RECEIVABLE MANAGEMENT OF INDIAN AUTOMAKERS IN A REVIVED SCENARIO *P.Nageswari ,** E.Bennet, *** Dr.M. Selvam Abstract January 2010 marks a milestone in the automotive journey of the country with Maruthi Suzuki, Tata Motors, Mahindra & Mahindra and General Motors India reporting their highest ever monthly sales. A firm’s profitability is determined partly by way of its working capital management. An efficient management of working capital will yield significant results and its neglect can be highly dangerous to any firm. The Automobile Industry is growing at a very high speed. During the post global financial crisis, the growth of the Automobile Industry is at a very high rate compared to the other industries. A sample of eleven companies were selected for this study on the basis of high sales turnover and data for this study were collected for a period from 1999 to 2009 to analyze whether the sample companies really managed their Receivables or not. The study used Ratio Analysis and ANOVA as tools to find out the efficiency of Receivable Management during the study period. The study found out that the Automobile Industry in India efficiently managed their Receivables and based on the future sales forecast, the sales turnover and profit will be good in the future.
Keywords: Receivable Management, Profitability, Automobile, Working Capital.
* Research Scholar, Department of Commerce and Financial Studies, Bharathidasan University, Tiruchirappalli, Tamil Nadu, India **Research Scholar, Department of Commerce and Financial Studies, Bharathidasan University, Tiruchirappalli, Tamil Nadu, India *** Associate Professor and Head of the Department of Commerce and Financial Studies, Bharathidasan University, Tiruchirappalli, Tamil Nadu, India
Electronic copy available at: http://ssrn.com/abstract=1791942
1.0 Introduction Automakers zoom on the fastest lane in January 2010. January 2010 marks a milestone in the automotive journey of the country with Maruthi Suzuki, Tata Motors, Mahindra & Mahindra and General Motors India reporting their highest ever monthly sales. Maruthi, the top car maker, set a new sales record of nearly 96,000 units, while its closest challenger, Hyundai Motor India, clocked 52,635 units and, in the process, its highest ever domestic sales at 29, 601 units. For Tata Motors, passenger vehicle sales of 26,245 units was its highest ever to date. Similarly, Mahindra & Mahindra and GM India saw their sales reaching all-time highs of 20,332 and 9,421 units respectively. The January month also saw the company treble its exports to 14,562 units and register a 40 percent growth in the multi purpose vehicle segment, which almost touched 11,000, with the new Eeco 1. It is worth noting that creating value with cash flow, high profitability and better consumer service are fundamental challenges to all types of business. In this regard, the aim of any company is to increase the profit by increasing sales and reducing cost. A trader very often buys and sells goods on a credit basis. The credit is one of the instruments to promote sales in the competitive world. In the event of credit sales, the sundry debtors are one of the significant and major components in the Receivables Management. The objectives of Receivable Management are to increase the volume of sales, to ensure credit worthiness or financial soundness of the concern and to measure the effective handling of accounts Receivables. In a business concern, the accounts receivable is considered to be the most important aspect of financial planning and control next only to inventories and cash. The term ‘Accounts Receivable’ is defined as ‘debt owned to the firm by customers arising from sale of goods or services”. The word ‘Account Receivables ’ is also known as ‘Sundry Debtors’ or ‘Trade Debtors’ or ‘Book Debts’. The Sundry Debtors may be defined as “money due from a customer for sale of goods or services in the ordinary course of business”.
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