The Aditya Birla Group is an Indian multinational conglomerate named after Aditya Vikram Birla, headquartered in the Aditya Birla Centre in Worli, Mumbai, India. It operates in 40 countries with more than 120,000 employees worldwide. The group was founded by Seth Shiv Narayan Birla in 1857. The group interests in sectors such as viscose staple fibre, metals, cement (largest in India), viscose filament yarn, branded apparel, carbon black, chemicals, fertilisers, insulators, financial services, telecom (third largest in India), BPO and IT services.

The Aditya Birla group is a diversified conglomerate with total revenue of approximately US$45 billion in year 2014. With gross revenue of USD 45 Billion (in 2014) it is the third largest Indian private sector conglomerate behind Tata Group with revenue of just over USD 100 Billion and RIL with revenue of USD 74 Billion.

OVERVIEW:

A US $40 billion corporation, the Aditya Birla Group is in the League of Fortune 500. It is anchored by an extraordinary force of over 120,000 employees belonging to 42 nationalities. The Group has been ranked Number 4 in the global 'Top Companies for Leaders' survey and ranked Number 1 in Asia Pacific for 2011. 'Top Companies for Leaders' is the most comprehensive study of organisational leadership in the world conducted by Aon Hewitt, Fortune Magazine, and RBL (a strategic HR and Leadership Advisory firm). The Group has topped the Nielsen's Corporate Image Monitor 2013-14 and emerged as the Number 1 corporate, the 'Best in Class', for the second consecutive year.

Over 50 per cent of the Aditya Birla Group's revenues flow from its overseas operations. The Group operates in 36 countries – Australia, Austria, Bangladesh, Brazil, Canada, China, Egypt, France, Germany, Hungary, India, Indonesia, Italy, Ivory Coast, Japan, Korea, Laos, Luxembourg, Malaysia, Myanmar, Philippines, Poland, Russia, Singapore, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Tanzania, Thailand, Turkey, UAE, UK, USA, and Vietnam.

Aditya Birla Group – The Global ScenarioAround the world, they’re known for:

A metals powerhouse, among the world's most cost-efficient aluminium and copper producers. Hindalco-Novelis is the largest aluminium rolling company. It is one of the three biggest producers of primary aluminium in Asia with the largest single location copper smelter

No.1 in viscose staple fibre No.1 in carbon black The fourth-largest producer of insulators The fourth-largest producer of acrylic fibre Among the top 10 cement producers Among the best energy-efficient fertiliser plants The largest Indian MNC with manufacturing operations in the USA

Aditya Birla Group – The Indian ScenarioIn India, here's what we have accomplished:

The largest fashion (premium branded apparel) and lifestyle player The second-largest manufacturer and largest exporter of viscose filament yarn The largest producer in the chlor-alkali sector Among the top three mobile telephony companies A leading player in life insurance and asset management Among the top two supermarket chains in the retail business

Rock solid in fundamentals, the Aditya Birla Group nurtures a culture where success does not come in the way of the need to keep learning afresh, to keep experimenting.

Aditya Birla Group – Beyond Business

Works in 3,000 villages Reaches out to seven million people, annually, through the Aditya Birla Centre for Community

Initiatives and Rural Development spearheaded by Mrs. Rajashree Birla Focuses on healthcare, education, sustainable livelihood, infrastructure and espousing social

reform in India, Brazil and Egypt, as well as Philippines, Thailand, Laos, Indonesia, Korea and other Asian countries

In India:

The Aditya Birla Group runs 42 schools, which provide quality education to 45,000 children. Of these 18,000 students belong to the underprivileged segment. Merit scholarships are given to an additional 12,000 children from the interiors.

The 18 hospitals run by the Aditya Birla Group tend to more than a million villagers.

In line with its commitment to sustainable development, the Aditya Birla Group has partnered with Columbia University in establishing the Columbia Global Centre's Earth Institute in Mumbai.

The idea of embedding CSR as a way of life in organisations has led to the setting up of the FICCI – Aditya Birla CSR Centre for Excellence, in Delhi.The Aditya Birla Group transcends the conventional barriers of business because we believe it is our duty to facilitate inclusive growth.

PARTA SYSTEM OF COST MANAGEMENT

Kumar Mangalam Birla works "normal Bombay hours", except that he is also in office on

Saturdays and half of Sundays. "My work-life balance is completely messed up," he says.

On each of those days, he would like to know how much cash came into his group and how

much went out. Not turnover, not profit. Cash.

Of course, it will be a bit of a stretch for the chairman of a $35 billion group to actually count the cash, but that is the broad philosophy of the Parta system. A financial performance monitoring mechanism, it has been refined over generations of Marwari businessmen. Among the Birlas, Ghanashyam Das Birla embraced it wholeheartedly. And his great grandson Kumar Mangalam swears by it. "It is a timeless concept and can be applied even 20 years from now," says Birla.

Many variations of Parta have evolved over the centuries. But, at the heart of all the different variations, the underlying principle remains the same: at the end of the day, there should be a net inflow of cash into the system. If there isn't, something somewhere needs fixing.

The late Mr. Ghanashyam Das Birla, the grandfather of the late Mr. Aditya Birla developed the system. Parta means what will be the return to pocket in net. Parta is a system of establishing return on Investment based on Cost Management. 

Since the Group had diversified in different businesses based on availability of license, technology & resources for raw material they needed a system to monitor profits consistently. It is a system of accountability based on which each company in the group had to draw a series of estimates for any new investment: how much it should cost to manufacture a particular volume of product, sell it & make a profit. The Project department will give the cost of capital for different capacity levels or different processes or different raw materials. These are the tools to analyse new businesses, viability of new & old business. This will also give factual information for investment to Stake Holders including Bankers and helps later on for review and monitoring based on norms and commitment given while taking sanction of Capital purchase.

The group maintained very good control on preoperative costs to keep a healthy cash flow. There have been hardly any cases of overrun I have seen during my tenure of over 25 Years with Aditya Birla Group. 

Parta could be of different types: 

1. Production based: Capacity of each equipment based on guarantee of production given by the manufacturer of machinery. There are cases where the Birla companies exceeded the rated manufacture. Manufacturers came and studied the factors that enabled overshooting of rated production. Estimate of investment will give the capacity of project. (Where supply is short of demand). Like - Birla super.

2. Market based: With increase in capacity in items where demand was lesser than supply, it was based on market research & projected estimates. Dynamics of changes in policy may give further moderation like Birla White. 

Parta is normally made at the start of Project / New Plant / New Machinery / New Product Manufacturing. 

All information were validated by discussion & questioning with related persons Finally the member of the Birla family approves Parta for each unit. Sanction for capital expenditure is given only after the Parta is approved. Working of Parta to get details of

(1) INPUT Raw Material (a) Mix (Quantity), (b) Source, (c) Quality (2) Production Cost, (a) Capacity Utilization, (b) plant no of days running in year (3) Selling & Administrative Cost per Unit of Product, 1) Fixed 2) variable (4) Marketing & Advertising costs: one-time and Regular. 

There is a meeting of different units manufacturing the same product (like cement business parta) at a common place which generates healthy competition and sharing of knowledge as well as concerns. Parta system keeps a close watch on efficiency. 

Parta: Executive summary 

It is MIS tool developed by Birlas, commonly accepted by all -Challenge and Controls generates competition to perform better than the best. -Parta is a control device in micro terms for time (Daily Parta), product mix, consumption, logistics, sales volumes, and profits and losses.

Corrective actions are taken in time - A Stitch In Time Saves Nine. -Each and every rupee spent either towards capital expenditure or revenue expenditure must earn in a pre decided time Parta is to see that the object is met.

Not only Production or Sales are monitored through parta but almost all aspects of cost and revenue. 

Out Put - Selling Price, Return- Discount I Brokerage I Commission, Freight, Tax. Market Mix Product Mix Finance Cost- (a) Interest (b) Borrowing Mix (c) Cost of public issue Parta = Selling Cost -(Manufacturing Cost + Administrative Cost include finance cost) = Net Profit 

Once master parta is made then the monthly Target is made based on environment of marketing & Plant Machinery running (after shut down required for maintenance) Time. Parta v/s Target explained by CEO I COO to the member of Birla Group who is in charge of the particular unit. 

Target v/s Daily Working is explained by Head of function, marketing I Com/Production, to CEO. For exceptions & action corrective actions are taken in time - Parta v/s Target - (Monthly Profitability Statement) exceptions. Monthly Progress Report. Target v/s Daily - Daily Report of Profit (loss) & specific Break down etc 

Daily report is for Daily Parta of Gain (Loss) Statement i.e. only minus figures are reported & update is for the month. It is the control device in Micro terms for time, product mix, consumption & yield of raw material, logistics, sales volume & profit / loss.

Cumulative Average = Cumulative Profitability/Working days 

By 20th of the month you must be near the target; if not, a serious review is done between Mr. Birla and the CEO and the Head of Function. 

Change in Parta takes place if there is Marketing Change / Plant Capacity Change I Raw Material factor Change / Product factor Change 

Excellence & Constraints in System 

Having worked in different groups I find the system is ideal in principle for a multi unit group. It is a convenient and efficient mechanism for control and monitoring. The changes are less and proper Home Work is done. But it could not be owned by young Managers due to Secrecy & rigidity of Top man in fixing norms and intolerable attitude of the top person for facts. Also mostly it was a production oriented system i.e. the underlying assumptions of "whatever is produced will be sold". 

In making parta one may challenge norms & its controls generate competition to perform better than the previous best. Parta monitors all aspects of business not only sales or production. It is a dynamic concept, which changes with any major change. 

Main parta has full details of working running into more than 100 pages while daily review is on one sheet and the monthly review goes up to 10 sheets. 

Parta is a dynamic concept and not only is an academic one, and this proved during the last 100 years of Birla record of growth.

The CEO gives his explanation for the exceptional items to Mr. Birla.

The group organizes Parta conferences at different places, and different unit teams deliberate almost all the aspects so as to determine targets for expenses and savings.

Parta conference generates a healthy competition amongst the units and ultimately the Bottom-lines are improved for all the organizations. Parta is thus a powerful tool for ensuring the continued viability of the unit.

PERFORMANCE MANAGEMENT

CIA 1:

COSTING PRACTICES OF A COMPANY

PARTA SYSTEM OF COST MANGEMENT

BY-

ADITYA BIRLA GROUP

SUBMITTED BY:

SAMIEL TRIPATHI

ROLL NO. 1311856

BBA F&A