The western india plywoods ltd project report

The success of every business is based on how efficiently its cash flows are planned and controlled. Shortage of cash will disrupt the smooth flow of the operations which can even lead the business to bankruptcy and at the same time excess cash remain idle in the business, which adversely affect the profitability. Main firms fail due to lack of sufficient cash, they may be profitable in their financial statements but when it comes reality, they fell shortage of cash to pay off their obligations. So, a proper management of cash assumes more significance in the working capital management as cash is the most important current asset of a business. Adoption of a sound cash management can maintain liquidity and keeps the business profitable and sustainable. However, the existing studies revealed that there is no much studies were conducted to study the relationship between cash management and profitability. Therefore, this study aimed to find out the impact of cash management practices on the profitability of the Western India Plywood ltd, which is the largest plywood manufacturing firm in Asia. The studies recommend that the existing cash management practices are not performing well. A proper management system should be implemented to increase the profitability of business.

Cash inflows and outflows in order to facilitate smooth stream of business. The success of any business depends on how professionally the management has planned to control its cash flows. The main intention of cash management policy is to bring efficient management of cash so as to ensure optimum level of cash in the company's working capital. Cash is the most imperative segments of working capital which is the essential compel to keep the business running. Shortage of cash will disrupt the day to day operations and can even lead the business to bankruptcy or insolvency

Business firms are profitable in their financial statements but when it comes to the reality the firm lacks cash to perform its day to day operations and short-term obligations. Many of large number of firms fail due to this reason. That is absence of cash rather than absence of profit. So e implementation a of proper cash management system is essential to ensure profitability of any successful business. Efficient cash management involves1 the identification of optimal amount of cash to be kept by business firm by analysing of trade-off between the opportunity cost of having excessive cash and cost having too less cash. Lack of cash will disturb the business operation and the liquidity issues will rise; the organization may struggle to pay off its short-term obligations in time. At the same time excessive cash will remain idle instead that could be invested in some profitable manner. So, a careful study has to be conducted to determine the optimum amount of Cash to be hold. Cash management can be seen from different perspective of company. Cash management can be said as a financial management, Cash management is a part of short-term financial management, where planning and execution of cash flow techniques based on the cash budget where the prediction and projection of cash flows are pre planned.

Physical money that the business possesses at the bank or is held on the business itself. It is not in the form of stock, accounts receivables. These assets have the potential to be converted into cash but these are not capable to directly pay off its short-term obligations. So, every one of the segments of working capital should be legitimately checked and controlled to keep up satisfactory level of liquidity in the business. So, cash management is also referred as liquidity management. Cash management can be seen as part of risk management, specifically managing liquidity, interest rate and foreign currency risk. Liquidity risk is the common risk every business manager confronts, to pay off short term liabilities when they become due, without converting assets or taking loan. So a sound cash management is a mandatory for every business to maintain liquidity, profitability, solvency, and sustainability

Cash is the most important part of working capital management. The main reason behind the failure of many firms is due to lack adequate level of cash in order to pay off short term obligations. Many business firms are profitable as per their financial statements, but as and when their liabilities are become due, they lack cash to settle this obligation. This situation necessitates the firm either to convert their fixed assets or to raise additional loans which results into over burden of liabilities in the form of interests. So, lack of cash management or improper cash management may lead the business into bankruptcy or insolvency. So, it indicates that cash management practices are to be given proper care as it would assist in future planning and profitability.

A proper cash management practices assist the business to confront future financial Uncertainties. This would be done to enhance the efficient management of cash and decision making which will enhance the firm's profitability. Generally, there is a misconception is existing that high revenue results high profit, but understand that if liquid cash is not generated from those revenue the business will have not enough cash to pay off its short-term obligation and can even lead to dissolution of the firm. The business will be having a positive cash inflow if their cash inflow exceeds its cash outflow.
A positive cash flow indicate that the firm is having some control in cash to maintain liquidity, on the contrary if there is more cash outflow than cash inflow then the firm is having negative cash flow which necessitates the firm should increase its cash inflow, this could be due to poor collection of payments from debtors or expired inventory. So, it misadvised to maintain a positive cash flow in a firm. A negligible positive income does not simply that firm is productive but rather, there should be a sound cash management frameworks a result the firm will try to decrease its cash outflows and increase cash inflows to keep liquid form of money. Once there is enough cash in business sales and profits also getting increased.

IMPORTANCE OF CASH MANAGEMENT
Cash management practices are the vital part of business decisions. The lack of liquid cash

Results disruption in the day to day activities. The firm becomes insolvent when it fails to

Meet its short-term debts and obligations timorously, which can even lead to bankruptcy.

Importance of cash management is listed below:

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  Management of cash helps to maintain liquidity and control.
  
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  Control over the receipt and disbursement of cash will helps to maintain liquid form
  
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  of cash and extra idle money can be invested in some profitable ventures
  
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  Maintaining sufficient amount cash in business aids to meet future business
  
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  A sound cash management prevents bankruptcy and increases profitability
  

Cash is the life blood of a business. To ensure smooth flow of business operations, the firm should keep sufficient cash balance neither more nor less. Deficiency of cash will obstruct the business operation while excessive cash will remain idle. Many businesses fail because they run out of cash. These may be profitable according to its financial statements but are not capable of paying its obligations due to absence of precise cash management. So every company has to have enough cash y funds for supporting its day to day operations and to meet its short-term obligations. In this situation the study is undertaken to find efficient cash management practices to improve the companies financial stability, profitability, and solvency

1. 
   To study the existing cash management practices
   
2. 
   To assess the effectiveness of current cash management practices on the efficiency of the firm
   
3. 
   To examine current liquidity position
   
4. 
   To find out trends in inflows and outflows of cash management.
   

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  Since the data used for analysis is secondary data, the quality of study largely depends on quality of data.
  
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  The study is entirely based on quantitative data. Qualitative factors are not taken in to consideration.
  
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  Detailed study of dynamical aspects of the company cannot be done due to time constraints.
  
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  Finance is the most confidential matter of every business so they are reluctant to provide adequate information.
  

Trees are nature greatest bounty to man. Nature develops trees as a mother brings up children, making each one a separate individual. It is an amazing sight to see the characteristic theoretical beat of time, colour and texture of wood. Nothing from nature brought indoor gives such a long lasting enjoyment as the natural beauty of woods.

India is one of the developing countries in the world having blessed with rich natural resources both above and beneath the soil surface. India is blessed with many forests throughout the country spread all over the north and south. Forest is one of the important natural resources in India. Because of abundant availability of trees, wood-based industry plays a major role in the manufacturing field of India. We can see that from the ancient time onwards wood has been used for many purposes. And the consumption of wood in one or other form will exist as long as humanity exists. Among the various sectors of wood processed industry plywood manufacturing plays a vital role owing to its employment potential and value addition. Plywood manufacturing in India gained momentum from the Assam where it was monetarily created without precedent for India, nearly a century ago. The primary raw material of plywood industry is timber, so these businesses are specifically subject to woods. In India approximately 67 million hector areas are covered with forest which would be above 22% of the total geographical area. The lion part of the forest is concentrated in the states like Assam, Madhya Pradesh, Kerala, Orissa, and Karnataka and in the Indian territories like Andaman and Nicobar Island.

Wood is as a raw material for several industries. Wood needed for industries like paper, plywood, hardboard, rayon, matches etc. Planning commission said that the forest of India are wellspring of numerous sorts of items with different specialized properties which sub serve the necessities of the building business of resistance and correspondence and additionally growing scope of enterprises in which wood form the main raw material.

The plywood industry has a very old story in India. About 75 years ago plywood manufacturing started in India on a modest scale. The first commercial venture started in Assam and neighbouring areas. For the first time plywood was brought in India during the year 1906-07 which was valued 32 lakhs. By 1924-25 it was worth 90 lakhs as a result of rapid rose in plywood import in India. The improvement of tea industry in Assam, west Bengal and Kerala offered approach to consider development of plywood industry as tea chests production. There after two plywood manufacturing plants were started in Assam in 1923-24 but their progress was steady and slow but not remarkable as they are new born babies. However, in the historical backdrop of plywood industry in India these were set apart as a pioneer and the strength and courage shown by them in the initial phase of plywood industry was incredible and plywood industry owes appreciation to these two business visionaries. Post situation of Second World War required the need of assembling tea trunks particularly in the neighbourhoods it was especially felt.

As a result the idea of starting plywood industries in the form of tea chests industry got executed on a large scale. A lot of experiments were carried out at forest research institute, Dehra dun and the results were shown that the plywood products which are made of India timber was having good quality as imported products. There after research on these were done and encouraged to set up present day processing plants in various states of India such Sitapur, Bangalore, Baliapatam, Dandeli, Coochbehar.

PLYWOOD INDUSTRY IN INDIA

In 1916, a committee was formed by government of India in order to study the feasibility of manufacturing tea chest plywood in Bengal and Assam and the other in north Bengal were set up in 1917 to manufacture the same, but these couldn’t continue their production further , they were forced to stop production because of non-availability of materials, indigenous lead lining nails and bands of packing. Both the imported plywood and sawn wood chest were used together. Thereafter there was a stagnant progress in this field until two new factories in assam came to take charge as a matter of challenge during the period 1924-25. As the commencement of these two firms the plywood industry in India gained momentum. The major drawback imposed against the plywood products was on the ground that the quality of timber was not suitable.

Since independence, the plywood industry has regained strength and has grown to a full-pledged industry in spite of some setbacks faced by the industry in the post war period. In 1947, India was a net import of plywood, mainly tea-chest plywood compared to the plywood production in 1947 which was negligible, the present-day production has grown up to 62 Million M2. These have been a steady growth in the plywood industry. Since the last 3-4 years.

The plywood industry consumes about 15 million M3 of timber. The other main raw materials used by plywood industry in the synthetic rain, which is available within the country.

In Kerala, there are more than 500 plywood industries including large scale industries such as Hindustan New Print and Western India Plywood Ltd. In India Plywood industry are mainly located in Assam, Karnataka, Kerala, Maharashtra, Madhya Pradesh and Andaman & Nicobar Islands.

FUTURE PROSPECTUS OF PLYWOOD MARKET IN INDIA

India is a rich company in terms of forest wealth. Deciduous tropical trees are an essential resource for the wood panel industry. The industry has been witnessed a transformational change from unorganized sector to organized market. The market can be classified on the basis of distribution channel where the unorganized market is having lion part of share. The change in consumer preference in terms of good quality and tendency to buy branded products has made transformational shift towards organized segment. Desire to spend on branded plywood among while collar class or above has been noted in the recent years, which proposes more noteworthy significance being given to the quality of the product. This shift in demand is mainly due to the urbanization and more disposable income.

The demand of the plywood market is triggered by the increase in the demand in the housing market. Plywood has become a crucial part of emerging market like modular kitchen market, furniture market as well as flooring market. In addition to this enactment of goods and service tax (GST) will provide an impulse to the plywood industry in India.

This chapter is looking at the definition of cash management and profitability. It will also review existing findings research work that has been done before on the factors that relates cash management and profitability, and the cash management challenges faced by manufacturing firms. This review is concerned of finding the effect of money cash management on the profitability of Western India Plywood ltd. This study is allocated into five parts, the first part deals with the background of the study and industrial profile. The second part is dealing with the review of literature and existing cash management theories and concepts for the study. The third section is dealing with the organizational information and study, while the fourth section is concerned with analysis and calculations of results on

cash management practices, finally final part findings and suggestion succeeds thereafter.

COMPANY PROFILE

The Western India Plywood ltd is a largest plywood industry in Asia. The company was established in 1945 and commenced its business on 9th February 1948. The company and its factory are situated at Baliapattanam in Kannur district, Kerala. The main raw material of plywood is timber. Western India Plywood imports quality timber mainly from Malaysia, Africa. Burma and Russia. Imported timbers are kept in the specially arranged salt water pool in the valiyapatanam river side. Thus, it is being process through various sections of the factory and converts into various finished products such as different varieties of plywood, hardboard, furniture, etc. Major part of the finished products are being exported, 80% of the total production are exported to Germany, USA, Canada, Italy, Australia, Japan, Sweden, Gulf countries. The remaining 20 % of the plywood products are sold out through retail outlets and company sales depots.

Western India Plywood has been pioneering in the manufacture of plywood related panel products for the last six decades. It is a widely held public limited company, listed in Cochin and madras stock exchanges. The commencement of Western India plywood ltd was closely after the Second World War. In the initial stage it started its business on simple scale manufacturing sawn wood and plywood, with a few lent rented machineries. As a result of the progressive viewpoint and persistent hard work of WIPs founder Managing Director Shri.A.K..Kaderkutty, a leader of the wood based panel industry in India, the company showed atransformational change end changed to present day stature and has been pioneering in the wood based industrial sector in the country and also in Asia having an employee potential of1200. The Western India Plywood Itd is an ISO 9001-2000 certified company.

Since 1942 Western India plywood ltd showed modest scale of operation and humble beginning, and become thee pillars in the plywood sector of India as well as Asia. In 1989, the company has put up a pre finishing plant with Italian and German technical support for printing wood grains and plain colures on plywood’s and hardboards.

The company is renowned for the introduction of a pilot plant for radiating wood with the collaboration of Bhabha Atomic Research Centre, Mumbai in order to upgrade the quality of low-grade wood. Western India Plywood ltd has made a steady growth over the two decades and showed a transformational change into a well-integrated wood preparing unit with at long last tuned abilities in new item development and manufacturer through its 70 years of existence. The innovations in the Indian plywood industry is the milestones of the productive activities of WIP.

ORIGIN

Established in 1945 the company started manufacture of sawn timber and plywood on a modest scale with a few indigenous and lent-leased machinery. Due to the progressive outlook and relentless efforts of WIP’s founder Managing Director Shri. A.K. Kaderkutty, a doyen of the wood-based panel industry in India, the company made steady progress over the years and business expanded to its present stature and is today one of the biggest woods based industrial integrated complexes in the country and also in South-East Asia with an employee strength of 1200.The company had an initial capital of 11.50 lakhs consisting of 9199 equity shares of Rs.100 each and 250 preference share of Rs.100 each. The organization has gained relentless ground throughout the years by the expansion of new machines and sophisticated technology.

From the humble beginnings in 1942 as a sawmill and a tea chest manufacturing facility, W.I.P grew steadily adding the latest in machinery and incorporating new manufacturing techniques. Products ranged from Plywood’s, Block boards, Flush door, Shuttering and Marine Plywood, Aircraft Plywood etc. The Company planned and executed the hardboard plant between the years 1956 and 1958 with an initial installed capacity of 12.5 tonnes of hardboard per day. The Company also installed its own synthetic resin unit in 1959 with a capacity of 200 tonnes per annum, which gradually increased to 2400 tonnes per annum, by 1975. Manufacture of densified Wood was commenced on a small scale initially as a part of the plywood plant. An Industrial Licence was obtained in 1974 for manufacture of Densified Wood with a capacity of 2000 M.T. per annum. Since then, the Company has been producing components of densified wood required mainly by the electrical, textile and chemical industries, Railways, etc. In 1974 a plant for manufacture of furniture was added.

The hardboard manufactured by the company found ready acceptance in the market so much so that the demand quickly exceeded supply. And company expanded its project in 1977 with the most modern Swedish Machinery from M/s SundsDefibrator to increase the output of hardboard to 20000 tons per annum. The expansion project was completed in 1980. The installed capacity was increased to 24700 tonnes per annum after the expansion completed in 1986.

A new plant, with the latest Italian Machinery and German technical know-how for water-based lacquers and dispersions was setup in 1989 which makes use of UV curing process for the production of pre-finished plywood and hardboards. The pre-finishing plant is the only one of its kind in the country and one of the very few plants in the world. And company is known for the water-based varnishes made with the collaboration of Germany and the same is not manufactured by any other paint manufacturer in India.

The company has a well-equipped Research and Development Division which asset the company in technology and product development. It is one of the best research centres in wood working industry in the country approved by the department of scientific and industrial research, ministry of science and technology Government of India where continuous research is going on for improvement of quality and development of new products. Due to the high demand for hardboard, the company decided to go in for any other modern hardboard plant, the latest in wet process hardboard manufacture in the world and the line was supplied by M/s Sunds Defibrator, Sweden, reputed and largest manufacturer of such machinery in the world.This new plant was commissioned in March 1998, thereby increasing the installed capacity to34000 tons per annum.

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  First to make Irradiated wood
  
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  First to make Aircraft plywood
  
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  First to make Fire retardant plywood confirming to BS:476 specification
  
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  First to make high pressure industrial laminates
  
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  First to make metal faced plywood
  
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  First to develop Weatherproof, marine and Fire-retardant hardboards using UV cured surface finishing technology.
  
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  First to obtain ISO9002 certification for hardboards and pre furnished boards.
  
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  First to manufacture DAP Resin in the country with indigenously developed knowhow
  

Keep on remaining the best plywood board organization in India with development in allied areas.

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  To give the most fulfilment to the client through best quality Customer care.
  
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  To constantly redesign the product through developments and merging of new innovation and to create the best quality at the least cost.
  
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  To ensure and enhance shareholder esteem
  
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  To respect poise of all representatives and together to become
  
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  Instrumental in the improvement of the nation while protecting the society and environment.
  
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  To use the surplus for the welfare of representatives and the general public at a large.
  

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  Western India Plywood Ltd manufactures the plywood products as per the parameters of national or international standards and deliver superior quality products as per client's preferences.
  
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  WIP's activities to improve the quality of its products and associated services are on frequent basis through consistent enhancement efforts.
  
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  A well-organized quality control system is maintained to monitor and ensure the quality, and to enhance the effectiveness of production to meet the changing market needs.
  

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  Appropriate equipment and machinery for process control at all stages.
  
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  Providing of sufficient resources containing raw material and man power to ensure reliable product quality.
  
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  Well-defined process and product characteristics to enable monitoring analysis and continual improvement.
  
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  Communication of requirements of products including customer requirements statutory regulatory requirements, aspects of Quality Management System including policy and objectives among all employees.
  

The Western India Plywood Ltd has been pioneering in the plywood industry since 1945 over the six decades. The reason behind the success of the company is the delivering of finest quality plywood products following the international standards. The company has four unit.

1. The Western India Plywood division

2. Densified Wood Division

3. Furniture plant division

4 Hardboard unit

The main raw material for the plywood products is timber, Western India Plywood Ltd collects quality timber importing from Malaysia, Africa, Burma, and Russia. And later these are undergone through different processing stages in the factory and being converted to various finished products ranging from plywood, hardboard, furniture, wood floor etc. The imported raw materials like timber is kept in the salt water using the nearby infrastructure facilities of Valapattanam River bank, as long as keeping the wood in the salt water that much finest quality of timber can be made. The raw materials that are used to produce the output are as follows:

1. Wood.

3. Chemicals.

Mainly used woods are Calpine, Cell pine, Mango, Neeli, Pali, Mullan Pali RedcarPula, Red pine, Cher etc. For decorative purpose, the woods used are Rosewood, Teak, Mahogany, Padauk, Beech Silver Oak, Cassia, Dhavala and Champak.

Steam is the energy used to operate the machines. Steam is generated by using the factory waste and wood wastes. The steam comes from boilers. There are four to five types of boilers. They are: -1. Saw Dust Boiler 2.Fire wood Boilers3.Industrial Engineering &Agricultural Cooperation Boiler 4. Thermo tank Boilers

The various chemical used in the preparation of plywood are Urea formaldehyde, Acryl ate Phenol Formaldehyde etc. The product mix of WIP includes Hardboard, Plywood Densified Wood, Industrial Marinates, and Furniture and pre-finished Boards Product profile of WIP It includes plywood, hard boards, densified woods laminates, prefinished boards furniture and other products.