A CASE STUDY ON BBC PVT. LTD.

Presented By: Group B

Aishwarya D
Abdullah A.
Aishwarya M.
Abhijeet D.
Hemant
Darshan
Amit
Akshay
Anjali M.
 INTRODUCTION
BBC Pvt Ltd Chemical manufacturing company
established in 2004
Headquarters are located in Banglore
Manufacturing plant is located in Lucknow
2 Directors Arpit Agarwal & Mukesh Kumar
Company purchases its raw material from Sonbhadra,UP
 FACTS OF THE CASE
Small scale industry also called as chemical or
hazardous industry.
Price fluctuation rate depends upon capacity of
supplier to store, sales, maintenance
2 Types of manufacturing techniques was
1. Better quality of product
2. Inferior quality of product
Competitiors of company were : Aditya Birla
Grp,DCM Grp,Crasim Industry Ltd,etc.
Type of customer category
1. Govt Account
2. Private Account
BBC was carrying existing unsecured loans that
lead to paid interest more than INR 600000 p.a.
 ANALYSIS
Company management system was conservative
& traditional.
Debtors receivable turnover ratio had ranged
from 2.9 3.2 Times from last 3 F.Y.
Company maintained cash credit limit of INR
2.5m with union bank of India.
Company was facing lack of storage facility
because of restriction of place & high rate of
inventory.
Inferior quality with low cost of product which
lead to decrease the growth rate of the company.
 FINANCIAL OVERVIEW
2010-11 Company earned less profit as compare
to 2009 because of sales reduction
Current asset > Current liabilities

Net working capital = Current asset-current

liability
Net working capital of 2010-11 decreasing highly

Proportionate than 2009 because of increasing

debtors & liabilities of company
 PROBLEMS
Lack of working capital
Fluctuating rate of raw material

Low cost of product with inferior quality

Lack of storage capacity

High rate of inventory

Not adequate availability of liquid cash

 SOLUTION
Company needs to keep reserve & surplus for
future uncertainty.
Company needs proper allocation of inventories
as per precautionary motive, transaction motive ,
speculative motive which help the company to
reduce inventory turnover
Company needs to reduce credit period of debtors
which help company to have sufficient cash flow.
Techniques such as EOQ, Inventory
management, and cash budgeting should be
adopted.
 IMPROVE WORKING
CAPITAL MANAGEMENT ?
Yes , company should need to improve its
working capital management because of
1. Normal current adequate ratio is 2:1
2. Companys inadequate ratio was 10:1
3. Need to increase liquid cash flow
4. Need to keep sufficient reserve & surplus for
future activity
5. Company need to maintain capital budgeting
for smooth flow of financial resources
 CONCLUSION
From the case we would like to conclude that
companys financial policy was unsatisfactory
Company must reconstruct the financial policy

Company must invest funds in short term

investment to maintain the cash flow