1

INDEX

SR. PARTICULARS PAGE

NO. NO.
1 History & Development of Unit 3
2 Current Status 4
3 Growth Outlook 6
4 Brand Profile & Size and form of the organization 7
5 Joint Ventures and Subsidiaries 8
6 Manufacturing Process and Production 9
7 Organization Chart 11
8 Time Keeping System 12
9 Group Companies at a glance in India & Contribution 13
of the Unit to the Industry

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
Present: Aditya Birla Group is a conglomerate of companies operating in different sectors and areas.
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 : “upper-
crest” – 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 : - Knitwear brand for socks and t-shirts; leading international brands for under-
clothes.

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. Streeping
b. Shreeding
c. Pre-Ageing
d. Xanthation
e. Pressing
f. Dissolving
g. Repenning & Filteration
2. 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
Executiv
workers.
e
President
6. Packing Section
Packing of the final product as per ISI standard disclose after quality. Here they use card
Personnel & Administratio
Production Engineering Co
board for packing because it is easy H R D and
to handle taken less nweight than wooden box. On box the full
Department Department De
Department Department
information is printed.
i) Name of the Party to whom the goods are despatched.
Raw Maintenanc
ii) Date of Packing. Time Office
Material
Viscose
e
iii) Quality Grade & Weight.
iv) Register Trademark of the Company.
Welfare Legal Spin Bath Electrical
V) Colors of Stones

Labour S
Sales Spinning Instrument
Office P

ORGANISATION
Personnel CHART After
Treatment
B

HRD 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” 7:00am to 3:00pm

Shift “B” 3:00pm to 11:00pm
Shift “C” 11:00pm to 7:00am
General Shift 8:30am to 5:30pm
Lunch Break 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 Key Products / Services

Grasim Viscose Staple Fibre, Cement, Sponge Iron, Textiles, Exports,
Software Consulting
Hinadalco Aluminum
Indian Rayon Viscose Filament Yarn, Textiles, Insulators, Carbon Black
Indo Gulf Fertilizers, Copper
Birla Global Finance Financial Service
HIGI Industries Files, Castings, Gases
Essel Mining Iron and Manganese ore mining, Ferro alloys, HPE woven
sacks
Shree Digvijay Cement Cement

13
Kerala Spinners Synthetic and blended yarns
Eastern Spinning Mills 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. PARTICULARS PAGE
NO. NO.
1 Introduction to the Industry 16
2 Competitive Position - VFY 18
3 Domestic Competitors - VFY 19
4 Competitive Position – Chlor Alkali 20
5 Dealing with competitors 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 EXPORT SHARE
SHARE

7% 0%
29% 5% 16%
24% 42%
Indian Rayon
Century
Keshoram
NRC
BRC
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 VFY NATIONAL

RAYON RAYON
DOMESTIC
16000 TPA 16000 TPA
18425 TPA 06-07 MANUFACTU
12604 TPA 06-
RERS 07

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

8.50% 3.20%

3.50% GRCD
Indian Rayon
BCCL
GACL
14.90% IPCL
DCM
Andhra Sugar
Others
51.50% 6.30%

4.70% 7.40%

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. Financial Planning 24
2. Capitalization 25
3. Capital Structure 26
4. Financial Leverage 27
5. Management of Fixed Assets 28
(I) Capital Budgeting
6. Management of Working Capital 39
(I) Inventories
(II) Receivable
(III) Cash & Bank
7. Operating Leverage Analysis 43
8. Dividend Distribution 44
9. Per Share Data 45
10. Last 5 year Profit & Loss A/c 46
11. Last 5 year Balance Sheet 47
12. Last 5 Year Cash Flow Statement 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 EPS (RS.)
2001-2002 7.04
2002-2003 20.71
2003-2004 18.59
2004-2005 20.27
2005-2006 25.01
2006-2007 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 (Rs. In Crore.)
2007-2008 2006-2007
Share Capital 95.01 93.31
Reserves & Surplus 3551.32 3031.24
Secured Loan 1856.72 2071.62
Unsecured Loan 886.70 760.21

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 Share Capital
2000 Reserves & Surplus
1500 Secured Loan
1000 Unsecured Loan
500
0
2007-2008 2006-2007

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 2003-
2004. 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 Net Block
st
As at 31 march-06 As at 31st march-07
Tangible Assets

Land
Free Hold 1.20 1.20
Lease Hold 24.96 24.85
Railway Siding 0.97 0.69
Building 160.95 164.30
Lease hold improvements 0.26 0.16
Plant & Machinery 679.72 781.33
Furniture Fixture & Equipment 31.59 33.97
Vehicles and Aircraft 12.92 13.54
Live Stock 0.00 0.00

Intangible Assets

Goodwill on Acquisition 20.35 20.35

Trademark 77.96 61.38
Specialized Software 2.19 2.48
TOTAL 1038.07 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
affect decisions about the other project.
 The second category is mutually exclusive projects. This means that only one of a given
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. Generation of Investment Proposal,

2. Estimation of cash flows,
3. Evaluation of cash flows,
4. Selection of project(s) based on an acceptance criterion,
5. 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 Accept
PI < 1.0 Reject
PI = 1.0 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 Accept project
IRR < RRR Reject project

38
IRR = RRR Indifferent
Advantages:
 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 Accept
NPV < 0 Reject
NPV = 0 Indifferent
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

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) Gross Working Capital
II) Net Working Capital

 Gross Working Capital means total of Current Assets

 Net Working Capital means difference between the Current Assets and Current Liabilities

Raw
Cash
Material

Work in
Debtors
Progress

Sales Finished
(Credit) 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) Raw Material
2) Material in Process
3) Contract Job in Process
4) Finished Goods
5) 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 31st March, 2007.
Balance with scheduled bank
Current Account 19.16
Cash & Cheques in Hand 1.12
Current A/c. in respect of Right Issue 1.41
Refund order
Deposit A/c. 1.03
Balance on Non-Schedule Bank

SBS Current A/c., London 0.02

TOTAL 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 X 100

%CHANGE IN PROGIT

= 3577.89 – 2786.39 x 100

224.97 – 186.93

= 791.50
38.04

= 2027.40

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 Dividend Per Share Payout(%)

1995-96 6.25 15.20
1996-97 6.75 15.55
1997-98 5.00 17.46
1998-99 4.00 28.25
1999-00 1.00 (2.76)
2000-01 3.00 28.88
2001-02 3.30 45.47
2002-03 3.75 24.05
2003-04 4.00 20.58
2004-05 4.00 24.02
2005-06 5.00 29.08

LAST 5 YEARS PER SHARE DATA

48
LAST 5 YEARS PROFIT & LOSS ACCOUNT

49
 2007- 2006- 2005- 2004- 2003-
(Rs. Crore)
08 07 06 05 04
4,137. 3,577. 2,786. 1,988. 1,717.
Income from operations
52 89 39 04 61
Less: excise duty 213.31 157.42 144.34 127.20 140.22
3,924. 3,420. 2,642. 1,860. 1,577.
Net income from operations
21 47 05 84 39
Other income 41.59 44.51 23.44 9.72 14.23
3,965. 3,464. 2,665. 1,870. 1,591.
Total income
80 98 49 56 62
(Increase) / decrease in stocks (83.68) (45.48) (47.32) (11.16) (21.01)
2131.2 1,840.3 1,447.5 999.60 816.30
Cost of materials
5 6 7
Salaries, wages and employee benefits 258.2 193.22 164.10 124.97 117.43
Manufacturing, selling and other 1026.0 873.09 657.45 493.00 421.08
expenses 8
Interest and other finance expenses 179.02 171.16 55.79 18.73 14.82
(net)
3,510. 3,032. 2,277. 1,625. 1,348.
Total expenses
87 35 89 14 62
Profit before depreciation / 454.93 432.63 387.60 245.42 243.00
amortisation and exceptional
items
Depreciation / amortisation 141.1 120.32 111.81 77.74 77.59
Marketing / technical know how - - - 2.95 3.93
expenditure written off
Profit before exceptional items 313.83 312.31 275.79 164.73 161.48
and tax
Exceptional items 0.73 (1.23) (4.04) (7.65) 19.95
Profit after exceptional items 314.56 311.08 271.75 157.08 181.43
Provision for current tax 78.14 98.82 92.97 45.35 44.25
Provision for deferred tax 25.24 15.16 (6.91) (1.99) 5.90
Provision for fringe benefit tax 3.86 3.39 4.25 - -
Tax provision of earlier years written (35.75) (31.26) (5.49) - -
back
Net profit 243.07 224.97 186.93 113.72 131.28

50
 LAST 5 YEARS BALANCE SHEET
2007- 2006- 2005- 2004- 2003-
(Rs. Crore)
08 07 06 05 04
Sources of funds
Shareholders' funds
Share capital 95.01 93.31 83.50 59.88 59.88
Share warrants 377.41
3551.3 3,031.2 2,124.1 1,294.1 1,207.8
Reserves and surplus
2 4 1 8 0
4,023. 3,124. 2,207. 1,354. 1,267.
74 55 61 06 68
Loan funds
1856.7 2,071.6 1,084.2
Secured loans 493.03 405.81
2 2 1
Unsecured loans 886.70 760.21 479.36 - -
2,743. 2,831. 1,563.
493.03 405.81
42 83 57
Deferred tax liabilities 200.31 174.08 167.70 125.52 127.51
6,967. 6,130. 3,938. 1,972. 1,801.
Total funds employed
47 46 88 61 00
Application of funds
Fixed assets
3,111.7 2,653.1 2,461.8 1,418.7 1,301.3
Gross block
8 5 1 4 1
1,680.8 1,548.9 1,448.7
Less: depreciation 663.49 588.53
9 0 4
1,430.8 1,104.2 1,013.0
Net block 755.25 712.78
9 5 7
Capital work-in-progress 70.73 203.88 122.45 55.03 24.69
1,501. 1,308. 1,135.
810.28 737.47
62 13 52
4,054. 3,849. 1,675.
Investments 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
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
251.14
1,411. 1,127.
Net current assets 972.94 462.67 318.95
68 57
6,967. 6,130. 3,938. 1,972. 1,801.
Total funds utilized
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 13.29 8.82 2.19 2.81 2.99
Capital subsidy received - - - - 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 0.00 0.01
(including share premium)
Security premium received 339.70 759.93 0.06 0.04 0.06
Proceeds from issue of share warrants
377.41 - - - -
(net of conversion)
Proceeds from / (repayment of)
(157.81) 1272.87 764.86 88.00 138.31
borrowings (net)
Dividends paid (including tax thereon) - (106.13) (27.31) (27.08) (25.33)
Interest and finance charges paid (194.55) (184.69) (62.06) (21.92) (23.97)
Net cash (used in) / from financing
366.45 1751.79 675.56 39.05 89.07
activities
Net increase in cash and equivalents 72.40 2.42 4.75 (3.86) (28.03)
Cash and cash equivalents (opening
22.74 20.32 9.41 13.27 41.30
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 9.41 13.27
balance)

53
54
 INDEX

SR. NO. PARTICULARS PAGE NO.

1. Introduction 52
2. Organization Structure of Production 53
Department
3. Introduction to Company’s Product 54
4. Manufacturing Process 55
5. Plant Layout 59
6. Material Handling 60
7. Purchase Department 61
8. Plant Maintanance 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.

Outputs
Inputs

Products
Material Production Services
Labour Process Information
Capital Products or 56
Services
 ORGANIZATION STRUCTURE OF PRODUCTION DEPARTMENT

Sr. Vice President

(Production)

Sr. GM GM
(Prod.) (Prod.)

Viscose Spin Spinning After Textile Continuous Chemical

Dept. bath Dept. Treatment Dept. Spinning
Dept. Dept. Yarn (CSY)

Dy. GM Dy. Man. Dy. Man. Manager Sr. Man.

Ast. Sr.
Manager Manager

Dy. M Ast. Man Ast. Man. Dy. Man. Dy. Man.

Sr. Sr.
Supt. Supt.
Sr. Supt Sr. Supt. Sr. Eng. Sr. Supt. Sr. Supt.

Supt. Supt.

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

Jr. Jr.
Incharge Incharge Workman Incharge Incharge Supt. Supt.
Supt Supt Supt. 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. VISCOSE FILAMENT RAYON YARN

2. SULPHURIC ACID (H2SO4)
3. CARBON-DI-SULPHIDE(CS2)
4. 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:

 Uses of Rayon Yarn in Manufacturing Of :

1) mantle of gas lanterns
2) Dress materials and saris, Fancy yarns and finishing fabrics.
3) Elastic tapes
4) Fancy yarns and finishing fabrics
5) Warp and weft for weaving of suiting and shirting’s

 Uses of Sulphuric Acid (H2So4) In:

1) Chemical Industry & Agro-Chemical Industry
2) Paint & Dye Industry
3) Medicine Industry
4) Rayon Industry

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

1) Glass Industry
2) Pharmaceutical Industry
3) Rayon Industry
4) Base for Agro-Chemical Industry

 Uses of Sodium Sulphate In :

1) Glass Industry & Paint Industry
2) Paper Industry
3) Dye Industry
 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) Viscose Filament Rayon Yarn
2) Sulphuric Acid
3) Carbon Disulphide
4) Sodium Sulphate

The main raw material required for Rayon Yarn is:

1) Wood Pulp
2) Caustic Soda
3) Carbon Disuphide
4) 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 Old rate of the product

o Lowest bids
o Reputation of supplier
o Delivery period
o Payment terms
o Technical evolution
o After sales service
o 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 2003-04 2002-03

(Rs. Crores) (Rs. Crores)
Buildings 1.62 1.23
Plants & Machinery 4.86 5.11
Others 0.47 0.45

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

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

It mainly depends upon two factors:

1) Product – Service design

2) Operating System – makes a product/provides a service

Quality Policy

We are committed to

o Meet customer’s expectation of quality an service in premium segment.

o Maintain high morale of employees
o 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 Regular checking of set parameters.

o Checking individual.
o Checking of abnormality in the process.
o Highlighting the variation from the set operation procedures/parameters.
INDEX
 SR. NO. PARTICULARS PAGE NO.
1 Introduction 66
2 Organization Structure 67
3 Marketing Mix and Product Mix 68
4 Product Planning and Development & 69
Product Life Cycle
5 New Product Development 70
6 Packaging & Marketing Research 71
7 Market Segmentation 72
8 Pricing 73
9 Promotional Tools & Advertising 74
10 Channel of Distribution 75
11 International Marketing 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 Legal & Sales & Transport

& Storage Liaison Marketing

General Senior General Senior

Manager Officer Manager Officer

Deputy Manager
Manager

Senior Sales Officer

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) Product

2) Price

3) Place

4) 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) The development and introduction of products

2) The modification of the existing products
3) 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 Quality improvement in existing range

o Development of new market segment
o Improvement in process, cost control and productivity
o Improvement energy efficiency
o 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 Pricing objective
o Determining demand
o Estimating costs
o Analyzing competitors prices and offers
o Pricing methods (selecting)
o 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. PARTICULAR PAGE NO.

1. Information Related to Employees 79
2. Recruitment, Selection & Induction 81
Procedure
3. Training & Management Development 82
Programme
4. Job Description (Managerial Level 83
Only)
5. Promotion ,Transfer Policy & 84
Performance Appraisal System
6. Wage and Salary Administration & 85
Working of ESI Scheme
7. Employer Services 86
8. Welfare Facility 87
9. Study of P.F. Scheme & Grievance 89
Handling Procedure

INFORMATION RELATED TO EMPLOYEES

MANPOWER PROFILE (PREVIOUS YEAR)

Sr. Level Professional Non-

No. (CA, MBA, Professional
BE, MBBS, (B.COM,
AMIE, M.COM,
ICWA, MMS, B.SC, M.SC,
BS, PHD, BA, DIP.
PGD, IRPM, ENG., ITI)
MSW)

1) Sr. Mgt. (GM & Above) 16 2

2) Middle Mgt. (Manager & upto 30 11

DGM)
3) Jr. Management (Officer & upto 88 87
Dy. Manager)

4) Staff/Supervisor/Asst. Officer 1 286

TOTAL 135 386

PERMANENT WORKMEN

Higyly Skilled - 222

 Skilled - 456

Semi-Skilled - 1163

Un-Skilled - 303
______
TOTAL 2144
======

BADLI WORKMEN

Higyly Skilled - 000

Skilled - 000

Semi-Skilled - 277

Un-Skilled - 499
______
TOTAL 785
======

MANPOWER PROFILE (CURRENT YEAR)

Management Employees - 234

Staff - 355

Permanent Workers - 2059

Badli Workers - 508

Contract Workers - 1049

______
TOTAL 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
A lateral shift causing movement of individuals from one position to another position usually
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.

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 : Aditya Birla Group.
ABNL : Aditya Birla Nuvo Ltd.
ARR : Accounting Rate of Return.
BPO : Business Process Outsourcing.
EPS : Earnings per Share.
IRIL : Indian Rayon & Industries Ltd.
IRR : Internal Rate of Return.
MIRR : Modified Internal Rate of Return.
NPV : Net Present Value.
PI : Profitability Index.
PBIT : Profit Before Interest and Tax.
PBP : Pay Back Period.
PSY : Pot Spun Yarn.
ROACE : Return on Average Capital Employed.
ROCE : Return on Capital Employed.
ROI : Return on Investment.
VFY : Viscose Filament Yarn.
VSF : 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.