A Project Report ON

CORPORATE PERFORMANCE MEASUREMENT

AS PARTIAL FULFILLMENT OF PGDM PROGRAM, II nd year

Company certificate

Certificate from college

ACKNOWLEDGEMENT

This project has been an honest and dedicated attempt to make the analysis on marketing material as authentic as it could. And I earnestly hope that it provides useful and workable information and knowledge to any person reading it. During this period, I had the pleasure of working closely with accomplished organization people who shared with me their experience and helped me in completion of my research. I express my sincere thanks to my project guides and my institute faculty for guiding me. Lastly I am grateful to my parents who been my mentors and motivators. I am also thankful to all my batch mates who have been directly or indirectly involved in successful completion of this project.

TABLE OF CONTENTS
Topics Sr. No. 1. Objectives And Scope Of The Project. 2. Background Introduction / Synopsis Of The Project. a) Company profile, b) Basic introduction of the project, c) Organizational hierarchy, d) Department. 3. Research Methodology. a) Methods & Tools adopted for analysis, b) Data collection, c) Techniques for analysis, d) Pictorial / Graphic / pie charts, presentation of data. 4. Observations / Findings. 5. Limitations. 6. Suggestions / Recommendations. 7. Conclusion. 8. Bibliography.
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Page no.s

OBJECTIVES AND SCOPE OF THE PROJECT

Objective of the project

To know the organizational structure of Indian Telephone Industry Limited, RAEBARELI: My first objective is to know the organizational structure of Indian Telephone Industry Limited, Raebareli. The various departments in ITI Ltd, and the working & operations of Indian Telephone Industry, Raebareli . To know the Financial Statement of the Company and to know its investment in different sectors: My second objective is to know about the financial statement of the company and to analyze financial position of the company. An analysis of financial statement is very needful for the planning for investment i.e. the different areas where the company should invest. To know the techniques in which were prevailing and used in the company for maintaining its profit as it was in loss: My third objective is to know about the techniques which are use in recording the financial data. This is very necessary for maintaining its profit as it was in condition of suffers. To know the capital structure of the Indian Telephone Industry: My fourth objective is to know about the capital structure of the Indian Telephone Industry. How much the equity capital issued & how many the debentures are barrowed, what is the position of surplus and reserve in the company.

Scope of the project

Business description - A detailed description of the companys operations and business divisions. Company history - Progression of key events associated with the company. Major products and services - A list of major products and services of the company. Key competitors - A list of key competitors to the company. Key employees - A list of the key executives of the company. Key operational heads - A list of personnel heading key departments/functions. Important locations and subsidiaries - A list of key locations and units of the company, including contact details. Detailed financial ratios- The latest financial ratios derived from the annual financial statements published by the company.

SCOPE & IMPORTANCE OF FINANCIAL ANALYSIS Financial management, at present is not confined to raising and allocating funds. The study of financial institutions like stock exchange, capital, market, etc. is also emphasized because they influenced under writing of securities & corporate promotion. Company finance was considered to be the major domain of financial management. The scope of this subject has widened to cover capital structure, dividend policies, profit planning and control, depreciation policies. Some of the functional areas covered in financial management are discussed as such1. Determining financial needs: - A finance manager is supposed to meet financial needs of the enterprise. For this purpose, he should determine financial needs of the concern. Funds are needed to meet promotional expenses, fixed and working capital needs. The requirement of fixed assets is related to types of industry. A manufacturing concern will require more investments in fixed assets than a trading concern. The
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working capital needs depend upon scale of operations. Larger the scale of operations, the higher will be the needs for working capital. 2. Choosing the sources of funds: - A number of sources may be available for raising funds. A concern may be resort to issue of share capital and debentures. Financial institutions may be requested to provide long-term funds. The working capital needs may be met by getting cash credit or overdraft facilities from commercial bands. A finance manager has to be very careful & cautions in approaching different sources. 3. Financial analysis and interpretation: - The analysis & interpretation of financial statements is an important task of a finance manager. He is expected to know about the profitability, liquidity position, short term and long-term financial position of the concern. For this purpose, a number of ratios have to be calculated. The interpretation of various ratios is also essential to reach certain conclusions Financial analysis and interpretation has become an important area of financial management. 4. Cost-volume profit analysis: - This is popularly known as CVP relationship. For this purpose, fixed costs, variable costs and semi variable costs have to be analyzed. Fixed costs are more or less constant for varying sales volumes. Variable costs vary according to the sales volume. Semi-variable costs are either fixed or variable in the short-term. The financial manager has to ensure that the income of the firm will cover its variable costs, for there is no point in being in business, if this is not accomplished. Moreover, a firm will have to generate an adequate income to cover its fixed costs as well. 5. Working capital management:- Working capital refers to that part of firms capital which is required for financing short-term or current assets such as cash, receivables and inventories. It is essential to maintain proper level of these assets. Finance manager is required to determine the quantum of such assets. 6. Dividend policy: - Dividend is the reward of the shareholders for investments made by them in the shares of the company. The investors are interested in earning the maximum return on their investments whereas management wants to retain profits for future financing. These contradictory aims will have to be reconciled in the interests of shareholders and the company. Dividend policy is an important area of financial
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management because the interest of the shareholders and the needs of the company are directly related to it.

Basic introduction of the project

The objective of this project was to assess the Corporate Performance of Indian Telephone Industries Ltd. and to facilitate the development and guideline for Indian Telephone Industries Ltd. that would employ non-financial performance measures. Specific best practice conclusions and recommendations, as garnered from literature research and discussions with the Indian Telephone Industries Ltd, are highlighted in this report. The project emphasized the principles behind establishing a comprehensive and measurable performance measurement foundation corporate strategies, goals, objectives, measures, targets and actions for Indian Telephone Industries Ltd. This project anticipates that Indian Telephone Industries Ltd. equipped with an efficient and customized performance measurement system can encounter greater congruency in the achievement of its actual versus planned corporate goals. The project provides supplementary information that can assist Indian Telephone Industries Ltd. in the development of a system into a value-added management tool. Moreover, it supports the Councils ongoing monitoring duties by facilitating the development of a more transparent accountability system behind the activities of the system. Indian Telephone Industries Ltd. Performance measurement is the practice of gauging progress towards declared targets or objectives. Its most effective form, performance measurement is a management and communication tool. Recent trends indicate the increasing importance of shifting focus from the amount of resources allocated (inputs) and the amount of work completed (outputs) to the actual results achieved from the corporate processes (outcomes), as compared to the intended results. An effective measurement approach may help your organization pinpoint strategic areas to monitor progress and manage through chaos. Therefore, business strategy is clearly and succinctly translated to its results and level of accomplishment. The simple logic states that without measuring and tracking outcomes, the effectiveness of a firms
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strategy cannot be determined. Performance measurement allows the establishment of targets for accomplishing strategic objectives and public policy goals and then track progress relative to these targets.

BACKGROUND INTRODUCTION/SYNOPSIS OF THE PROJECT

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COMPANY PROFILE
Indias first Public Sector Unit (PSU) - ITI Ltd was established in 1948. Ever since, as a pioneering venture in the field of telecommunications, it has contributed to 50% of the present national telecom network. It has presence across six locations and a countrywide network of marketing/service outlets, the company offers a complete range of telecom products and total solutions covering the whole spectrum of Switching, Transmission, Access and Subscriber Premises equipment. ITI joined the league of world class vendors of Global System for Mobile (GSM) technology with the inauguration of mobile equipment manufacturing facilities at its Mankapur and Rae Bareli Plants in 2005-06. This ushered in a new era of indigenous mobile equipment production in the country. These two facilities supply more than nine million lines per annum to both domestic as well as export markets. The company is consolidating its diversification into Information and Communication Technology (ICT) to hone its competitive edge in the convergence market by deploying its rich telecom expertise and vast infrastructure. Network Management Systems, Encryption and Networking Solutions for Internet Connectivity are some of the major initiatives taken by the company. Secure communications is the company's forte with a proven record of engineering strategic communication networks for India's Defence forces. Extensive inhouse R&D work is devoted towards specialized areas of Encryption, NMS, IT and Access products to provide complete customized solutions to various customers. ITI Limited is an India-based company. The Company offers a range of telecom products and solutions covering the spectrum of switching, transmission, and access and subscriber premises equipment. The Company manufactures mobile infrastructure equipment based on global system for mobile (GSM) technology and code division multiple access (CDMA) technologies. During the fiscal year ended March 31, 2010 (fiscal 2010), it established the manufacturing facility for Gigabit Passive Optical Network (GPoN) at its Rae Bareli Plant and supplied equipment to BSNL. During fiscal 2010, the Company also implemented the National Population Register Project of the Ministry of Home Affairs at its Palakkad Plant. The ITI- Huawei combine has enabled BSNL to launch third generation (3G) services in the South Zone.
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ORGANIZATION'S VISION
The following are the organizations vision of Indian telephone industries limited To perceive by their customer as the leading business partner for providing total network. To offer innovation solution using leading technologies in competitive manner to help customer achieve their business objective. To pursue new opportunities arising from the convergence of information communication and entertainment business. In manufacturing business organization will continuously drive down costs. Organization will leverage its telecom domain knowledge to build telecom software business in India catering to global requirement. To transfer I.T.I in to a creative livewire entrepreneurial enterprise with a quest for growth and shared values.

MISSION The following are the mission of Indian telephone industries ltd. Leader in domestic market: Important global player Providing different solution to customer. To build on core competencies to enter new business area.
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COPORATE OFFICE Bangalore Plant

This is the first Plant of ITI set up in 1948. With its vertically integrated, state-of-theart infrastructure a vast range of telecom products are manufactured. They include digital switches (large, medium, small), Digital Microwave equipment, optic fibre equipments, satellite communication equipment, access products, terminal equipments.

The main R&D Centre and the Micro Electronics Division are housed in this Plant.

ITI Bhawan Doorvaninagar, Bangalore

MANKAPUR PLANTS
It was established in 1983 for manufacturing of large digital switches (E10B). This Plant has modern vertically integrated infrastructure for manufacturing. The OCB 283 / CSN exchange in technical collaboration with Alcatel is manufactured in this Plant.
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Facilities include
Research and Development Centre Thick Film Hybrid manufacturing Surface Mount Technology Environment Test Lab PCB Plant PCB Assembly and Testing Metal parts manufacturing Finishing Shop Molding & Tool Room Connectors and MDF's manufacturing

SRINAGAR PLANT
It was established in 1971 for component manufactures. This plant has upgraded facilities for assembly and testing Established in 1971 for component manufactures. This plant has upgraded facilities of assembly and testing of telephone of various types.

NAINI PLANT
This Plant was set up in 1971 for the manufacturing of transmission equipment. The major products are optic fiber systems of both PDH and SDH and telephone instruments of various types. It has an R&D Centre and modern facilities for assembly and testing with Surface Mount Technology. Environmental lab, metal parts manufacturing facilities and PCB plants are part of the modern infrastructure.
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Facilities include:
Research and Development center Environment test lab Chemical and metallurgical PCB plants PCB Assembly and Testing Metal parts manufacturing Surface Mount Technology

PALAKKAD PLANT
Established in 1976, the plant manufactures large digital switches and digital trunk exchanges in collaboration with M/s Alcatel. A lean and highly productive plant by virtue of its structure it has modern facility for PCB manufacture (including multi-layer bards) assembly and automated testing facilities with SMT line and environmental test lab.

Facilities include
Surface Mount Technology Environment test lab PCB plant

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NETWORK SYSTEMS UNIT:

Bangalore

REGIONAL OFFICES:
i. ii. iii. iv. v. vi. vii. viii. ix. x. xi. Delhi Bangalore Kolkata Lucknow Mumbai Chennai Hyderabad Bhubaneswar Bhopal Ahmadabad Kochi

MANUFACTURING UNITS:
i. ii. iii. iv. v. vi. Bangalore(Karnataka) Naini(U.P) Mankapur(U.P) Raebareli(U.P) Palakkad(Kerla) Srinagar(J&K
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ISO CERTIFICATION

The International organization for Standardization (ISO) is the specialized international agency for standardization, at present comprising the national standards bodies of 91 countries including india.ISO is made up of approximately 180 committees. Each technical committee is responsible for one of the many area of specialization. The object of the ISO is to promote the development of standardization & related world activities with a view to facilitating International Exchange of goods & services & to develop the co-operation in the sphere of intellectual, scientific technological & economic activity. The result of ISO works are published as International Standards. The standards discussed here is result of this process.

COMPETITORS OF ITI LTD

Arvind Micro System, Hyderabad. HECL, Calcutta Dynahytac System, system Sabmife, Hyderabad Afcoset, Mumbai Wolpower Telecom System , Mumbai UTL ,Bangalore
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HTL , Chennai Aleatelmodi, France NEC , Japan

Comparisons with some main competitors of ITI Ltd.

Company

Last Price

Market Cap. Sales Net Profit (Rs. cr.) Turnover

Total Assets

Siemens

892.70

30,378.13

9,400.07

827.21

3,478.00

Honeywell Autom. 2,562.50

2,265.64

1,355.79

105.05

438.78

HFCL

16.95

1,682.11

86.42

40.22

1,265.23

GTL Infra

16.15

1,546.12

490.42

-139.29

6,242.13

GTL

95.35

927.45

2,396.30

139.75

3,515.75

ITI

32.15

925.92

2,102.22

-381.87

2,293.18

Gemini Comm. Astra Microwave AGC Networks

23.80 30.60 169.00

309.74 250.39 240.54

314.92 161.14 305.57

10.43 18.61 12.82

331.25 174.76 261.60

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Kavveri Telecom

158.00

222.29

255.57

34.12

177.99

GLOBAL CUSTOMERS
Botswana Comoros Gambia Ireland Madagascar Malaysia Nepal Rwanda Sri Lanka Sudan Switzerland Uganda Vietnam Yemen Zimbabwe

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INDIAN CUSTOMERS

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Department of Telecommunications (DoT), Government of India BSNL Mahanagar Telephone Nigam Defence Services Paramilitary, Police & Internal Security organisations Power, Steel and Oil sectors Railways Post Offices, Factories, Offices, Bank Corporate Hotels

ITI MARKE CUSTOMER PROFILE

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ITI unique selling proposition for the global customer is a one-stop-shop for all his present & emerging needs. This is solidly supported by its R&D state of the art manufacturing, integrated logistic support (ILS) & strategic alliances.

ITI CAN OFFER ITS CUSTOMERS

Solution for telecom networks. Telecom solution for defence railways electricity board etc. Specialized networks for tropical countries. Network management Customized country adaption of the product. Migration from legacy system.

RAEBARELI UNIT
Raebareli Manufacturing unit was setup in 1973 and boasts a world-class infrastructure. Presently, this unit manufactures GSM network equipments and CDMA handsets. ITI Raebareli has taken a leap to enter broadband equipment G-PON and WiMAX. This unit is India's first telecom equipment manufacturer to conduct field trial of G-PON technology in India, and is all set to rollout India's first lot of G-PON equipment. Multi-location state-of-the-art electronic assembly & component manufacturing facilities accredited with ISO 9001:2000 The pioneer public sector undertaking, ITI Ltd. was set up by the efforts of Mrs. (Late) India Gandhi, Ex-Prime Minister of the republic of India, under the patronage of ministry of communications.

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ITI Ltd. Raebareli has Switching System (ESS), Digital Multi Excess Rural Ratio (MARR) System, Electronic digital system with C-DOT technology & 3-channel open wire transmission. The I.T.I Ltd Deals with drivers technologies continuously phasing out old technologies & phasing in new technologies. A part from these technologies, centre of development of telemetric (C-DOT) has also provided indigenous technologies for manufacturing rural automatic exchange (RAX) & main automatic exchange (MAX). The companys product range includes all that is required to equip national & international telecommunications network, satellite communication & optical communication system. Prominent foreign technologies under manufacturing include: Digital Switching System OCB283 (in collaboration with CITALCATE, France). Digital Microwave System (in collaboration with NEC, Japan). Optical Communication System (in collaboration with NRT, Denmark). Digital Co-axial system (in collaboration with AT & T PHILIPS, Holland). Switch Mode Power Supply (in collaboration with ASCOM, Switzerland).

LOCATION ADVANTAGE
I.T.I Raebareli is well connected to all the major metros of the country by the rail & road at just 574 Kilometers. From New Delhi, the capital city of India, the unit is easily accessible in the true sense of the world. I.T.I is just a ninety minutes drive from Lucknow Airport.

AREA OF BUSINESS:
Telecom Equipment Manufacture GSM network equipments and CDMA handsets Broadband equipment G-PON and WiMAX.

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PRODUCTS:

GSM - Infra(BTS) ,Shelter, Tower, RTT, SMPS, Control Panels ,Franchise Wimax & Wimax CPEs and GPON SWITCHING: A- Large switching B- B- Medium switch C- C- Small switching

TRANSMISSION: A- Microwave B- B -Fiber optic C- C- Satellite ACCESS: A- Wireless in local loop (WLL) B- B- Digital loop carrier (DLS) C- C- Pair gains.

TERMINAL EQUIPMENT:A- Telephones B- B- ISDN product C- C- Video conferencing MICRO ELECTRONICS: A- Application integrated circuits B- B- Application S/W OTHER PRODUCT: A- Switch mode power supply B- B- Supervisory control & data Acquisition (SCADA) C- Solar power system

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GSM / CDMA Products

Base Trans-Receiver Station (BTS) BTS A-9100, is radio frequency mobile communication product based on GSM technology. It is a set of equipments that facilitates wireless communication between user equipment (UE) and a network. A BTS in general consists of Trans-receiver module, Antenna Network Combiner, Controller (SUMA) & Alarm Extension System (XIBM). It is a self contained unit for transmitting / receiving signal for mobile communication.

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BTS SHELTER Shelter is a portable sealed cabin made up of sandwiched insulated panels with polyurethane as filler material between galvanized pre-coated steel sheet. Floor is made up of 19mm thick marine plywood and is covered with PVC antistatic flooring. MS tube is reinforced inside floor panel for higher floor load capacity. Secondary slanting roof is provided to protect primary roof from direct sunlight and rainwater. Door is fixed with heavy-duty hinges. It is equipped with hydraulic closer & three way locking arrangement. Shelter is installed on suitable base frame of galvanized I-beam supported on concrete pedestal. ITI LIMITED RaeBareli is manufacturing Prefabricated Shelter for housing of BTS & its accessories used in Telecom Mobile Service.

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ROOF TOP TOWER RTT is made up of structural steel as per IS2062 Grade A & hot dip Zinc galvanized as per IS 4759. It can carry 6 Nos. GSM/WLL Antenna & 3 Nos. 0.6M dia Microwave Antenna. Basic design of RTT is for wind speed 200 Km/h. It can survive wind velocity up to of 210 km/h for short duration.

SMPS(Switch Mode Power Supply)

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CDMA (Code Division Multiple Access)

CDMA (Code Division Multiple Access) is a digital wireless technology to provide mobile communication. CDMA works by converting speech into digital information, which is then transmitted as a radio signal over a wireless network. CDMA uses a unique code to distinguish each different call. The receiving device is instructed to decipher only the data corresponding to a particular code to reconstruct the signal. This enables many subscribers to share the same frequency band and, at the same time, without any cross talk or interference. CDMA-WLL technology provides option of limited as well as full mobility to the customers. This helps to provide faster last mile connectivity, where laying of cables is difficult.

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INFRASTRUCTURE:

In-house Research & Development Network System Unit capable of undertaking turnkey jobs Self contained component evaluation centre Fully automated assembly lines In circuit tester (ICT) Modern Chemical, Metallurgical Labs Mechanical fabrication/Machine e shops with modern CNC machines Moulding & Die casting Full fledged state of the art tool rooms SMT (Surface mount technology) Environmental testing Component approval centre approved by BSNL Total Area - 250 Acres A/C Area - 1500 Sq. Mts. 4400 K.V.A. Captive Power for uninterrupted power supply communicated all over world.

MANPOWER
Officers Non- officers Total DISTRIBUTION OF MANPOWER Male Officers Non-officers 1225 2521 Female 47 79 1272 2600 3872

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FACILITIES: SMT line PCB Assembly In-circuit testing Cabinet and Rack Manufacturing Pressed and formed Sheet Metal Component Plastic moulded components Electroplating and Powder Coating Facility

Surface Mount Technology (SMT)

An exclusive facility dedicated to Surface Mount Technology (SMT) offers a total solution for a wide range of SMT production. Company has two most modern zero defect SMT lines which are capable of handling complex and fine pitch components with great accuracy. The SMT lines are supported by latest and advanced BGA rework station. The manufacturing facility is also equipped with latest accurate connector fixing machines which provide total solution for SMT art of work.

IN-CIRCUIT TESTER:
The state of art In-Circuit Tester TS 128 from Teradyne, USA, is capable of highly reliable and accurate quality test for complex PCB assemblies. It can test upto 3840 test points on any size of PCB with facility of DSM programming and Boundary scan. It provides excellent diagnostic accuracy because closed-loop, low- impedance drivers remains accurate even under fault conditions. It has the highest capacity in-circuit test solution available in the market.

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PRODUCTION OF PRODUCT IN ITI LTD RAEBARELI

At Present Products producing by ITI Raebarli GSM (Main) Parts of GAM a) b) c) d) Shelter Base Tower- RTT (Roof Top Tower) BTS-Base Terminal system SMPS- Switch Mode Power Supply

SALES

EPD EPD - Electronic Product Division MPD - Manufacturing product Division

MPD

Special note
ITI Ltd has begged a contact from ALCATEL to supply 300 BTS (Base station equipments) for the companys GSM execution abroad.

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Organizational hierarchy

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Board of Directors
SummaryName K. Dhingra Since 2010 Current Position Executive Chairman of the Board, Managing Director Director - Finance, Director Company Secretary Whole Time Director, Director Marketing Director - Human Resources, Wholetime Director Independent Whole Time Director Chief Vigilance Officer 2010 General Manager - HR & GSM - SZ, Director - Production, Director

Ravi Khandelwal Rachana Choudhary R. Agarwal

2011 2010 2010

K. Khurana

2008

A. Jain M. Das K. Gupta

2009

S. Tikoo A. Srivastava P. Mohapatra 2009 2008

General Manager - Finance Director - Govt. Nominee Non-Executive Director - Govt. Nominee Independent Director Independent Director Non-Official Part-Time Director Independent Non-Executive Director GOI Nominee Non-Official Part-Time Director Non-Official Part-Time Director

V. Ron Keshav Saran M. Balakrishnan A. Bansal

2009 2009 2010 2008

S. Chaudhuri T. Narayanasami

2010 2010

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Biographies

Name K. Dhingra

R. Agarwal

K. Khurana

K. Gupta

M. Balakrishnan

A. Bansal

Description Shri. K. L. Dhingra is the Executive Chairman of the Board, Managing Director of ITI Ltd. Shri. Dhingra is a Master in Commerce (M.Com) and Master in Business Administration (MBA Finance) from Faculty of Management < Studies (FMS), Delhi University. He has also done LLB (Academic). He has acquired additional Banking qualifications from India (CAIIB) and UK (ACIB, London). He secured the first rank in three of the courses on banking conducted by the Institute of Banking and Finance, Shri. R.K. Agarwal is the Whole Time Director, Director - Marketing of ITI Ltd. Prior to taking over the charge of Director Mktg., he was General Manager (Corporate Marketing). An industrial Engineering Graduate, Shri. Agarwal joined ITI Ltd. in 1976 as an Assistant Executive Engineer in the Company's Bangalore Plant. Shri Agarwal is having 33 years experience in areas such as manufacturing, quality control and marketing. Shri. K. K. Khurana is Director - Human Resources, Whole-time Director of ITI Ltd. He holds B.Sc. Engineering Degree from Punjab Engineering College, Chandigarh and Post Graduate Diploma in Electrical Engineering from REC Kurukshetra. Shri. K. K. Gupta is the General Manager - HR & GSM - South Zone, Director - Production, Director of ITI Ltd. Prior to taking over the charge of Director -Production, he was General Manager, Corporate HR and GSM (South Zone).. Prof. M. Balakrishnan is the Non-Official Part-Time Director of ITI Ltd. He was appointed as non-official part-time Director on the Board with effect from 9th March 2010. He is a Professor in the Department of Computer Science & Engineering at I.IT. Delhi. He has done B.E. (Hons) in Electronics & Electrical Engg. from BITS Pilani with 1st rank in 1977 and Ph.D. from EE Dept. IIT, Delhi in 1985. He worked as a Scientist in CARE, NT Delhi from 1977 to 1985 where he was involved in designing and implementing real-time DSP systems A. S. Bansal is Independent Non-Executive Director - GOI Nominee of ITI Ltd. He has done Bachelors degree in Electrical Engineering from esteemed Roorkee University (now lIT) in 1965 and M.B.A. from Delhi University. He was former CMD, Telecommunications Consultants
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S. Chaudhuri

T. Narayanasami

India Ltd. (TCIL), New Delhi. For over 37 years, he has been associated with the Indian Telecom Industry and expert in Strategic Management and is advising many Telecom Industrial Houses in India and Abroad. Dr. S. K. Chaudhuri is the Non-Official Part-Time Director of ITI Ltd. Dr. Chaudhuri who has done Ph.D. in finance, MA (Economics), M.Phil. Finance and B.Sc. Physics (Hons) has over two-and-a-half decades of experience in teaching, research & consultancy. He was a visiting scholar at J L Kellogg Graduate School of Management, USA and Manchester Business School, UK. He has served North Bengal University (West Bengal), Burdwan University (West Bengal) Management Development Institute (Gurgaon, Haryana) and International Management Institute (New Delhi). Shri. T. S. Narayanasami is the Non-Official Part-Time Director of ITI Ltd. He has done B.Sc. (Physics) and presently he is Managing Director & CEO of United Stock Exchange of India Ltd. He is also the Director of MTNL & Axis Asset Management Company Ltd. He is having experience in banking industry. He held the position of Chairman & Managing Director of Bank of India,

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DEPARTMENTS

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ROLE OF FINANCE DEPARTMENT IN ITI LTD. RAEBARELI

There are the following roles of finance department in Indian telephone industries limited. Preparation of cash flow statement. Assisting in purchase of equipment, raw material, and laying down suitable procedure for purchase. Advising the Chief Executive on the policies of prices of products, inter departmental issues etc. Advise the management on all service matters having financial implications. Organizing an Internal Audit Department and processing the reports submitted by the internal Auditor, and placing them before the Board. Ensuring that the annual accounts are prepared in time according to statutory audit and the audit by the Comptroller and Auditor General. Acting as custodian of cash of the company. Furnishing management with prospective costs of the products to enable them to determine the optimum product etc. Preparation of quarterly report on resources employed cash flow, capital expenditure, profit & loss accounts and ratio analysis. Ensuring sound finance, non-finance interface.

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FUNCTIONS OF DEPARTMENTS
DEPARTMENTS (FINANCE & ACCOUNTS) Sales Billing Personal Claim Bills Payable Cash & Bank Material and Cost Accounting Payroll Central Finance

SALES BILLING DEPARTMENT

Sales billing department, the motto behind establishing this department is to realize money from the customers of ITI limited Raebareli. Working of sales billing department starts from A.P.O. (advance purchase order). For example directorate of BHARAT SANCHAR NIGAM LIMITED, the leading customer of ITI limited Raebareli issues A.P.O. Advance purchase contains: A.P.O is likely to be converted into detailed purchase order under the following terms and conditions: Quantity of item & general (commercial) terms &conditions Prices Delivery period Cancellation of purchase order Technical /commercial compliances Placement of detailed purchase order Withdrawal of the advance purchase order

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Bills payable (works)

Departmental procedure

1. Purpose: To pass and account for the payment to contractors. 2. Scope: The scope of bills payable works is to release the payment of the contractors and its accounting. 3. Reference documents I. Company quality manual no.cor/q/cm/001. Ii. Quality system procedure no.cor/q/qsp/01. Iii. Unit supplement to company quality manual. Iv. Accounts manual. V. Work order/mb etc. Vi. Financial instructions issued time to time. 4. Authority and responsibility The head of bills payable (works) has the authority to implement and control the procedure to ensure achieving the stated purpose. To manage, perform & verify the function of bills payable works a suitable organization shall be established and authority assigned. The head of bills payable works shall prepare and maintain the following. I. Organization chart. II. Responsibility and interfacing departmental matrix.

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5. Procedure 5.1 Bills works section passed bills of all the contract works relating to constructions/repair of building, electrical new work and maintenance works etc. The works are defined as under. I. Secured advance. Ii. Passing of running bills as well as final bills. Iii. Passing of security deposit bills. Iv. Release of bank guarantee. 5.2 These bills are passed by works section based on the verifications made by concerned department i.e. Civil, central services, plant etc. The system of passing and recording are as under. 5.3 Work is carried out as follows Bills received from concerned section duly checked and recommended for payment. Bills recorded in bill register. Bills given to concerned officials. Officials pass the bills with reference to work order etc. If bills are not in accordance with the work order or there is objection it is returned to concerned department. If bills are in order, it is put up to concerned officer for approval. If bills are running, then after approval by concerned officer voucher is prepared and sent to cash for payment. if bills are final, it is sent to internal audit for audit.

After audit, voucher is prepared and signed by the concerned officer and sent to cash office for payment
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PAYROLL
This department has payment works. Its calculated the salary of the employees under given rules & regulation. The working of this department start from the attendance of the employees is calculated after 13th of every month. It is assumed that employee will be there, for the rest of the month. But in cash employee is absent after 13th it will adjust in the coming month. The rule & regulation for computing salary is formulated under the industrial instrumental act & central govt. The salary of employees is calculated as per the personal manual. This manual classifies the employees into various grades (for officers) & categories (for non-officers). According to the payroll department, the basic salary of officer & non-officer are as follows: - it to be revised:-

FOR OFFICERS

GRADE 1 2 3 4 5 6 7 8 9 10 6,500 8,600 10,750 13,000 14,500 16,000 17,500 18,500 20,500 23,750
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BASIC SALARY 200 250 300 350 350 400 400 450 500 600 - 11,350 14,600 16,750 18,250 18,700 20,800 22,300 23,900 26,500(G.M) 28,550

FOR NON-OFFICERS
A0 A B C D E F G H 3000-35-4,750 3650-60-5130 3730-65-4510-70-5420 3875-75-4775-85-5880 4040-90-5120-95-6355 4240-105-5500-115-6995 4460-120-5900-125-7525 4700-130-6200-140-8080 5100-155-6960-160-9040

In additional of basic salary, an employee of I.T.I Ltd also receives different allowances among them, main are:DEARNESS ALLOWANCE: - It is given on the basis of price index, which changes from time to time; current rate of price index is 45.3%. IN CASE OF OFFICER: - D.P is 45.3% of basic salary. IN CASE OF NON-OFFICER:- D.A is 45.3% of basic salary & service weightage or benefits. HOUSE RENT ALLOWANCE: - According to rules & regulation it is computed @10% of salary. For officer it is 10% of basic salary & for non-officer it is 10% of basic salary + service weightage. CCA: - Raebareli is unclassified city thats why there is no provision regarding to city compensatory attendance to the office.

45

For non-officer this allowance is payable with another name that is special allowance is as follows:BELOW PAY RANGE Below Rs.4000 Rs 4001-5250 Rs 5251-6499 Rs 6560 & above SPECIAL PAY 25 35 65 120

An employee is also entitled to get inanities which are based on productivity. Any employee who is directly attached with production is entitled to get direct incentive. Any employee who is not directly attached with production is also entitled to get indirect incentives. Indirect incentives are given to those employees who are non-operating worker & officer. After checking the balance sheet I come to know only I.T.I Ltd. Raebareli unit pays Rs 84 crores salary per annum. The bank but 70 people who withdraw his salary in cash pays the total salary. After analyzing the Master of payroll Junes come to know that I.T.I Ltd Raebareli units paid Rs 4, 68, 67, 840 salary of the month of may 2011. The bank pays total salaries the 1st day of the next month except 70 people. Those 21 people take his salary in cash at 5th day of the next month I.T.I Ltd Rbl wants close the cash payment of salary. Those employees who accept salaries through bank live for way from the factory or township bank thats why the company for their convenience pays salaries through other bank which will be nearer to them.

46

There are 12 bank through which these payment are made, these are follows (payment made for the month of May 2011 through these bank) S.B.I TOWNSHIP ( CHECK) S.B.I Main branch S.B.I Beliganj Union Bank Of India B.O.B (Malikmau) B.O.B (City bank) S.B.I (F.G College) P.N.B DENA Bank Allahabad Bank Vijaya Bank B.O.B 22657870 435760 385820 700190 1277010 1124290 185920 1994860 662630 534410 616010 63900

CONVEYANCE ALLOWANCE:-Conveyance allowance is also paid by I.T.I for officer Rs.250/- per month & non officer Rs.125/-per month. Salaries of employee depend upon major section:1) Central time office 2) Establishment/confidential cell 3) Personal claim department 4) Incentives department Total salary made on unifax system & accounting of those entry upon Baan system. Above section support to making salary, they sent his report. Attendance report comes from establish section/confidential cell. Medical claim, T.A Bills other bills report comes from incentives department. Employee drawn his salary in 2 various head. 1) Earning 2) Deduction.

47

CENTRAL FINANCE
Central Finance section Deals with the analysis & compilation of all reports generated by the entire Department of Finance and Account:

CENTRAL FINANCE

Compilation of Account Report 1) Sales Report 2) Bills etc. 3) Personal Claim 4) Services Audit 1) Statuary Audit 2) Government Audit 3) Tax Audits

Fixed Asset Accounting

Inventory

Capital Budget -Capital Sanction

Routine MIS.Report - Inventory Debtors

- Cash Flow

ROLE OF MIS IN ITI LTD. RAEBARELI EDP Department was established for this purpose in 1982 to analyze, design, development & implementation of various system with the help of computers in all Department/Division. The input data from the entire Department is stored in the SERVERS, Which is processed in accordance to the requirement and reports are generated accordingly and sent back to respective department.

48

BAAN FINANCE SYSTEM (ERP) BAAN Finance System in an integrated information system, which consist of mainly.

Following package
a) Distribution Package b) Manufacturing Package c) Finance Package d) Transport Package e) Service Package f) Process Package At ITI LTD RAEBARELI only FINANCE PACKAGE has been implemented. This package contains the following module. 1) General Ledger 2) Accounts payable 3) Accounts Receivable 4) Cash Management 5) Fixed Assets 6) Cost Collection 7) Financial Statement 8) Finance Budgeting

49

Personal Claims Department

1. Purpose: To settle the personal claim bills relating to TA/LTE/Medical Claim/Officers conveyance and Accounting thereof. 2. Scope: To settle and pass personal claims of ESL-1 and ESL 2 & Central Services Employees Reference Documents: Company Quality Manual No. COR/Q/CM/001 Quality System Procedure No. COR/Q/QSP/01 Unit supplement to company quality manual TA as per administrative circular No.745 dated 27/12/1992. LTC as per administrative circular No. 845 dated 24/04/1994 Medical as per administrative circular No. 330 dated 31/08/1982 and amended time to time. Lunch /Conveyance as per administration circulation No. 824 dated 20/01/1994 Material handling as per financial circular No. 240 dated 27/01/1994

Authority and responsibility

The head of personal claims has the authority to implement and control the procedure and insure achieving the stalled purpose. To manage performance and verifying the functions of personal claims a suitable organization shall be established and responsibility shall be assigned. The head of Personal Claim shall prepare and maintain the following: Organizational Chart Responsibility and Interfacing Department Matrix

50

Procedure Personal claim section is dealing with three type of payments: 1. Advance towards travelling allowance, leave travel concession and medical reimbursement. 2. Final settlement of claims regarding travelling allowance, leave travel concession and medical reimbursement. 3. Payment of lunch and conveyance allowance to non officers and vehicle reimbursement allowance to the officers.

Medical Bills Claim

All medical bills as per government rules and regulation or payment of bills are accordingly AIMS rules. Some organizations medical bills are 100% reimbursed like SGPGI etc. Medical advance: Sanction memo comes from establishment section in case of non officers and in the case of officers from confidential cell. After proper checking section memo payment voucher is prepared and entered in medical advance journal and ledger. Payment voucher sent to cash section for cash /cheque/ DD payment through voucher dispatch register.

Final payment:
Payment of medical claims is three types: 1. If employees treatment is done in ITI dispensary 2. If employees treatment is done outside ITI dispensary 3. If employees treatment is done by Homeopathic/Ayurvedic dispensary

51

1. Treatment by ITI dispensary:

Medical claim supported by cash memo duly verified by treating doctor/CMO comes from establishment /confidential cell. All claims are recorded in receipts register on day to day basis. The claims are settled as per the guidelines of medical attendant and personnel and administration department circulars issued time to time. Passed claims are recorded in a medical ledger staff otherwise and a fixed date advice is sent to payroll section for payment through salary. In exceptional cases payment voucher is prepared for cash payment. All advances are settled in final payment voucher for payment.

2. Treatment by outside dispensary:

Claims are supported by proper movement order of ITI hospital and verified and signed by CMO come through establishment/confidential cell. All other system for payment of claim stated above.

Travelling Allowance Advance: Advance application supported by movement order duly approved
/sanctioned by establishment section/confidential cell comes to personal claims section. After proper checking of rate and fair /dearness allowance /hotel rent, payment voucher is prepared and entered in travelling allowance advance journal & ledger. After proper recording payment voucher is sent for sanctioning payment through dispatch register.

Final payment:
Employee submit TA final bill to concerned establishment/confidential cell within 15 days after completion of journey. TA final claim should be supported by original order period of lodging and local conveyance charges counter signed by competent authority.
52

Establishment/confidential cell forwarded the same to concerned personal claim section process the claim/pass as per company TA rule. The passed bill is recorded in TA journal ledger. If any excess amount due the same is paid & if recovery very falls the same is advised to payroll section for recovery from salary.

Leave travel concession

Advance : Advance application duly approved/sanctioned by establishment/confidential cell comes to personal claim then after proper checking of charges admissible payment voucher is prepared & entered in LTC advance journal & ledger and send to cash section for payment through dispatch register.

Final settlement of leave travel concession claim:

After completion of journey bill have to be submitted in establishment/confidential cell suffered by proof of journey performed. Establishment/confidential cell send the claim to personal claim section. Personal claim sections enter the claim in receipt register and process the bill as in the case of TA allowance as stated above.

Leave Travel Concession Encashment:

LTC encashment is limited to 75% of the admissible then fare for 1500 Km. each way. The facility is a only once for a block of 4 years. LTC encashment application form comes through establishment /confidential cells to personal claim section. After receipt the same is recorded in personal claim register after the bill is processed for payment duly entered in journal / ledger. The other system for payment is same as above.

Reimbursement of material handling charges:

When an employee goes on official tour brings heavy materials he may claim loading unloading charges coolie charges etc. and other incidental charges from company as per tariff approved by management. Divisional head approved the claims. Employee submit the claims with all receipt of relevant expenditure supported by proper movement order to personal claim section and personal claim section pass the
53

claim as per tariff approved and entered the passed claim in payment register maintain for the purpose.

Officers Conveyance: Monthly reimbursement of expenditure on use of own vehicle

claim is submitted to personal claim section after completion of the month. Personal claim section checks the salary with section given by establishment/confidential cell and passing the same payment is made through salary. The passed claim is recorded in register.

Lunch & Conveyance: Lunch & Conveyance reimbursement is given to non officer
duly approved by competent authority when an employee is sent for official purposes outside the factory. A bill passing the payment is entered in registered maintained the purpose.

Work Sequence:
a) Bills received from confidential cell/ establishment section. b) Bills recorded in control register. c) Bills given to concerned officials. d) Officials pass the bills with reference to rules /circulars issue time to time. If any bill is not as per rules, it is returned to confidential cell/ establishment section. Passed bills are journalized and passed in ledger.

Work is carried out as follows:

We receive the bills from establishment/ confidential cell duly verified as per delegation of power. After receiving the bills it is recorded in control register then dealing assistant / accountant passed the bill according to the rules. If the bills are as per rules, it is passed in the relevant journal/ledger and put up to concerned officer. Officer sign the bills as per the delegation of powers. After the vouchers are recorded in a movement register salary & rent to cash section for payment or a list of a passed bills that are not paid through each voucher is

54

sent to payroll section to make payment through salary. Those bills that are claim accordance with the rules are sent back to confidential cell/ establishment section.

Records:
TA advance register LTC advance register

TA journal

LTC journal

TA ledger

LTC ledger

Medical ledger

Medical advance register

Medical journal

Lunch conveyance register

Insurance and co-ordination cell

Department procedure: Purpose: To ensure risk coverage of ITI properties in coming & outgoing consignment
etc.

Scope: The scope of insurance and coordination cell is to send for monthly declaration
to insurance company and dispatch the cheque / DD in bank timely.

Reference document:
1. Company quality manual No. CDR/Q/CM/001 2. Quality system procedure No. CDR/Q/QSP/01 3. Unit supplement to company quality control
55

4. Insurance as per manual and requirement of factory act & guidelines issued by the MAT form time to time. 5. Co-ordination as per procedure order No.40 dated 02/02/1987 & FZ/48 dated 30.10.1993. 6. Safe custody as per financial instruction No. 128 dated 30.08.1985

Authority & responsibility

The head of insurance & co-ordination cell has the authority to implement and control the procedure to ensure achieving the stated purpose. To manage, perform and verify of insurance & co-ordination cell a suitable organization cell shall be established and responsibility assigned. The head of insurance & co-ordination cell shall prepare and maintain the following: Organization chart Responsibility and interfacing depart matrix Procedure Insurance Insurance policies are taken from insurance company year relating to fire assets and stocks, marine inward/outward, import policy, cash in transit and fidelity guarantee & JPA policy on quotation / negotiation basis, insurance company submits the bills for the value as declared based on budgeted figures for next year. Payment is being as per quoted/ negotiated rates after recording in premium payment register. We are receiving the policies from insurance payment register. We are receiving the policies from insurance company. The copy of the same is forwarded to concerned department. This cell is also sending the declaration to insurance company based on purchase journal and MIS report. At the end of year, consolidated declaration is sent to insurance company for adjustment/ refund of policy ITI Limited RBL has 9 type of insurance. These are given below: 1. Marine inland transit insurance (for inward and outward carriage) 1 year 2. Marine import / export policy. 1 year 3. Personal escort policy ( only for outward kit) year 4. Janta personal accident policy (group insurance) 1 year
56

5. Personnel accident policy (only for the disturb area) 6. Arguably policy (for fraud ) 7. Cash insurance (cash in safer locker/ cash in transits) 8. Fidelity floating policy for 1 year 9. Fire policy (1 year)

Co-ordination
1. In the co-ordination cell all the cheques related to suppliers is being received from cash office. This all recorded in cheque dispatch register and prepared envelops are sent it to central department. In same case it is already directed by bills section to send the cheque to respective department. In some cases payment is released by DD. The same is also received in this cell through concerned bill section. The DD is also send as per direction of bill section. This cell also sends 1 copy of the cheque or DD forwarding letter to concerned purchase department. 2. This cell also received the cheque /DD received from DDI & other arty through cash office the cheque /DD recorded in receipt register and after the filling up the bank slip some are being deposited in bank. In case of discounting of cheque bank charges their commission. 3. This cell also received FDR/TDR/NSC etc/ bank guarantee from bills work section to keep in a safe custody. After receipt of the same these documents are recorded in related register and kept in safe custody. In case of bank guarantee letter is sent to concerned bank for confirmation of bank guarantee. The same is also recorded in relevant register

Work sequence:
a) Receiving the cheque/ DD from concerned section. b) Making entry in a control register. c) Received cheques /DDs are dispatched after registered post send to central dispatch section or delivered to concerned section for getting proper signature. d) Receipt signatures are tallied with the signature mentioned in the register.
57

e) Cheque / DDs that are to be deposited in bank are deposited in the same time as per instructions.

Work is carried out as follows: Cheques and DD,s are received by the dealing persons and entry are made in control register. After that DD and cheques are either sent to central dispatch section making a required post on envelope or delivered to concerned section getting receiving signature of the officers. The signatures of these officers are received through ION and are tallied when the cheques and DD are handed over.

Records:
1) Insurance: Premium payment register Declaration register Insurance file for each policy

2) Co-ordination: Cheque dispatch register DD dispatch register Forwarding letter dispatch register Cheque /DD deposit register

3) Safe custody: Bank guarantee register Bank guarantee safe file FDR/TDR/NSC registers. FDR/TDR/NSC safe files.

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CASH & BANK DEPARTMENT

Cash & bank is life blood of any organization. Cash & bank department deals with the procurement of the cash from the: Customer Various units Corporate office

ITI Limited Raebareli is fully based on its customers for cash. The customer fulfill at least 90% requirement of cash at I.T.I Ltd Raebareli. Secondly various units also fulfill the requirement of cash directly & indirectly. The corporate office Bangalore fulfills the additional requirements of cash of units. ITI Ltd Raebareli has cash credit facility in three banks:1. S.B.I 2. B.O.B 3. P.N.B 7 crores 2.5 crores 1 crores

Presently I.T.I Ltd Raebareli has done all transactions through state bank of India I.T.I Township branch. Company has pay 13% of interest on his credit of S.B.I. Cash limit of cash & bank department daily transits insurance trust is 1 crore. Company has paid only 20000rs.In cash of on our employees, If payment is more than 20 thousand than company pay through cheque. The cash & bank department makes daily entry of the entire vouchers in a register. All payments made by the cash & bank section whether in cash or through cheque or draft are entered into a register. For all earning & payment made through banks, the cash section prepares a monthly statement, which is reconcile with the bank at the end of the month, if there is any difference is shorted out. The Payroll department calculates the salaries of employees & a statement pertaining it
59

that it is sent to the cash & bank department all of the payment salaries made through bank only 70s employees salaries made in cash. The cash department issues a note to the concerned bank for debiting the companys account with the amount equal to the salaries to be paid by the bank. The cash & bank department also makes the payment to the contractor & suppliers. The criteria for the payment to the contractor & supplies remain to be the amount of the payment, the age of payment etc. The cash & bank sections issues cheque or draft to the contractors & suppliers. The cash section allocates funds to the different department for their requirements. The cash allocation of cash individual department is depending upon the requirement & capacities of the department each individual depend make purchase on their own & then sends the accumulated voucher to the cash & bank depart for reimbursement of the amount. The payment mode of cash & bank section is so easy. After collecting all vouchers section updated the voucher in his special accounting system (Baan system) & processed them. After processing section take printout of cheque & issues to individuals department to generate or suppliers. There are two authorized signatory should be signed upon cheque otherwise cheque not valid. Payment vouchers prepare for payment by different section i.e. bills payable, payroll, personal claim provident fund section purchase etc.

60

Costing and material department

Costing: cost stands for a mature amount of value purposefully released or to be released in the acquisition or creation of economic resources (material, labour etc.) either tangible or intangible. Cost is forgoing measured in monetary terms incurred or potentially to be incurred to achieve a specific objective. The amount measured in money of cash expended or other property transferred capital stock (share) issued service performed on a liability include in consideration of goods or service, received or to be received. (Is cost) Purpose: to calculate actual cost of material, labour hour rate and overhead. Scope: costing is a core of any organization. Costing shows overall expenditure upon manufacturing. It helps to gain profit. It is so necessary for organization. Working of costing department: when any requirement raise or any order comes for ITI Ltd. Raebareli of manufacturing planning department send usable raw material list known as bills of material. According to bills of material (BOM) costing department know which type of material use of making require product. Costing department had price list of all type of material in the Master. Planning department also send a process sheet. Process sheet is all unable material & working hour of making require product, labour quantity. etc. according process sheet costing department calculate the cost of material or finished goods. Costing department calculate the cost material from the MASTER which are use in manufacturing. Usable material is shown by process sheet. This department also calculates labour hour rate and overhead. According costing department Rs.68/- & Rs. 73 per labour per hour rate and 537% & 748% overhead of the labour rate.

61

Calculation of wages / hour / month / operator for 2009 -2010. No. of days in the year Less: Declared holidays Sunday off/weekly Casual leave Sick leave 12 52 20 5 104 Days 365 Days

261 Days Let that No. of hour per day per operator Less: Lunch Time 260 Days 8 Hour 0.5 Net Working Hour No. Hour per month (260 7.5 12) Calculation of direct wages: No. of direct operator (as on 31/03/09) Average hour/operator/year (162.5 12) Total available Hour 643) Labour hour rate Total direct wages (1253850 78) Rs. = = =9, 78,00,300
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Hour 7.5 Hour = 162.5 Hour

643 employee = 1950 Hours 12, 53,850 Hours 78 Rs.

(1950

Calculation of direct labour hour rate of ESL- II Total no. of operator Basic pay Fitment benefit Service weightage VDA Monthly incentive FDA CCA PF & PP @ 12% on Total of HRA @ 10% on basic pay Gratuity on (B) Bonus Cleaning charges 1.9% on (C) 2887055 58874 (IA) Nil 1196221 (IB) 72083 (I C) 39278 40740 505708 288705 199142 Nil 100468.31 53,88,274.31 452

Total labour cost per operator 11920.96

5388274 =

452 Labour cost per operator per hour 11920.96 = 73.16 162.5 Say that - 73 Rs.

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Calculation of direct labour hour rate of ELS I Total no. of direct operator Basic pay VDA Service weightage (fitment benefit) FDA Total of (A) Monthly incentive Total (B) PF as actual HRA Gratuity 15/261263,20,674.00 Ex. Gratuity 2500/12643 CCA Total of (C) Special pay Total of (D) Cleaning charge @ 1.9 % of the total (D) Grand total 3,48,737.00 18,05,853.00 1,01,724.00 64,360.00 62,56,314.00 86,167.00 63,42,481.00 7,51,350.00 3,46,608.00 3,00,784.00 1,33,744.00 74,465,00 79,49,432.00 4,602.00 79,54,034.00 1,51,127,.00 81,05,161.00 643

Total labour cost per operator

8105161 = 12,605.22 643

Total labour cost per operator/ Hour = 12605.22 = 77.57 162.5 Say that = 78/- Rs.

Overhead:
537% of labour rate of ESL I 748% of labour rate of ES II

64

Material department
Purpose: Maintain the records for the receipt and issue of inventory and obtain the closing stock of inventory and obtain the closing stock of inventory. Evaluate the cost of all products/ services dealt by the ESL I and ESL II. Scope: It covers identification, maintenance, protection, assessment of value of inventory lying in stories/ analysis of inventory, material in process, identification of dormant items and cost data. Objectives and targets: Objective: the following objectives are identified: a) Material accounting b) Costing and Rate building c) Valuation of inventory Reference and definition: Reference: a) Company quality manual b) Quality system procedure c) Unit supplement to company quality manual d) Accounts manual e) Financial circulars issued time to time f) Corporate guidelines Definition: ISO 9000-2000(E) Responsibility and authority: The head of cost and material authorize the process owner i.e. sectional in-charges to implement and follow the companys accounting policies and procedures to ensure to
65

achieve the stated purpose. To manage the function of the cost and material, a suitable organization is established and responsibility is assigned. He is authorized to monitor and control all function and activities in the section and for the continuous improvement of the process as per organization. Process: Material accounting: To maintain the receipt and issue of inventories and accounting. Costing and rate building: Periodical rate building, costing of main products/components and assemblies. Process Map: It is detailed in Annexure- III. The process description is as given below: Receive IGA, SR, DT, SRN, and SSU from stores. Carry our check of documents. Send documents to EDP for processing. Carry out checks of punched documents. Obtain final document from EDP. Obtain BOM, process sheets and timing from Engineering, Method/IED for rate building. The work is initially done by assistant; it is checked by accountant and finally received by the officer. Aid is required from EDP for processing of data. Analysis and improvement: Data analysis is carried out monthly. If the achieved value is not meeting the required target, improvement action shall be taken. Record of documents: Price store ledger (PSL) Consumption statement report ABC analysis Stock status Dormant inventory status Cost sheet of products/components. Quantity weighted average rate.

66

RESEARCH METODOLOGY

67

RESEARCH METHODOLOGY Research methodology is a way to systematically solve the research problem. It may be understood as a science of studying now research is done systematically. In that various steps, those are generally adopted by a researcher in studying his problem along with the logic behind them. It is important for research to know not only the research method but also know methodology. The procedures by which researcher go about their work of describing, explaining and predicting phenomenon are called methodology. Methods comprise the procedures used for generating, collecting and evaluating data. All this means that it is necessary for the researcher to design his methodology for his problem as the same may differ from problem to problem. Data collection is important step in any project and success of any project will be largely depend upon now much accurate you will be able to collect and how much time, money and effort will be required to collect that necessary data, this is also important step. Data collection plays an important role in research work. Without proper data available for analysis you cannot do the research work accurately.

Methods & tools adopted for analysis

Sources of Data (Primary & Secondary) In this project work primary and secondary data sources of data has been used. Primary data: Primary data is collected through observation, or through direct communication or doing experiments. For this report primary data was collected by personal interview with employees and officers in various department of ITI Ltd. The data was collected over a period of 7 week from 16th MAY to 2nd July 2011. The information is collected through the primary sources like:
68

Talking with the employees of the department. Getting information by observations e.g. in manufacturing processes. Discussion with the head of the department.

Secondary data: Secondary data refers to existing primary data that was collected by someone else or for purpose other than the current one. It means already available through books, journals, magazines, newspaper, and websites. Data has been collected through various websites the list of which has been given in the end of report

Research Method or type of study:

The Research method used is Descriptive Research. Descriptive research, also known as statistical research, describes data and characteristics about the population or phenomenon being studied. Descriptive research answers the questions who, what, where, when and how. In the present Research I have collected data through interview and questionnaire of various department of ITI Ltd.

Contact Method:
Personal interview is used as a method of contacting in various departments. It is a market research technique for gathering information through face-to-face contact with individuals. Personal interviews take place in a variety of settings-in homes, at shopping malls, in a business office. This type of research is relatively costly, because it requires a staff of interviewers, but it provides the best opportunity to obtain information through probing for clearer explanations. It is the best technique to use early on in the
69

research process when the researcher is not yet sure which questions need to be asked, because new and better questions can come out of the dialogue.

Data collection method:

Research Instrument used in this research was Questionnaire. A questionnaire is a formalized set of questions for eliciting information. It is one of the most common instruments used for primary data collection. The questionnaire can be administered in various ways. It can be administered by means of a personal interviewer as well as by the telephone, Mail. Here, the questionnaire was administered by a personal interview Tools of analysis: For the proper analysis of data, Quantitative Technique such as percentage method was used.

Annual results in brief:

Mar ' 11 Sales Operating profit Interest Gross profit EPS (Rs) 2,102.22 -478.29 83.87 -358.03 -13.26 Mar ' 10 4,661.24 -482.00 109.76 -240.60 -10.22 Mar ' 09 1,700.80 -503.28 292.02 -618.99 -23.20

(in crore)
Mar ' 08 1,233.67 -287.18 268.37 -155.52 -12.02 Mar ' 07 1,841.53 -285.12 210.11 -336.05 -13.08

70

Annual results in detail:

Other income Stock adjustment Raw material Power and fuel Employee expenses Excise Admin and selling expenses Research and development expenses Expenses capitalized Other expenses Provisions made Depreciation Taxation Net profit / loss Extra ordinary item Prior year adjustments Equity capital Equity dividend rate Agg.of non-prom. shares (Lacs) Agg.of non promotoHolding (%) OPM (%) GPM (%) NPM (%) Mar ' 11 204.13 89.64 424.33 390.49 Mar ' 10 351.16 112.32 830.15 441.35 Mar ' 09 176.31 -21.01 628.95 400.91 Mar ' 08 400.03 2.54 927.09 377.23 67.88 -

(in crore)
Mar ' 07 159.18 33.20 1,493.77 362.15 64.76 -

1,676.05 23.84 -381.87 288.00 202.19 7.02

3,759.42 26.74 -294.43 -27.09 288.00 202.19 7.02

1,195.23 26.72 0.36 -668.18 -22.11 288.00 202.19 7.02

146.11 34.07 0.76 -346.11 -155.76 288.00 202.19 7.02

172.77 39.96 0.56 -376.57 -35.80 288.00 202.19 7.02

-22.75 -15.52 -16.56

-10.34 -4.80 -5.87

-29.59 -32.98 -35.60

-23.28 -9.52 -21.19

-15.48 -16.80 -18.82

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Balance sheet
Mar ' 10 Sources of funds Owner's fund Equity share 288.00 capital Share application money Preference 300.00 share capital Reserves & -1,021.09 surplus Loan funds Secured loans 258.52 Unsecured 19.69 loans Total -154.88 Uses of funds Fixed assets Gross block 3,681.16 Less : 2,448.06 revaluation reserve Less : 1,089.35 accumulated depreciation Net block 143.75 Capital work- 1.33 in-progress Investments 0.41 Net current assets Current 5,835.86 assets, loans & advances Less : current 6,136.23 liabilities & provisions Total net -300.37 current assets Miscellaneous expenses not written Total -154.88 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

288.00 -

288.00 -

288.00 -

288.00 -

300.00 -3,064.78

300.00 -2,400.50

300.00 -2,036.93

300.00 -1,595.35

1,349.94 793.98 -332.86

1,335.35 895.42 418.27

1,051.98 690.00 293.05

1,180.72 800.00 973.37

3,678.61 2,472.72

3,657.09 2,498.72

3,644.06 2,526.83

3,631.54 2,653.94

1,039.60

987.32

933.12

768.25

166.29 1.78 0.41

171.05 1.29 0.41

184.11 2.16 0.41

209.35 4.98 0.41

3,021.88

2,550.49

2,531.29

2,641.58

3,523.22

2,304.97

2,424.92

1,891.37

-501.34 -

245.52 -

106.37 -

750.21 8.42

-332.86

418.27

293.05

973.37

72

Notes:
Book value of unquoted investments Market value of quoted investments Contingent liabilities No. of equity shares outstanding (Lacs) 0.41 0.41 0.41 0.41 -

326.39 2880.00

177.55 2880.00

243.62 2880.00

184.03 2880.00

322.86 2

CASH FLOW STATEMENT

Cash flow statement or statement of changes in financial position on working capital basis is similar to statement of changes in financial position on working capital basis or fund flow statement. CFS may be defined as the statement showing inflow and outflow of cash during the specific period. Cash Flow statement is statement setting out the flow of the cash under different head of sources and their utilization to determine the requirement of the cash during the given period and to prepare for its adequate provisions. Advantage of cash flow statement: Cash is procured by a company from its owner and lender at cost. Therefore finance manager of a company has to ensure proper management of cash. He has to ensure that there is sufficient cash to meet the obligation at their maturity and at the same time there is no surplus of cash remaining idle. The most usual tool of the cash management is to prepare cash flow statement. CFS has different advantages: I.C.W.A.I.

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1. CFS is an important tool in the hands of management to evaluate its financial policies and current cash position. CFS is especially useful in preparing cash budget. 2. CFS enable management to plan and co-ordinate the financial operations. 3. CFS may be used as a control device for the management. IT enables management to check the tendency to over spend. 4. CFS enables the management to formulate a suitable dividend policy. If the company is not able to obtain sufficient inflow of cash, company may restrict its cash dividend. 5. CFS highlights cash inflows from operations and therefore it is very useful to internal financial management in deciding the form of borrowing, retiring, long term loans, planning replacement of plan etc.

CASH FLOW
Cash flow Profit before tax Net cash flowoperating activity Net cash used in investing activity Net cash used in fin. activity Net inc/dec. in cash and equivalent Cash and equivalent begin of year Cash and equivalent end of year Mar ' 10 -458.76 -568.46 Mar ' 09 -667.82 271.26 Mar ' 08 -357.23 -569.83 Mar ' 07 -404.70 261.41 Mar ' 06 -427.55 -55.93

11.62

-12.58

-13.06

-6.45

-28.32

835.05

-253.87

560.11

-436.98

125.86

278.21

4.81

-22.78

-182.02

41.61

19.03

14.22

37.00

219.02

177.41

297.24

19.03

14.22

37.00

219.02

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FINANCIAL STATEMENT ANALYSIS

Financial statements are used by the management as the basis for planning, operations, including procurement of adequate financing, and as a means of exercise control over financial position of the business and efficient & Profitable use of assets. The basic purpose of preparing financial statement is to convey to owners, creditors and the general public about financial position of the enterprise. Financial analysis is the process of determining financial strengths and weaknesses of the company by establishing strategies relationship between the components of balance sheet and profit and loss statement and other operative data. Financial analysis is two types to interpret the position of an enterprise:1. Vertical analysis: Analysis of relationship as between different individual components and as between these component and their total for given period of time. It is also devoted by static analysis. 2. Horizontal Analysis: Analysis of changes in different components of the financial statement over different period with the help of series of the statement . It is also known as dynamic analysis. Financial analysis is the process of selection, relation and evaluation. The objective of financial analysis is a detailed cause and effect study of the profitability and financial position.. N.L.Hingorani

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RATIO-ANALYSIS
Ratios are simply a means of highlighting in arithmetical terms the relationship between figures drawn from accounting statements. Ratio analysis refer to the process of taking relevant item or groups of terms from financial statement establishing quantitative relationship between there with the purpose of making a comparative and interpretative study and then drawing meaningful conclusion which may be useful for performance appraisal of business. Ratio analysis is a widely used tool of financial statement analysis.

TYPE OF FINANCIAL RATIO

Ratio as tool of measuring liquidity, profitability, efficiency and financial position of a firm can be classified into five basic types: 1. Liquidity Ratio. 2. Solvency Ratio. 3. Activity Ratio. 4. Profitability Ratio

LIQUIDITY RATIO

Liquidity ratios provide test to measure the ability of the firm to cover its short-term obligations out of its short-terms resources. Interpretation of liquidity ratio provides considerable insight into the present cash solvency of the firm and its ability to remain solvent in times of adversities. There commonly used liquidity ratio: - current, quick or acid test & absolute liquid ratio & cash ratio.

A.

CURRENT RATIO: - Current Ratio expresses relationship between current

assets and current liquidity. Current ration of 2:1 is long considered as minimum in a sound business. The higher the current ratio, the larger is the amount of rupees available
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per rupee of current liability, the more is the firms ability to meet current obligations and the greater is the safety of funds of short-terms creditors. The current ratio is a measure of margin of safety to the creditors.

Current Ratio =

Current Assets Current Liabilities

For 2005-2006 Current ratio = For 2006-2007 Current ratio = For 2007-2008 Current ratio = For 2008-2009 Current ratio =

2,097.38 / 1,902.26 = 1.1026 times 2,151.69 / 2,373.79 = 0.9064 times 2,202.51/ 2,414.72 = 0.9121 times

2,677.13/ 3,467.95 = 0.7720 times

For 2009-2010 Current ratio = 5,327.89 / 6,101.14 = 0.8733 times

Conclusion: The current ratio has been reduced and even it is less than the standard
ratio which means that short term financial position is not sound.

B.

ACID-TEST/QUICK RATIO: - It is a measure of judging the immediate

ability of the firm to pay off its current obligations. It is obtain by dividing quick current assets by current liability. A ratio of 1:1 is usually considered adequate.

Quick Ratio =

Liquid Assets Current Liability

Liquid Assets= Current Assets (Stock & Prepaid Expenses)

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Mar '06 Quick assets Current Liabilities Quick Ratio 1,881.48 1,665.09 1.12996

Mar '07 1,744.63 2,189.76 0.79672

Mar '08 1,839.46 2,171.10 0.84725

Mar '09 2,287.20 3,290.40 0.69511

Mar '10

5,218.51
5,774.75 0.90368

Conclusion: The quick ratio has been reduced and is less than ideal ratio which shows
unsound short term financial position .

SOLVENCY (LONG TERM) RATIO

The second category of financial ratio is solvency ratio. The long-term creditor would judge the soundness of a firm on the basis of the long-term financial strength measured in terms of its ability to pay the interest regularly as well as repay the installment of the principal in due date or in one lump sum at the time of maturity. The commonly used in solvency ratio:- Debt- equity ratio, proprietary ratio or equity assets ratio or debt assets ratio or slovenly ratio, long term debts to total capitalization ratio & capital gearing ratio.

A. DEBTS EQUITY RATIO The relationship between borrowed fund and owners capital is a popular measure of the long-term financial solvency of firms. If the ratio is greater it would mean that the creditors have more invested in the business than the owners. Debts equity ratio = Internal equities External Equities
OR

External Equities Internal equities

Or

D/E ratio

Long term loans Shareholders Fund

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External equities or long term loans =

Debentures + loans + Mortgage etc.

Internal equities or shareholders funds = Equity share capital + Preference Share Capital + reserve & surplus. . For 2006-2007 the D/E ratio = 579.13 28320.25 = 0.0204:1

For 2007-2008 the D/E ratio =

435.01 27948.29

0.015:1

Conclusion: The ideal ratio is 1:2 which means that shareholders fund must be twice of
long term loans. The ratio is less here hence the long term financial position is not sound

B.DEBT TO TOTAL ASSETS RATIO

This ratio exhibits the proportion of total assets created through debts including short term and long term liabilities. This ratio is known as solvency ratio.

Solvency ratio =

Total outside liability Total Assets

Outside liability =

Debentures+ Current liabilities

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Mar '06

Mar '07

Mar '08

Mar '09

Mar '10

Total Outside 1,980.72 Liability Total Assets 3,627.31 Ratio 0.5461 0

1,741.98 2,819.88 6177

2,230.77 2,916.99 0.7648

2,143.92 2,139.86 1.0019

278.21 2,293.18 0.1213

Conclusion: The outside liabilities have been DECREASED from previous year. The
firm is supposed to be solvent, if its solvency ratio is lesser than one. In case it is more than one, it will mean total liabilities are more than total assets. It shows the financial unsoundness and the state of probable insolvency.

C.
assets.

FIXED ASSETS RATIO: - The relation between long term funds and fixed

Fixed Assets Ratio =

Shareholders fund +long term liabilities Net fixed assets

Networth Net Block RATIO

1,646.59 2,863.29 0.5751

1,077.90 2,710.94 0.3976

686.22 2,669.77 0.2570

-4.06 2,639.01 -0.0015

2,014.97 2,591.81 0.7774

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Conclusion: The ideal ratio should be more than one. Here the ratio is less than one
and even the ratio has been reduced from the previous year which means that the business has been financing the purchases of fixed assets out of working capital which is a wrong policy.

PROFITABILITY RATIO
Apart from the creditors, both short term and long term, also interested in the financial soundness of a firm are the owner and management or the company itself. The management of the firm is naturally eager to measure its operating efficiency. The owners invest their funds in the expectation of reasonably return. The profitability of a firm can be measured by its profitability ratio. Profitability ratio can be determined on the basis of either sales or investment. The profitability ratios in relation to sales are:1. Profit margin 2. Expenses ratio. b. return on capital employed e. return on shareholders

Profitability in relation to investment is measured by a. equity Return on assets

Profitability Ratio Related to sales:- These ratios are based on the premise that a
firm should earn sufficient profit on each rupee of sales. These ratios consist of (i) Profit margin (ii) Expenses ratio

1. PROFIT MARGIN: - The profit margin measures the relationship between profit
and sales. As the profits may be gross or net, there are two types of profit margin gross profit margin & net profit margin.

A. Gross profit margin: - Gross profit margin is known as gross margin. It is

calculated by dividing gross profit by sales. Gross Profit Margin / Ratio = Gross Profit Net Sales
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X 100

Gross profit = net sales cost of goods sold Net sales = sales sales return For 2006-2007 , Gross profit = 11894.03- 26945.97 = (15051.64) Gross profit ratio = (15051.64) * 100 11894.03 = (126.54) % For 2007-2008, Gross profit = 5140.73-25596.24 Gross profit ratio = (20455.51)*100 5140.73 = (397.91) %

Conclusion: The % of loss has been increased from the previous year. Gross profit
ratio reveals the profit earning capacity of the business and decrease in the ratio means increased cost of production or sales at lesser price.

B. Net Profit Margin: - NPM is also known as net margin. This measures the
relationship between net profits and sales of a firm. Depending on the concepts of net profit employed, this ratio can be computed in two ways:(i) N.P ratio = Net Profit Net sales
X 100

Net profit = Gross profit + Operating and Non operating income Operating and Non operating expenses For 2006-2007, Net profit = (15051.64) + 2425.69+1806.74+60.85 = (37704.33) Net profit ratio = (37704.33) x 100 11894.03 (317.002)% For 2007-2008, Net profit = (20455.51) + 3358.73+459.62+2849.46-25596.24 = (39383.94)

Net profit ratio = (3983.94) x 100 5140.73

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= (766.11) %

Conclusion: The net profit ratio has been decreased from the previous year. The
decrease in the ratio indicates the managerial inefficiency and excessive selling and distribution expenses and corrective action should be take

3. PROFITABILITY RATIO RELATED TO INVESTMENT: -These

Ratios are given below:(i) Return on Investment:ROI = Net profit before tax, interest and dividend x 100 Capital employed Capital employed = Net fixed assets + Working capital For 2006-2007, ROI = (11987.38) X100 38103.35 = (31.4) % For 2007-2008, ROI = (14380.18) x 100 33977.16 = (42) % (ii) Return on shareholders fund: Net profit after tax Shareholder funds Shareholder fund = Shareholder capitals + reserve & surplus + share premium accumulated losses or miscellaneous. Exp. extents not written off.
X 100

For 2006-2007, ROE = (11987.38) x 100 28320.25 = (42.3) %

For 2007-2008, ROE = (14452.70) X 100 27948.29 = (51.7) %

Conclusion: ROI and ROE measures the operational efficiency of

management. Since the ratio has been decreased which means that the capital employed and shareholders funds are not utilized effectively.
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ACTIVITY RATIO
Activity ratios are concerned with measuring the efficiency in assets management. These ratios are also called efficiency ratios or assets utilizations ratios. An activity ratio may be defined as test of the relationship between sales and various assets of the firm.

A. INVENTORY (STOCK) TURNOVER RATIO: - This ratio indicates the

number of times inventory is replaced during the year. It measures the relationship between the cost of goods sold and the inventory level. The ratio can be computed in two ways. (i) Stock turnover Ratio = Cost of goods sold Average stock For 2006-2007 , ratio = 26945.97 4665.82 For 2007-2008 ,ratio = 25596.24 5554.63 = 4.61 times = 5.78 times

Conclusion: The ratio measures how many times the average stock is sold during the
year.The ratio has been decreased from the previous year. Lower turnover ratio shows that the stock is blocked and not immediately sold.

B. DEBTORS TURNOVER RATIOthe debtors of the firm. (i) Debtors turnover Ratio =

This ratio is a test of the liquidity of

Net credit sales Average Debtors = Total sales (cash sales + sales return)

Net credit sales For 2006-2007, ratio = 11894.03 19592.19 For 2007-2008, ratio = 5140.73 14276.01

= 0.607 times

= 0.360 times

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C. ASSETS TURNOVER RATIO: - This ratio is known as the investment

turnover ratio. It is based on the relationship between the cost of goods sold and assets/ investments of a firm. It reference to this was made while working out the over all profitability of a firm as reflected in its earning power. Depending upon the different concepts of assets employed, there are many variants of this ratio:-

(i)

Fixed assets turnover

Cost of goods sold Fixed assets loss depreciation

For 2006-2007, ratio = 11894.03 31729.27 For 2007-2008, ratio = 5140.73 31966.58

= 0.37 times

0.16 times

Conclusion: This ratio is very significant for manufacturing enterprises. The ratio has
been decreased from the previous year which indicates the poor performance. (ii) Capital turnover = Cost of goods sold Capital Employed Capital employed For 2006-2007, ratio = = For 2007-2008, ratio = = = long term capital + short term capital

189413.0/38103.35 0.312 times 5140.73/33977.16 0.15 times

Conclusion: The ratio shows how many times capital is turned over into sales. There is
no ideal capital turnover ratio, because it may be different for different enterprises. High capital turnover ratio is always in the interest of enterprises. (iii) Working capital turnover = Cost of goods sold Net working capital

For 2006-2007, ratio = 11894.03/6374.08 = 1.86 times For 2007-2008, ratio = 5140.73/2010.58
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= 2.556 times

Conclusion: The ratio reflects the efficiency in the utilization of working capital. The
ratio must be normal.

RATIO:
Ratios Per share ratios Adjusted EPS (Rs) Adjusted cash EPS (Rs) Reported EPS (Rs) Reported cash EPS (Rs) Operating profit per share (Rs) Book value (excl rev res) per share (Rs) Book value (incl rev res) per share (Rs.) Net operating income per share (Rs) Free reserves per Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

-16.47 -15.63

-19.29 -18.37

-11.80 -10.78

-13.33 -11.72

-14.90 -12.80

-15.93 -15.09

-23.20 -22.27

-12.44 -11.43

-14.07 -12.46

-14.89 -12.79

-13.89

-9.58

-2.94

-6.06

-8.03

-25.45

-96.42

-73.35

-60.73

-45.69

59.55

-10.56

13.41

27.01

46.46

170.62

63.61

52.50

63.40

58.66

-125.77

-111.75

-88.55

-76.11

-62.27

CONCLUSTION Company earnings per share and operating profit are negative over the last many years. which is increasing continuously in negative which shows the companys poor performance.
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Profitability ratios:

Operating margin (%) Gross profit margin (%) Net profit margin (%) Adjusted cash margin (%) Adjusted return on net worth (%) Reported return on net worth (%) Return on long term funds (%)

-8.13 -8.63 -9.20 -9.03

-15.05 -16.51 -35.70 -28.26

-5.60 -7.54 -22.85 -19.79

-9.55 -11.63 -21.48 -17.89

-13.69 -15.82 -24.11 -20.73

-25.13

-76.90

-46.95

-26.75

-92.79

-52.09

-13.59

-0.52

-5.01

-100.80

Leverage ratios:

Long term debt / Equity Total debt/equity Owners fund as % of total source Fixed assets turnover ratio

0.33 0.33 74.78

6.55 6.55 -505.05

2.62 2.62 -596.80

-134.31

1.34

0.49

0.41

0.50

0.46

Liquidity ratios: Current ratio Current ratio (inc. st 0.95 0.87 0.85 0.56
87

1.11 0.62

1.04 0.68

1.41 0.76

loans) Quick ratio Inventory turnover ratio

0.90 17.96

0.74 4.73

0.94 4.33

0.86 4.52

1.18 4.47

Coverage ratios:
Financial charges coverage ratio Fin. charges cov.ratio (post tax) -2.77 -0.81 -0.10 -0.51 -0.63

-2.64

-1.20

-0.17

-0.60

-0.63

Component ratios:
Material cost component (% earnings) Selling cost Component Exports as percent of total sales Import comp. in raw mat. Consumed Long term assets / total Assets 85.76 80.86 58.81 76.54 67.98

0.17 -

0.83 0.01

0.98 0.60

1.54 1.01

1.82 0.04

39.11

60.12

53.98

61.51

69.00

0.02

0.04

0.05

0.06

0.07

Conclusion Material cost component is increasing continuously over the years which is affecting companys profit adversely. However selling cost component has been decreasing over the years . Export and import has been decreasing over the years. Company has reduced its long term assets in comparison to short term assets.

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Profit loss account

Mar ' 10 Income Operating 4,913.75 income Expenses Material 4,244.33 consumed Manufacturing 355.13 expenses Personnel 557.70 expenses Selling 8.38 expenses Administrative 148.15 expenses Expenses -0.01 capitalized Cost of sales 5,313.68 Operating -399.93 profit Other 69.09 recurring income Adjusted -330.84 PBDIT Financial 119.24 expenses Depreciation 24.31 Other write offs Adjusted PBT -474.39 Tax charges Adjusted PAT Non recurring 35.49 items Other non -19.86 cash adjustments Reported net -458.76 profit Mar ' 09 1,832.07 Mar ' 08 1,512.08 Mar ' 07 1,825.86 Mar ' 06 1,660.74

1,461.08 148.19 400.91 15.38 82.56 -0.19 2,107.93 -275.86 39.31

893.49 134.35 382.63 14.96 171.55 -0.10 1,596.88 -84.80 56.17

1,418.84 147.59 364.93 28.25 40.77 -0.03 2,000.35 -174.49 60.63

1,281.54 190.87 405.14 114.27 -0.15 1,991.67 -330.93 164.02

-236.55 292.02 26.72 -555.29 0.36 -555.65 -96.62 -16.42

-28.63 280.68 29.27 -338.58 1.15 -339.73 32.74 -51.39

-113.86 223.24 37.94 8.42 -383.46 0.56 -384.02 -16.27 -4.97

-166.91 224.76 35.88 -427.55 1.21 -428.76 -

-668.69

-358.38

-405.26

-428.76

89

Earnigs before appropriation Retained earnings

-458.76 -458.76

-668.69 -668.69

-358.38 -358.38

-405.26 -405.26

-428.76 -428.76

Management Effectiveness

Return on Assets (TTM) Return on Assets - 5 Yr. Avg. Return on Investment (TTM) Return on Investment - 5 Yr. Avg. Return on Equity (TTM) Return on Equity - 5 Yr. Avg.

Company -3.22 -6.28

Industry 4.22 4.66

Sector 12.26 13.59

S&P 500 6.59 5.97

-6.34

5.99

16.06

8.50

-12.53

6.87

18.52

7.81

-6.68 -25.78

6.37 8.04

17.81 20.02

18.80 15.44

Conclusion Return on assets and return on equity of the company is negative since last few years in the other hand industry has positive. It is matter of concern for the company. Management has to work it upon it effectively

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Efficiency
Company -Revenue/Employee (TTM) Net Income/Employee (TTM) Receivable Turnover (TTM) Inventory Turnover (TTM) Asset Turnover (TTM) Industry 6,039,970 Sector 14,402,144 S&P 500 733,750

--

124,618

1,390,296

93,156

0.44 10.13 0.19

4.90 5.91 0.78

5.98 434.02 1.03

9.04 7.99 0.59

Conclusion

A low turnover is usually a bad sign because products tend to deteriorate as they sit in a warehouse. Companies selling perishable items have very high turnover

Companys inventory turnover ratio better than industry because it is more than the industry.

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Financial Strength
Quick Ratio (MRQ) Current Ratio (MRQ) LT Debt to Equity (MRQ) Total Debt to Equity (MRQ) Interest Coverage (TTM) Company 0.90 0.92 5.95 5.95 -Industry 1.79 2.14 18.72 29.95 0.34 Sector 2.32 2.72 14.04 24.79 0.80 S&P 500 0.72 1.05 135.78 180.74 18.32

Conclusion
The higher the QUICK RATIO, the better the position of the company. In the event that short-term obligations need to be paid off immediately, there are situations in which the current ratio would overestimate a company's short-term financial strength But here company quick ratio is less than the industry and sector. It is a matter of concern. A high DEBT/EQUITY RATIO generally means that a company has been aggressive in financing its growth with debt. This can result in volatile earnings as a result of the additional interest expense. But the company debt equity ratio is too less than the sector and industry it is a matter of concern.
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The lower the INTEREST COVERAGE RATIO, the more the company is burdened by debt expense. When a company's interest coverage ratio is 1.5 or lower, its ability to meet interest expenses may be questionable. An interest coverage ratio below 1 indicates the company is not generating sufficient revenues to satisfy interest expenses. Company this ratio also less than the sector. This is harmful for the comp

Basic Business Performance Measures

Gradually and with time, we will discover new and better measuring strategies that will enable us to gauge the performance of the business effectively and efficiently. In the primary stages, we can use the following five basic yet important business performance measures.

Customer Satisfaction:
Customer satisfaction is the most important criteria that can determine the performance of the business. Every business wants to earn profits by satisfying and fulfilling the needs and requirements of their clients and customers. However, in the end, if the customers are not happy with the product or services, then we have not only wasted your time and effort, but also other valuable resources. Questionnaires will enable you to compile the necessary data pertaining to important aspects of your business, and to make changes if necessary. For this ITI Ltd has quality assurance department which ensures the quality product and as it has huge resources and experienced workforce which helps to satisfy the customer.

Shortcomings or Faults in Products and Services:

This is directly related to the quality and performance of your business. When defects in products are reported, it directly interprets not only the satisfaction level of our customers, but also translates to their expectations regarding our products and services.

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The measure of customer satisfaction is complementary to the defects in your product and services. This information will also help to give you a clear idea about the different reasons for the defects, faults and other shortcomings in the business. Companys research and development department continuously work on the improvement in the project and quality assurance department is efficient according to customer review survey there is neglectable Shortcomings or Faults in Products and Services.

Time for Entire Cycle:

The time taken to complete the full cycle successfully, to produce a product or render a service to your customers is of utmost importance and has an immediate relationship to the level of customer satisfaction. Therefore, the cycle time should be measured in order to measure the performance of our business appropriately. Using cycle time as a basic business performance measure does not merely entail production of the product or fulfilling the service within the committed time frame, but also ensuring efficient use of time, efforts and other important resources. This includes eliminating any steps that are unnecessary or a waste. Additionally, it emphasizes the need to set fixed working standards. Timely delivery of the company is a fine example of this, and is directly again linked to customer satisfaction.

Productivity as a Performance Measure:

The success of the productivity of our business in terms of elimination of waste, rework, work hours, rate, quantity, cost, and other important factors like resources and labor are all included in this strategy.

Encouraging Innovation and Improvements:

If we expect your business to be successful, then the structure of your business culture should encourage and promote innovative ideas and improvement. This includes the ideas of all of your employees, no matter what their position is. Make sure that your employees know that no idea is too outrageous for consideration because then they be more
94

forthcoming with their ideas for improvement. And who knows your customers better than your employees the ones dealing with customers every day? In order to ensure our business success, we have to know where it stands. Using the basic performance measures above, we will ensure that your business is as successful as it can be.

Limitation: Although full efforts have been made in the study but the following limitations should be kept in the mind before making any conclusion: The respondents may be biased or influenced by outside factors. The time constraint was one of the major problems. The respondents were limited and cannot be treated as the whole population. The accuracy of indications given by the respondents may not be considered

adequate. The research has been conducted according to present market conditions of ITI Ltd. As it is declared as itself as sick industrialist unit so the finding and inferences may not hold good for every business cycle Financial statements suffer from the following limitations: 1. Financial statements do not given a final picture of the concern. The data given in these statements is only approximate. The actual value can only be determined when the business is sold or liquidated. 2. Financial statements have been prepared for different accounting periods, generally one year, during the life of a concern. The costs and incomes are apportioned to different periods with a view to determine profits etc. 3. The allocation of expenses and income depends upon the personal judgment of the accountant. The existence of contingent assets and liabilities also make the

95

statements imprecise. So financial statement are at the most interim reports rather than the final picture of the firm. 4. The financial statements are expressed in monetary value, so they appear to give final and accurate position. 5. The value of fixed assets in the balance sheet neither represent the value for which fixed assets can be sold nor the amount which will be required to replace these assets. 6. The balance sheet is prepared on the presumption of a going concern. The concern is expected to continue in future. So fixed assets are shown at cost less accumulated depreciation. Moreover, there are certain assets in the balance sheet which will realize nothing at the time of liquidation but they are shown in the balance sheets. 7. The financial statements are prepared on the basis of historical costs Or original costs. The value of assets decreases with the past few years.

OBSERVATIONS AND FINDINGS Performance appraisal of an organization or institution has to be conducted with reference to objective of that entity. In practice PSU have been assigned to cater the objective. The concept of PSU indicates dual nature of its accountability. Public sector has two dimensions first being the public dimension and other one is enterprise dimension. The major findings are as follows: 1. Most of the purchases of ITI are government enterprises or government undertaking. So, it may happen that payments are delayed for long. 2. As ITI is a PSU it is facing the problem of over employees. 3. Debtors of the company are continuously increased since many years which result in the blockage of working capital. 4. Company is paying nearly 10 % of its sales and services as an interest amount against their loans in a year. 5. Inventory cost of the company is 50% of the capital employed.
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6. Liabilities of the company are double its assets. 7. The financial position is also very poor. 8. The basic reason behind the current position of the company is govt. policies and withdrawal of contract of BSNL. 9. ITI limited is a public limited company so, company cannot stop any facility. Therefore the cost of production and other expenses are very high. 10. Due to these factors company is unable to give competition to its competitor.

SUGGESTIONS & RECOMMENDETION

The sales billing department should be more efficient for the realization of money from the customers. As company is over employed so company should encourage VRS for the employees . There must be proper control over inventory. The company has to emphasis on the inventory management so that cost of inventory is reduced and thus the cost of capital. Collection policy should be evaluated time to time in terms of collection expenditure, collection period. Reasonable amount of credit should be given and only under unavoidable condition this credit unit should be exceeded. It is suggested that ITI should go for factoring accounting receivable. Though this cash flow will be stable and certain which will help in better financial planning and management. Credit standards:- these are the criteria to decide the type & of customer to whom goods could be sold on credit ITI ltd. Main customer are DOT nearly 70% of the total sales figure show the finished product are sold to DOT org. ITI ltd. It sells its product to DOT org. on credit basis as the govt. is mostly secured. Depreciation should be charged on written down value method."The reducing balance method can result in significant in the annual depreciation charge, depending on the "percentage" of written down value that is used to calculate the charges". Debtor's can be decreased by giving them discount or payment before there period Service should be given more importance for increasing the income.
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Process for executing the work should be flexible. Supply chain of purchasing material should be revised because it increases the expenses if it is large. Company must have online application for filling various detailed information retailing to accounts materials departments etc and other all the department of company. Proper channel must be established for communication between Departments in the company.

Conclusion
As students, many of us are completely ignorant of the work cultures of various corporate organizations. SIP is an attempt to provide us a practical corporate Exposure - where we work in certain corporate organizations as interns. Working ITI Ltd. is a nice opportunity by which I can explore my knowledge. As ITI Ltd. has huge resources and experienced manpower still it is not profit making. Some units are in big loss continuously in last few years because it has not adopted new technology according to time. ITI Ltd. has fixed quota of 30% to fulfill BSNL requirement of SMPS, BTS, SHELTER, and TOWER like equipment at lower price, and its cost is more than the selling price. And ITI Ltd management has no directly power to select clients which in future can be profitable for the company. Telecom ministry directly decided the companys investment and other decision. Some decisions are taken at late stage which is not good for the company. Company mostly fulfills requirement of government sector like railways and defense at very lower price, it can not select tender which can be viable project for the company, it has to select the project of lower price in comparison to its competitors. Company is using its fixed assets like building and land for itself, but at it has huge infrastructure so it has given its premises on rent to the various institute like NIFT (NATIONAL INSTITUTE OF FASHION TECHNOLOGY), RGIPT (RAJEEV
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GANDHI INSTITUTE OF PETROLIUM AND TECHNOLOGY), NIPER (National Institute Of PHARMACEUTICAL EDUCATION AND RESEARCH), from which companys Raebareli unit receives 4 crore annually as rent. But according to new technology ITI LTD. has installed US imported G-PON technology which is only installed in Raebareli unit in INDIA. The Brand image of ITI Ltd. is good in market but according to customer satisfaction reviews the company have to provide better services and proper follow up At last it can be on be concluded by that ITI Ltd. is still growing in the telecom equipment manufacturing sector although it had monopoly in this sector, but now to gain same status its merger which is proposed with the BSNL and MTNL is required as soon as possible, because it has more transaction with the BSNL for which it has to pay huge excise duty but after merger company can save huge excise duty because the transaction will be treated as inter unit transfer, and it will be treated as manufacturing unit of BSNL. and has a huge potential for the coming times.

BIBLIOGRAPHY
Books Referred C R Kothari, Research Methodology, 2nd edition, New Age International Publishers, ISBN: 978-81-224-1522-3 Malhotra, Naresh "Marketing Research and Applied Orientation" IV Ed., 2005, Pearson Agarwal, J.D. "Security Analysis & Portfolio Management: A Review, Finance India, Vol. II No. 1, March 1989. Annual Report of ITI Limited

Websites: www.rediffmoney.com www.reuters.com www.moneycontrol.com www.itiltd-india.com www.google.com

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