Kota Fibres Case
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. Currently the industry is experiencing a growth in demand of about 15% per year. Kota Fibres is currently growing sales at a rate of 18%; this is a great sign of the strength of the company as a competitor within the industry.
However there are several issues that Kota Fibres is currently facing.
• Liquidity Issues
• Shareholder Dividend Issues
• Asset Turnover Rates
• Payment Periods
These concerns will be addressed within the body of this analysis. The understanding of the memos that Ms. Pundir has received provide more insight into the future operations of Kota Fibres and some present favorable results.
External Analysis
The external analysis for Kota Fibres is very positive with stable and predictable demand featuring a unit demand increase of 15%. The demand has increased due to both population and national income increases. The demand for synthetic yarn peaks during the mid-summer months. Kota Fibres is a synthetic yarn manufacturer, selling their product to local mills who in turn sold to merchants and retailers who finally sold to the end consumer. The supply chain system of the yarn industry starts with consumers who purchase their Saris from local cloth merchants (who maintain low levels of inventory) who
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. Currently the industry is experiencing a growth in demand of about 15% per year. Kota Fibres is currently growing sales at a rate of 18%; this is a great sign of the strength of the company as a competitor within the industry.
However there are several issues that Kota Fibres is currently facing.
• Liquidity Issues
• Shareholder Dividend Issues
• Asset Turnover Rates
• Payment Periods
These concerns will be addressed within the body of this analysis. The understanding of the memos that Ms. Pundir has received provide more insight into the future operations of Kota Fibres and some present favorable results.
External Analysis
The external analysis for Kota Fibres is very positive with stable and predictable demand featuring a unit demand increase of 15%. The demand has increased due to both population and national income increases. The demand for synthetic yarn peaks during the mid-summer months. Kota Fibres is a synthetic yarn manufacturer, selling their product to local mills who in turn sold to merchants and retailers who finally sold to the end consumer. The supply chain system of the yarn industry starts with consumers who purchase their Saris from local cloth merchants (who maintain low levels of inventory) who