A PROJECT

ON

INVENTORY MANAGEMENTAT WAREHOUSE

PROJECT REPORT SUBMITTED BY: AR

KYADEEP CHOWDHURY(WORKING AS AN INTERN IN ITC LTD)

1

INTERNSHIP SUPERVISOR: MR.SABYASACHI BAGCHI

INDEX

CONTENTS PAGENO.

2

Introduction – Company’s Profile

Natural Movement

Standard Operating Procedure for Warehouse Management

Standard Instructions Receipt of Stocks Storage and Stacking Repacking of Stocks Stock Verification, Discrepancies and Damages During Storage

Dispatch of Goods

Conclusion

Acknowledgement

3 – 5

6 – 7

9 – 1516 – 26

2728

29 – 3435 – 37

38 – 39

40 - 41

3

I NTRODUCTION

4

COMPANY’S PROFILE

ITC is one of India's foremost private sector companieswith a market capitalization of nearly US $ 19 billion and a turnover of over US $ 5.1 Billion. ITC is rated among the World's Best Big Companies, Asia's 'Fab 50' and the World's Most Reputable Companies by Forbes magazine, among India's Most Respected Companies by Business World and among India's Most Valuable Companies by Business Today. ITC ranks among India's `10 Most Valuable (Company) Brands', in a study conducted by Brand Finance and published by the Economic Times. ITC also ranks among Asia's 50 best performing companies compiled by Business Week.

ITC has a diversified presence in Cigarettes (Market leader), Hotels, and Paperboards & Specialty Papers, Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel,Personal Care, Stationery, Safety Matches and other FMCG products.

As one of India's most valuable and respected corporations, ITC is widely perceived to be dedicatedlynation-oriented. Chairman Y. C Deveshwar calls this source of inspiration "a commitment beyond the market".

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In his own words: "ITC believes that its aspiration to create enduring value for the nation provides the motive force to sustain growing shareholder value. ITC practices this philosophy by not only driving each of its businesses towards international competitiveness but by also consciously contributing to enhancing the competitiveness of the larger value chain of which it is a part." 

ITC's diversified status originates from its corporate strategy aimed at creating multiple drivers of growth anchored on its time-tested core competencies: unmatched distribution reach, superior brand-building capabilities, effective supply chain management and acknowledged service skills in the hospitality industry. Over time, the strategic forays into new businesses are expected to garner a significant share of these emerging high-growth markets in India.

Agricultural products. ITC is one of the country's biggest foreign exchange earners (US $ 3.2 billion in the last decade). The Company's 'e-Choupal' initiativeis enabling Indian agriculture significantly enhance its competitiveness by empowering Indian farmers through the power of the Internet. This transformational strategy, which has already become the subject matter of a case study at Harvard BusinessSchool, is expected to progressively create for ITC a huge rural distribution infrastructure, significantly enhancing the Company's marketing reach.

ITC's wholly owned Information Technology subsidiary, ITC InfoTech India Limited, is aggressively pursuing emerging opportunities in providing end-to-end IT solutions, including e-enabled services and business process outsourcing.

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ITC's production facilities and hotels have won numerous national and international awards for quality,productivity, safety and environment management systems. ITC was the first company in India to voluntarily seek a corporate governance rating.

ITC employs over 25,000 people at more than 60 locations across India. The Company continuously Endeavour’s to enhance its wealth generating capabilities in a globalizing environment to consistently reward more than 3, 66,000 shareholders, fulfill the aspirations of its stakeholders and meet societal expectations. This over-arching vision of the company is expressively captured in its corporate positioning statement: "Enduring Value. For the nation.For the Shareholder”

ITC was incorporated on August 24, 1910 under the name of 'Imperial Tobacco Company of India Limited'. Its beginnings were humble. A leased office on Radha Bazar Lane, Kolkata, was the centre of the Company's existence. The Company celebrated its 16th birthday on August 24, 1926, by purchasing the plot of land situated at 37, Chowringhee, (now renamed J.L. Nehru Road) Kolkata, for the sum of Rs 310,000. This decisionof the Company was historic in more ways than one. It was to mark the beginning of a long and eventful journey into India's future. The Company's headquarter building, 'Virginia House', which came up on that plot of land two years later, has become one of Kolkata's most venerated landmarks. The Company's ownership progressively Indianised, and the name of the Company was changed to I.T.C. Limited in 1974. In recognition of the Company's multi-business portfolio encompassing a wide range of businesses - Cigarettes & Tobacco, Hotels, Information Technology, Packaging, Paperboards

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& Specialty Papers, Agri-Exports, Foods, Lifestyle Retailing and Greeting Gifting & Stationery - the full stops in the Company's name were removed effective September 18, 2001. The Company now stands rechristened'ITC Limited'.

NATURAL MOVEMENT

8

1.

→

Factory → Warehouse is known as K2 movement.

2. Factory → Wholesale Distributor is known as K1 movement.

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3.

→

Warehouse → Wholesale Distributor is known as K3 movement.

4. Wholesale Distributor → Retailers

5. Retailers → Customers

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STANDARDOPERATING

PROCEDURE FOR WAREHOUSE

MANAGEMENT

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The Standard Operating Procedure for Warehouse management cover the topics mentioned below:

1. Receipt of Stocks from the Factory/Hub – The responsibility of the Warehouse starts from the receiptof stocks from the source based on the orders generatedfrom the units.

2. Storage of Stocks in Warehouse – The stocks received are checked for physical quality and quantity as per the receipt documents and stored in the warehouse in a prescribed location based on pre-determined stacking norms.

3. Stock reconciliation – The physical stock in the Warehouse has to be periodically verified against the stock quantity displayed in the system.

4. Receiving Delivery Order instructions – Post receipt ofthe Shipment details from the Unit, input appropriate transportation vendor codes in the system to fetch the route.

5. Preparing for dispatch of Stocks – Generate the LoadingSheet and start loading as per Loading Sheet. Record Loading End and Shipment Completion, to generate Shipment Cost Document.

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6. Documentation – Receive proof of delivery details and update in the system.

STANDARD INSTRUCTIONS

1. Receipt of Goods at Warehouse

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2. Stacking of Goods at Warehouse

Receipt of Goods

1. Determining the expected number of trucks

2. Arrival Information of the truck

3. Document verification

4. Intimation of Unloading/Stacking of

stocks5. Physical stock

verification

6. Receipt of stocks in system

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3. Stock Reconciliation

Stacking of Goods

1. Get intimation of Receipt

2. Determine total space requirements3. Allocate Bays by

Categories/Sub Categories

4. Inspect the area5. Allocate labour

for unloading & stack the stocks as per

norm

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4. Receiving Delivery Order Instructions

Physical checking of

stocks

1A. Identify damage/aged stocks & report

2A. Get SPR report from SAP and stock

position report

3. Check the date of

manufacture of stocks to ensure FMFO1B.

Segregate the stocks based on

instructions & update the

system

2B. Compare SPR reports

with physical count

2C. Report & Reconcile stocks if mismatch

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Receiving DO Instructions

1. Receive information from

Unit, post creation of shipment

2. Retrieve individual shipments

in the system

3. Populate Transportation vendor code

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5. Preparing for dispatch of stocks

Dispatch of Stocks

1. Check-in trucks for dispatch

2. Fetch SKU’s in warehouse based on the loading sheet

3. Load the trucks based on dispatch

priorities

4. Confirm loading & shipment completion

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6. Documentation

Documentation

1. Receive Proof Of Delivery from the transporter

2. Update Proof Of Delivery

details in the system

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RECEIPT OF STOCKS

1.Truck Reporting

When the truck arrives at the Gate, the Security Guard must check that the truck which has arrived is meant for that Warehouse. He will then fill in the data’s in the Truck Reporting Register (Format 1) and then he must sign on the reverse of the Lorrie Receipt (LR) (Format 2). Any truck which reports after the laid down time limits, i.e. 8 PM forOutstation trucks & 6.00 PM for local trucks should be considered as reported on the next day for computation of detention, etc.

Format 1

Sr.No.

Reporting

Details

Truck InDetails

Truckout

Details Source

Transporter’s Name

TruckNo.

LRNo.

Signature of

SecurityDat

eTime

Date

Time

Date

Time

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Should be filled by Security at the time of truckreporting & at the time of truck out.

Format 2

The following details are to be filled up on the reverse of the Lorrie Receipt. The Security guard will fill in the Arrival date & time and truck number. Other details should be filled by the Warehouse Service Provider after unloading the goods from the vehicle:

WSP NAME: XYZ LOGISTICS CO.WAREHOUSE LOCATION: KOLKATA

Arrival Date TimeUnloading Date Time

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Quantity Received (CFC/Bags)Truck TypeContainer/Non-ContainerTruck NumberTransshipment (Yes or No)Damages/Shortage Quantity (CFC/Bags)REMARKS

Signature of WSP

Signature of Driver

2.Checking of Incoming Consignments

A. Verification of accompanying documents

The Warehouse Service Provider (WSP) shall check the following details in the documents accompanying the consignment. WSP shall ensure that the following documents are available and where required are in agreement with SAP records before unloading of goods.

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Documents Key information to be verified& checked

Delivery Challan

1.Company’s Purchase Order number/Stock Transfer Order.

2.Date of manufacture.3.Product SKU and Product Code.4.Quantity of the Goods.5.Delivery address.

Excise Gate Pass wherever applicable

1.Description of the goods should be same as Delivery Challan.

2.Product SKU and quantity on the Gate Pass should be the same as theDelivery Challan.

3.Endorsement of the Excise authorityon the Gate Pass.

LR Copy 1.The total quantity should be as perDelivery challan.

2.The description of the goods.3.Assessable value of the goods as

per challan.4.Shipment number.5.Truck type.6.Dispatch date.7.Truck number.

Way Bill/road permit(in case is applicable in the

1.Whether the way bill is accompanying the consignment.

2.To Cross check value of Way Bill & STO. In case of mismatch to inform Branch FS immediately, who shall take up the matter with source of supply.

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state)

B. Pre Unloading Inspection

The following should be checked before the truck is unloaded:

Whether truck has had an accident or has any other material besides Company’s material.

The condition of the tarpaulins and whether the tarpaulins have been used or not.

Whether the truck Type is the same as that mentionedin Lorrie Receipt.

In case of any issue on any of these items, the WSP will intimate to the Branch Logistics Executive/ Regional Logistics manager (BLE/RLM) who shall take up the matter with the Transporter and inform Head Office Logistics, if required.

C. Post Unloading Inspection

Once the inspection of the truck is over, the Supervisor will offload the material in the area near the unloading bays or there will be direct off loading incase of sufficient space in the unloading bays. The Supervisor will then stack the materials batch wise. The following should be checked at the time of inspection:

o Hygiene & Original packaging i.e. whether the outer packet is visibly damaged and is there any presence of bad odour.

o Damages if any and the extent of damages. (OnlyCarton is damaged or material is also damaged).

o Any visible damages due to rain.o Any damages to CFCs/bags because of rough

handling or use off hooks.

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o Any shortages.o Hooks should not be used for unloading and

stacking activity for bags.

Supervisor will conduct 100 % Batch Wise Counting ofall SKUs and will fill the Unloading Sheet (Format 3). And finally he will mention the Truck Reporting Date & Time and actual unloading date & time on the Unloading Sheet.

Format 3

This document is to be filled by the WSP and will facilitatethe SAP Executive to make the transfer postings for Loss in Transit, Damage in Transit, Repacking stock, etc.

UNLOADING SHEETWSP Name Sr. No. - Warehouse Address & PhoneNo.

Shipped From Date

Shipped ToCount Sheet No.

Transporter’s Name

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Truck No.GR No.Sr.No.

ProductCode

BatchNo.

MRPCategory

Unit/Type(CFC/Bags

)

SentQty.

Received Qty.

Excess+

Shortage -

Good

Qty.

DamageQty. Remark

s

Signature of the WSP

Signature of the Driver

Any Excesses/Shortages/Damages/Batch mismatch shouldbe noted down.

The WSP will put necessary remarks on the Unloading Sheet and affix his signature on the same.

3.Stock Discrepancies and Damages in Transit

Any incidences of loss/damage of stocks shall be reported toBranch by WSP immediately on occurrence of such event so that the Branch can make sure whether such damage is insurable or not. The procedure to be followed in case of such an incidence is as follows:

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A. Damage in transit

Any material which is received at the warehouse in a damagedcondition (damage under gone in the process of transit), shall be treated as Damage in Transit. Some examples of damage in transit are given hereunder:

CFC is crushed and the material inside has been damaged.

Leakages in packets especially in case of Bingo & Confectionery products.

CFC received in Oil/Water Drenched condition & the material is damaged from inside.

CFC received with foreign contamination/Odour/Chemical diffusion.

CFC and the material therein have been damaged due to water seepage in the vehicle.

Infested stocks, Rotten smell of stocks, Puffed cans, etc.

Damage in Transit may further be classified as:

Non Insurable cases - If the value of damaged stock is less than Rs. 10,000/- for Foods & Personal Care products, Rs. 25,000/- for Matches & Agarbatti and Rs. 1, 00,000/- for Cigarettes then the same is not claimable under Company Insurance Policy. The entireamount of loss shall be recovered from the Transporter or any other person responsible for suchdamages.

Insurable cases – If the Value of Damaged Stock is more than the aforementioned threshold value limits then such losses will be claimed from the Insurance Company policy. Any deductibles under the respective

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Insurance policy shall be recovered from the Transporter or any other person responsible for suchdamages. Prescribed procedures for lodging insuranceclaim should be allowed, as detailed in the StandardOperating Procedure for insurance.

Currently in cases where Insurance claims are being preferred, some amount is also recovered from the transporter like 10% of the loss in case of Cigarettes. However, it should be noted that as per our agreement with the Transporters actual loss may be recovered from them.

Process

The goods damaged in transit should not be returned back to the source location or the transporter. Such goods shall be kept in a separate bay with clear marking that the goods are defective or damaged.

The WSP should ensure that the details are filled in Format 2 & 3 with respect to the damaged goods and the driver signature must be taken on these documents.

Photographs of such stocks must be taken by the WSP in case of insurance claims.

Once the stock has been moved to the Damage and Destruction in Transit (DDIT), the same can be transferred back to any other system storage location in subsequent months only with the approval of the Finance Manager.

The WSP shall also obtain a damage report from the transporter along with the copy of the FIR of the incident in case of damages due to accident.

At the end of the month, the WSP shall make sure that all the transfer postings to the DDIT location for thatmonth have been completed and confirmed with the branch.

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The Branch Logistics Executive/ Financial Superintendent shall ensure that the quantity damaged at the warehouse & posted in DDIT storage location in SAP is uploaded in the system on a monthly basis.

After receipt of write off from Strategic Business Unit(SBU), destruction will be carried out as per separate procedures laid down in this regard and ensuring that stocks are flushed out from the SAP system.

Lost in transit

If any truck consignment has reported at the warehouse with short quality then such shortages will be treated as Lost inTransit. Loss in transit is further classified into two types:

A. Non Insurable cases – If the value of shortage of stock is less than Rs. 10,000/- for Foods & Personal Care products, Rs. 25,000/- for Matches & Agarbatti and Rs. 1, 00,000/- for Cigarettes then the same is not claimable under the Company Insurance Policy. The entire amount of loss shall be recovered from the transporter.

B. Insurable cases - If the value of shortage of stock ismore than the aforementioned value limits then such losses will be claimable from the Insurance Company Policy. Any deductibles under the respective Insurancepolicy shall be recovered by the transporter.

C. Currently in cases where Insurance claims are being preferred, some amount is also recovered from the

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transporter like 10% of the losses in case of cigarettes. However, it should be noted that as per our agreement with the transporter actual loss may be recovered from them.

Process

The WSP shall ensure that details with respect to shortquantity are filled in format 3 & format 2 and the driver signature is to be taken.

Wherever possible, photograph of the truck having shortquantity must be taken to facilitate the procedure of insurance claims.

Once stocks have moved to Loss in Transit (LIT) they can be transferred back to any other system storage location in subsequent months only after approval of the finance manager.

The WSP shall also obtain a shortage from the transporter along with copy of FIR of the incident.

At the end of the month, the WSP shall verify that all transfer postings to LIT location pertaining to the month that has been completed and confirm with the branch.

After receipt of write off sanction from SBU, destruction will be carried out as per separate procedures laid down in this regard and ensuring that stocks are flushed out from the SAP system.

Recovery:

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Recovery for the month of April 2010

1. Branch – Vizag

Type Transporter

LRNo.

Date

TruckNo.

Material

Qty.

BUn MaterialDescription

LIT Safe express

220494834

8th AP 16TX6181

1755 0.02 M_S 11480 Scissors Std FT

DDIT Tirupati Logistics

KOL36511

6th AP 16TW7639

9700 1.8 M_S 20000 AIM (YELLOW)

DDIT Tirupati Logistics

150017

22nd UP 52F 4647

FA2112 50 KG 41706 AASHIRVAAD WHOLE WHEAT ATTA 5 KG

DDIT Delhi Assam Roadways

150017

23rd HR 58 6001

FA2112 50 KG 41706 AASHIRVAAD WHOLE WHEAT ATTA 5 KG

2.Branch – Guwahati

Type Transporter

LRNo.

Date

TruckNo.

Material

Qty.

BUn MaterialDescription

LIT TLPL 150061

19th UP61H 3590

FJ2111 240 KG 42120 AASHIRVAAD WHOLE WHEAT ATTA -10 K

DDIT TLPL 150061

19th UP61H 3590

FJ2111 60 KG 42120 AASHIRVAAD WHOLE WHEAT ATTA -10 K

DDIT Delhi Assam Roadways

VRN24D-0043

26th WB41D-1679

FJ2111 30 KG 42120 AASHIRVAAD WHOLE WHEAT ATTA -10 K

DDIT MEHTA TRANSPORT

71627 15th UP53AT-8706

FM2112 60 KG 41740 AASHIRVAAD WHOLE WHEAT ATTA -

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5 KG

Recovery for the month of February 2010

Branch – Kolkata

Type Transporter

LRNo.

Date

TruckNo.

Material

Qty.

BUn MaterialDescription

DDIT Om sakthi Transportation

5630 10th KA02AC556

9700 0.60 M_S 20000 AIM (YELLOW)

DDIT Om sakthi Transportation

6636 10th TN28AF1309

9700 0.60 M_S 20000 AIM (YELLOW)

LIT Tirupati Logistics

35936 10th WB156595

11000 14.4 M_S 60190 MANGALDEEP100 MADHUR(N)

DDIT Tirupati Logistics

3607 10th WB336775

11000 14.4 M_S 60190 MANGALDEEP100 MADHUR(N)

Recovery for the month of January 2010

Branch – Patna

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Type Transporter

LRNo.

Date

TruckNo.

Material

Qty.

BUn MaterialDescription

DDIT Tirupati Logistics(P) Ltd.

62535 10th up63c/9683

FA2112 50 KG 41706 AASHIRVAAD WHOLE WHEAT ATTA 5KG

DDIT Delhi Assam Roadways Corp.

621 10th up64c/8656

FA2112 100 KG 41706 AASHIRVAAD WHOLE WHEAT ATTA 5KG

DDIT Mehta TransportCorp of India

62492 10th rj07g/6036

FA2112 50 KG 41706 AASHIRVAAD WHOLE WHEAT ATTA 5KG

DDIT Tirupati Logistics(P) Ltd.

24315 10th up64c/8656

FA2112 50 KG 41706 AASHIRVAAD WHOLE WHEAT ATTA 5KG

Detention, Transit time & Transshipment

In case of outstation trucks, if the same are not unloaded within the next day of reporting, the transporter can claim detention charges for each such day, as per the contract.

Truck should reach the warehouse as per the agreed Transit time or else he will be penalized as per the contract.

In respect of outstation trucks, the cut off for reporting of trucks is 8PM. Any truck reporting after 8PM shall be considered to be arrived on the next day.

Similarly, in case of local trucks, the truck reportingcut off time is 6PM and any truck reporting after that will be considered to have reported on the next day.

The WSP should make a note of Transshipments, if any, on the reverse of the LR.

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The WSP shall keep a track of all detentions and transshipments as per Format 4 and should send the sameto the branch.

Format 4

Shipment No.

Transporter

LRNo.

Truck No.as perLR

Truck No. received at the Warehouse

Transshipment

Truck type as perLR

Trucktype actually received

Actualdate of reporting

Actualtime of reporting

Actualdate of unloading

Actualtime of unloading

Detention

STORAGE AND STACKING

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1.Shifting of stock from Unloading Area to Storage Area

The material will be moved from the Unloading areato the Storage Bay.

Stacking should be done to effectively utilize theavailable space within the prescribed stacking norms.

In case it is not possible to accommodate the stock which has been received within the availablespace in the warehouse, the WSP should seek for anapproval to change the stacking norms for a temporary period up to 15 days.

In case of consistent issues, temporary warehouse space may be taken or recommendation for a bigger warehouse is to be made.

2.Storage of Goods

Stocks should be stored batch wise so that identification of CFCs is possible.

Stack should be updated. Excess stocks, Repacking and Damaged stocks

should be kept separately and should not be stored along with regular stock.

The area used for storage of damaged and obsolete goods should be clearly identified andthe following declaration prominently displayedthere at – “Damaged stock not fit for human consumption”.

Matches stocks should ideally be stored in separate Warehouse.

3.Blocking of stocks

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Blocking of stocks in the system which has not expired will be done only after receiving the approval from the National Sales Manager.

Review of the blocked stock shall be done on a monthly basis. Any unresolved issue will be highlighted to the National Sales Manager.

REPACKING OF STOCKS

1.Identification of Repacking Stock

If the outer carton is damaged, without any damage to the material inside, it is termed as Repackable stock. Cigarettes are not re-packed.

Conditions under which the stock will be classified as repackable are:

o Outer Carton is wet or damagedo Outer Carton has oil marks or any

other contaminationo Bags are in torn condition in case

staple products In case of cigarettes, the loose stocks will be

shipped out at least in a month. Material awaiting repacking should be stacked

SKU and Batch wise.

2.Packing Material Requisition and Inventory Holding

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In respect of selected SKUs, the warehouse shall try and maintain sufficient inventory of CFCs and keep a manual record at the same.

Stocks lying must be reviewed by the BLE/FS at least once every 15 days to ensure necessary action is being taken for repacking is being taken under the expiry.

3.Repacking Process

The process of Repacking is enumerated hereunder: If the packing material is available in the

warehouse, the WSP shall ensure that stocks arerepacked at the earliest.

On repacking, the WSP shall sign over the Tape by Permanent Black Marker and also indicate theproper Batch Code after proper verifications.

Once the Repacking activity is completed, the WSP will inform the branch.

If the stocks have expired, an email communication should be sent to the BLE/FS who on verification of the same will transfer such stocks to the storage location in SAP system.

STOCK VERIFICATION,DISCREPANCIES AND

DAMAGES DURING STORAGE

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1.Handling Shortage/Excess at the Warehouse

Incidence of shortages/excesses/mismatch of stocks can arise in warehouses on account of incorrect dispatch to Wholesale Distributors or theft at the warehouse. Incorrect dispatch by WSP could be in the nature of:◦ Excess dispatch to the Wholesale Distributors◦ Short dispatch to the Wholesale Distributors or◦ SKU mix up at the time of dispatch

Process for handling shortage of stocks:

• In case of shortages of stock observed at the warehouse viz. during the IRA process or month end physical verification or otherwise, the same should be brought to thenotice of BLE/FS immediately. The BLE/FS shall also keep theRLM informed in respect of the same.

• At the end of every month (after the 100% physical verification), a shortage certificate shall be prepared and signed by the WSP. The shortage certificate should inter-alia contain the following details - SKU, batch number, Quantity short, Estimate value of Shortage, Possible reason for such shortage, Signature of WSP representative. Based onsuch shortage certificate, the BLE/FS shall transfer the shortage quantity to Loss in Storage location in SAP system.

• In case the shortage is certain then the same can be transferred to LIS storage location in SAP system even during the course of the month. • Once stocks have moved to LIS storage location in SAP system, the same can be transferred back to any other systemstorage location in the subsequent month only after approvalof the FM. The transfer posting shall be done by the BLE/FS.

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• At the end of the month, the WSP shall verify that all transfer postings to LIS location pertaining to the month have been completed and confirmed the same to the Branch FS.

• The BLE/FS shall ensure that shortage quantity posted in the LIS storage location in SAP is uploaded in the system (in respect of food products) on a monthly basis. For other categories a suitable recommendation for write off should besent to respective businessmen on a monthly basis.

Process for handling excess stocks:

In case there are only excess stocks within the same productsub-category where the price per UOM is the same, the WSP shall be instructed to remove the stocks from the Warehouse immediately and deal with it appropriately since such stocksdo not belong to the Company.

Responsibilities for handling storage/excess stocks: • The BLE (FS/FE in non BLE branches) shall be responsible for resolving issues related to incorrect Receipt from Source Location.

• The BLE (FS/FE in non BLE branches) shall be responsible for identifying the excess/short stocks and netting off excess and short stocks and transfer of short stocks to LIS location wherever applicable.

• The RLM shall be responsible for carrying out the SKU to SKU transfer through movement type 309 with prior approval of FM.

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• The FS shall be responsible for valuing the short stocks and advising District Office for recovery.

• The FS shall be responsible for maintaining an audit trailof the physical verification, differences identified and themanner of disposal of such differences.

• The FS shall review the entire process to ensure all differences between book stock and physical stocks, including recoveries from WSP, are resolved in a time bound manner.

• Post physical verification of the FM shall seek confirmation from the Branch FS that necessary action as detailed in this note has been taken for all identified excesses and shortages if any.

• The AFM/FM shall conduct a quarterly review of the above process.

NOTE: for the purpose of this note “price per UOM is same” would include instances where there is a difference of +/- 10% in the price per UOM.

Example 1:

Short /Excess

Category

SubCategory

SKU ShortQty

UOM Invoice PricePer UOM

Short

Biscuit

Cream FC3239 Bourbon176g

-10 Kg 104.69

Excess

Biscuit

Cream FA3247 Bourbon

+20 Kg 113.42

40

88g

Transfer 10Kg FC3239 Bourbon 176g to FA3247 Bourbon 88g through movement type 309.

Revised list of Excess/Shortage

Short /Excess

Category

SubCategory

SKU ShortQty

UOM Invoice PricePer UOM

Short

Biscuit

Cream FC3239 Bourbon176g

0 Kg 104.69

Excess

Biscuit

Cream FA3247 Bourbon88g

+10 Kg 113.42

WSP shall remove 10Kg of FA3247 Bourbon 88g from the Warehouse.

Example 2:

Short /Excess

Category

SubCategory

SKU ShortQty

UOM Invoice PricePer UOM

Short

Biscuit

Marie FA3266 MarieLight 224g

-20 Kg 51.42

Exce Biscui Marie FD3256B +10 Kg 52.69

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ss t MarieLight 306g

Transfer 10Kg FA3266 Marie Light 224g to FD3256B Marie Light306g through movement type 309.

Revised list of Excess/Shortage

Short /Excess

Category

SubCategory

SKU ShortQty

UOM Invoice PricePer UOM

Short

Biscuit

Marie FA3266 MarieLight 224g

-10 Kg 51.42

Excess

Biscuit

Marie FD3256B MarieLight 306g

0 Kg 52.69

Transfer 10Kg of FA3266 Marie Light 224g and obtain signature of WSP. Recover Rs514.20 (10Kg * Rs51.42) from theWSP.

Seek write off sanction for 10Kg of FA3266 Marie Light 224g.

2.Damage occurrence during storage at the Warehouse:

Process:

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• The WSP shall ensure that any damages occurring at the Warehouse, due to handling or for any other reason, are brought to the notice of BLE/FS of the Branch immediately.

• The BLE/FS shall ensure that suitable action like verification of such stock at the Warehouse is carried out for any damages observed/reported. The BLE/FS shall keep the RLM informed in respect of the same.

• The BLE/FS shall ensure that a Damage certificate is prepared and signed by WSP’s authorized signatory position at the Warehouse. The damage certificate should inter- alia contain the following details viz. SKU, Batchnumber, Quantity damaged, estimated value, Reason for damage, Signature of WSP representative.

• Such goods shall be kept in a separate bay with a clearmarking that the goods are damaged/ defective.

• On completion of verification by the BLE/FS, all such identified damaged stocks shall be transferred from BRND to Damage, Destruction and Expired (DDEX) storage location in SAP through movement in SAP with proper narration in the text field containing the following details - Name of WSP and Damage certificate number and date.

• Once stocks have been moved to DDEX storage location inSAP, the same can be transferred back to any other systemstorage location in the subsequent months only after approval of the FM. The transfer posting shall be done bythe BLE/FS in SAP system.

• If any damage of goods is claimable and has occurred due to risks covered under the Company insurance policy then prescribed method for lodging insurance claim shouldbe followed, as detailed in the SOP for insurance, in co-ordination with the BLE/FS.

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• At the end of the month, the WSP shall verify that all transfer postings to DDEX location pertaining to the month have been completed and confirmed the same to the Branch FS.

• The BLE/FS shall conduct surprise check of the damaged stocks once in a quarter. In case of differences between physical and SAP stock, suitable explanation shall be sought from the WSP.

• The BLE/FS shall ensure that quantity damaged at the Warehouse and posted in DDEX storage location in SAP system is uploaded in the WHDD system (in respect of foodproducts) on a monthly basis. For other Categories, a suitable recommendation for write off should be sent to respective businesses on a monthly basis.

• On receipt of write off sanction from the SBU, destruction will be carried out as per separate procedures laid down in this regard.

• After receipt of write off sanction from SBU, destruction will be carried out as per separate procedures laid down in this regard and ensuring that stocks are flushed out from the SAP system. Further, oncea month at the time of 100% physical verification of stocks, in case there are any differences due to stocks not having been flushed out then the same should be highlighted by the BLE/FS to the person responsible for such flushing.

3.Expiry of stocks at the warehouse

Process:

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• Expired stocks will be those whose shelf life has expired.

• The BLE/FS shall generate stock aging report on a fortnightly basis and identify expired quantity shall be transferred to DDEX storage location in SAP system by theBLE/FS.

• Once stocks have moved to DDEX storage location in SAP system, they can be transferred back to any other system storage location in the subsequent months only after approval of the FM.

• At the end of the month, the WSP shall verify that all transfer postings to DDEX location pertaining to the month have been completed and confirm the same to the Branch FS.

• The BLE/FS shall conduct surprise check of the damaged stocks once in a quarter. In case of differences between physical and SAP stocks, suitable explanation shall be sought from the WSP.

• The BLE/FS shall ensure that quantity damaged posted inDDEX storage location in SAP is uploaded in the WHDD system (in respect of food products) on a monthly basis. For other Categories, a suitable recommendation for writeoff should be sent to respective businesses on a monthly basis.

• On receipt of write off sanction from the SBU, destruction will be carried out as per separate procedures laid down in this regard.

• After receipt of write off sanction from SBU, destruction will be carried out as per separate procedures laid down in this regard and ensuring that stocks are flushed out from the SAP system. Further, oncea month at the time of 100% physical verification of

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stocks, in case there are any differences due to stocks not having been flushed out then the same should be highlighted by the BLE/FS to the person responsible for such flushing.

DISPATCH OF GOODS

1.Planning for Dispatches

K2 Planning

Stock Transfer Orders do not contain details ofthe Batches for the stocks that need to be shipped out. The SAP operator should take a

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dump of pending orders and convert such Stock Transfer Orders to Delivery Orders.

On creation of such Delivery Orders, the details of batches to be dispatched against anygiven Stock Transfer orders will be generated automatically by the SAP system.

The WSP should intimate the BLE incase the warehouse is unable to execute any Stock Transfer Orders.

The SAP Operator will make a destination wise summary of shipments.

K3 Planning

K3 Planning shall be done by the Branch. SAP uses FMFO logic to allocate batches to any

given Delivery Order. The loading sheet communicated by the branch

shall be deemed to be the final shipment plan based on which indent for truck placement, etc will be done by the warehouse.

Warehouse will ensure that the Truck No. & LR No. for every shipment is entered in SAP.

In case of Key Accounts the material will be shipped out irrespective of the Truck utilization.

Incase of Key Accounts, the Branch will allocate the recent Batches of products throughManual Stock Transfer Orders into the KA plant in SAP.

2.Indenting & Truck reporting

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As per the K2/K3 Plan, the WSP will calculate the destination wise vehicle requirement.

Indents will be raised on transporters based upon the vehicle requirement as computed above. Indentsto Transporters may be given over phone or email, etc.

Vehicle Placement status will be circulated to theHead Office freight team on daily basis for K2 shipments.

A manual register shall be maintained at the security gate showing the following details which are to enter the warehouse for loading:i. Dateii. Transporter nameiii. Destinationiv. Truck Numberv. Time-Invi. Time-Outvii. Signature of security guard

When the truck reports to the Warehouse, the Security shall check the following:i. Vehicle must be clean/no bad odourii. Vehicle must be dryiii. Vehicle does not contain any outside

stock/foreign materialiv. No hole in vehicle bodyv. 3 Tarpaulins for open trucks/1 Tarpaulin for

Container The WSP will check the documents as mentioned

below:i. Insuranceii. Driving License

In case the documents are not valid the truck must be rejected by the WSP and the transporter shouldbe advised to place a new truck with the necessary documents.

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3.Picking, Loading and Invoicing

The loading and /or pick sheet will be prepared bythe SAP operator in the warehouse. The same shouldbe reconciled with the physical stock picked before loading the material.

The WSP shall ensure that the batch codes of the stocks picked up for loading is as per the batch codes in the SAP system.

The matching of the batch code will depend on how the batch code is defined for the Category, i.e. day wise or month wise.

In case of differences between the physical and system batch stocks efforts should be made to locate the correct physical stocks.

Ideally batch wise corrections should be made at the time of shipment however considering that all warehouses do not have ITC staff/ shipments happenat night, this is not possible and will effect market servicing.

The problem will have to be resolved by exiting weaker WSPs and who fail to improve after continuous counseling and guidance.

Thereafter the material shall be loaded in the truck. The driver/transporter representative, the WSP & the Shift in charge shall affix their signature on the loading/pick truck.

The WSP shall verify the truck type and stamp it on the LR as well as enter the name on the pick sheet.

The SAP executive will enter the LR No., Waybill No., truck type, route code, and vendor code in SAP system.

The SAP executive shall ensure that the same trucktype & truck No. is entered into the SAP system asmentioned by the WSP in the pick sheet.

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The SAP executive will check the quantity loaded as per the pick sheet against delivery order quantity.

Security guard shall allow the truck to go out after verifying the number of CFCs and that the Tarpaulin has been tied properly.

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CONCLUSION

Rural initiatives

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ITC's Agri-Business is India's second largest exporter of agricultural products. ITC is one of the India's biggest foreign exchange earners (US $ 2 billion in the last decade). The Company's 'e-Choupal' initiative is enabling Indian agriculture significantly enhance its competitivenessby empowering Indian farmers through the power of the Internet. This transformational strategy, which has already become the subject matter of a case study at Harvard Business School, is expected to progressively create for ITCa huge rural distribution infrastructure, significantly enhancing the Company's marketing reach.

The company places computers with Internet access in rural farming villages; the e-Choupals serve as both a social gathering place for exchange of information (choupal means gathering place in Hindi) and an e-commerce hub. What began as an effort to re-engineer the procurement process for soy,tobacco, wheat, shrimp, and other cropping systems in rural India has also created a highly profitable distribution and product design channel for the company—an e-commerce platform that is also a low-cost fulfillment system focused on the needs of rural India. The e-Choupal system has also catalyzed rural transformation that is helping to alleviate rural isolation, create more transparency for farmers, and improve their productivity and incomes.

Corporate philanthropy

ITC creatively leverages information technology to set up a meta-market in favour of India's small and poor farmers, whowould otherwise continue to operate and transact in 'un-evolved' markets.

As of July 2007, services through 6400 e-choupal across 8 states, reach more than 4 million farmers in about 40,000 villages. ITC intends scaling up the initiative with 20,000 choupals and 700 saagars to reach 10 million farmers in 100,000 villages by 2010.

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Free access to Internet is also opening windows of rural India to the world at large. ITC e-choupal is now being regarded as a reliable delivery mechanism for resource development initiatives. Its potential is being tested through pilot projects in healthcare, educational services, water management and cattle health management with the help of several service providers including organizations. When Classmate notebooks were launched, it came up with the initiative of contributing 1 rupee towards the education of poor children, from every single notebook it sold.

ACKNOWLEDGEMENT

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ITC Limited is one of the most reputed companies ofIndia. I am thankful to ITC to have given me this opportunity to work with this prestigious company and it was an honour for me. I have been working atthe ITC-Eastern District office and it has been a thrilling experience for me. This is my first work experience and I have been gifted to be a part of this company.

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I worked as an intern in this company for a period of one month and it has been very knowledgeable forme as I got to learn a lot of things during this short period. First and foremost I got to know how the work culture is in an office and also how the atmosphere is. It has helped me realize as to how Ican prepare for my future. I got to learn a lot of things and how finance was applied in reality.

I would like to thank Mr. Debal Bose, Assistant Finance Manager, for giving me this opportunity andfor also supporting and encouraging me during this period. I would also like to thank Mr. Sabyasachi Bagchi under whose supervision I have been working.He was my mentor and guide during this period as anintern. He was very supportive and he made it very easy to work on this project. He provided me with information and also helped me to understand everything worked. Without him and his support it would have much harder and hence he was truly a good mentor and I would look forward to working with him in the future if given the opportunity.

It has been a great experience working for this company and I hope I can later in the future. Everything that I have learned will be of great importance in my life and I will truly remember this experience.

And lastly, I would like to thank my parents who have always supported me and believed in me. Without them nothing would have possible.

Sincerely,

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ArkyadeepChowdhury.

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