1. MCC PTA India Corp. Private Limited
Summer Internship Program
2013
By:
Pooja Ghosh
Enrollment no.: 12BSPHH010703
IBS HYDERABAD
DATE:27TH May, 2013

3. About The Company
 Mitsubishi Chemical Corporation (MCC),
a Fortune 500 giant, is Japan’s largest
diversified chemical company.
It is also the world’s second largest
producer of Purified Terephthalic Acid
(PTA).
In 1997, it decided to enter into a
shareholder’s agreement with the West
Bengal Government, setting up an affiliate
company, MCC PTA India Corp. Private
Ltd (MCPI), headquartered in Kolkata.

4. Methodology
Data collection methods-
Secondary data namely Annual reports and
internal/sales records. In addition certain
theoretical books were referred for the
purpose of the analysis and certain valuable
information was found from different
websites.
Primary data includes which was collected
by conducting various discussions and
interviews with the managers and employees
of the company.

5. Tools and Techniques
 Altman’s Z-score Analysis
 Financial Ratio Analysis.
 DuPont Analysis
 Calculate various components of Return on Equity
 Comparative Financial Statements
 Trend Analysis (Indexing)
 Common Size Analysis
 Regression Analysis
 Correlation Analysis
 Moving Averages
 Cash Conversion Cycle
 Net Working Capital
 Software was used for data analysis( Excel)

6. Working Capital Management and
its Main Components
Cash Conversion Cycle
Operating Cycle- Net operating cycle
Correlation Analysis between the
important components of working capital
and performance indicators.
Discuss the major dimensions of working
capital management- accounts
receivables, accounts payables, cash and
inventory management.

7. Working Capital Management and
Cash Conversion Cycle
25.32
50.06
91.88
66.5159.2954.01
117.84
159.51
208.22
263.31
136.91
190.72
-83.44
-98.87
-87.85
-173.16
-52.02
-107.31
-200.00
-150.00
-100.00
-50.00
0.00
50.00
100.00
150.00
200.00
250.00
300.00
2006 2007 2008 2009 2010 2011 2012 2013
Days sales
outstanding
Days inventory
outstanding
Days payable
outstanding
Cash Conversion
Cycle

8. Operating Cycle
82.03
74.96
89.98
52.34
26.15
-99.74
-142.60
-182.65
-118.53
-110.17
-200.00
-150.00
-100.00
-50.00
0.00
50.00
100.00
150.00
Gross
Operating
Cycle
Net Operating
Cycle
2008 2009 2010 2011 2012

9. Correlation Analysis
Correlation analysis is used to quantify
the relationship between variables.
The value ranges from +1.0 to -1.0.
Hypothesis-Working capital management
has a relationship with the performance
analysis of the company.
Result of Analysis- True

10. Correlation Analysis between Working
Capital Factors & Performance Factors
Variables CCC CATA CLTA ROA ROE
CCC 1.000
CATA 0.283 1.000
CLTA -0.145 0.791 1.000
ROA 0.505 0.263 -0.289 1.000
ROE 0.533 0.274 -0.275 0.999 1.000

11. Working Capital Management-Its
major dimensions
Important Components of Working Capital
management that need to be considered are:
I. Receivables Management
II. Cash Management
III. Payables Management
IV. Inventory Management

12. Receivables Management
The receivables management of the
company is very strong and it faces
negligent chances of bad debt losses.
The company maintains a strict collection
policy whereby the customers are suppose
to pay their bills either in advance or
within a span of maximum 20days.
Credit is given only to two big customers-
RIL & JBF.

13. Receivables Management
8.178414777
12.23996807
24.89733573 24.98330761
27.91377078
14.69910223
0
5
10
15
20
25
30
Average Collection Period
2012 2011 2009 2008 2007
There is a positive relationship between sales and collection which indicates
that the receivables management of the company is healthy.
According to the company records we have seen that the average collection
period is very less compared to the industry average. At present in 2012 it is
just 8 days.
The company does not face issues with bad debts as most of the customers
pay their bills in advance.

14. Correlation Analysis betwee Sales and
Collections
Correlation Analysis
between Sales and
Collections
Variables Sales Collections
Sales 1.000
Collections 0.2480 1.000
Thereceivablesmanagementofthecompanyishealthyandtherelationshipbetweenthevariablesisperfect.

15. Moving Averages
It helps in tracking the trends of sales of a
company by smoothing out the fluctuations.
Prediction of the future sales of a particular
product over a specific time period is based on:
A. Past performance
B. Inflation rates
C. Market trends
D. Interest rates.
 It is the primary tool for predicting the volume
of attainable sales.

16. 0
500000000
1E+09
1.5E+09
2E+09
2.5E+09
3E+09
3.5E+09
4E+09
4.5E+09
0 5 10 15 20 25 30
Value
Data Point
3 Monthly Moving Average
Forecast

17. Cash Management

18. Cash Management
The company maintains a good cash balance
always as liquidity plays a very important role.
There are ways in which the company manages a
negative cash balance:
I. Extension Payment Period.
II. Buyer’s credit/ Short Term Loan.
III. Overdraft Facility by SBI.
 Cash planning plays a very important role.
Among its main cash outflows is the purchase of
Paraxylene which is the main raw material for
producing PTA.

19. LIQUIDITY POSITION OF MCC PTA
INDIA CORP. PRIVATE LIMITED
0.63
0.84
0.92
0.62
1.20
1.14
0.42
0.53
0.49
0.36
0.77
0.83
0.09
0.22
0.01
0.08
0.260.28
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
Current
Ratio
Quick Ratio
Absolute
Quick Ratio
2007 2008 2009 2010 2011 2012

20. Payables Management
The first objective is paying bills at a
later date.
The second objective of the payables
department is to hold money as long as
possible.
The third objective of the payables
department is to build strong
relationships with vendors.

21. Payables Management
181.77
217.56
272.63
170.88
136.32
0.00
50.00
100.00
150.00
200.00
250.00
300.00
Average Payment Period
Average
payment
period
2008 2009 2010 2011 2012
In 2012 we see that the average payment period is 136 days.
Generally all company wishes to keep their average payment period
longer as this facilitates them in maintaining liquidity.
We notice an increasing trend from 2008 to 2010 which is a healthy
sign in terms of payables management.

22. Inventory Management
For a manufacturing company like MCC
PTA India Corp. Private Ltd inventory is
materials needed to produce the final
product, work-in-progress and finished
goods.
 For this company inventory is one of the
largest asset item in the balance sheet.

23. Inventory Planning
The company has a system whereby the
people, systems and databases all interact
with each other.
They have an integrated specialized
demand and inventory planning software.
The top management involves themselves
in forecasting sales.
They use standardized data definitions.

24. Financial Performance Analysis
FINANCIAL PERFORMANCE ANALYSIS
Ratio Analysis
Common Size
Financial Analysis
Trend Analysis
Altman's Z-
Score
Du Pont
Analysis
Comparative
financial
statements
Leverage

25. Firm-wise Analysis
0.632
0.841
0.925
0.616
1.196
1.141
0.000
0.200
0.400
0.600
0.800
1.000
1.200
1.400
Current Ratio
Series1

26. Firm-wise Analysis
2.86
1.69
2.21
2.78
1.31
0.96
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
Debt-Equity Ratio
Series1
2012 2011 2010 2009 2008 2007

27. Firm-wise Analysis
8.178414777
12.23996807
24.89733573 24.98330761
27.91377078
14.69910223
0
5
10
15
20
25
30
Average Collection Period

28. Firm-wise Analysis
-9.24%
-4.33%
-11.58%
-24.55%
0.61%
4.06%
-30.00%
-25.00%
-20.00%
-15.00%
-10.00%
-5.00%
0.00%
5.00%
10.00%
Net Profit Margin
2007 2008 2009 2010 2011 2012

29. Firm-wise Analysis
-28.33%
4.82%
18.78%
-36.38%
-5.75% -6.45%
-40.00%
-30.00%
-20.00%
-10.00%
0.00%
10.00%
20.00%
30.00%
Return On Equity

30. Inter-firm Analysis
0.6318
0.8410
0.9250
0.6160
1.1958
1.1163
1.25351.2692
1.1045
1.2979
0.0000
0.2000
0.4000
0.6000
0.8000
1.0000
1.2000
1.4000
1.6000
1.8000
2.0000
Nov/07 Jun/08 Dec/08 Jul/09 Jan/10 Aug/10 Feb/11 Sep/11 Apr/12 Oct/12
Current Ratio(MCC
PTA)
Current Ratio(RIL)
Current Ratio(BASF)
Current Ratio(IOCL)
Current Ratio(TATA
CHEMICALS)
INDUSTRY AVERAGE
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12

31. Inter-firm Analysis
0.4193
0.5302
0.4891
0.3647
0.7653
0.6301
0.6971
0.59580.5852
0.6888
0.0000
0.2000
0.4000
0.6000
0.8000
1.0000
1.2000
Quick
Ratio(MCC
PTA)
Quick
Ratio(RIL)
Quick
Ratio(BASF)
Quick
Ratio(IOCL)
Quick
Ratio(TATA
CHEMICALS)
INDUSRTY
AVERAGE
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12
Mar-10 Mar-11 Mar-12

32. Inter-firm Analysis
2.8638
1.6909
2.2087
2.7750
1.3090
0.7747
0.5792
0.8470
1.0794
0.6556
-0.5000
0.0000
0.5000
1.0000
1.5000
2.0000
2.5000
3.0000
3.5000 Debt Equity Ratio(MCC
PTA)
Debt Equity Ratio(RIL)
Debt Equity
Ratio(BASF)
Debt Equity
Ratio(IOCL)
Debt Equity
Ratio(TATA
CHEMICALS)
INDUSTRY AVERAGE
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12

33. Inter-firm Analysis
9.8132
7.0016
4.4613
6.2070
6.5178
8.3867
7.9110
6.6031
8.3812
7.3821
0.0000
2.0000
4.0000
6.0000
8.0000
10.0000
12.0000
Inventory Turnover
Ratio(MCC PTA)
Inventory Turnover
Ratio(RIL)
Inventory Turnover Ratio
Ratio(BASF)
Inventory Turnover
Ratio(IOCL)
Inventory Turnover
Ratio(TATA
CHEMICALS)
INDUSTRY AVERAGE
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12

34. Inter-firm Analysis
8.18
12.24
24.9024.98
27.91
24.55
21.15
26.03
23.71
30.42
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
Nov/07 Jun/08 Dec/08 Jul/09 Jan/10 Aug/10 Feb/11 Sep/11 Apr/12 Oct/12
Average Collection
Period(MCC PTA)
Average Collection
Period(RIL)
Average Collection
Period(BASF)
Average Collection
Period(IOCL)
Average Collection
Period(TATA
CHEMICALS)
INDUSTRY AVERAGE
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12

35. Inter-firm Analysis
-9.24%
-4.33%
-11.58%
-24.55%
0.61% 1.51%
3.36%3.78%
-0.26%
8.06%
-30.00%
-25.00%
-20.00%
-15.00%
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00% Net profit Ratio(MCC
PTA)
Net profit Ratio(RIL)
Net profit Ratio(BASF)
Net profit Ratio(IOCL)
Net profit Ratio(TATA
CHEMICALS)
INDUSTRY AVERAGEMar-08 Mar-09 Mar-10 Mar-11 Mar-12

36. Inter-firm Analysis
-3.71
0.632.46
-4.76
0.76
28.51431.276
36.01437.074
51.146
-20
0
20
40
60
80
100
120
140
160
Earnings per share(MCC
PTA)
Earnings per share(RIL)
Earnings per share(BASF)
Earnings per share(IOCL)
Earnings per share(TATA
CHEMICALS)
INDUSTRY AVERAGE
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12

37. Altman’s Z-Score Analysis
The Z-score for predicting bankruptcy was
published in 1968 by Edward I. Altman
Altman‘s Z-Score analysis is used for knowing
the company’s fiscal fitness (a method to predict
the bankruptcy prediction for a company)
Zones Of Discrimination:
Z > 2.99 - “Safe” Zone
1.81 < Z < 2.99 - “Grey” Zone
Z < 1.81 - “Distress” Zone

38. Z-SCORE FOR IOCL
2.192.16
2.43
2.692.70
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
Z-SCORE FOR IOCL
Z-SCORE
2008 2009 2010 2011 2012
SAFE ZONE
DISTRESS ZONE
GREY ZONE

39. Z-SCORE FOR RELIANCE
INDUSTRIES LIMITED
1.73
1.35
1.27
0.93
1.55
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
Z-SCORE FOR RIL
Z-SCORE
2008 2009 2010 2011 2012
GREY
ZONE
DISTRESS
ZONE
SAFE ZONE

40. Z-SCORE FOR TATA
CHEMICALS
2.20
2.04
1.92
2.06
1.78
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
Z-SCORE FOR TATA CHEMICALS
Z-SCORE
2008 2009 2010 2011 2012
DISTRESS ZONE
GREY ZONE
SAFE ZONE

41. Z-SCORE FOR BASF
2.40
2.67
3.04
2.94
3.06
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
Z SCORE FOR BASF
Z-SCORE
SAFE ZONE
GREY ZONE
DISTRESS ZONE
2008 2009 2010 2011 2012

42. Z-SCORE FOR MCC PTA INDIA
CORP. PRIVATE LIMITED
0.78
0.93
0.58
-0.25
0.52
-0.50
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
2007.5 2008 2008.5 2009 2009.5 2010 2010.5 2011 2011.5 2012 2012.5
Z-SCORE FOR MCC PTA INDIA CORP. PRIVATE
LIMITED
Series1
Series2
Series3
Series4
SAFE ZONE
GREY ZONE
DISTRESS ZONE

43. Trend Analysis
100
139.5888424
862.6740657
-435.682433
-381.2614795
601.073595
-800
-600
-400
-200
0
200
400
600
800
1000
SALES
EBIT
PAT
CURRENT ASSETS
CURRENT
LIABILTIES
GROSS FIXED
ASSETS
NET ASSETS
TOTAL ASSETS
NET WORTH
DIVIDEND2007 2008 2009 2010 2011 2012

44. RETURN ON EQUITY ANALYSIS
One of the most important fundamental facts about
any business is that the operating performance of the
firm shapes its financial structure. One of the most
popular measures of financial performance is Return
on Equity (ROE).
Three Determinants of ROE:
 Profit Margin= Net Income/ Sales
 Asset Turnover= Sales/ Assets
 Financial Leverage= Assets/ Shareholder’s Equity.

45. RETURN ON EQUITY ANALYSIS
-0.0924-0.0433-0.1158
-0.2455
0.00610.0406
2.1689
1.4488
0.64640.5992
0.6815
1.1306
2.45532.5240
2.7583
2.6808
2.3999
2.1387
-0.5000
0.0000
0.5000
1.0000
1.5000
2.0000
2.5000
3.0000
Profit Margin
Asset Turnover
Financial
Leverage
2007 2008 2009 2010 2011 2012

46. ASSET MANAGEMENT RATIOS
44.63
29.82
14.6614.6113.08
24.83
37.19
52.13
81.81
58.80
56.00
28.29
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
Accounts Recievables
Turnover
Days in Receivables
Inventory Turnover
Days in Inventory
Capital Turnover
Fixed Assets Turnover Ratio
Total Assets Turnover Ratio2007 2008 2009 2010 2011 2012

47. Du Pont Analysis
-0.115381208
0.0191084770.068102295
-0.135709581
-0.023945032
-0.5
0
0.5
1
1.5
2
2.5
MCC PTA India Corp. Private limited
PAT/EBT*
EBT/EBIT*
EBIT/SALES*
SALES/TOTAL ASSETS*
TA/EQUITY
ROE
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12

48. Du Pont Analysis
0.1187084580.127170907
0.178052573
0.118303067
0.23970013
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
Reliance Industries Limited PAT/EBT*
EBT/EBIT*
EBIT/SALES*
SALES/TOTAL
ASSETS*
TA/EQUITY
ROE
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12

49. Du Pont Analysis
0.068328360.1345593320.202175225
0.067038
0.169462533
0
0.5
1
1.5
2
2.5
3
3.5
4
Indian Oil Corporation Limited
PAT/EBT*
EBT/EBIT*
EBIT/SALES*
SALES/TOTAL
ASSETS*
TA/EQUITY
ROE

50. Leverage Analysis
186.935
13.680
0.119 5.646
-50.000
0.000
50.000
100.000
150.000
200.000
250.000
300.000
MCC PTA INDIA CORP PRIVATE LTD
DOL
DFL
DTL

51. Leverage Analysis
-1.4497
-8.3298
-1.0323
-0.6605
1.6453
0.6865
1.1485
2.1827
-10.0000
-8.0000
-6.0000
-4.0000
-2.0000
0.0000
2.0000
4.0000
INDIAN OIL CORP LTD.
DOL
DFL
DTL
2008 2009 2010 2011 2012

52. Leverage Analysis
-1.7763
1.5680
-0.4476
0.1967
1.0664
-0.4558
1.5428
0.3466
-2.5000
-2.0000
-1.5000
-1.0000
-0.5000
0.0000
0.5000
1.0000
1.5000
2.0000
RELIANCE INDUSTRIES LIMITED
DOL
DFL
DTL

53. Findings
The Average Collection Period is very low.
Transportation costs are extremely high
The company has a negative operating cycle
There is a credit crunch which leads to
shortage of cash balance of the company
which leads to a fall in current ratio.
The Average Payment Period is very long so
reputation of the firm may be hampered.
In the Z-score analysis we see that the
company lies in the Distress zone.

54. Findings
The company takes huge amount of short
term loan for its day to operations and
payment of its creditors.
The payables management of the company is
not very strong so it looks for buyer’s credit
and extension in payment period from its
reliable suppliers.
The company takes financial help from its
parent company, Mitsubishi Chemical
Corporation.
The sale price of PTA is independent of the
raw material cost

55. Recommendations
The company needs to explore cheaper
sources of funds for its operations.
The strict credit policy can be liberalized
to increase the customer base.
The transportation costs can be recovered
from the customers to reduce
transportation costs.
Payment to creditors must be made on
time.

56. ANNEXURES

57. THANK YOU