Collections management; ITC Agro tech Limited

Abstract

ITC Agro Tech Limited sells both branded and unbranded refined edible o11 through two different groups, Commodity Trading Team (C.T.T.) and Brand Management Group (B.M.G.), respectively. The objective of the project was to suggest measures to reduce the cost of collections. CTT collections are done through either ANZ Grindlays or Citibank depending on the location. The cost of collections were abnormally high because of the high collection charges of Citibank which was about 5 to 6 times that charged by ANZ. The report examines different options of collection with the objective of cost reduction mainly by replacing collections by Citibank with other methods. The most viable options are: - A discount of .75% on the purchase price as compensation for immediate payment by Demand Draft. - Collection by ANZ instead of Citibank for a few high volume areas. - Collection at location (i.e. where cheque is payable) and subsequent transfer to Hyderabad through 4 Draft or Telegraphic Transfer. Faster collection at higher costs. BUG eollections are through ANZ Grindlays. The collections are done from all over the country at the various ANZ branches for subsequent transfer to Hyderabad. The following options can be adopted for cost reduction: - Five wore areas were identified for direct transfer to Hyderabad, namely Lucknow, Cuttack, Baroda, Patna and Bhopal.