Kota Fibres Case Essays

1126 Words Feb 7th, 2012 5 Pages
Table of Contents
Executive Summary……………………………….Page 2
External Analysis………………………………….Page 3
Internal Analysis…………………………………..Page 3
Financial Analysis…………………………………Page 4
Recommendation and Conclusion…………..……Page 4

Executive Summary
Kota Fibres is a single nylon manufacturing plant in Kota India managed and owed by Ms. Pundir. The company produces synthetic fiber yarns that are used to make colorful cloth used in creating saris. The need for saris’ is very seasonal and as such the demand for synthetic fibers mirrors this seasonality. Because of these peak seasons, the need for various financial structures throughout the year is present.
The synthetic textile industry is currently stable within India with seasonal fluctuations.
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Finally yarn manufacturers supply credit to their textile mills. It is important to note that the yarn manufacturers like Kota Fibres do not receive any credit from their suppliers. It is within this hierarchy structure that Kota Fibres operates and as a result Kota Fibres should remain mindful of the industry as a whole because they rely heavily on the downstream activities.
The memo from the transportation manager provides a more positive outlook on Kota Fibres future operations. The memo details that the new road has drastically improved supply shipments. This thereby reduces the raw inventory requirement from 60 days to just 30. This decreases the amount of inventory costs and increases the amount of cash on hand that the firm will have.
Internal Analysis
Kota Fibres’ liquidity issues are creating problems when paying the excise tax needed in order to move their product. In addition to the cash shortages, Kota Fibres is not paying creditors on time or in the correct amounts this is creating a huge financial strain on the organization and this issue needs to be addressed.
Ms. Pundir is currently paying high dividends to the companies stakeholders; this is a huge concern to the company’s overall profitability. Currently more emphasis is being placed on the payment of dividends than the payment to creditors.
Currently the organization has uneven levels of production. This creates uneven demand for labour and as a result layoffs

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