Finance WC Ankur
Finance WC Ankur
Finance WC Ankur
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INTRODUCTION
Every business whether big, medium or small, needs finance to carry on its operations
and to achieve its target. In fact, finance is so indispensable today that its rightly said to be the
lifeblood of an enterprise. Without adequate finance, no enterprise can possibly accomplish its
objectives. So this chapter deals with studying various aspects of working capital management
that is necessary to carry out the day-to-day operations. The term working capital refers to that
part of firms capital which is required for financing short term or current assets such as cash,
marketable securities, debtors and inventories funds invested in current assets keep revolving fast
and are being constantly converted in to cash and this cash flows out again in exchange for other
current assets. Hence it is known as revolving or circulating capital. On the whole, Working
Capital Management performs a key function and is of top priority for every finance manager.
All managers must, however, keep in mind that n their pursuit to liquidity, they should not lose
sight of there basic goal of profitability. They should be able to attain a judicious mix of liquidity
and profitability while managing their working capital.
Working capital management deals with the most dynamic fields in finance, which needs
constant interaction between finance and other functional managers. The finance manager acting
alone cannot improve the working capital situation. In recent times a few case studies regarding
management of working capital in selected companies have been in order to make in-depth
analysis of the several experts of working capital management, The finding of such studies not
only throws new lights on the technical loopholes of management activities of the concerned
companies, but also helps the scholars and researchers to develop new ideas techniques and
methods for effective management of working capital.
Decisions relating to working capital and short term financing are referred to as working
capital management. These involve managing the relationship between a firm's short-term assets
and its short-term liabilities. The goal of working capital management is to ensure that the firm is
able to continue its operations and that it has sufficient cash flow to satisfy both maturing shortterm debt and upcoming operational expenses.
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OPERATING CYCLE
The operating cycle is the average period of time required for a business to make an
initial outlay of cash to produce goods, sell the goods, and receive cash from customers in
exchange for the goods. If a company is a reseller, then the operating cycle does not include any
time for production - it is simply the date from the initial cash outlay to the date of cash receipt
from the customer.
The operating cycle is useful for estimating the amount of working capital that a
company will need in order to maintain or grow its business. A company with an extremely short
operating cycle requires less cash to maintain its operations, and so can still grow while selling at
relatively small margins. Conversely, a business may have fat margins and yet still require
additional financing to grow at even a modest pace, if its operating cycle is unusually long.
In case of a manufacturing company, the operating cycle is the length of time necessary
to complete the following cycle of events
Conversion of cash into raw materials
Conversion of raw materials into work-in-progress
Conversion of work-in-progress into finished goods
Conversion of finished goods into accounts receivables
Conversion of accounts receivable into cash
The above operating cycle is repeated again and again over the period depending upon the nature
of the business and type of product etc. the duration of the operating cycle for the purpose of
estimating working capital is equal to the sum of duration allowed by the suppliers.
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Realization
Sales
Accounts Receivable
Cash
Finished Goods
Purchases
Production
Production
Raw Materials
Work-in-progress
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The concept of working capital includes current assets and current liabilities both. There
are two of working capital they are gross and net working capital.
1. Gross working capital: Gross working capital refers to the firms investment in current
assets. Current assets are the assets, which can be converted into cash within an accounting year
or operating cycle. It includes cash, short term securities debtors (account receivables or book
debts), bills receivables and stock (inventory).
2. Net working capital: Net working capital refers to the difference between current assets and
liabilities are those claims of outsiders, which are expected to mature for payment within an
accounting year. It includes creditors or accounts payables bills payable and outstanding
expenses. Net working copulate can be positive or negative. A positive working capital will arise
when current assets exceed current liabilities and vice versa.
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OBJECTIVES
Every company has their own objectives of working capital that is they try to keep
company position at upper level through working capital. Company may get good position by
giving less credit period to debtors, receivables, etc. and by taking more credit period from
creditors, payables etc. Its main objective is to get back cash in short term period and meets
companies day to day operations. Effective working capital helps a company to borrow short
term funds and long term funds from public, banks, investment banking and financial
institutions.
The overall financial management objectives of an organization could be summarized in terms of
the following five objectives:
To ensure that the organization always has enough cash to meet its legal obligations and
avoid illiquidity- that is, to maintain adequate short-term financial flexibility.
To arrange to obtain whatever funds are required from external sources at the right time,
in the right form, and on the best possible terms.
To ensure that the organizations assets and liabilities current and long-term, financial
and operating are utilized as effectively as possible.
To forecast and plan for the financial requirements of future operations.
To make all decisions and recommendations on the basis of one primary criterion:
maximizing the long-term value of the organization. This objective is attained in a
publicly owned corporation through maximization of the wealth of the owners
(stockholders) by maximizing stock price.
The last point is particularly important; without this requirement, financial executives could find
many suboptimal solutions to problems. It would be easy, for example, to satisfy the first
requirement by maintaining enormous cash balances or investing very large sums in readily
salable short term securities; but such a policy would normally not be in the best interests of the
stockholders of a typical corporation.
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IMPORTANCE
Proper management of working capital is very important for the success of an enterprise.
It aims at protecting the purchasing power of assets and maximizing the return on Investment.
The manager of administration of current assets to a very large extent determines the success of
the operations of a firm. Constant management is required to maintain appropriate levels in the
various working capital accounts. A study of working capital is of major importance to internal
and external analysis because of its close relationship to current day-to-day operations of
business, Inadequacy or mismanagement of working capital is the leading cause of business
failures. Shortage of working capital, so often advanced as the main cause of failure of Industrial
concerns, is nothing but the clearest evidence of mismanagement, which is so common. The
current assets and current liabilities flow round in a business like an electric current. The
working capital plays the same role in the business as the role of the heart in the human body.
Just as the heart gets blood and circulated the same in the body, in the same enterprise, adequate
amount of working capital is pre-requisite. The adequacy of cash and current assets together with
their efficient handing virtually determine the survival or demise of a concern. Inadequate
working capital is a business ailment as compared to the availability of excess working capital
may lead carelessness.
About costs and therefore, to inefficiency of operations. Many a times business failure
takes place due to lack of working capital. If a concern maintains an adequate amount of working
capital, it enjoys a good credit rating and gets discount on payment. It will ensure proper
functioning of the business operations and help in the maximization of threat of return. A
business house can maximize its rate of return on the capital invested provide in keeps pace with
the scientific and technological developments taking place in the field to which it pertains. As
soon as some technological and scientific development takes place, a business enterprise in order
to accelerate its profitability should immediately introduce the same to its productive process. In
reality, however the sufficiency of working capital will determine the course of decision in this
regard.
Working capital helps to operate the business smoothly without any financial problem for
making the payment of short-term liabilities. Purchase of raw materials and payment of salary,
wages and overhead can be made without any delay. Adequate working capital helps in
maintaining solvency of the business by providing uninterrupted flow of production. Quick
payment of credit purchase of raw materials ensures the regular supply of raw materials from
suppliers. Suppliers are satisfied by the payment on time. It ensures regular supply of raw
materials and continuous production. A firm having adequate working capital, high solvency and
good credit rating can arrange loans from banks and financial institutions in easy and favorable
terms.
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CURRENT ASSETS:
Current assets are those which can be converted into cash as and when needed, i.e., those
assets which can turn to cash as per the requirement of the business within the accounting period.
SUNDRY DEBTORS
Debtors are those to who products are supplied on credit basis. These amounts are
collected within the accounting period. Therefore, they are converted into cash as per
requirement, hence they are considered under current assets.
INVENTORIES
Closing stocks or inventory includes raw materials, work in progress and finished goods,
which are needed for the smooth running of the organization. Generally inventory is maintained
by every organization, which is bound to meet its demand in the market. The amount of
inventory maintained by the firm represents its profitability position. The quality must not be in
excess or inadequate, it must be according to the requirement. The quality stores must be able to
meet the market demand.
CASH AND BANK
Every organization or firm maintains cash reserves in their accounts. This is the major
key on which working of the entire organization is dependent upon. This is required in every
aspect of production, marketing, financing etc. In other words, it can be said that it plays a vital
role in the functioning of any organization.
LOANS AND ADVANCES
Advances to staff are those advances, which are given to the employees as festival
advances. These advances are treated as current assets as they are given advance to the
employees and are collected with in the accounting year. It doesnt result in any default payment
as the amount is deducted from their salaries directly during their payment. Their advances are
prepared and are collected in the accounting year. These are the loans and advances amount that
are given by the organization in procuring of raw materials. Amount is given in advance to its
supplier in supplying the raw materials required and this is adjusted after receiving the raw
material. The final settlements take place only after deducting the advances amount from total
amount.
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CURRENT LIABILITIES:
Current liabilities are those which are payable during an accounting year. These are paid
out of current assets like cash. When current assets availability is present there exist the current
liabilities but current assets must always be in excess to current liabilities. This provides the
organization to be in a good position.
SUNDRY CREDITORS
Creditors are those from whom products are purchased on credit basis. These amounts are
paid within the accounting period. If the creditors number increase the amount payable also
increases which further increases the liquidity.
LINE OF CREDIT:
Banks to new business do not often give lines of credit. However, if your new business is
well capitalized by equity and you have good collateral, your business might qualify for one. A
line of credit allows you to borrow funds for short terms needs when they arise. The funds are
repaid once you collect the accounts receivables that resulted from the short-term sales peak.
Lines of credit typically are made for one year at a time and are expected to be paid off for 30 to
60 consecutive days sometime during the year to ensure that the funds are used for short-term
needs only.
SHORT TERM LOAN:
While your new business may not qualify for a line of credit from a bank, you might have
success in obtaining a one-time short-term loan (less than a year) to finance your temporary
working capital needs. If you have established a good banking relationship with a banker, he or
she might be willing to provide a short-terms note for one order or for a seasonal inventory
and/or accounts receivable buildup. In addition to analyzing the average number of days it takes
to make a product (inventory days) and collect on an account (account receivable days) Vs. the
number of days financed by accounts payable, the operating cycle analysis provides one other
important analysis. From the operating cycle, a computation can be made of the dollars required
to support one day of accounts receivables and inventory and the dollars provided by a day of
accounts payable. Working capital has a different impact on cash flow in a business.
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RESEARCH METHODOLOGY
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What is Research?
Research means search for facts in order to find answers to certain questions or to find
solutions to certain problems. It is often referred to as scientific inquiry or scientific
investigation into a specific problem or situation. This is because; the search for facts should be
made by scientific method rather than by arbitrary method. The scientific method uses systematic
rational approach to search for facts, whereas, the arbitrary method attempts to find answers to
questions on the basis of imagination and ones own beliefs and judgment.
In simple words Research is the systematic process of finding out problems between
variables by investigating inside or outside of the company and giving better solutions to it.
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TYPES OF RESEARCH
Types of research are very important to research something in the company or somewhere
else. There are many researches which suits for different areas to find out the problems in an
organization, for e.g. quantitative research at numerical area. I have been used three types of
researches for my project work that is Descriptive Research, Historical Research and
Quantitative Research.
Descriptive Research:
Descriptive research helped me to find out facts and details of the IndiaMart ltd. I have
been enquired directly to senior executives and senior employees about what has happened and
what is happening in the company.
Historical Research:
Through historical research I have been found past details which is affecting current
situation of IndiaMart. They sold their float glass manufacturing plant to Saint Gobain ltd. Since
that day they are spending a lot for raw materials and creditors are more than debtors.
Quantitative Research:
This research has undertaken to measure the quantity or amount of the company. I
glanced at companys balance sheet then I came to know since 3- 4 years they are in loss.
Companys expenses and current liabilities are more than profit and current assets respectively.
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To appraise the utilization of current asset and current liabilities and find out shortcomings if any.
To measure and evaluate the liquidity and profitability position of IndiaMart Ltd.
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Time factor is the most crucial one. The study was conducted within a short period of two
months.
I had to wait for a long time to make contact with the executives, because they were busy
with their work.
It is also found that some of the executives lack interest, enthusiasm, initiative and
involvement, which was de-motivated me.
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RESEARCH DESIGN
Problem: In IndiaMart, since 3 years there is negative and equal relationship between current
assets and current liabilities. Collection period is more than payment period so cash conversion
cycle is more which should be less or negative. This is main pressure on working capital.
Objective: The main objective of research is to appraise the utilization of current asset and
current liabilities and find out short-comings if any and to suggest measure for effective
management of working capital.
Sampling Design: I have been used judgement method in non random sampling. Because all
will not be good respondents to answer my questions. I have selected those who know about
working capital, debtors, creditors, stock etc. Sample size is 50 in different glass industry from
different departments.
Data Collection: I have been collected data through both primary and secondary. Primary data
from Questionnaire, Observation and Personal interview with CFO, executives and senior
employees. Secondary data from annual reports and company websites.
Areas of Data Collection: I was visiting different company to collect data. I have done survey
other than IndiaMart in Others Industry, Alibaba Industry.
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SAMPLING DESIGN
Sampling Method:
I have been used appropriate sample to collect right data from respondents. For research
in finance we cannot ask information to everyone regarding finance. We should concern the
person who is aware about the company finance. So that I have used non random sampling under
this I have used judgement method to collect data. I have gathered data by judgement. I have
concerned the one those who aware about companys working capital i.e. debtors, creditors,
receivables, payables, stock cycle etc. I have done survey in different glass industry i.e. Others
Industry, NSD Global Trade Pvt Ltd to collect data.
Sample Size:
The study encompassed a representation of a sample of 30 respondents from IndiaMart,
Others Industry and NSD Global Trade Pvt Ltd.
No of Respondents
5
15
20
30
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DATA COLLECTION
Sources of Data:
There were mainly two major sources of data namely;
Primary Data:
Primary data has been obtained through personal discussions with managers and senior officials
of the organization; observations and questionnaire both open ended and closed ended.
Secondary Data:
Secondary data has been obtained from published reports like the annual reports of the company,
balance sheets, and profit and loss account, websites, records such as files, reports maintained by
the company.
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COMPANY PROFILE
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Mr. M. K. Chouhan
MANAGING DIRECTOR, Mahendra&Ardneham Consulting
(P) Ltd.
Mr. RAJESH SAWHNEY
PRESIDENT, Reliance Entertainment Private Ltd.
Core values
For us they are simple and straight; take responsibility, work with passion and commitment,
move ahead as a team and conserve the integrity.
We firmly believe that core values keep organizations stable and focused to the common goal.
Our core values have helped us achieve our mission to bring measurable benefits to our
customers.
Responsibility
Team Work
Integrity
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IndiaMART.com nominated among the top three at Emerging India Awards 2008
Bestowed with "Amity Corporate Excellence Award" on the occasion of the Tenth
Business International Horizon INBUSH 2008
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Fact Sheet
1996-97
Successfully introduces free listing & free-query forwarding concept to familiarize Indian
SMEs with benefits of Internet for business promotion
1997-98
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1998-99
Increases workforce to 40
1999-2000
2000-01
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2001-02
Adds exclusive services to its portfolio - Electronic Trade Offers & Request for
Quotation / Request for Proposal
CNBC India recognizes IndiaMART.com as one of the only profitable dotcoms in India
based on report by McKinsey
2002-03
Launches Exim.IndiaMART.com
2003-04
Touches 26 million page views per month, generating more than 300,000 business
queries
2004-05
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2005-06
2006-07
2007-08
2008-09
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Participates in more than 100 international & 200 domestic trade shows
2009-10
Mr. Deep Kalra (Founder & CEO of Makemytrip.com) & Dr. NachiketMor (President,
ICICI Foundation) join IndiaMART.com Board of Directors
2010-11
Takes a giant leap in SME space & launches 'IndiaMART Leaders of Tomorrow Awards'
The SmartTechie ranks IndiaMART.com among India's '25 Most Promising Internet Cos.'
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Dynamic Catalog
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Trust Seal
Trust Seal is a business verification service that checks supplier's records of existence,
credibility and trustworthiness for the benefit of buyers.
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Star Supplier
With Star Supplier to your support, you can get premium
positioning among suppliers in all the relevant categories.
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Leading Supplier
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Banner Advertising
Build your brand & drive traffic to your website with Banner
Advertising
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(Rs in crores)
TABLE 3:
Financial Performance
2012-13
2011-12
2010-11
2009-10
2008-09
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62.67
44.86
279.62
44.89
37.11
Total Income
74.27
53.45
294.19
51.17
51.59
Depreciation
2.44
2.34
40.09
2.65
2.50
Interest
8.10
1.73
66.73
3.80
3.76
-8.97
-0.57
-96.21
1.31
3.17
-16.00
-52.64
-63.90
2.52
2.12
0.07
0.08
Fixed Assets
91.65
153.02
840.34
668.16
389.56
Investments
4.31
3.72
0.08
0.06
0.06
-4.89
39.14
37.09
11.01
30.97
22.42
29.35
31.22
Loan Funds
23.84
32.36
623.61
517.55
276.17
Provisions
0.35
0.31
1.09
2.47
54.98
Net Worth
340.11
160.59
141.94
33.55
33.55
33.55
28.80
28.00
1.45
4.20
138.06
197.53
305.11
127.59
113.94
171.61
231.08
340.11
160.59
141.94
Share Capital
Share Warrant / Share Application
Money
Reserved and Surplus
Net Worth
Source: Secondary data
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(Rs. in crore)
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Year
Receivables
Payables
2013-14
66
55
2012-13
35
30
2011-12
24
18
2010-11
32
121
2009-10
22
73
179
297
Total
Source: Secondary data
140
121
120
100
80
Rs. in crores
60
66
73
55
35
40
30
24
32
18
Receivales
Paybles
22
20
0
2013-14 2012-13 2011-12 2010-11 2009-10
Years
INTERPRETATION:
It is inferred that there is poor relationship between receivables and
payables. Always receivables should be much more than payables. For effective working capital
company should always count back debtor days and count forward creditor days. Company
should always pull creditor days up to 90 days and customers days should not be extended above
60 days. Therefore company can maintain liquidity position. Here receivables are more so
company should convert it into cash as soon as possible.
Relationship between Short term borrowings and Short term loans & advances
(Rs. In crore)
Year
2013-14
33
10.5
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2012-13
32
26
2011-12
14
40
2010-11
96
67
2009-10
75
50
250
193.5
Total
Source: Secondary Data
120
100
80
60
Rs. in crores
40
20
0
Years
INTERPRETAION:
The relationship between short term borrowings and loans & advances is
poor. On average 50cr is borrowing and 38.5cr is loans & advances. For positive working capital,
company should decrease borrowings and increase loans. Company should take care of
borrowings, if they are borrowing they should clear suppliers payment.
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Days
2013-14
53
2012-13
135
2011-12
-357
2010-11
40
2009-10
Source: Secondary Data
47
CCC
200
100
No. of days
0
2013-14
-100
2012-13
2011-12
2010-11
2009-10
Days
-200
-300
-400
Years
INTERPRETAION:
Cash Conversion Cycle should be very effective to meet working capital
needs where it is absence over here. During 2011-12 CCC was very good i.e. payable period was
more than receivables. CCC can be effective when it comes in negative. It meant payable days
are more than receivables and inventory days.
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Current Assets
Current Liabilities
2013-14
109
134
2012-13
91
96
2011-12
104
64
2010-11
161
123
2009-10
68
102
Total
532
520
Rs. In Crores
180
160
140
120
100
80
60
40
20
0
Current Assets
Current Liabilities
Years
INTERPRETATION:
On an average companys working capital ratio is good. The relationship
between current assets and current liabilities is good. Average current assets is 532cr and current
liabilities is 520cr so current assets is more than current liabilities. Average current ratio is 1.023
which should not be less than 1. This much ratio is enough to release fund from bank to meet day
to day operations.
(Rs. In Crore)
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Years
Sales
Expenses
2013-14
126.37
135.45
2012-13
62.67
73.73
2011-12
44.86
53.36
2010-11
279.62
283.58
2009-10
44.89
42.39
Total
558
589
Average
112
118
AMOUNT
Sales
Expense
150.00
100.00
50.00
0.00
2013-14 2012-13 2011-12 2010-11 2009-10
YEARS
INTERPRETATION:
Expenditure is the main cause for the company to getting into loss. There
is big gap between expenditure and total sales. On an average 112cr is the total sales and 118cr is
the expenditure. In the year 2010-11 there was more sales still company is in loss because of
more expenditure than sales. So company should take care of unnecessary expenses.
No. of Respondents
IndiaMart Ltd.
20
Total
30
Percentage of Respondents
17%
17%
67%
INTERPRETATION:
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Alibaba
(Frequency)
Others
(Frequency)
0-30 days
50%
20%
0%
30-60 days
39%
80%
20%
60-90 days
0%
0%
40%
Above 90 days
11%
0%
40%
Respondents
No. of Respondents
10
9
8
7
6
5
4
3
2
1
0
No. of Days
INTERPRETATION:
From the above table 50% respondents of IndiaMart is saying collectin
money 0-30 days. It is excellent compare to others like Alibaba & Others. 39% respondents said
30-60 days it is also good but 11% respondents said above 90 days. So company always should
give less period to debtors where Alibaba is doing better than IndiaMart Alibaba respondets said
upto 60 days they have been given to debtors. So company should always count backward
debtors days as far as possible to run company effectively.
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Alibaba
(Frequency)
Others
(Frequency)
0-30 days
24%
20%
0%
30-60 days
47%
80%
40%
60-90 days
11%
0%
60%
Above 90 days
18%
0%
0%
Respondents
8
7
6
5
4
No. of Respondents
2
1
0
Days
INTERPRETATION:
From the above table 47% respondents of IndiaMart 80 % of Alibaba they
used to take 30-60 days. IndiaMart is pulling credit days above 90 days whereas other
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competitors are not doing. Even though Others also extending upto 90 days. So company should
always count forward creditors days as far as possible to run company effectively.
Companys Inventory Cycle
IndiaMart
(Frequency)
Alibaba
(Frequency)
Others
(Frequency)
Less than
30 days
39%
20%
60%
30-60 days
44%
80%
40%
17%
0%
0%
Respondents
More than
60 days
Source: Primary data
Inventory Cycle
No. of Respondents
9
8
7
6
5
4
3
2
1
0
Days
INTERPRETATION:
From the above table 39% of respondents of Indiamart, 20% of Alibaba
and 60% of Others taking less than 30 days its pretty good. 44% of Indiamart , 80% of Alibaba,
and 60% said 30-60 days. Here Indiamart is much better than others but it should not take more
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than 60 days where competitors are absence so it may opportunity for them. So company reduce
inventory cycle by adopting advance technology or more employees.
Credit Risk in Company
IndiaMart
(Frequency)
Alibaba
(Frequency)
Others
(Frequency)
Bellow 5%
22%
100%
40%
5-10%
45%
0%
40%
Over 10%
33%
0%
20%
Respondents
12
10
8
No. of Respondents
4
2
0
Bellow 5%
5-10%
Over 10%
Percentage
INTERPRETATION:
From the above table more credit risk is in Indiamart that is 33%
respondents said over 10% whereas Alibabas risk is bellow 5% . Even Othress risk is also less
compare to Indiamart. If there are more credit risk then company should take advance receipts
from customers or dealers so that these things may not be happened.
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Alibaba
(Frequency)
Others
(Frequency)
Bellow 1%
6%
0%
20%
1%-5%
44%
100%
60%
6%-10%
28%
0%
20%
Over 10%
22%
0%
0%
Respondents
Over 10%
6%-10%
Percentage
1%-5%
Bellow 1%
0
8 10 12
14 16
No. of Respondentse
INTERPRETATION:
From the above table the bad debt level of IndiaMart is more compare to
others i.e. 1% to 10%. Whereas Alibabas bad debt level is upto 5%. This is also one the reason
for IndiaMart to getting into loss. If there is more bad debts then company should take advance
receipts from customers or dealers so that these things may not be happened.
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Alibaba
(Frequency)
Others
(Frequency)
Yes
15
83%
80%
40%
No
17%
20%
60%
Respondents
Yes
No
INTERPRETATION:
From the above table more than 80% of the respondents from Indiamart
and Alibaba, they are providing discount offer for prompt payment is being made by customers.
This one of the things attract customers to pay promptly. Company should provide offers like
discounts, gifts, vouchers, coupons etc. So that company can maintain good liquidity position.
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Alibaba
(Frequency)
Others
(Frequency)
Weekly
10
56%
80%
40%
Monthly
22%
20%
60%
Quarterly
22%
0%
0%
Annually
0%
0%
0%
Respondents
25
20
15
No. of Respondents
10
5
0
Yes
No
INTERPRETATION:
From the above table Alibabas 80% respondents , 56% of Indiamart and
40% of FG said weekly. Monthly is also good to remind customers but quarterly bad where 22%
of Indiamart respondents said quarterly. Company should call every week or month to inform
customers about discount offers for early payment.
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Alibaba
(Frequency)
Others
(Frequency)
Weekly
11%
100%
10%
Monthly
28%
0%
40%
Quarterly
33%
0%
40%
28%
0%
0%
Respondents
Whenever
Necessary
Source: Primary data
6
5
4
3
No. of Respondents
1
0
INTERPRETATION:
From the above table 100% respondents of Alibaba said they are doing
weekly working capital review so that they can arrange fund from other sources whereas
maximum respondents of Indiamart said quareterly and whenever necessary. Company should
review about working capital once in a week or 15days so that company can understand where
fund is tied up.
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Findings
After I completed my training in indiaMART, I had a very mixed experience regarding the online
promotions . My analysis showed the customr were very happy in interacting with Indiamart
.Indiamart is having a very good standing in the market at the present market outset. Being an
online promotional company , they have taken subtle online promotional strategies which is
fruitful for the company. During this session ,I had managed to interact to many buyers ,prepared
the questionnaire for their buyers perception towards the activities of Indiamart.com and I come
up with the companys positive and the negative aspects along with some limitations.
1. Some of the important findings in Indiamart was that most of the Buyers were very
reluctant to spend money on the online Purchasing of products.
2. They have a very good knowledge of the online retail websites which are prevalent in the
market and they are interested also.
3. They are also aware of the other competitors in the market like alibaba.com,
tradeindia.com, etc
4. Most importantly they have enough faith on indiamart.com and they are very much
interested in buying the product through the indiamart as they know the number of
Suppliers in Indiamart are very high.
5. They are also in the belief that if they want to Buy product globally globally, online
purchasing are necessary.
6. During the interaction with the buyers ,it was very much clear of the fact that the service
rendered by indiamart is of supreme quality and they want to be the client of the
company.
ANALYSIS
Thus it could be said the company is in a good position in the market and
is expected to have a bright future ahead.
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LIMITATIONS OBSERVED
Following are some limitations which affect our performance in the organization. Indiamart.com
is providing eminent facilities so as to increase and maintain the performance of each and every
employee in the organization.
1. Some of the suppliers are satisfied with the present status of their Purchases. They dont want
to buy further due to limited money or lack of vision and like to avoid risk.
2. The price factor also plays key role in generating leads because aware customers are likely to
respond to that services which offer maximum advantages at minimum cost. For e.g.
tradeindia.com provides almost same services but at considerably low amount as compared to
indiamart.com.
3. Some of the clients are not able to afford the cost or price that indiamart.com offers. It
necessitates keeping record of their status at regular interval. For e.g. with the help of
appointment at regular intervals, the probability of converting the prospect into regular client can
be found out.
4 .Many of the clients had bad experiences as a result they have withdrawn from it. The most
likely reasons are late service or late delivery.
.
5. Most of the organizations are controlled from their respective headquarters as a result the
decision remains pending for a long period of time. Regular follow up is required to maintain
their proper status.
6. The absence of respective departmental head because of meetings or on leave requires follow
up on continuous basis.
7. Some of the clients are very satisfied with market locally and so they do not go for online
marketing.
8.Few clients are satisfied with their present service provider in all respect so they dont want to
change it.
9. Some of the organizations are positive about online promotional services but they cant afford
it at present
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RECOMMENDATION
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Recommendations
For an effective online promotional marketing strategy for a manufacturer, there are some
recommendations which need to be followed so as to increase the revenue of the company.
BUILD A WEBSITE
A website that covers complete product and company information along with client
testimonials has become a prerequisite for manufacturers looking for web presence.
Updating the product catalogue and other latest happenings such as trade fare
participations at regular intervals is also essential to keep the customers and visitors
interest. The company must be prompt in replying to business queries from buyers over
email or phone.
Also the manufacturer firms should register themselves at Google Local , Google Maps, and
similar services across all search engines, both major and minor.
EMAIL MARKETING
A concrete database of the target customers from a reliable source should be obtained
and send mailers using a service that gives detailed statistics of its rate ,click through ,etc.
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BUILD TRUST
Online marketing is mainly based on trust. You can capitalize on mechanism which
bridge the trust gap associated with the online medium and enhance your
credibility.Indiamart.com has a business verification service Trust Seal and that needs to
be used in a very fair way to obtain the customers trust.
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CONCLUSION
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Conclusions
The main purpose of Dissertation is to gain practical knowledge and apply our skills in practical
and real environment. It is the time when we have to sharpen our skills, abilities and knowledge
which would help me in getting final placement.
In Indiamart.com, I have got an opportunity to explore my potential. By preparing extensive
research reports I have attained fundamental knowledge of online promotional services, its
scope, the suppliers perceptions towards the different online promotional tools provided by the
company and its importance in coming years. I have also come across various technicalities
related to online promotional services. I am very confident that after completing my internship in
Indiamart.com Company I would have mastered in various online promotional services.
The purpose of this study was to give an insight to customer preferences in the services market,
and the objectives were achieved to some extent. The research results of this study provide new
information as to which areas more effort should be put into. The research could have been
more extensive to get a deeper view of the customers opinion on the product itself, even though
the research provided a general picture of the market preferences.
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REFERENCES
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BIBLIOGRAPHY
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http://www.birlacorporation.com
http://www.amzon.com
http://www.wikipedia.com
http://www.answer.com
http://www.cma.com
ANNEXURE
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Questionnaire
Name:
Designation:
Date:
(Tick as Appropriate)
Section-A: Personal Data
1. Your Age
1) Bellow 25 yrs
2. Gender
1) Male
2)25-29 yrs
3) 30-34 yrs
2) Female
3) Post-Graduate
8. Do you charge interest if customers/ debtors will pay you after due date?
1) Yes
2) No
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10. How often does your company remind customers to pay the balance amount?
1) Weekly
2) Monthly 3) Quarterly 4) Annually
11. Do you give discount offer to customers/ Debtors for early payment?
1) Yes
2) No
If No why? ______________________________________________________________
12. What is stock cycle in your company?
1) Less than 30 days 2) 31 days 60 days 3) more than 60 days
13. Rate the percentage of credit risk in your company
1) Less than 5%
2) 5-10%
3) Over 10%
14. What is the bad debt level in your accounts receivable?
1) Less than 1%
2) 1% - 5% 3) 6% - 10% 4) Over 10%
15. How many days do you take to convert into finished goods from the date of purchase of
raw materials?
1) Less than 10 days 2) 10 days - 20 days 3) more than 20 days
16. Do you use banking source to finance your working capital?
1) Yes
2) No
If No why?______________________________________________________________
17. How often does your company review its working capital policy?
1) Weekly
2) Monthly
3) Quarterly
4) Whenever necessary
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