A Comprehensive Study on Cash Management Services (CMS) in Berger paints India Ltd-British Paints Division

Under the guidance of: Mr. M.A. Mateen VP (F&A),BPIL .

Prepared By: Nishant Gupta MBA 3rd Sem FMS(BHU)

Flow Of Presentation
Industry Profile Company Profile Analysis Of Financial Statement SWOT Analysis Research Methodology Findings Suggestions

Industry Profile
The Market Size of Indian paint Industry is Rs. 170bn in value terms. Per Capita Consumption of Paints in India 800-900gms as compared to 15-25kg in developed Countries. Growth rate in Organized sector 15-17%p.a.

HISTORY
Genesis in 1919 in united kingdom Name changed from British Paints India Ltd to Berger paints India Ltd in 1983. Berger Paints goes on to become Indias second largest paint company with its four SBUs LEWIS BERGER And RAJDOOT, BAICL and NEPAL DIVISION BERGER PAINTS takes over all assets and liabilities of RAJDOOT SBU in 1999.

Company Profile
PRESENT in INDIA as BERGER PAINTS INDIA LIMITED LEWIS BERGER & BRITISH PAINTS (NOW INDIAS SECOND LARGEST PAINT COMPANY)

BERGER BECKER COATINGS PRIVATE LIMITED

INTERNATIONAL OPERATIONS IN : NEPAL, BANGLADESH, RUSSIA, POLAND

INFRASTRUCTURE
HEAD OFFICE of BRITISH PAINTS is LOCATED IN NEW DELHI. FACTORIES IN SIKANDRABAD, SAMBA, DEVLA & SURAJPUR. HAVE 37 DEPOTS PRESENT IN 6 REGIONS:

Organizational Structure

BPIL Chairman MD

President
V.P. (Production) V.P. (Purchase)

V.P. (Sales & Marketing)

H.R. Manager

V.P. (Finance & Accounts)

Commercial Manager

Manager ISD

Chief Manager F&A

Sr. Manager Factory

Audit Head

Financial Analysis
Ratio and Statistics Liquidity Ratio Current Ratio Quick Ratio Profitability Ratio Gross Profit Margin Net Profit Margin 8.88 7.02 7.08 5.79 8.69 6.79 1.81 0.89 1.34 1.10 1.15 1.08 2009-2010 2008-2009 2007-2008

Leverage Ratio

2009-2010

2008-2009

2007-2008

Debt equity Ratio Equity Ratio Interest Coverage Ratio Activity Ratio Inventory Turnover Ratio Debtors Turnover Ratio

0.04 0.96 64times

0.19 0.84 10times

0.35 0.74 12times

6.09

6.64

5.92

8.76

8.92

8.87

 Second Largest Paint Company in India. Large distribution Network.

Uses push strategy as the only promotional tool. Low sell of industrial paints

S
Stiff Competition from other paint companies. Entry of global Players.

W O
Increasing Per Capita consumption of paint Growth rate 0f 1517%.

CONCEPT OF CASH MANAGEMENT SERVICES

 Cash management services (CMS) are generally offered by banks for speedy collection and faster realization of cheques to a business firm.  Successful cash management involves not only avoiding insolvency, but also reducing days in account receivables (AR), increasing collection rates

Cash Management Services offered by different banks:

 Cash Concentration Services: Prevents funds in accounts from being idle and not earning sufficient interest . Primary bank "pull" the money from other accounts into a single interestbearing bank account.  Automated Clearing House: This is an electronic system used to transfer funds between banks.  Sweep Accounts: Excess funds from a company's bank accounts are automatically moved into a money market mutual fund overnight and moved back the next morning.

Zero Balance Accounting: This allows the company to look at individual statements for each unit. Lockbox services: Instead of mailing checks to the firm, customers mail checks to a nearby P.O. Box. A commercial bank collects and deposits the checks. This reduces mail float, processing float.

Research

Research Methodology
Research Objective: To observe any improvement in terms of Cheque Realization Period after implementation of CMS

Secondary Objectives
To analyze Cash Management Services availed by BPIL. Compare ease of Banking in terms of services provided before and after availing Cash Management Services.

To compare the CMS service provided by two different Banks to depots

Primary Objectives

Research design:
The research design used is Experimental. Selecting the Samples through Convenience. Measuring the responses before exposing it to the Experiment. Exposing the respondents to the Experiment. Tools Used: Tool Used is Descriptive Statistics. Types of Data collected: Primary Data: Companys Internal Reports Secondary Data: Secondary data collected from various banks websites.

Sampling: Convenience Sampling Population: All the Cheques BPIL received in the month of Feb11
and March 11

Sample size: 582 (the Cheque realization from 3 Depots have been
taken as samples)

Location: British paints India limited ( Head office New Delhi) Duration: 2 months Data: Internal records

Comparative study between two different banks provided to two different Depots
1) Ajmeri Gate Depot-ICICI Bank 2) Sultanpur Depot- IDBI Bank

AJMERI GATE DEPOT

CMS service is provided by ICICI Bank Total No. of cheques studied in the month of Feb and March
NO. OF CHEQUES

80 140

FEB
MARCH

Local Cheques: In the month of Feb. & March 2011 Clearance of cheques was done in 2.36 days on an avg.
No. of cheques

19

Favourable Unfavourable

201

SULTANPUR DEPOT
CMS service is provided by IDBI Bank Total No. of cheques studied in the month of Feb 2011 and March 2011
NO. OF CHEQUES

50 82

FEB
MARCH

Local Cheques: In the month of Feb. & March 2011 Clearance of cheques was done in 2.92 days on an avg.
No. of cheques

16

Favourable Unfavourable

116

IDBI BANK CMS SERVICE Charges

Local clearing charges Rs.0.10/ Rs.1000 Upcountry cheque clearing charges Rs.0.08/ Rs.1000 Cheque return charges Rs. 50/instrument Cheque collection fee Rs. 300 per centre Outside network collection cheque Rs. 2.50/Rs.1000 No minimum charges applicable

ICICI BANK CMS SERVICE Charges

Local clearing charges Rs.0.07/ Rs.1000, Min. Charges NIL Upcountry cheque clearing charges Rs.0.08/ Rs.1000, Min. Charge Rs 20 Cheque return charges Rs. 75/instrument Cheque collection fee Rs. 300 per centre Outside network collection cheque Rs. 2.00/Rs.1000 On all upcountry there is a minimum charge of Rs. 20

Comprehensive analysis of CMS and non-CMS in Jammu Depot

In Jammu depot CMS service from SBI Bank is implemented in Jan end 2011 CMS implementation affects the floating* time of cheques *Float time is time taken to realize the cheque amount

Jammu Depot:
In the month of Jan 2011: Avg. Clearance days of cheques was 3.18 days In the Month of March 2011: Avg. clearance days of cheques was 2.26 days after availing of CMS from SBI

Avg. Float Days

3.5 3 2.5 2 1.5 1 0.5 0 Jan March

Avg Float Days

Out of total sample of 115 cheques in each case, no. of unfavorable cases in the month of January 2011 is more in comparison to March 2011
9

MARCH
17

JAN

Favourable 106 unfavourable

Favourable Unfavourable

98

Service provided by ICICI Bank is at par to the services provided by IDBI Bank After implementation of CMS in Jammu depot realization of cheques has become faster.

CMS is cost effective

MIS Provided by CMS are remarkable

Suggestions
Company should continue with the CMS because of its benefits.

Company can demand for better services (in terms of Outstation Cheque realization duration) from banks end. If company desire to reduce work load from the employees then company can continue MIS services of Banks. It ease the reconciliation of statements If the objective of Centralized control is to be fulfilled then company should continue with CMS service of bank with better monitoring.

LIMITATIONS

No Communication with Banks. Small sample size. Not easy availability of depots records.

REFERENCES: Financial Management I.M.Pandey Marketing Research Naresh K Malhortra www.axisbamk.com www.rbi.gov.in www.wikipedia.com www.mamagementparadise.com www.icicibank.com www.idbibank.com www.domain-b.com