General Information

1

GENERAL INFORMATION

Sr.

No.

Particular Page

No.

1 Introduction to the Company 3

2 History And Development 5

3 Vision Statement 6

4 Existing Body 7

5 Size of the Unit 9

6 Unique Features of the Unit 10

7 Organization Structure 11

8 Time Keeping System 12

9 Major Players in India and their capacity 13

10 SWOT Analysis 14

11 Future Plan 16

12 Quality Brand Logo 17

2

Introduction to the Company

Incorporated as the Indian Rayon Corporation Ltd. In 1956, the Co. was originally engaged in the Rayon Yarn business. In 1966, the Birla’s acquired it and Jaya Sheri Textiles & Ind. Ltd., an Aditya Birla Group Co. active in textiles and insulators, was amalgamated with this Co. Over the years, a number of other businesses were developed.

INDIAN RAYON AND INDUSTRIES LIMITED

INDIAN RAYON AND INDUSTRIES LIMITED (formally known as INDIAN RAYON CORPORATION LTD.) is a 16000Cr. Multi-product and multi-location industrial conglomerate, a part of Aditya Birla Group, and the organization of a long, illustrious and magnificent legacy spread over a period of 125 years. The Group is consolidating its position under the chairmanship of Shari Kumar Man glam Birla taking the aspirations from the legacy of a leading industrialist, Late Shari Aditya Vikram Birla. The organization came on the sphere of Rayon Industry in 1963 when Late Shari Lal Bahadur Shastri laid down its foundation stone.

Shari Morarji Vaidya of Vaidya Group started this organization with production capacity of 4MT per day in collaboration from Von-Kohom International of USA. In 1966 it was taken over by Shari Aditya Vikram Birla and since then has been a part of the AV Birla combine. The Rayon Division is one of the 12 Divisions of Indian Rayon, located in Veraval, Gujarat. The main product of the Rayon Division is the Viscose Filament Yarn apart from chemicals like sulphuric Acid, Carbon-di-sulphide, which are both consumed in-house and Sodium Sulphate, which is a by-product. The total production is 38.5 TPD of yam likely to will be increased to 40 TPD by June 1998. Rayon industry consists of seven domestic players, and we are the market leader in terms of sales. Exports constitute about 15% of the total turnover. Besides, 100 TPD Caustic Soda plant and 16.5 MW Power Plant have also been commissioned in 1996.

The Viscose filament Yarn is manufactured by the regeneration of Sodium Cellulose Cantata part of Viscose when it comes in contact with the Spin bath solution, a mixture of the dilute Sulphuric Acid, Zinc Sulphate and Sodium Sulphate. After regeneration, the yarn is taken out using the conventional Pot Spinning technology, in the form of cakes. After the treatment of cakes are reminded in the form of cones by the coning machines in the Textile department to make it presentable in the market.

The Inputs the main raw material for the manufacture of yarn is wood pulp. Different types of pulp are used in the process depending upon the market availability and for acquiring the required quality. Apart of the pulp is also imported. Apart from pulp, the ot6her major raw materials are caustic, sulphuric acid and carbon di-sulphide. The Company has gone for backward integrating by manufacturing sulphuric acid and carbon di-sulphide.

3

The Product

Viscose Filament Yarn is what the layman calls as the "artificial silk". The Properties of the yarn is such that it can be easily blended with other fabrics and in terms of it comfort, it is second only to Cotton, which is a natural fabric. And the luster of Rayon only adds to its wide demand. The rayon yarn is used to make saris and special effects like Bosky, Chiffon Georgette and Fancy dresses.

The Market

Most of the sale of yarn has been through dealers and agencies. The major market for the Viscose Filament Yarn is Surat. The other Major centers are in Bombay, Ahmedabad, Salem, Bangalore, and Amritsar etc. The main competitors are Century Rayon, Baroda Rayon and National Rayon. The most visible USP of the IRIL product is high

Percentage of the 1st grade yarn, which results in the customers, the mills, having a higher confidence in the IRIL yarn.

The average growth rate for Viscose Filament Yarn in the Market is around 8% in a year. The Market Share of the Company on an average has been of 20% in last 5 years, which has been possible only due to matching Company's Average Growth Rate of 7.6% in last 5 years in its Sales. Hence the company does not envisage any major problem in future in marketing Yarn.

The organization is accredited with ISO: 9002 for "Quality Systems" and ISO: 14001 for "Environmental Management Systems". A scheme for another 15 MW captive Power Plant is in the pipeline.

In 1987, to reflect the multifold activities of the Co., it was renamed as “Indian

Rayon and Industries Limited.”

In 1998, as part of the Group’s restructuring and consolidation, Indian Rayon’s cement

business was transferred to Grasim Industries. Today Indian Rayon’s focuses on three

businesses I which the Co. enjoys a leadership position:

Viscose Filament Yarn – India’s second largest producer

Carbon Black – India’s second largest producer

Insulators – World’s third largest

3 3

4

History and Development

The late Prime Minister Shri Lal Bahadur Shastri laid the foundation stone of Indian Rayon and Industries Ltd. On 21st June 1959. It was incorporated on the 26th September 1956 under the Companies’ act of 1956 and the company was given the commencement certificate on 13th Feb 1958.

The inauguration of the company was done by an American ambassador Mr. H. H. Galbreth on 13th April 1963 and on the same day company took its trial production.

Shri Morarji Vaidy one of the leading industrialists of Gujarat with a view to manufacture Viscose Filament Yarn (VFY) in collaboration with Von-Kohorn International of USA started this organization.

Once a sick company and virtually on the verge of closure was taken over by Shri Aditya Vikram Birla in 1966, who believed in consolidation, expansion and diversification. Because of his belied and sincerity towards his work the company has not only turned around but has also made up strong market position today. By 1975, the Jaya Shree Textiles had merged with Indian Rayon. The Indian Rayon & Industries Ltd. is Public Ltd. Company.

5

VISION STATEMENT

MISSION STATEMENT

To produce Viscose Filament Yarn to meet the expectation of customers in premium segment.

To achieve minimum cost of production through innovation, development and involvement of employees and vendors.

To maintain clean, safe and pollution free environment.

5 ‘S’ CONCEPT

‘S’ SEIRI – Sort out unnecessary items in the work place and discard them‘S’ SEITION – Arrange necessary items in good order so that they can be easily

picked for use‘S’ SEISO – Clean and maintain workplace so that there is no dust and dirt.‘S’ SEIKETSO – Standardize the work procedure for every thing we do.‘S’ SHITSORE – Develop a habit of doing right things as standardize.

6

To be preferred choice of customers in premium

segment of Viscose Filament Yarn Global

Market while remaining committed to the interest of

all stakeholders.

EXISTING BODY

BOARD OF DIRECTORS:

Mr. Kumar Mangalam Birla, ChairmanMrs. Rajashree BirlaMr. H. J. VaidyaMr. B. L. ShahMr. P. MurariMr. B. R. GuptaMs. Tarjani VakilMr. Vikram RaoMr. S. C. Bhargava

MANAGER

Mr. K. K. Maheshwari

CHIEF FINANCIAL OFFICER

Mr. Adesh Gupta, President

COMPANY SECRETARY

Mr. Devendra Bhandary

AUDITORS

Khimji Kunverji & Co., MumbaiS. R. Batliboi & Co., Mumbai

BRANCH AUDITORS

K. S. Ayer & Co., MumbaiDeloitte Haskins & Sells, BangaloreClark, Gardner, Wolf & Co., Mumbai

SOLICITORS

Mulla & Mulla and Craigie, Blunt & Caroe, Mumbai

7

29

REGISTERED OFFICE

Junagadh – Veraval Road, Veraval – 362 266 (Gujarat)

EXECUTIVES

RAYON DIVISION

Mr. K. K. Maheshwari Group Executive PresidentMr. K. C. Jhanwar Executive PresidentMr. S. S. Gupta Joint PresidentMr. D. P. Modani Sr. Vice President (Fin. & Comm.)Mr. S. K. Nanda Sr. Vice President (Caustic)Mr. J. P. Pandey Sr. Vice President (Production)Mr. K. D. Joshi Sr. Vice President (Marketing)

GLOBAL EXPORTS AND MARKETING

Mr. S. R. Dutt President

CORPORATE FINANCE DIVISION

Mr. Manoj Kedia Sr. Vice PresidentMs. Pinky Mehta Sr. Vice President (Taxation)Mr. Anil Rastogi Sr. Vice President (Corporate Finance)

BANKERS

State Bank of IndiaDena BankHDFC BankUTI BankCanara Bank

BRAND NAME

Ray OneQuality The World Prefers

YEAR OF ESTABLISHEMENT

1963

8

Size of The Unit

IR&IL Co. Veraval is a Public Ltd. Company. It is large-scale industry. It is Capital Oriented unit because automatic machineries do most of work. It can be called heavy industry because the symptoms of heavy industries are seen like – capital investment is very huge, production cycle and installation of heavy and costly machineries. The work of unit has been divided into 42 departments.

Contribution of the Unit

The IR&IL Co. is one of the single units, which manufacture Rayon Yarn earning huge profit. On the part of market company contributes more than 25% of total market in India and of course Birla group has two other units engaged in production Rayon Yarn. So totally about 75% of market has been covered in India. Company has been also export Rayon Yarn in more than 15 countries.

9

Unique Features of the Unit:

Tube Spinning technology in Filament Yarn Latest technology in VFY continuous Spinning machines (proposed) Pioneering slurry press, continuous Viscose process. Twin roll press, continuous filtration process, multi-stage flash evaporation, acid

absorption crystallizes. Spinning machines running on invertors. Renovation and re-engineering Vendors development Predictive maintenance with the help of non-destructive testing technique Labor intensive but peaceful industrial relation Optimum Automation First company to get ISO 9002 in Rayon Industry in Nation Initiated EMS (Environment Management System) Participative management Captive Power plant Backward integration – Caustic Plant Sharing the gains with the employees Market Leadership Occupation Health & Safety Assessment series 18001 – 1999 (OHSAS)

10

Organization Structure

11

Executive President

ProductionDepartment

EngineeringDepartment

CommercialDepartment

AdministrationDepartment

Personal & HRDDepartment

Viscose Maintenance Finance Raw Material Time Office

Spinbath Electrical Share Legal

Spinning

Welfare

Instrumentation Stores

Purchases

AND

BARDHANA

Labour Office

After Treatment

Textile

Chemical

Research & Development

Quality Control

Internal Audit

Sales

Personnel

HRD

Estate

Security

TIME KEEPING SESTEM

Each and every unit has their own time keeping system. Since the some keeping system the arrival and leaving of employee are recorded.

In Aditya Birla Nuvo Ltd. time keeping system is given bellows

For Officers :08:30 Am to 12:30 Pm01:30 Pm to 05:30 Pm

Officer’s Lunch Time12:30 Pm to 01:30 Pm

For Workers :Shift A : 06:45Am to 02:45PmShift B : 02:45pm to 10:45PmShift C : 10:45pm to 06:45Am

Worker’s Lunch TimeShift A : 10:45Am to 11:45PmShift B : 06:45pm to 07:45PmShift C : 03:45pm to 04:45Am

12

Major players in India and their capacity

Major Players Capacity (MT) Percentage (%)Indian Rayon 16000 24.58Century Rayon 14600 22.43National Rayon 16000 24.58SI Viscose 7500 11.52Kesoram Rayon 6500 9.98Baroda Rayon 4500 6.91Total 65100 100%

13

SWOT ANALYSISSTRENGTH: -

Yarn produced here is of high quality. Wastes are being sold. Better packing, carriage and transportation system with all modern Equipment. Good after sales service. PURTA system helps in the functioning of the division PURTA SYSTEM

[budget]. Regular meetings and seminars are conducted in all the departments And the loopholes traced and solution is unearthed for it. Sophisticated German machinery helps in the continuous spinning yarn Department [increased productivity] Internet marketing. Division has WCM, a cell that look out for better manufacturing ways.

ISO 9002 certificate for better quality of production. Division certificate by ISO 14001[good environment management system] Effective security system for identified unwanted problems Honored by safety awards. Employees at each level are given training according to the need Of the company. A state of the ART laboratory was new and effective chemicals are explored. Computerized power plant. For production of caustic and by products division has

modern caustic Plant.

WEAKNESS: - Heavy cost of production due to old technology installed in certain Departments. Long process steps. Far from markets. Long process cycle Certain loop holes in INFORMATION system.

OPPURTUNITY: -

New markets should be unearthed for its products and chemicals. Lucrative export market. Cost control and lean consumption should be worked on as Globalization has made the world a village. Find ways to penetrate deeper into the worlds biggest textile markets EUROPE and U.S.A.

14

THREATS: - Government policies. Changing fashion. The viscose process is highly polluting. Emergency of cotton threads made the market share of rayon yarn low.

ANALYSIS: - The company should work on cost reduction programmer by having a Multi

dimensional attack on cost.

The overseas market should be properly traced out {by an efficient IS system}

The company should work on value addition. The company should concentrate on lean consumption model. The company should trace down the loopholes in its system and to fill It as it would help in lowering the work burden and would increase Productivity.

15

FUTURE PLAN

Development of cationic softener for soft finishing. Development of microfilament yarn arilobal yarn & flat yarn etc…. Development of improved design roller guide for spinning machines. Development of wastewater recycles system. Economy quilting. Development related to improved yarn dying.

16

17

PRODUCTION DEPARTMENT

18

PRODUCTION DEPARTMENT

Sr.

No.

Particulars Page

NO.

1 Introduction 20

2 Organization Structure & Production Department 21

3 Introduction to Company Product 22

4 Manufacturing Process 23

5 Plant Layout 31

6 Material Handling 32

7 WCM Excellence Model for Competitive Advantage 33

8 Purchase Department 34

9 Store Department 35

10 (IR &IL) Supply and Chain Management 36

11 Quality Control 37

19

Introduction

Production means creation of utilities and entails the procurement and utilization of factors of production, which includes manpower, material, buildings and equipments.

Production is fabrication of physical object though use of men, material and equipment.

“Production management deals with decision making related to production process so that the resulting goods or service is produced according to specifications, in the amounts and by schedule demanded and at minimum cost.”

-- E. S. Buffa

Production must be operated in an economic and efficient manner because cost of production is vital factor in facing market competition and in ensuring normal profit or return on investment.

20

Inputs

MaterialLaborCapitalEnergy

InformationResources

Outputs

ProductsServices

InformationProducts of

services

ProductionProcess

Organization Structure of Production Department

21

Sr. Vice President

(Production)

Sr. GM(Prod) GM (Prod)

Viscose Dept.

SpinbathDept

SpinningDept.

AfterTreatmen

t

TextileDept.

ContinuousSpinning

Yarn (CSY)

Chemical

Dy. GM

D. Man

Sr. supt

Supt

InchargeSupt

D. Man

Ast Man

Sr. supt

Supt

InchargeSupt

D. Man

Ast man

Sr. Eng

D. Man

Workman

Manager

D. Man

Sr. Supt

Supt

InchargeSupt

Sr.Man

D. Man

Ast. Manager

InchargeSupt

Supt

Sr Supt

Workman

Jr.Supt

Supt

Sr. Supt.

Jr.Supt

Supt

Sr. supt

Sr. Man.

Workman

Introduction To Company’s Product

There are 12 units working under IRIL division of Birla Group. Various types of products are producing in each an every unit. Here we are mainly concern with Rayon Division where total four products are manufactured. These are as under:

1. VISCOSE FILAMENT RAYON YARN2. SULHURIC ACID (H2SO4)3. CARBON-DI-SULPHIDE (CS2)4. ANYHYDROUS SODIUM SUPHATE

Vital and essential raw material for Viscose Filament Rayon Yarn are wood pulp, caustic soda (NaOH) while for the production of sulphuric acid – sulphur, oxygen gas and water are required and super and coke are required for production of carbon-di-sulphide. There is separate plant for each and every product. The forth product sodium is a by-product. The use of each product is as under:

Uses of Rayon Yarn in Manufacturing Of:

1. mantle of gas lanterns2. Dress materials and saris, Fancy yarns and finishing fabrics.3. Elastic tapes4. Fancy yarns and finishing fabrics5. Warp and/or weft for weaving of suiting and shirting’s.

Uses of Sulphuric Acid (H2SO4) In:

1. Chemical Industry & Agro-Chemical Industry.2. Paint & Dye Industry3. Medicine Industry4. Rayon Industry

Uses of Carbon-di-Sulphate (CS2) In:

1. Glass Industry2. Pharmaceutical Industry3. Rayon Industry4. Base for Agro-Chemical Industry

Uses of Sodium Sulphate In:

1. Glass Industry & Paint Industry2. Paper Industry3. Dye Industry

22

Manufacturing Process

IR&IL Co. is the market leader of the nation and its market share is round about 30%. It produces more than 500 shades, ranging from natural white to a wide array of colors from purist tints, though medium tones to vibrant deep shades I fine to coarse deniers ranges from 70 to 900. The unit’s production capacity is 16000 TPA of high quality. The technology used for the production process in Rayon Division is conventional one and simultaneously it uses pot spinning yarn process.

VISCOSE FILAMENT RAYON YARN:

The main products at Rayon Division Veraval :1. Viscose Filament Rayon Yarn2. Sulphuric Acid3. Carbon Disulphide4. Sodium Sulphate

The main raw material required for Rayon Yarn is:1. Wood Pulp2. Caustic Soda3. Carbon Disulphide4. Sulphuric Acid

About 90% of the above are available from the domestic market. Wood pulp is also imported from Canada, Sweden and South Africa. The sheets of wood pulp are made from the cellulose from the following trees:

Eucalyptus (South Africa) Spruce (Canada) Bamboo (India)

23

24

The manufacturing process of Viscose Filament Yarn can be divided in the following sections:

A. VISCOSE SECTIONThe process is carried out in the following stages:

Conversion of woo cellulose into alkali cellulose i.e. mixing of wood pulp with NaOH.

Conversion of alkali cellulose into sodium cellulose xanthate. Conversion of sodium xanthate into viscose solution.

The process is carried out in the following steps:a) Mixing

Foremost the raw materials, woo pulp containing 91% to 97% of cellulose is mixed with the sodium hydroxide (NaOH) of necessary strength for an hour a half.

b) SteepingIn this step, the cellulose (wood-pulp) is mixed with the caustic

solution and it combines to form the alkali cellulose which is called slurry. The excess soda is then drained off for reuse. In this step the hemi cellulose and the other impurities are also removed.

c) Homogenizer:From the mixer slurry is pumped to vessel which is called

homogenizer. Here in this stage different batches of slurry are blended thoroughly to get uniform alkali cellulose mat at the press. The slurry is constantly and continuously supplied to be pressed. The slurry in the homogenizer is stirred continuously by stirred homogenizer. It is also hacked to control slurry temperature circulating water.

d) Pressing (Twin Roller Press)It is a continuous process. From the homogenizer, slurry is

pumped to be pressed where it passes between two perforated drums (rollers). The excess caustic is removed by pressing and slurry in the form of mat is received. The hemi cellulose and other impurities are also dissolved in the pressed caustic and removed by dialysers. Generally the mat received is constituted with the following composition and proportion:

Cellulose 34%Alkali 15.5%Water 50%Carbonate 0.5 to 0.55%

25

e) Shredding:Shredding process increase the surface of the A.C. mat ensures the

next stage of aging and xanthation to be rapid an uniform. In this process mat is out into small pieces by three rollers rotating at different speed and each of them is attached with a linkering wire which outs the mat form the shredder, A.C. pieces are carried maturing rum by conveyor belt.

f) Maturing:Maturing is the necessary process to decrease the degree of

polymerization from 1400 monomer units to 600 monomer units of alkali cellulose by the effects of temperature and time caging to facilitate xanthation stage. In this process, the maturing drum used is of 70 feet long and 9 feet diameter. This cylindrical vessel is rotation at a speed of 1?3 rpm an it is inclined a 3 degree to horizontal to facilitate A.C. flow. The stock of A.C. in the drum remains about 25000 kgs.

g) Xanthation:This is the main reaction carried out during viscose production.

There are four xanthation equipped with agitator and are vacated though which cold water is circulated to control the product temperature. Xanthation is carried out under vacuum. After dumping the batch in the dissolver xanthate is cleaned with soft water and then it is dried with air.

h) Dissolving:In this stage the viscose is uniformed by eight dissolver vessels

which are equipped with agitator which makes viscose uniformed. The dissolving time is 3 hours. The term is controlled to maintain ripening index (R-S) from the dissolver viscose which is transferred to ripening room.

i) Ripening:In ripening viscose is filtered though different filters. It is

necessary process to remove the impurities before sending the viscose solution to spinning section.

B. SPIN BATH SECTION

Spin bath is quality section to spinning rayon yarn. Spin bath is an important constituent for the viscose to be re-generated in to cellulose. The main composition of the spin bath solution is sulphuric acid (H2SO4) and sodium hydroxide (NaOH) other composition is ZnSO4, Na2SO4, temperature etc. which constitute the spin bath solution and the sodium sulphate (Na2SO4) is receive as a by-product.

26

A-9

Sodium sulphate is a min by-product which is requires 22 tones per day. This by-product Na2SO4 should be removed form spin bath solution and spin bath solution transferred to spinning section by total six drums out of which two of them are in old spin bath dept. while other four are in new spin bath dept.

C. SPINNING SECTION

In this section viscose solution from viscose section is directly supplied through dye units to spinning machine for bright and colored yarn. The merging pump drives fixed amount viscose in one minute depending upon the capacity of the pump. Viscose temperature is around 28 degree centigrade. Spin bath solution is also following with high speed from the spin bath section at 56 degree centigrade to spinning section. Viscose coming from heat cons in the contact with spin bath coagulation of viscose which takes place to form yarn of particular denier.

Denier is a weight of 9000 mtrs. of dry yarn in grams. Yarn is specified by its denier and filaments e.g. 225/40 that means 225 denier with 40 filaments. Jet is made of anti corrosive material consisting of 70% Au (Gold), 29% Pt (Platinum) and 0.5% Rh. The yarn coming out is passed through a cup tube of length 550 mm of 450 depending upon denier.

D. AFTER TREATMENT SECTION

Raw cake from spinning section is brought to A.T. section in raw cake trucks. Here the raw cakes pass through 20 parts for 19 minutes each. In these 20 parts the different machines are fixed in which the washing, bleaching and drying are done by soft water. Various hydro extracted chemicals etc. are used to remove impurities, dust and dirt. Afterwards the cakes are dried in the dryer room by the air.

E. TEXTILE SECTION

The dry cakes are now dry for wining. The yarn is in the form of conesor, and hank time duration of coming depends upon the denier of yarn. The textile department s place where the manufacturing process of Rayon Yarn comes to an end. Although it comes under production processes but its function is auxiliary and very important in nature.

27

F. PACKING SECTION

After wining the cones an hank, they are sent to the pacing section where they are visually check by the inspectors an grades are given as per their quality.

At present cones are packed in cardboard boxes. Then the cartoons, which are filled by inspection side; helpers, are first brought to the weighing balance where the weight is balance as per pre-determine standard. After that a computer pacing slip is made having various necessary details. On is paste on cartoon, second is kept inside the cartoon and third is kept for record purpose. After that the cartoons are stepped with Polly propylene type. Finally B.O.P.P. adhesive tape is applied at the joint of top flaps of cartoons. These fully packed and sealed cartoons are sent to bonded stores room (B.S.R.) for sales department to be dispatch.

The packing slip is having following details: Name of parts Date of packing Quality grade an weight Registered trade mark of the company The color of cones an hanks Deniers

SULPHURIC ACID (H2SO4):

Sulphuric acid is one of the important raw materials require for the production of viscose solution. It is used to generate the strength to the filament yarn. The main raw material required for the productions of H2SO4 are Sulphur, Soft Water an Oxygen gas.

The process can be state in the following stages:

SULPHER MELTER:In the sulpher the steam passing though the melter melts the solid form of sulpher.

SULPHER BURNER:The melted sulpher is fed to sulpher burner, which is also fed. The oxygen

gas is passed though the boiler and filter in which the filtration of So2 are maintained and made respectively.

CONVERTER:Form the filter the filtered SO2 gas is transferred to converter, which

results in SO3 gas. Afterward it passes though 4th converter.

COOLER:From the 4th converter SO3 gas is transferred to cooler when it is cooled

own and excess air is drawn out for the top of the cooler.

28

ABSORPTION:The cooled SO3 is then absorbed into absorption tower in the sulphuric

acid. In the tower H2SO4 is sprayed on the cooled SO3 from the top and it makes H2SO4 acid.

ACID PRODUCTION TANK:In this stage H2S2O7 transferred to acid tank and the purified water is

added here which react and produced the H2SO4 acid.

CAUSTIC SODA PROCESS

Caustic soda lye, chlorine gas and hydrogen gas are simultaneously produced from Bipolar Membrane cells. The products obtained are of high quality , since the process demands very high quality of raw materials for Membrane cell Technology. Caustic soda lye produced is of 32% concentrated and chlorine and hydrogen are produced as gases from cells. these two gases are purified in respective sections.

Sequentially the process is divided in the sections namely , brine purification ,cell house,catholyte and acolyte handling, chlorine liquefaction, caustic evaporation and flaking, HCI synthesis and waste air dechlorination.

BRINE PURIFICATION SECTION : -

Saturated salt solution often referred to as brine solution is prepared by adding fresh salt to lean brine coming from the cell house ( recycle process ) . the brine solution contains impurities such as calcium, magnesium and Sulphate. These impurities are removed in two stages, namely, primary and secondary purification. Primary purification is done by chemical treatment using soda ash, and sodium hydroxide to remove calcium and magnesium impurities to ppm levels. In secondary purification, the impurities are removed to the ppb level by passing the brine through ion exchange resin beds. The brine solution obtained after these process is of high quality, which is suitable for feeding to the electolyzer cells.

CELL HOUSE :-

The purified brine from the brine sections is fed to the bipolar membrane cells. The brine solution is electrolyzed by appling D.C. current . sodium chloride gets dissociated into sodium ions and chloride ions . Membrane is used as separator in betweencathode and anode in cells.At the anodic side, hydrogen gas is produced along with caustic soda lye. The caustic soda produced is of 32% concentration.

29

CATHOLYTE AND ANOLYTE HANDLING :-

CATHOLYTE CONSISTS OF 32% LYE AND HYDROGEN GAS. Hydrogen gas is cooled and filtered to obtain dry hydrogen gas . hydrogen gas is used either to produce HCI or used as fuel for burners in caustic soda flaking unit or sold. Anolyte consists of lean brine and chlorine gas. Chlorine gas is cooled and passed to chlorine handling unit for further processing. Lean brine is neutralized, dechlorinated and sent back to the saturators as brine make-up

CHLORINE LIQUEFACTION :-

Chlorine gas cooled in the anolyte handling section is dried in drying tower using sulphuric acid. Dried chlorine gas is compressed in compressor house and liquefied in liquefier using freon gas as refrigeration media. Liquid chlorine is passed to the liquid chlorine storage tanks for further selling it after filling in tonners.

CAUSTIC EVAPRATION AND FLAKING :-

32% CAUSTIC SODA LYE FROM CELL HOUSE IS ENRICHED TO 48% Lye in triple effect evapration unit for selling.Alternatively this can also be converted to flakes on flakers unit.

HCI SYNTHESIS :-

Burning hydrogen and chlorine in graphite furnance chamber produces HCI gas . the HCI gas so produced is scrubbed in water to produce 30% hydrochloric acid.

WASTE AIR DECHLORINATION :-

All chlorine bearing waste streams from the plant are scrubbed in dilute caustic soda lye solution to produce sodium hypochlorite.

30

PLANT LAYOUT

Plant layout refers to the development of an arrangement, which will permit the most efficient flow of work form the standpoint of distance and cost.

The plant layout activity is one in which consideration is given to following things:1. The arrangement of production an service departments in the plant2. The arrangement of production facility with which the operator must work at a

particular work station in one theses department.

SELECTION OF LOCATION

There was no regional advancement before the establishment of the factory. Veraval region was very much backward in terms of industrial activities. People over here were also socially as well economically backward. So the government decided to develop the area with the establishment of the factory. For this the land cost guarantee an various other incentives like smooth supplement of the water an electricity were also provided by the Govt. up to 1979.

From 1979 the company has established its own Power Plant and water supplement from Govt. is still continue but the Co. has to pay the water charges as per the Govt. rule. This industry was not paying octroi duties local Veraval city.

31

Material Handling

“Material handling is the art and the science involving the movement, packing and storing of substance in any form.”

-- American Handling society

Material handling can be defined as “Controlling the amount, location, movement and timing of the various commodities used in and produced by the industrial enterprise.”

IR&IL Co. is totally using the automatic process for production, but at certain stage it uses equipment for the shifting of raw materials. The company uses trolly as an equipment for material handling in its Viscose Section to brought up the woo pulp form the storage department an in after treatment department to puts the cakes in washing an knitting. After the last stage of the production, the final product is sent to the packing section with the help of trolly.

Many a times IR&IL Co. uses Conveyers Rails Cranes Trucks

For the supply of raw material to various departments.

The Diesel Power House of the IR&IL Co. uses conveyer belts for the supply of coal that is imported form Bihar.

Whereas the other raw materials like woo pulp, sulphur etc. are brought by land route i.e. rails and truck to the factory.

32

WCM Excellence Model for Competitive Advantage

WCM POLICY followed by IR&IL Co. To maximize equipment effectiveness Achieve zero breakdowns, zero defect, zero accident and eco-friendly

environment through innovative methods with total involvement of our employees and b continuous upgradation of technology.

This will lead us to excellence and perfection in all spheres of management, to be globally competitive and preferred choice of customers.

33

Purchase Department

Purchasing function is the heart of any business and it is suppose to be cast goldmine to profits.

“The task of purchasing is related to going to the open market, fining the desire material at the lowest possible price and selecting the supplier to offer minimum prices having required quality of material.”

s in :- Purchase the right quality of material To purchase right quantity of material To make the material available at right time To purchase the material at right price To purchase material from right source

PURCHASE PROCEDURE OF IR&IL Co.

INVENTORY DEPARTMENTInventory dept. of IR&IL Co. uses Scientific Mounting Level Method. In this Co. inventory control is long process.

Any dept. that is in need of any material prepares an indent. This indent includes the information like quality, quantity, requirement etc. this indent after filing it is sent to the purchase dept. of the Co.

PURCHASE DEPARTMENTPurchase dept. of IR&IL Co. makes inquiry about the material from the suppliers and collects quotation from the suppliers.

While placing the purchase order IR&IL Co. considers the following factors. Old rate of the product Lowest bids Reputation of supplier Delivery period Payment terms Technical evolution After sales service Performance guarantee

The above quotations are comparing on the basis of comparison chart which they prepare with the help of all the information. The decision of purchase is one by the authority.

34

The purchase order is placed on the basis of feasibility. So, we can say that IR&IL Co. Applies Integrated Material Management Concept.

Store Department

The store dept. of the IR&IL Co. receives the raw material which was ordered from the supplier. This dept. prepares Good Receipt Note (GRN). One copy of GRN is sent to that Dept. which has place an indent.

Particular dept. approves the materials and sends requisition to store dept. and collect the material. On the basis of GRN, final invoice is paid Account dept.

Plant Maintenance

“Plant maintenance ensures that all production facilities are in serviceable condition at required time, causing no production hold-up, interruption, or loss of individual efficiency for operation.”

The objective of plant maintenance is to improve functional reliability of production facility to grab opportunities.

IR&IL Co. follows World Class Manufacturing Policy (WCM) of plant maintenance, which it has adopted in the recent years. However formerly it was using Total Productive Maintenance (TPM) of plant maintenance.

INVENTORY CONTROL METHODS

Inventory control is one of the key factor on the basis of which the company can take ,Decisions on the behalf of that the cost can be controlled if the company is having a very good control on the inventory then the cost can be controlled more effectively.

The inventory control helps the company in forecasting the feature demand of the goods as per the requirement of the production and the market.

The commonly used inventory control method that a company uses are the EOQ and ABC

EOQ :- [economic order quantity ]In this method the feature demand of the inventory is been identified as per the requirement of theindustry, the key frocus in this type of inventory control method is the optimum utilization .

ABC :- [always better control ]In this type of the inventory control method the name it self states the use and potentiality which lies in theis method.in this method the goods are divided in such a way that ,in

35

response to its use and orde and cost as the goods are divided in parts as acoording to A ,B ,C .

(IR&IL ) SUPPLY AND CHAIN MANAGEMENT

36

MANUFACTURINGCYCLE TIME

MATERIALHANDLING

INVENTORY REDUCTION

DELIVERY SCHEDULE

PLANNINGMANAGEMENT

SINGLE MINUTEEXCHANGE DIE

CAUSTICCHANGE OVER

LEAD TIME

JIT &

SUPPLY CHAIN

MANAGEMENT

Quality Control

“Quality is an asset which may be offered to the potential customer of a product or a service.”

It mainly depends upon two factors:1. product – Service design2. operating System – makes a product/provides a service

Quality Policy, we are committed to Meet customer’s expectation of quality an services in

premium segment. Maintain high morale of employees Use eco-friendly technology and maintain pollution free

environment.

Environmental PolicyWe believe that preservation of environmentIs essential for the survival of our business,

Employees, society and surroundings.We shall achieve it with the involvement

Of our workforce, vendors, customers and neighborhood.

Major Function undertaken by IR&IL Co.: Regular checking of set parameters. Checking individual Checking of abnormality in the process Highlighting the variation from the set operation procedures/parameters.

TECHNICAL SALES: Regular market visits to meet consumers demand. Regular comparison of yarn quality and physical properties of other manufacturer Checking and suggestion to eliminate market complains

IMPROVEMENT CELL: Analysis of Breakdown and Stoppage of process Suggestion for improvement in existing operational system for better plant control To carry out study on specific problem/effect and to suggest their steps To develop different shades / product for sales promotion

IR&IL Co. has receive Occupation Health & Safety Assessment series 18001-1999 (OHSAS) certificate and it is the first company to receive ISO 9002 certificate in Rayon industry in Nation. It has also received 14001 Environment certificate.

37

Marketing Department

38

Marketing Department

Sr.

No.

Particulars Page

No.

1 Introduction 40

2 Organization of Marketing Department 41

3 Marketing Mix 42

4 Chemical Product 43

5 Product Planning & Development 46

6 Marketing Research 48

7 Market Segmentation 49

8 Pricing Policy 50

9 Promotion Tools 51

10 Advertising 52

11 Channel Distribution 53

12 International Marketing 54

13 Future Plan and Achievement 55

39

Introduction

Marketing deals with identifying and meeting human and social needs. One of the shortest definition or marketing is “meeting needs profitably.”

“A market may be considered as a convenient meeting place where buyers and sellers gather together for exchange of goods and services.”

Marketing is a process by which individuals and groups obtain what they nee and want by creating and exchanging products and value with others.

Marketing is typically seen as the task of creating, promoting and delivering goods and services to consumers and businesses. Marketing people are involve in marketing ten types of entities’ goods, services, experiences, events, persons, places, properties, organizations, information, ideas.

Marketing has often been described as “The Art of Selling Products.”

40

Organization Of Marketing Department

Organization here depicts a form of co-operative efforts that re undertaken by the number Of persons at different hierarchy level.

IR&IL Co. at Veraval is producing a product which is use by all manufacturing industries. Hence, all marketing activities is one through Centralized System

IR&IL Co. has its main Sales Office at Mumbai, but at Veraval it has only dispatch Office from where they send product as per instruction of Mumbai Head Office for sales.

Organization Structure

41

VicePresident

Raw Material& Storage

TransportSales & MarketingLegal & Liaison

General Manager

Sr. OfficerGeneral Manager

Sr. Officer

D. Manager

Sr. Officer Sales Officer

Manager

Marketing Mix

Marketing mix is the set of marketing tools that firm uses to pursue its marketing objectives in the target market.

It consists of everything the firm can o to influence the demand for its product. The many possibilities can be collected into 4 groups of variables known as the four Ps i.e. Product Price Place Promotion

Product Mix

Product mix which is also called as product assortment is the set of all product & items that a particular seller offers for sale. A Co.’s product mix has certain with, length, depth & consistency.

IR&IL Co. product is VFY but along with it the Co. also manufactures some chemicals and by-products, which are require for the production of Yarn, and the excess of this product is sol out in the market. Not only that, IR&IL Co. is manufacturing the Yarn which is of different colors and different quality – denier wise as per the requirement of the client.

IR&IL Co.’s main product VFY has certain length in terms of: Color yarn Dull yarn Spunned yarn

And it has depth in terms of: Quality Denier

IR&IL Co.’s width include various other chemicals and by-products: Caustic Soda Sulphuric Acid NA2SO4

42

CHEMICAL PRODUCTS

6

11

1

2

2 2 5

4

3 4

THE ABOVE MENTIONED PRODUCTS AND THEIR CLASSIFICATION ACCORDING TO THEIR RESPECTED DEPARTMENTS IN WHICHTHEY ARE PRODUCED.

CAUSTIC DEPARTMENT : -

LIQUID CLORINE , C.S.FLAKES , CAUSTIC SODALYE, H CI

ACID PLANT : - H 2 S O 4

CS 2 : - SODIUM SULPHATE

43

LIQUID CHLORINE

SODIUM SULPHATE

C .S . FLAKES

CAUSTIC SODALYE

H2 SO4

H C I

PRODUCT VARIETY

MARKETING OBJECTIVES :- TO have a highly delighted customer base. TO develop committed , target oriented internal customer supplier relationships. TO ensure cost effective, profitable marketing operations. TO maximize realizations , through focus on direct sales and reduced logistics. TO develop customer centered , profit oriented long term marketing strategies . TO ensure transportation of goods in strict adherence of safety and environmental

guidelines. TO ensure timely redressal of customer complaints / grievance.

PROCESS TO MEET OBJECTIVES :-

Market environment analysis. Customer requirement need gap analysis. Strategic planning and budgeting . Production delivery alignment. Systems improvements . Customer satisfaction assessment . Internal customer - supplier relationship assessment . Review mechanism .

ACTION PLAN :-

Periodic market visits . Strengthening relations with buyers-direct sales. Reducing distant sales . Reduced credit days -encouraging cash sales . Minimizing inventories . Better co-ordination with co producers. Dedicated transporters. Effective utilization of toner charges. Optimize Hydrogen utilization.

44

CUSTOMER SUPPORT SERVICES :-

REDUCE

45

PERIODIC CUSTOMER MEET

PROVIDE TECHNO-COMMERCIAL

PLANT VISITMAJOR BUYERS

PERIODIC CUSTOMER SATISFACTION SURVEY.

IMPARTINGGOOD PRACTICES OFWCM / TPM

OTIF ANDEFFECTIVECOMMUNICATION.

SUSTAINABLERELATIONS

EFFECTIVEDISTRIBUTION AND LOGISTICNETWORK

BULDINGPERSONELSUPPORT

PERIODIC CUSTOMERSATISFACTION SURVEY. C-8

Product Planning and Development

“Product Planning determines the characteristics of the product best meeting the consumers numerous desires, characteristics that a stability, to products and incorporate this characteristics into the finished products.”

-- Johnson

Product planning involves three important considerations:1. The development and introduction of products2. The modification of the existing products3. The elimination of unprofitable products.

IR&IL Co. plans its product design according to the demand of the clients, market situation, price of the product, its competitors.

Product Life Cycle:A company’s positioning and differentiation strategy must change as the product, market, and competitors change over time.

IR&IL Co. is passing form maturity sate. Hence, this company can make changes in its product and technology by adopting new machines like horizontal spinning machine and pot spinning yarn process.

Because of the technology adaptation, absorption and innovation the benefits derive by the IR&IL Co. are:

Quality improvement in existing range Development of new market segment Improvement in process, cost control and productivity Improvement energy efficiency Reduction in import material consumption.

New Product DevelopmentNew product development shapes the company’s future. Given the rapid changes in tastes, technology and competition a company can’t rely solely on its existing products.

Companies that, fails to develop new products are putting themselves at great risk. Company can a new products though acquisition and development.

46

IR&IL Co. has made efforts in technology absorption and in specific areas that bring: Development in its rayon division, i.e.

Developing new shades of Spun ye Yarn Enhancement of Soium sulphate recovery Development of new products, i.e. Flat Yarn

development in carbon Black division development in textile division

BrandThe American Marketing Association defines brand is:“A name, term, sigh, symbol or design or a combination of them, intends to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.” Thus brand identifies the sellers or makers.

With six of the foremost name in the apparels business into its fold, Indian Rayon is today the largest branded apparel Co. in the country. The portfolio includes leading brand names like Louis Phillipe, San Frisco, Van Heusen, Allen Solly, Peter England, and Byford – together making Indian Rayon the Undisputed Market Leader for branded men’s wear.

PackagingIt includes the activities of designing and production the container for a product. The container is called the package. In recent years, product safety has also become a major packaging concern. Companies are also realizing the power of good packaging to create instant consumer recognition of the company or brand.

Packaging system IR&IL Co.: Cones (2 to 2.1 kgs. each), Bobbins (2.5 to 2.7 kgs. each), Hanks, Cakes All wrapped in transparent polythene sheets Each cartoon to contain 24 cones Best logistic management to suit the clients requirement and ensure timely

delivery.

Packaging Procedure of IR&IL Co.: The cartoons which have been filled by inspection side are first brought to the

weighing balance of packing of 50 kg and than passé to the computer slip. Important details of slip are stenciled on the cartons in order to meet excise dept

requirement. These cartons are than rechecked for weight, packing slip and stenciling. After polypropylene packing cartons are transported to store room for Sales dept

LabelingSeller must label products. The label maybe a simple tag attaché to the product or and elaborately design graphic that is part of the package. Label performs several functions:

1. It identifies the products or brand47

2. It grades the product.3. it describes the product4. It also promotes the product.

In IR&IL Co. label carry only the brand name or and information regarding the quality of the yarn as per denier.

48

C-12

Marketing Research

“To manage a business well is to manage its future; and to manage the future is to manage information.”

-- Marion Harper

Marketing Research specifies the information needed to address marketing issues, designs the methods for collecting information, manages and implements the data – collections process, analyzes the results, and communicates the finings and their implications.

IR&IL Co., in its initial stages were using the service of professional persons and sponsor trade delegation for the purpose of market research. But thereafter from 1988, they installed their own Quality Control department for market research. The company is also sending its higher level executives to the foreign countries for the purpose of survey and market research.

The form of marketing research adopted by the company is continuous research. It has also adopted survey method.

IR&IL Co. has its own Research and development dept. That undertakes market survey and functions as per the trend of the market. This ept. enables the Co. to carry out the productions of yarn and various chemicals as per the demand of the customer and market condition.

49

Market Segmentation

“Market Segmentation consists of taking this total heterogeneous market for the product and dividing it into several sub-marketer segments each of which tens to be homogenous in all the significant aspect.”

-- Willliam Stanon

The company identifies different ways to segment the market and develops the profiles of the resulting market segments.There are two approaches regarding Market Segmentation:

People Oriented Approach Product Oriented Approach

IR&IL Co. uses ‘People Oriented Approach’ method for Market Segmentation. They classify their consumer on the basis of place, income, geographical location, etc.

The branches of IR&IL Co. are located at Ahmebabad, Delhi, Mumbai, Amritsar, Surat, Bangalore, and Madras. Its head office is situating at Mumbai which takes all the decisions regarding the company’s products. There are different manufacturing companies that consumes and demand for the specific type of yarn of very fine quality. This demand for yarn differs from company to company on the basis of their handloom production. So, this company has segmented the total market on the basis of product application consumer industry wise.

The IR&IL Co.’s marketing office is at Mumbai. The company has various types of segments. They are selling its product in India as well as exporting in many countries.

Branches in India:Surat Delhi Mumbai VaranasiBanglore Amritsar Calcutta Veraval

Branch Abroad:Korea Italy Africa Saudi Arabia Bangladesh

The above mentions are the major market of IR&IL Co. There are various other branches of IR&IL Co. spread over the world.

50

Pricing Policy

Pricing is a key factor, which remarkably effects the sales operations. Price may be define as, “The value of the product attributes expressed in monetary terms which a consumer pay or is expected to pay in exchange and anticipation of the expected or offered utility.”

The firm has to consider many factors in setting its pricing policy: Pricing objective Determining demand Estimating costs Analyzing competitors prices and offers Pricing methods (selecting) Selecting final price

Price is the only element in the marketing – mix that produces revenue.

IR&IL Co. has not adopted any clear pricing policy but it follows the mixture of following pricing strategy:

Competition oriented pricing policyUnder this policy all the manufacturers meet together at Mumbai and they fix maximum price level by negotiating with each other. Sometimes the Co. also uses the prestige pricing method because it is believe that the product with higher quality can attract the customer with the higher prices.

Demand oriented pricing policyUnder this policy the company uses the method of pricing at market. This helps to avoid the price competition and price war in the market.

Cost oriented pricing policyUnder this policy the company uses the method of target pricing. It fixes a target return of total cost. It uses break even analysis for deciding cost plus pricing which helps it in e determining the level of output.

51

C-17

Promotional Tools

“Promotion consists of those activities that are designed to being a company’s goods or services to the favorable attention of customer.”

Every company is inevitably cast into the role of communicator and promoter.

Sales Promotion

Companies use sales – promotion tools to create a stronger and quicker response.

There is a separate organization, which jointly made efforts for sales promotion and this organization is followed by IR&IL Co. This organization is known as “The Silk and Rayon Textile Export Promotion Council.”

The head office of IR&IL Co. does all the activities of the sales promotion. It promotes its sales via dealers i.e. the product is sale thought middle man.

Following tools have been use in this method:

Buying allowance discount Display allowance Dealers contest Concession on the net sales (25 Free gift.

52

Advertising

“Any paid form of non-personal communication of ideas, goods or services by business firm identified in the advertising message intend to lea to sale immediately or eventually.”

-- American Marketing Association

Advertising is basically used for: Creating or enhancing goodwill Preparing ground for new product Creation of demand Facing the competition

IR&IL Co. is very sound company producing industrial product. Major factories producing rayon yarn in India are under one management i.e. The Birla Group. The Aitya Birla Group has covered near about 75% of the yarn market. Thus there is no question of advertising.

Rayon yarn is use as a raw material in textiles industries that are not affected by any media of advertisement and that is the reason why the company is not advertising its product.

The company publishes magazines, which depicts various facts and figures of companies manufacturing process, EXIM policy, pricing policy, strategies, etc. I short; the company adopts the direct advertising method.

Transportation

The IR&IL Co. uses road way and railway for transportation. The products are distributing though trucks. The unit utilizes contract carriers. They give contract to transport agencies. Transportation is one by truck up to Mumbai, but above Mumbai the product is transported by rail.

It pays Rs. 3.24 per tone for a kilometer. The unit faces transportation problem during monsoon season.

53

C-20

Channel of distribution

“The middleman is not a hire link in a chain forgets by a manufacturer, but rather and independent market, the focus of a large group of customers for whom he buys.”

-- Phillip McYey

IR&IL Co. has adopted its own sales branches and sales offices in context of its channel distribution. The company has selected the distribution channel keeping in view the demand of the customer and the current market trend.

In IR&IL Co. the main product is Rayon Yarn so, this unit utilize zero level (direct selling) and one level of channel of distribution. They are conduction the sales activity with the help of their own sales depots and agent’s dealers, sub dealers etc. in different cities and different state.

IR&IL Co.’s sales marketing office is at Mumbai which performs the functions of selling the product of the company. The marketing office collects all the orders from the twelve different sales branches. All the sales branches of IR&IL Co. maintain the facilities like storage, after sales service etc.

IR&IL Co. also produces chemical along with the yarn like sodium sulphite, sulphuric acid, and carbon-di-sulphide are distributed though dealers and selling agent.

Dealing with competitors

To be successful, the company must o a better job than its competitors of satisfying target consumers. Thus, marketing strategies must be adapted to the needs of consumers and also to the strategies of competitors. Base on its size and industry position, the company must fin the strategy that gives it the strongest possible competitive advantages.

The IR&IL Co. enjoys the monopoly in the market because of its total market of Rayon yarn industry. The Indian Rayon covers almost 25% of the market and the Aitya Birla group have also other two units of rayon yarn so altogether three units covers the 75% units of the total market.

Competitors of IR&IL Co. are Century Rayon National Rayon Baroda Rayon South Indian viscose Kesavram Rayon Shriram Rayon

54

Company Sales Office Customers

International Marketing

International marketing refers to the Organizations which are international owned and which operate in more than one country, though subsidiary and associate companies.

“A traveler without knowledge is like a bird without wings.”-- Sa’DI’ Gulistan

IR&IL Co. Exports its product to the various countries through its own officers in abroad companies. Being well diversified, Birla management group has its own offices in various countries and abroad. It manufactures the product which is in great demand in almost all the countries of the world.

It also imports its raw material called pulp from Canada which is use in the production of Rayon Yarn. They have established their own training house in foreign country which enables IR&IL Co. to get export order and create export demand. The Co. is having its various branches aboard too. Over the above this the company’s export contributes 17% to the divisions revenue.

55

Future Plan of Action

Development of spatiality yarn Eco and energy auditing Improvement in intrinsic quality of yarn Developing new shades of Spun ye Yarn Development in the quality of existing range.

Achievements

Rayon division has bagged “Gold Trophy” for highest export from Synthetic and Rayon Textile Export Promotion Council

The “Certificate of Merit – 2003” of national Energy Conservation of VFY

“First Prize” of National Energy Conservation Award – 2003 for Chlor-Alkali Sector both from Ministry of Power, New Delhi

The prestigious “Greentech Environment Excellence Silver Award 2002-03” in Chlor-Alkali Sector for outstanding achievement in the field of Environment from Greentceh Foundation, New Delhi

The Gujarat Safety Council has conferred upon the “Certificate of Honor – 2002” upon the division base on its safety record and performance.

The caustic division has achieved the greentech award in 2004.

56

HUMAN RESOURCES DEPARTMENT

57

Human Resources Department

Sr.

No.

Particulars Page

No.

1 Introduction 58

2 Organization Structure of Personnel Department 59

3 Manpower Planning 60

4 Job Description 61

5 Recruitment and Selection 62

6 Training and Development 63

7 Performance Appraisal 64

8 Wage and Salary Administration 65

9 Promotion and Transfer 66

10 Trade Union 67

11 Corporate Social Responsibility 71

58

Introduction

Personnel management is a link between the op management and the workers or we can say that its acts like bridge between the employees and the employers. It is basically concerned with human relationship within the organization and helps in maintaining smooth relationship between employee and employers. It is the art of getting things done by other people.

Manpower is the most important resource among all the resources. Factors such as funs, machineries, technological advancement etc. that are require in order to run and organization, nothing will work if a organization doesn’t have sufficient manpower and suitable managerial personnel and practices.

Human resource is the greatest asset of any business enterprise. The workers are the heart of the organization. It is the manpower that operates the machines, processes the raw materials into a finished product and makes it possible to sale in the market. Henceforth we can say that personnel management is the most essential department of and organization in order to have a proper manpower planning, organizing, staffing, directing and controlling in order to achieve individual, social and organizational goals.

With reference to Indian Rayon & Industries Ltd., the personnel department of which is divided into two divisions i.e. HR & Training and the other one is personnel department.

PERSONNEL EPARTMENTIt mainly deals in the process of recruitment of manpower, and act as a consulting agent between the officers and the workers.

HR & TRAININGIt deals with the staff members of and organization and is accountable to the vice president.

59

Organization Structure Of Personnel Department.

60

PersonnelDepartment

Vice President

Personnel H. R. D.

General Manager Manager

Chief Manager Sr. Officer

Welfare Disp. Labor Office

Dy. Manager Manager

Labour Manager Time Officer

Sr. Officer Sr. Officer

Manpower Planning

“The process of determining manpower requirements and the means for meting those requirements in order to carry out the integrate plan of the organization.”

-- Coleman

IR&IL Co. uses ‘PURTA’ which is known as the system of control though budgets and standards in modern cost accounting and management costing. ‘PURTA’ summaries the objective of the whole organization. All the dept. that is need of additional requirement of manpower has to contact the Personnel dept. Which makes the arrangement for the require manpower. Every month the Personnel dept. issues personnel requisition from the dept. and this forecasts its manpower demand of each dept. accordingly the requirement are made.

In IR&IL Co. the workers are divided into three categories. – Permanent, Badli and Temporary.IR&IL Co.’s Man Power Resource Is:

Permanent 2144Badli 785Staff 533

-------------------------------------------Total Manpower 3462

61

Job Description

The job description means to give the information and guidance to candidate about his particular job for which he has been selected.

IR&IL Co. started the Job Analysis and Evaluation (JAE) initiative across all the businesses with an objective of creating clear documentation of roles and responsibilities, to help to clarify accountabilities and expectation from the jobs. And also facilitate goal setting and performance measurement of all managerial personnel.

In IR&IL Co. the duties and responsibilities of administrative dept. are collected though job description which is as under:

Observation of employees at the time of their work Discussions with departmental head and outside experts.

In IR&IL Co. the employees are categories as :

CATEGORIES OF EMPLOYEESTotal 9 categories – from Senior Vice President to AssistantCATEGORIES OF WORKERSTotal 4 categories – Unskilled, Semi skilled, Skilled, Highly skilled.

MANAGERIAL LEVELThose personnel that re selected at this level are being made well converse with their:

Nature of job Duties n responsibilities Job summary Position and status Working condition

62

Recruitment and Selection

RECRUITMENT“Recruitment is process to discover the sources of manpower to meet the requirement of the staffing schedule and to employ effective measures for attracting that manpower in adequate numbers to facilitate effective selection of and efficient working force.”

The recruiting procedure of IR&IL C. consists of three segments: Recruitment of Workers Recruitment of Executives and Managerial Staff Recruitment of Technical Personnel

So far as IR&IL Co. is concerned the recruitment procedure is directly depend upon human forces and is relate to the selection of well qualified personnel’s

SELECTIONThe selection procedure is concerned with securing relevant information about an application.

IR&IL Co.’s recruitment and selection procedure for blue collar force is as per the labor laws. For the recruitment of labor in the Co. it is essential that he should acquire the certificate of ITI examination.

Workers are selected by the concern supervisor and the labor welfare officer. Physical fitness, attitude for work, etc. are considered at the time of selection.

With reference to the method, the IR&IL Co. use the indirect method more frequently for the recruitment of its employees. Some times the IR&IL Co. also uses the Third Party Method at the time of the selection of high level personnel like general manger, secretary, and vice president.

Recruitment and selection procedure for white collar force.White collar job refers to the selection of officers and managers. For this purpose the IR&IL Co. is largely depend upon the fresh candidate and for that the Co. is following the formal selection procedure:

Application Receipt Employment Test Group discussions Final Interview Medical Examination Reference Checked Orientation

63

Training and development

TRAINING“Training is a process of learning a sequence of programmed behavior.” It is a short-term process utilizing a systematic and organizes procedure by which non-managerial personnel learn technical knowledge and skill for definite purpose.

TRAINING FOR THE WORKERSThe HR department of the IR&IL Co. prepares schedule for training of the workers in order to make them familiar with their task and to develop the job. The main purpose of the company behind imparting training is to make the workers well converse with the new technology.

TRAINING FOR CLERK AND TECHNICAL STAFFThe IR&IL Co. is not imparting any training courses as far as clerical staff is concerned. But the supervisors are trained for:

Gaining knowledge of responsibility Cost control and cost effectiveness Knowledge of all disciplinary action Development of leadership quality

Timing Schedule for training of workers and staff in IR&IL Co.:

No. of Trainee No of daysWorkers 2933 3731Staff 892 2199

0

500

1000

1500

2000

2500

3000

3500

4000

No. of Trainee No of days

Workers

Staff

The other purpose of IR&IL Co. behind imparting training is: To create awareness among the workers regarding the quality of products and to

improve knowledge thereby. Enhancement of technical knowledge and various safety measurement techniques. To improve the discipline of the worker, good conduct and job responsibility

64

Performance Appraisal

It is the process of evaluating the performance and qualifications of the employee in terms of the requirement of the job, for which he is employed.

The main aim of the evaluation system is to identify the performance gap (if any). This gap is the shortfall that occurs when performance does not meet the standard set by the organization as acceptable.

IR&IL Co. the management is using open system of studying performance appraisal system. When a new candidate is recruited, the management examines his performance for two years which is called as the apprentice period.

In this Co. normally three years of service period is considered to be qualified period for getting promotion. At the meanwhile of this three years the performance of the employee is continuously observed and is taken into account while giving promotion. During this period the management prepares the confidential report of the performance and behavior of the candidate.

The performance appraisal system adopted by IR&IL Co. is traditional one. It conducts the performance appraisal program in the month of May every year and all the employees are divided into two categories i.e. staff members and operating workers.

65

Wage and Salary Administration

“Wage and Salary administration” refers to the establishment and implementation of sound policies and practices of employee compensation.

Wage Administration of IR&IL Co.It includes wages of operating manpower. Wage sheets are prepared by Time Office and payment is done on the basis of Time Rate. In case of late comers, the part of the amount form their wages are deducted. Payment of wages to the workers is done dept. wise and the period of payment is normally between 4th and 10th of every month.

Salary Administration of IR&IL Co.Salary Administration involves salary of administration staff and electrical personnel. Salary sheets are prepared in account office and payment is done on the basis of time rate and net attendance.

Besides salary the Co. also provides various other incentives to its employees. Increments are given every three year. Company has graded its employees according to their job level. There are total 11 grade levels as per the rationalization, career path and qualification of the employees. It provides the car, housing, medical and other facilities as per the grade level of the employee.

The State Govt. has revised rates of minimum wages for Contract Labor w.e.f. 01.04.2004 to 30.09.2004 as under and these rates are supposed to be followed by the IR&IL Co.:

Basic/day(Rs/ps)

DA/day(Rs/ps)

Total(Rs/ps)

Unskilled 71.18 10.40 81.58Semi-skilled 72.45 10.40 82.85Skilled 73.71 10.40 84.11

66

Promotion and Transfer

PROMOTION“A promotion is the transfer of an employee to a job which pays more money or one that carries some preferred status.”

-- Scott and Clothier

IR&IL Co. Have sound personnel policy. The policy is a blend of seniority and merit consideration stressing more emphasis on seniority. And employee is promoted considering his ability to deal with problems occurs among the subordinates and seniors as well as level of proficiency, loyalty, etc.

Promotion is given after every 3 or 4 years on the basis of disciplinary action and by performance appraisal system.

Employees are promoted within the organization in term of vacancies or creation of new post. IR&IL Co. adopts to take the advance of the employees, one very well aware of companies policy and production procedures in term to motivate them.

TRANSFER“A lateral shift causing movement of individuals from one position to another usually without involving any marked change in duties, responsibilities, skills needed or compensation.”

IR&IL Co. runs various unit located at different places within the country, yet under this unit transfer practice is not followed. Sometimes some workers are transferred from one department to another because of physical fitness problem.

67

Trade Union

“A trade union is any combination of persons, whether temporary or permanent, primarily for the purpose of regulation the relations between workers and employers, or between workers and workers, and for imposing restrictive conditions on conduct of any trade or business, and includes the federation of two or more trade union.”

According to Sec. 2 (b) of the Trade Union Act of 1926

In IR&IL Co. there are more than 4000 employees in the organization and for the state of the protection of their rights that have formed their trade union. Presently there are three trade unions.

1. Indian Rayon Employee Union (IREU)2. Indian Rayon Karmachari Mandal (IRKM)

Which is associated with the Hind Mazdoor Sabha Karmachari Mandal3. Rayon Mazdoor Sangh (RMS)

Which is associated with Bhartiya Mazdoor Sangh

Not only the workers are the member of trade union but the staff employees have also got the membership of trade union. The strength of IREU is about 60% of total working force, the rest of two uses to follow the decision and negotiations made by the IREU.

The advantage of registered trade union is that police can’t arrest any representative of trade union. Henceforth company has been keeping a good relation with trade union.

Industrial RelationIt refers to a dynamic and developing concept which is not limited to “the complex of relations between trade unions and management but also refers to the general web of relationship. Normally obtained between employers and employees - a web much more complex than the simple concept of labor-capital conflict.”

As it is useful for the organization, the IR&IL Co. has also developed good and appreciable industrial relation.

There exist three Trade Unions all over the unit that are:1. Indian Rayon Employee Union2. Rayon Mazdoor Sangh3. Indian Rayon Karmachari

The last major strike in this unit was in 2001 after that no strike has been occurred till now. This strike was settled down by the Memorandum of Settlement which was made by the Co. along with the Labor Union. The strike was basically in reference to the wage payment of the worker and bonus.

68

Grievance Handling“A grievance is any discontent of dissatisfaction, whether expressed or not, whether valid or not, arising out of anything connected with the company which and employee thinks, believes or even feels to be unfair, unjust or inequitable.”

-- Jucius

To handle and solve such grievance the IR&IL Co. have special procedure:1. In IR&IL Co. the workman will take his grievance in oral or written to his

immediate superior, such as section head. In case if the complaint is against the immediate supervisor it should be written and submitted to the next higher authority.

2. If the decision of his immediate superior on the next higher authority is not satisfactory, he has to forward to the manager of the department.

3. The management brings out the situation to the grievance shift if the workers are not satisfied. Or reply is not received within seven working days. If the solution is satisfactory the copy of it is forwarded to grievance committee, otherwise the

4. matter will be included in the agenda for discussion at the next meeting of the

grievance committee.

Employees Services & Welfare Activities & Amenities

To motivate the employees and to increase their morals it becomes very necessary for every company to perform the activities which can be helpful in the achievement of this motive and there by the efficiency and satisfaction of the employee can be raised accordingly.

In this regard IR&IL Co. provides the following facilities:

QUARTERS FACILITLY:The IR&IL Co. gives quarter facilities to its employees – the staff

as well all as the workers. Basically this quarter a facility is given on the basis of the category of employee.

The management staff and the executive level employees are also given the housing facility but it would be with some extra and specific facilities. IR&IL Co. has provided these facilities to almost 90% or its staff level employees.

RECREATIONAL AND ENTERTAINMENT FACILITY:The company has its won auditorium in which it conducts different

types of programs and games on different type of occasions especially for its staff members. It also provides many type of sports facility to its workers. There are lawn tennis courts, table tennis, cricket grounds, etc. it has competitive players units in its cricket team. The company also arranges Rayon Cup cricket tournament every year between the very large companies in Saurashtra.

69

WELFARE CENTER:The centre was established in 1993 for the benefit of workmen and

their families. The facility includes games like volley ball, tennis, carom, chess, reading room and library. For ladies embroidery and tailoring classes are conducted as a continuous activity.

INDEPENDENCE AND REPUBLIC DAY CELEBRATION:The company celebrates the Independent & Republic Day every

year. On this day the program of the national flag hosting is followed by sweet distribution to all the employees of the company.

CREDIT COOPERTIVE SOCIETY:Members are given loan facility up to and amount of Rs. 60000 at

the nominal interest rate. This is managed by cooperative society.

DEATH RELIEF FUND:In case of death of any employee while working in the company,

management provides his family with Rs. 4000 as funeral expenses. The company also deducts Rs 10 of all the employees and collects about Rs. 50000 and provides to the dead person’s family. And the company itself also gives Rs 1400 along with the amount received from United India Insurance Company.

SCHOOL FACILITY:It has set up a school both English Medium as well as Hindi

Medium. English Med. Is up to 12th standard having both Science and Commerce stream and affiliated with Gujarat Board (GSEB). Every year 2000 approx. number of students is admitted over here out of which more than 50% of the students are employees’ children.

Whereas Hindi Med. School has been set up four years back. It is the only Hindi Me. School in the entire district. It is upgraded by one standard every year. 50% of the school fee is reimbursed by the company of the employees children.

LIBRARY FACILITY:Company is having its own library which contains useful books

related to all the sectors of the study and magazines of all kinds. It also provides internet facility to its employees.

BIRLA MANDIR:It is been set up by Birla Group for spiritual and religious

activities. It is one of the popular land mark and religious spot in Veraval.

LABOUR WELFARE FACILITY:Welfare activities are one of the major activity, which is closely

related with IR&IL Co. the company is doing various types of welfare activities.

70

CANTEEN FACILITY:The company has followed the Factories Act that reveals that

wherever there are 250 or more workers working, there should be a canteen facility for them. This canteen facility runs on no profit no loss bases. It provides snacks, tea and coffee at nominal rate to the employees.

FIRST AID FACILITY:IR&IL Co. had its won dispensary in the factory, besides first aid

box, which is being provided in every dept. the dispensary is taking nominal fee from the employee and its family. The co. had its own Ambulance too.

REST ROOM FACITLITY:IR&IL Co. has provided a rest room where the employees used to

take rest and can have their lunch during their intervals.

VOLUNTARY RTIREMENT SCHEME (VRS)VRS would be shortly introduced at IR&IL Co. for the retirement

of the surplus manpower. This would be applicable to both staff and the workers of the company provide with employee is above 40 years of age or have minimum of 10 years service.

71

CORPORATE SOCIAL RESPONSIBILITY

vision

"To actively contribute to the social and economic development of the communities in which we operate. In so doing, build a better, sustainable way of life for the weaker sections of society and raise the country's human development index."

— Mrs. Rajashree Birla, Chairperson, The Aditya Birla Centre for Community Initiatives and Rural Development

Making a difference

Before Corporate Social Responsibility found a place in corporate lexion, it was already textured into our Group's value systems. As early as the 1940s, our founding father Shri G.D Birla espoused the trusteeship concept of management. Simply stated, this entails that the wealth that one generates and holds is to be held as in a trust for our multiple stakeholders. With regard to CSR, this means investing part of our profits beyond business, for the larger good of society.

While carrying forward this philosophy, his grandson, Aditya Birla weaved in the concept of 'sustainable livelihood', which transcended cheque book philanthropy. In his view, it was unwise to keep on giving endlessly. Instead, he felt that channelising resources to ensure that people have the wherewithal to make both ends meet would be more productive. He would say, "Give a hungry man fish for a day, he will eat it and the next day, he would be hungry again. Instead if you taught him how to fish, he would be able to feed himself and his family for a lifetime."

Taking these practices forward, our chairmanMr. Kumar Mangalam Birla institutionalised the concept of triple bottom line accountability represented by economic success, environmental responsibility and social commitment. In a holistic way thus, the interests of all the stakeholders have been textured into our Group's fabric.

The footprint of our social work today straddles over 3,700 villages, reaching out to more than 2 million people annually. Our community

work is a way of telling the people among whom we operate that We Care.

72

strategy

Our projects are carried out under the aegis of the "Aditya Birla Centre for Community Initiatives and Rural Development", led by Mrs. Rajashree Birla. The Centre provides the strategic direction, and the thrust areas for our work ensuring performance management as well.

Our focus is on the all-round development of the communities around our plants located mostly in distant rural areas and tribal belts. All our Group companies —- Grasim, Hindalco, Indian Rayon, Indo Gulf and UltraTech have Rural Development Cells which are the implementation bodies.

Projects are planned after a participatory need assessment of the communities around the plants. Each project has a one-year and a three-year rolling plan, with milestones and measurable targets. The objective is to phase out our presence over a period of time and hand over the reins of further development to the people. This also enables us to widen our reach. Along with internal performance assessment mechanisms, our projects are audited by reputed external agencies, who

measure it on qualitative and quantitative parameters, helping us gauge the effectiveness and providing excellent inputs.

Our partners in development are government bodies, district authorities, village panchayats and the end beneficiaries -- the villagers. The Government has, in their 5-year plans, special funds earmarked for human development and we recourse to many of these. At the same time, we network and collaborate with like-minded bilateral and unilateral agencies to share ideas, draw from each other's experiences, and ensure that efforts are not duplicated. At another level, this provides a platform for advocacy. Some of the agencies we have collaborated with are UNFPA, SIFSA, CARE India, Habitat for Humanity International, Unicef and the World Bank.

WORKING OF E.S.I. SCHEME:E.S.I. means Employee’s State Insurance Scheme. It is necessary

in all the companies. According to 1948 Act, the company has provided insurance facilities to all the workers. Under this Insurance Policy, the company deducts certain amount from the salary of the workers every month.

The amount that is kept under this policy is being used at eh time of the occurrence of any accident or any kind of illness or injury to the worker. According to this scheme the workers can get salary up to two months without doing any work. In this Co. there is no E.S.I. Scheme, but the employees are insured in Oriental Insurance Co.

73

PROVIDENT FUND SCHEME:Provident Fund Scheme of IR&IL Co. for the employees is as per

the rules and regulations of the Govt. the provident fund refers to eh compulsory saving of the employees from their own salary. The company follows the law of 1952 in terms of PF Scheme. According to this scheme, employees will get the amount which he has saved at the time of his retirement in terms of PR.

The company is generally regular and depositing with the appropriate authorities’ undisputed statutory dues including PF. Out of this PF fund, the employee can get the loan or can withdraw the required amount form it whenever he is in need. Round about 10% of the amount from the employees’ salary is reserved as PF.GROUP PERSONAL ACCIDENT POLICY (GPAP):

1. This policy is for tall the staff members.2. This policy covers the damages of every accidental injury while on

employment.3. The premium amount shall be borne by the Company.

WORKMEN CONPENSATION:All the workmen of the company are compensated for damages

caused by any injury while performing his job, as per the provisions of Workmen Compensation Act 1923.

74

FINANCE DEPARTMENT

75

FINANCE DEPARTMENT

Sr.

No.

Particulars Page

No.

1 Introduction 76

2 Organization Structure & Finance Department 77

3 Capital Structure 78

4 Capitalization 79

5 Leverage 80

6 Fixed Asset & Capital Budgeting 81

7 Working Capital & Receivable 82

8 Cash Management 85

9 Future Plan & Strategies 89

10 Balance Sheet 90

11 Profit & Loss a/c 91

76

Introduction

Financial management can be defined as:The management of the finances of a business / organization in order to achieve financial objective.

Taking a commercial business as the most common organizational structure, the key objectives of financial management would be to:

Create wealth for the business Generate cash, and Provide and adequate return on investment bearing in mind the risks that the

business is taking and the resources invested.

There are three key elements to the process of financial management:1. FINANCIAL PLANNING:

Management need to ensure that enough funding is available at the right time to meet the needs of the business. In the short tem, funding may be needed to invest in equipment and stocks, pay employees and fund sales made on credit.

In the medium and long term, funding may be required for significant additions to the productive capacity of the business or to make acquisitions.

2. FINANCIAL CONTROLFinancial control is a critically important activity to help the business

ensure that the business is meeting its objectives.

3. FINANCIAL DECISION-MAKINGA key financing decision is whether profits earned by the business should

be retained rather than distributed to shareholders via dividends. If dividends are too high, the business may be starved of funding to reinvest in growing revenues and profits further.

77

Organization Structure of Finance Department

78

Board Of Director

Executive President(Rayon Division)

President & CFO(Corporate Finance

Division)

Sr. Vice President(Finance & Comm.)

GM Finance

AssistantManager

Cash

Sr. Manager(A/C)

Assistant Manager

Salary

Assistant Manager Creditor

Officer Officer Officer Officer OfficerOfficer

Capital Structure

Capital structure may be defined as the combination of debt and equity that leads to the maximum value of the firm.

“Capital structure refers to the mix of long-term sources of funds such as debenture long-term debit, preference share capital and equity share capital including reserves and surplus. The company should plan and optimum capital structure.”

Particulars (Rs. In Crores)2005 2006

Share Capital 59.88 65.80Reserves & Surplus 1294.18 1387.67Secured Loans 493.03 569.87Unsecured Loans 62.16 92.68debentures 290 353

Share Capital of the IR&IL Co. remains same but the secured loan granted by the IR&IL Co. has increased by 54.15% as compared to previous year. Also its Reserves & Surplus ahs increased by 10.92% which indicates that the Co.’s sale has increased by its previous year. This ultimately indicates that the Co.’s profit has also increased.

79

Capitalization

Capitalization means the total amount of Co.’s capital or value of its capital stock. The total amount of Co.’s capital should be enough to meet its present and future needs.

For the Co. the Book value and Real value of Share are two main components or assessment of Co.’ financial position which can be calculated as per under.

Year EPS Rs.2005-2006 21.452004-2005 192003-2004 18.592002-2003 20.712001-2002 7.042000-2001 11.441999-2000 9.62

Book value per share is Rs 212

Book value = Equity share + Capital reserves & surplus No. of Equity Shares

= 59.88 + 1294.18 5.98

= Rs 226.43

The closing Market Price of the Co. per share is Rs 188.95 as on March –’05 which is less than its Book Value per share

From this we can say that the Co. if facing Over Capitalized situation. The above graph depicts that the Co.’s Earning Per Share has decreased by 0.76% as compared to its previous year.

The reason for decrease in the value of Co. Presence of its various competitors in the market and especially China Rayon Decrease in the price of the Yarn

80

Leverage

The employment of and asset or source of funds for which the firm has to pay a fixed cost or fixed return is termed as Leverage.There are two types of leverages:

Operating Leverage Financial Leverage.

FINANCIAL LEVERAGE:The leverage associated with financial activities is called Financial Leverage. It represents the relationship between the firms’ earnings before interest and taxes and the earning available for ordinary shareholders.

It is defined as the ability of firm to use fixed financial charges to magnify the effects of change in EBIT on EPS

IR&IL Co. has posted a superior financial performance during the year 2003-2004. The revenue has grown to 1573.90 crores against 1442.50 crores in the previous year.

Financial Leverage = EBITEBT

= 168.83158.09

= 1.07%

As financial Leverage ration is less than one it indicates that Co. is using its debt effectively.

OEPRATING LEVERAGEThe leverage associated with the investment (asset acquisition) activities is referred to as Operating Leverage. It is determined by the relationship between the firm’s sales revenue and its earning before interest and tax (EBIT).

Operating leverage results from the existence of fixed operating expenses in the firm’s income stream. With fixed cost the percentage change in profit accompanying a change in volume is greater than percentage change in fixed asset.

81

Fixed Asset

As the name suggest, such assets are acquired to be retained in business on long term basis to produce goods and services and are not for resale.

IR&IL Co. has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. All the fixed assets have not been physically verified by the management during the year but there is regular program of verification which is r reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.

Capital Budgeting

The system of Capital Budgeting is employed to evaluate expenditure decisions which involve current outlays but are likely to produce benefits over a period of time longer than one year.

These benefits may be either in the form of increased revenue or decreased cost.

There are various methods of Capital Budgeting: Internal Rate of Return Average Rate of Return Profitability Index Pay Back Period Net Present Value

IR&IL Co. undertakes Capital Budgeting every year with the help of financial experts of financial dept on basis of pay back period methodology.

The Co. always aims at increasing and expanding the installed capacity of Rayon Yarn production. It constantly tries for its success. At present the installed capacity of plant is 15000 Tons/annum.

At present the main objective of IR&IL Co. is replacement and modernization of machine and fixed assets and business expansion by adding new machineries and technology. This decision is taken by the unit base on Pay Back Period.

82

Working Capital

Working Capital is concerned with management of current asset. It is and important and integral part of financial management as short term survival is prerequisite for long term success.

The divisional management of IR&IL Co. manages the working capital within the broad framework laid by and with consultation of Corporation Finance Division (CFD). Decision regarding the utilization of the current assets is made in accordance with the policy of company.

The operating cycle can be said to be at eh heart of the need for working capital.

Current Liabilities Rs in 2006Crores

Current Assets Rs In 2006Crores

AcceptancesSundry CreditorsAdvances from CustomersInterest accrued but not due on loansUnpaid dividendUnpaid application moneyUnpaid matured depositsUnpaid matured debenturesInterest accrued on above provision

8.69158.06

8.063.18

1.500.190.28

65.39

InventoriesSundry DebtorsCash and Bank balancesInterest accrued on investmentsLoans and Advances

369268

10.23

2.09108.89

Total 245.35 Total 758.21

Working Capital of 31st March 2005:= Current Assets – Current Liabilities= 758.21 – 245.35

= 512.86

83

Receivable

Inventory

Cash

Assessment of the Working Capital

The assessment of the working capital in the IR&IL Co. is done by the CFD with the consultation with the management staff of the Co. and on the basis of the Co.’s previous year experience. This helps to maintain efficiently fund for operation of the organization.

Inventory

“Inventory refers to the stockpile of the products a firm is offering for sale and the components that make up the product.”

The IR&IL Co. is the manufacturing organization, so being manufacturing organization it needs a large among of the inventories for the smoothing of business operation. The Co. invests nearly 48 to 50 percent of total current assets in the inventories.

In the IR&IL Co. the inventory is maintain by finding the actual requirement and the analyzing material, which is scared or not easily meet at the proper time. Then after the Co. decides the optimum level for each inventory based on the requirement. But because Co. has a good image to the supplier, it maintains the three days stock inventories for most of the goods even though the industry standard is seven days.

In IR&IL Co. there is a special storage dept. and separate inventory management force which perform certain functions for efficient management of inventories in the company. It maintains sufficient stock of raw materials in period of short supply and anticipates price change. It helps sales dept. by maintaining sufficient finished goods inventories for smooth sales operation.

The company is maintaining proper records of inventory. No material discrepancies have been noticed on physical verification of stocks as compared to book records.

Inventories 31st March, 2005Finished Goods 108Stores And Spares 14.28Raw Materials 139.23Packing Materials 1.69Work-in-Progress 26.89Waste/Scrap 0.61

Inventory Turnover Ratio = Net SalesInventory

= 1986.07 290.07 = 6.83 times

Cost of inventory is compared on a weighted average or FIFO basis. For the inventories of stores and spares the organization uses the Music 3D system (Multi Unit Selective Inventory Control) of inventory management.

84

Receivables

The term receivable is defined as debt owned to the firm by customers arising form sale of goods or services in the ordinary course of business.

IR&IL Co. sells its products to the industries. So it needs to grant credit to its buyer.

Receivable treated as marketing tool to aid the sale of goods as well as use for protecting the customers form the competitor and attract the new customers and thereby profit.

CREDIT STANDARDSAs per the industrial standard for rayon, the organization runs well on the track of Average collection period.

But because of the core competition in the chemical market the avg. collection period increased and reach near to the 25 to 30 days, so it can conclude that organization investment in receivables is not very high.

The customers are paying its obligation to the organization in time. The default rate is nearly zero in the organization.

Beside all above the organization also evaluate their customers’ financial condition, character and capacity and that’s why the Co. has never incurred the bed debt in its entire history.

CREDIT TERMVFY = 15 daysChemical = 45 days

The collection of the fund is done by HDFC Bank, which plays and agent role. The avg. collection period for the account receivables between 21 to 27 days.

Total debt of company as on 31st March, 2004 is 186.41 crores which have increased as compare to that of the last year’s debt. i.e. 31st March, 2003 was 151.20 crores. So, it can be said that debtors are up by Rs. 35.2 crores. Major addition was on account of insulator domestic marketing.

As a result of the above mention, there is and increase in the Net Sales of the company by 9% as compare to that of last year’s sales.

Receivables Turnover Ratio = Net Sales S. Debtors

= 1860.62 260.90 = 7.13

85

D-15

Cash Management

Generally any organization holds the cash for Transaction motiv. Precaution motive. Speculative motive. Compensating motive.

The IR&IL Co. holds the cash only for the transaction motive. It holds the cash for smoothing the day-to-day operation only. If there is surplus of cash in the Co., it is transferred to the CFD while if there is deficit of the cash in the organization, it borrows it from the CFD and also decision regarding the investment of cash in to Marketable Security is done through the CFD only.

CASH COLLETCIONIR&IL Co. operating in various geographical area of the country. It tries to speed up the cash collection by decentralization with the help of ten ash collection centers all over the India.

CASH DISBURSEMENTSThe disbursement is one through centralized system by the organization. The payment of the bill will be made from the central account (at division place) and form the head office. So the Co. can enjoy the transit time delay using the factoring.

OPTIMUM CASH BALANCE The IR&IL Co. keeps a maximum level of cash balance worth and average payment for three days. If cash is more than its maximum level than the cash if transferred to the CFD and if cash is less than the level than the requirement of the cash is borrowed from the CFD.

IR&IL Co. manages its in a manner that enables the firm to remain in liquidity position at its best.Particulars 31st March, 2006Cash and Cheques in hand and remittances in transit 1.89Balances with scheduled banks:Current AccountsDeposit Accounts

8.060.89

Balances with non-scheduled banks:On current account – SCB(Standard Charted Bank, London)

0.03

Total 10.87

The company has no accumulated losses at the end of the financial year and it has not incurred any cash losses in the current or in the immediately preceding financial year.

86

D-17

Dividend Distribution

Dividend refers to that portion of a firm’s Net Earnings which are paid out to the Shareholders. A major decision of financial management is the dividend decision in the sense that the firm has to choose between distributing the profits to the shareholders and ploughing them back into the business.

In IR&IL Co. the Board has proposed the dividend of Rs. 4.00 per share for the year 2004 - 05. as, the Co. will also pay a dividend tax of 12.81% the total dividend outgo will be Rs. 27 crores in the current financial year.

YearDividendPer Share Payout (%)

1995-961996-971997-981998-991999-002000-012001-022002-032003-042004-052005-06

6.256.755.004.001.003.003.303.754.004.005.00

15.2015.5517.4628.25(2.76)28.8845.4724.0520.5824.0229.08

Profitability Ratio

(1) ROI (Return On Investment) = EBIT * 100 Capital Employed

Year EBIT Capital Employed Ratio (%)2005-06 168.83 1809.62 9.33

(2) ROE (Return On Equity) = EBIT * 100 Equity Funds

Year EBIT Capital Employed Ratio (%)2005-2006 168.83 62.83 268.71

87

Turn over ratio: -

(1) Debtors ratio = Net Sales ------------- Receivables

1986.07 = -------------- 150.25

=

(2) Inventory Ratio = Net Sales

-- -------------- Inventory

1986.07 = -------------- 290.7

=

(3) Receivables Turnover Ratio = Net Sales ------------- S. Debtors

= 1986.07 268.00 = 9.40

88

13.22

6.832

7.41

Financial Ratio: -

(1) Current Ratio = Current Assets -------------------- Current Liabilities

758,210,000 = -------------------- 245,350,000

=

(2) Fixed Assets Ratio = Fixed Assets ------------------- Long Term Fund

823.25 = ---------- 74.16

= 12.1512

(3) Debt Equity Ratio = Debt ------------------- Total Equity

469.75 = ---------- 1161.14

= 0.41 : 1

89

3.09

11.10

0.404

[FUTURE PLAN ]

FOCUS TO EFFICIENT MANAGEMENT OF CASH FLOW / WORKING CAPITAL.

FOCUS TO E V A IMPROVEMENT. FOCUS TO DELTA E V A IMPORTANCE.

STRATEGIES : -

DEVELOPMENT OF WORKING CAPITAL MECHANISM. FINANCIAL PLANNING & BUDGETING. IMPARTING KNOWLEDGE ON E V A , AN EFFECTIVE TOOL TO

MEASUREVALUE CREATION, BY WHICH MANAGERS CAN BE ENCOURAGED TO TAKE ECONOMICALLY CORRECT DECISION.

MAKE THE PEOPLE UNDERSTAND DRIVERS OF VALUE REATION AND EXPLAIN IMPACT OF VARIOUS OPERATIONAL DECISIONS ON VALUE CREATION.

MEASURE VALUE CREATION. TRAINING AND COMMUNICATION TO CREATE AWARENESS AND APPRECIATION FOR PRINCIPLES AND TOOLS FOR VALUE

MANAGEMENT. POST INVESTMENT ANALYSIS.

90

BALANCE SHEET Rs. in crores

(Rs. crore) 2005-06 2004-05 2003-04 2002-03 2001-02

SOURCES OF FUNDS

Shareholders' Funds

Share Capital 59.88 59.88 59.88 59.88 59.88

Reserves & Surplus 1,327.80 1,294.18 1,207.80 1,110.91 1,030.91

1.387.68 1,354.06 1,267.68 1,170.79 1,090.79

Loan Funds

Secured Loans 569.08 493.03 405.81 266.32 443.47

Unsecured Loans - - - 1.58 15.66

569.08 493.03 405.81 267.90 459.13

Deferred Tax Liabilities 121.46 125.52 127.51 126.42 101.20

Total Funds Employed 2,078.22 1,972.61 1,801.00 1,565.11 1,651.12

APPLICATION OF FUNDS

Fixed Assets

Gross Block 1,522.54 1,418.74 1,301.31 1,177.54 1,242.14

Less: Depreciation/Amortization 748.23 663.49 588.53 501.55 491.30

Net Block 774.31 755.25 712.78 675.99 750.84

Capital Work-in-Progress 84.96 55.03 24.69 8.09 10.92

859.27 810.28 737.47 684.08 761.76

Assets held for disposal - - - - 13.52

Investments 811.30 699.66 741.63 514.30 439.79

Current Assets, Loans & Advances

Inventories 369.70 355.00 276.91 245.42 265.43

Sundry Debtors 268 260.90 186.41 151.20 223.26

Cash & Bank Balances 10.23 9.41 13.27 41.30 14.20

Interest accrued on Investments 2.09 - - 0.02 0.06

Loans & Advances 108.89 103.88 93.50 145.85 130.17

758.91 729.19 570.09 583.79 633.12

Less: Current Liabilities & Provisions

Current Liabilities 245.35 228.58 212.74 189.92 188.12

Provisions 39.84 37.94 38.40 34.02 19.76

285.19 266.52 251.14 223.94 207.88

Net Current Assets 473.72 462.67 318.95 359.85 425.24

Miscellaneous expenditure (to the extent not written off)

Marketing / Technical know-how - - 2.95 6.88 10.81

Total Funds Utilised 2,078.22 1,972.61 1,801.00 1,565.11 1,651.12

91

PROFIT AND LOSS ACCOUNT Rs. in crores

Rs. crore) 2005-06 2004-05 2003-04 2002-03

Sales 2,140.35 1,987.82 1,717.61 1,593.35

Less: Excise Duty 154.28 127.20 140.22 150.93

Net Sales 1,986.07 1,860.62 1,577.39 1,442.42

Other Income 15.52 10.07 14.23 10.00

Total Income 2,001.59 1,870.69 1,591.62 1,452.42

(Increase)/Decrease in Stocks 8.67 (11.16) (21.01) (3.87)

Cost of Materials 1,054.76 995.74 816.30 686.81

Salaries, Wages and Employee Benefits 121.29 125.16 117.43 122.83

Manufacturing, Selling and Other Expenses 472.87 496.93 421.08 406.46

Interest and Other Finance Expenses (Net) 16.53 18.60 14.82 21.72

Total expenses 1674.12 1,625.27 1,348.62 1,233.95

Profit before depreciation / amortisation and exceptional items

253.48245.42 243.00 218.47

Depreciation/Amortisation 78.46 77.74 77.59 67.81

Less: Transfer from Revaluation Reserves - - -

Marketing / Technical knowhow expenditure written off

2.95 2.95 3.93 3.93

Profit before exceptional items & tax 172.87 164.73 161.48 146.73

Exceptional Items 28.65 (7.65) 19.95 (18.66)

Profit after exceptional items 201.52 157.08 181.43 128.07

Provision for Current Tax 48.55 45.35 44.25 9.00

Provision for Deferred Tax (3.24) (1.99) 5.90 25.22

Net Profit after current tax 156.21 113.72 131.28 93.85

Tax provision of earlier years written back - - (11.48)

Net Profit 156.21 113.72 131.28 105.33

92

CONCLUSION

The IR & IL is a highly benchmarked company in each and every aspect . as from the balance sheet , profit and loss account and other corporate data’s its clear that the company has achieved a 360o o of growth from every edge.

IR &IL has become a vehicle for funding it’s other business operation’s . Overall the growth of the company in it’s IT business, garment business, BPO business and other business has increased.

The company is also loyal with it’s welfare programs and performing it’s corporate social responsibility very well.

Overall the company has achieved growth and is with the flow of modernization.

93

BIBLIOGRAPHY

We referred following books preparing our project report.

Principal & Practice of Management - L. M. Prasad

Personnel Management - C. B. Mamiria

- S. V. Ganker

Human Resource Management - P. Subba Rao

Marketing Management - Philip Kotler

- J. C. Gandhi

Finance Management - Khan & I. M. Pandey

James C. Van Horne

94