Submitted By:Meghal ShahExam Set No.M.B.A Semester II

ANAND INSTITUTE OF MANAGEMENTM.B.A PROGRAMME

OPP.TOWN HALL, NR. GRID, ANAND

JUNE 2010

1

2010

Submitted to

FACULTY GUIDE

Krishna Gor

(Anand Institute of Management)

COMPANY GUIDE

Mr. Amar Petiwale

Excicutive RIL,(VMD)

(Finance Depatment)

10/7/2010

Cash and bank Management

A

SUMMER TRAINING REPORT ON“CASH AND BANK MANAGEMENT”

FOR

“RELIANCE INDUSTRIES LTD (VMD)”

Submitted To

ANAND INSTITUTE OF MANAGEMENT

IN PATIAL FULLFILLMENT OF THE REQUIREMENT OF

THE AWARD FOR THE DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

Submitted By

MEGHAL SHAH EXAM SEAT NO:- _____

M.B.A-SEMESTER II

Under The Guidance Of

FACULTY GUIDE COMPANY GUIDE

KRISHNA GOR MR. AMAR PETIWALE

ANAND INSTITUTE OF MANAGEMENTM.B.A PROGRAMME

2

OPP.TOWN HALL, NR. GRID, ANANDJUNE 2010

CERTIFICATE

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PREFACE

The Anand Institute of management, Anand gives the students an Opportunity to have an

insight of any large scale unit so that we get the exposure to an actual managerial environment of

company. I am lucky to have summer training in a company like RIL which is considered to be one

of the “largest establishments” in India.

During this period, I had overview of the finance department within which I could make a

detail study of all the section comes under the roof of finance in RIL. This training will help me to

correlate theoretical knowledge and its practical applications. It was a thrilling experience while

studying working of RIL and understanding it. This program has led me to realize the contribution

of RIL to the Petroleum Industry of India.

I am grateful to the senior executives of RIL for their cooperation and interest in my project

without which it could not have been possible to go ahead with my assignment.

With great pleasure, I present this project which consists of a brief study of inventory

management in RIL.

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Acknowledgement

Words are indeed inadequate to convey my deep sense of gratitude to all those who have

helped me in completing this summer project to the best of my ability. Being a part of this project

has certainly been a unique and a very productive experience on my part. This project would not

have been successful without the help of these personalities.

I am really thankful to, Mr. AMAR PETIWALE, General Manager (GM Finance).for making

all kinds of arrangements to carry the project successfully and for guiding and helping me to solve

all kinds of quarries regarding the project work. His systematic way of working and incomparable

guidance has inspired the pace of the project to a great extent.

I am very grateful to Mr. B.P. Shah General Manager (Training Officer), who has given

me the opportunity to do this project in the Reliance Industries Ltd. & give me guidance to make

my project.

I am very thankful to Krishna Gor lecturer of ANAND INSTITUTE OF MANAGEMENT for

her useful guidance and advice.

This project would not have been successful without the help of Mr. A.K RASTOGI,

General Manager (Finance & Accounts).

This project would not have been successful without the help of Mr. NARESH PATEL

(CASH) AND SUNIL PATEL (PAYMENT).

Last but not least I would like to thank all the employees of RIL VMD who have directly or

indirectly helped me with their moral support for the completion of my project.

Meghal Shah

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DECLARATION

I, meghal shah, hereby declare that the report on “Summer Training” entitled “CASH & BANK MANAGEMENT” is a result of my own work and my indebtedness to other work publications, if any, have been duly acknowledged.

Place: Anand Meghal Shah

Date: 10/07/2010

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EXECUTIVE SUMMARY

I, Meghal P Shah student of Anand Institute of Management, Anand, have completed summer

training as a part of MBA program of 6 weeks at RIL Vadodara.

I have completed my training at material (finance) department. My area of work was on Cash and

bank management. I undertook a unique, step-by-step methodology for preparation of the report.

Reference books, RIL internal portal, website.

In this report first I have given the general information regarding the company. It includes the

history of company; its disinvestments, milestones, board of directors, quality policy, financial

position of the company, and the products. I have also given the functional department of the

company like Production department, stores, finance department, marketing department and

human recourse department etc.

In the second part, I have focused on my core project regarding the procedure followed for the

cash and bank management at RIL. In the end, the conclusion and the bibliography are given. The

report totally depends on the secondary data and it may be possible that the data from which the

report is made may not appear in the report because some data is confidential for the company.

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TABLE OF CONTENTS

SR. NO PARTICULARS PAGE NOS.PART-I GENERAL INFORMATION

1 About the Company2 About the Functional Departments

Production Department Human Resource Department Finance Department Marketing Department Purchase and Stores Quality Assurance Dispatch and Logistics

PART-II PRIMARY STUDY3 Introduction

Why cash management? Why bank management? Introduction of the subject Importance of Studies Objective of the project Analysis of data

4 Cash Management Theoretical Perspective Cash management in RIL Cash Register Cash Budget Expense Register Investments What is New?

5 Bank Management Theoretical Perspective Type of Bank maintain in RIL (VMD) Bank Reconciliation Statement Payment Method at RIL (VMD) What is New?

6 Account receivables and payables# Vendors Selection at VMD# Vendor Management at VMD# Debtors management at VMD# Ratio Analysis and Interpretation# Cash Flow Statement Analysis # Accounting System# SWOT Analysis of RIL

7 Limitations of the Study

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8 Results and Findings9 Bibliography

LIST OF TABLES

SR. NO. PARTICULARS TABLE NOS. PAGE NOS.1 Milestones 1

2 Table of Product 23 Capacity of Plant of VMD 34 Major Competitors 45 Classification of Materials in SAP 56 Types of movement commonly use in

mm model6

7 Six Sigma 78 Cash Account Book 89 Expense Register 910 Different between Bank Balance and

Bank Overdraft 10

11 Ratio Analysis 1112 Cash Command in SAP 12

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LIST OF DIAGRAMS

SR. NO PARTICULARS DIAGRAMS NOS. PAGE NOS.

1 Finance Department 12 Product Line 23 Purchase Procedure 34 Purchase to Issue Cycle 45 Oder process for solid product 56 Distribution Channel 6

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LIST OF CHARTS

SR. NO PARTICULARS CHARTS PAGE NOS.

1 Current and Acid test Ratio 12 Cash Cycle 23 Operating Cycle 34 Net Current Assets 45 Collection and Payment Period 56 Debtor to Sales 67 Creditors Turnover 78 Net Profit Margin 89 Total Assets Turnover 910 Fixed Interest coverage Ratio 1011 Expense Ratio 1112 Net Worth Turnover Ratio 12

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PART-I GENERAL INFORMANTION

1 CHAPTERISATION

The research project has been articulated with the help of eight chapters as follows_

CHAPTER I – COMPANY PROFILE:-

Company profile it focus on introduction of company, Progress of company in past

few years. It also include the historical developments and changes in the company.

CHAPTER II – PRODUCTION DEPATMENT:-

This chapter starts with the defining the plant layout, product, in the background of

production, capacity of plant of RIL (VMD).

CHAPTER III –HUMAN RESOURCE DEPARTMENT:-

This chapter focuses on Introduction of HRM, structure, HR planning requirement

and selection of employee, performance appraisal system. Learn at theory background and the

practical appearance .

CHAPTER IV –FINANCE DEPARTMENT:-

In this chapter includes theoretical concepts relating to subject of project it focuses

theoretical knowledge in financial management books related to topic and structure of finance

account management

CHAPTER V: MARKETING DEPARTMENT:-

This Chapter includes the Theory background of marketing management, how many

RIL competitors and customer.

CHAPTER VI: PURCHASE AND STORE:-

This chapter includes the Theory background of purchase and store; how RIL makes

manage the store, purchase the material practical implication. Flow the process.

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CHAPTER VII: QUALITY ASSURANCE:-

This Chapter includes the Theory background of Quality of product. Learn the six sigma

technology in RIL (VMD).

CHAPTER VIII: DISPATCH AND LOGISTICS: -

This chapter includes the theory background of the logistics and the dispatch of

product.

PART-II PRIMARY STUDY

2. CHAPTERISATION

The research project has been articulated with the help of five chapters as follows_

CHAPTER I – INTRODUCTION:-

This chapter starts with the introduction of cash and bank, defining the objective of the

project and ends by defining the limitation of this project. It also includes the importance of

studies and presentation of data.

CHAPTER II: CASH MANAGEMENT:-

This Chapter includes the Theory background of Cash management, how RIL makes

optimum utilization of cash, Cash management in RIL and the ratios related to the inventory

management of RIL (VMD).

CHAPTER III: BANK MANAGEMENT:

This chapter includes the Theory background of Bank management, how RIL makes

manage the bank, bank management and how to invest in bank.

CHAPTER IV: ACCOUNTS RECEIVABLES & PAYABLES:-

This Chapter includes the Theory background of Receivables & Payables, Procedures of

dealing with the debtors & creditors at RIL, vendor selection and management techniques and

ratios related to the Receivables & payables of RIL.

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CHAPTER V: FINDINGS AND CONCLUSIONS: -

This chapter is based on analysis and interpretation. It includes our findings. Last by

the report contains appendix & bibliography. This contains the balance sheet and profit and loss

accounts with help of this researcher has done research work & bibliography give the

information about the books magazine & websites used by the researcher to complete the

research work.

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PART-I GENERAL INFORMANTION

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Company Profile

Introduction of RIL.

History of IPCL.

Reliance Acquisition.

MISSION, VISION, VALUE & MILESTONES

COMPANY PROFILE

COMPANY LOGOS

Organization Chart

Company Profile

Introduction of RIL.

History of IPCL.

Reliance Acquisition.

MISSION, VISION, VALUE & MILESTONES

COMPANY PROFILE

COMPANY LOGOS

Organization Chart

1.1 Introduction of RIL

The Symbol of ‘R’ reflects our global Indian personality. This

symbol is the evidence of the trust of people towards the Reliance.

It also shows the future of RIL as a growing organization. RIL is

MUKESH DHIRUBHAI AMBANI GROUP.

We at Reliance committed to meeting

Customer requirements through continual improvement of its quality

management systems. Reliance shall sustain organizational excellence

through visionary leadership and innovative efforts.

Significant contribution to India’s economic growth

14.5 % of India’s total exports.

5.6 % of the Government of India’s indirect tax Revenues.

5.7% of the total market capitalization in India

Weightage of 12.8% in the BSE Sensex

Weightage of 10.6% in the S&P CNX Nifty Index

(Position as on the march 2010)

Growing importance across the globe

Largest refining capacity at any single location

Largest producer of Polyester Fibre and Yarn

4th largest producer of Paraxylene (PX)

5th largest producer of Polypropylene (PP)

7th Largest producer of Purified Terephthalic Acid (PTA) and Mono Ethylene

Glycol (MEG)

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(Position as on the march 2010)

1.2 HISTORY OF IPCL

HISTORY (1969-2002)

Indian Petrochemicals Corporation Limited (IPCL). A company under the Companies Act with

Registered Office at Jamnagar (near Vadodara) in Gujarat was registered in March 22, 1969. It

was assigned the responsibility of setting up two upstream mother units and two downstream

units near an established public sector refinery, Gujarat Refinery of Indian Oil Corporation on

the outskirts of Vadodara in Gujarat. The industry was highly capital intensive, involved

handling and processing of hazardous material, involved development of nascent markets and

managing new technologies with a skill base that was inadequate. Hence they were doubtful

about the prospects in the industry and were unwilling to invest. On the other hand, the

government realized the importance of integrated nature of the entire project.

Mrs. Indira Gandhi, the Prime Minister of India laid the foundation stone for the Gujarat Olefins

Project (Naphtha Cracker) on January 29, 1972. The plant was commissioned on March 28,

1978. By March 15,1979, IPCL achieved the unprecedented feat of commissioning 11 plant in

quick succession, at a capital investment of INR 3.04 billion. Thus, a fully integrated

petrochemical complex

Today, out of the 15,000 plastic and detergent processors in the country almost 12,000 owe

their existence to IPCL, thanks to the Entrepreneur Development teams that went out with their

“magic lanterns,” guiding, developing and showing the path to prosperity to the willing but

unaware entrepreneurs. The petrochemical revolution was thus set in motion by IPCL in India.

Disinvestments

The Government of India declared IPCL as one of the Navaratna companies on

February 28, 1997. This means the company belongs to the select group of blue chip

PSUs that are given additional autonomy in matters related to administration and finance. The

government reconstituted the IPCL Board by nominating four part-time directors on November

23,1998 so that the additional freedom granted under the Navaratna package

becomes operative. The Government decided to retain only 26 per cent of its

holdings by Government of India finally decided not to pursue the sale of Vadodara

complex to Indian Oil Corporation and decided to divest 26% equity in favor of strategic partner

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with a commitment of divesting atleast a further 25% equity from IPCL on November 12, 2001.

Government of India issued the advertisement for this in December 2000. This announcement

attracted three companies Reliance Industries Ltd., Nirma Chemical Works Ltd and Indian Oil

Corporation Limited. Interested investors submitted their financial bids on April 29, 2002. The

Evaluation Committee constituted by the Government of India to arrive at reserve price

recommended a price of Rs. 845 Crores for 26% equity (Rs. 131 per share). The cabinet

committee on disinvestment which met on May 28, 2002 to evaluate the bids found that the bid

submitted by Reliance Petro investments Ltd. was the highest at Rs. 1491 crores (Rs. 231 per

share) around 74% higher than the closing price of IPCL's shares at National Stock Exchange,

Mumbai.

The offer from Indian Oil Corporation was Rs. 826 crores (Rs. 128 per share) and that from

Nirma Chemical Works Ltd. was Rs. 711 Crores (Rs. 110 per share).

This brought an end to one of the most keenly watched disinvestment by Government of India.

1.3 2002 Onwards-Reliance Acquisition

The government of India handled over management control to Reliance group on June 4, 2002,

since then the company is being managed by reliance. The new management team has re-

endorsed the company’s mission to create value for all stakeholders. All over efforts are being

made to enhance productivity and control cost for superior value addition.

The physical and cultural integration began from the word go, both IPCL and Reliance started

adopting “Best Practices” from each other. This led to optimal utilization of available resources

for enhancing productivity. The profit for the first financial year(2002-03) under the reliance

management stood at INR 2.04 billion, 90% jump over the previous year’s profit of INR 1.07

billion.

Commenting on the results for 2002-2003, Mr. Mukesh Ambani, Chairman, said “we are

delighted with the complete turnaround in IPCL’s performance in the very first year of

acquisition by reliance. The successful absorption of Reliance’s best practice by IPCL in all

areas of operations, and positive impact of measures introduced for cost reduction and

productivity and efficiency gains. We have great confidence in the capabilities of IPCL and its

people, and are confident of further improvement in the company’s performance in the future”.

The Company's operations can be classified into four segments namely:

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Petroleum Refining and Marketing business

Petrochemicals business

Oil and Gas Exploration & Production business

Others (Textiles, retail, etc.)

1.4 Mission, Vision, Value & Milestones

RIL MISSION

Continuously innovate to remain partner in human

Progress by harnessing science and technology

In the petrochemicals domain

RIL VISION

“Be a globally preferred Business associate with responsible concern for ecology, society and

stakeholders value”

RIL VALUE

“Integrity, Respect for people unity of purpose outside – in focus Agility and Innovation”

RIL growth and success are based on the ten core values of Care, Citizenship, Fairness,

Honesty, Integrity, Purposefulness, Respect, Responsibility, Safety and Trust.

PROACTIVE MANAGEMENT

1. All injuries and illness can be Prevented and all operations exposures can be

controlled.

2. All accidents must be Reported and analyzed.

3. Off the job safety is also important.

4. Management Audits are must.

5. All deficiencies must be Corrected promptly.

6. Training employees to work safely is essential.

7. All employees must be Involved.

8. Safety is our Value not just a Priority.

9. Working safety is a condition of continual Employment.

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10. All levels of Management are responsible.

MILESTONES(TABLE NO: 1)

YEAR KEY EVENTS

1969 IPCL was incorporated Under company’s Act.

1970 Construction of first petrochemical complex commenced at Vadodara, Gujarat

1973 Commenced commercial operation at Vadodara

1979 Commissioning of the first Naptha cracker at Vadodara

1992 Initial public offering and listing on the Vadodara stock exchange

1992 Second petrochemical complex commissioned at Nagothane, Maharashtra

1996 Third petrochemical complex at Gandhar, Gujarat

2000 Entered into joint venture agreement for implementing GCPTCL

2000 Completion of second phase of Gandhar complex

2002 GOVT. of India disinvested 26% of our equity share capital to the strategic partner

2004 Amendment agreement between the GOVT. and Strategic partner, Reliance petrochemical Ltd., a Reliance group company.

2004 Govt. of India disinvested its balance shareholding

2005 Govt. of India withdraw its nominee directors from the board of director of IPCL

2006 Amalgamation of six polyester companies

2007 RIL completed a land mark acquisition of IPCL

2008 During the year, Reliance signed an agreement to acquire certain polyester assets of Hualon, Malaysia

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2008 Reliance also signed MOU with GAIL (India) Ltd. to explore opportunities of setting up petrochemical plant in feedstock rich countries outside India

2009 RPL merger with RIL and 6.92 crore new equity share of RIL have been allotted to the share holder of RPL

2009 RIL joins the league of global deep water oil and gas operators

1.5 Company Profile1. COMPANY DETAIL:

NAME: Reliance Industry Ltd.

2. COMPANY INFORMATION:

a) Head office:

Reliance industries Ltd.

3rd floor, maker chambers IV, 222, Nariman Point,

Mumbai: - 400021, Maharashtra,

India.

Website: www.ril.com

b) Site office:

Vadodara:

Vadodara manufacturing unit,

P.O. Petrochemical- 391346

Vadodara, Gujarat.

Ph. 0265- 6696000/ 669700

Jamnagar:

Jamnagar manufacturing unit,

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Jamnagar, Gujarat.

Nagothane:

Nagothane manufacturing unit,

Raighad, Maharashtra.

Hazira:

Hazira manufacturing unit,

Surat, Gujarat.

Dahej

P. O. Dahej,

Bharuch - 392 130

Gujarat, India

Gadimoga

Tallarevu Mandal

Gadimoga – 533 463

Andhra Pradesh, India

Jamnagar SEZ

Village Meghpar / Padana,

Jamnagar 361 280

Gujarat, India

Patalganga

B-4, Industrial Area,

Patalganga, Near Panvel,

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Maharashtra, India

3. Board of Directors of Reliance Industries Limited

Shri Mukesh D. Ambani (Chairman and Managing Director)

Shri Nikhil R. Meshwani (Executive Director)

Shri Hital R. Meshwani (Executive Director)

Shri PMS Prasad (Executive Director)

Shri P.K. Kapil (Executive Director)

Shri Ramniklal H. Ambani

Shri Mansingh L. Bhakta

Shri yogendra P. Trivedi

Dr. D.V. Kapur

Shri M.P. Modi

Prof. Ashok Misra

Dr. Dipak C Jain

Dr Raghunath Anant Mashelkar

4. Company Secretary Vinod M. Ambani

5. Solicitors & Advocates Kanga & Co.

6. Auditors Chaturvedi & Shah,

Deloitte Haskins & Sells

Rajendra & Co.

ACHIEVEMENT

Best Petrochemicals Company World-wide: 1990 (Cl , London) ICMA award for Forward technology development: 1981, 1985, and 1991. DGTD award for Biotechnology Process 1994. Corporate Performance Award ET HBSAI: 1994-95 Sward of Honor from British safety council.

1.6 Company Logos

The first logo, which consisted of a tetrahedron - representing the molecular structure of

the simplest organic chemical, methane - in a circle.

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This decision of the government, “Every thing under one roof” inspired the second logo of

IPCL. IPCL took up the challenge of setting up the entire integrated complex at Vadodara.

IPCL, as a corporate entity, is and what it shall strive to be. This symbol, or logo,

reflects what IPCL is a single matrix of the many; a diversity of activities and products,

emerging from one sourceand branching out in different directions, yet retaining its

unity and identity. The lines flow upwards and outwards from a common base into

infinity, reaching for unending growth, universal goodwill, general prosperity and

excellence in everything. The green colour used in the design reinforces the theme -

aspiration and growth, rooted in the earth and in harmony with the other

elements - water, light, air and space

The government of India handled over management control to Reliance group on June 4, 2002,

since then the company is being managed by reliance.

1.7 Organization Chart

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Chairman

Mukesh Ambani

Whole Time Director

Baroda complex

President

Senior Vice President

General Manager

Nagothane complex

Gandhar complex

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Dty. General Manager

Senior Manager

Dty. Manager

Asst. Manager

Officers

Staff

Production Department

Plant Layout of VMD

Organization Structure

Table of Products

Products at a Glance

Capacity of plant at VMD

2.1 Plant Layout of Vadodara Manufacturing Division

Flow Diagram – Vadodara Complex

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The Vadodara Complex houses 21 plants on over nearly 500 hectares of land and produces

large variety of products consisting of Linear Alkyl Benzene, Acrylic Fibers, Acrylic Esters,

Ethylene Glycol, Polyvinyl chloride, Polyethylene, polypropylene, Butadiene rubber, etc. The

company's registered office is located in Vadodara Complex and that was the first

manufacturing facility setup by the company.

2.2 Organization Structure: The following chart shows the structure of the Production Department

2.3 Table of Products(Table No: 2)

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Sr. Vice President

Vice President

Asst. Vice President.

Sr. General Manager

General Manager

Sr. Manager

Manager

Operators

Commodity Chemicals: Acetonitrile

Benzene

Butyl Acrylate

Caustic Soda Lye

Ethylene

2-Ethylhexyl Acrylate

Orthoxylene

Propylene (Polymer Grade)

Ammonium Sulphate

Butadiene

Caustic Soda Flakes

Carbon Black Feedstock

Ethyl Acrylate

Methyl Acrylate

Propylene (Chemical Grade)

Solvents:  

  CIXON

  HEPTON

  Solvent CIX

Surfactants:  

  Ethylene Oxide

  Linear Alkyl Benzene

Commodity Plastics:  

  Indothene

  Indothene LL

  Indothene HD

  Koylene

  Koylene CP

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  Koylene ADL and Koylene ADL - CP

  Indovin

Rubber and Hydrocarbon Resin:

 

  Cisamer 01

  Cisamer 1220

  Petrez

Catalysts and Adsorbants:  

  Catal

  Catsiv

  Speciality Catalyst

Fibers and Intermediates:  

  Acrylonitrile

  Ethylene Glycol

  Demethyl Terephthalate

APPLICATION OF PRODUCTS

Solid Products

Main uses of polymers:

Product Uses

LDPE/LLDPE Consumer packaging/film, extrusion wires, cable coatings, heavy-duty bags, garbage bags, milk & shopping bags.

HDPE Fertilizers/household packaging, woven sacks, cartons, crates, luggage, pipes, paints, storage bins etc.

PP Cement packaging, monofilament yarn, ropes, fishing nets.

PVC Water pipes, electrical conduit/wires, cables, sheets, footwear, flexible films

PBR Automobile tires & tubes, conveyor belts, footwear.

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Main uses of fiber & fiber intermediates:

Products Uses

AF/DSF Textiles, knitting yarns, sweeter.

MEG Polyesters, Anti freeze.

A C N Acrylic fiber, Acrylates, engineering polymers.

DMT Polyester staple fibers, polyester filament yarns, polyester.

Liquid Products

Main uses of chemicals:

Products Uses

LAB Raw material for household, industrial detergents, personal care products.

EO/BENEZENE/TOLUENE Phenol, dyestuff, pharmaceuticals, paints, industrial uses, caprolactum

Caustic Soda Alumina/paper.

Caustic Soda Alumina/paper.

2.4 Product at a Glance

The products manufactured and marketed by the Corporation could be classified into the

following 3 major groups:

Polymers:

Polymers that include plastic and rubber is a major product-line, not only by virtue of the

quantity and multiplicity of grades but also because of the very number of small-scale

customers spread all over India. Polypropylene and Polybutadiene rubber are new to Indian

market. These have been produced for the first time in India by IPCL.

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Fibres and Fibre Intermediates:

Some quantities of Acrylic fiber being imported earlier were mainly for hand knitting yarn. Due to

the developmental activities undertaken by IPCL, unprecedented applications have been possible

for acrylic fiber namely range of suiting/dress materials/hosiery/carpets/blankets/upholstery, thus

making Indacryl (brand name for Acrylic Fiber) the fiber for all seasons. Having developed a wide

range of applications, to meet the growing demand for acrylic fiber, IPCL decided to expand the

acrylic fiber manufacturing capacity to 24,000 MTA. The expansion is with the technical know-how

from ElDu Pont Nemours, USA.

Chemicals:

At present, about 31, different chemical products are being marketed, and the growth in the

product line has been possible mainly due to the development of value added products from the

return streams. Chemical intermediaries find wide and diverse applications in various industries.

2.5 Capacity of plant at VMD

(TABLE NO: 3)

NAME OF PLANTS CAPACITY (MT)

Naphtha cracker (ethylene) 130000

LDPE plant 110000

Ethylene glycol 20000

VCM plant 57300

PVC plant 60000

PPCP plant 25000

PP4 plant 75000

Acrylonitrite plant 30000

Acrylates plant 10000

Butadiene extraction plant 54000

Poly butadiene rubber plant -| 20000

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Poly butadiene rubber plant - || 30000

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Human Resource Department

HRM

Organizational Structure of HRM

HR DEPARTMENTS OF VMD (RIL)

HR Planning, Recruitment & selection

Performance appraisal system

Promotion and Transfer Policy

Welfare activities

Functions of Time Office

Human Resource Department

HRM

Organizational Structure of HRM

HR DEPARTMENTS OF VMD (RIL)

HR Planning, Recruitment & selection

Performance appraisal system

Promotion and Transfer Policy

Welfare activities

Functions of Time Office

3.1 Human Resource Department

For VMD its real wealth is over 4100 employees. The Corporation follows a planned approach

to human resources development. Training of manpower happens to be an integral component

of the development strategy. Today VMD possesses one of the best pools of talents in the

petrochemical industry in India. Well maintained residential complexes, schools, recreational

centers, transport, medical and other such facilities ensure a better quality of life for its

employees, paving way for healthier industrial relations. Other aspects of its employee related

programs include: Training programs conducted on regular basis. Nearly a third of its

employees receive training each year. The programs are conducted at three centers:

Petrochemical Management Development Institute (PMDI), Vadodara, and at training centers at

Vadodara, Nagothane and Dahej.

3.2 Organizational Structure of HRM

Senior Vice President

Vice President

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HR IR Canteen Training

Centre

Establishment Disciplinary Method Time keeping

3.3 HR Departments of VMD(RIL)HR SECTION:

SAP-HR DEPARTMENT

LIBRARY

LEARNING CENTER

SALARY DEPARTMENT

IR SECTION:

LEGAL DISCIPLINARY DEPARTMENT

UNIONS

ESTABLISHMENT SECTION:

PERFORMANCE DEPARTMENT

ADVANCE DEPARTMENT

DEPARTMENT OF PROMOTION CELL

GENERAL ADMINISTRATION:

SECURITY

TELECOM

CANTEEN

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TRANSPORT

ADMINISTRATION SERVICE:

REPAIR & MAINTAINANCE

LEVERIES

CENTRAL REGISTRY

PRINTING

HOLIDAY HOME

MEDICAL DEPARTMENT

CENTRAL TIME OFFICE

WELFARE DEPARTMENT

The various H.R. subsystems areRecruitmentTraining and DevelopmentPerformance management Career planningCareer counseling/ mentoringAssessment and development centreCompensation and rewards

3.4 Human Resource Planning, Recruitment and

Selection

Human Resource Planning is one of the most primary activities carried out at RIL. Planning is

done by maintaining a ‘Stock of Sanction, Filled and Vacant’ (SFV) File. This file maintains a

track of the requirements of personnel’s in the organization. It is regularly reviewed by the top

management. As and when the need arises, arrangements are made for the recruitment of the

personals.

Generally, Reliance is doing centralized recruitment from Mumbai. RIL generally goes to the

reputed campuses for recruitment purpose. It does not go for advertisement in the newspapers

or media or any such other ways of recruitment. RIL’s one of the foremost criteria for selection

of employees is competent and knowledgeable enough to perform their duties effectively and

efficiently.

3.5 Performance Appraisal System

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RIL undertakes performance appraisal at regular intervals without fail. Here annual confidential

reports are filed wherein the details of the work done by the employees are entered. In this way,

a track of the performance of individuals in the organization is maintained. For supervisors,

Performance Management System is in practice. In this, the key result areas are listed down

and the performance is evaluated and rated keeping in view these core areas. Setting up of

development centres for assessment of competencies, identification of gaps and charting out

further interventions is in progress. Thus the performance appraisal system in RIL is

contributing its full-fledged efforts to improvise the performance of its employees.

3.6 Promotion and Transfer Policy

The promotion at RIL is time bound. The vintage period is generally 6 years. For supervisors

the vintage period is 4 years. Once an individual is promoted to General Manager Post he gets

2 years residence period. If there is no vacancy available the employees are simply upgraded.

And if vacancies are available, the employees are promoted as per the requirement of the

company policy. The transfers are done as per needs of the company.

3.7 Welfare ActivitiesThe welfare activities at RIL include the following:

Medical Benefit- The expenses beared by the employees on medical

treatement (including the family members) is reimbursed as per the company policy.

Accident Insurance Scheme.

House Building Advance.

Car loan at subsidized rate of interest

Benevolent Fund Free provision of uniform, apron, towel, jersey, raincoat,

gumboot, safety shoes, soaps, napkins, etc.

Apart from its welfare activities towards its employees, RIL also carries out community welfare

activities in the villages surrounding its three complexes at Vadodara, Nagothane and Gandhar

through various initiatives in the areas of education, health, agriculture, employment generation

and infrastructure development.

3.8 Functions of Time OfficeThe role of HR begins right from manpower planning in discovering vacancies to training and

evaluating the employee after hiring and selecting him/her. In RIL there is a material times

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office which looks into all the matters concerning the employee. These matters include allotting

supervisors, maintaining the records and documents, satisfying the basic needs, providing the

minimal working conditions to the employee etc.

RIL has adopted the latest software called SAP that makes the work easier for the HR

personnel and so now the information is easily accessible to the employee. Time materials

office (MTO) maintains R-matrix (Registered Matrix). R-matrix is the channel of communication

which follows from an employee to his supervisor and upwards. The department also prepares

the Annual Confidential Report (ACR). Here all Head of Departments are supposed to evaluate

the performance of the staff under them and on this basis the ACR is prepared.MTO provides

administrative services like providing coupons etc. the dining hall services are the subsidiary

services. The most important is that the MTO also maintains the personal file. This file has all

the details of the employee like the appointment letter, the declarations and all the benefits

taken by the employee. The most integral part of the personnel file is the service book. This

book has all the details of the employee. The book also contains as to when the employee has

availed any loan, scheme of RIL

37

Finance Department

Finance

Organizational Structure of Finance Department

Accounting Policies

Finance Department

Finance

Organizational Structure of Finance Department

Accounting Policies

4.1 Finance Department

Finance is the life blood of any business undertaking. Effective financial management is the

outcome of proper management of investment of funds in business. Funds can be invested for

permanent or long term purpose such as acquisition of fixed assets, diversification and

expansion of business, renovation or modernization of plant and machinery and development.

Funds are also needed for short term purpose, that is, for current operation of business. For a

manufacturing unit one has to manage the procurement of raw material, payments of wages,

and salaries to employees and for meeting routine expenses.

The finance Department is divided in to 8 different section

(DIAGRAMS NO: 1)

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Reliance Finance Department

Account Receivable

Central Accounting

Cash & Bank

Taxation Section

Account Payable

4.2 Organizational structure of Finance Department:-

4.3 Accounting Policies Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention in

accordance with the generally accepted accounting principles in India and the provision of the

companies act, 1956.

Use of estimates

The presentation of financial statements requires estimates and assumptions to be made the

affect the reported amount of assets and liabilities on the date of the financial statements and

the reported amount of revenues and expenses during reporting period. Difference between the

actual result and the estimates are recognized in the period in which the are

known/materialized.

Own fixed assets

Fixed assets are stated at cost net of modvat/cenvat, less accumulated depreciation. All costs,

including financing costs till commencement of commercial production, net charges on foreign

exchang contracts and adjustment arising from Exchange rate variations attributable to the

fixed assets are capitalized.

Leased assets

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Costing Section

Pay Roll Section

Procurement Section

o Operating leases: rentals are expensed with reference to lease terms

and other considerations.

o Finance leases prior to 1st April, 2001 : rentals are expensed to lease

terms and other consideration

Depreciation

Depreciation on fixed assets has been provided on straight line method at the rates and in the

manner prescribed in schedule XIV to the companies Act, 1956.

foreign currency transactions

Transactions denominated in foreign currencies are normally recorded at the exchange rate

prevailing the time of the transaction.

Investments

Long-term investments are stated at cost.

Inventories

Items of inventories are measured at lower of cost or net realizable value. Cost of inventories all

cost of purchase, cost of conversion and the other cost incurred in bringing them to their

respective present location and condition.

Turnover

Turnover includes sale of goods, services, excise duty and sales during trial run period;

adjusted for discounts.

Excise duty

Excise duty has been accounted on the basis of both payments made in respect of goods

cleared as also provision made for goods lying in bonded warehouses.

Employees retirement benefits

Company’s contribution to provident fund, family pension fund, gratuity and leave encashment

benefit are charged to profit and loss account

Research and development expenses

Expenditure relating to capital items is debited to fixed assets and depreciated at applicable

rates. Revenue expenditure is charged to profit and loss account of the year in which they are

incurred.

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Borrowing costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are

capitalized as part of the cost of such assets.

Provision for current and deferred tax

Provision for currents tax is made taking into consideration benefits admissible under the

provision of the income tax act, 1961. Deferred tax resulting from “timing difference” between

book and taxable profit is accounted for using the taxrates and laws that have been enacted or

substantively enacted as on the balance sheet date

Miscellaneous expenditureMiscellaneous expenditure is amortized over a period of five years on a pro-rata basis.

Contingent liabilities These are disclosed by way of notes on the balance sheet.

41

Marketing Department

Introduction

Marketing Department of RIL,VMD

Product Line

List of Competitors

Major Customers

Marketing Department

Introduction

Marketing Department of RIL,VMD

Product Line

List of Competitors

Major Customers

Head Office - Mumbai

5Regional Offices

11regional Sales Centers

130 As

93 Stock Points

5.1 Introduction

Marketing is inevitable in the present era as, “consumer is the king”. Marketing activity includes

identification of fulfilled needs and wants, defining and measuring which target market the

organization can best serve.

Marketing Objectives:

Allocate resources to the marketing mix to maximize the long run profitability

of the firm.

Strategic market development.

Formulation of marketing plans/cash flow plans.

Competitor’s strategy updated and co-operative strategic responses.

Set of an effective and efficient system for expenditure.

Prepare all necessary production and sales report.

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Report marketing as a tool of value addition.

Floating various tenders and preparation of tender documents.

Strategic integration of development plans with National plans.

5.2 Marketing Department of RIL, VMD:

Marketing department is the nerve center of any organization. It is the most vibrant and

dynamic part responsible for the distribution of the products produced by an organization. For

an industrial goods manufacturing company like, VMD, which is, market driven it is its marketing

department that has to be at its serving all the time.

The Marketing department is one of the biggest departments in the VMD, which has its network

spread all over India. It has 5 Regional offices and also 6 sales offices in different cities in India

The Marketing VMD department is divided in: -

A. PRODUCTS MANAGEMENT

B. SUPPORT MANAGEMENT

C. SALES MANAGEMENT

(A). Products Management: -

The product management is further divided into two sub groups. They are:

Polymers Business Group [PBG]

Chemicals Business Group [CBG]

(B). Support Management: -

VMD’s Marketing group has three support groups viz.

Strategic Marketing Group [SMG]

Product Application Group [PAG]

Marketing Operations and Planning Group [MOP]

(C) Sales Management: -

The Sales Management group comprises export and domestic market. It includes

International Business Group [IBG]

Domestic sales group

5.3 Product Line of RIL

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VMD has following major product lines viz..

Polymer

Chemical

Rubber

Above products can be further classified as follows:

(DIAGRAMS NO 2)

5.4 List of

Competitors

Competitors are those firms or individuals playing in the same industry i.e. producing a similar

product. In other words, it means a threat to the firm in terms of acquiring the market share.

The petrochemicals industry in India is dominated by two large producers in addition to RIL.

These are GAIL & HP. Moreover, since petrochemical products can be freely imported in to

India, RIL & their domestic competitors face competition from products manufactured by global

manufacturers like Dow chemical, Exxon Mobil, Royal, Dutch, Shell & SABIC.

RIL has changed significantly after the management control was transferred by government to

RIPL, which is part of the Reliance group. The largest company of Reliance group is RIPL,

which is India’s largest petrochemicals company

Major Competitors

(TABLE NO: 4)

Product group Domestic ForeignPBR NIL Sanghai petro,

Goodyear

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PRODUCT LINE

Solvents Surfactants Polymers Rubber

Ammonium Sulphate, Benzene, Caustic Soda, Carbon Black, Ethylene, Propylene, etc

Cixon, Hepton, Solvent, etc

Ethylene Oxide, Linear Alkyl Benzene, etc

LDPE, HDPE, PVC, PP, etc

Polybutadiene, etc

Chemicals

BridgstonePolymers HPL Exxon mobil

GAIL BasellFinolex Dow chemicalSupreme petrochemical AutofinaNOCIL BP-AmocoChemplast EquistarDCM Shriram Philips-ChevronVardhaman Acrylic ltd. Sabic, Borealis

Chemicals GAIL, HPL Exxon mobilBPCL, HPCL Dow chemicalIOC BasellSAIL SabicTamilnadu Petroproducts Ltd.Nirma Chemical

5.5 Major Customers:

Plastics: Nilkamal, Rainbow, Supreme etc.

Rubber: Appollo, MRF, Goodyear, JK Tyre, Vikrant, Ceat etc.

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Purchase & store Department

Organizational Structure of Purchase & store.

Methodology

Purchase Procedure

Purchase to Issue Cycle

Purchase & store Department

Organizational Structure of Purchase & store.

Methodology

Purchase Procedure

Purchase to Issue Cycle

6.1 Organizational Structure

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Gen. Manager

Deputy GM

(Purchase)

Deputy GM

(Stores)

Sen. Manager Sen. Manager

Manager Manager

Dty. Manager

Officers

Assistants

Dty. Manager

Officers

Stores Keepers

To run any manufacturing company, all you need at the first stage is raw

material. At VMD, the basic raw material is Naptha along with many other materials. Purchase

of raw material is basically done by:

Domestic Purchase

International Purchase (Import)

The function of receiving and physically handling delivered material, together with verifying that

the deliveries correspond exactly to those specified in the Purchase Order is done by a

specialized group in the Receipt Section of Stores.

Purpose of this Procedure is to describe the methods employed for receipt and inspection of

incoming materials, properly accounted for the purpose of payment, user information, and fast

retrieval of information.

6.2 Purchase Procedure(DIAGRAMS NOS: 3)

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TOL (TRUCK ORDER LINKING)

TRUCK ENTERS THE WAREHOUSE

WBN (WEIGH BRIDGE ENTRY) ENTRY TRUCK IS WEIGHTED

TPN (TRUCK PARKING ENTRY)

ENTRY OF TRUCKS

PICKING UP NOTE

WB (WEIGH BRIDGE)

6.3 Purchase to Issue Cycle(DIAGRAMS NOS: 4)

Purchase Requisition Note

(When plant require material)

Request Quotation

(Company ask for quotation from vendor)

Quotations comes

Selection of vendor

(On basis of terms and conditions expected by the company)

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INV (INVOICE)

WBX (WEIGH BRIDGE EXIT)

MGX (MAIN GATE EXIT)

Put Purchase Order

Material comes

Material goes to the excise section

(Capture the invoices)

Material goes to security keeper

(They check the material are as per unit mention in invoices or not)

Material goes in stores Receipt Ward

(Here the material check against P.O.and labeling is done)

Material goes to the Inspection Ward

(They do quality check and prepare Inspection Report)

On the basis of the Inspection Report they prepare Goods Receipt Note and also check Test Certificate send by vendor and then

Inspected Material

Go to Issue Ward Go to vendor

(If goods accepted) (If goods rejected)

Before sending goods to the Issue Ward goods are insured.

And for rejected goods they prepare Goods Rejection Note and also prepare O.G.P. (Out Goods Note) and sent to the vendor.

For the liquid chemicals used as raw material storing process are as follows

Liquid chemical comes in tanker at gate

Tanker goes to excise section

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(Capture the invoices)

Tanker goes to store

(Weight of the tanker with liquid and quality check of the chemical is done)

Unloading

(Tanker is unloaded to respective plant)

/Tanker again comes to the store after unloading

(Again weight of the tanker is done without liquid)

Difference between weight of tanker before and after unloading the chemical is the actual quantity comes from the vendor.

This is the whole procedure for storing to issuing of the raw material. Thus stores department works with the materials.

CodificationRIL Vadodara complex is huge manufacturing division having different continuous

manufacturing production processes. In VMD they are maintaining around 67000 items as the

inventory having approximate value of Rs.225 crores. Codification helps in identifying the items

individually. The items are known from the codes and not from the name. Materials are entered

in the system with complete specification and details like size, name of manufacture, model

number, design number, color, height and width of product etc. these information needed for

the separation of the products and to assign different codes for different type of product.

First of all the codification request is been made for the new product, the form is to be filled with

all the information of the inventory and where it is used. After getting the form inventory

management department will check for the data validation of the inventory, if any manipulation

is there then they have to again fill the form. Then checking of the data is been done for the

existing inventory if any existing inventory’s sub part is there. The code is been given of 10

numbers.

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The first two digits are known as the main group. It represents the similar items in a

single group, the group is formed with the numbers from 01 to 99. It contains similar products

and its spare parts. E.g. 68 – it contain all types of pumps and its spares.

Next two digits are known as the subgroup, it include 01 to 99 number of group. It

shows the manufacturer codes. If the manufacturing code is not available than this group shows

the design number. E.g. 6804 – It shows the pumps of ----company.

Next 3 digits are known as sub-subgroup, again it include groups from 01 to 99.

These numbers are indicating the model number or identification or design number or blueprint

number. E.g. 680401 – this number is for the pumps of ---- company having the design number

‘CNU465’.

Up this six numbers code is known as “CODING SCHEMA”.

Next three digits are showing the serial number assign to a particular part or item. It

include the group the groups from 001 to 999.

Last digit shows the origin of the product. This number must be 1 or 3. 1 indicates

that this product is indigenous and 3 indicate that the product is imported.

With this RIL generates the unique number for each and every product or spare. RMMCS is

linked with the SAP system. SAP generates the unique serial number for each and every item

as soon as RMMCS accepts the code. SAP numbers are just a serial number. These codes are

maintained centrally so the same codes are used for a single product in all departments of RIL.

Flagging System:

RIL has 167th rank in ‘FORTUNE 500’ companies and one of the largest company in the world.

In the time of recession management of RIL decides to go for centralization and manage the all

departments from the head office. Management is also looking for minimum human efforts in

the management work by using the technological changes. In such a huge company it becomes

necessary to give more attention towards the inventory. RIL has its own system to manage the

inventory i.e. RMMCS and one of the best techniques of managing the inventory is known as

Flagging.

Flagging prevents the management from purchasing the goods if the similar goods are

available in other department so it avoids the unnecessary blockage of money. This system is

managed centrally by a team and prevents the duplication of purchase or over stocking of

similar kind of goods in the RIL. Suppose the Vadodara department needs the ‘bearing of 14

51

inches of flag co.’ and if the similar bearings are available with any other department of RIL than

if the Vadodara department could not enter purchase requisition order in the system as that

item contain the flag. In this case system shows the name where the similar bearings are

available. Vadodara department needs to contact the responsible person in the department

having stock of those bearings. If That department did not need that bearings or that bearings

are not in regular use than Vadodara department has to get those bearings by generating STO

(Stock Transfer Certificate). Suppose those bearings are of regular use or they need it and not

an over stock item than they have to conform it and department having the similar stock needs

to remove the flag from that item. Once the flag has been removed, Vadodara department can

enter a purchase requisition in the system to purchase those bearings. System generates the

different type of flag for different reasons depending on the days of storage of that item.

02 flag for duplicate material available.

013 flag for material not moved within one year.

08 flag for moderate material not moved since last 2 years.

03 flag for slow moving material not move for more than 2 years.

05 flag for material stock more than the maximum limit.

System generates the flags only for those materials having cost more than RS.5000 per

unit .RIL is using the flagging system and with this system RIL able to reduce the investment in

the inventory. This system really helps in managing the inventory and reduces the cost

associate with the inventory and ultimately all these results in increase in profit by reduction in

cost.

6.4 Classification of Material in SAPRIL is centrally managed with the help of SAP system. In SAP system every material name is

identified with the code, with this code system identify each material easily.

(TABLE NO.: 5)

CODE MATERIALS

SPAR SPARES

CACH CHEMICALA& CATALYSTS

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PAMA PACKAGING MATERIAL

FTRMFINISHED TRADABLE RAW

MATERIALS

LABC LAB CHEMICALS

Purchasing Groups

Feed Stock

Chemicals & Catalysts

Packaging

Administration

Consumables

Electrical

Instrumentation

Pumps and Spares

Heavy Equipment

PR Creation

Account Assignment

Delivery Date

Plant

Purchasing Group

Requisitioner

Code

Quantity

Value

MRP Control

Valuation

Fund Center

PO Creation

Mandatory Fields

1. PR NO.

2. VENDOR CODE

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3. PURCHASE ORGANIZATION

4. PURCHASING GROUP

5. DELIVERY DATE

6. PLANT

7. RATE

8. INCO TERMS

9. TAX CODE

10. FUND CENTER

6.5 Types of Stores CENTRAL STORES

CHEMICAL STORES

BULK CHEMICALS

GAP STORES

SCRAP YARD/ DISPOSAL

Stores Cycle Receipt of material at Material Gate Excise Capturing Verification by RGHS Weighment GRN preparation by Receiving Section Offering material for inspection User Decision Stocking of material in respective wards Issue of material to users

6.6 Various Types of Movements Commonly Used In MM ModulesIn the SAP system not only the material but the activities are also known from the codes for this

movement numbers are given to each activity. User of SAP needs to remember the codes for

smooth functioning in system. In the master window one has to enter the code for the activity

which he wants to perform. List of such activities are given below. In this movement numbers

are for the activity wants to perform and T-CODE are used for identification of type of goods.

(TABLE NO.: 6)

Movement Activity T Code101 Goods Receipt YMGR, YGR1, MB01991 Goods Receipt without E- MB01

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invoice501 Goods Receipt without P.O MB01122 Rejection, return to vendor MB01502 Removal without P.O MB01321 User’s Decision QA11201 Issue against Cost center MB1A961 Issue against Pm order MB1A

6.7 Purchase Order Terms1) Packing forwarding charges: extra 2% 2) Excise duty (as applicable)s3) CST: Extra as applicable presently at 4% against form”c”.4) Freight charges extra, kindly arrange to dispatch the goods through our

authorized transporters, M/S Time to share hanlus to its address of correspondence.5) Insurance by RIL as same as the goods are dispatched.6) Please inform dispatch details to our material manager.7) (Stores) to enable us to arrange transit insurance.8) Manufacturer test certificate, guarantee certificate submitted along with the

supply.

Payments Terms

1) Our standard payment terms is 100% payment within the 30 days of receipt subject to acceptance of materials at RIL stores Vadodra by: E-payment only as under: - We have a mission to convert all vendors into e-payment route, in there is connection we have issued service of communication to all vendors.

2) WE have a e-payment (direct electronic credit to vendors a/c) facilities with three banks, they are HDFC, ICICI, CITI Bank, The major requirement here is that you have to open a/c with this banks. However e-payment through this route are free of cost.

3) As the designated banks do not have branches at all the places across India and so many vendors are to open a/c. So we explode the bank netuaral , RBI operated electronic payment system (RTGS) Real Time Gross Settlement to SEFT Special electronic Fund Transfer where the vendor can have a/c in the any bank but its branch should RTGS / SEFT enabled. The bank will charge vendor a fee for receiving RTGS / SEFT facility.

4) Liquidated or Damages will be charged weekly 11% subject to maximum of 5% of order value will be leyeied in case of delayed supply.

Terms of Value Added Tax (VAT)

1) Please vote while preparing the invoice it is mandatory to mention sales tax

no. / VAT no, / TIN no. and date (as the case may be) of both sellers and purchasers. Without

this, input tax credit (ITC) will not be allowed and invoice become defective.

2) Address of purchaser to be mentioned in invoice. Billing address and

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shipping address of purchaser. In supplier invoice must be of the came state in case of local

purchaser for VAT state for ITC purpose. However supplier may submit the invoice to

purchasers account department at RIL Baroda complex, as per the prevailing practice.

3) The carrier of the entering into the state of Gujarat shall carry dully filled in

form 404 in triplicate along with log book, a bill of sale of delivery note to addition carry a goods

vehicle record shut to tripshit.

4) During the movement of goods if any of the designated check port or barrier

is encouraged, the “original” form 404 shall be deposited with the check port officer and

“duplicate” to “triplicate” of the form403shall be got endorsed by the check port officer.

5) Duplicate of the form 403 shall be forwarded to the consigner of the goods to

Triplicate copy of the form 403 shall be retained by the carrier of the vehicle through its journey

in the state of Gujarat.

6) Format of the form 403 is attached with PO

7) Clarification if any then pleas get it confirmed before dispatch of goods

6.8 General Terms of QuotationsPurchase procedure actually starts with the demanding of quotations but prior this plant needs

to generate purchase requisition (PR) before some days depending on the types of goods. It

means plant requires the material for smooth functioning of production but if the material is not

available with the stores they need to show the requirement in the system. Here the work of

purchase department starts, after this purchase department fetches the data from the inventory

module and search for the suppliers of the same material. RIL has predefined loyal suppliers

and if the supplier is not available in this case they are looking for the new suppliers. They are

sending the requirement to all the suppliers, with the terms and conditions, and ask the

quotations for same.

Selection of Supplier:Once the quotations are demanded from the suppliers they need to respond for the same. Suppliers are sending the quotations, if they are accepting the terms & conditions or wants to negotiate with the terms and conditions or send the regrets letter if he is not ready to supply the same material. After collecting the quotations management are scrutinize the suppliers with the terms and condition and prepare a comparative statement of the suppliers which are suitable for the same. On the basis of comparative statement management decides the supplier who is tendered a lower price and easy terms and conditions. RIL has its approved suppliers and maintained relationship from a longer period so they are not worried about the quality but price matters here and lower quoted supplier gets the advantage. At the end order has been put to

56

the selected supplier if needed after selecting the supplier management may enter in to negotiation for the price and terms and conditions. ReceiptsAfter the order has been placed, the goods have been transferred by the supplier. First of all the

gate security will check the truck number and they will provide them the TPN number after

taking that number the truck will go for the excise clearing where it will get the excise ID from

there. The excise person will make a entry of excise, after that the MMN entry is done and then

they will sent the goods to the stores department where the GRN (Goods Receipt Note) will be

made. Stores department will send the goods for the inspection and on that base the inspection

note is to be prepared of acceptance or rejection of the goods. That is also known as user

decision and the goods will be consider as the RIL’s property and if the goods are rejected then

they will make the MMX exit entry

InspectionInspections of all the materials are to be done on the basis of the purchase order that have

been placed, they will check for the quality and the quantity of the material as per the purchase

order. If all the criteria are ok then they will accept the material and will send to stores or at the

where it is required. And if the material is inferior then they will reject that material and will quote

the reasons for the rejection of the materials.

Storage and preservationAfter the materials are checked they are kept in stores or at the plant site, where due care is

been taken for the material so that they are not damaged or Obsolescence. Plant engineers are

responsible for preservation of heavy machineries and specific goods. Chemicals and other

hazardous material are kept well preserved so that they may not prove vital for the health of the

employees.

IssueIssue of the materials is done as per the reservation made by the particular plant. Each plant

has to make a reservation for the material that they required and also to show how much stock

they have and how long it will last, the materials department will make the verification of the

reservation and as per the past consumption record they will allot the materials to the plant.

Plant has to give the fund center as well as profit center number it helps in costing computation

of a particular plant.

Scrap and disposals

After the use of the materials some materials may turn to wastages or useless due to some

reasons. So they are to be scraped, not only the materials but also any type of inventory like

57

spares and mechanical will go Obsolescence with the time passing and will be useless for the

plant that has to be scraped. First of the plant manager has to prepare MRV (Materials Return

Voucher) which include all the details of inventory, with its code and type of inventory and

where it is been used with the approval of the head that this is not usable now should be

scraped. For the disposal of the scrap they will invite the tender and ask them to visit the scrap

yard, the acceptance of the tender will be done by the Mumbai office. The disposal of the scrap

is done once or twice a year. In scrap all the materials are to be kept as per their type if they are

of electrical then at different place and so as on, and then in electrical each item at specific

place like fans at different place, motors at different place. Each department has an authority to

sell the scrap but the price of scrap is decided by the head office only.

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Quality Assurance Department

Introduction

Six-Sigma Technology Use in VMD

Clean Development Mechanism

7.1 Introduction

7.1.1 Quality Policy

"We at RIL are committed to meet customers' requirements through continual improvement of

our quality management systems. We shall sustain organizational excellence through visionary

leadership and innovative efforts."

7.2 SIX-SIGMA Technology Used in VMD

What is Six-Sigma?

The 18th letter of the Greek alphabet, Sigma is the symbol for standard deviation, a measure of

variation. Sigma has a history and is: -

59

1. A Vision

2. A Philosophy

3. A Management System

4. An Aggressive Goal

5. A Benchmark

6. A Disciplined Date Based Methodology for improvement

7. A tool Box

8. A vehicle for Customer Focus

7.2.1 Six- Sigma is an Aggressive Goal

SIX-SIGMA TABLE

(TABLE NO.:7)Sigma Level

Defects Per Million Opportunities (DPMO) (Long Term)

2 sigma 308,537

3 sigma 66,807

4 sigma 6210

5 sigma 233

6 sigma 3.4

7.3 Clean Development Mechanism

RIL professes the doctrine that any economic activity should not erode the very foundation of

such activity. Development should therefore be with due regarded to environment protection. In

line with this approach, RIL has set up state of the art facilities at all its manufacturing sites for

the management of all emissions in liquid, gaseous or solid form. Major emphasis is given on

60

conservation of natural resources like water, energy, raw material, green belt development etc.

To conserve the precious water resource all sites of RIL have taken special steps such as rain

water harvesting, reducing water consumption, recycling and reusing the treated water to the

maximum extent in process, cooling water systems, and horticulture and gardening programs.

Reduction in raw material consumption, waste generation and encouraging of reuse and

recycle of products waste are our prime initiatives in this direction. All manufacturing sites of

RIL have also instituted Environmental Management System based on the internationally

accepted ISO-14001 standards. All RIL manufacturing sites have also taken many pro-active

steps to go beyond compliance in the area of environment, one such initiative is the innovative

"Green Card Rating System" to integrate manufacturing with environment, where in all

manufacturing plants of sites are rated / benchmarked for their environmental performances.

Apart from this all sites have instituted ISO-18001, Occupational safety and Health

management systemRIL has been a recipient of many prestigious awards from Federation

Gujarat Industry (FGI), Green Tech Foundation, Federation of Indian Chamber of Commerce

and Industry (FICCI) for environment conservation and pollution control. Apart from this RIL has

formulated a clear and focused Safety, Health and Environment policy, which reinforces the

corporate commitment to these facets of business.

At RIL , safety of person overrides all the production Targets. RIL believes that all injuries,

occupational illness as well as safety and environmental incidents are preventable. RIL shall

strive to be a leader in the field of management of Health, Safety and Environment.

An artificial lake created from treated wastewater at RIL-Vadodara attracts over 100 species of

birds from all over the region. This bears a testimony to the quality of treated effluents. The

Vadodara Complex has a 'Living Museum of Trees' with 70 species grown over 40 acres of

land.

At Nagothane, over 7 Lac trees cover more than 260 hectares of land. The company

encourages people residing in neighborhood of Nagothane complex to plant economically

attractive and environment friendly trees by providing saplings and grafts. Zero garbage

concept is adopted for environmental conservation.

At Gandhar, there is an ongoing wasteland development program that is expected to provide

tree cover in the barren salt ingress land. The company carried out detailed investigation of soil

61

and weather conditions and selected trees, which can adapt to hostile conditions associated

with high salinity and scanty rainfall.

62

8.1 Introduction Definition:

“Logistic means management of the flow of goods or material from point of origin to point of consumption and in some cases even to the point of disposal.”

The Council of Logistics Management (CLM) defines:

63

Dispatch & Logistics

Introduction

Type of logistics

Logistics is that part of supply chain process that plans, implements and controls the efficient, effective flow of and storage of goods, services and related information from the point of the point of consumption in order to meet the customers’ requirement.

8.2 Types of Logistics

(A) INBOUND LOGISTICS

In inbound logistics, the material moves from the supplier to the company’s raw material warehouses, then transportation of raw material from ware houses to the plants i.e. to the production houses.

(B) OUTBOUND LOGISTICS

It is mainly concerned with 3 types of logistics.

1. Primary logistics: - in which materials moves from plant area to C&F agent. (Cost and freight) or from company warehouses to the C&F warehouse.

2. Secondary logistics: - in which materials flow would be from C&F agents to the end users (customers) or wholesaler or retailer.

3. Tertiary logistics: - in which material flow from the retailer to the customers.

OUTBOUND LOGISTICS AT RILBlock diagram of order procedure for solid products:-

(DIAGRAM NO.: 5) Order

PRODUCT DELIVERED THROUGH

TRANSPORTERS TTTTT

PLACE THE (ADVANCED

ORDER PAYMENT BY

CHEQUE OR DRAFT)

RELEASES

DISPATCH

PLAN PLACE THE PENDING ORDER RELEASES

ORDER IN SAP

Explanation

The customers of the VMD are located all over India. The customer places the order at their

respective Regional offices. The customer has to make advance payments through the cheque,

DD or cash.

64

CUSTOMER

REGIONAL OFFICES

HEAD OFFICE (BUSINESS GROUP) MOP

DEPARTMENT

PTD (WAREHOUSE)

The major functions of different Regional offices are to receive payment, to make the sales

orders and to calculate relevant taxes and discounts and attend to customer complaints. If all

conditions are satisfied then Regional offices enters the customer order in SAP system.

At the head office the concern Business group receives the customer orders from five Regional

offices located all over the India. The major functions of Business group are to decide the prices

of different materials, customer wise allocation and region wise allocation of the materials.

After checking the availability of materials, Business group releases the pending order through

SAP system to MOP (Marketing, operation & planning department) The major function of MOP

is to check the availability of material in different warehouses, to make the dispatch plan, to

release the dispatch plan to the concerned transporters and to see that the respective loading

for the day gets over well in advance. The final dispatch plan is prepared and given to the

transporters in the previous day evening. MOP also gives some additional dispatch plan

throughout the day, which again depends on the order that comes from the head office.

Transporters have to place their trucks for the additional plan given throughout the day.

The Product Transfer Department (PTD) releases the material to the respective transporters

and in turn transporters deliver the material to customers.

Prime Activities of LogisticsThe key activities of logistics are:

1) Inventory Maintenance

It is usually not possible or practical to provide instant production or instant delivery to

customers. In order to achieve a reasonable degree of product availability, inventories need to

be maintained as buffers between supply and demand. The extensive use of inventories results

in the fact that, on the average, they account use of approximately one third of logistics costs,

making inventory maintenance a key logistics activity.

2) Order Processing

Order processing cost tends to be minor as compared to transportation or inventory

maintenance costs. Nevertheless, it is a primary logistics activity. Its essential nature comes

65

from the fact that there is a critical time element in getting goods and services to customers.

Also it is the primary activity that triggers product movement and service delivery.

3) Transportation

For most firms, transportation is the most important logistics activity, simply because it absorbs,

on the average, approximately two thirds of logistic costs. “Transportation” refers to the various

methods for moving a product. Road, rail, water and air are just a few of the popular choices.

Management of the transportation activity usually involves in making choices regarding the

method of shipment, the routings, and the utilization of vehicle capacity.

Marketing Operations and Planning (Logistic Group)

RIL has achieved considerable progress in the area of logistics in terms of its selling strategies.

MOP is the backbone of the whole organization which is responsible for warehousing and

movement of the product from different plants to various customers, distributors etc.

The logistic movement of solid, liquid, gaseous products is done either by roadways, railways or

even by pipelines. The dispatches of materials at VMD are mainly through trucks for hard

material and, liquid materials and some gaseous materials arrive through tanks. Some

materials are also transported through pipeline. Sometimes the materials are transported from

Dahej port to Madras by ship. Therefore the major modes of dispatch are-

Truck

Tankers

Pipelines

Ship

Rail

Generally contracts are given to the transporters for the transportation of the materials or

bookings are done for rail bogies.

The regional offices collect the orders and submit their requirements to PMG, CBG

respectively. The respective business groups then send the requirements to the MOP.

The MOP group undertakes all the logistic activities. The other activities include processing

freight bills for payment, coverage of insurance policies, hiring of warehouses, appointment of

surveyor etc.

66

Distribution ChannelRIL (VMD) has a network of 64 distributors all over India. RIL serves its customers through the regional

offices situated in various parts of the country. There are 5 Regional Offices situated at Ahmedabad,

Mumbai, Kolkata, New Delhi and Chennai.

Gradually RIL realized that the regional offices were not enough to meet the demands of its customers.

Therefore, many sales centers and sales offices were opened at various places for the convenience of

the customers. The sales centers are situated at Vadodara, Indore, Daman, Kanpur, Ludhiana,

Hyderabad and Bangalore. The Sales Offices are situated at Rajkot, Jaipur, Pune and Nagpur. RIL has

contract with 21 transporters to transport its goods to various destinations. Thus RIL has a well

coordinated network of distribution channel which takes care of satisfying the customers in most

effective manner. Thus, RIL distribution and supply channel are as follows:

(DIAGRAM NO.: 6)

Scenario - Feedstock and Polymers

Distribution Channel

RIL distribute its products through direct marketing channels & indirect marketing channels.

Direct Marketing Channels:

RIL’s direct marketing channel addresses requirement of large customers. Direct marketing

efforts of RIL are conducted through its regional offices, sales centers & head office.

Indirect Marketing Channels:

RIL’s indirect marketing channels addresses requirement of small customers. Indirect marketing

efforts are conducted through approximately 130 consignment & Del credere agents located

67

RIL

Plants &

Customers

Sales Centers Warehouse

Distributors

Exports

Customers

Customers

Customers

throughout the country. Consignment agents store & sell products to the customers, while Del

credere agents do not store the products. Both consignment & Del credere agents are

responsible for collecting the amounts due from customers & agree to compensate in the even

customers fail to pay for the products.

PART-II PRIMARY STUDY

68

Highlights

Turnover : Rs. 2,00,400 Crore ($ 44,632 million)

69

Introduction

Why cash management?

Why bank management?

Introduction of the subject

Importance of Studies

Objective of the project

Analysis of data

PBDIT :

Cash Profit :

Net Profit :

Net Profit 10 years CAGR :

Total Assets :

Rs. 33,041 Crore ($ 7,359 million)

Rs. 27,933 Crore ($ 6,221 million)

Rs. 16,236 Crore ($ 3,616 million)

21%

Rs. 2,51,006 Crore ($ 55,903 million)

(Position as on the march 2010)

9.1 Why Cash Management?

In the any organization numbers of activities are performed and each activity has its own

importance. Maintaining the smooth and continuous flow of organization is the challenging task

for each organization, for this management needs the availability of each and every component

of 4M i.e. Man, Machine, Money and Material. Day to day management of money components

is known as “CASH MANAGEMENT”. Cash management is an important activity for any

organization as it maintains the continuous flow. Purchase of fixed assets decisions are taken

once and it continues for a longer period of time but the decisions relating to the Cash are taken

on each day based on the circumstances. Cash is the base for any organization especially for

manufacturing organization.

9.2 Why Bank Management?

In the any of the organization maintain the cash in bank and each of the activity has its own

importance. Day to Day management of bank related adjustment can be defined. At of time

every organization can be payment and collection of money thought bank. In the bank give

grantee to vendor. In bank new technology introduce all the activity on sitting one place. Bank

are introduce new investment plan to organization. Bank can save on day to day basis,

organization can earn profit. In any organization one of the part of the bank they can manage

the whole cash.

9.3 Introduction of the Subject

70

Management of cash and bank is a challenging task particularly in developing countries like

India. In developing countries generally, there is shortage of funds, frequent changes in the

monetary policy as an instrument of controlling inflation, pressure from the government to obey

some unnecessary obligations, vast demands on bank funds, high interest rates, shortage of

goods and services luring both business houses and consumers to hoard and maintain large

inventories and existence of parallel black economy. A large part of finance manager’s is

devoted in managing cash and to get day-to-day needs of an organization. His prime attention

is devoted to maintain sufficient liquidity in the form of cash, marketable securities, accounts

receivables and inventories to grease the operations of business adequately. But at the same

time he is to take care of the profitability of the organization. Too much liquidity is a burden on

profitability, as these are inversely related to each other. It is to balance between these two

conflicting objectives of liquidity and profitability. For the organization it is a continuous process.

Company needs to maintain balance within the organization as well as outside the organization.

Management maintains the financial balance within the organization with the help of Cash

capital and Bank balance, especially for routing or day to day activities.

9.4 Importance of the Study

In every business organization its financial transactions are recorded in the systematic term,

which called ‘Financial Statements’ such as Profit and Loss Account and Balance Sheet.

Financial Statements shows the financial strength and weakness of the firm, hence, the

Financial Statements are prepared for the decision-making. Management becomes able to this

purpose such financial statement are necessary to be analyzed.

The study is useful to understand the Cash and Bank Management at ‘Reliance Industries

Limited’ [Vadodara Manufacturing Department (VMD)]. It is useful in understanding all

theoretical concepts, by applying it into practical work, how they are practically implemented.

Also the various types of ratios were studied which helps in analyzing company’s position &

status. Also the studies the cash budget and controlled day to day expenses, they are

practically imply do analysis of future expanses, investment strategy learn at RIL (VMD).

9.5 OBJECTIVES OF THE PROJECT

The objectives of the study were –

71

To understand and study the Cash and Bank management.

To analyze the management of Bank and cash in the organization.

To study the different kind of payment kept in the organization.

To study the bank and cash transaction in the organization

To learn about the practical methodology of cash stock kept in the organization.

9.6 ANALYSIS OF DATA

In this project data are used to calculate ratio i.e. financial tools are used to analyze data and

charts or diagrams are used for easy interpretation.

72

10.1 Theoretical Perspective Objectives

The Basic objective of cash management is twofold:

73

Cash ManagementTheoretical Perspective

Cash management in RIL

Cash Register

Cash Budget

Expense Register

Investments

Ratio

What is new?

Cash ManagementTheoretical Perspective

Cash management in RIL

Cash Register

Cash Budget

Expense Register

Investments

Ratio

What is new?

(a) To meet the cash disbursement needs (payment schedule);

(b) To minimize funds committed to cash balances. These are conflicting and mutually

contradictory and the task of cash management is to reconcile them.

Cash management is concerned with managing of:

i) Cash flows in and out of the firm

ii) Cash flows within the firm

iii) Cash balances held by the firm at a point of time by financing deficit or inverting surplus

cash.

Sales generate cash which has to be disbursed out. The surplus cash has to be invested while

deficit cash has to be borrowed. Cash management seeks to accomplish this cycle at a

minimum cost. At the same time it also seeks to achieve liquidity and control. Therefore the aim

of Cash Management is to maintain adequate control over cash position to keep firm sufficiently

liquid and to use excess cash in some profitable way.

1. Cash Planning.

2. Managing the cash flows.

3. Optimum cash level

4. Investing surplus cash

Cash Management Techniques & Processes

The following are the basic cash management techniques and process which are helpful in

better cash management:

Concentration Banking:

In this system of decentralized collection of accounts receivable, Instead of all the payments

being collected at the head office of the firm, the cheques for a certain geographical areas are

collected at a specified local collection centers. Under this arrangement the customers are

required to send their payments at local collection center covering the area in which they live

and these are deposited in the local account of concerned collection, after meeting local

74

expenses, if any. Funds beyond a predetermined minimum are transferred daily to a central or

disbursing or concentration bank or account.

Lock-Box System:

Facilitates the cash improvement where, instead of being delivered to business address,

customer payments are delivered to a special post office (PO) box. It is only the customers'

payments that are delivered in the PO Box and the company's own bank collects the amount

and delivers them to the banks of the customers. The bank of the customers opens and

processes the payments for direct deposit to the bank account. Lockbox contents regularly

removed and processed.

Slowing disbursements:

A basic strategy of cash management is to delay payments as long as possible without

impairing the credit rating/standing of the firm. In fact, slow disbursement represents a source of

funds requiring no interest payments. There are several techniques to delay payment of

accounts payable namely (1) avoidance of early payments; (2) centralized disbursements; (3)

floats

1. Avoidance of early payments: One way to delay payments is to avoid early

payments. According to the terms of credit, a firm is required to make a payment within a

stipulated period. It entitles a firm to cash discounts. If however payments are delayed beyond

the due date, the credit standing may be adversely affected so that the firms would find it

difficult to secure trade credit later. But if the firm pays its accounts payable before the due date

it has no special advantage.

2. Centralized disbursements: Another method to slow down disbursements is to

have centralized disbursements. All the payments should be made by the head office from a

centralized disbursement account. Firstly it involves increase in the transit time. The

remittances from the head office to the customers in distant places would involve more mailing

time than a decentralized payment by a local branch. The second reason for reduction in

operating cash requirement is that since the firm has a centralized bank account, a relatively

smaller total cash balance will be needed. In the case of a decentralized arrangement, a

minimum cash balance will have to be maintained at each branch which will add to a large

operating cash balance.

75

3. Float: A very important technique of slow disbursements is float. The term float

refers to amount of money tied up in the cheque that have been written, but have yet to be

collected and en-cashed. Alternatively, float represents the difference between the bank

balance and book balance of cash of a firm. The difference between the balance as shown in

the firm’s record and the actual bank balance is due to transit and processing delays. There is

time lag between the issue of a cheque by the firm and its presentation to its bank by the

customer’s bank for payment.

Cash operating cycle

In the RIL (VMD) they can adopt these types of stagey. They collect the money early and payment of vendor after the collection of money.

10.2 Cash management in RIL

Daily Fund Requirement:

VMD has a centralized management so they needs to generate the daily cash demand to head

office. RIL has a PULL ACCOUNT SYSTEM to manage the daily cash requirement. Under this

system VMD management ask for the cash to the head office a day before and send the

requirement to head office. In early morning head office transfer the required cash in the VMD

account at HDFC bank through the RTGS system. At the end of the day Excess amount with

this account was pull by the head office it means management maintains the zero balance at

the end of the day. On the same day again management has to send the estimation to head

office. Major transactions relating to the cash is managed by the head office. For general use

VMD maintain Rs.50,000 as a cash balance.

10.3 Cash registerIn below the cash register to made in RIL on the daily basis. They can tally all this items are

required in the cash register. First of the recorded the opening balance and recorded the cash

payment and cash collection on the daily bases. In the SAP they can recoded but Stamps are

not enter in SAP and they can made day- to –day entry enter in register. Company can own

purpose they prepare manually. They maintain Stamp 2000rs. And cash maintain.

Cash Account Book

76

(TABLE NO.: 8)

DATE :28.06.2010

Particulars DENOMINATION OF RS.

Particulars 1000 500 100 50 20 10 5 2 1 TOTAL COINSR. STAMPS G TOTAL

OPENING

BALANCE 1 25   1 - 105 1 -

- 14,605 32 1,720 16,357

CASH

WITHDRAWAL - - - - - - - -

- - - - -

CASH RECEIPT - - - - - - - -

- - - - -

TOTAL (A) 1 25 - 1 - 105 1 -

- 14,605 32 1,720 16,357

OPENING

BALANCE 1 25 - 1 - 105 1 -

- 14,605 32   16,357

CASH

WITHDRAWAL - - - - - - - -

- - - - -

CASH RECEIPT - - - - - - - -

- - - - -

TOTAL : (B) 1 25 - 1 - 105 1 -

- 14,605 32 - 14,637

CLOSING

BALANCE - - 314 100 - 102 1

-

- 37,425 30 1,720 39,175

TOTAL : ( C ) - - 314 100 - 102 1

-

- 37,425 30 1,720 39,175

CLOSING

BALANCE - - 314 100 - 102 1

-

- 37,425 30 1,720 39,175

( A - B + C )

SUMMARY RUPEES FINAL ACCOUNTS

Opening Balance 52,257.00

Withdrawal - 1,000 - -

Receipt - 500 - -

Total : ( A ) 52,257.00 100 314 31,400.00

    50 100 5,000.00

77

Misc. payment (13,082.00) 20 - -

    10 102 1,020.00

Total : ( B ) (13,082.00) 5 1 5.00

    2 - -

Closing Balance : A – B 39,175.00 1 - -

TOTAL :   37,425.00

COINS   30.00

REVENUE STAMPS 1,720.00

GRAND TOTAL RS. 39,175.00

  FROM TO

RECEIPT NO: - -

PAYMENT VR. NO.   - -

CREDIT VR. NO.   - -

Sign. of Cashier

Sign. Of Officer

10.4 Cash budget

Company made cash budget on the monthly and the six monthly they can control on the

expanses they can accrued, cash on the uses on the day to day. In the RIL (VMD) they made

cash budget and send to the corporate office in Mumbai. The entire monthly they submitted and

the analysis on the cash budget which of the plant expense are more and the how to controlled

it. in RIL (VMD) monthly cash budget submit to Mumbai they transfer fund. In the last month

fund can’t utilize plant can control the expenses. Funds are as it is. They can made another

time made cash budget for next month.

If any plat future expense is 200cr Rs. They made cash budget in case fund are as it not utilize

it. And second month plant required so another time they made cash budget for 200cr Rs.

10.5 Expenses Register

78

In expense budget format as under company work on the monthly made expense budget and

all the detail they fill up and submit to the corporate office in Mumbai. RIL (VMD) works on the

monthly and six monthly compare to the expanse. In whole RIL can work on GL basis. In SAP

can be work on the GL code.

(TABLE NO.:9)

All figures should be duly reconciled with respective GL Codes

  BARODA MFG. SITE FOR THE DAY

  EXPENDITURE HEADS   ► Raw Material   ► Chem Cats   ► Stores & Spares   ► Packing Material   ► Excise   ► Sales Tax   ► Service Tax   ► TDS / Income Tax   ► Customs Duty   ► Salaries   ► Repairs & Maintenance   ► Rent   ► Water Charges(GC)   ► Electricity Charges/Duty   ► Telephone   ► Travel - Domestic   ► Travel - Foreign   ► Other Administrative Expenses-    (Vendor Payments) (If not included above)    Supplies    Contractual Services    Non-PO based    Lease Rent    Railway Freight    Furniture   ► Others (specify) -    > GCPTCL STOREGE TANK RENT    > PIIPL Transportation charges    > Others    Fund Transfer   ► Capex   ► Refunds (If any)    SUB TOTAL   ► Scrap Sale Collections   ► Other Collections  

79

  Fund Transfer    Total   ► Major Raw Materials - (If funded by sites)    Naptha Imported    PROPANE Imported    C2C3 Ind.    Gas GAIL Ind.    PMT Gas GC Ind.    PMT Gas BC Ind.    Lean Gas Ind.    EDC Imported    VCM Imported    BUTENE Imported    OCTENE Imported    ACETIC ACID Imported    ACETIC ACID Ind.    METHANOL Imported    CAUSTIC SODA Ind.    LPG Ind    Others (LDO, CBFS etc) Ind.  

10.6 Investments:

RIL manage the huge amount of daily cash in such situation it needs to manage it efficiently.

RIL manage the cash and its investment simultaneously the excess cash pull from the different

divisions are invested simultaneously in the different investment avenues.

RIL has its own treasury department which mainly handles the investing activities. Investment

of cash takes part as regular activity. Investing activity should be made before 12p.m similarly

the selling activity should be made before 3p.m. If the excess cash available in the begging of

the day it will be invested in the different avenues similarly if there is shortage of cash than the

cash should be balanced by selling the investments. Treasury department evaluates the

investments opportunities and then invest in such a way that it gives maximum return to

company.

10.7 What is new?

Daily cash budgeting and analysis.

Expense budget monthly and six monthly prepare.

Daily investment.

80

81

Bank Management

Theoretical Perspective

Type of Bank maintain in RIL (VMD)

Bank Reconciliation Statement

Payment Method at RIL (VMD)

Ratio

What is New?

Bank Management

Theoretical Perspective

Type of Bank maintain in RIL (VMD)

Bank Reconciliation Statement

Payment Method at RIL (VMD)

Ratio

What is New?

11.1 Theoretical PerspectiveA bank is a financial intermediary that accepts deposits and channels those deposits into

lending activities, either directly or through capital markets. A bank connects customers with

capital deficits to customers with capital surpluses.

Different between Bank balance and Bank overdraft.

(TABLE NO.:10)Bank balance Bank overdraft

1. Meaning When the trader’s money is lying in his

bank account, it is called bank balance.

When he has withdrawn fewer amounts

than the money he has deposited, there

is a bank balance.

When the trader has withdrawn bank’s

money, his bank stamen shows debit

balance and it is called bank overdraft.

When a trader withdraws more money

than the money he has deposited, the

balance is called overdraft.

2. Balance When there is a bank balance the cash

book shows debit balance and bank

statement shows credit balance.

When there is bank overdraft, the cash

book shows credit balance and bank

statement shows debit balance.

3. Effect of

paying

money

When there is a bank balance increase

when money or cheque is paid. When

money is withdrawn, the balance

decreases.

When there is bank overdraft and money

is paid in bank account, the overdraft

decreases. When money or withdrawn,

the overdraft increases.

4. Effect of

interest

When interest is allowed on bank

balance, it is the income of bank and the

bank balance increase. It is recorded on

debit side of cash book in bank column.

When interest is charged on overdraft, it

is an expense of the trader and the bank

overdraft increase. It is recorded on

payment side of cash book in bank

column.

5. Relation When there is bank balance, the trader is

a creditor and bank is a debtor.

When there is bank overdraft, the trader

is a debtor and bank is the creditor

6. Agreement When there is bank balance, no

agreement is necessary to withdrawn

money

When there is no bank balance, and yet

money is to be withdrawn from bank

account, an agreement has to be made

with the bank and some security has to

be given to the bank.

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11.1 Type of bank maintain account in RIL (VMD)

1. SBI Koyali

2. SBI Madvi

3. HDFC.

In this bank day to day transaction maintain in this account. Every transition is follow by only

two banks 1.SBI Koyali 2. HDFC Bank. RIL (VMD) can issue cheque and payment they

recorded in the SAP. End of the day corporate office transfer the balance to Mumbai accounts.

RIL (VMD) banks every day null balance. If any balance is credit or debit balance they transfer

to the head office.

Transitions are the bank account like this.

Bank a/c Dr. Rs.50000

To swift to HDFC bank Mumbai a/c Rs.50000

Transfer the credit or debit balance of daily at 6.00clock.in case VMD wants this

much amount this 1days early they can communicate e-mail trough Corporate office at Mumbai.

The can adjust the amount and the credited to VMD bank account.

11.2 Bank Reconciliation Statement

Bank reconciliation is the process of comparing and matching figures from the accounting

records against those shown on a bank statement. The result is that any transactions in the

accounting records not found on the bank statement are said to be outstanding. In the ril daily

basis of the BRS and they maintain the account, 0balance can do the BRS. Both the side the

equal balance they nullify otherwise they are not removing in this account. One is debit entry

and another credit both are match. Entry is match and correct of the amount. In the BRS

company can be see the 1. Cheque Number. 2. Amount 3. References. All are tally than they

can be removing. Balance can be null.

11.3 Payment Method at RIL (VMD)

1. E-payment:

Company directly payment to customer or purchase of the vendor they can use Electronic

payment. Direct bank to bank transaction. No paper work can do. Safely transfer, many

customers prefer to e-payment. Company pays any taxes by e-payment.

2. RTGS:

83

Systems (RTGS) are funds transfer systems where transfer of money takes

place from one bank to another on a "real time" and on "gross" basis. Settlement in "real time"

means payment transaction is not subjected to any waiting period. The transactions are settled

as soon as they are processed. "Gross settlement" means the transaction is settled on one to

one basis without bunching or netting with any other transaction. RTGS system is suited for

low-volume, high-value transactions. It lowers settlement risk, besides giving an accurate

picture of an institution's account at any point of time. The RTGS system is primarily for large

value transactions. Initially there were no restrictions on the amount to be transferred through

RTGS system, only to popularize the aforesaid payment mechanism. Effective minimum

amount to be remitted through RTGS is above Rs.1 lkhs. There is no upper ceiling for RTGS

transactions.

1. Amount to be remitted.

2. His account Number which is to be debited.

3. Name of the Beneficiary Bank.

4. Name of the Beneficiary Customer.

5. Account Number of the Beneficiary Customer.

6. Sender to Receiver information, if any.

7. The IFS Code of the receiving bank branch.

In RIL (VMD) all employee salary paid by RTGS. Mention in the form company submitted bank

with a two copy one hard copy and another is soft copy.

3. Fund From:

Fund transfer to one department to another department, in case any of the balance are credit

had office can be transfer fund day to day activates.

4. NEFT:

(NEFT) is an online system for transferring funds of Indian financial institution (especially

banks). This facility is used mainly to transfer funds below Rs.1, 00,000. The Reserve Bank of

India has instructed banks that they should not use RTGS for amounts below Rs 1 Lkhs

(100 thousand). The new rule came into effect on 1 January 2007. For small transactions, RBI

has asked banks to offer National Electronic Fund Transfer (NEFT)

5. Cheque:

Cheque is one of the papers. They mention which of the customer company can be payment.

Cheque is only 6month valid.

6. Demand Draft:

84

DD can be advance payment or another bank account they can be transfer on dd. In the made

dd bank can be taken a charges they can be pay by cash or deducted from the account.

Cash Credit

A cash credit is a short-term cash loan to a company. A bank provides this type of funding, but

only after the required security is given to secure the loan. Once a security for repayment has

been given, the business that receives the loan can continuously draw from the bank up to a

certain specified amount.

VMD one bank gives to cash credit. HDFC can give to Rs.80Lkhs cash credit. VMD can

withdraw up limit, account can be debited up to Rs.80Lkhs. in case money can’t be deposit on

the due date bank can be charge on daily base 2.49%interest they will taken.

Credit advice:

Any of the customers the direct deposit in the bank, bank give to the credit advice.

Debit advice:

Any of the charges debit in the bank, bank give to debit advice.

11.4 What is new?

Quick payment through new techniques like RTGS and E-PAYMENT.

Salaries management and payments.

BRS in SAP.

85

86

Accounts Receivables and payables

Vendors Selection at VMD

Vendor Management at VMD

Debtors management at VMD

Ratio Analysis and Interpretation

Cash Flow Statement Analysis

Accounting System

SWOT Analysis of RIL

Accounts Receivables and payables

Vendors Selection at VMD

Vendor Management at VMD

Debtors management at VMD

Ratio Analysis and Interpretation

Cash Flow Statement Analysis

Accounting System

SWOT Analysis of RIL

12.1 Vendors Selection at VMD

RIL is a huge organization and it needs to purchase various materials and items from the open

market. There is a particular procedure to purchase the goods and material. When the

purchase department needs to purchase the material first they have to send the request for

quotation to the vendors, these vendors are already selected by the head office after properly

analyzing them. After collecting the quotation from all the interested vendors, management

analyzes the terms and conditions of vendors and prepares the comparative statement of

vendors. On the basis of comparative statement management decide the vendors and enters in

to negotiation with them for price and terms and conditions for supply of material. At the time of

selection of vendors, less price quoted vendor has a higher chances of getting selected as

quality are fixed by the management and the vendors are reliable as they are existing vendors

for RIL. In every purchase the same procedure is followed. In case of material which are used

in continuous production, this procedure is followed only once in the begging of the year and

material is purchased from the same vendor throughout the year.

12.2 Vendors Management at VMD

At the time of purchase VMD decides the payment terms in this management have a credit of

around 30 days but payments, if large amount, managed by the head office. Management of

VMD can also access the vendors accounts manage by the head office in SAP system. VMD

maintain the details related to the vendors and also solve the issues relating to the vendors. If

the vendors are not paid or vendors that are shown in open items even if the payment due,

management at VMD reminds the head office to make payment. Before the payments due of

vendors of VMD management needs to send the details to head office. VMD can also stop

payment or can release payments early.

12.3 Debtors Management at VMD

RIL manage most of the transaction from the head office of VMD, debtors are one of that

transactions. Debtors are paid by the head office only and VMD has no interfere in managing

the debtors. It means that management focus on central disbursement. They are focus in

centralized payment to avoid the any kind of misappropriation.

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12.4 Ratio Analysis and Interpretation(TABLE NO.:11)

Year 2005-06 2006-07 2007-08 2008-09 2009-10

Current Ratio 1.00 0.95 1.03 1.67 1.29

Acid test Ratio 0.38 0.30 0.44 0.75 0.62

Cash Cycle (5.21) (1.89) (7.51) (24.39) (15.86)

Net Current Assets to Sales 10.00 9.85 7.08 7.46 8.76

Operating Cycle 68.06 58.81 61.90 59.05 62.57

Average Payment Period(in

days)

73.34 60.70 69.38 83.43 78.46

Average Collection Period(in

days)

18.18 12.9 13.62 13.89 15.39

Debtors Turnover Ratio (in

times)

20.07 28.29 26.79 26.27 23.71

Creditors Turnover Ratio (in%) 16.14% 13.17% 14.20% 18.94% 18.07%

Net Profit Margin(in%) 11.17% 10.69% 14.58% 10.79% 8.44%

Total Assets Turnover 1.16 1.27 1.19 0.84 0.91

Fixed Interest cover Ratio 12.99 12.19 20.79 11.40 11.28

Expenses Ratio in (%) 84.41 82.32 82.06 83.53 86.29

Net worth turnover Ratio in

(Times)

1.63 1.75 1.64 1.12 1.40

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(CHART.1)

(CHART.2)

(CHART.3)

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(CHART.4)

(CHART NO. 5)

(CHART NO.6)

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(CHART NO.7)

(CHART NO.8)

(CHART NO.9)

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(CHART NO.10)

(CHART.11)

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(CHART.12)

1. Current Ratio and Acid test Ratio:

Interpretation:

Current ratio and acid test ratio are shown as 2:1 is ideal ratio. Current assets is more than

current liability its means they pay of the debts in this year. in the current year current ratio

is1.29:1. And acid test ratio is current year is inventory is more than previous year, in current

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year is 0.62:1 its means company can be solvent. Acid test ratio is moving of the assets they

utilize in the all over of RIL.

2. Cash Cycle:

Interpretation:

Cash Cycle is reducing over a period for three years but in the 2008-09 it was reduced to -15.86

days, this is the precautionary step taken against the recession. But it starts increasing again in

the next year. Cash cycle for the RIL is actually moving negatively. RIL can be money use

perfectly and cash can be performing well.

3. Net Current Assets to Sales:

Interpretation:

Net current assets is reduces by the over a period in the 2007-08 is low 7.08 then the increase

by the Future. In the current year improve the sales of all over the RIL branch and the futures

they will increase in the sale, in the some of the financial crises in the last year reduce the sale.

4. Operating Cycle:

Interpretation:

Operating cycle of RIL show that the collection of cash early time and inventory of the more

they can be utilize and the inventory is more in the case of retail store. Operating cycle is

upward in the year

5. Collection and Payment Period

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Interpretation:In this chart show the RIL can be collected and payment strategy. They collected the money

from customer with in the 10 to 20 days. And they paid to vendor within 60 to 70 days. Before

RIL collected money.

6 Debtors to Sales

Interpretation:

. In the 2006-07 in this year is sundry debtors is low is rs.3, 732.42 compeer to the five year.

And a net sale is high. In this year are high debtors to sales 28.29 times. In current year is

debtors are high in the previous year the company can receive the subsidiary. Company high

debtors in the previous year debtors are Rs 359.29 crore. They can addition in the current year

as per the company SCHEDULE ‘G’.

7 Creditors Turnover:

Interpretation:

Creditors Turnover Ratio increasing 10% to 21% during four year. In the current year decrease the %. It is clear that RIL has a policy for credit purchase but maintain the sales on the cash bases as much as possible. Even RIL receives the advances for few chemicals.

8 Net Profit Margin:

Interpretation:

Net profit margin going downward for the year in this year current investment and the long term investment low then other income is low excise duty is more than the previous year one of the products are can be loss in this mall of the reliance fresh is the loss making. Profit can come to the low. Salaries, director commission they calculated @0.40 in the schedule “O”.

9 Total Assets Turnover:

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Interpretation:

Total assets turnover ratio can be defined the company total assets, in the current year company can increase the inventory of raw materials, the sundry debtors and decrease the cash and bank balance to the fixed deposits are down the current year its company can be solvency in the year.

10 Fixed Interest coverage Ratio:

Interpretation:

These ratios are continuously decreasing in two year. Then they increase the PBIT profit is

large than company debt is low that’s year. It signifies that the company’s profit before tax and

interest flaunting where the interest continuously Flaunting so that the company’s interest

coverage ratio decreasing which indicates that the company is using excessive debt.

11. Expense Ratio:

Interpretation:

In the year 2005-06, 2006-07, 2007-08, 2008-09 and 2009-10 the company’s expenses ratio for

every rs.100 is 84.41%, 82.32%, %, 80.06%, 83.35% and 86.28% respectively which is very

nearly to each other but lesser the ratio is better for the company. Here the every year the

company’s ratio is going up and down that is not good for the company. It shows that the

company’s expenses every year increases except in 2007-08 and the sales of the company

also increasing but the expenses are increasing more faster than the sales so that the ratio is

flaunting so company will require further investigation.

11 Net Worth Turnover Ratio in (Times)

Interpretation:

This ratio is continuously fluctuating till 2009-10 which means that the company has not enough

sales so it can’t earn easily. But in the year 2009-10 it is 1.40 times and it is more than the

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previous year. So it is good for the company but yet company requires further investigation so it

can earn more profits.

12.5 Cash Flow Statement Analysis

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Analysis of the cash flowWe are analysis of the reliance industry Ltd. For the year ended 2009-2010.

Cash flow statement the cash flow statement, as reported in the annual report, is reproduced

hereunder for ready reference.

Analysis of 2009-10 follows.

(A) Operating activities

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1. Entire cash flows of RIL during 2009-10 have been contributed by operating

activates.

1.a. this typically indicates a very strong cash position.

2. RIL had a very high cash inflow on account of provisions for contingencies, sale, and

depreciation.

2.a. this is indicates high hidden reserves and very favourable cash position.

3. RIL had a net cash inflow in respect of working capital.

3.a. this typically indicates an efficient management of working capital.

(B) Investing activities:

4. RIL had a net cash outflow for fixed assets.

4.a.this indicates RIL is purchasing more fixed assets.

4.b. in general, this is an indication of expanding business.

4.c. Fixed assets are income-producing assets, which are expected to produce higher

future revenues.

5. RIL had significant outflow towards investment.

5.a. it indicates a favorable cash position.

(C)Financing Activities:

6. RIL had a substantial net inflow from borrowings. It is, however, not clear whether the inflow

was on account of long-term debt or working capital financing. The analyst, therefore, needs to

look at the schedules of loans in the balance sheet. Clear disclosure is required to facilitate

analysis. (It is on account of working capital as per the schedule.)

7. RIL’s dividend and dividend tax outflow at Rs.2,219.45 crore against net cash inflow from

operating activities at Rs. 20,490.22 crore is to high-10.83%.

7.a. seen the background of net outflow into fixed assets of Rs.21,829.48 crore only this

typically shows that the management has no aggressive growth plans on the anvil, just normal

plans.

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7.b. this typically means that cash inflow from operations in future will have only steady

growth, unless the company reverses its policy of aggressive dividend payouts.

8. RIL’s financing activities reflect a favorable cash position in the sense that there is a net

outflow despite outflow into fixed assets.

(D) Quality of cash position:

9. the information provided by the cash flow statement of RIL appears to indicate a high quality

of cash position. The reasons are simple and more than clear. It has been generating cash from

operating activities and utilizing this money in expanding it business and paying dividends.

(E) Ability to generate positive cash flow from operations in future:

10. RIL has generated cash from operations in both the years. The amount, thought

increased this year, is more or less the same as last year. Information provided by its cash flow

statement establishes its ability to generate steady positive cash flows from operations in future.

It appears from this information, and as supported by the balance sheet, that RIL’s debts are

not high in comparison to its size. Therefore, it is in a very comfortable position to meet its

obligations towards lenders as well as shareholders.

12.6 Accounting System:

The accounting system at IPCL is SAP oriented. Each and every transaction is done through

SAP. The important Accounting Policies are as under:

The financial statements are prepared under the historical cost convention in accordance with

the generally accepted accounting principles in India and the provisions of the Companies Act,

1956.

Fixed Assets are stated at cost, less accumulated depreciation including impairment loss.

Depreciation on fixed assets is provided on straight line method at the rate prescribed in the

Companies Act, 1956.

Transactions denominated in foreign currencies are normally recorded at the exchange rate

prevailing at the time of the transaction.

Long term investments are stated at cost.

Items of inventories are measured at lower of cost or net realizable value. Cost of inventory

comprises of all cost of purchase, cost of conversion and other cost incurred in bringing them to

their respective present location and condition. By-products are valued at net realizable value.

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Turnover includes sale of goods, services, excise duty and sales during trial run period.

Company’s contribution to provident fund, family pension and gratuity and leave encashment

benefits are charged to Profit and Loss Account.

Compensation to employees who have opted for retirement under the voluntary retirement

scheme of the company is charged off to Profit and Loss Account.

Premium on redemption of bonds / debentures are adjusted against the Securities Premium

Account.

An asset is treated as impaired when the carrying cost assets exceeds its recoverable value.

An impairment loss is charged to the Profit and Loss Account in the year in which an asset is

identified as impaired.

All the account handling by SAP program, cash management, payment, budget all the items are

recorded in SAP program and evaluate.

Cash command in SAP.(TABLE NO.:12)

codeName of the account

F-02 G/L account postingF-52 Incoming PaymentFBL-1 Vendor line item displyF-21 Vendor new code enterZBVR Bank/ cash receipt printFB103 G/L a/c displyFBL1 Year report seenFCH1 Display check information FCHI Cheack loate inputeYACM Scroll reportSteps in manual payment run

F-53 Post out going paymentFCH5 Create Cheque informationYF12 Cheque printing manual FBZ5 Printing from for payment documentSteps in auto payment Run

YHBK House bank updatingF110 Auto payment transactionYFBP Bank payment voucher preparationSP-01 Cheque printing and advice printing

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Steps of bank reconciliation

FF67 Session uploadSM 35 Batch Input Monitoring and clearingZBKR Viewing of bank reconciliation

12.7 SWOT Analysis of RIL: Strengths

Manpower with rich experience in managerial, technical commercial fields. Plants located on the west-coast, where the downstream industry is concentrated. Both liquid and gas fire crackers. Diverse product range. Global sized plants at Gandhar and Nagothane complex. Extensive sales network and infrastructure facilities. Noteworthy safety and environment records.

Weakness Feedstock supply constraints at Gandhar and Nagothane. Dependence on sole suppliers for natural gas and C2/C3 Commodity business – subject to cyclicality. Dependence on external sources for feed stocks.

Opportunities Huge growth potential in Indian polymer market. Excellent research and development facilities. Scope for expansion especially at Gandhar complex. Revamp of old plants located at Baroda. Productivity enhancement to global standards. Strong outlook for global petrochemical industry. Despite sustained growth of petrochemicals units in the country, India’s consumption

of polymer products still remains very low on a per capita basis. This reflects significant potential for continued demand growth in future.

The company, with its global scale and integration of operations and extensive marketing and distribution network is ideally positioned to benefit from the growing domestic market for petrochemicals products.Threats

Uncertainties on natural gas pricing. Competition from “low cost” Middle East producers. High rate of technological obsolescence. Environmental concerns on plastics. Unfavorable trends in import tariff on key raw material and product may adversely

impact the cost structure and/or selling prices of products in the domestic markets, thereby potentially affecting margins.

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Limitations

This project is not far from limitations. The limitations are: -

A company generally doesn’t disclose its internal policies to outsiders. In such case,

it is very difficult to find out and gather complete and true information in the forms of figures

regarding financial matters.

The report highly depends on the secondary data and it may be possible that the

data from which the report is made may not appear in the report because some data is

confidential for the company.

The authenticity of the suggestions and recommendations depend upon the

rationality of the data provided to me.

Data for VMD separately are not provided as it is confidential so data are taken on

proportionate basis based on the information provided to us.

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General Findings:

SAP system of management is quite useful in managing the information and sharing

the data. This system makes management more easy and also reduce the work of

management. It also handles the few computations relating to the management and also makes

remind to management for activities needs to be followed.

VMD has an experience management team force to manage the activities and all

activities are managed in professional way that would result in better profitability from available

resources.

VMD has bright opportunities for the expansion as VMD has the additional resources

in the form land and capital.

Specific Findings:

VMD gives importance to the Working capital management. VMD has a proactive

Management as they are consider the budgeting as an important part of each activities and

compare the actual consumption with the budgeted and being prepared for next steps.

Each Element of working capital is managed by the different group of members, they

are working with the coordination with all the groups to achieve the goal of the organization.

Working capital is not completely managed by the management of VMD but few

elements or partial working of that elements are managed centrally by the head office which

leads to better control on management.

Most of the cash transactions are managed by the head office.

General Conclusion:

VMD is the oldest and still this site gives a considerable contribution to the profit of

RIL. Management relies on the technology to connect all the departments of VMD and to

connect with the other sites of RIL.

VMD is not only focusing on expansion or growth of the company but they are keenly

interested in employees’ empowerment and career development.

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Efficient Management will surely lead the VMD for more expansion and development

in near future.

Bibliography

1) Web site-www.ril.com

2) Annual report of RIL2009-10

3) Company’s internal portal

4) I.M.pandy books of finance management

5) Ambrish Gupta Financial accounting for management.

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Annex:

Balance sheet of RIL

Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

particulars 12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of Funds

Total Share Capital 1,393.17 1,393.21 1,453.39 1,573.53 3,270.37

Equity Share Capital 1,393.17 1,393.21 1,453.39 1,573.53 3,270.37

Share Application Money 0 60.14 1,682.40 69.25 0

Preference Share Capital 0 0 0 0 0

Reserves 43,760.90 59,861.81 77,441.55 112,945.44 125,095.97

Revaluation Reserves 4,650.19 2,651.97 871.26 11,784.75 8,804.27

Networth 49,804.26 63,967.13 81,448.60 126,372.97 137,170.61

Secured Loans 7,664.90 9,569.12 6,600.17 10,697.92 11,670.50

Unsecured Loans 14,200.71 18,256.61 29,879.51 63,206.56 50,824.19

Total Debt 21,865.61 27,825.73 36,479.68 73,904.48 62,494.69

Deferred Tax Liability 4,970.82 6,982.02 7,872.54 9,726.30 10,926.30

Total Liabilities 76,640.69 98,774.88 1,25,800.82 2,10,003.75 2,10,591.60

Application Of Funds

Gross Block 84,970.13 99,532.77 104,229.10 149,628.70 215,864.71

Less: Accum. Depreciation 29,253.38 35,872.31 42,345.47 49,285.64 62,604.82

Net Block 55,716.75 63,660.46 61,883.63 100,343.06 153,259.89

Capital Work in Progress 6,957.79 7,528.13 23,005.84 69,043.83 12,138.82

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Investments 5,846.18 16,251.34 22,063.60 21,606.49 23,228.62

Inventories 10,119.82 12,136.51 14,247.54 14,836.72 26,981.62

Sundry Debtors 4,163.62 3,732.42 6,227.58 4,571.38 11,660.21

Cash and Bank Balance 2,146.16 1,835.35 4,280.05 22,176.53 13,462.65

Total Current Assets 16,454.66 17,707.35 24,827.71 41,632.49 52,195.88

Loans and Advances 8,119.79 12,206.00 18,058.13 13,079.78 10,183.22

Fixed Deposits

Total CA, Loans & Advances 24,574.45 29,913.35 42,885.84 54,712.27 62,379.10

Deffered Credit 0 0 0 0 0

Current Liabilities 12,563.50 16,865.53 21,045.47 32,691.00 36,849.40

Provisions 3,890.98 1,712.87 2,992.62 3,010.90 3,565.43

Total CL & Provisions 16,454.48 18,578.40 24,038.09 35,701.90 40,414.83

Net Current Assets 8,119.97 11,334.95 18,847.75 19,010.37 21,964.27

Miscellaneous Expenses 0 0 0 0 0

Total Assets 76,640.69 98,774.88 1,25,800.82 2,10,003.75 2,10,591.60

Contingent Liabilities 24,897.66 46,767.18 37,157.61 36,432.69 25,531.21

Book Value (Rs) 324.03 439.57 542.74 727.66 392.51

Profit and Loss account of RIL

Mar '06 Mar '07 Mar '08 Mar '09 Mar '10particulars 12 mths 12 mths 12 mths 12 mths 12 mthsIncome   Sales Turnover 89,124.46 118,353.71 139,269.46 146,328.07 200,399.79Excise Duty 7,913.13 6,660.99 5,826.46 4,480.60 7,938.77Net Sales 81,211.33 111,692.72 133,443.00 141,847.47 192,461.02Other Income 682.92 478.28 5,628.79 2,059.88 2,460.47Stock Adjustments 2,131.19 654.6 -1,867.16 427.56 3,947.89Total Income 84,025.44 112,825.60 137,204.63 144,334.91 198,869.38Expenditure   Raw Materials 59,739.29 80,791.65 98,832.14 109,284.34 153,689.01Power & Fuel Cost 1,146.26 2,261.69 2,052.84 3,355.98 2,706.71

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Employee Cost 978.45 2,094.09 2,119.33 2,397.50 2,330.82Other Manufacturing Expenses 668.31 1,112.17 715.19 1,162.98 2,153.67Selling and Admin Expenses 5,872.33 5,478.10 5,549.40 4,736.60 5,756.44Miscellaneous Expenses 300.74 321.23 412.66 562.42 651.96Preoperative Exp Capitalised -155.14 -111.21 -175.46 -3,265.65 -1,217.92Total Expenses 68,550.24 91,947.72 109,506.10 118,234.17 166,070.69Operating Profit 14,458.74 20,405.91 22,432.52 24,152.39 29,969.07PBDIT 15,005.70 20,642.80 29,028.18 25,416.42 33,057.12Interest 893.61 1,298.90 1,162.90 1,774.47 1,999.95PBDT 14,112.09 19,343.90 27,865.28 23,641.95 31,057.17Depreciation 3,400.91 4,815.15 4,847.14 5,195.29 10,496.53Other Written Off 0 0 0 0 0Profit Before Tax 10,711.18 14,528.75 23,018.14 18,446.66 20,560.64Extra-ordinary items 0.88 0.51 48.1 0 0PBT (Post Extra-ord Items) 10,712.06 14,529.26 23,066.24 18,446.66 20,560.64Tax 1,642.72 2,585.35 3,559.85 3,137.34 4,324.97Reported Net Profit 9,069.34 11,943.40 19,458.29 15,309.32 16,235.67Total Value Addition 8,810.95 11,156.07 10,673.96 8,949.83 12,381.68Preference Dividend 0 0 0 0 0Equity Dividend 1,393.51 1,440.44 1,631.24 1,897.05 2,084.67Corporate Dividend Tax 195.44 202.02 277.23 322.4 346.24Per share data (annualised)   Shares in issue (lakhs) 13,935.08 13,935.08 14,536.49 15,737.98 32,703.74Earning Per Share (Rs) 65.08 85.71 133.86 97.28 49.64Equity Dividend (%) 100 110 130 130 70Book Value (Rs) 324.03 439.57 542.74 727.66 392.51No.of share 139.36 139.35 145.36 157.37 327.07

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