1

INDEX

SR. NO.
1 2 3 4 5 6 7 8 9

PARTICULARS
History & Development of Unit Current Status Growth Outlook Brand Profile & Size and form of the organization Joint Ventures and Subsidiaries Manufacturing Process and Production Organization Chart Time Keeping System Group Companies at a glance in India & Contribution of the Unit to the Industry

PAGE NO.
3 4 6 7 8 9 11 12 13

2

HISTORY & DEVELOPMENT OF UNIT
The late Prime Minister Shri Lal Bahadur Shashtri laid the foundation stone of Indian Rayon and Industries Ltd. on 21st June, 1959. It was incorporated on 26th September, 1956 under the companies act of 1956 an the company was give 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.. Shree Morarji Desai one of the leading industrialists of Gujarat with a view to manufacture Viscose Filament Yarn in collaboration of U.S.A. started this organization. The regular production of Rayon was started on 27th September, 1963. As a result of strike and chaos in the unit the present management is Birla Group took over the chairman is Aditya Birla. He took over the company in 1966 due to expansion INDIAN RAYON & CORPORATION PVT. LTD. Named it became INDIAN RAYON & INDUSTRIES LTD. after that the company is paying dividend regularly to their share holders.

Vision
“To be preferred choice of customers in premium segment of viscose filament yarn global market and benchmarked chlor alkali producer while remaining committed to the interests of all stake holders.”

3

Mission
 To Produce viscose filament yarn to meet the expectations of customers in premium segment.  To achieve minimum cost of production through innovation of employees and vendors.  To maintain clean, safe & pollution free environment.

Values
• • • • • Integrity Commitment Passion Seamlessness Speed Aditya Birla Group is a conglomerate of companies operating in different sectors and areas.

Present:

Be it insurance, textiles, chemicals, cement, mining, insurance or business process outsourcing, the group has its presence in all the fields.

CURRENT STATUS

Madura Garments
The Garments Division has maintained its market leadership. Revenues have grown by 20.6 per cent to Rs. 472.40 crore vis-à-vis Rs. 391.68 crore recorded in the previous year with the divisional operating profit growing by 70.5 per cent to Rs. 39.20 crore against Rs. 22.98 corers last year. Two of the power brands - Louis Philippe in the fashion segment and Peter England in the popular segment -have crossed the Rs. 100 crore mark in revenues. Improved sales of higher price point products have boosted realizations and top line growth. Suits, blazers and jackets have performed well and have contributed towards a richer product mix. The opening of 21 stores during the year has bolstered retail presence and the division has an aggressive retail expansion plan for the future both in malls and in high streets. Consistent brand building efforts, development of innovative merchandise and aggressive campaigns for each of the brands, have accelerated brand growth and equity with consumers. Madura Garments received the 'Best Apparel Company of the Year' award at the Images Fashion Awards 2004 for the second consecutive year and at CMAI. The other accolades showered on it include "Allen Solly - Best Trouser Brand of the Year", "Allen Solly Women's Wear - Most Admired Women's Wear Brand of the Year", Louis Philippe and Allen Solly amongst top 100 Super brands.

4

Madura Garment will continue to be an industry leader. Its focus will be on building further on consumer equity and market share in a competitive market. Delivering international standard retail experience at the new stores being opened will be a thrust area.

Rayon division
The Rayon division's revenues at Rs. 385.00 crore are higher by 9.38 per cent compared to Rs. 352.00 crore in the previous year. VFY realizations were effected with high industry stock and increased import from China. Despite this, sales volume rose by 6 per cent to 17380 tonnes on the back of stabilization of the 1,000 tonnes Continuous Spinning Yarn (CSY) capacity and 105.9 per cent utilization of the expanded capacity. The chlor-alkali segment has been buoyant. The chemical plants were operating at 107.7 per cent of capacity. Better ECU realization also complemented the revenues. To insulate itself from the present difficult market conditions, the company has embarked upon an ambitious program of quality improvement and cost reduction. The company has successfully implemented the revised work norms pursuant to long-term settlement with workers, which shall result in improvement in productivity by 35 per cent. Capex initiatives include raising Caustic Soda capacity by 85 tonnes per day through de-bottlenecking and setting up a captive power plant of 20 MW.

Carbon Black division
Carbon Black Division's revenues at Rs. 564.2 crore are up by 21 per cent vis-à-vis Rs. 467.2crore attained in the previous year. Sales volume grew by 7 per cent by 175944 tonnes than previous year 165,095 tonnes, benefiting from the 40,000 tonnes Brownfield expansion, completed in March 2004 and 10,000 tonnes added through de-bottlenecking. The plant operated at 103 per cent of the expanded capacity. Even as increased demand in the domestic market is being catered to, export volumes rose to augment sales. Volatile crude oil prices remain a cause of concern. Realisation has improved with the pass on of the high CBFS cost to the customers. The division's emphasis will be on maximizing realization through passing on the increase in feedstock cost and proactively managing its procurement. The company has initiated work on the 50,000 tonnes brown-field expansion at Chennai at a capex of Rs. 105 crore.  Textiles division The textiles division's revenues have gone up 15.1 per cent to Rs. 524.8 crore as against Rs. 456.1 crore in the previous year. Profits improved across all the product ranges. Exports constituted about 46 per cent of the division's revenues. The worsted segment has gained from value added yarns and stable wool prices. Flax yarn performance has bettered with the modernization of the plant. The linen fabric has 5

profited from retailing initiatives and the addition of 20 looms (1,15,000 mtrs per month). Expansion of wool combing facility by 4,000 TPA is operational with the installation of first card; the balance two cards will be installed in the next 2 months. A capex of Rs 22.5 crore has been planned for the expansion and modernization of flax yarn and linen fabric facilities.  Insulators domestic marketing The division's revenues stood at Rs. 135.9 crore. The outlook for the insulator business is promising given the power sector reforms, which will hike demand in the transmission and distribution segment.

Consolidated performance:The Company's consolidated revenues jumped 49 per cent from Rs. 3189.1 crore to Rs. 4759.4 crore. With the growth of new businesses, Indian Rayon's JVs and subsidiaries have contributed 62 per cent to the consolidated revenue, led by the life Insurance business. The consolidated net profit surged 225.7 per cent at Rs. 190.7 crore. BPO business has turned positive for the whole year. IT business losses have come down drastically. In life insurance business losses have been pruned with the benefit of higher renewal business. A poor export market and higher input cost has adversely impacted the company's insulator JV

GROWTH OUTLOOK
The sector-wise outlook for the company is promising


• • • • •

Garments
Integrated go to market initiatives for each brands Increase quality reach of Peter England. Retail space to be doubled over next 2 years. Focus on merchandise management and sell thrus. Renewed focus on manufacturing export.

Life Insurance
• • • Aggressive ramping up 31 branches and additional advisors on cards. New products launch targeting specific segments. Superior returns to policy holder with better transpency.

BPO
6

• • •

Great world class infrastructure ahead of demand. Focus in building new verticals and horizontals. Revamp recruitment and improve quality of hire.

Telecom
• • • • Strengthening network in existing circles. Roll out of services in three new circles and explore further expansion. To provide value added services to drive customer loyalty and revenues. Financial restructuring to reduce interest cost.

IT
• • Strengthening marketing and delivery capabilities. Initiating build up of specialization/differentiation.

BRAND PROFILE
The portfolio includes leading brand names like: 1) Louis Phillippe : - launched in 1989 – India’s first national up-market men’s shirt : “uppercrest” – seen as status symbol. 2) Van Heusen : - Powerful contemporary corporate wear; also one of America’s leading brand. 3) Allen Solly : - Pioneered the concept of smart casuals an Friday dressing. 4) Peter England : - Launched in 1997 as the mid-price “Honest Shirt”; already India’s largest shirt brand. 5) San Frisco : - Positioned as the hard working trouser in the mid-priced segment.

7

6) Byford : clothes.

Knitwear brand for socks and t-shirts; leading international brands for under-

SIZE OF THE UNIT AND FORM OF THE ORGANISATION
The Aditya Birla Nuvo Ltd. is large scale industry. Indian Rayon is Built on firm, strategic business principles and strong professionals management. INDIAN RAYON & INDUSTRIES LTD. is a public ltd. company. It is a large scale industry because it possesses all the features of heavy industries likes, Large amount of capital and also uses costly and heavy machinery and bulk material. The work of Indian Rayon & Industries Ltd. is divided into 42 departments.

JOINT VENTURES AND SUBSIDIARIES

The Company's joint ventures and subsidiaries are on track. BIRLA NGK Insulators Private Limited has posted marginal growth in turnover to Rs. 168.83 crore. Its brown-field expansion of 8,000 tonnes has been commissioned in Dec 2004, which will enhance volumes. Guided by NGK experts, yield improvement efforts are being pursued.

Birla Sun Life Insurance Company has recorded a jump of 16 per cent in annualized premium income from new business to Rs. 711.1 crore. The total premium income has grown by 37 per cent to Rs. 1233.8 crore. The business continues to retain the number two position amongst private life insurance companies with 10 per cent credit to single premium policy in line with international practice. The company is a front-runner in unit-linked products and alternate channel distribution. The company is focusing on increasing the distribution network by opening 41 new branches taking total 85 branches by June 2006.

8

The IT Services business has reversed the downward trend in performance and has turned EBITDA positive for the year. Revenues stood at Rs. 85.8 crore. The company has increased its focus on Banking, Financial and Insurance (BFI) verticals and the Independent Software Vendor (ISV) segment, with greater thrust on high margin business. The BPO business revenues have grown significantly from Rs. 108.23 crore in the previous year to Rs. 163.3 crore, while seat capacity has increased to 2235 and headcount to 4114. The Company is striving to further augment its client base and improve its seat utilization.

MANUFACTURING PROCESS & PRODUCTION
The main product of Indian Rayon is Viscose Filament Yarn or producing Rayon Yarn vital and essential and raw material required which are as follows. I. Wood Pulp II. Caustic Soda III. Carbon-Di-Sulphide cs2 IV. Sulphuric Acid From above raw materials the wood pulp is still imported from Canada, Sweden & South Africa and above 90% of raw materials is available from the following things.

1.

Viscose Section

9

Viscose Filament Yarn (VFY) is made from natural fibres. Fabric made with VFY fields like Cotton, Drapes Like Wool, Sheaths and Cling like Satin, and has the lustre and feel of Silk. VFY is used by manufacturers of Apparel, Saris, Upholstery, Suit linings, etc…… In this section the process from Wool Pulp to Viscose is done means Wood Pulp is converted into Viscose sector. This process is carried out some sub steps as are following. a. b. c. d. e. f. g. 2. Streeping Shreeding Pre-Ageing Xanthation Pressing Dissolving Repenning & Filteration

Spin Bath Section
In this section recovery of by product is done i.e. Sodium Sulphate. Spin bath contain 11% Sulphuric Acid to naturalize Sodium Hydroxide of Viscose 1.2%

Zink to give strength to the yarn and fasting the rate of relation take place. A) Recovery of Sodium Sulphate Spin Bath to extract through provided in spinning machine after the reaction excess of the Spin Bath is returned to the Spin Bath Department for make a acid Zink and proper temperature of 55-56. During the reaction acid 8 Spin and Caustic Soda of Viscose in naturalize and Sodium Sulphate to recovered as the by product of the process. 3.

Spinning Section
Formatting of Yarn and collection from the raw cakes. This section is also called as cake

formation department. The yarn is through against the side of this rotation pat when it is laid in the farm of the cake because of the channel depending on the speed of the revolving pat. 4.

After Treatment Section
Washing, Bleaching and Dying of raw cake are made here. After the treatment section

means washing section i.e. washing room of the cake when the cake burn in the opening par it is still full

10

of acid and relatively to through many types of water like soft water etc. and thus all the excess liquid is removed and now cake are ready for conning. 5.

Textile Section
The cake is now ready for winding in the of cones in this section the cake winding by the

workers.

Executiv e President

6.

Packing Section
Packing of the final product as per ISI standard disclose after quality. Here they use card
Personnel & HRD to handle and Department Administratio taken less nweight Department

board for packing because it is easy information is printed. i) ii) iii) iv) V) Date of Packing. Quality Grade & Weight.

than wooden box. On box the full Department Department

Production

Engineering

Co De

Name of the Party to whom the goods are despatched.
Time Office Raw Material Viscose Maintenanc e

Register Trademark of the Company. Colors of Stones
Welfare

Legal

Spin Bath

Electrical

Labour Office

Sales

Spinning

Instrument

S P

ORGANISATION CHART Personnel
HRD

After Treatment

B

Textile

Estate

Chemical

Security

R&D

Quality Control

11

TIME KEEPING SYSTEM
India Rayon & Industries Ltd. Has adopted very good time keeping. The unit has installed computerized time keeping system. In this system all the Employee including staff member of worker have issued punch cards. There are seven punching machine that have been fixed and HRD dept when the employees enter in the premises he has to punch this card in any machine and have to do this same thing at the time of exit also. Time office dept. of the company keeps the attendance register. Many workers have been given attendance sleep also. In the system the workers are supposed to fill their sleep at the time of entry as well as exit. The register collects the date through computer and their salary and wages are prepare according to this collected data.

12

The workers are allotted to enter in to the premises late up to half and hours from the time duty’s starts. While there is no any hard and fast rule exit for the staff member of the company. There are four shifts of IRIL Co. Shift “A” Shift “B” Shift “C” General Shift Lunch Break 7:00am to 3:00pm 3:00pm to 11:00pm 11:00pm to 7:00am 8:30am to 5:30pm 12:30pm to 1:30pm

Each and every employee working hours is fixed of eight hours the employees are give leave as per the company rules.

GROUP COMPANIES AT A GLANCE IN INDIA
Company
Grasim Hinadalco Indian Rayon Indo Gulf Birla Global Finance HIGI Industries Essel Mining Shree Digvijay Cement

Key Products / Services
Viscose Staple Fibre, Cement, Sponge Iron, Textiles, Exports, Software Consulting Aluminum Viscose Filament Yarn, Textiles, Insulators, Carbon Black Fertilizers, Copper Financial Service Files, Castings, Gases Iron and Manganese ore mining, Ferro alloys, HPE woven sacks Cement

13

Kerala Spinners Eastern Spinning Mills

Synthetic and blended yarns Blended yarns

CONTRIBUTION OF THE UNIT TO THE INDUSTRY
The Indian Rayon & Industries Limited is one of the single unit which manufacture Rayon Yarn earning huge profit on the part of market company contributes more than 25% of total market share in India and of course Birla Group has two other units engaged in producing Rayon Yarn so totally about 75% of market has been covered in India. Company has been covered in India. Company has been also export rayon yarn in more than 15 countries.

14

SR. NO.
1 2 3 4 5

PARTICULARS
Introduction to the Industry Competitive Position - VFY Domestic Competitors - VFY Competitive Position – Chlor Alkali Dealing with competitors

PAGE NO.
16 18 19 20 21

INDEX

15

INTRODUCTION TO THE INDUSTRY

Man made fiber includes both synthetic fibers and celluloses. Rayon is a generic term for man-made fiber, composed of regenerated cellulose and deviates also called as celluloses. The standard types includes viscose staple fiber(VSF) an continuous viscose filament yarn(VFY) while the synthetic fiber includes polyester nylon, propylene, acrylic etc. This segment of industry has vital role to play in Textile Industry.

16

Global Scenario
The Asian share of global VSF product is growing many folds an there was an increase in Filament Yarn also. This is presumably due to the shift in textile production from developed countries to low cost Asia. The shift continuous as textile consumption in Asia is likely to grow in line with rapid economic growth in the countries. In future the supply of Celluloses fibers will slightly drop and supply of synthetic fibers will grow by about % per annum.

Indian Scenario
Till 1950 small quantity of Viscose Filament Yarn was imported into India. In 1950 the first Viscose Filament Rayon Yarn of M/S Travancore Rayon at Rayonpuram, Kerala was commissioned which was later on followed by National Rayon plant at Mohane in Kalyan in the beginning of 1951. Last Viscose Filament Yarn plant was commissioned in the year 1964. After that no new plant were commissioned due to the heavy capital requirement and fierce competition from synthetic filament yarn. Due to expansion of the existing plants, higher production for Filament yarns was achieved in 70’s an 80’s. M/S J. K. Rayon at Kanpur stopped production in early 1980’s. M/S Travancore also seize production around 1983-84 and have restart it in 1987. at present 7 filament yarn are in operation producing about 60000 tones yarn per annum and the capacity of Viscose Filament Yarn in India is 68300 MT per annum.

Group Overview
The Aditya Birla Group is India’s second largest business house with turnover of over Rs. 200 billion; asset base valued at over Rs. 180 billion and nearly 65000 employees in 15 countries all over the world. Over 75 units in India an overseas as well and International trading operations spanning several countries include Singapore, Dubai, Russia, Vietnam, Myanmar, an China make it India’s first truly multinational conglomerate. Committed to being a Global Benchmark Group, all of its accredited with the ISO 9002 Certification and nine of them are certified with ISO 14001.

17

The Aditya Birla Group reaches out to the core sector in India in industries integral to the nations growth – cement, Aluminum, Fertilizers, Viscose Staple Fiber, Textiles, Petroleum Refining, Power, Telecommunications, Industrial Chemicals an Financial Services. The Aditya Birla Group is the worlds: • • • Largest producer of Viscose Staple Fiber Third largest producer if Insulators Fifth largest producer of Carbon Black

In India it has a Leadership position in: • • • • • • Aluminum Viscose Filament Yarn White Cement Rayon Grade Pulp Grey Cement Linen Yarn

Over an above this the group also has its significant presence in the petroleum refining, power and telecommunications sectors – in tie – ups with giants – Hindustan Petroleum, Powergen Plc. (UK), an AT&T (USA). On the social front it is a value based, caring corporate citizen. The Aditya Birla Group inherently believes in a Trusteeship concept of management. Party of the group profit is ploughed back into meaningful welfare driven initiatives that make a qualitative difference to the lives of a marginalized people

COMPETITIVE POSITION - VFY

The major competitor of Indian Rayon is the Century Rayon. Kesoram Rayon and National Rayon are other VFY market players. RAY ONE has 29 % share in Domestic Market, it has been striving to increase its export and captured 42 % of total VFY export from India with a growth status of 26.7 % in 2000 – 01 to 42 % in 2006 – 07.

18

DOMESTIC MARKET SHARE

EXPORT SHARE

24%

7%

29%
Indian Rayon Century Keshoram NRC BRC

5% 16%

0%

42%

8%

32%

37%

DOMESTIC COMPETITORS - VFY

MAJOR VFY DOMESTIC MANUFACTURERS & INSTALLED CAPACITY VS ACTUAL PRODUCTION DURING 06 - 07

19

INDIAN RAYON 15000 TPA 17669 TPA 06 -07

CENTURY RAYON 16000 TPA 18425 TPA 06-07

VFY DOMESTIC MANUFACTU RERS

NATIONAL RAYON 16000 TPA 12604 TPA 0607

KESORAM 6500 TPA 5291 TPA 06-07

COMPETITIVE POSITIO – CHLOR ALKALI
The major competitors for Chlor Alkali product is GACL, IPCL, DCM, Andhra Sugar and other player in the market. ABG Group is having the market share of 15.2% out of which captured 3.2 % of total production from India with a growth status of 2.3% in 2003-04 to 3.2% in 2006-07 20

Market Share Chlor - Alkali Products
3.20% 3.50% 14.90% 51.50% 4.70% 6.30% 7.40%
GRCD Indian Rayon BCCL GACL IPCL DCM Andhra Sugar Others

8.50%

DEALING WITH COMPETITORS
To be successful, the company must do 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.

21

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 Aditya 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

22

INDEX
SR. NO. PARTICULARS PAGE NO.
23

1. 2. 3. 4. 5. 6.

Financial Planning Capitalization Capital Structure Financial Leverage Management of Fixed Assets (I) Capital Budgeting Management of Working Capital (I) (II) Inventories Receivable

24 25 26 27 28 39

7. 8. 9. 10. 11. 12.

(III) Cash & Bank Operating Leverage Analysis Dividend Distribution Per Share Data Last 5 year Profit & Loss A/c Last 5 year Balance Sheet Last 5 Year Cash Flow Statement

43 44 45 46 47 48

FINANCIAL PLANNING

Financial Planning Is the most important job for the financial management. Financial planning is concerned with sources from which the fund are to be raises at now cost ant what much cost and what time financial planning result in formulation of financial plan. It is a statement estimating planning is essential that each financial act is carefully planned before any action. As the success of failures of the firm depends totally on it.

24

In IRIL the task financial planning is divided into 3 parts. Financial decisions are very crucial. Head office a Mumbai plan for new project of company.

TOP LEVEL
This level is concerned with preparing plans pertaining to the long term requirements of the firm. Its capital expenditure permanents short term needs inflows and outflows.

MIDDLE LEVEL
This level is generally concerned with listing and calculation of outflow. This is constituted by the virtually routine finance plan.

LOWER LEVEL
This level is generally concerted with the listing and calculation of outflows but process at this level is divided into 2 steps.

CAPITALISATION
“Capitalisation is sum of the par value of the stock & bonds outstanding.” - Guthaman & Duggal For the co. the book value and real value of share are two main components or assessment of co.’s financial position which can be calculated as under.

25

YEAR 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

EPS (RS.) 7.04 20.71 18.59 20.27 25.01 25.74

BOOK VALUE

=

Equity Share + Capital reserve & Surplus No. of Equity Share

=

59.88 + 1294.18 5.98

=

Rs. 226

The book value per share is Rs. 335 and market value per share of Co. as on March 07 was Rs. 1061.80 Which is higher than its book value per share so we can say that co. is under capitalized. The highest market price of share during the year was 1324.90 in Jan-07 & the lowest price was 510.05 in Jun-06.

CAPITAL STRUCTURE
“Capital structure may be defined as the combination of debt and equity securities that leads to maximum value of the firm.” - Hampton Capital Structure refers to mix or long term source of funds such as Debenture, Long Term Debt., Preference Share and Equity Share capital including reserve and surplus. The company should plan optimum capital structure.

26

Particulars 2007-2008 Share Capital Reserves & Surplus Secured Loan Unsecured Loan

(Rs. In Crore.) 2006-2007 95.01 3551.32 1856.72 886.70 93.31 3031.24 2071.62 760.21

The share capital of IRIL Co. is Increase by 1.70 in current year as compared to previous year. The Reserves & Surplus of IRIL Co. is increased by 520.08 in current year as compared to previous year. The Secured Loan of IRIL Co. is Decreased by 214.9 in current year as compared to previous year. The Unsecured Loan of IRIL Co. is increased by 126.49 in current year as compared to previous year
4000 3500 3000 2500 2000 1500 1000 500 0 2007-2008 2006-2007 Share Capital Reserves & Surplus Secured Loan Unsecured Loan

FINANCIAL LEVERAGE
Financial Leverage is defined as the activity of firm used Financial Leverages to magnify the effects of firms earning per share.

27

The Financial Leverage is also called by Trading on Equity. Company can finance its investment by variety of sources such as Preference Share Capital including Reserves and Surplus The Financial Leverage is controllable and also compactly avoidable Leverage. The degree of fund collected by the firms outside is called Financial Leverage. The IRIL Co. has posted a superior financial performance during the year 20032004. The revenue has grown to 1806.06 Crores against 1577.04 Crores in previous year.

FINANCIAL LEVERAGE

=

EBIT EBT 493.58 314.56 1.57

=

=

MANAGEMENT OF FIXED ASSETS
There are two types of assets in every firm fixed assets and variable assets. Manage fixed assets is the most important task facing management such are required to be retained in business on long term basis to produce goods and service and not or sale.

28

Particulars Tangible Assets Land Free Hold Lease Hold Railway Siding Building Lease hold improvements Plant & Machinery Furniture Fixture & Equipment Vehicles and Aircraft Live Stock Intangible Assets Goodwill on Acquisition Trademark Specialized Software TOTAL

Net Block As at 31 march-06
st

As at 31st march-07

1.20 24.96 0.97 160.95 0.26 679.72 31.59 12.92 0.00

1.20 24.85 0.69 164.30 0.16 781.33 33.97 13.54 0.00

20.35 77.96 2.19 1038.07

20.35 61.38 2.48 1128.25

From the above table we can say that the assets profitability is also fluctuating it was increasing dramatically from year 2007. In this year the market condition was favorable and the IRIL Co. was able to fulfill the demand from the market that way the assets were efficiently and effectively worked.

CAPITAL BUDGETING & INVESTMENT APPRAISAL
One of the most crucial and vital areas of long-term decision-making that firms must tackle is that of investment - the need to commit funds by purchasing land, buildings, machinery and so on, in anticipation of being able to earn an income greater than the funds committed. In order to handle these decisions, firms have to make an assessment of the size of the outflows and inflows of funds, the lifespan of the investment, the degree of risk attached and the cost of obtaining funds. The expenditure incurred to fund such investments is termed as capital expenditure (CAPEX). The capital expenditure (CAPEX) could be incurred for expanding existing capacity (brown-field project) or to invest in altogether new investment avenues (green-field projects). But before incurring any such

29

expenditure proper appraisal of the available opportunities is to be carried out because capital expenditure, by its very nature, is irreversible, i.e. once incurred, it has long-term implications. Hence investment appraisal (capital budgeting) comes into play. Appraisal of investment opportunities depends upon the nature and type of the project. There are two main types of projects:

The first category is independent projects. This means that accepting one project does not The second category is mutually exclusive projects. This means that only one of a given

affect decisions about the other project.

set of projects can be taken (e.g. different sized factories)

Investment appraisal and Capital Budgeting:
Investment appraisal is a systematic financial procedure to ensure that adequate capital is allocated to value adding opportunities. The investment appraisal is a complex procedure and is not unique for all the investment proposals. There are various steps to appraise the given set of the projects. The major steps that are involved in the process of investment appraisal are as follows: 1. 2. 3. 4. 5. Generation of Investment Proposal, Estimation of cash flows, Evaluation of cash flows, Selection of project(s) based on an acceptance criterion, Continual reevaluation of Investment project after its acceptance.

The evaluation of any major capital budgeting decision should be done under the broad outline of these steps.

GENERATION OF INVESTENT PROPOSALS
The generation of an investment proposal is the fundamental and most important step in the capital budgeting process. It involves crucial procedures of drafting the investment proposal as per the requirements, checking its financial and technical viability, obtaining approval from the authorities

30

and most importantly securing adequate funds for the requisite project. This step is also very crucial as it encompasses the identification, analysis and selection of alternative(s). Generally, in any organization, there will be many potential investment proposals generated. Obviously, they cannot all go through the rigorous project analysis process. Therefore, the identified investment opportunities have to be subjected to a preliminary screening process by management to isolate the marginal and unsound proposals, because it is not worth spending resources to thoroughly evaluate such proposals. ESTIMATION OF CASH FLOWS The next logical step in the process of investment appraisal is the estimation of cash flows that the proposed project would be generating over its lifetime. Estimation of cash flows is very crucial as it provides the foundation for further decision-making. The estimation of cash flows, to be effective, should be carried on certain basic premises like:

After-tax cash flows: For the purpose of estimation of cash flows, after-tax cash flows should be considered. Incremental cash flows: The cash flows from the proposed investment proposal should be estimated on incremental-basis. Opportunity costs & Sunk costs: In the estimation of proposed cash flows from the project the opportunity casts should be included. As against this, the sunk costs should be ignored in the computation of the cash flows. Depreciation and Inflation: Another important consideration that should be made before approving any project is the impact of inflation on the depreciation and the tax-cover that it provides. This is especially useful in the replacement decisions.

Capital Budgeting Process- an overview: Capital budgeting, matter of fact, is a very crucial process as it involve taking long term decisions of irrevocable nature which have an impact in the long term functioning and future prospects of the concern.

31

In a nutshell the capital budgeting process can be summed up with the help of following flow chart:

32

33

Capital budgeting is a multi-faceted activity. There are several sequential stages in the process. The above flow chart indicates that every capital budgeting decision, especially in the large corporation has to go through certain logical steps as per the company policies. In general the proposals have to be scanned through the steps as mentioned in Fig.4. A strategic plan is the grand design of the firm and clearly identifies the business the firm is in and where it intends to position itself in the future. Strategic planning translates the firm’s corporate goal into specific policies and directions, sets priorities, specifies the structural, strategic and tactical areas of business development, and guides the planning process in the pursuit of solid objectives. A firm’s vision and mission is encapsulated in its strategic planning framework. There are feedback loops at different stages, and the feedback to ‘strategic planning’ at the project evaluation and decision stages – indicated by upward arrows in the given figure– is critically important. This feedback may suggest changes to the future direction of the firm, which may cause changes to the firm’s strategic plan.

Evaluation of cash flows
Having collected the relevant data pertaining to the available alternatives and estimation of the cash flow projections, the next logical step in the process of investment appraisal is to evaluate the cash flows on standards in terms of the impact of the project on the NPV of the company, the period that the project requires to payback its initial outlay and so-on. In other words the endeavor is to assess the economic worth of the project with due consideration to the risk and quality of Investment proposals under consideration. There are various methods that are applied for the evaluation of cash flows of the capital investment proposals. Some of the major methods are as follows:

Average Rate of Return (ARR)
The average rate of return looks at the expected net cash flows (income expenses) of the investment project. It measures the average net return each year as a percentage of the initial cost of the investment.

34

A project is accepted when its ARR is greater or equal to the required rate of return on the investment. Advantages: The accounting rate of return as a technique of capital investment appraisal offers following advantages:  It is a particularly useful approach for ranking projects where a firm faces liquidity constraints and requires fast repayment of investments.  It is appropriate in situations where risky investments are made in uncertain markets that are subject to fast design and product changes or where future cash flows are particularly difficult to predict.  The method is often used in conjunction with NPV or IRR method and acts as a first screening device to identify projects that are worthy of further investigation.  All levels of management easily understand it.  It provides an important summary method: how quickly will the initial investment be recouped? Disadvantages: However this method suffers from following demerits:  It does not take account of the timing of the profits from an investment.  It implicitly assumes stable cash receipts over time.  It is based on accounting profits and not cash flows. Accounting profits are subject to a number of different accounting treatments.  It is a relative measure rather than an absolute measure and hence takes no account of the size of the investment.  It takes no account of the length of the project.  It ignores the time value of money.

Payback Period Method:

35

The payback period is the length of time it takes to recover the initial cash flow without regard to the time value of money. In other words it is the ratio of the initial fixed investment over the annual cash inflows for the recovery period. It is commonly used but crude method for analyzing capital projects. Its main defects are that it takes no account of the profits over the whole life of the investment, nor of the time profile of the cash flow. Advantages: The advantages of Payback-period method as a technique of investment appraisal are as follows:  Simple to compute  Easy to understand  A crude measure of liquidity Disadvantages:  Ignores the time value of money  Ignores cash flows beyond the payback period  No objective decision criteria

Importance of Payback Period:
Despite the limitations of the payback method, it is the method most widely used in practice. There are a number of reasons for this:
 It is a particularly useful approach for ranking projects where a firm faces liquidity constraints

and requires fast repayment of investments.

It is appropriate in situations where risky investments are made in uncertain markets that are subject to fast design and product changes or where future cash flows are particularly difficult to predict.

 The method is often used in conjunction with NPV or IRR method and acts as a first screening device to identify projects that are worthy of further investigation.  All levels of management easily understand it.  It provides an important summary method: how quickly will the initial investment be recouped?

36

Discounted Payback Period Method:
The discounted payback period is the length of time it takes to recover the initial cash flow in terms of discounted cash flows. This method is used in risk analysis by comparing the discounted payback period to the expected life. The closer the discounted payback period is to the expected life, the more risk (when other conditions are equal). Advantages: The Discounted Payback Period method offers following advantages over the ‘simple’ Pay Back Period Method:  Considers the time value of money  Considers risk Disadvantages: Inspite of the above-cited merits, the Discounted payback Period Method suffers from following demerits:  Ignores cash flows beyond the discounted payback period  No objective decision criteria

The Profitability Index (Benefit-Cost Ratio)
Profitability index is the present value of the future cash flows divided by the initial investment. It is also called the benefit-cost ratio.

where, PI= Profitability Index A profitability index value above 1.0 indicates that the project is expected to enhance owners' wealth. Decision rule: PI > 1.0 PI < 1.0 PI = 1.0 Accept Reject Indifferent

37

Advantages: The main advantages of Profitability Index as a measure of appraising capital investment proposals are as follows:  Considers all cash flows  Considers risk  Considers the time value of money  Useful when ranking and selecting projects when capital is rationed Disadvantages: Profitability Index suffers from following disadvantages:  Difficult to interpret  Requires specifying a cost of capital  May give incorrect decision when comparing mutually exclusive projects

Internal Rate of Return
The internal rate of return (IRR) is the effective yield on the project; that is, the discount rate that causes the net present value to be equal to zero.

Linear extrapolation:

where, p1=% by positive NPV p2=% by negative NPV A = positive NPV (by % p1) B = negative NPV (by % p2) Decision Rule: If the IRR is greater than the required rate of return (RRR), the project is expected to enhance owners’ wealth: IRR > RRR IRR < RRR Accept project Reject project

38

IRR = RRR Advantages:

Indifferent

 Considers the time value of money  Considers risk (in the decision rule)  Considers all cash flows  Objective decision criteria

Disadvantages:  No unique IRR if there is more than one sign change in cash flows  May give an incorrect decision when deciding among mutually exclusive projects or in the case of capital rationing.

Modified Internal Rate of Return
MIRR is a financial measure used to determine the attractiveness of an investment. It is generally used as part of a capital budgeting process to rank various alternative choices. As the name implies, MIRR is a modification of the financial measure Internal Rate of Return (IRR). The modified internal rate of return (MIRR) is the effective yield on the project if intermediate cash flows are reinvested at a specified rate (usually the project's cost of capital).

The superiority of Modified Internal Rate of Return, as against the simple Internal rate of return, lies in the fact that • • Modified Internal Rate of Return considers negative cash flows after the initial investment, It also considers the reinvestment potential of positive cash flows.

Example: A firm has investment options with returns that are generally moderate. An unusually attractive investment opportunity comes up with much higher return. The cash spun off from this latter investment will probably be reinvested at the moderate rate of return rather than in another unusually high-return investment. In this case, IRR will overstate the value of the investment, while MIRR will not. 39

MIRR is calculated as follows:

Advantages: Major advantages of Modified Internal Rate of Return over simple Internal Rate of Return is the fact that it:  Considers the time value of money  Considers risk  Considers all cash flows  Follows an objective decision criteria

Disadvantages: Major limitation of this method is that it:  May give an incorrect decision when deciding among mutually exclusive projects or in the case of capital rationing.

Net Present Value Method:
The net present value (NPV) is the difference between the discounted future cash inflows and the discounted cash outflows for a project.

NPV= Present Value of cash inflows- Present Value of cash outflows

40

where, NPV=Net Present Value CFn=Cash Flows for the period n i= required rate of return A project whose NPV is greater than zero is expected to enhance owners’ wealth. The simple decision rule is: NPV > 0 NPV < 0 NPV = 0 Advantages: Net Present Value Method of evaluating the capital investment projects is considered to be the most theoretically sound method of appraisal. Its prime advantages over the other appraisal methods are as follows:  Considers the time value of money  Considers risk  Considers all cash flows  Objective decision criteria Disadvantages: Although theoretically sound, the Net Present Value Method has certain drawbacks, viz.:  Difficult to interpret  Requires specifying a cost of capital Accept Reject Indifferent

41

MANAGEMENT OF WORKING CAPITAL
Working capital is that which is required maintaining the daily expenses of the business management of Working Capital refers to the fine investment in Current Assets. Current Assets are as assets which are converted into cash cycle. Current Assets include Cash, Short term Securities, Debtors, Bills Receivable and Inventory. Management of Working Capital is an integral part of Finance Management and it has earning on the objectives of the owners wealth. Working Capital is essential to operate the fined assets in the sales activities however sales do not covered into cash instantaneously therefore a need of Working Capital arises. There are two concepts of Working Capital. I) II) Gross Working Capital Net Working Capital  Gross Working Capital means total of Current Assets  Net Working Capital means difference between the Current Assets and Current Liabilities
Cash Raw Material

Debtors

Work in Progress

Sales (Credit)

Finished Goods

42

INVENTORY
Inventory means how to manage raw material & supply of goods required for the production which will insure minimum five cost of form. Management of inventories is important part of Working Capital Management the aim of inventory management is to provide conscious surplus of Raw Materials other goods which are required for production. There are five types of Inventories in IRIL 1) 2) 3) 4) 5) Raw Material Material in Process Contract Job in Process Finished Goods Stores & Spares It maintains sufficient stock of Raw Materials in period of short supply and anticipates price change it helps sales department to maintains sufficient finished goods inventories for smooth sales operation. In IRIL there is special department and separate Inventory Management force which perform certain functions for efficient management of Inventories in the company

BILLS RECEIVABLE
The term Bills Receivable is defines as debt owned to the firm by customers arising form sales of goods or services in the ordinary course of business. 43

Receivable treated as marketing total to aid the sale of goods as well as use for protecting the customers from the competitor and attract the new customers and there by profit. The IRIL Co. sells its product to the industries so it needs to grant credit to its buyer CREDIT STANDARDS As per industrial standard for rayon the organization runs well on the track of average collection period. But because of the care competition in the chemical market the average collection period increased and reaches near to 25 to 30 days so it can conclude that organization investment in receivable is not very high. The customers are paying its obligation in time the defaults rate is nearly zero in the ort. Beside all above the organization also evaluate their customer’s financial condition character and capacity and that why the Company has never incurred the bed debt in the entire history. The collection of the fund is done by HDFC Bank which plays an agent role the average collection period for the account receivable between 21 to 27 days. Total debt of company as on 31st March, 2008 is 760.98 crores which have increased as compare to the last year debt i.e. 31 st march, 2007 was 595.99 Crores so it can be said that debtors are up by Rs. 164.99 Crores.

CASH MANAGEMENT
Cash is described as the oil to the ever turning wheels of the business without is the process rinds to a stop Generally any organization holds the cash for Transaction Motive, Precautionary Motive, Speculative Motive, Compensation Motive. The IRIL 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

44

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 market table security is done through the CFD only

CASH COLLECTION: The IRIL Co. operating in various geographical area of country it tries to speed up the cash collection by decentralization with the help of ten cash collection centres all over the India. CASH DISBURSEMENTS: The disbursement is one through centralized system by the organization the payment of the bill be made from the central amount and from the head office. So the Co. can enjoy the transit time delay using the factoring. OPTIMUM CASH BALANCE: The IRIL Co. keeps a maximum level of cash balance worth and average payment or three days. If cash is more than its maximum level than the cash is transferred to CFD and if cash is less than the level than the requirement of the cash is borrowed from the CFD.

45

Particulars
Balance with scheduled bank Current Account Cash & Cheques in Hand Current A/c. in respect of Right Issue Refund order Deposit A/c. Balance on Non-Schedule Bank SBS Current A/c., London TOTAL

31st March, 2007.
19.16 1.12 1.41 1.03

0.02 22.74

OPERATING LEVERAGE ANALYSIS
The leverage is associated with the investment 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). 46

Operating Leverage analysis results from the existence 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 Assets. OPERATING LEVERAGE = %CHANGE IN SALES %CHANGE IN PROGIT 3577.89 – 2786.39 224.97 – 186.93 791.50 38.04 2027.40 X 100

=

x 100

=

=

DIVIDEND DISTRIBUTION
Dividend refers to that portion of firm net earnings which are paid out to the Shareholders. A major decision of financial management is the dividend decision in the sense that the

47

firm has to choose between distributing the profits to the shareholders and ploughing them bank into the business. Following Table shows Dividend per Share and Dividend Payout Ratio for last five years.

Year 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06

Dividend Per Share 6.25 6.75 5.00 4.00 1.00 3.00 3.30 3.75 4.00 4.00 5.00

Payout(%) 15.20 15.55 17.46 28.25 (2.76) 28.88 45.47 24.05 20.58 24.02 29.08

LAST 5 YEARS PER SHARE DATA

48

LAST 5 YEARS PROFIT & LOSS ACCOUNT

49

(Rs. Crore) Income from operations Less: excise duty Net income from operations Other income Total income (Increase) / decrease in stocks Cost of materials Salaries, wages and employee benefits Manufacturing, selling and other expenses Interest and other finance expenses (net) Total expenses Profit before depreciation / amortisation and exceptional items Depreciation / amortisation Marketing / technical know how expenditure written off Profit before exceptional items and tax Exceptional items Profit after exceptional items Provision for current tax Provision for deferred tax Provision for fringe benefit tax Tax provision of earlier years written back Net profit

200708 4,137. 52 213.31 3,924. 21 41.59 3,965. 80 (83.68) 2131.2 5 258.2 1026.0 8 179.02

200607 3,577. 89 157.42 3,420. 47 44.51 3,464. 98 (45.48) 1,840.3 6 193.22 873.09 171.16

200506 2,786. 39 144.34 2,642. 05 23.44 2,665. 49 (47.32) 1,447.5 7 164.10 657.45 55.79

200405 1,988. 04 127.20 1,860. 84 9.72 1,870. 56 (11.16) 999.60

200304 1,717. 61 140.22 1,577. 39 14.23 1,591. 62 (21.01) 816.30

124.97 117.43 493.00 421.08 18.73 14.82

3,510. 3,032. 2,277. 1,625. 1,348. 87 35 89 14 62 454.93 432.63 387.60 245.42 243.00

141.1 120.32 111.81 -

77.74 2.95

77.59 3.93

313.83 312.31 275.79 164.73 161.48 0.73 (1.23) (4.04) (7.65) 19.95 314.56 311.08 271.75 157.08 181.43 78.14 98.82 92.97 45.35 44.25 25.24 15.16 (6.91) (1.99) 5.90 3.86 3.39 4.25 (35.75) (31.26) (5.49) 243.07 224.97 186.93 113.72 131.28

50

LAST 5 YEARS BALANCE SHEET
(Rs. Crore) Shareholders' funds Share capital Share warrants Reserves and surplus 2007- 200608 07 Sources of funds 95.01 377.41 3551.3 3,031.2 2,124.1 1,294.1 1,207.8 2 4 1 8 0 4,023. 3,124. 2,207. 1,354. 1,267. 74 55 61 06 68 Loan funds Secured loans Unsecured loans 1856.7 2,071.6 1,084.2 493.03 405.81 2 2 1 886.70 760.21 479.36 2,743. 2,831. 1,563. 493.03 405.81 42 83 57 Deferred tax liabilities 200.31 174.08 167.70 6,967. 6,130. 3,938. Total funds employed 47 46 88 Application of funds Fixed assets 3,111.7 2,653.1 2,461.8 Gross block 8 5 1 1,680.8 1,548.9 1,448.7 Less: depreciation 9 0 4 1,430.8 1,104.2 1,013.0 Net block 9 5 7 Capital work-in-progress 70.73 203.88 122.45 125.52 127.51 1,972. 1,801. 61 00 93.31 200506 200405 200304

83.50

59.88

59.88

1,418.7 1,301.3 4 1 663.49 588.53 755.25 712.78 55.03 24.69

1,501. 1,308. 1,135. 810.28 737.47 62 13 52 4,054. 3,849. 1,675. 699.66 741.63 17 39 79 Current assets, loans and advances Inventories 776.60 475.26 526.33 355.00 276.91 Sundry debtors 760.98 595.99 415.44 260.90 186.41 Cash and bank balances 97.15 22.74 20.32 9.41 13.27 Interest accrued on 0.82 investments Loans and advances 476.50 332.33 664.18 103.88 93.50 Investments 2,112. 1426.3 1626.2 729.19 570.09 05 2 7 Less: current liabilities and provisions Current liabilities 566.89 393.73 424.78 228.58 212.74 Provisions 133.48 59.65 73.92 37.94 38.40

51

700.37 453.38 498.70 266.52 Net current assets Total funds utilized

251.14

1,411. 1,127. 972.94 462.67 318.95 68 57 6,967. 6,130. 3,938. 1,972. 1,801. 47 46 88 61 00

LAST 5 YEARS CASH FLOW STATEMENT
(Rs Crore) 2007-08 2006-07 2005-06 2004-05 2003-04 A Cash flow from operating activities Net profit before tax 314.56 311.08 271.75 155.16 161.48 Add: Adjustments for Depreciation 141.20 120.43 111.91 77.84 77.67 Marketing and technical know-how 2.95 3.93 written-off Interest expenses (net) 179.02 171.16 55.80 18.73 14.82 (Profit) / loss on fixed assets sold (7.18) (2.66) 0.34 (0.36) 0.16 (Profit) / loss on sale of investments (1.19) (6.76) (2.54) (0.60) (1.19) Dividend income (4.23) (23.73) (16.54) (6.41) (8.74) (Gain) / loss on sale of contract exports (0.20) division (Gain) / loss on sale of Rajshree Syntex (0.73) unit Employees stock options outstanding 0.71 307.60 258.24 148.97 92.15 86.65 Operating profit before working capital 622.16 569.32 420.72 247.31 248.13 changes Add: Adjustments for Decrease / (increase) in trade and (141.39) (7.60) 231.47 (87.18) 21.53 other receivables Decrease / (increase) in inventories (258.47) 28.00 (118.66) (78.33) (31.49) Increase / (decrease) in trade and 102.52 (32.71) (275.57) 17.77 24.65 other payables (297.34) (12.31) (162.76) (147.74) 14.69 Cash generated from operations 324.82 557.01 257.96 99.57 262.82 Income taxes refund (paid) (net) (46.11) (60.66) (81.00) (48.23) (48.12) Net cash from operating activities 278.71 496.35 176.96 51.34 214.70

B

Cash flow from investing activities Proceeds from sale of fixed assets Capital subsidy received

13.29 -

8.82 -

2.19 -

2.81 -

2.99 1.16

52

Proceeds from transfer of global 5.40 exports and marketing division Sale / redemption / (purchase) of 212.28 (116.08) 257.44 84.87 (48.01) investments (net) Sale of investments in subsidiaries and 10.96 joint ventures Proceeds from sale of Rajashree 5.06 34.50 Syntex unit Interest received 24.78 24.29 13.15 4.34 9.17 Dividend received 4.23 23.73 16.54 6.41 8.74 Increase / decrease in corporate (89.76) 132.50 (184.63) deposit Purchase of fixed assets (238.05) (302.72) (199.97) (153.66) (105.13) Investment in equity of joint ventures - (1597.89) (661.09) (8.00) Investment in equity of subsidiaries (504.59) (463.83) (91.40) (44.42) (150.18) Acquisitions - (42.54) Net cash (used in) / from investing (572.76 (2245.72 (847.77 (331.80 (94.25) activities ) ) ) ) C Cash flow from financing activities Proceeds from issue of share capital 1.70 9.81 0.01 (including share premium) Security premium received 339.70 759.93 0.06 Proceeds from issue of share warrants 377.41 (net of conversion) Proceeds from / (repayment of) (157.81) 1272.87 764.86 borrowings (net) Dividends paid (including tax thereon) - (106.13) (27.31) Interest and finance charges paid (194.55) (184.69) (62.06) Net cash (used in) / from financing 366.45 1751.79 675.56 activities Net increase in cash and equivalents 72.40 2.42 4.75 Cash and cash equivalents (opening 22.74 20.32 9.41 balance) Cash of IGFL and BGFL 6.16 Cash acquired on merger of ABIL 2.02 Cash outflow on sale of RST unit (0.01) Cash and cash equivalents (closing 97.15 22.74 20.32 balance)

0.00 0.04 88.00 (27.08) (21.92) 39.05 (3.86) 13.27 9.41

0.01 0.06 138.31 (25.33) (23.97) 89.07 (28.03) 41.30 13.27

53

54

INDEX

SR. NO.
1. 2. 3. 4. 5. 6. 7. 8.

PARTICULARS
Introduction Organization Structure of Production Department Introduction to Company’s Product Manufacturing Process Plant Layout Material Handling Purchase Department Plant Maintanance

PAGE NO.
52 53 54 55 59 60 61 62

55

9.

Quality Control

63

INTRODUCTION
Production means certain of utilities and entails the procurement and utilization of factors of production, which includes manpower, material, building 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 services are 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.

Inputs
Material Labour Capital

Outputs Production Process
Products Services Information Products or Services

56

ORGANIZATION STRUCTURE OF PRODUCTION DEPARTMENT
Sr. Vice President (Production)

Sr. GM (Prod.)

GM (Prod.)

Viscose Dept.

Spin bath Dept.

Spinning Dept.

After Treatment Dept.

Textile Dept.

Continuous Spinning Yarn (CSY)

Chemical

Dy. GM

Dy. Man.

Dy. Man.

Manager

Sr. Man.

Ast. Manager

Sr. Manager

Dy. M

Ast. Man

Ast. Man.

Dy. Man.

Dy. Man. Sr. Supt. Sr. Supt.

Sr. Supt

Sr. Supt.

Sr. Eng.

Sr. Supt.

Sr. Supt. Supt. Supt.

Supt.

Supt.

Dy. Man.

Supt.

Supt. Jr. Supt. Jr. Supt.

Incharge Supt

Incharge Supt

Workman

Incharge Supt.

Incharge Supt.

Workman

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. 2. 3. 4. VISCOSE FILAMENT RAYON YARN SULPHURIC ACID (H2SO4) CARBON-DI-SULPHIDE(CS2) ANYHYDROUS SODIUM SULPHATE 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:

 1)
2) 3) 4) 5)

Uses of Rayon Yarn in Manufacturing Of :
mantle of gas lanterns Dress materials and saris, Fancy yarns and finishing fabrics. Elastic tapes Fancy yarns and finishing fabrics Warp and weft for weaving of suiting and shirting’s


1) 2) 3) 4)

Uses of Sulphuric Acid (H2So4) In:
Chemical Industry & Agro-Chemical Industry Paint & Dye Industry Medicine Industry Rayon Industry

 1)
2) 3) 4)

Uses of Carbon-di-Sulphate (CS2) In :
Glass Industry Pharmaceutical Industry Rayon Industry Base for Agro-Chemical Industry

Uses of Sodium Sulphate In :
Glass Industry & Paint Industry Paper Industry Dye Industry

1) 2) 3)

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 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) 2) 3) 4) 1) 2) 3) 4) Viscose Filament Rayon Yarn Sulphuric Acid Carbon Disulphide Sodium Sulphate

The main raw material required for Rayon Yarn is: Wood Pulp Caustic Soda Carbon Disuphide 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) The manufacturing process of Viscose Filament Yarn can be divided in the following sections: VISCOSE SECTION The 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 soltution.

  

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) Steeping: In 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 bended 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 shirred 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 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% e) Shreding :

Shreding 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 conveyou 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 173 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. 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 received as a by-product. Sodium sulphate is a min by-product which is requires 22 tones per day. This by-product Na2SO4 should be removed from 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.

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 or 450 depending upon denier. 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. 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 process but its function is auxiliary and very important in nature. 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

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 plant 2.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 incentivies 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.

MATERIAL HANDLING
“Material handing is the art and the science involving the movement, packing and storing of substance in any form.” - American Handling society Material handing 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 trolley as an equipment for material handling in its Viscose Section to brought up the woo pulp from 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 trolley. 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 conveyers belts for the supply of coal that is imported from Bihar. Whereas the other raw materials like woo pulp, sulphur etc. are brought by land route i.e. rails and truck to the factory.

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.” IR&IL Co. believes in o Purchase the right quality of material. o Purchase right quantity of material. o Make the material available at right time. o Purchase the material at right price. o Purchase material from the right source. Purchase procedure of IR&IL Co. INVENTORY DEPARTMENT Inventory 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 DEPARTMENT Purchase 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. consider the following factors. o o o o o o o o Old rate of the product Lowest bids Reputation of supplier Delivery period Payment terms Technical evolution After sales service Performance guarantee

The above quotation 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. 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. receive 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. Repair & Maintenance Expenditure of: Particulars Buildings Plants & Machinery Others 2003-04 (Rs. Crores) 1.62 4.86 0.47 2002-03 (Rs. Crores) 1.23 5.11 0.45

6 5 4 3 2 1 0 2003-04 (Rs. Crores) 2002-03 (Rs. Crores) Buildings Plants & Machinery Others

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) 2) Product – Service design Operating System – makes a product/provides a service

Quality Policy
We are committed to o o o Meet customer’s expectation of quality an service in premium segment. Maintain high morale of employees Use eco-friendly technology and maintain pollution free environment.

Environment Policy We believe that preservation of environment Is 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.: o o o o Regular checking of set parameters. Checking individual. Checking of abnormality in the process. Highlighting the variation from the set operation procedures/parameters.

INDEX

SR. NO.
1 2 3 4 5 6 7 8 9 10 11

PARTICULARS
Introduction Organization Structure Marketing Mix and Product Mix Product Planning and Development & Product Life Cycle New Product Development Packaging & Marketing Research Market Segmentation Pricing Promotional Tools & Advertising Channel of Distribution International Marketing

PAGE NO.
66 67 68 69 70 71 72 73 74 75 76

INTRODUCTION

Marketing deals with identifying and meeting human and social needs. One of the shortest definition of 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 service.” Marketing is a process by which individuals and groups obtain what they need 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 business. Marketing people are involve in marketing ten types of entitles’ Goods, Services, Experiences, Events, Persons, Places, Properties, Organizations, Information, Ideas. Marketing has often described as “The Art of Selling Products.” Organization of Marketing Department Organization here depicts a form of co-operative efforts that re-undertaken by the number of person sat different their archylevel. 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

Vice President

Raw Material & Storage

Legal & Liaison

Sales & Marketing

Transport

General Manager

Senior Officer

General Manager

Senior Officer

Deputy Manager

Manager

Senior Officer

Sales Officer

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 do 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. 1) 2) 3) 4) 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 sold 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.

PRODUCT PLANNING & 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) 2) 3) The development and introduction of products The modification of the existing products 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 from 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: o o o o o 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 DEVELOPMENT
New 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. 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 Sodium Sulphate receovery Development of new products i.e. Flat Yarn Development in Carbon Black Division Development in Textile Division

Brand
The 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 seller 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.

PACKAGING
It 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 passes to the computer slip.  Important details of slip are stenciled on the cartoons in order to meet excise department’s requirement.  These cartoons are than rechecked for weight, packing slip and stenciling.  After polypropylene packing cartoons are transported to store room for Sales Department.

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 collection process, analyze 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 Department. 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 customers and market condition.

MARKET SEGMENTATION
“Market Segmentation consists of taking this total heterogeneous market for the product and dividing it into several sub-markets segments each of which tends to be homogenous in all the significant aspect.” -William 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 o People Oriented Approach o 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 Ahmedabad, 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.

PRICING
Pricing is a key factor, which remarkably effects the sales operartions. 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 o o o o o o 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 Policy
Under 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 Policy
Under 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 Policy
Under this policy the company use the method of target pricing. It fixesa target return of total cost. It uses break even analysis fordeciding cost plus pricing which helps it in determining the level of output.

PROMOTIONAL TOOLS
“Promotion consists of those activities that are designed to being a company’s goods or services to the favorable attention of customers.” 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 through middle man. Following tools have been use in this method: o Buying allowance discount o Display allowance o Dealers contest o Concession on the net sales o Free gift

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 MarketingAssociation Advertising is basically uses for: o Creating or enhancing goodwill o Preparing ground for new product o Creation of demand o 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 Aditya 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 textile 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 depict various facts and figures of companies manufacturing process, EXIM Policy, Pricing Policy, Strategies, etc. In short the company adopts the direct advertising method.

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 function 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 through dealers and selling agent. CHANNEL OF DISTRIBUTION

Company

Sales officer

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 abroad too. Over the above this the company’s export contributes 17% to the divisions revenue.. Future Plan of Action o Development of spatiality yarn o Eco and energy auditing o Improvement in intrinsic quality of yarn o Developing new shades of Spun ye Yarn o 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 Greentech Foundation, New Delhi The Gujarati Safety Council has conferred upon the “Certificate of Honor – 2002” upon the division base on its safety record and performance.

INDEX
SR. NO.
1. 2. 3. 4. 5. 6. 7. 8. 9.

PARTICULAR
Information Related to Employees Recruitment, Selection & Induction Procedure Training & Management Development Programme Job Description (Managerial Level Only) Promotion ,Transfer Policy & Performance Appraisal System Wage and Salary Administration & Working of ESI Scheme Employer Services Welfare Facility Study of P.F. Scheme & Grievance Handling Procedure

PAGE NO.
79 81 82 83 84 85 86 87 89

INFORMATION RELATED TO EMPLOYEES

MANPOWER PROFILE (PREVIOUS YEAR)

Sr. No.

Level

Professional (CA, MBA, BE, MBBS, AMIE, ICWA, MMS, BS, PHD, PGD, IRPM, MSW)
16 30 88

NonProfessional (B.COM, M.COM, B.SC, M.SC, BA, DIP. ENG., ITI)
2 11 87

1) 2) 3)

Sr. Mgt. (GM & Above) Middle Mgt. (Manager & upto DGM) Jr. Management (Officer & upto Dy. Manager)

4)

Staff/Supervisor/Asst. Officer

1

286

TOTAL

135

386

PERMANENT WORKMEN Higyly Skilled 222

Skilled Semi-Skilled Un-Skilled TOTAL BADLI WORKMEN Higyly Skilled Skilled Semi-Skilled Un-Skilled TOTAL

-

456 1163 303 ______ 2144 ======

-

000 000 277 499 ______ 785 ======

MANPOWER PROFILE (CURRENT YEAR) Management Employees Staff Permanent Workers Badli Workers Contract Workers TOTAL 234 355 2059 508 1049 ______ 4205 ======

RECRUITMENT, SELECTION & INDUCTION PROCEDURE
RECRUITMENT Recruitment is a process of searching for prospective employees and stimulation and encouraging them to apply for jobs in an organization.

Recruitment is process to discover the sources of manpower to meet the requirement of the staffing schedule & to employee effective measure for attracting that manpower in adequate numbers to facilitate effective selection of and efficient working force. The recruiting procedure of IRIL Co. consists of three segments. 1. RECRUITMENT OF WORKERS 2. RECRUITMENT OF EXECUTIVE & STAFF 3. RECRUITMENT OF TECHINCAL PERSONNEL So far as IRIL Co. is concerned the recruitment procedure. Is directly depend upon human force & is relate to the selection of well qualified personnel. SELECTION The selection procedure is concerned with securing relevant information about an application. IRIL Co.’s recruitment and selection procedure for blues collar force is as per the labour laws. For the recruitment of labour in the company it is essential has he should acquire the certificate of ITI Examination. Workers are selected by concerned supervisor and the lobour welfare officer physical fitness attitudes for worker etc. are considered at the time of selection. The IRIL Co. uses the indirect method more frequently for the requirement of its employees sometime the IRIL Co. also uses the third party method at the time of selection of high level personnel like general secretary and vice president. INDUCTION Indication is the process of receiving and welcoming an employee when he first joins a company and giving him the basic information he needs to settle down quickly and happily and start work. The IRIL does not believe in indication because it believes that it is wastage of time and so it does not give important to the induction.

TRAINING & MANAGEMENT DEVELOPMENT PROGRAMME
Training is an important aspect of personnel which increase the knowledge and skill of workers for doing a specific job.

 TRAINING FOR THE WORKERS The HRD department prepares schedule for the workers in need of training to develop the job, a company’s main purpose is to give knowledge about new technology and to confirm the main purpose of giving training. To improve the skill and knowledge of workers towards quality of product. To give the technical knowledge and safety measure training. To give the information about operating the working programmer For discipline good conduct & job responsibility.

   

TRAINING FOR CLERK & TECHNICAL STAFF The IRIL Co. is not imparting any training courses as far as clerical staff is concerned nut the supervisor are trained for. Gaining knowledge of responsibility Cost of control and cost effectiveness Knowledge of all disciplinary action Development of leadership quality  DEVELOPMENT The IRIL sent its officer and managers to its different unit within the country as well as abroad for the exchange of ideas relate to the operation management and also for the improvement of technical knowledge. The IRIL Co. has adopted the concepts of Birla Management Centre with aims at giving new ideas and innovation the target BMC center is executive for everyone.

JOB DESCRIPTION

Job Description means to give the information and guidance to candidate about this particulars job for which he has been selected it is a process of giving information candidates about his status, duties & responsibility. In IRIL Co. the duties and responsibilities of administrative department are called through description are as undoes. Observation of employees at the first time at work. Discussion with department and outside experts.  CATEGORIES OF EMPLOYEES Total 9 categories from senior vice president to assistant. CATEGORIES OF WORKERS Total 4 categories Un-Skilled, Semi-Skilled, Skilled and Highly Skilled MANAGERIAL LEVEL Those personnel that are selected lever are being made well converse with their. Nature of Job Duties and Responsibilities Job Summary Position and Status Working Condition

PROMOTION & TRANSFER POLICY
 PROMOTION

A promotion is the assignment of highest responsibility to an individual. It refers to vertical transfer means downwards to upwards that is why promotion is called positive. Top Management emphasis on promotion rather than transfers because promotion is advancement within an organization. IRIL Co. has sound personnel policy. The policy is a blend of seniority and merit consideration stressing more emphasis on seniority. An 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 the disciplinary action and by performance appraisal system.  TRANSFERS without involving any marked change in duties responsibilities, skills needed or compensation. IRIL 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 form one department to another because of physical fitness problems. A lateral shift causing movement of individuals from one position to another position usually

PERFORMANCE APPRAISAL SYSTEM
It is the process of evaluating the performance and qualification of the employee in term of the requirement of the job which he is employed. In IRIL Co. the management is using open system of studying performance appraisal system when a new candidates is recruited the management examines his performance for two years which is called as the apprentice period. In this company three year service period is considered to be qualified period for getting promotion in these three years the performance of the employees is continuously observed and is taken in to account while giving promotion during this period the management prepares the confidential report of the performance and behaviors of the candidate.

WAGE & SALARY ADMINISTRATION

Wages & Salary administration refers to the establishment implementation sound policies of employee compensation. Wages & Salary are given to employee as a reward for their contribution to production process. Usually wages refers to hours rate paid to such group of production and maintenance employee whom we call as blue collar worker while on the other hand salary refers to monthly paid to clerical administration and professional employees i.e. white collar workers. There are two systems by which wages to be paid to the workers. Time wages system Piece wage system The IRIL gives good rate of salary to the staff and worker.

 

WORKING OF E.S.I. SCHEME
E.S.I means employees state insurance scheme . It is necessary in all the companies according to 1948 act the company has provided insuance facilities to all the workers the company deducts certain amount of the salary of the workers every month. If any accident occurs on the job or any kind of illness or injury this reserved money is given him from the insurance. In this company there is no E.S.I. scheme but the employees are insured in Oriental Instance Co.

EMPLOYER SERVICES

It motivate the employees and to increase their efficiency it become 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 Indian Rayon & Industries Ltd. Provides the following facilities.

QUARTER FACILITY
IRIL Co. gives Quarters facilities to its employees the staff as well as the workers. Basically this Quarter facility is given on the basis of the category of employee.

ENTERTAINMENT FACILITY
The company has its own auditorium in which it conducts different types of programs and games on different types of occasions especially for its staff members. It also provides many type of sports facility to its workers the company has competitive players unit in this cricket team. The company also arrange Rayon Cup Cricket Tournament every year between the very large companies in Saurashtra.

WELFARE FACILITY

The centre was established in 1993 for the benefit of workman and their families the facility includes games like Volley Ball, Tennis, Carom, Chess, Reading Room & Library for ladies embroidery and tailoring classes are conducted as a continuous activity. SCHOOL FACILITY It has set up a school named Ind Rayon School for both English medium as well as Hindi medium. English is upto 12th standard having both science as well as commerce stream and affiliated with Gujarat Board. Every year approximately 2000 students are admitted over here out of which more than 50% of the students are employees’ students. Where as Hindi medium school has been set up six years back it is the only Hindi medium school in the entire district. It up graded by one standard every year. 50% of the school fee is reimbursed by the company of the employees’ children. VOLUNTARY RETIREMENT SERVICE VRS would shortly introduce at IRIL company for the requirement of the surplus man power this would be applicable to both staff and the workers of the company provided to employees who are is and above 40 years old or have minimum of 10 years service. CANTEEN FACILITY The company has followed the act that reveals that wherever there are 250 or more working there should be a canteen facility for them. This canteen facility runs on no profit no loss aces. It provides snacks tea and coffee at nominal rate. LIBRARY FACILITY Company is having its own library which contains useful books related to all the sector of the study and magazines of all kinds. It also provides internet facility to its employees.

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 employee and collects about 50000 and provides of the dead person family. And the company itself gives 1400 along with the amount received from United India Insurance Company. CREDIT COOPERATIVE SOCIETY Members are given loan facility up to an amount of Rs. 60000/- at the nominal rate. This is managed by cooperative society. MEDICAL FACILITY In any accident or emergency situation company give ambulance and medical facility without any cost BONUS FACILITY IRIL gives 20% bonus for employees who get less than 1600 basic salary at present 20% Bonus + Salary is given bonus. UNIFORM FACILITY IRIL provides uniform to chemical Viscose Department 10 M clothes in every year of month now-a-day company pay Rs. 200 to each employee to purchase shoes. MILK FACILITY Company provides milk to worker who are working in chemical and spinning department.

STUDY OF PROVIDENT FUND SCHEME

Provident Fund of this unit is as per rules and regulations of the government the company follows the Law of 1952 in terms of Provident Fund Scheme the Provident Fund Scheme is a compulsory of the employees. The employees can get the loan or can withdraw amount from Provident Funds in case of marriage sickness house loan etc. In which IRIL 12% salary of the employees is collect to Provident Fund and also pays interest.

GRIEVANCE HANDLING PROCEDURE
Grievance is any dissatisfaction as feeling of injustice in connection with ones employment situation that is brought to the attention of the management. In IRIL Co. the grievance can be solved by following procedure. In IRIL Co. the workman will take his grievance in oral or written to his immediate supervisor if the supervisor fails to solve the problem he can go to higher authority if even the solution suggested by higher authority is not satisfactory for the person or the reply is not received within seven working days the copy of it is forwarded to grievance committee otherwise the matter will be included in the agenda for discussion at the next meeting of the grievance committee.

ABBREVIATIONS USED

ABG ABNL ARR BPO EPS IRIL IRR MIRR NPV PI PBIT PBP PSY ROACE ROCE ROI VFY VSF

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Aditya Birla Group. Aditya Birla Nuvo Ltd. Accounting Rate of Return. Business Process Outsourcing. Earnings per Share. Indian Rayon & Industries Ltd. Internal Rate of Return. Modified Internal Rate of Return. Net Present Value. Profitability Index. Profit Before Interest and Tax. Pay Back Period. Pot Spun Yarn. Return on Average Capital Employed. Return on Capital Employed. Return on Investment. Viscose Filament Yarn. Viscose Staple Fibre.

BIBLIOGRAPHY

Apart from the study of Company’s financial literature, statements and other financial records, following books, websites and Manuals have played a very crucial role in shaping this report: Books: 1. Chandra, Prasanna, “Financial Management” 2. V. K. Bhalla, “Financial Management and Policy” 3. Philip Kotler, “Marketing Management” Websites: 1. http://www.indianrayon.com/ 2. http://www.google.com/ 3. http://www.adityabirla.com/ Manuals: 1. Annual Report Manual, Aditya Birla Group. 2. Capital Budgeting Manual, Aditya Birla Group.

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