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TERM PAPER ON MANAGEMENT CONTROL SYSTEM OF RELIANCE INDUSTRIES LIMITED
DR. MOHD. ANEES DEPARTMENT OF BUSINESS ADMINISTRATION UNIVERSITY OF LUCKNOW
ABHAY SINGH CHANDEL MBA (Fin.) SEM- 4 ROLL NO: 1
4. 3. 7. 1. 3 3 4 4 6 7 8 9 . 2. 5. no. 8.CONTENT Sr. 6. particular Company Profile Organizational Structure Of Reliance Functional Structure Management Style And Culture At Reliance Industries Limited Management Control Systems Recommendation Rewards And Recognition Communication And Coordination page no.
It also contributes 7. Exports and Retail & Franchising.7% of India's total exports. Reliance Industries India has been a pioneer in the equity culture cult and is highly respected for its corporate transparency. The Reliance Industries Limited was started by the legendary Late Dhirubhai H. . fibre intermediates. innovations and above all for its ability to generate 'products & services' for all sections of the society. Reliance Industries generates revenues in excess of USD 44 billion and exports products worth USD 7 billion to more than 100 countries.6% of India's GDP. Today. The Reliance Industries Limited is a 'Fortune Global 500 company' and employs more than 25. plastics. Reliance Industries Limited holds largest Oil & Gas exploration area in India and has achieved 74 % success rate in terms of discoveries.9% of the Government of India's indirect tax revenues. Health Safety & Environment. Energy Management. petroleum refining and oil and gas exploration and production . Starting with textiles in the late seventies. Backward vertical integration has been the cornerstone of the evolution and growth of Reliance. Its guardianship for India Inc. stupendous growth has been felicitated with no of awards in areas like Quality. deep market penetration ability. Reliance enjoys leadership in polyester yarn & fiber produce and is among the top 5 players in the world in major petrochemical products. 7.COMPANY PROFILE The Reliance Industries India group is India's largest private sector conglomerate. Ambani.000 professionals across the world. It also bagged 'Golden Peacock Award' for Corporate Management in 2005-2006 and enjoys high corporate ranking in Fortune Global 500 Company.to be fully integrated along the materials and energy value chain. Reliance pursued a strategy of backward vertical integration . petrochemicals. Reliance enjoys a preeminent position in terms of its contribution to the Indian economy with revenues equal to 2.in polyester. After a humble start in the late 1970's as a textile company its success skyrocketed and now covers almost all industry verticals.
. RPL stands amalgamated with RIL. creating value in the refining sector worldwide. Regenerative Medicine. plant and industrial biotechnology opportunities. Novel Therapeutics. Molecular Medicine. Specifically. life sciences organization that participates in medical. Pharmaceuticals. Clinical Research Services. Reliance Life Sciences is a research-driven.ORGANIZATIONAL STRUCTURE OF RELIANCE RelianceIndustries Limited Reliance Petroleum Limited Reliance Logistics Reliance Life Sciences Reliance Retail Limited Reliance Industrial Infrastructure Limited (RIIL) Figure 1 Reliance Major Subsidiaries Reliance Petroleum Limited (RPL) was a subsidiary of Reliance Industries Limited (RIL) and was created to exploit the emerging opportunities. Biofuels. Reliance Industrial Infrastructure Limited (RIIL) is engaged in the business of setting up / operating Industrial Infrastructure that also involves leasing and providing services connected with computer software and data processing. biotechnology-led. Currently. Plant Biotechnology and Industrial Biotechnology. these relate to Biopharmaceuticals.
and supply chain needs. distribution. has been set up to provide clinical research services to pharmaceutical. hence RIL is strictly following suggestions given by Kumar mangalam Birla committee regarding corporate governance. logistics. a contract research organization (CRO) and wholly owned subsidiary of Reliance Life Sciences. Reliance Logistics (P) Limited is a single window solutions provider for transportation. Figure 2 Reliance Board Structure . warehousing. supported by in house state of art telemetric and telemetry solutions. As far as Board structure of RIL is concerned there are 8 Non executive directors and four executive directors. biotechnology and medical device companies. Reliance Clinical Research Services (RCRS).
a functional organization is best suited as a producer of standardized goods and services at large volume and low cost. This leads to operational efficiencies within that group. As a whole. But not only beneficial for organization but also for employees faiths. which makes producing a limited amount of products or services efficient and predictable. efficiencies can further be realized as functional organizations integrate their activities vertically so that products are sold and distributed quickly and at low cost. However it could also lead to a lack of communication between the functional groups within an organization. Hence Reliance is Having Highest Operational efficiency as compared to competitors. Coordination and specialization of tasks are centralized in a functional structure. Moreover. making the organization slow and inflexible. For instance.Figure 3 Reliance Reporting Hierarchy FUNCTIONAL STRUCTURE Employees within the functional divisions of an organization tend to perform a specialized set of tasks. for instance the engineering department would be staffed only with production engineers. . a small business could start making the components it requires for production of its products instead of procuring it from an external organization.
teamwork and continuous improvements. Mr. RIL has unique fully integrated structure. Basically it is a process centric organization that maximized synergies across all interfaces. specifically RIL focuses on high performance work culture which fosters innovation. Citizenship and Caring. The firm belief of innovation being the differentiator for future and the source of competitive advantage shows the importance that is given to it. Reliance believes that any business conduct can be ethical only when it rests on the nine core values of Honesty. driven by the market.e. The introduction of various quality improvement tools in the facilities like the Total Quality Management (TQM). Fairness. The company believes that it is the innovation in thinking and execution that has made RIL reach where it is today. Trust." The leadership system defined by Ambani is based on value creation towards both its customers and stakeholders. "Growth has no limit at Reliance. Kaizen Activities . The existence of the culture in RIL is driven towards achievement of excellence in systems. current Chairman and Managing Director of RIL. Dhirubhai Ambani who said. "To become a globally competitive enterprise.MANAGEMENT STYLE AND CULTURE AT RELIANCE INDUSTRIES LIMITED Reliance Industries Limited (RIL) has emerged as India's largest private-sector enterprise and carved out a distinct place for itself in global Fortune 500 companies. processes. Reliance's business success and competitive position reflect the leadership provided by its founder. Integrity. Responsibility. technology and people and also toward the fulfillment of their corporate vision i. Respect. creating and maintaining a lead over competition through quality products and establishing itself to be the preferred supplier of its customers. inclusiveness. Purposefulness. leverage core competencies of various disciplines to maximize value from current assets and create growth opportunities while allowing people to develop and contribute to their full capabilities. Mukesh Ambani. The same vision has been taken up and forwarded by his son Mr. entrepreneurship. I keep revising my vision. Among all RIL basically focuses on innovation and has a innovative council for promoting the same. When we talk about the organization culture. Only when you dream it do you get it." With the vertical integration of chain from refinery to textiles. RIL in the early 1990s did suffer from low employee participation in improvement activities and low customer satisfaction.
drinking water. safety and environment project on a priority basis. This program has also been able to improve the performance of the company on the occupational health and safety front. large-scale development of employable skills. They aim to provide timely and balanced disclosure of all material information concerned towards stakeholders. RIL has a long and strong tradition of supporting the larger communities that it connects with from education. The publication of annual corporate governance report is one important aspect showing its growing inclination towards it and its aim to have fair and equitable treatment of its employees.and customer focus approach led to the improvement in quality. has given more importance to the use of its human potential and the creation of Learning organization to help in continued success in future. affordable high-quality health care. The Reliance Foundation would address social development imperatives of India. RIL realizing the importance of human and intellectual capital for business success. code of business conduct and ethics for director/management personnel signifies the existence of the culture driving the whole organization towards effective corporate governance. shareholders. health. specifically quality. The growing importance of Corporate Governance by RIL shows its priority towards a transparent and accountable organization thus being able to meet the needs of all the concerned stakeholders. to assistance during natural calamities such as earthquakes and cyclones. Management in simple words are characteristic ways of making decisions and relating to subordinates. Different management styles and employed by different organizations depending . The existence of code for board of directors and board committees. Health and Workplace Environment Program (CASHe) – which is an initiative to promote healthy workplace and reducing health and safety risk has been instrumental in creating a culture of implementing health. productivity improvement and customer satisfaction in the organization. meaningful rural development and urban renewal. customers and investors. and protection and promotion of India's priceless heritage of arts and culture. RIL in its importance to the health and safety also has also initiated Safety. The Health and Safety Principles that were put forward in this regards to articulate the stakeholders expectation along with the existing values of the company underpin both the corporate culture and cooperation across the company. formal and vocational education. Moreover they aim to have a sound system of risk management and internal control.
headed by the CEO or the President. But they have given much more independence to the individual units at different level to take decisions at their level. but a more of a democratic style of leadership is seen. RIL is an organization which is operation in multiple facets. the nature of the business. the reliability of financial controls. the nature of the task and the personality and skills of the leaders. The Company has an exhaustive budgetary control system to monitor all expenditures against approved budgets on an ongoing basis. Since they promote innovation and value their human capital they promote participative environment at different levels of management to be able to make a better and informed decision. There is a good mix of corporate level strategy (taking RIL as a whole which is set up by the BOD) as well as appropriate business level and operational strategies at each segment as well as business units to accomplish the corporate level strategy. However the level of decisions and intensity of problems are defined whereby decisions can be taken at particular level of management.on the prevailing culture. They have multiple manufacturing facilities at multiple locations where by dealing in different product ranges. and compliance with laws and regulations. Every unit which is a part of RIL has its own hierarchy. The Company maintains a system of internal controls designed to provide a high degree of assurance regarding the effectiveness and efficiency of operations. Empowering the employees in RIL is relevant. MANAGEMENT CONTROL SYSTEMS 1. The supreme authority of the company is Board of Directors. The Company’s accounting process is based on uniform accounting guideline that sets out accounting policies and significant processes and deadlines on a company wide basis. RIL has well established policy towards maintaining the highest standards of health. safety and environmental norms while . INTERNAL CONTROLS RIL has a comprehensive system of internal controls to safeguard the Company’s assets against loss from unauthorised use and ensure proper authorisation of financial transactions. There are binding directives for internal reconciliations and other accounting operations.
The management duly considers and takes appropriate action on the recommendations made by the statutory auditors. INTERNAL CHECKS AND BALANCES At the heart of our processes is the wide use of technology that ensures robustness and integrity of financial reporting. sufficient and credible. if it considers necessary The role of the Audit Committee includes: 1. 3. To secure attendance of outsiders with relevant expertise. 2. Reliance deploys a robust system of internal controls to allow optimal use and protection of assets. 4. control and governance process. AUDIT COMMITTEE Powers of the Audit Committee: 1. facilitate accurate and timely compilation of financial statements and management reports and ensure compliance with statutory laws. To investigate any activity within its terms of reference. 2.maintaining operational integrity. It is also responsible for assessing and improving the effectiveness of risk management. . 3. plans and statutory requirements. This policy is strictly adhered to all RIL manufacturing facilities. To obtain outside legal or other professional advice. regulations and company policies. The Company has an internal audit function. internal auditors and the independent Audit Committee of the Board of Directors. To seek information from any employee. Oversight of the Company’s financial reporting process and the disclosure of its financial information to ensure that the financial statements are correct. which is empowered to examine the adequacy and compliance with policies.
Disclosure of related party transactions. 1956. . Major accounting entries involving estimates based on the exercise of judgement by the management. with particular reference to: Matters required to be included in the Directors’ Responsibility Statement to be included in the Directors’ Report in terms of sub. 4. the replacement or removal of Statutory Auditors and fixation of audit fees. Significant adjustments made in the financial statements arising out of audit findings. Reviewing with the management. if any. 5. Reviewing with the management. if required. 3. in accounting policies and practices and reasons for the same.section (2AA) of Section 217 of the Companies Act. the annual financial statements before submission to the Board for approval. the performance of Statutory and Internal Auditors. 6. Recommending to the Board. Approval of payment to Statutory Auditors for any other services rendered by the Statutory Auditors. reappointment and. Changes. the quarterly financial statements before submission to the Board for approval. Compliance with listing and other legal requirements relating to financial statements.2. adequacy of internal control systems. Qualifications in draft audit report. the appointment. Reviewing with the management.
To review the functioning of the Whistle Blower Mechanism. Internal audit reports relating to internal control weaknesses. Carrying out such other functions as may be specifically referred to the Committee by the Board of Directors and / or other Committees of Directors of the Company. . submitted by management. 8. Discussion with Statutory Auditors before the audit commences. 11. shareholders (in case of nonpayment of declared dividends) and creditors. in the payment to the depositors.7. removal and terms of remuneration of Internal Auditors. about the nature and scope of audit as well as post audit discussion to ascertain any area of concern. Discussion with Internal Auditors any significant findings and follow up thereon. Reviewing the adequacy of internal audit function. reporting structure. staffing and seniority of the official heading the department. 9. if any. 10. Management letters / letters of internal control weaknesses issued by the Statutory Auditors. Statement of significant related party transactions (as defined by the Audit Committee). debenture holders. including the structure of the internal audit department. 14. Reviewing the findings of any internal investigations by the Internal Auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board. if any. and The appointment. coverage and frequency of internal audit. 13. To review the following information : The management discussion and analysis of financial condition and results of operations. To look into the reasons for substantial defaults. 12.
stands at 23.15. there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchases of inventory and fixed assets and for the sale of goods and services. but still very effective. such as cash bonuses and stock awards. To enable consistent growth. Reviewing the financial statements and in particular the investments made by the unlisted subsidiaries of Company. we have not observed any continuing failure to correct major weaknesses in internal control system. and an increased role in decision-making. rights issue. Other types of rewards and recognition may be less tangible. preferential issue. paid parking. Reliance believes “Growth is Life” – for Reliance and for all Reliance people. and is one of its fundamental competitive strengths. assignment of more enjoyable job duties. These "non-monetary" rewards include formal and informal acknowledgement. 16. 2010. as on March 31. During the course of our audit. and a wide variety of company-paid perks. Review of uses / application of funds raised through an issue (public issue.365 with the average employee age of 41 years. A large in-house pool of intellectual capital is the driving force behind Reliance’s accelerated growth. RIL's talent base. etc.) RECOMMENDATION In my opinion and according to the information and explanations given to us. Reliance puts a great deal of effort behind creating a workplace where every Reliance employee can reach their full potential and achieve maximum personal fulfillment. The aim is to lower the average employee age and invigorate the youth to take the organization forward over the next few decades as indeed the current leaders have done over the . like car allowances. opportunities for training. REWARDS AND RECOGNITION Many types of rewards and recognition have been given by Reliance to its employees. and gift certificates.
and contribute innovative ideas in meeting the targets of the company. the Company has put into place a central shared services organization for HR. RIL has continued to look at. Reliance’s appraisal and reward system is aimed at increasing employee involvement in the goals and objectives of the organization. The Company continues to nurture this as it grows exponentially Breakup of professional workforce Ph. Towards this end. create and execute seamlessly. Networking.45 years -34% 46 .D. apart from leveraging on the . initiatives which enhance productivity and efficiency. The company offers comprehensive world-class training and development resources. As an ongoing exercise. coaching and mentoring provide additional opportunities for people to grow personally and professionally throughout their careers. business performance. undertake voluntary projects that enable them to learn.35 years -44% 36 . wherein Global Best Practices for HR Shared Services are integrated.9% Engineers. wherein the employees will share the risk and the rewards of company’s performance.83% CA/ ICWAs.55 years -15% 56 + years -2% Reliance offers world of opportunities to employees by giving them more freedom and responsibility to chart their own course within the company. The company has moved to a Key Result Area oriented performance appraisal system and will soon move to performance linked incentive scheme. and encouraging individuals to go beyond their scope of work.2% MBAs. The objective of this centre. team performance and their individual performance. The entrepreneurial spirit has been a hallmark of the organization.6% Age Profile Upto 25 years. identify.last 30 years by starting early in their 20s and 30s.5% 26 .
NGOs and contractors. For this it has initiated a sharper and more focused dialogue with key stakeholders. RIL continues to invest in people through various Learning & Development initiatives. The Company has continued to invest in this area through newer and state-of-the-art modules both in the Technical and Management domains.economies of scale. suppliers. it has restructured the processes to address their concerns better and design programmers that would enhance their quality of life.092. Acting upon the feedback. The Board of Directors determines strategic business imperatives and mentors the achievement of reliance corporate goals. is to provide a world class experience to the employees on all the matters that they have to deal with on a day-to-day basis including all transactions. trade unions. COMMUNICATION AND COORDINATION Coordination and communication is central to the very existence of organizations. newspapers etc. which involved shareholders. Specific management communication within the organization is necessary for coordination. These results are also published in various magazines. It executes its role in corporate governance through regular reviews of Reliance’s financial performance and critical business issues. In order to provide better communication and coordination Reliance organizes different meetings for the following: Shareholders – Annual General Meetings (AGMs) Shareholders’ grievance meetings One-to-one meeting . local community. regulatory authorities. which has seen 3. Reliance focuses on building life-long relationships with its stakeholders and believes it is important to understand their concerns and perception. E-learning as a medium is much sought after by the employees for upgrading skills and competencies since people can learn when needed at their own convenience and from where they may be. customers. The quarterly and yearly financial results are sent to the Stock Exchanges immediately after the Board approves the same. employees.403 man hours of Learning & Development activities at manufacturing divisions.
'shop floor communication meet' In-house newsletters Suppliers Separate Contractors' Cell Monthly Contractors' Safety Meetings Regulatory Authorities Maintaining and updating all records Support to local authorities in times of crisis Supporting neighboring industries through local associations . Open forum Customers Market Research External Customer Satisfaction Survey Employees Feedback mechanism. 'Peer Group Sharing' HSE Committees 'Toolbox Talks' Self Development Modules ILNA (Individual Learning Needs Assessment) Career progression / job rotation / role diversification Business Dialogue.'Employees Suggestion Scheme' Awards for 'best Case studies' for Internal Learning.'QUEST'.
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