Fertilizers And Chemicals Travancore Ltd.

4.1 FINANCE DEPARTMENT

Director (Finance)

DGM (IA)

DGM (Finance)

Mgr (IA)

CM (Sales)

CM (Costing, MIS, Budget)

CM (Bills & Mat)

CM (Gen A/C)

Mgr (cash, Bank & Payroll)

Mgr (Tax & Duties)

Fig. 4.1: Structure of Finance Department Any organization whether big or bad, depends largely on its finance department. This is the very department which is responsible to a great extent for the growth of the organization. Some of the main functions of the financial departments are Payroll, billing, Preparation of journal, ledger and trial balance, Banking, Financial resources & materials accounting, Budget preparation, Cost accounting, Auditing, Preparation of financial statements & reports, Corporate Planning. Finance department is divided into five sections for carrying out its process. They are: Bills & Materials Sales Costing, MIS, Budget Cash, bank & Payroll and

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Fertilizers And Chemicals Travancore Ltd. Tax & duties

4.1.1 BILLS & MATERIALS The main functions are Stores accounting and Receiving, Dispatch and holding of bills. 3 Bills section Bills section deals with the contract account for execution of civil works and other construction/erection, maintenance and services. It includes: 1. Sale of tender form 2. Remittance of EMD 3. Remittance of security deposit 4. Issue of materials to the extractors 5. Receipts to certified bill in the specified format 6. Security on running account bills and final bill 7. Statutory procedures and formalities in works contract 2 Stores accounting Main functions of stores accounting are: 1. Receipts of stores 2. Issue of stores 3. Returns of stores 4. Value adjustments 5. Reconciliation with control accounts 6. Unconsumed materials lying at site at the close of financial year 4.1.2 SALES ACCOUNTING Some of the functions are 1. Accountability for selling and distribution of products & byproducts 2. Recording the transaction 3. Transfer of information from depots to HO 4. Compilation of reports 4.1.3 COSTING, MIS AND BUDGET SECTION School of Management and Business 2 Studies

Fertilizers And Chemicals Travancore Ltd. This section is concerned with ascertaining the cost of production, providing information, helping to prepare a budget, forecasting the performance and finally making a plan. 1 Cost accounting Identification of the cost centre - Direct expenses is recorded to the respective cost centre. Indirect expenses are separately booked and allocated at the end of the year. Cost sheet is prepared in two ways. The item in the cost sheet is compiled on the basis of process of the products or on the basis of elements of the product. Cost centre in Udyogamandal Division: Process water, DM water, Steam, CPP, Ammonia, Sulphuric Acid, So2/ Oleum, Phosphoric acid, Pollution Control, Ammonium Sulphate, Ammonium Phosphate Classification of cost Variable cost - Raw Materials, Intermediate products, Consumable, Products, Utilities, Packing materials, Pollution control expenses. Fixed cost - Fixed cost of a product mainly consists of conversion cost of the product of Salaries and wages (Direct, Indirect, Administration Plant & Maintenance),Staff welfare expenses, Insurance, maintenance,

Depreciation, Factory overheads, Administrative overheads, Head office overheads, Gratuity and bonus, Interest on term loans and working capital. 2 MIS (Management Information System) To provide the management with vital facts which affects the efficient running of the business for decision making on planning, organizing and controlling the major activities of the organization and initiating suitable action. MIS Briefly consists of: 1. Divisional Reports - Two monthly reports for each division. One for the finance department and another for the GMs office 2. P & L Account-Statement and its analysis. 3. Production performance of the division. School of Management and Business 3 Studies

Fertilizers And Chemicals Travancore Ltd. 4. Inventory position. 5. Cost of production - Actual and budget for the month. 6. Specific information important for the management - Major projects, man hour utilization etc. 3 Budgeting Two types of budget: Revenue and Capital budget. Two types of estimates-: Budget and revised estimate Revenue Budget Every year early in August detailed production targets and norms for consumption of materials for remaining portion of the current year and also for the next financial year are prepared by the head of Divisions. Capital Expenditure Shows all items of capital expenditure to be undertaken during the budget period like expenditure on acquisition of new assets like machinery, furniture and office equipments which have reasonable life; expansion of existing facilities and modification and improvements to plant and machinery resulting in i) ii) iii) iv) Increase in capacity. Increase in useful life. Improvement in quality of output. Reduction in cost of output is treated as capital expenditure.

Budget revision While preparing the next years revenue budget, the revenue budget for the current year is revised, based on the actual from April to September and the anticipated trend for the remaining period. Monthly report

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Fertilizers And Chemicals Travancore Ltd. On closing of the accounts of the months a monthly P & L account is prepared for each Division and the same is send it to the Division Head, FD and CMD. This report would give a comparison of the actual for every month against budgeted performance. 4.1.4 CASH, BANK AND PAYROLL SECTION This section is concerned more with the day to day activities and less of future forecasting & planning. 1. Cash and Bank Accounts Section The various functions include: 1. Receipt of cash, cheques, bank drafts, and postal money orders 2. Handling of bank deposits/withdrawals, custody of cash and inter unit transfer of funds 3. Maintenance of petty cash books and cash books 4. Reconciliation of bank accounts 5. Security arrangement of cash handling 6. Safe custody of valuable documents 7. Cash interests calculation 8. Any other duties assigned by authorized officer 2. Payroll Section Functions of the section are: 1. Preparation and disbursement of salaries and wages to managerial and nonmanagerial employees. 2. Affect various recoveries through payroll and remit the same to concerned agencies. 3. Processing of various personal payments advances.

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Fertilizers And Chemicals Travancore Ltd. 4. Keeps books of account for the above transaction. 4.1.5 TAX & DUTIES SECTION This section is concerned with calculation & payment of various taxes and duties to the Government. 4.1.6 BANKERS SUPPORTING FACT: State Bank of Travancore, State Bank of Hyderabad, State Bank of India, Bank of Baroda, Bank of India, Canara Bank, & Dena Bank. 4.1.7 AUDITING Various types of audits in FACT are: Statutory audit, Government audit, Cost audit, Income tax audit, Sales tax audit and Internal audit. Some of the main functions of Internal Audit Section are; 1. Operational/ systems/ management audit 2. Proprietary audit and audit of sanctions 3. Routine audit 4. Surprise verification of physical stocks

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