenient sampling method was used .It was decided to consider the Amritsar
customer and dealers. It includes all range of persons ,educated, uneducated, rich and poor
resident of of different colonies of amritsar city and dealers from the cities AMRITSAR
,JALANDHAR, LUDHIANA and U.T (chandigarh).

Data collection

Data was collected by primilary survey from consumers and dealers. For this purpose,
two questionnaires were prepared. In order to get all the information and view point required for
research report both the questionnaires were formed in such a way. That it covered all the
important information and hence attained our objectives.

The research methodology means the way in which we would complete our prospected
task. I have adopted the following procedure in completing my report study:
 1. Formulating the problem

2. Research design

3. Determining the data sources

4. Analyzing the data

5. Interpretation

6. Preparing research report

(1) Formulating the problem

I analyzed first the factors that are important for the banking sector. On the basis of the analyzed
factors, I felt that the important issue right now as far as the credit facilities are provided by bank
is non performing assets, I started knowing the basics of the NPAs and decided to study on the
NPAs.

(2) Research design

The research design tells about the mode with which the entire project is prepared. My research
design for this study is basically analytical. Because I have used number of data of the Banks.

(3) Determining the data source

The data source can be primary or secondary. The primary data are those data which are used for
the first time in the study. However such data take place much time and are also expensive.
Whereas the secondary data are those which are already available in the market. These data are
easy to search and are not expensive too. For my study I have utilized totally the secondary data.

(4) Analyzing the data

The primary data would not be useful until and unless they are well edited and tabulated. When
the person receives the primary data many unuseful data would also be there. So, I analyzed the
data and edited them and turned them in the useful tabulations. So, that can become useful in my
report study.

(5) Interpretation of the data

With use of analyzed data I managed to prepare my project report. But the analyzing of data
would not help the study to reach towards its objectives. The interpretation of the data is required
so that the others can understand the crux of the study in more simple way without any problem
so I have added the analysis that would explain others to understand my study in simpler way.

(6) Project writing

This is the last step in preparing the project report. The objective of the study was to report the
findings of the study to the concerned authorities.

LIMITATIONS
 1. The was conducted in only the major cities of Punjab and may not be representation of
entire national market. No attempt has been made to get the views of customers outside
these major areas because money resources were biggest constraints

2. Consumer may be personally biased.

3. Being based on random sampling the probability of error is susceptible .

4. The coverage of the study has been restricted to selected retailers and all types of retailers
were not included in the study because as it would have lot of time, money and energy not
feasible in present project report .So generalized conclusion cannot be derived with help of
small size.

Perceived performance and expectations of customer with the preferred

brands.

1. OCM:

Highly satisfied - 16%

Satisfied - 62%

Dissatisfied - 22%

2. RAYMOND:

Highly satisfied - 72%

Satisfied - 20%

Dissatisfied - 8%
 3. SIYARAM:

Highly satisfied - Nil

Satisfied - 20%

Dissatisfied - 80%

4. REID & TAYLOR:

Highly Satisfied - 6%

Satisfied - 30%

Dissatisfied - 64%

FINANICIAL POSITON :
Financial Snapshot (Rs.in millions)
Mkt. Cap 450.26
P/E * -3.54
Div 0.00
EPS (TTM) * -1.85
Book Value -10.01
Debt Equity Ratio -3.01
Return On Networth 0.00
Current Ratio 1.56
Quick Ratio 0.84

* Calculated on adjusted profit after extra-ordinary items

March December September June

NET
2009 2008 2008 2008
Sales 342.40 360.30 413.60 293.10
Profit 14.70 -43.60 -11.60 -30.80

450
400
350
300
250
200 NET SALES
150 NET PROFIT
100
50
0
-50
Mar-09 Dec-08 Sep-08 Jun 20008

TEXTILE INDUSTRY IN PUNJAB

 Rising input costs and high taxes have pushed the textile industry in Punjab to the brink
of closure with many of them even facing the danger of winding up, which could render many
people jobless, an industry body said today.

Because of rising input cost and high taxes, the textile industry in Punjab is passing
through the most tough and difficult times in recent times. Punjab's textile sector mainly consists
of small and medium units with considerable noteworthy textile units consisting of stand-alone
spinning and fabric manufacturing units. Total textile output of Punjab is estimated at Rs 10,500
crore, including Rs 3,250 crore exports of knitwear, shawls, made-ups and yarns.

The direct and indirect employment of textile activity in the Punjab is estimated at 2
million people. The state produces approximately 1.8 to 2.2 million bales, about 11-12 per cent
of the country's output of cotton. But only 43 per cent of the cotton yarns produced in Punjab is
used within the state and rest is sold outside the state. Punjab can muster its economic strength
through consumption of cotton yarns within the state for value addition by encouraging
establishing down stream fabric manufacturing and procession units.

The textile industry particularly spinning units located in the state are suffering more
because of the higher taxes and levies, higher cotton cost and power shortage. The taxes and
levies in the state are much higher than other states. In Punjab various taxes (excluding VAT) are
10 per cent the highest, compared with Haryana 4 per cent, Gujarat 0.5 per cent, Rajasthan 1.6
per cent, Madhya Pradesh 2 per cent and Maharashtra one per cent.

The logistic costs have further increased the problems of the already burdened industry.
To offset this, the state government introduced the scheme 'Freight subsidy' to help industry to
be competitive; however, this was never disbursed to the Industry in last 4 years.
The industry is also suffering due to the rate of interest, which has gone up in such
difficult times. The state government has withdrawn interest subsidy on exports and with input
cost like fuel, power, transportation the burden is severe for the industry to bear.
 .

COMPANY PROFLE

INTRODUCTION:

The acronym OCM stands for ORIENTAL CARPET MANUFACTIRERS. OCM began
its illustrious pursuit over 80 years ago, with the manufacture of handmade carpets and carpet
yarn and was gradually transformed to worsted fabric manufacturing.

One of the leading worsted mills, one of the leading worsted textile mills strategically
located in Amritsar (Punjab), the centre of prime north Indian market, with an annual capacity of
8.4 million meters, OCM utilizes the most modern equipment to produce some of the finest
technological innovations that the textile industry has to offer. From fiber to finished fabric, the
mill is completely vertical and offers customers a varied product range from the finest worsted
fabrics for tailored garments to diverse blends for a sportier look. The mill has a stellar
reputation for maintaining colour continuity - especially in the segment of suit separates -
empowering the end customer with the ultimate in buying flexibility.

On its sprawling 36-acre site, OCM has the distinct advantage of having; under a single
roof, the facility for every process - right from the fiber to the finished fabric and is the first
worsted mill in India to get the prestigious ISO: 9001 certification.

Earlier OCM was being run by the Birla Group under the name Birla VXL Textiles Ltd.
and none of the director of the company ever bothered to visit in Amritsar for the last three
decades. During the tenure of Birla Group employees were not getting regular salary and there
was no bonus increment for the last one decade as company was running in loss. Moreover, Birla
people never gave the management free hand to introduce new technology and new designs as a
reason company had become debt ridden. Now with the arrival of WL Ross & C. LLC of New
York this OCM has become debt free and running in profit.
ABOUT THE COMPANY:

Since its inception in 1924 as a manufacturer of hand-knotted carpets, OCM has come a
long way to become one of the largest worsted suiting producers, the first one to implement a
customized textile ERP solution.
A completely vertically integrated plant, OCM has in-house production facilities to
convert tops to finished fabrics through dyeing, spinning, weaving and finishing using state-of-
the-art machinery. All the materials and processes pass through stringent checks at every stage
and help in delivering outstanding quality.
At present the company’s capacity includes 34064 Spindles and 182 high speed shuttle
less Looms thereby giving spinning capacity of 12000 kgs yarn and weaving capacity of 25000
Mtrs of fabric per day. The spinning preparatory is from NSC, France, Spindles frpm Zinser,
Germany, Auto coners from Schlhafhorst, Germany, TFO’s from Leewha, Korea and looms
from Lindaeur Dornier, Germany, Sulzer, Switzerland and Picanol, Belgium. Apart from this,
colour continuity is tested on colour matching system from Gretag Macbreath, UK and fabric
gets final finish on KD from Biella Shrunk, Rotary Press of Mario Crosta, Italy, Continuous
Decatising from Speretto Rimar, Italy, Superfinish from M-Tec, Germany and Shearing
machine from Xetma Vollenweider, Switzerland.

TAKEOVER
 Gone are the days when OCM Textile mill when it was badly debt ridden and
running in loss for the last one decade, now heading towards profit with new summer
collections, since February 2007 OCM is leaping towards huge profit after being this textile firm
OCM India Ltd. acquired by the American based company in $37 million in cash. (Rs. 170
crore). Turn around specialist Wilbur L Ross Jr has made his first investment in India.

The acquisition has been carried out through The Asset Reconstruction Company of India
(ARCIL) as said by Mr. Rajeev Surana who is Chartered Accountant manages the Finance
policy of OCM. Sudhamoy Khasnobis, Managing Director & CEO of Arcil, said, "The OCM
acquisition is the first 100 per cent buyout of a major Indian enterprise by a global turnaround
fund.”

Surana said that now the turnover of the Amritsar based OCM is Rs. 125 crore and it
would touch Rs. 160 crore by next year. Now total employment in the OCM is eleven hundred
staff members.

Wilbur L. Ross, Jr., Chairman and CEO of WL Ross said, "OCM establishes us in India's
textile sector and further adds to the resources and synergies of our textile holdings.”

REASONS
 As the company remains heavily leveraged, interest costs will continue to be a drag on
profitability in the immediate term. It might take a while before the company makes a complete
turnaround.

Birla VXL, part of the S.K. Birla group, is a manufacturer of worsted/woollen fabric
and sells under the brand name Digjam. The brand has a 10 per cent market share and has a
brand recall. The company also has a readymade garment unit. It exports about 40 per cent of
its production. At a capacity of six million metres, it remains a relatively small player compared
to market leader Raymond, which has a capacity of 30 million metres. BVXL expanded
massively in the mid-1990s; this did not yield results.

Surplus capacity, input pressures and a difficult demand environment affected

profitability. Accumulated losses completely eroded its net worth by June 2004. Shortly
afterward, ARCIL (Asset Reconstruction Company India) took over debt from some of
BVXL's lenders. The securitisation outfit, which now owns 54 per cent of the pre-issue share
capital, has begun to restructure its Rs 400-crore debt.

As part of the restructuring process, the Amritsar facility, which manufactured the
OCM brand of worsted fabrics, was carved out into a separate division, OCM India, as a 100
per cent subsidiary. Loans worth Rs 160 crore were transferred to the division.

BVXL's entire shareholding in OCM India was recently sold to US buy-out firm, WL
Ross, for about Rs 170 crore. The proceeds were to be used to pay off loans that had been
transferred to the division. BVXL has also divested its other subsidiaries Masuzawa Punjab silk
and VXL Technologies; it exited from its joint venture with Dormeuil Freres of France end of
September. About Rs 50 crore worth of debt will be paid off through the disposal of non-core
assets, which have been allocated to a separate investment division. About Rs 25 crore has been
converted into equity.
 Post-conversion and the carving out of OCM India, the share capital of the company
stands reduced to Rs 43 crore from about Rs 100 crore. Long-term debt, even after the
restructuring initiatives, however, remains at about Rs 150 crore.

BACKGROUND OF WL ROSS & CO.

Talking about the Textile industry of WL Ross (Wilbur Louis Ross) & Co. LLC of New
York, It is a company of Rs 40,000 crore and Rs. 5000 crore of the company is already involved
the Textile business. Further majority owned by WL Ross is global diversified textile
manufacturer with annual revenues in excess of $1.0 billion.

The company was founded in April 2000 as a global private equity firm and since then
has created more than $4bn of transactions. WL Ross affiliates own approximately 90% of the
equity of International Textile Group.

In October 2005, W.L. Ross formed a joint venture with Housing Development Finance
Corporation Ltd (HDFC), India’s leading housing finance institution, to invest in corporate
restructurings and turnarounds. W.L. Ross (India) Pvt. Ltd, based in Mumbai, is a sub-advisor to
India Asset Recovery Management Ltd — which advises various private equity funds, including
the Mauritius-based $300 million India Asset Recovery Fund that W.L. Ross formed to invest in
sick companies.

W.L. Ross was formed by Mr. Wilbur L. Ross, Jr., an American investor specializing in
restructuring failed companies in industries such as steel, coal, telecommunications and textiles.
He specializes in leveraged buyouts. The company acquired Ohio-based International Steel
Group and sold it to the Mittal Steel Company in 2005 for $4.5 billion.

W.L. Ross is now part of Invesco, a leading global investment management company
with assets under management as of December 31, 2007 of $500 billion.

According to Invesco’s 2007 annual report, it acquired W.L. Ross & Co in October 2006
for an initial consideration of $134 million. The annual report further says that the assets under
management by W.L. Ross went up from $2.6 billion at the time it was acquired by Invesco to
$6.8 billion as of December 31, 2007. W.L. Ross now has about $7.9 billion of assets under
management. Business Line had reported in August 2006 that W.L. Ross was

interested in investing over Rs. 1,500 crore ($350 million) in the Chennai-headquartered ailing
fertilizer manufacturer Southern Petrochemical Industries Corporation Ltd. This deal did not go
through.

The investment by W.L. Ross & Co in Spice Jet is its second in India, after it bought 100
per cent stake in OCM Ltd, a worsted fabric manufacturer, for Rs 170 crore ($35 million) in
October 2006.

The countdown has finally begun for OCM India’s long-awaited sale. OCM, which has
been on the block for a while now, is likely to be snapped up by one of the three final bidders:
stressed-asset management fund WL Ross, global investment fund eight capital or Raymond.

Sources confirmed that (ARCIL), which owns majority shares in OCM’s parent company
Birla VXL, is expected to announce the outcome of the bid by September 30. OCM was spun off
as a separate entity from Birla VXL following the reconstruction of the SK Birla group
company. Though the Birlas still have management control of the company, Arcil has been in-
charge of finding a buyer for the suitings brand. The OCM India deal has been in the news
because of disagreements over the valuation of the company and protracted negotiations with the
bidders. The race for OCM has been a hotly contested one with most Indian textile majors and a
couple of foreign funds queuing up to acquire the company. S Kumars, Arvind Mills, Raymond,
WL Ross and some other global funds have all figured in the constantly-changing list of suitors.
The fabric manufacturing facility for the OCM brand in Amritsar, with a capacity to produce
8.4m metres of suiting fabric, is being sold off as part of debt recast exercise.

However, the company’s valuation still remains a moot point, with Arcil expecting
around Rs 180 crore from the sale while most of the bidders stayed put in the Rs 120-150 crore
range. It is not known at what price the deal is likely to be sealed. OCM, along with the other
Birla VXL suitings brand Digjam, is considered to be among the top three suitings’ brands in the
country. OCM specialises in all wool worsted as well as wool-blended worsted suitings.

INTERNATIONAL TEXTILE GROUP

International Textile Group was formed by Wilbur Ross in 2004 and operates five
primary business units:

 Automotive Group,
 Cone Denim and Burlington Worldwide (Apparel Fabric),
 Government Uniform Fabric,
 Burlington House (interior fabrics and furnishings) and
 Carlisle Finishing (Commission Finishing)

The company employs over 10,500 people worldwide with operations in the United
States, Mexico, China, Germany, Romania, Czech Republic, Poland, South Africa, Nicaragua
and Vietnam.

BURLINGTON WORLDWIDE AND OCM INDIA

A new commercial partnership was announced on 12 September,2007 between US fabric maker
Burlington WorldWide and Indian worsted wool fabric maker OCM India to provide an
additional source of suiting products for the US and European markets

Under the agreement, Burlington WorldWide will help OCM to develop new
manufacturing processes and woollen fabrics which can be exported to the US, European and
Asian markets.

In return, OCM, which is located in Amritsar, will be licensed to produce and sell wool
fabrics under the Burlington brand name to the domestic Indian market

According to Wilbur L Ross, chairman of International Textile Group (ITG) which owns
Burlington WorldWide, this is a tremendous opportunity to expand ITG's footprint into the
growing Indian market and provide an additional supply chain of products for the US and
European markets. Burlington WorldWide is the North American leader in worsted wool
products and its expertise in wool manufacturing and new fabric development will further
OCM's operations and breadth of product to grow a global wool platform for both companies.

According to Rajeev Surana, CEO of OCM India Limited, OCM is a trusted Indian brand
for worsted suiting. This alliance can contribute immensely in lending it an international edge.
The technological capabilities and global experience of Burlington WorldWide coupled with
OCM's core strengths will enhance the aspirational value of the brand and its products.

WINTER COLLECTION 2009

The winter range of ocm brings the rich blends of wools and poly wools in the form of the
following new ranges:-

Mistico
Spectacular superfine all wool fabric with ultra soft feel ensures a lustrous look to this fabric.
Be a mughal of fashion with the attires created from this fabric which is available in hues of
navy, grey, black and brown. A luxurious fabric that epitomizes the opulence of hand crafted
masterpiece. Formal or evening wear is as impeccable to look at in this ensemble.

Gratiana
Think about her – the softness, the warmth, the caresses, ………………… feel the same in
these 52/48 Silk Wool combination of classical and geometrical designs where the softness of
silk with warmth of wool in various hues of grey, golden, blacks woven in checks,
houndstooth and geometrics will keep you stratling. The fabrics conceived and created while
keeping in mind round the year wear-ability. Don’t buy them, own them.

Checkmate
Our designers from the fashion capitals of the world have conceived and created this fabric for
the much aware and globe trotter fashion conscious Indians. All wool and poly/wool fabrics in
blend of 55/45 are majorly available in black and white. However, some shades of blues and
greys have also been thrown in. An ideal fabric for bottom weights will make you look
different and ensure no miss outs.
Marathon
We beg to differ with all those who felt tweeds were only for low temperatures of north and
north-east. This perennial classic is now available with a modern twist. Especially for those,
who are looking for tweed designs in light weight fabric, we offer a Poly/Wool blend of 65/35.
You will find designs in herringbone, glen checks, houndstooth in shades of blue, grey, green
and browns. It’s a fabric ideal for round the year wear ability.

Shetland
Timeless all wool classics from OCM design lab which are ideal for that sporty look and outer
wear. Slip comfortably in these cozy jackets in those chilly winters. To create this ideal fabric
in classical herring bone, hounds tooth, glen checks took designers to understand the equation
that is right for us without being over or under dressed.

Snazzy
Here is a collection that is “Smart and Stylish”. Soft tweeds, in all wool fine weave, that drape
faultlessly in garments created from this fabric. Herringbones and lock weaves designs are
further accentuated in natural fibers like Angora, Alpaca and wool. Available in different hues
of all shades, suits in this fabric live up to the promise of something extra in a completely new
interpretation of style.

Estrella
This fabric exudes power, making it the perfect attire for boardrooms and presentations. This
blend of superfine wool and rayon with extra sheen is the epitome of understated excellence.
An ideal fabric for evenings and breezy tropical afternoons, it takes you from business to
pleasure with ease. So be it at work or at home, it ensures appreciation everywhere.

SUITINGS :

OCM is amongst few companies which provide a huge variety of fabric ranging from pure
wools to wool blends in 50/50, 65/35, 70/30, 75/25, 85/15. Wool is blended with various
exotic fibers like cashmere, silk, linen, cotton, mohair, viscose, bamboos, camel hair etc.

We produce more than 1000 design ranges for the domestic market every year. Each of our
ranges caters to the taste and style of highly evolved customer of today.
 GOLD CLUB
Manufactured from 120’s wool and cashmere, a light weight fabric that makes the world feel
your presence. A luxurious top of the line all wool collection mixed with cashmere to give an
extra delicate and soft feel for the connoisseurs. A fabric which is presented in futuristic
designs while keeping our designer’s expertise in traditional weaves so as to get your suit
crafted as perfect as you are.

SOLID GOLD
An all wool premium range of suit and jacket material which is worth its weight in gold. We
use super 100’s extra fine wool mixed with cashmere to give a very soft handle and rich look
to pamper the soul within you. The colour and design range gives an edge to the whole gambit
which has no parallel in the region. Fabric for the people who yearn to reach at the top.

GOLD ORCHID
Indulge you in a wool rich poly wool fabric in 60/40 blend that has a unique luxurious feeling.
Crafted out of extra fine polyester and super 100’s extra fine marino wool blended with
cashmere to provide an extra smooth handle.

PURE GOLD
A brilliant range to T/W suiting in 55/45 blend for occasions when you’d like to make a
statement. Superfine polyester blended with super 100’s extra fine wool to give rich soft handle,
comes in attractive solids/satins and classic designs.

GOLD OPULENCE
A T/W fabric in 60/40 and 55/45 blend that represents an evolution from traditional favourites
to pastel shades with soothing hues. Super 100’s wool blended fabric with superfine polyester
makes it stand apart from other fabrics in the category. Presented mostly in plains, this also
has some exquisite designs to complement the range.

24 Carat Gold
A T/W fabric mostly in 60/40 blend is a tribute to those who want nothing short of the best. A
light weight wool rich fabric having the finest microns which will make you afloat.
 Smoothness of the fabric and the drape will make everybody envy. Contemporary designs
with a flash of modernity will enhance the wearer’s style statement.

Gold ‘n’Gold
An all wool fabric with a sprinkle of cashmere which makes it a wearer’s delight. Ample designs
and shades make it difficult to make a choice. But lovers of Blues and Greys will have a feast of
selection.

WINDSOR
The success of Gold Collection motivated our designers to come out with yet another
exquisite range in a very fine count, which is a blend of P/W mixed with cashmere gives an
excellent feel and finish. Competitively priced, this range is ‘Value for Money’. Comprising
of beautifully crafted designs in super micro effect, bold pin stripes, subtle stripes, mini chalk
stripes, herring bones and beautiful plains that surely is delight to the wearer.

ROYAL SALUTE
The collection is made out of the superfine polyester mixed with 100s wool. Keeping in view the
rich taste of connoisseurs, we have developed this range in T/W blend of 55/45. The smoothness
will give scotch a run for its money. The colour ways are sublime and classics. It consists of
choicest of elegant designs and is a must for every wardrobe. The fine blend of fabric drapes the
wearer elegantly giving a rare smoothness

SEIGNIOR COLLECTION
A T/W 60/40 collection with 100’s wool in fine count with polyester. A range which has
designing in normal and high twist yarn to give designs look different and class of their own.
This is ideally suited for formal wear.

BEAU MONDE
A blends of P/W 55/45 having rich & luxurious collection in exuberant designs. This
multifarious collection has been designed especially for young executives, who seek ‘value for
money’
 ESQUIRE
A fine T/W 55/45 suiting spun out of 80s wool. This comes in blissful designs i.e. pin stripes,
chalk stripes, herring bone coupled with orthodox stunning blues, greys, brown and traditional
salt & pepper effect. The fabric for people susceptible to grace. Weight of the fabric is just
right for the subcontinent and carries excellent drape.

RITZY CLUB
A wool rich fabric created out of 100s wool which is a blend of P/W 55 : 45 with an excellent
feel & finish. Competitively priced, it consists of choicest of elegant designs and is a must for
every wardrobe. The fine blend of fabric drapes itself elegantly to the wearer giving him/her a
rare smoothness.

PRISTINE
A party wear fabric T/W 55/45 fabric made out of 80s wool and superfine polyester. A fabric
for formal wear that is available in shades that are out of this world. A light weight fabric with
exquisite designs makes it an essential wear for all seasons.

HARVARD’s COLLECTION
A Super 100s, P/W blend of 55/45 reversible fabric, can give the designer’s look without
much of an effort when you use them as separates or a suit will look equally elegant. Crafted
in various hues of grey, blue and brown, translated in some of the most sophisticated designs
including pinstripes, micro-effects and with a soft luxurious feel thrown-in in good measure,
these fabrics are the ultimate statement in luxury. So be prepared to make heads turn when
you are on the move this season.

Yuvraj
A light weight fabric in polyester/wool blend in 55/45, for those who have taste for whites and
shades of white. A union of technological and stylistic innovation capabilities of OCM gave
birth to this fabric. This versatile and premium fabric having different designs in self with soft
and smooth touch would be an unusual traditional wear. A unisex fabric for all occasions.
 JUBILEE COLLECTION
Launched on the occasion of platinum jubilee celebration of the OCM suitings, the range
became an instant hit. Ideal for formal, informal festive and wedding occasions. A truly
versatile suiting material developed by blending super fine polyester with super 80’s extra
fine wool in 55/45 blend. A range developed for both day and evening wear. We have
expanded this range and introduced new weaves like diagonal cords etc. in a wide spectrum of
shades.

REGENCY CLUB
A party wear fabric made out of 70s wool and superfine polyester. Comes in more than 20
vibrant designs and colours. The fabric for formal wear that is available in shades that are out
of this world. A versatile fabric that’s ideal for parties, office, semi-formal wear and reflects
that mood for commemoration.

SUPERFINE CRYSTAL
Our designer’s have created this P/W fabric in 70/30 blend using extra fine Super 70’s wool
having paper and salt effect. A truly special fabric with an extra ordinary feel.

SUPREME COLLECTION
A T/W fabric in 85/15 blend has been developed to provide better value for money to the
ultimate consumer, this range has been further expanded in different weaves & shades to cater
to the economy segment. This range has been an instant hit. The whole gamut includes variety
of designs in stripes, checks and solids to make a deep niche in market.

DEBONAIR
In the fine blend of 70 / 30 P/W, the finesse and the fall will lure you towards ecstasy.
Meticulously crafted and specially designed for that ultimate look – the Debonair range.
WAVES FASHION INSIGNIA
Keeping in view the copious opportunity arising out of transition of consumers mind shift
from plains to designs, our designers have conceptualized an exotic gamut in horizontal and
diagonal patterns using. The set of designs revolves around the geometrical theme. It is
specially designed for the young, who want to make a bold fashion statement.
MELODY COLLECTION
For those who intend to shine like a sunlight. A 70/30 blend T/W fabric in satin finish with
silvery designs. Developed in Super 70s, this range is paradise for people with taste bud of
satin. As the name suggests the designs are melodious and sweet to the taste of the consumer.

DESIGNER’S COLLECTION
Created by the designers with fancy yarns in poly wool in 70/30, the range has been super-hit
in the market for more than a decade and has fascinated the youngsters over the years. The
USP - Our competitors have tried to recreate this without success.

TIARA
When the going gets tough, this P/W 70/30 suiting range gets you going. A light weight
superfine wool fabric range from OCM, this fabric is ideal for suits & dress pants keeping you
warm and comfortable at work even when the mercury is headed southwards. A soft feel and
handle means that you are always in control of the elements. Available in a wide range of
patterns in diagonal cords is truly a must-have this winter.

OXFORD
To keep abreast with the fashion, this excellent Polyester Viscose Fabric in a very fine count
with micro effect has been an instant hit & has been further expanded. This fabric is excellent
 for round the year wear. It comes in solids, cross shades and classic designs like pin stripes
etc. Must for a fashion conscious wardrobe.
BLACK STALLION
For people having lust for black, this range is most apt. Having filtered the number of designs,
the range is compact and includes Bar-at-Law fabrics also. The fine Polyester Viscose
presently include 3 black beauties.
PREMIUM TERENE SUITING
Another collection of Polyester Viscose fabrics available in various weights in more than 30
colors to pick from. You can choose chord in diagonals and verticals, twill and plain weaves
to suit the occasion. A perfect fabric to keep you cools in that blistering heat.

WHITE PEARL
An efficacious fabric in white created by our designer’s for those special people with a special
taste. An exclusive Polyester Viscose fabric available only in shades of white ideal for making
a summer suit. Abundance of choice in twill, matty, picks n pick, herring bone and structured
weaves. Even she would look stunningly eloquent in a summer suit designed and stitched to
suit her style.
EXCEL
An exclusive twill weave Polyester Viscose fabric manufactured out of yarn spun in worsted
system. An innovation by our designers that makes unmatched light weight fabric to suit your
style. You will have more than 10 shades to lay your hands on. Its perfect drape makes it all
occasion favourite.

MARQUE
Stay attuned to time. This range of Polyester/ Wool blend of 55/45 created in Super 80s wool
in single weft is ideal for festive occasions and formal ensembles. Large option of colors
ranging from Black, Navy, and Brown to Grey, Fawn and Charcoal and the weaves, satin and
twill are suitable for all age groups. So don’t forget to take him/her along, you might find it
hard to shop alone.
 FAUSTINE
A polyester/wool blend of 85/15 in light weight has been created after receiving an
overwhelming response to our Supreme Collection. The fabric is woven in plains and the
choice will be very exciting as the buyer will have 10 colors to choose from. So try a summer
suit in light and medium colors and flaunt with your style statement.

BIG BOSS
The name says it all! Our designers have given new flavor to P/V range by adding some linen
in it. Colors are all light tones of grey, brown, green in stripes, houndstooth and plain weave to
ensure comfort and designs all classy to make that perfect suit for summer. So take full liberty
with the creativity inside you as this fabric is suitable for suits, trousers, safaris and what not.
Don’t forget to take her along as the range has been created to complement both of you.

EURO CLUB
A fabric created in P/V for the consumers who want designs of worsted fabrics but are very
price sensitive. Full palette of colours in twill, satin, fancy and cord weave are irresistible. An
ideal fabric for summer; will create an impeccable suit and the trousers too will look great. An
exuberance of designs will give the buyer full value for money.

AMBIENCE
For those who want comfort of summer but at the same time look for that perfect drape of
worsted fabric, our designers have created this special fabric. A fabric with only 7 per cent
wool, so as to give that perfect drape. Woven in fancy, twill and rib, this fabric in black, navy,
charcoal and browns has the perfect weight for a summer suit or a safari. So the whole
ambience is suitably matched to your taste.
NOVACOT
Multidimensional is the concept of this range. For the lovers of summer comfort our designers
have given T/V blend in 65/35 woven in plain, fancy and twills. However for those who not
only want comfort, but also want something made out of natural fibers so as to get the perfect
drape, this fabric has been presented in Polyester/Wool/Cotton blend of 43/8/49. The blend has
been designed for the summer comfort and wool has been sprinkled to give that flawless
drape. So who says cotton and wool don’t look smart together!
Eminent
A hybrid blend of polyester, wool and cotton lustrous fabric birthed by combining soft Egyptian
cotton with fine wool and microfiber to suit all your needs. Immaculate finish in various hues of
summer shades is most suitable for a perfect suit while you are on your way for an important
meeting. Clothing created from this fabric looks sophisticated enhancing your eminent
personality.

Solitaire
A Polyester Viscose fabric in structured, vertical chords and rib weaves is available in aura of
colors to suit your summer requirements for all occasions. A unisex fabric available in
different weights makes a style statement while keeping you cool in the summer heat.

PRODUCT LINES
BASIC
A revolutionary T/W fabric in 70/30 blend presented at a price which suits all pockets. An
unbelievable range in more than 40 colors to choose from in plains. The designs in S & Z are
hot picks in all markets. An ideal fabric for that perfect trouser.

CEREMONIAL SHERWANI
A T/W fabric in 70/30 blend exclusively designed for wedding & festive wear. This range has
no parallel in the desired segment. Looking at the overwhelming response in the past, more
jacquard designs have been added, ideally suited for Jodhpuri and Sherwani, especially aimed
at wedding & other functions.

SUPERFINE CRYSTAL
Our designer’s have created this P/W fabric in 70/30 blend using extra fine Super 70’s wool
having paper and salt effect. A truly special fabric with an extra ordinary feel.

DESIGNER’S COLLECTION
Created by the designers with fancy yarns in poly wool in 70/30, the range has been super-hit
in the market for more than a decade and has fascinated the youngsters over the years. The
USP - Our competitors have tried to recreate this without success.
DEBONAIR
In the fine blend of 70 / 30 P/W, the finesse and the fall will lure you towards ecstasy.
Meticulously crafted and specially designed for that ultimate look – the Debonair range.

EXCLUSIVE CO-ORDINATES
Young achiever wants something different. Specially designed for the young and for the
young at heart. Dictated by the trend of the day. Woven Solid Checks and textured jackets
with matching trouser. Super 70’s wool blended with extra fine polyester in T/W blend of
70/30 is a wearer’s delight.
 MELODY COLLECTION
For those who intend to shine like a sunlight. A 70/30 blend T/W fabric in satin finish with
silvery designs. Developed in Super 70s, this range is paradise for people with taste bud of
satin. As the name suggests the designs are melodious and sweet to the taste of the consumer.

SILVER PEARL
Fabric in matty weaves having a blend of 70/30 in polyester and wool. An all time favourite
since its inception and hasn’t lost its charm even now. Available in plains as well as S & Z
designs.

DESIGNER’S FASHION CIRCLE

Exclusive light weight Terry Wool 70/30 fabric that’s made by blending super 70’s wool and
flax (linen) with extra fine polyester. The range can be pitched for a perfect summer safari.
Comes in light pastel shades ideally suited for summer.

WAVES FASHION INSIGNIA

Keeping in view the copious opportunity arising out of transition of consumers mind shift
from plains to designs, our designers has conceptualized an exotic gamut in horizontal and
diagonal patterns using. The set of designs revolves around the geometrical theme. It is
specially designed for the young, who want to make a bold fashion statement.

SPECIALITIES
 FRESH ‘N’ FRAGRANT
A rich blend of poly wool that has been given special treatment to impart anti odorant
properties, by virtue of which the garments made out of this fabric will keep the wearer fresh
throughout the day. So no more perfumes required, just feel free when she is around.

COMFORT WEAR
A tasteful blend of poly wool with lycra gives the fabric a natural stretch and soft handle. Hey
girl in there, feel free to entice his feelings showing your contours. This fabric is a wearer’s
delight for the comfort it gives in the worsted fabric and an aura of colors to choose from. Our
designers strongly recommend this collection for a frequent traveler.

FLANNELS
A fine all wool fabric, smooth as silk comes in rock solid shades. Perfect for chilly winters,
can be draped for excellent overcoat or fit corporate suit for that important presentation. The
flannel has been OCM’s forte over the year’s uninsured till date.

VICUNA
An all wool fabric perfect for those who have the taste for black. An exquisite fabric woven in
berthea weave is our designer’s favourite. Charcoal black is the only colour for this speciality
collection which looks elegant in suits, but Bundgalas look awesome.

COOL ‘N’CLEAN
A P/W fabric with extraordinary properties. It absorbs moisture, which subsequently
evaporates and provides a cool feeling to the wearer. Moreover, stains can be effortlessly
released after normal wash. It’s a specialty collection for those rainy days when perspiration is
high and leaves the marks on light shade clothes. So, this fabric is our answer to those bad
stains and emanating body odours.

DEPARTMENTS :
PRODUCTION PLANINING AND CONTROL DEARTMENT

PURPOSE:-

Its purpose is to lay down the procedure for production planning to avoid any possible lapse &
resultant loss of quality.

PROCEDURE:-

The procedure is as following in their:-

ESTIMATION OF RAW MATERIAL:-

The tentative gross plan for winter/summer is 6th months & 6th months respectively. The monthly
raw material requirements ore worked out.

DESIGN WAS MANUFACTURING PLAN:-

The actual production plan is received from sales & export orders from export section. It is
divided into months keeping in view the monthly capacities and the given targets.

YARN SPINNING ORDER:-

Designing through QC lab provides all the master cards related to the actual production program.
The yarns, which remain unused are taken in fresh order. Indent is given to the worsted spinning
recombing and dyeing house.

MONITERING YARN STOCK’INDENTS:-

Yarn received in the EPYS either from weaving or worsted spinning is weighted before storing.
Monthly stock statement is prepared and copy of its given to costing department. With this, the
left over yarn is also utilized. Report of yarn spun by worsted spinning is received from single
yarn store.

ISSUE OPF WARP FABRIC PRODUCTION:-

On the basis of yarn received in the worsted store, wrap tickets are prepared from the master
card.

MONITORING FABRIC PRODUCTION:-

Loom pieces are inspected by greasy perch is reported and the information is fed to computers.
Fortunate variance report is taken out from the computers.

COMPUTERS PRINT MASTER SUMMARY REPORT:-

The master summary report quality and design wise are printed and a copy is sent to joint
president and V.P(SALES)

DESIGNING PEPARTMENT

the outline of the produce For civil designing is as follows:-

BASIC DESIGN/PATTERN REQUIRMENT:-

Requirement of design patterns (quality wise) is received from sales before commencement of
every range winter or summer.

YARN INDENT:-

Yarn indents are placed form seveloped & feeler making. New shades are selected for top dyeing
& cone dyeing is running qualities. Count, blend and twist/inch are also decided.

BASIC DESIGN/PATTERN DEVELOPMENT:-

Procedure for basic design development includes blend composition, twists, count and shades as
the inputs. To establish a basic design, feeler sample is made & after approval from sales,
designs patterns are developed.

DESIGN PATTERN SELECTION:-

Design wise marked and cut samples made against basic designs are seen by V.P(SALES) &
HOD(designing).

MASTER CARD:-

Master card of approved designs is made.

FEELERS MANUFACTURING:-

Feeler are made to feel, finish & performance of the cloth for basic design and the making
sample folders, flappers etc for booking purpose.

DESIGN APPROVAL:-

Blanket sample is developed in the weaving dept. the weaving department weaves the
department samples as per instruction. The the export flappers of the blankets are sent to
customers/agent for approval.

ORDER:-
Order is received from customer/agent through V.P(export)

DYE HOUSE DEPARTMENT

Dyeing is carried out in following form:-

 1. Fiber dying (loose fiber)

2. Top dyeing(silver form)

3. Yarn dyeing

4. Piece dyeing

The major fiber used is polyester and wool. In dye house top is obtained in ball from and yarn is
obtained in cheese from. 9 machines of capacities from 6Kgs to 500 Kgs are used.

NEW SPINNING DEPARTMENT

Some important terns used in spinning are:-

ROVING:-

Continuous silver produced on rubbing frame or flyer rover for spinning into yarn.

BOBBING:-

A parallel tube on which the roving silver is wound.

WRAPING:-

Determining the weight or length of the silver or count of the yarn by measurement and
weighting.

In spinning section, the roving is further drawn on the ring framne and the single yarn is made.
The yarn is passed through the electronic yarn clearing m/c where the thickness faults such as
fluff, thick or thin places are removed.

GILLING:-

The carded silver is processed on three gilling stages so that:-

1. The fibers are disentangled and laid parallel.

2. The silver wt/length is reduced to around 16gm/m suitable to feed the comb.

3. The silver is made uniform as possible in weight/length.

The process of gilling in three stages:-

 1. GILLING NO 1:- 1 head, 1 delivery

2. GILLING NO 2:-1 head, 1 delivery with auto leveler nit

3. GILLING NO 3:-1 head, 2 deliveries

COMBING:-

The function of combing is to remove the short fibers of predetermined length as noil, to remove
the vegeltable matter, to remove the naps formed in carding operation. The long silvers pass to
form a silver called top.

RECOMBING:-

It is done to further improve the quality.

POST SPINNING DEPARTMENT

After new spinning, the yarn is sent to post spinning:-

AUTOCORNER:-

It winds the yarn from spinning cops on to cons or cheese and makes it a large package. It clears
the yarn of all faults like slubs, naps, thick thin places. Join the ends by splicing.

ASSEMBLY WINDER:-

It winds two single yarns together on to a parallel cheese. It makes suitable packages of about
1.5 Kgs each to feed the TFO.

TWO FOR ONE TWISTER(TFO) :-

It twists the assembly wound yarn. It winds the twisted yarn into the cone or chesse.

YARN STEAMING:-
This is to set the twist and to avoid snarling. The also improves the strength in the yarn to some
extent. The final is sent to auto corner.

AUTOCORNER:-

It is a big chamber form which air con be evacuated, steam can be injected, and temp at desired
level can be maintained.

WEAVING DEPARTMENT

Weaving is basically placement of wrap ( the thread which runs down the length of the cloth) &
weft ( the thread which lies at aright angle to wrap, crossing the fabric from salvage to salvage.

Following functions are being performed in the weaving department:-

SHEDDING:-

It means the vertical separation of wrap threads.

PICKNG:-

It is inspection of weft yarn through the warp sheds.

The speed of picking decides the speed of loom. It is done with the help of shuttle, projectile and
rapier.

BEATING UP:-

It means the pushing the weft yarn into the fell of the cloth by means of read mounted on the
oscillatory slab.

LETTING OFF:-

It is releasing the thread of wrap on the wrap beam.

Some important faults that can occur during weaving are:-

 1. Missing end 8. Read mark

2. Broken end 9. float

3. Wrong end 10. Tight end

4. Missing pick 11. draft

5. Broken pick 12. Brunch

6. Wrong pick 13. Yarn bar

7. Temple cut 14. Abrasion mark

GREASY PERCH:-

The fabric is examined on the perch against light to detect the defects if any.

The defect may be either due to spinning or weaving.

MENDING DEPARTMENT

Basically 2 types of defects are being mended in mending department. These are :-

Defects generated from spinning or due to the raw material. Some of them are:-

1. Thick end

2. Slabs

3. Neps

4. Contamination

Defects generated due to weaving are:-

1. Missing pick
 2. Wrong pick

3. Wrong drafting

All the work in this department is manual and there are 150 menders. I is important to note that
this department has arrangement for music as it has been observed that music improves the
efficiency of the worker to a great extent.

FINISHED DEPARTMENT

The various processes that place in this department are as follows:-

BRUSHING:-

the machine is used to remove any foreign particle on the cloth.

SINGELING:-

The cloth is passed at very high speed (120 mts/p min) over a flame to burn any projecting
threads to smoothen the surface.

SCOURING:-

This process is to clean the cloth with same detergent and rinse it.

HYDRO EXTACTION:-

This is to remove 70% of the water in the cloth by high speed revolution in the machine.

DRY:-

The cloth is heated at 130-140 degrees to remove the remaining water in the cloth.

HEAT:-

In the process, the cloth is heated at 180 degrees (for dyed) or 200 (for white) in the stenter.
CROPING:-

The cutters of this machine cut the loose fibers on the cloth.

PAPER PRESS:-

The dalal irons the cloth to remove the creases.

INSPECTION DEPARTMENT

Here, first of all the cloth is put on the perch machine and viewed against light to detect any
stain, pin, hole etc. for minor defects, a white flag is put on that area and the cloth is sold at a
discount. If the defect id big. It is marked yellow and must be cut off. After this cloth arrives on
the measuring and cutting table.

The material is cut according to its size and a card is attached on with following information:-

QUALITY NO

SHADE NO

PIECE NO

GROOSE Mts

FLAG ALLOWENCE

NET Mts

INSPECTED BY

Next the folding is done. For export it is done. For export it is done in rolls for civil orders it is
done in thans. A stamp having information blended composition/ shade/quality/ month of
manufacturing/ length in meters. Finally the computerized bar coding is done and a slip is
attached on the card previously attached to the cloth.

QUALITY CONTROL LAB

this department maintains a check on quality of the output from each department. Any deviation
is brought to the notice of the concerned department. Raw material is imported from Australia.
 WAREHOUSE DEPARTMENT

The department lays the procedure for stock maintaining, allocation, and dispatch of material,
segregation of material, production summary to sales department, allocations, preparation of
challans, verification of challans, material of packing section, material dispatches to concerned
transport, lorry receipt, and invoicing section for documentation.

THE COMPUTER NETWORK

As mentioned earlier, OCM engaged stands alone PC’s long time ago. They improved the
functioning of the firm to a great extent, but the absence of a network was greatly felt. In 1998,
the computer was physically laid.

PHYSICAL STRUCTURE OF THE NETWORK:-

The network is of mesh type and has two serves, IBM(12GB hard disk, 96MB RAM). These
servers hold all the data and software for the network. The main backbone of the network is an
optimal fiber cable that has been laid form one department to other. The various terminals are
connected to the network by UTB cables at hubs on the main backbone.

Out of total of a 100 pc presently being used, 66 have been connected to the network and the
rests are stand-alone. The client terminals used are Pentiums and Celerons of varying memory
capacities as per requirement. Printers have also been installed wherever required.

OCM India Limited

Balance Sheet as at 31 March 2008

(Amounts in Rupees)
SOURCES OF FUNDS SCHEDULE As at As at

31 March 2008 31 March 2007

Shareholders’ funds 1a 1,103,000,000 133,163,630

Share Capital

Share application money 1b - 1,604,230,000

Reserve and Surplus 2 634,643,630 250,000

Loans fund

Secured loans 3 174,468,222 2,460,000

------------------ ------------------

1,912,111,852 1,740,103,630

-------------------- ------------------

APPLICATION OF FUNDS

Fixed Assets
 Gross block 4 1,622,875,097 1,567,829,712

Less acc. Depreciation 421,070,311 324,343,688

------------------ ------------------

Net block 1,210,804,786 1,243,486,024

Capital work in progress 24,208,165 -

------------------ ------------------

1,226,012,951 1,243,486,024

Investments 5 2,500 9,956

Current assets 6

Inventories 291,367,657 30,644,319

Sundry debtors 381,875,624 131,765,757

Cash and bank balances 43,122,912 69,031,582

Loans and advances 33,635,982 22,907,167

--------------------- ------------------

750,002,175 454,348,825

less: Current liabilities 7

Current liabilities 235,642,678 158,830,695

Provisions 29,931,014 29,649,765

----------------------- ------------------

265,573,692 188,480,460

----------------------- ------------------

Net current assets 484,428,483 265,868,365

Profit and loss account 210,667,918 230,739,285

 --------------------- ------------------

1,912,111,852 1,740,103,630

------------------- ------------------

METHODS OF RAISING CAPITAL

The company raises its capital by the following ways:-

 • Issuing Shares
• Debentures
• Loans

The company procures both secured and unsecured loans from:-

* IRBI

* IDBI

* IFCI

* LIC

* UTI

* GIC

Loans are also taken from Punjab State Industrial Development Cooperative and Gujarat
Housing Board.

WORKING CAPITAL MANAGEMENT

Working capital, also known as net working capital or NWC, is a financial metric which
represents operating liquidity available to a business. Along with fixed assets such as plant and
equipment, working capital is considered a part of operating capital. It is calculated as current
assets minus current liabilities. If current assets are less than current liabilities, an entity has a
working capital deficiency, also called a working capital deficit.

WorkingCapital = CurrentAssets − Current Liabilities

A company can be endowed with assets and profitability but short of liquidity if its assets cannot
readily be converted into cash. Positive working capital is required to ensure that a firm is able to
continue its operations and that it has sufficient funds to satisfy both maturing short-term debt
and upcoming operational expenses. The management of working capital involves managing
inventories, accounts receivable and payable and cash.

Current assets and current liabilities include three accounts which are of special importance.
These accounts represent the areas of the business where managers have the most direct impact:

• accounts receivable (current asset)

• inventory (current assets), and
• accounts payable (current liability)

The current portion of debt (payable within 12 months) is critical, because it represents a short-
term claim to current assets and is often secured by long term assets. Common types of short-
term debt are bank loans and lines of credit.

An increase in working capital indicates that the business has either increased current assets (that
is received cash, or other current assets) or has decreased current liabilities, for example has
paid off some short-term creditors.

NEED FOR WORKING CAPITAL

One of the basic objective of the financial management is to maximize the shareholders wealth
and for this it is important to generate sufficient profits. The extent to which these profits can b
earned depends upon the magnitutde os sales. Sales however do not convert into cash instantly.
There is an invariable time gap between the sales of the goods and the receipts os cash.
Therefore there is a need of Working capital in the form of current to deal with the situation
arising of the lack of immediate realization of the cash against goods sold. There is an operating
cycle involved in the sales and the realization of the cash. During this time lag Working capital is
required for the following reasons:

• Purchase of the raw material

• To pay wages

• To incur overhead cost such as fuel

• To meet the selling cost like packing,advertising etc.

• To provide credit facility to customers and so on

Operating or Working Cycle:

Operating cycle is the continuing flow from cash to suppliers to inventory to accounta receivable
and back into cash. It involves Three Processes:

• Acquisition of resources such as raw material,power,fuel

• Manufacturing unit of the product that includes conversion of raw material into work in
progress into finished products

• Sales of product either for cash or on credit. Credit sales create book debts for collection

IMPORTANCE OF ADEQUATE WORKING CAPITAL

 Working Capital is very essential to maintain the smooth running of a business. No
business can run successfully without an adequate amount of Working capital. The main
advantages of maintaining adequate amount of working capital are as follows:-

1. Solvency of the business

2. Goodwill
3. Easy Loans
4. Cash Discounts
5. Regular supply of Raw Materials
6. Regular payment of Salaries, Wages and Other day-to-day commitments
7. Exploitation of favorable market conditions
8. Ability to face crisis
9. Quick and Regular return on Investment
10. High morale

CONCEPT OF WORKING CAPITAL

There are two concepts of working capital :-

* Gross Working Capital

* Net Working Capital

The Gross Working Capital is the capital invested in total current assets of the enterprise. It
focuses on the following aspects of current assets management:-

 Optimum investment in current assets

 Financing of current assets

Excessive and inadequate investment in current assets should be avoided. Excessive investment
results on idle investment. On the other hand inadequate working capital may lead to solvency of
the firm. If it fails to meet the obligations then the management needs to strike a balance between
the two aspects.

Secondly whenever the need to work due to increasing level of business activity arises, it
should be procured promptly. At the same time the surplus funds should be made available and
should be immediately invested in short term securities.
 Current Assets Current Liabilities
Cash in hand / at bank Bills Payable
Bills Receivable Sundry Creditors
Sundry Debtors Outstanding expenses
Short term loans Accrued expenses
Investors/ stock Bank Over draft
Temporary investment
Prepaid expenses
Accrued incomes

One of the most important areas of finance to monitor is your company's working capital, which
is the difference between current assets and current liabilities. As a small business owner, you
must constantly be alert to changes in working capital and their implications; otherwise, you may
miss some warning signs that can lead to business failure. The most important component of
working capital is cash, far the most important asset of any business, particularly a small
business. Without it, the business will fail. So it is of paramount importance for you as the
business owner to control all cash transactions.

It is helpful for us, as a business owner, to think of working capital in terms of

five components:

1. Cash and equivalents. This most liquid form of working capital requires constant
supervision. A good cash budgeting and forecasting system provides answers to key questions
such as: Is the cash level adequate to meet current expenses as they come due? What is the
timing relationship between cash inflow and outflow? When will peak cash needs occur? When
and how much bank borrowing will be needed to meet any cash shortfalls? When will repayment
be expected and will the cash flow cover it?

2. Accounts receivable. Many businesses extend credit to their customers. If you do, is the
amount of accounts receivable reasonable relative to sales? How rapidly are receivables being
collected? Which customers are slow to pay and what should be done about them?

3. Inventory. Inventory is often as much as 50 percent of a firm's current assets, so naturally it

requires continual scrutiny. Is the inventory level reasonable compared with sales and the nature
of your business? What's the rate of inventory turnover compared with other companies in your
type of business?

4. Accounts payable. Financing by suppliers is common in small business; it is one of the major
sources of funds for entrepreneurs. Is the amount of money owed suppliers reasonable relative to
what you purchase? What is your firm's payment policy doing to enhance or detract from your
credit rating?

5. Accrued expenses and taxes payable. These are obligations of your company at any given
time and represent a future outflow of cash.

Working Capital policy

Estimation / forecast of working capital requirements

"Working capital is the life blood & controlling nerve centre of a business." No business can be
successfully run without an adequate amount of working capital.
 • To avoid the shortage of working capital at once, an estimate of working capital
requirement should be made in advance.
• But estimation of working capital requirements is not an easy task & a large no. of
factors has to be considered before starting this.

Factors requiring consideration while estimating working capital.

• The average credit period expected to be allowed by suppliers.

• Total costs incurred on material, wages.
• The length of time for which raw material are to remain in stores before they are issued
for production.
• The length of the production cycle (or) work in process.
• The length of sales cycle during which finished goods are to be kept waiting for sales.
• The average period of credit allowed to customers
• Other factors.

PERMANENT AND VARIABLE WORKING CAPITAL

The need of current assets arises because of operating cycle. The operating cycle is a
continues process and therefore the need for the current assets is felt constantly. But the
magnitude of current assets need is not always same. It increases and decreases over time.
However there is always a minimum level of current assts which are always requireed by the
firm to carry on the business operations. The minimum level of the current assets is refered to as
permanent or fixed working capital. It is permanent in the same way as the firm’s fixed asseta
are depending upon the changes in the production and sales.

The need for the working capital over and above the permanent working capital will
fluctuate. For exzmple: Extrainventory and finished goods have to be maintained to support the
peak periods of sales and investment in receivable may also increase during such periods.
 On the other hand investment in raw material, work in progress and finished goods will fall.
The extra working capital needed to support the changing production and sales activities are
called fluctuating or temporary or variable working capital. Both kinds of working capital-
permanent as well as temporary are necessary to facilitate production and sales through the
operating cycle.

But temporary working capital is created bt the firm to meet the liquidity requiments that will
be able to compensate only temporary differences between the temporary and permanent
working capital. The permanent working capital is believed to be stable over a period of time.
While the temporary working capital is fluctuating,sometimes increases and sometimes
decreases.

However, the permanent working capital line need not be horizontal if the firm’s requirement
for the permanent capital is increasing over a period of time. For a growing firm the difference
between the permanent and temporary working capital may be depicted.

METHODS OF WORKING CAPITAL

The methods of the working capital are as follows:-

 1. Matching approach

2. Conservative approach

3. Aggressive approach

MATCHING APPROACH

The firm can adopt a financial plan which matches the expected life of assets with expected
life of sources of the funds raised to finance assets. Thus a ten years loan may be raised to be
finances with an expected life of ten years.

Stock of goods to be sold off in thirty days may be financed with the thirty days commercial
paper or bank loan.

CONSERVATIVE APPROACH

A firm in practice may adopt a conservative approach in financing its current as well as fixed
assets. Under the conservative plan the firm finances the permanent assets and also a part of
temporary assets with long term financing in the period when the firm has no need for temporary
current assets with long term financing.

In this period when the firm has no need for temporary current assets then the long term funds
can be invested in the tangible securities to conserve the liquidity.

AGGRESSIVE APPROACH

An aggressive approach policy is to be followed by the firm when it uses more short term
finances than warranted by the matching plan. Under the aggressive approach the firms finances
a part of permanent assets with the short term finance. Some extremely aggressive firms may
even finance a part of their fixed assets with the short term finance. The relative short term
finances make the firm more risky.

WORKING CAPITAL CYCLE

Cash flows in a cycle into, around and out of a business. It is the business's life
blood and every manager's primary task is to help keep it flowing and to use the cash flow to
generate profits. If a business is operating profitably, then it should, in theory, generate cash
surpluses. If it doesn't generate surpluses, the business will eventually run out of cash and expire.
The faster a business expands, the more cash it will need for working capital and investment.
The cheapest and best sources of cash exist as working capital right within business. Good
management of working capital will generate cash will help improve profits and reduce risks.

DEBTORS
(Received)
SALES

CASH FINISHED
GOODS

RAW MATERIAL WORK-IN-PROGRESS

PERMANENT AND VARIABLE WORKING CAPITAL

The need of current assets arises because of operating cycle. The operating cycle is a
continues process and therefore the need for the current assets is felt constantly. But the
magnitude of current assets need is not always same. It increases and decreases over time.
However there is always a minimum level of current assts which are always requireed by the
firm to carry on the business operations. The minimum level of the current assets is refered to as
permanent or fixed working capital. It is permanent in the same way as the firm’s fixed asseta
are depending upon the changes in the production and sales.

The need for the working capital over and above the permanent working capital will
fluctuate. For exzmple: Extrainventory and finished goods have to be maintained to support the
peak periods of sales and investment in receivable may also increase during such periods.

On the other hand investment in raw material, work in progress and finished goods will fall.
The extra working capital needed to support the changing production and sales activities are
called fluctuating or temporary or variable working capital. Both kinds of working capital-
permanent as well as temporary are necessary to facilitate production and sales through the
operating cycle.

But temporary working capital is created bt the firm to meet the liquidity requiments that will
be able to compensate only temporary differences between the temporary and permanent
working capital. The permanent working capital is believed to be stable over a period of time.
While the temporary working capital is fluctuating,sometimes increases and sometimes
decreases.

However, the permanent working capital line need not be horizontal if the firm’s requirement
for the permanent capital is increasing over a period of time. For a growing firm the difference
between the permanent and temporary working capital may be depicted.

FINANCIAL STATEMENT ANALYSIS

In OCM woolen mill there are three main types of current assets:-

1. Stock

2. Sundry debtors

3. Cash

Stock consists of

* Raw material and components

* Stores and spare parts

* Stock in process

* Finished goods

Debtors consist of

♦ Debt over six months

♦ Other departments

Cash includes

 Cash in hand
 Cash current account
 Fixed account
The total current assets available together constitute the gross working capital of a company.
Therefore, the calculation of gross of working capital would be as follow

Stocks
Particulars 2006 2007 2008
Raw material 29541657 25381734 83170729

Work in process 39385321 35845838 70624168

Stores and spares 32494380 30369654 33284652

Finished goods 173344236 138497501 103458859

Other stock 331750 549592 829249

Total stock 275097344 2306444390 291367657

Debtors
Particulars 2006 2007 2008

Over six months 15159509 55639817 814444414

Other debtors 162317184 175774239 423342813

Total debtors 177476693 131765757 381875624

Cash
Particulars 2006 2007 2008

Cash 276837 71645 221360

Current account 745530 4555244 2739552

Fixed deposit 22000 64404693 40162000

Total cash 130569 69031582 43122912

Gross Working Capital

Particulars 2006 2007 2008

GWC 489363156 454348825 750002175

Growth rate 37.82% 92.8% 153.26%

GROWTH RATE OF GROSS WORKING CAPITAL

10000000
9000000
8000000
7000000
6000000
Cash
5000000
Sales
4000000
GWC
3000000
2000000
1000000
0
2006 2007 2008

SALES
Particulars 2006 2007 2008
Sales 796261233 522133945 966065240

Growth rate 110.7% 65.5% 121.32%

Particulars Current Sales Percentage of Growth rate Growth rate

Assets C.A. to sales of sales of C.A.

2006 489363156 796261233 61.56% 110.7% 37.82%

2007 454348825 522133945 87.01% 65.5% 92.8%

2008 750002175 966065240 77.63% 121.32% 153.26%

The growth rate of current assets and sales in the year 2006 & 2007 is low as compared to the
year 2008. In the year 2008 the growth rate of current assets and sales has shown remarkable
increase.

NET WORKING CAPITAL

The net working capital assures the firm’s potential reservoir of funds. It is that part of
current assets that is left over after the part of current assets financed through current liabilities.
The net working capital of OCM has increased to a great over the years although the growth rate
is very poor. It has increased in the year of 1998 and 1999, but has decreased in the year 2000
and 2001. Again it is increased in the year 2002, but its growth rate was not so good.

CALCULATION OF NWC

Particulars 2006 2007 2008

Current assets 489363156 454348825 750002175

Total current 173554360 188480460 265573692

liabilities

NWC 662917516 265868365 484428483

GROWTH RATE OF CURRENT LIABILITIES, NWC

Particulars 2006 2007 2008

Current liabilities 173554360 188480460 265573692

Growth rate 108.6% 153.02%

NWC 662917516 265868365 484428483

Growth rate 87.5% 159.55%

90
80
70
60
50 Current Liab.
40 Growth Rate
30 NWC
20
10
0
2006 2007 2008

Cash Management

Cash is the most important current assets needed for the uninterrupted and efficient flow of
various operation of a firm. Cash basically is the business at all times. It is also the ultimate
output that is expected to be realized by selling of the product or service of a particular firm. In a
narrower sense cash is used to cover currency and generally accepted equivalent of a cash. Such
as cheques, drafts and demand deposits in banks. However a broader meaning of it includes near
cash assets marketable securities and time deposits. In banks that are characterized as being
reserve pool of liquidity that can be readily sold and converted into cash. They also provide a
short term investment outlet for excess cash.

Cash is money that is easily accessible either in the bank or in the business. It is not inventory, it
is not accounts receivable, and it is not property. These might be converted to cash at some
point in time, but it takes cash on hand or in the bank to pay suppliers, to pay the rent, and to
meet the payroll. Profit growth does not always mean more cash.

Profit is the amount of money you expect to make if all customers paid on time and if your
expenses were spread out evenly over the time period being measured. However, it is not your
day-to-day reality. Cash is what you must have to keep the doors of your business open. Over
time, a company's profits are of little value if they are not accompanied by positive net cash
flow. You can't spend profit; you can only spend cash.

Cash Flow refers to the flow of cash into and out of a business over a period of time. The
outflow of cash is measured by the money you pay every month to salaries, suppliers, and
creditors. The inflows are the cash you receive from customers, lenders, and investors.

Positive Cash Flow

If the cash coming into the business is more than the cash going out of the business, the
company has a positive cash flow. A positive cash flow is very good and the only
concern here is managing the excess cash prudently.

Negative Cash Flow

If the cash going out of the business is more than the cash coming into the business, the
company has a negative cash flow. A negative cash flow can be caused by a number of
problems that result in a shortage of cash, such as too much or obsolete inventory, or
poor collections on accounts receivable. If the company doesn't have money in the bank
or can't borrow additional cash at this point, it may be in serious trouble.

A Cash Flow Statement is typically divided into three components so that you can see and
understand both the internal and external sources and uses of cash.

1. Operating Cash Flow (Internal)

Operating cash flow, often referred to as working capital, is the cash flow generated
from internal operations. It is the cash generated from sales of the product or service of
your business. Because it is generated internally, it is under your control.
2. Investing Cash Flow (Internal)
Investing cash flow is generated internally from non-operating activities. This
component would include investments in plant and equipment or other fixed assets,
nonrecurring gains or losses, or other sources and uses of cash outside of normal
 operations.
3. Financing Cash Flow (External)
Financing cash flow is the cash to and from external sources, such as lenders, investors
and shareholders. A new loan, the repayment of a loan, the issuance of stock and the
payment of dividend are some of the activities that would be included in this section of
the cash flow statement.

Good cash management means:

• Knowing when, where, and how your cash needs will occur,
• Knowing what the best sources are for meeting additional cash needs; and,
• Being prepared to meet these needs when they occur, by keeping good relationships with
bankers and other creditors.

The starting point for avoiding a cash crisis is to develop a cash flow projection. Smart business
owners know how to develop both short-term (weekly, monthly) cash flow projections to help
them manage daily cash, and long-term (annual, 3-5 year) cash flow projections to help them
develop the necessary capital strategy to meet their business needs. They also prepare and use
historical cash flow statements to gain an understanding about where all the money went.

CollectionCollect
Collection

Information and control Borrowed and Invest

Payments

Cash Management Cycle

Explanation :
 Sales generate cash which has to be disbursed out. The surplus cash has to be
invested while the deposit has to be borrowed cash management seeks to accomplish this cycle,
at a minimum cost at the same time it also seeks to achieve liquidity and control.

In order to cash the uncertainity regarding the cash flow production an efficient cash
management should follow following steps:

Cash Planning :
Cash inflows and outflows should be planned to project cash surplus or
depict for each part of the planning period. Cash budget should be prepared for this purpose.

Managing cash flows:

The flow of cash should be so managed. The cash inflows should be
accelerated while, as far as possible, the cash outflows should be decelerated.

Optimum cash level:

The firm should decide about the appropriate level of cash balances. The
cost of excess cash and danger of cash deficiency should be matched to determine the
optimum level of cash balances.

Investing surplus cash:

The surplus cash balance should be properly invested to earn profits. The
firm should be properly invested to earn profits. The firm should decide about the division of
such cash balance between alternative short term investment opportunities such as bank
deposits, marketable securities or incorporate lending.

MOTIVES FOR HOLDING CASH

The firm need to hold the cash may be attributed to the following three motives:

• Transaction motive
• Precautionary motive
• Speculative motive
• Compensation motive

Basic strategies of OCM to manage the cash:

1. Stretching accounts payable

This implies that the firm pay its accouts payable as late as possible without
damaging its credit standing. However cash discount available on prompt payment
should also availed off.

2. Efficient inventory production management

Another strategy is to increase the inventory turnover rate avoiding stock out for
shorage of stock by increasing the rawmaterial turnover, decreasing the production
cycle or increasing the finished goods.

3. Speeding collection of accounts receivable

This refers to the quick collection of receivables without loosing future sales. The
average collection period of receivable can be reduced by changes in the credit terms,
credit standards and collection policies.

OCM woollen mills has recently decreased the interest rates by 1% due to reduction
in the RBI monetary policy.

The product manufactured in the OCM woollen mills is such that the sales is
seasonal in nature. The lean season is from April to August during which the
realization is comparatively less. Although during rest of the year, the realization
averages of about 65- 70 lacs. To ensure speedy collection of receivables, firstly the
firm grants a free of interest period to its customers. This is 15 to 20 days depending
on the reputation of the customer. During this period, no interest is charged from the
customers. Although, in case of delay in payment of the expiry of this period. The
following rates are charged

22 – 45 days - 18%

45 – 65 days - 20%

60 – 75 days - 22%
 90 onwards - 26%

Secondly cash discount is offered to the customers by the firm regularly. Sometimes the
company announces some special offers to specify the debt recovery which is bound by a
particular condition that the customer would be required to pay particular percentage of the total
payment. Initially to be entered for the cash discount. Thirdly , the firm has increased the
customer management services network. Earlier 20 banks offerings the facility of cash
collection, now the number has increased to 27.

DEBTORS POLICIES IN OCM:

Material is supplied to the party when the parties pay the invoices. Invoices are paid by the
suppliers by 2 ways. The two ways are as follows:

• Through Bank
• Direct Payment

• THROUGH BANK: Suppliers can make the payment through Bank. This is a risky way
of payment for the company. Through bank payment can be by two ways that are as
follows:

• DA (Documents against Acceptance)

• DP (Documents against Payments)

In DA, bank give the documents to the suppliers and suppliers accepts the documents. He
does not give the money at the time but he makes promise to pay the payment. Bank give the
document on the bases of suppliiers promise to pay.

In DP, direct payment is made by the suppliers. Bank take payment from the suppliers and
give him the documents.

• DIRECT PAYMENT: In this mode, payment is made directly. It can be made by

cheque,draft and the centres of OCM mills. The centers of OCM MILLS are HDFC
Bank and Corporation Bank. Payment are received mostly by this method.

CREDIT NOTES: These are given to the customers. 10% discount is given to the items
that have minor defects and the items having major defects are not sent for sales. Goods are
taken back in the later case.

SALES POLICY:

FOI (FREE OF INTREST POLICY): These are for the suppliers of the company. The policy
is different for different suppliers depending upon the partues. A specific time period is given
to the suppliers to pay the payment of the goods. Time period given depends upon the
amount os payment that suppliers have to pay. In this time period no intrest is charged from
the suppliers.
Suppliers can make payment:

• 10 lac upto 30 days

• 10 to 15 lac upto 45 days

• Above 50 lac a time period of 60 days

INTREST POLICY:

The parties that make late payment intrest is charged from them. Intrest is given to the parties
that make early payment.

The parties that make Early payment intrest is given as follows:

• If the parties makes payment within 15 days then 18% intrest is given to those
suppliers

• If the parties make payment after 15 days then 15% intrest is given to suppliers

The parties that make Late payment, intrest is charged from them as follows:

• If the payment is made within 60 days after the due date then 15%intrest is charged
from them

• If the is made after 60 days intrest charged is 18 %

INCENTIVES:

To promote the sales, Incentives are given to the suppliers depend upon their amount of
payment. It is between 1 to 5 %. It is as follows:

Amount(in lakhs) Incentives(in %)

 upto 2.50 NIL

2.51-3.00 1.50

3.01-5.00 2.00

5.01-8.00 2.50

8.01-10.00 3.00

10.01-15.00 3.50

15.01-25.00 4.00

25.01-50.00 4 .50

Above 50 5.00

The suppliers have to pay 12% intrest per annum as a security deposit.

RAW MATERIAL MANAGEMENT IN OCM

Raw material is purchased from domestic & international market in the form of wool and
polyester after getting requirement from the production planning department.

 Wool is generally imported from Australia while polyester is purchased from domestic
market.
 Wool is having different qualities such as 22.5 micro, 21micro, 19.5 micro, 18.5
micro, 17.5 micro.
 Polyester is having generally two categories 2.5 denier & 3.0denier.

REQUIREMENT FROM PRODUCTION PLANNING DEPART.

 To call quotations from different suppliers as per requirement of procurement from raw
material.
  Accordingly, order is placed to the supplier as per agreed terms and conditions which
are better for procurement.
 The payment of term is under Letter Of Credit (L/C) or by cheque or directly.
 In case of L/C, the L/C is open for DA period that is 30 days, 60 days, 90 days, 120
days & 180 days for making the payment of shipped concinement on maturity date.
 L/C bank inform to the supplier through their bankers
 The supplier will get the L/C and arrange shipment of the material as per order &
negotiates the documents through bank. The same will be delivered to the L/C opening
bank.
 L/C opening bank will receive the documents and inform to the buyer with request to
accept the same. After this the bank will hand over the original document to the buyer.
The buyer will collect the document forwarding to CHA (clearing house agent) to get the
conginement clear from the customs. After clearance, the wool tops, the same will be
return to the buyer.
 Wool top supply to spinning department for conversion into yarn for making fabric.

SWOT ANALYSIS

STRENGTHS
  The Biggest strength of OCMMILLS is its latest technology and imported machinery.
Moreover, versatility is synonymous to OCM, since the company has diversified into
production of carpets, yarn, blankets, tweeds and trousers making to become one of
the leading names in the high quality fabrics.

 In North India, the brand is perceived to be premium and reliable brand because of its
presence in the market for ever eight decades.

 The production capabilities of OCM are tremendous so as to meet the growing

demand with ease. Its total current production is 12.9 million meters and can go upto
23 millions meters at full maturity. OCM will then be the fifth worsted mill at full
maturity.

 Another Major strength is that the company’s operations are fully integrated i.e. every
operation is in house right from manufacturing of yarn to fabric production.

WEAKNESSES

 The main weakness of OCM is a conventional distribution channel. The company relies
mainly on the agents for the promotion. Thus, there is always a chance that the agents
might neglect their work to earn better margins.

 The plant is located in the city of Amritsar which is very far off for the people of south
and west which makes then little hesitate to purchases.

 The brands positioning is wrong. It is still perceived to be the older brand. This
perception goes against it when compared with more known brands like Raymonds,
Grasim and other foreign brands.
  The company’s capacity is too high. Thus the fixed cost remains the same at any amount
of production.

OPPORTUNITIES

 The biggest opportunity in India and overseas is the growing popularity of

Readymade units.

 The company can set up its own readymade units to increase the utilization of its
finished products.

 In today’s phase of recession small units are rather lacking back. OCM can take
advantages of this situation.

THREATS

 The biggest threat to OCM Mills is the growing popularity of the cotton fabrics and thus
the cotton producing units in India and abroad.

 Raymond Suitings has always been the major competitor of the OCM. With the market
share of 44% Raymond (turnover-1200 crores) today stands at the number one position in
the Indian Worsted Market. It has achieved such popularity through its innovation, a
strong distribution channels and a positive brand image.
  The converters i.e. units establish exclusively to convert fabric into readymade garments
pose the biggest threat to OCM since they usually buy cheaper material of not so known
brand.

SUGGESTIONS:

 For Cash Management, the company largely depends upon the short-term sources
of fund. Instead there should be a more systematic procedure of investing in the
 short term securities. So far such decisions are centralized and lie in the hands of
head office.

 There needs to be a more de-centralization in this respect so that more could be

invested in short term securities which can be realized at any time to pay the short
term liabilities.

 The company’s ratio analysis shows too much of surplus liquidity in the hands of
company. This should not be left idle and should be invested.

 The company should make disbursement from a centralization account so that

smaller cash balance is needed at each branch and Secondly, the company would
be able to convert the schedules tightly and it would be easier to make
disbursement on the right day. In order to hasten the account receivable the
company can adopt the lock box system which would ensure quick recovery of
receivables/

 The main advantage of the lock box system to OCM would be:

o The banks of OCM would be able to handle the remittances prior to

deposits at a lower cost.

o The processing time of such remittance is reduced since their collection

process becomes faster if OCM would have processed them for internal
accounting purpose prior to their deposit in the box. This box can still be
done the banks without delaying the collection.

 The major advantage of accelerating the collection is to reduce the firm’s total
financing requirement.

 Also by transferring the clerical functions the firm can reduce it’s cost.

 Another important strategy to speed up the accounts receivable could be that

company takes advantage of the factoring technique. This would help in
converting the receivables into productive assets.

BIBLIOGRAPHY
 I. GUPTA, SHASHI.K - FINANCIAL MANAGEMENT

II. PANDEY I M, - FINANCIAL MANAGEMENT

III. BHATACHARYA S.K.- ACCOUNTING FOR MANAGEMENT

IV. WWW.OCM.IN

V. WWW.GOOGLE.COM

VI. FINAL ACCOUNTS OF OCM

VII. THE REAL THINGS- BUSINESS INDIA

VIII. http://money.rediff.com/companies/ocm