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MS-41   Dec-2009

MS-41 : Working capital management

1. As the difference between the cost of short term financing and long term financing becomes smaller, which financing plan aggressive as conservative becomes more attractive ? Would the aggressive or conservative approach be preferable if the costs were equal ? Why ?

2(a) Explain the role of Cash Forecasting in cash management. Describe briefly any two methods of cash forecasting.

(b) Explain the Miller-Orr model with the help of a suitable example.

3. Discuss the different methods of creating a charge over the assets of the borrower which could be used by banks for safeguarding their interests.

4. Distinguish between the following :

a) Permanent working capital and variable working capital.

b) Options and warrants.

c) VED Analysis and F-S-N Analysis.

d) Public deposits and certificate of deposits.

5. Alpha company's present annual sales amount to Rs. 30 lacs at sale price of Rs. 12 per unit. Variable costs are Rs. 8 per unit and fixed costs amount to Rs. • 2.50 lacs per annum. Its present credit period is one month which is proposed to be extended to eithër 2 or 3 months, whichever appears to be more profitable. The following estimates are made for the purpose :

Fixed cost will increase by Rs. 50,000 annually after any increase in sales above 25% over the present level. The company requires a pre tax return on investment of at least 20% for the level of risk involved. What will be the most rewarding credit policy in case of Alpha company under the above circumstances ?

6. (a) What do you understand by Commercial Paper ? Explain the important guidelines

issued by Reserve Bank of India for the issuance of Commercial Paper.

(b) What is the meaning of the term factoring ? Explain its significance and mechanism and distinguish between with recourse factoring from without recourse factoring.

7. What do you understand by Trade Credit ? Is Trade Credit a free of cost source of financing working capital requirements ? Give reason. Discuss the different factors that determine the availability of Trade Credit to a firm.

8. Write short notes on any four of the following :

a) Decision tree model

b) Selective credit controls

(c) Gross profit ratio

d) Baumol model

e) C's to determine creditworthiness of a customer

(f) Euro Currency Market

MS-41   Dec-2010

MS-41 : Working capital management

Solved papers of MS-41 From mehta solutions

MS-41   Dec-2011

MS-41 : Working capital management

1. The cost sheet ABC Ltd. provides the following data.

                                                                           Cost per unit

Raw material                                                     Rs. 50

Direct Labor                                                              20

Overheads

(including depreciation of Rs. 10)                            40

Total cost                                                                110

Profits                                                                      20

Selling price                                                            130

Average raw material in stock is for one month. Average material in work-in-progress is

for half month. Credit allowed by suppliers; one month; credit allowed to debtors : one month Average time lag in payment of wages : 10 days ; average time lag in payment of overheads 30 days.

25% of the sales are on cash basis. Cash balance expected to be Rs. 1,00,000. Finished goods lie in the warehouse for one month.

You are required to prepare a statement of the working capital needed to finance a level of the activity of 54,000 units of output. Production is carried on evenly throughout the year and wages and overheads accrue similarly. State your assumptions, if any, clearly.

2. Explain with examples the ratios which can be used for assessing :

(a) Efficiency of working capital

(b) Structure of working capital

(c) Liquidity of working capital elements

3. (a) With help of illustrations explain risk return trade off in working capital management.

(b) Explain the various approaches a company may follow to arrive at appropriate level of investment in current assets.

4. Management of inventory must meet two-opposing objectives. Discuss them. How is balance brought between the two objectives, Illustrate with examples.

5. Explain the following sources of working capital finance :

(a) Inter-corporate loans

(b) Company deposits

6. Explain the following cash management models :

(a) Baumol model

(b) Miller and Orr model.

7. (a) What are credit standards that are used in credit policy decision ?

(b) A company has an average collection period of 60 days with sale of 2 lakh units @ Rs, 30 with variable cost of Rs. 20 and average cost per unit Rs. 25. The company is not offering any cash discount and all sales are on credit. It is considering a proposal given by its consultant to allow a 2 percent discount for payments within 10 days. It will increase sales by 2500 units and average collection period will be reduced by 15 days.

Incidently working capital needs will increase by Rs. 1 lakh. If the company makes half of the sales at cash discount and desires a return of 20 percent on investment, should the proposal of consultant be accepted ?

8. Explain the features of different forms of bank credit prevailing in India. Distinguish between pledge and hypothecation.

MS-28   June-2007

MS-28 : LABOUR LAWS

1.. The Fundamental Rights and Directive Principles of State Policy are the backbone of industrial jurisprudence in India. Elucidate.

2. Attempt any two of' the following :

(a) What arethe provisions regarding hours of work and annual leave with wages under the Factories Act, 1948 ?

(b) What are the provisions regarding health and welfare under the Plantations Labour Act, 1951 ?

(c) What are the salient features of the Child Labour (Prohibition and Regulation) Act , 1986 ?

3. What is a "trade union" under the Trade Unions Act, 1926 ? Discuss in brief the provisions for General Fund (Section 15) and Political Fund (Section 16) under the Act.

4. What is the procedure for obtaining registration by the employer and licence by the contractor under the Contract Labour (Regulation and Abolition) Act 1970 What are the obligations of the principal employer under the Act ?

5. a) Who is an "employee" under the Employees' State Insurance Act, 1948 ?

   b) Which are the establishments covered by the Act ?

   c) What are the benefits payable under the Act ?

6. Attempt any two of the following :

(a) What are the functions of the authorities under the Industrial Disputes Act , 1947 ?

(b) What are the provisions regarding strikes and lockouts under the Industrial Disputes Act ?

c) What is the procedure for fixing and revising minimum wages under the Minimum Wages Act, 1948 ?

7 write short notes on any three of the,following :

(a) Procedure for certification of standing orders under the Industrial Employment (Standing Orders) Act, 1946.

(b) Objectives of labour laws

(c) Welfare measures under the Factories Act, 1948

(d) Equal Remuneration Act, 1976

(e) Notice of change (section 9-A of the I.D. Act)

Read the case below and answer the questions given at the end of the case.

Lakshmi Manufacturing Company is a registe red factory employing 600 people. It produces spare parts for cars and scooters. Its security staff at the gate are very

rigid in checking people/vehicles going out of the works to prevent any theft of the company's material. On June 20, 1995, Prakash, material chaser, Services Department, went to the Stores Department to draw 10 new GEC electric switches

(15 amps each) for sorne urgent breakdown job. Prakash drew the material at about 11.00 a.m. and kept the same in his hand bag and put it on the cycle handle. Ther eafter, he came to the Co-operative Credit Society office to enquire about his loan application. He suddenly remembered at 11.30 a.m. his urgent work at the post office (which is situated just outside the works gate), so that he could write and post an urgent letter and therea fter go to his department which is situated at a distance of about one km from the Stores Department. The distance between the Stores Department and the Works gate is about 50 metres

Prakash works in general shift, i.e. from 7.00 a.m. to 11.30 a.m. and from 12.30 p.m. to 4.00 p.m. The lunch break is from 11.30 a.m. to 12.30 p.m. and during this period, workers are allowed to go out of the works. Prakash, like many others, arranged with a person to get his tiffin-carrier from home to his department every day at 11.45 a.m., or payment of a nominal amount every month. On June 20 also, his tiffin-carrier had come with his lunch as usual. At 11.35 a.m., there was. a telephone call to Mahesh Kumar, Manager Services Department from the Security Inspector Ramanand that one Prakash T.No. 321 has been caught red-handed at the works gate while trying to go out of the works with 10 new GEC electric switches belonging to the company. The two security staff who detected the attempted theft were Ramadhin and Trilochan. The materials were kept in a bag hanging from the cycle handle of Prakash.

After the incident, a preliminary enquiry was held, when Prakash confessed in writing that by mistake he was carrying the switches as he intended to come back to his department after his urgent work at the post office. As per procedure for drawing materials in the Services.

   Department, on the basis of a written instruction in the Log Book from the supervisor, material chaser is supposed to prepare the material requisition after entering the details himself in the Materials Requisition Register. After getting the Requisition signed by the supervisor and the departmental head, he is supposed to go to the Stores Department to draw the material. If the materials are heavy, he has to arrange for a transport. For small items like switch, fuse etc. Prakash himself carried the same to the department. Thereafter, he is supposed. To hand over the material to the supervisor and obtain his signature in the Materials Requisition Register. On checking the entries in the Log Book as well as in the Materials Requisition Register after the incident, it was found that Prakash had correctly entered ten pieces GEC electric switches (15 amps each). As per standing order No. 17 (iii) of the Company's certified Standing orders, "Theft, fraud or dishonesty in connection with company's business or property" is a misconduct warranting dismissal as per Standing Order No. 18. The rules also provide that the manager can issue a charge-sheet and also punish with dismissal any employee of his department who is alleged to have committed an act of misconduct.

Questions :

(a) Advise the manager, Services Department on the steps required to be taken in this case.

(b) Assuming that a domestic enquiry is to be held, suggest various steps of enquiry, in detail.

(c) Suggest what positive measures are to be taken by the company for maintaining and promoting sound industrial discipline.

MS-28   June-2008

MS-28 : LABOUR LAWS

l. Describe industrial adjudication and discuss the constitutional directive and limitations to labour laws.

2. Explain the concept of Contract labour, Contractor, Principal employer and Workman under the Contract Labour (Regulation and Abolition) Act, 1986. Discuss the obligations of principal employers regarding payment of wages.

3. Define the concept of Conciliation and explain the process of conciliation in an Industrial dispute.

4. Explain the meaning of Wages as envisaged in the Minimum Wages Act, 1948. What is the procedure for fixing and revising the minimum rates of wages ?

5. Write short notes on any three of the following :

(a) The scope and coverage of The Mines Act, 1952

(b) International Labour Organisation (lLO)

(c) Domestic Enquiry of Applicability

(d) The Payment of Gratuity Act, 1972

(e) Scope and applicability of The Plantations Labour Act, 1951

6. Read the case given below and answer the questions given at the end of the case.

The Vilas Mills Ltd., with a work force of about 2000 workmen, has been running smoothly for the past twenty years. There has been an increase both in the workers

category (5000) and white collar strength (56) during the last five years. There were no industrial disputes during the last fifteen years and even when other mills in the

locality were running into trouble with regard to industrial relations problems the Vilas Mills did not face any problem. The mill had two registered unions, one recognized by the mills, called The Vilas Mills Union and the other unrecognised, called the Mill Workers Union. The recognised union claimed that they have a following of 80 - 90 per cent of the workers. The unrecognised union claimed that they have a following of30 - 40 per cent and almost all white collar staff are their

followers. The 'Mill Workers Union' served a notice on the Administration with the following demands :

i)Foreman should be transferred to some other Unit.

(ii) Canteen facilities should be improved and the service of meals should be arranged for the night shift also.

(iii) Workload should be reduced both for blue collar and white collar staff.

(iv) Ambulance to be kept in mills for all twenty-four hours

(v) First-aid box should be replenished every two days.

Though the Union was an unrecognised one, it commanded about 30 per cent of the work force, and it was the Administration's policy was to examine any proposal put up by the Union and agree to certain demands in the interest of the administration and workers. Based on this policy, the Administration examined the above demands and straight-away implemented in part, demands (ii) and (iv) and did not consider demands (i), (iii) and (v) at all. Finding the Administration receptive to suggestions and conceding demands, as well as to show their prowess, The Vilas Mills Union too served a notice on the following points : -(1) Service rules to be modified.

(21 Transport should be arranged for all workers (including white collar) free of cost.

(3) Snack rates in the canteen should be reduced.

4) Automatic promotion should be given on completion of six years.

5) Transfers from one unit to another should be readily agreed to.

6) Victimisation should not be resorted to.

7)Apprentices given training under Apprentices Act should be appointed at least as

'badli' workers and 'badli' workers regularised as regular workers.

The Administration examined these demands but found it not practicable to concede to any of them except demand (3) which was consid ered and the rates reduced.: The recognised Union (The'Vilas Mills Union) served a strike notice on the Administration giving three weeks notice and setting the date of commencement of strike under Section 23 of the Industrial Disputes Act. At this stage, the Labour Department stepped in and started conciliation proceedings under Sections 4 and 5

of the Industrial Disputes Act. The strike could, therefore, not take place.

However, the conciliation proceedings fell through and the Labour Commissioner reported to the Government, failure of negotiations.

     The Government then examined and formed its opinion under Section 10(1) of the Industrial Disputes Act and did not consider it fit to refer the case for Arbitration or to the Labour Courts.

The Union felt that this decision was unjust and renewed their notice of strike stating that with effect from a certain date, they are going on strike. Accordingly, they went on strike from the modified date to press for their demands. The 'Mill

Workers Union' did not take part in the strike. However, it was seen that only about

800 persons were ready to come to work and they too could not attend due to f,ear of intimidation and non-availability of transport.

The mill at this stage declared the strike as illegal and declared a lock-out. The Vilas Mills Union maintained that the strike was not illegal as per Section 24 of Industrial

Disputes Act since the provisions Section 23 of the Act have been complied with and that the lock-out was illegal and that the mill authorities have to f,ace the

consequences. The deadlock continued. In the above case study, it is assumed that the Government has recorded and communicated to the parties the reasons for not making a reference under Section 12(5)

Questions :

(a) Is the strike legal or illegal ? Is the lock-out justified ? Is it legal or illegal ?

(b) How can such a stalemate be avoided ?

(c) Is there a defect in the legislation ? If so, where, and how can the defect be overcome ?

MS-28   June-2009

MS-28 : LABOUR LAWS

1- Discuss the sources of industrial jurisprudence in India. Briefly describe the role of adjudicatory bodies.

2- Describe the historical development of the Factories Act, 1948. Explain the process for approval, licensing and registration of factories.

3. What are the objects and functions of trade unions ? Describe the procedure for the registration and cancellation of a trade union.

4- Define Minimurn, Fair and Living wages. Briefly explain the enforcement of Minimum Wages Act.

5- write short notes on any three of the following :

(a) Domestic enquiry

(b) Certiorari

(c) Strikes and lockouts

(d) Retrenchment

(e) Res judicata

MS-28   June-2010

MS-28 : LABOUR LAWS

1. Briefly explain the terms :

a) Natural Justice

b) Equity

(c) Res Judicata

2. State the provisions relating to health and welfare under the plantations Labour Act, 1951,

3. Briefly state the main provisions of the Industrial Employment (Standing Orders) Act, 1946.

4. What are the various benefits payable under the workmen's compensation Act, 1923 ? Explain the provisions relating to distribution of compensation under this Act.

5. Write short notes on any three of the following :

a) Benefits payable to a female employee under the Maternity Benefit Act, 1961.

b) Payment of Gratuity under payment of Gratuity Act 1961

c) Obligations of employers and rights of employees under the payment of Bonus Act, 1965.

d) Mandamus.

(e) Domestic Enquiry

6. Read the case given below and answer the questions given at the end of the case.

Mohanlal, the lineman (electrical), was working in the power supply group of the electrical maintenance section of the mines Department. He had 15 years of experience of

repair and maintenance of high - tension (6.6 KV) and low - tension (440 V) overhead electric lines. From the beginning of the mines operation, he was engaged for the erection of electrical lines in the quarry area of the mines. During his service, he acted as leader of the crew whenever the charge man was absent. One day at 1 p.m. a message was received in the mine control centre that Mohanlal had fallen from a low - tension pole. He was shifted to the mines hospital where he was declared unfit for six weeks due to injuries on his shoulders, legs, and hands. On preliminary inquiries from his co-workers, it was gathered that Mohanlal was sent to attend the fuse complaint from the union office in the camp area. He was assisted by two persons. The helpers, who were at the site, said that Mohanlal checked the electrical circuit of the premises and upon finding everything in order, concluded that the supply was disconnected from the service lines on the pole near the office. He climbed the pole, but before he could attend to the fault he fell down from a height of about 6.5 meters and sustained physical injuries. Mohanlal stated in the hospital that as he climbed the pole, his elbow made contact with something metallic and that he felt some sensation in the nerves due to which he could not hold the pole firmly. In addition, the grip of one of his legs was lost. Consequently, he lost balance and fell down. On interrogation as to why he did not use a ladder and safety belt, he replied that he had not assessed this to be a job of line repair work. Further, he had been doing such

repairs many times earlier without the ladder and safety belt. He also pointed out the non-availability of transport and manpower for carrying the tools and tackles to the accident site. Further, he said that safety belts caused more inconvenience while working on the lines. He also confirmed that he had switched off the main supply lines feeding that area. He did not know what sensation he got in his body, but it was not electric shock, he said.

Questions :

a) What are the issues ?

b) Should Mohanlal be given paid leave and compensated as per the provisions in the

Workmen's Compensation Act ? Should he be penalised for his negligence or violation

of safety regulations, if any ?

c) Would it make a difference if Mohanlal was a contract worker, not a regular employee ?

d) What was the role of management, particularly the person who supervises the work of Mohanlal ?

MS-28   June-2011

MS-28 : LABOUR LAWS

1. Explain the sources of industrial jurisprudence in India. Discuss the specific objectives of labour legislation in India.

2. What is the meaning of the term "factory" under the Factories Act, 1948 ? Explain the provisions relating to hazardous processes under the Act.

3. Define Industrial Disputes and discuss the powers and duties of authorities under the Industrial Disputes Act, 1947.

4. Explain the process of domestic enquiry. Briefly describe the role of enquiry officer in it

5. Write short notes on any three of the following :

(a) Natural justice

(b) Registration of plantations

(c) Acts of misconduct

(d) Charge sheet

(e) Equal pay for Equal work

6. Read the following case and answer questions given at the end.

On every working day, when the Workers canteen of the company is opened at 8 a.m., there would be a big rush of employees for purchase of snacks and tea Normally, employees stand in queue for the purchase of various items from two different counters. The canteen remains open for half-an-hour and all employees who come there can conveniently purchase eatables, if they stand in queue.

On February 14, 1995, at about 8.15 a.m., Harvindar, Fitter, bearing Token No. 45 came to the canteen when in both counters people were standing in queue. Harvinder, who normally avoids standing in queue, tried to purchase the snacks through Vinod, a co-worker, bearing Token No. 84, who was in the queue. This was objected to by Ramlal, Welder, Token No. 88, who was standing just behind Vinod. Arguments started

between Harvinder and Ramlal. They were both angry and in the process, Harvinder gave a slap to Ramlal. The canteen supervisor, Joseph, intervened and separated them.

Incidentally, both Harvinder and Ramlal were active members of two different rival unions operating at the plant level.

     As per company's certified Standing Order No. 23(i), 'Riotous, disorderly or indecent

behaviour within the company's premises is a misconduct'. The works manager is the disciplinary authority as per the Standing Orders.

Questions :

(a) What is the problem in the case ? Discuss.

(b) Advise the works manager on the steps for handling this case.

(c) Draft a charge sheet to be issued to the employee concerned for his misconduct.

MS-28   Dec-2007

MS-28 : LABOUR LAWS

Labour law very important questions from mehta solutions

MS-28   Dec-2008

MS-28 : LABOUR LAWS

1. What are the provisions of Retrenchment in the Industuial Disputes Act, 1947 ? Discuss the recommendations of Second National Commission on labour retrenchment.

2. Briefly describe the concept and processes of Domestic Enquiry in Industry.

3. Discuss the concept of "arising out of and in course of employment" stipulated in the Workmen's Compensation Act, 1923. Give examples to make your arguments convincing.

4. What are authorised deduction, giu"n in the Payment of Wages Act, L936 ? Why are such provisions made in the Act ?

5. Write short notes on any three of the following :

(a) Eligibility for gratuity

(b) Equal pay for equal work

(c) Charge sheet

(d) Award and Settlement

(e) Employee Pension Scheme, 1995

6. Briefly describe the concept of writs and appeals under the Indian Constitution.

What is the meaning of the term "factory" under The Factories Act, 1948 ? Explain the procedure for approval, licensing and registration of factories.

7. Explain briefly the objectives, scope-and coverage of the Payment of Wages Act, 1936. Discuss the powers of inspectors under the Act.

8. Define "Trade union", and discuss the procedure for the registration and cancellation of a trade union under the Trade Union Act. 1926.

5. Write short notes on any three of the following :

(a) Social justice

(b) Registration of establishment

(c) Lay-off

(d) Dismissal and discharge

(e) Principles of 'Set on' and 'Set off' under

f)   Payment of Bonus Act, 1965

6. Read the following case and answer the questions given at the end :

On March 25, 1996 at about 6.45 PM, the Duty Officer (Security), Kumar, at the Works gate informed Rathod, Electrical Engineer on telephone that one Narayan, superisor of his department has been caught red-handed at the Works gate while attempting to steal one small electric motor and certain other spare parts used in the Electrical Dept. Rathod was requested to come to the Security Control Room, where a preliminary enquiry was to be held. During the preliminary enquiry, it came to light that Narayan, Personnel No. 5824, Foreman, came to the Works gate at 6.15 PM on his Suvega autocycle bearing registration no. BRX 1421 (the number was not clearly visible). The works guard on duty, Krishna Bahadur asked Narayan to stop and open the tool-box that was hanging on the right side of the rear wheel. When it was opened, only one empty tiffin-box was found. Since the driver's seat appeared to be thicker and of unusual size, the works guard enquired about the same from Narayan, and not being satisfied with the reply, gave it a jerk. It was found that Narayan had constructed one box under the seat where a 0.50 HP motor and eight 5 amps switches belonging to the company were concealed. On being asked, Narayan replled that he had attended a break-down after 5 PM in the Mill and replaced one 0'50 HP motor. The motor that was recovered was the defective one, but he could not return it as the store-issuer had already left for home after his duty which ended at 5 PM. He thought he would return the motor next day, as he had done many times in the past. He, however, could not explain why he was carrying the 5 amps switches. Nor did he give any satisfactory reason for not keeping the materials in the tool-box that was visible from outside, rather than where these were kept. On checking up at the Security Control Room, it was found in the presence of Narayan, that the electric motor recovered was in working condition. As per the Company's Certified Standing Order No. 23(iii),

'theft, fraud, or dishonesty in connection with company's business or property' is a

misconduct.

Questions :

(a) Does this case deserve suspension, pending enquiry ?

(b) Advise the Works Manager on the steps for handling the above case.