SAP-TO BE Process

New Allenberrry Works

FICO NAW
Finance and Controlling

Version 1.0
25.09.2006

STATEMENT OF CONFIDENTIALITY / DISCLAIMER

This document is the property of Caritor, Inc. No part of this
document shall be reproduced, stored in a retrieval system,
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permission from Caritor, Inc.

Table of Contents

Table of Contents
Organisation Structure & Basic Settings.....................................................................................................3
1. AS IS Process- Organizational Structure in NAW (Finance).................................................................4
Company.................................................................................................................................................................... 4
Company code........................................................................................................................................................... 5
Business Area /Segment............................................................................................................................................ 5
Chart of Accounts....................................................................................................................................................... 5
Document Type.......................................................................................................................................................... 5
Controlling Area.......................................................................................................................................................... 6
Cost Center, Profit Center, Internal order................................................................................................................... 6

2.

Core to Be Process.................................................................................................................................7
Organizational Structure.........................................................................................................................................7
Company.................................................................................................................................................................... 7
Company Code.......................................................................................................................................................... 7
Chart of Accounts....................................................................................................................................................... 8
Fiscal Year................................................................................................................................................................. 8
Posting Period............................................................................................................................................................ 9
Document type........................................................................................................................................................... 9
Currency.................................................................................................................................................................... 9
Field Status Variant.................................................................................................................................................. 10
Business Area Vs Profit Center Accounting under New GL Accounting...................................................................10
Segment................................................................................................................................................................... 11
Controlling Area........................................................................................................................................................ 11
Cost Center Standard Hierarchy.............................................................................................................................. 12
Cost Center.............................................................................................................................................................. 12
Internal Order........................................................................................................................................................... 13

Changes to Existing Organization........................................................................................................................13

Description of Improvements and Key Metrics.....................................................................................................14
Notes on Further Improvements...........................................................................................................................14
Functional Deficit and Method to Remove That....................................................................................................14
Interface Requirement..........................................................................................................................................14
System Configuration Considerations..................................................................................................................14
File Conversion Considerations............................................................................................................................14
Any reports required related to current business process....................................................................................15
Any document/output would be printed for this business process........................................................................15
Authorization Considerations................................................................................................................................15
End User Training Requirements..........................................................................................................................15

A. SAP Standard Reports..........................................................................................................................17

B. Custom Developments.........................................................................................................................18

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Table of Contents

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Organisation Structure & Basic Settings

TO-BE Document
For SAP R/3 Implementation at New Allenberry Works.
Date: 25.09. 2006
Sr. No of TO BE document

Ref. Sr. No. Of AS-IS document

Name of Business Process:

Organisation Structure & Basic Settings

Module: Finance/Controlling

Sub module: Basic Settings-FI/CO

Version no of document: 1.0

Date: 25.09.2006

Version Management This Document is subject to change control. Every change of the document has to Undergo change
control procedure and has to be registered in the following table
Version

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Change

Prepared By

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1. AS IS Process- Organizational Structure in NAW (Finance)

The organizational structure in NAW FARIDABAD with respect to Finance is quite simple.
The Reporting Structure in FICO in NAW is as follows:

C.M.Dugar
AGM-Acct /Fin.
Manager Accts
B.L.Sharma
Vishal .Sharma
Manager Accts

B.Khanna

S. Shekawat

Dinesh Kr.

Pawan Sharma

Dy Acct.Officer

Accts.Officer

Accts.Officer

GS Tanwar

VK Sharma

Sajimon CT

M Prasad

Cashier

Sys.Executive

Sr.Steno

Chaser

Company
Deepak Industries Ltd is a Company. NAW Faridabad is a unit of M/s Deepak Industries Ltd.
The unit does not have any branches in India or outside India. The unit doesnt have
separate PAN number under Income Tax Act and neednt file Income Tax return annually. All
the compliances under Income Tax are discharged by Deepak Industries Ltd. NAW Fbd is
registered with the Excise/service tax and Sales Tax department. The financial results of
NAW Fbd will be consolidated into the financial results of Deepak industries Ltd.
NAW Fbd has currently one manufacturing unit.
All transactions are posted in INR but USD, EUR and other currencies are also used for
generating invoices in foreign currencies through Export module.
NAW uses 31st March as the date on which the financial data is reported.

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Company code
NAW Fbd is currently having only one plant and there is no separate Research and
Development Center.
NAW Fbd is not having distinct legal entity under Companies Act i.e neednt publish the
annual results, declare dividend etc and is a part of Deepak Industries Ltd. The unit
prepares accounts mainly to ascertain the profitability of the unit and to comply with tax laws
like excise/service tax, customs and sales tax .The financial results of the unit will be
clubbed into the financial results of Deepak industries Ltd.

Business Area /Segment

Currently NAW Fbd unit is not divided further into business areas. But NAW Fbd has to
comply with the reporting requirements on business segments Automotive Gears and
Industrial Gears. At present NAW Fbd is presenting Reporting on two manufacturing
segments: (Primary Segments)
1 Tractor and Automobile Gears & shafts
2 Industrial Gears, Gear Boxes & Gear Coupling
3.Others
The segmentation needs to be reported on both the income statement and balance sheet
separately. NAW Fbd caters mainly to the needs of the Indian Market and there is no
reportable geographical segment (i.e. no secondary segments)

Chart of Accounts
As there is only one unit it uses one chart of accounts, which has got approximately 300
natural accounts. The chart of accounts is maintained in English and no additional language
is required.

Document Type
Documents are classified on the basis of
Bank Payment/ Receipt Transaction

- Bank Voucher

Cash Transaction

- Cash Voucher

Sale Invoice

- Sale Voucher

Purchase

- Purchase Voucher

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Debit / Credit

- Debit Note / Credit Note

Other Transactions

- journal Voucher

Except Excise documents (Legal requirement) all other documents are internally numbered.
Document number is separate for each type of document mentioned above. Further these
documents are year dependent.
At present document number is generated automatically for each category of document
such as separate number for Sales Invoices, Purchase voucher, Bank Voucher, Cash
voucher, journal voucher.

Controlling Area
Currently NAW Fbd doesnt have a separate organizational unit from a cost accounting point of
view. The GL accounts form a base for all the costing reports and analysis.

Cost Center, Profit Center, Internal order

Currently NAW Fbd dont have any costing set up and hence do not have any monitoring
mechanism of costs through system. NAW Fbd do not have use any cost objects like Cost
Center, Profit Center and Internal Order to track/ monitor costs or to ascertain the profitability of
the division. Only GL account is the base for entire cost set up.

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2. Core to Be Process
Finance module in SAP is a repository module as the accounting data flows from all the core
modules in SAP like MM, SD, PP, QM, PM and CS. All statutory reporting is done through this
module.
The Finance Module in SAP can be expressed as the receiving module or the central
integrating module in SAP as accounting data flows from all the core modules in SAP like MM,
SD, PP and HR into the FI Module
CO module is tightly integrated with FI module and data flows from FI module to the CO
module.

Organizational Structure
Company
A company is an organizational unit in Accounting, which represents a business
organization according to the requirements of commercial law in a particular country.
In the SAP system, consolidation functions in financial accounting are based on
companies. A company can comprise one or more company codes. All company
codes within a company must use the same operating chart of accounts and the
same fiscal year variant. The company code currencies, on the other hand, can be
different. A Company has one local currency in which its transaction figures are
recorded
Since Deepak Industries Ltd owns NAW Fbd, Company 1000- Deepak
Industries Ltd. will be created as company in SAP.

Company Code
The company code is an organizational unit used in accounting and created
according to tax law, commercial law, and other financial accounting criteria. It is
used to structure the business organization from a financial accounting perspective.
As a rule, a company code in the SAP system represents a legally independent
company and It is the smallest organizational unit for which a complete selfcontained set of accounts can be drawn up. The company code can also represent a
legally dependent operating unit based abroad if there are external reporting
requirements for this operating unit, which can also be in the relevant local currency.

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All the other organizational units of other modules like Controlling Area, Plant, Sales
Organization etc. are linked to Company Code.
Since NAW Fbd doesnt have distinct legal entity under Commercial Law
(Companies Act etc) and under Income Tax Act, NAW Fbd will not be created as
Company Code and Deepak Industries will be created as Company Code in SAP. NAW
Fbd will be created as plant in SAP. Nevertheless NAW Fbd can use the Chart of
Accounts of Deepak Industries Ltd and generate financial statements on its own.
Company code 1000 for Deepak Industries Ltd is created as company
code in SAP and NAW Fbd a plant falls under company code Deepak Industries.

Chart of Accounts
Chart of Accounts is a systematically organized list of all G/L account master records
that are required in a company code. A company can maintain a number of Chart of
accounts for different purposes. Single chart of accounts can be used by one or
several company codes of a company. Every Controlling area/company code can
use only one Chart of Accounts.
Under the chart of accounts a G/L account will be created and each G/L will have a
unique account number, account name and will belong to one account group in the Chart
of Accounts.
Chart of Accounts 1000 will be created for Deepak Industries Ltd and NAW Fbd
can use this chart of Accounts for the maintaining of accounts and for its financial
reporting.

Fiscal Year
A fiscal Year is the normal accounting period for which the working results and balance
sheet is compiled every year. A fiscal year usually has 12 posting periods. In General
Ledger Accounting, in addition to normal periods 4 four special periods can be defined
which will be used for year-end audit purposes.
For Deepak Industries Ltd the Fiscal Year will start with first of April of the year till
31st of March of the subsequent year.

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Posting Period
A posting period is necessary to ensure chronological maintenance of data, and to
prevent documents from being posted to a wrong posting period. Desired periods can be
closed.
Usually the current posting period is open and all other periods are closed. During the
procedure of financial closing, some special periods may also be open for closing
postings. Four Special Posting Periods will be present in the system.
In SAP the fiscal year will be broken into Posting Periods and each period will
have a start and end date. The posting period variant used for Deepak Industries
Ltd. will correspond to a calendar month. In simple terms there will be 12 Posting
Periods for a fiscal year. We will define 4 Special Periods which are used for the
purpose of Year-end entries.

Document type
The document type classifies business transactions .It is noted in the document header.
Attributes that control the entry of the document are stipulated for each document type.
In particular, the number range assigned to the relevant documents is determined on the
basis of the document type.
Depending on document type, there are also required fields viz., Document Header Text,
Reference Text, assignment field, Text, Tax field etc.

Currency
The legal currency INR is used for company code Deepak Industries Ltd and this will be
called as Local Currency or as Company Code Currency in SAP. Business transactions
can be recorded in any currency (called as document currency) in a document .All the
entries that are posted into the system in any currency other than that of INR (Company
code currency) will be treated as a Foreign Currency from SAP perspective. A document
posted in foreign currency can also be viewed in local currency.

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Exchange Rate Maintenance
Exchanges rates are required to translate the foreign currency amounts when posting or
clearing, to determine gain or loss from exchange rate differences and to evaluate the
open items in foreign currency balance sheet items.
The authorized person will update the Exchange rate in the exchange rate tables using
the transaction code OB08.

Field Status Variant

A field status variant groups together several field status groups. Field status group
determines which fields are ready for input, which are required entry fields, and which
are hidden during document entry. Any additional account assignments (i.e. cost centers
or orders) can be made mandatory using this field status groups. Field status groups are
assigned in each G/L account and then entries with this GL account can be saved only if
the required data are entered in the corresponding fields.
Deepak Industries Ltd will use 1000 as field status variant.

Business Area Vs Profit Center Accounting under New GL Accounting

As per SAP OSS Note 321190 -The business area is initially used in addition to the
company code as a further unit for external reporting that has to be done by the
company. The area of responsibility of business areas generally stretches over several
company codes (lines of business, divisions).
Profit Center Accounting was initially only implemented for displaying the profitability key
figures (Like return on Investment) results of internal areas of responsibility. For this
purpose, all controlling objects relevant for revenues and expenses (cost center, orders,
projects, sales orders and so on) were mapped on profit centers and updated with the
corresponding data affecting the result. For displaying profitability key figures (return on
investment), current asset and fixed asset balance sheet items as well as short-term
payables were distributed to profit centers later.
Consequently the profit center became more and more similar to the business area with
respect to the assignment of financial statement data. The differentiation into an
externally oriented classification according to business areas and a classification for
internal controlling purposes according to profit centers, became less important in the
course of the convergence of external and internal accounting

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Also As per OSS Note 321190- The business area will be retained in the present form.
To meet the changing requirements, additional developments in future will be made
available under Profit Center Accounting through New G/L Accounting Functionality.
With the New General Ledger in release mySAP ERP 2004, based on the data available
to system, it is possible, to create financial statements on profit centers. In view of the
above discussion Profit Center Accounting through New GL Accounting functionality will
be implemented for Deepak Industries Ltd.
There will be two profit centers and hence it is possible, to create separate
financial statements on profit centers:
Profit Center 1001- Tractor and Automobile Gears & shafts
Profit Center 1002- Industrial Gears, Gear Boxes & Gear Coupling
Profit Center 1003-Others.
For all transactions is SAP where Cost Canters and Profit Centers are not determined
automatically the data for Cost Center and Profit Center has to be input manually.

Segment
Three segments Automotive Gears, Industrial Gears and Others will be created for Deepak
Industries Ltd and the business can enter an associated segment in the master record of a profit
center. The segment is then derived from the assigned profit center during every posting of an
accounting document. The assignment of segment in profit center will help in consolidating the
financial statements of profit centers, based on the data available to system, among the units of
Deepak Industries Ltd (Like of Faridabad, Rudrapur etc) across the segments.

Controlling Area
The controlling area is an organizational unit in Accounting used to subdivide the
business organization from a cost accounting standpoint. The company code allocated
to the Controlling area must use the same operating chart of accounts and the same
fiscal year variant. Each controlling area has a unique standard hierarchy; the highest
node is created when maintaining the Structure. To the standard hierarchy of cost
centers, all the cost centers created for a Company code are attached.
For Deepak Industries Ltd. Controlling Area 1000 the highest organisational unit for Costing
purpose.

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Controlling Area 1000 will have 1000 as chart of Accounts and will be assigned to Company
code 1000. Controlling Area 1000 will use currency type 20 i.e. controlling area currency and
is INR.
Controlling component enables the determination of the cost of goods manufactured or the cost
of goods sold for the manufacturing or service output of the company.
It provides the management with the environment to
_ Establish/Capture planned costs (budgeted costs)
_ Record actual costs for the cost objects
_ Compare actual costs with target costs and with planned costs, and analyze variances

Cost Center Standard Hierarchy

The Standard Hierarchy is a unique structure that collects together all the cost centers created
in a Controlling Area, using a drill-down system. To the highest node - the root of the hierarchy,
there are attached the nodes for each company code.
Standard hierarchy 1000 will be created for Deepak Industries Ltd.

Cost Center
The cost center collects the costs incurred in its original form. In order to create them you can
use some criteria such as locations, responsibility areas etc. No cost center can be created
without an allocation to one level in the standard hierarchy. Every Cost Center created under
standard hierarchy will belong to one Cost Center Category
The following Cost Center Categories will be used by Deepak Industries Ltd :
01-Production
02-Production Support
03-General and Administration
04- Selling and Distribution.
05- Plant Segment.
Every Cost Center will have 8 digits and the coding is as follows:
First 4 digits for the Cost center will be the plant number in sap, Next 2 digits will be Cost Center
Category and the next 2 digits will be cost center numbers
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Internal Order
An Internal Order is an extremely flexible CO tool that can be used for a wide variety of
purposes to track and control costs within a controlling area. Internal orders provide capabilities
for planning, monitoring, and allocation of costs. Internal order once created will be referred in
raising a Purchase order in the account assignment category. This is mandatory to capture the
costs / expenses on the internal order against a budget.
NAW Fbd will use Internal Order Cost Object to track the capital costs and to settle the costs to
asset under construction or main asset.
When NAW Rudarpur /NAW Calcutta intends to implement SAP the existing SAP organisation
structure setup gives the flexibility of creating Rudarpur/Calcutta as separate company code
with separate chart of accounts or using the same chart of accounts with separate GL accounts
or can use same chart of accounts under the same company code. The detailed discussion will
be made during the implementation of SAP in NAW Rudarpur/NAW Calcutta.
Process Flow chart

Operating Chart of Accounts

(1000)

Company Code
(1000)

Further Notes

Changes to Existing Organization

Introduction of the concepts Chart of Accounts, Segment, Accounts Group, Controlling
Area, Posting periods, Document Types, Number Ranges, Field Status variants, Cost
Center, Internal order and Profit Center are all changes by way of improvements to the
existing system.

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For all transactions in SAP where Cost Centers and Profit Centers are not determined
automatically the data for Cost Center and Profit Center has to be input manually

Description of Improvements and Key Metrics

Improved control over the accounting transactions on introduction of posting

period concept.

Reduction in number of GL accounts on introduction of Reconciliation account concept.

Standardized more number of Document Types and Document Number Ranges to
distinguish business transactions.
With the company code in place the financial statements for external/internal reporting
can be generated without much delay.
With the use of Profit Center Accounting through New G/L Accounting Functionality the
financials could be drilled down to segment of the business as well as can be drawn on
the Profit Centers.
With the use of the Controlling module the Overhead Costs can be closely monitored
that are collected over the Cost Centers and the cost of Goods manufactured or sold can
be determined for every product.

Notes on Further Improvements

NA

Functional Deficit and Method to Remove That

NA

Interface Requirement
NA

System Configuration Considerations

NA

File Conversion Considerations

NA

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Any reports required related to current business process
NA

Any document/output would be printed for this business process

NA

Authorization Considerations
Detailed Authorization matrix will be defined for all users in the common file for all
modules.
The high level Authorization requirements are as below.
Business Roles

Number of Users

Business Manager
Operations Manager
Transaction Owners

End User Training Requirements

<E.g.:
Business User Segments

Number of Users

Type of Transaction

Business Manager

Display, Reports

Operations Manager

Change, Display, Reports

Transaction Owners

Create, Display, Reports

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Geographical Location

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Sign-off (Approval) for this document:
Name of Team members:

Organization / Bus. Unit

FI/CO Consultant- Vinod Atmakuri

Caritor Inc

Business Process Owner- C.M.Duggar

New Allenberry Works

Key User- Balbir Khanna

New Allenberry Works

Key User-Vishal Sharma

New Allenberry Works

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A. SAP Standard Reports

<E.g.:
SAP Standard Reports
Sl No:
01

Report Description
Profit Center hierarchy

Selection Criteria
KCH4

Output
Screen View/Output

02
03
04
05
06
07
08
09
10
11

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B. Custom Developments
<E.g.:
Print Requirements
Sl No:

Report Description

Selection Criteria

Output

1.0
2.0

Development Requirements
Sl No:

Report Description

Selection Criteria

Output

1.0

Report Requirements
Sl No:

Report Description

Selection Criteria

Output

1.
2.
3.

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