Kota Fibres
FINANCIAL MANAGEMENT MM 5007
Case Study Kota Fibres, Ltd.
29113385 29113543 29113529 29113323 29113357
Faris Hizrian Ghea Widya Pratiwi Maulana Angga Utama Silvia Regina Yuthika Fauziyyah Syndicate 6
Master of Business Administration School of Business and Management Institut Teknologi Bandung Bandung 2014
Introduction Kota fibers, Ltd., was founded in 1962 to produce nylon fiber at its only plant in Kota, India. By using new technology and domestic raw materials the firm developed a steady franchise among dozens of small, local textile weavers. It supplied synthetic fiber yarns used to weave colorful cloths for making saris, the traditional women’s dress of India. The demand for synthetic textiles was characterized by stable year-to-year growth and predictable seasonal fluctuations. Unit demand increased with both population and national income. Unit growth in the industry was expected to be 15% per year. Kota had two distribution warehouses, but regardless, moving the yarn from Kota to the customer was a problem with the trip taking 10 to 15 days and the roads typically rough and one lane. Kota Fibers had been a profitable company through the years. Sales were grown at an annual rate of 18% percent in 2000 and net profit reached 2.6 million rupees (Rs). In the fiscal year at the end December 31, 2001 Gross sales were projected to reach 90.9 million rupees. There are a letters from field managers in this company: A letter from a field sales manager requesting permission to grant favorable credit terms to a new customer that tells that Pondicherry to considering this company as their prime suppliers, purchase would be Rs 6,000,000 and are not reflected in current sales forecast. Besides that, Pondicherry have asked for credit terms of 80 days, net, if Kota Fibers extend the credit terms, Pondicherry will not do business with this company. From the transportation manager regarding a possible change in the inventory policy that tells about to reduce
Case Study Kota Fibres, Ltd.
29113385 29113543 29113529 29113323 29113357
Faris Hizrian Ghea Widya Pratiwi Maulana Angga Utama Silvia Regina Yuthika Fauziyyah Syndicate 6
Master of Business Administration School of Business and Management Institut Teknologi Bandung Bandung 2014
Introduction Kota fibers, Ltd., was founded in 1962 to produce nylon fiber at its only plant in Kota, India. By using new technology and domestic raw materials the firm developed a steady franchise among dozens of small, local textile weavers. It supplied synthetic fiber yarns used to weave colorful cloths for making saris, the traditional women’s dress of India. The demand for synthetic textiles was characterized by stable year-to-year growth and predictable seasonal fluctuations. Unit demand increased with both population and national income. Unit growth in the industry was expected to be 15% per year. Kota had two distribution warehouses, but regardless, moving the yarn from Kota to the customer was a problem with the trip taking 10 to 15 days and the roads typically rough and one lane. Kota Fibers had been a profitable company through the years. Sales were grown at an annual rate of 18% percent in 2000 and net profit reached 2.6 million rupees (Rs). In the fiscal year at the end December 31, 2001 Gross sales were projected to reach 90.9 million rupees. There are a letters from field managers in this company: A letter from a field sales manager requesting permission to grant favorable credit terms to a new customer that tells that Pondicherry to considering this company as their prime suppliers, purchase would be Rs 6,000,000 and are not reflected in current sales forecast. Besides that, Pondicherry have asked for credit terms of 80 days, net, if Kota Fibers extend the credit terms, Pondicherry will not do business with this company. From the transportation manager regarding a possible change in the inventory policy that tells about to reduce