CHAPTER 1

INTRODUCTION

Keeping pace with the winds of rapid industrialization that are sweeping
Karnataka, MSIL is today resting on a strong footing of excellent
performance coupled with rooted trust and confidence amongst its clientele.

Mysore Sales International Limited popularly known as MSIL, is a marketing

organization formed in 1966 to meet the marketing needs of Karnataka. Since
then, the company has grown from strength to strength, to emerge as a dynamic
marketing force with a national presence and international reach.

A keen sense of business acumen, trade experience, managerial effectiveness

and credibility are a few of the hallmarks of this marketing giant. And, its ability to
manage a diverse range of products and services through innovative marketing
strategies is the secrete of its success. In a business where the prime motivator
is people, MSIL has developed flexibility in its thinking and management,
enabling it to tackle every fresh challenge with an innovative approach. To stay in
rhythm with the changing tastes and values.

From a modest turnover of just Rs. 1.5crores in 1966, MSIL has today
achieved a turnover of Rs. 280 crores. And, is one of the very few public sector
undertakings to earn substantial profits continuously.

1
 1.1OBJECTIVES OF THE STUDY

This is a pre-determined study on MSIL, with specific objectives like:

 Using and analysing the available information to determine the quality of

the performance.
 To learn how the different divisions like Finance, Marketing, Personnel, etc
are co-ordinated and synchronized to meet the goals and objectives of the
organization.
 To get acquainted to the real working environment in the organization.
 To gain valuable knowledge and experience during the study
 Finally, to gain a practical knowledge about the functions and working of
the company.

1.2 PURPOSE OF THE STUDY

1. The Performance and Functions of different business Organisations can be

evaluated in different methods in the area of marketing, finance, human
resources etc.

2. Each area of the evaluation is entirely different from one and the other; one
might influence the other tremendously. By conducting the analysis in different
area of operating insides (employees, managers), outsiders (shareholders,
general public, creditors, government etc). One can get an extremely valuable
and useful view of the enterprise and its operation in the form of a bird’s eye
view.

3. Evaluation of financial performance will serve as an eye opener to any

company and the company could understand its own position overtime.

4. This study also helps us (students) to get practical knowledge about the
functions and working of the Organisation

2
 CHAPTER 2

INDUSTRY PROFILE
ON

PAPER INDUSTRY

INTRODUCTION

The word paper is derived from the name of the reedy plant papyrus, which
grows abundantly along the Nile River in Egypt. In ancient times, the fibrous
layers within the stem of this plant were removed, placed side by side, and
crossed at right angles with another set of layers similarly arranged. The sheet so
formed was dampened and pressed. Upon drying, the gluelike sap of the plant,
acting as an adhesive, cemented the layers together. Complete defibring, an
indispensable element in modern papermaking, did not occur in the preparation
of papyrus sheets. Papyrus was the most widely used writing material in ancient
times, and many papyrus records still survive.

Overview

Industry Scenario - Why Priroty

The challenge for the Indian paper industry to meet the ever increasing demand
of paper, board and newsprint is getting crippled due to shortage of fibres in the
country. The future demand of paper is expected to grow from 5.6 MT at present
TO 9.5 MT in 2010 and 13 MT in 2015. Demand for creamwove paper is
expected to increase by 7-8%. Demand for different kinds of coated paper has
increased by 8% in 2002, duplex board has recorded increase by 6.5%, kraft paper has

registered a 6% rise in demand and newsprint an impressive 10%.

3
Indian paper industry can be broadly classified into paper and paperboards and
newqsprint. The paper and paper board segment constitutes of cultural paper,
industrial paper, speciality paper. We will be treating newsprint as a separate
type of paper and it is dealt in detail in the last section.

The paper industry in India has a long history with the first mill being
commissioned in 1832. The number of paper mills in the past with average
capacity is as given in the table below.

No. of Installed capacity Average

Year
Mills million ton capacity ton
1950-
17 0.137 8,050
1951
1970-
55 0.768 13,500
1971
1980-
137 1.816 11,500
1981
1990-
325 3.304 10,000
1991
1999-
406 6.200 15,270
2000
2001-
594 8.500 22,000 (approx)
2002

Why a priority?

The Indian paper industry, reeling under liberal imports, price cuts and rising
input costs for the past three years, seems to be on a comeback trail. With the
firming-up of international pulp and paper prices, the domestic paper market
registered an upward trend.

In South India, starting with ITC Bhadrachalam Paperboards Ltd (ITC-BPL) many
paper mills increased production and posted higher turnovers last year on

4
account of improved market conditions. For instance, The Andhra Pradesh Paper
Mills (APPM), The South India Paper Mills (SIPM), The Sirpur Paper Mills
(SPML), Delta Paper Mills (DPM) and the Coastal Papers (CP) have all posted
higher turnovers in 2001-2002.

Characteristics of Market

PAPER

Size of Market

The Indian paper industry is extremely fragmented. This industry structure is the
result of the past Government policies which encouraged the setting up of many
small mills with as low capacity as 1 ton per day.

Market Trend

The present domestic paper demand is 5.6 million tpa . Indian per capita
consumption of paper is 5 Kgs with an expected growth rate of 6-7% per annum
over the next 5 years. Paper consumption in India is expected to reach 9.5 million
tonnes by the year 2010 and 13 MT by 2015. The capacity utilisation of the
industry presently is 67%.

Constraints

Paper manufacturing is a highly capital and energy intensive industry. The

manufacturing process demands considerable material handling skills as very
large quantities of raw materials are used as input. Paper manufacturing is also a
highly polluting process and requires substantial investments in pollution control
equipment. Typically, a grass root paper plant costs about INR 50,000 to INR
120,000 (£750-1800) per ton of capacity and the average is around INR. 60,000
(£895) per metric ton. To achieve significant economies of scale the plant size

5
should be at least 3000 tonnes per annum, implying nearly Rs.1.8 billion (£27
million) of investment, with a minimum gestation period of two years

Demand Conditions

Demand for paper is strongly correlated with trends in GDP growth and increase
in per capita income (PCI). According to studies conducted by the UN, the
demand for paper increases by around 1.5-2.5% for every 1% increase in PCI.
This holds good even for India in the higher range in spite of year on year
variations in demand growth. Demand for paper is also influenced by other
factors like literacy rate, growth of service sector, advancement of printing
technology in the country, development of paperless transaction, development of
packaging industry, acceptability of substitutes, etc.

Different types of paper along with their usage, constitution of total demand and
expected growth rate is as given in table below:

Type of paper Main varieties Applications Expected growth rate (% of total

consumption) 2002-2003Cultural paper (46%) cream woven, maplitho, textbooks,
notebooks, 7-8% bond paper, Chromo paper office stationeryIndustrial paper
(48%) kraft paper ,paper board - wrappers, corrugated boxes, 6-7% paper board
- single layer liners, sacks and textile tubes board, multilayer board, packaging of
pharmaceuticals, duplex board, chromo board, cigarettes, match sticks, hosiery,
art board. food liquor, fruits juices, edible oils, engineering products, consumer
durables.Speciality paper (4%) security paper, grease proof currency, wrappers,
labels 10% paper, electrical grades of paper Newsprint (2%) glazed, non-glazed
Printing of newspapers & magazines 10%

Supply Conditions

The installed capacity of paper mills in the country has increased from 0.137
million tpa in 1951 to more than 8 million tpa in 2002. Paper and paperboard
capacity increased only 0.6 percent in 1999 and 1.3 percent in 2000, compared

6
with an annual average of 2.1 percent during the 1991 to 2000 period. The 41st
Annual Survey of Paper, Paperboard and Pulp Capacity and Fibre Consumption
projects capacity to rise at an annual average rate of 0.7 percent in the next three
years, specifically 0.8 percent in 2001, 0.9 percent in 2002 and 0.5 percent in
2003.

Capacity in this report includes some machines that have already been, or soon
will be, closed, but do not meet the survey criteria for removal , namely, that mills
and machines must be dismantled or closed for at least a year before their
capacities are removed from the survey base.

Best regions and capability

The geographical spread of the industry is given in the following table.

State Number of Mills Andhra Pradesh 39 Assam 2 Bihar 7 Chattisgarh 9 Gujarat

91 Haryana 17 Himachal Pradesh 7 Jammu & Kashmir 1 Jharkhand 2Karnataka
19 Kerala 13 Madhya Pradesh 27 Maharashtra 90 Nagaland 1 Orissa 6
Pondicherry 7 Punjab 73 Rajasthan 10 Tamil Nadu 37 Uttar Pradesh
94Uttaranchal 16 West Bengal 26 Total Mills 594

Demand-Supply

The demand for paper has gone up. But availability of raw materials like hard
wood, bamboo, wheat and rice straw, bagasse, grass and wastepaper, being low,
import of finished paper is likely to increase.

7
 CHAPTER 3

COMPANY PROFILE

INTRODUCTION

Keeping pace with the winds of rapid industrialization that are sweeping
Karnataka, MSIL is today resting on a strong footing of excellent
performance coupled with rooted trust and confidence amongst its clientele.

Mysore Sales International Limited popularly known as MSIL, is a marketing

organization formed in 1966 to meet the marketing needs of Karnataka. Since
then, the company has grown from strength to strength, to emerge as a dynamic
marketing force with a national presence and international reach.

A keen sense of business acumen, trade experience, managerial effectiveness

and credibility are a few of the hallmarks of this marketing giant. And, its ability to
manage a diverse range of products and services through innovative marketing
strategies is the secrete of its success. In a business where the prime motivator
is people, MSIL has developed flexibility in its thinking and management,
enabling it to tackle every fresh challenge with an innovative approach. To stay in
rhythm with the changing tastes and values.

From a modest turnover of just Rs. 1.5crores in 1966, MSIL has today
achieved a turnover of Rs. 280 crores. And, is one of the very few public sector
undertakings to earn substantial profits continuously.

8
History of MSIL:
The government of Karnataka, a pioneer in industrial promotion and growth, felt
the need of organization to manage the marketing needs of the growing
industries in the state. And, in march 1996, a unique concept of marketing
enterprise in the public sector was born in Bangalore-MYSORE SALES
INTERNATIONAL LIMITED.

Since then MSIL, has grown from a humble trading house to a vibrant multi-
product, multi-dimensional marketing export house, offering a wide range of
products and services.

The changing consumer profile has molded the activities MSIL, making it enter
new and challenging fields. Thereby diversifying its operations and broadening its
horizons. The company, now with a national marketing presence has crossed an
annual turnover of Rs.2000 million.

In the late ‘60s, MSIL was established as a novel concept in the sector-a
centralized marketing unit for various products of the State. With its subsidiary
advertising company Marketing Consultants & Agencies Ltd., MSIL provides a
comprehensive range of marketing and advertising services.

By the late ‘70s, having established its capabilities, MSIL began to extend its
operations beyond marketing – in managing special projects for the government.
Like the distribution of imported cement during nation-wide shortage and export
of white rice during a year of surplus. Manufacture and distribution of notebooks
for students, management of the Bangalore Air Cargo Complex – functioning as
custodians for customs cargo. Each one of these activities required a new kind of
expertise as well as infrastructure. And, MSIL managed each activity with
dedication.

9
In the ‘80s, MSIL entered the consumer durable market through its hire-purchase
scheme-MSIL Homaker. And, with the MSIL Tours & Travels Division, it started
meeting the travel requirements of a large number of officials.

The early 90s saw MSIL streamline the distribution of Indian Made Foreign Liquor
(IMFL) in the State.

Status of MSIL:

 Earning profits since inception

 Well-built up reserves
 No trade union problems
 No major liabilities except working capital limits
 Thin equity base
 Concurrent revenue yielding operations
 Diversified activities

Activities at MSIL:

1) Bangalore Air Cargo Complex: Handling export/import cargo.

2) Paper Division: Sale of “Vidya” and “Lekhak” notebooks and stationery.
3) Lottery Division: Sale of Karnataka State Lottery tickets.
4) Liquor Division: Sale of Liquor.
5) Arrack Division: Manufacturing and supplying arrack.
6) Tours &Travels Division: Booking of domestic Air Tickets for
Government.
7) Hire Purchase Division: Hire Purchase scheme applicable to government
employees for home appliances, 2 & 4 wheelers.
8) Silk Showrooms: Sale of fine Silk Textiles.
9) Industrial Products Division: Sale of ‘HOT SPRING’ Solar Water
Heaters.

10
 10) Financial Services: Leasing operations and mobilizing fixed deposits for
KPCL.

National Presence:
MSIL Marketing Network
• Head Office
• Branch Office
• Sales Office
Head Office: the head office is situated in Bangalore

MSIL House
36, Cunningham Road
Bangalore-560 052

Branch Office:
With branch offices in Delhi, Mumbai and Chennai and a network of sales offices
across the country, MSIl has the ability to reach people all over India and abroad.

Delhi
Chennai
Mumbai

Sales Office:
The sales office is spread in different parts of the country there are 31 sales office
from Jaipur, Dehra Dun, Salem, Cochin, Bidar, Bellary and so on.

Beyond Profits:

11
Going Beyond the books of credits and balances, MSIL has always supported
projects with social obligations. Contributions to hospitals, educational institutions
and cultural organizations have made MSIL a caring corporate.

MSIL has also drawn up a long-term plan to revive the rich cultural tradition of the
State. Towards this end, MSIL has instituted an annual state-level light music
competition for students titled ‘MSIL Nityothsava’, which evoked an
overwhelming response.

Also, an exclusive Art Camp was organized where 15 well-known artists from all
over India were invited to create new paintings. It is an annual event attracting
renowned artists.

Looking Forward:
MSIL – a consumer-oriented business house, takes on every challenge with
enthusiasm. And finds innovative solutions, by diversifying appropriately and
updating constantly. With progressive policies and strict financial discipline, MSIL
is poised for a quantum leap in the days ahead.

12
 3.1 GOALS AND OBJECTIVES OF THE COMPANY

1) To carry all kinds of Agency business.

2) To carry in guarantee and indemnity business relating to any
products/manufacturing.
3) To buy, sell, import, manipulate, prepare for market and deal in
merchandise of all kinds and generally to carry on business as merchants,
importers and exporters.
4) To establish offices, godowns, showrooms, exhibitions, art galleries,
factories, manufacturing and repairing centers in any part of the world.
5) To act as agents, brokers and trustees for any person or company.
6) To promote commerce in relation to industrial undertakings in India and
abroad.
7) To acquire and takeover the existing business manufacturers and dealers
in leather goods carried on under the name and style of “The Mysore
Chrome Tanning Company Ltd., Bangalore”
8) To carry on the business of manufacturers of and dealers in leather
dresses, counters, tanners, makers of leather goods.
9) To take over the existing shipping business carried on under the name and
style of “Karnataka Shipping Corporation Ltd., Bangalore” and carry on the
business of shipping.
10)To carry on the business of manpower export, recruitment agents,
placement services, personnel management and management
consultants, HRD consultants and other allied activities.

13
11)To carry on the business of leasing and hire purchase financing.
12)To carry on the business of agents/dealers in stores of exporters and
importer of all kinds of perishable items.

3.2 ORGANISATION CHART

& EA
AM

[1]
DIRECTOR (MKTG)

AM QC

A/c’s
AM

[2]
[1]

14
 MANAGING DIRECTOR

MANAGING DIRECTOR
DG
MANAGING DIRECTOR GM
M
BAC
HP
C
DG [1]
GM GM MGR GM Executive Director [1]DGM
(CS) F&A CCD T&T
[1] [1] [1] [1] DM
M PPR
A/c’s
[1]
GM G MGR
[1]
BAC
MGR
IPD SLS
[1] M SLS
[1]
[2]
C MGR
[1]
MGR Lot MGR
DM
F&A
T&T DGM F&A
SLS
[1]
AM DM MGR MGR [ ] LD t [1]
& EA PERS EST F&A [1] AM SLS
DG
MGR DM T
[1] [ ] [1] [2] AM
[2]
F&A SLS [1] DM A/c’s
LD [1] M DM
& EA DMSLSST
[1]
[1] [1] [1]
[1]
DM REC
AMAMSLS
MGR A/c’s A/c’s
[2]
DM DM DM SLS/ [1] [2] [1]
AM AM A/c’s ADMN T&T ARK AM AMAMSLS
LAW HRD [1] [1] [1] [2] & EA DM
GDN
[2]
[3]
[1] [1] [1] [1]
[8]

AM SLS AM
AM A/c’s
DEPO [2] AM
DM A&M AM
SLS
A/c’s
[1] [1]
AM AM T S/A/E
&[5]EA
[1]
AM AM SLS MGR
A/c’s [1] SLS [1] [1]
AM A/c’s [1] [1]
PERS [4] AM
[1] AM A/c’s
& EA
[1][1]
AM
AM SLS A/c’s AM
AM SLS [2] [1]
AM
[15] AM G/S
& EA REC
[1] [4]

15
[2]
 3.3 VISION AND MISSION OF THE COMPANY

VISION

1. To be the number one organization in the field of marketing and

distribution.

2. To increase the number of divisions.

3. To expand the branches outside the state.

4. To provide more and more services to the government employees.

5. To increase the population of customers to the credit of MSIL.

MISSION

MSIL – a consumer-oriented business house, takes on every challenge with

enthusiasm. And finds innovative solutions, by diversifying appropriately and
updating constantly. With progressive policies and strict financial discipline, MSIL
is poised for a quantum leap in the days ahead.

MSIL is coming up with many schemes and policies to increase the customer
satisfaction.

16
 CHAPTER 4
FUNCTIONAL AREAS

4.1 FINANCE AND ACCOUNTS DEPARTMENT

The finance and accounts department manages finances of the company, like
raising capital loans etc. The accounts function records all the financial
transactions and maintains all the proper accounts of income, expenses. The
department also takes care of the payroll preparation and processing of the same
for the employees of the entire organization every month. The finance and
accounts department has its branches in all the major functional divisions of the
organization.

At present, most of the documents like Invoicing, preparation of material inward

slip, delivery challan, stock ledger etc., are being done manually at all the depots
of the concerned divisions.
The division has well experienced personnel to handle conversion accounting,
cost accounting and financial accounts. One complaint in this functional area is
limited exposure to computer environment.

FINANCIAL, ACCOUNTING & MIS:

Some of the divisions at MSIL like the paper division, Bangalore Air Cargo
division, Industrial products division, Tours & Travels division, etc are operating
as profit centers and maintains divisional accounting system. The divisions are in
the process of implementing “online computerization” programme. At present,

17
 most of the documents like Invoicing, preparation of material inward slip, delivery
challan, stock ledger etc., are being done manually at all the depots.

FINANCIAL PERFORMANCE

BALANCE SHEET AS AT MARCH 31,2003

SCHEDULE PREVIOUS CURRENT

SOURCES OF FUNDS SHARE HOLDERS
FUNDS NO YEAR YEAR
CAPITAL 1 366623000 36623000
SHARE APPLICATION MONEY 165143000 239776000
RESERVES AND SURPLUS 2 712782744 652335373
DEFERRED TAX LIBILITY (NET) --- 76345958
914548744 1005080331

LOAN FUNDS
SECURED LOANS 3 99056967 50984598
UNSECURED LOANS 270110298 200185956
369167265 251170554
TOTAL 1283716009 1256250885

APPLICATION OF FUNDS
FIXED ASSETS 5
GROSS BLOCK 535822642 518513581
LESS DEPRECIATION 216962001 236061986
NET BLOCK 318860641 282451595
CAPITAL WORK IN PROGRESS 16969313 11126169

INVESTMENTS 6 61705500 68304500

CURRENT ASSETS LOANS AND
ADVANCES
INVENTORIES 7 446916897 466561754
STOCK WITH HIRERS 8 180541883 186662510
SUNDRY DEBTORS 9 374365988 431609984
CASH AND BANK BALANCES 10 118280791 113727124
OTHER CURRENT ASSETS 11 1404706 1666430
LOANS AND ADVANCES 12 356244222 376485758
TOTAL 1477754487 1576713560
LESS CURRENT LIABILITIES AND
PROVISIONS
LIABILITIES 13 540115788 577872342

18
 PROVISIONS 14 51458144 104472597
591573932 682344939
NET CURRENT ASSETS 886180555 894368621

TOTAL 1283716009 1256250885

P & L ACCOUNT FOR THE YEAR ENDED MARCH 31,2003

SCHEDULE 2001-02 2002-03

INCOME NO
SALES 3210401847 3168476334
COMMISSION AND SERVICE CHARGES 194634599 201960417
OTHER INCOME 15 164724715 162765725
EXTRA-ORDINARY INCOME 10902736 --
ACCRETION/DECRETION 16 -24312096 11374233
TO STOCK 3556351801 3544576709

EXPENDITURE
COST OF MATERIALS 17 2769109888 2859518175
PACKING AND FORWARDING 9862636 11531098
MANUFACTURING,SELLING AND
ADMINISTRATIVE EXPENSES 18 505237985 484389944
FINANCIAL EXPENSES 19 46247060 39504945
DEPRECIATON 5 67137640 71920041
DONATION 6295000 4525000
3403890209 3471389203
PROFIT BEFORE TAX 152461592 73187506
PROVISION FOR TAX 27500000 49200000
CURRENT DEFERRED -- -22321100
PROFIT AFTER TAX 124961492 46308606
PRIOR PERIOD ADJUSTMENTS 20
TAX RELATING TO EARLIER YEARS 466630 2371585
EXPENSES 1890102 -479964
2356732 1891621
BALANCE B/F FROM LAST YEAR 89284 694
AMOUNT AVAILABLE FOR APPROPRIATIONS 122694144 44417679

APPROPRIATIONS
DIVIDEND
PROPOSED DIVIDEND-SUBJECT TO TAX 5493450 5493450
INCOME TAX THERE ON 0 703848
TRANSFER TO GENERAL RESERVE 117200000 38219000
122693450 44416298
BALANCE CARRIED TO BALANCE SHEET 694 1381

19
 DIVISIONS 2002-03 2001-02

LIQUOR 20763.4 20716.11

ARRACK 3794.8 3797.55
CONSUMER PRODUCTS/EXPORTS 1090.21 1188.67
INDUSTRIAL PRODUCTS 1425.34 1018.51
PAPER 1994.65 2165.8
LOTTERY 4545.67 4757.6
HIRE PURCHASE 1040.94 1159.74
TOURS & TRAVELS 502.26 395.04
OTHERS 368.41 2921.25

TOTAL TURNOVER 355525.7 38120.27

DIVISIONWISE TURNOVER
(Rs. In Lakhs)

20
 THREE YEARS PERFORMANCE

FINANCIAL HIGLIGHTS FOR THREE YEARS

2000-01 2001-02 2002-03

NET WORTH 7046.74 9145.49 9287.34

PAID-UP CAPITAL 366.23 366.23 366.23

SHARE APPLICATION MONEY 723.8 1651.43 2397.76

21
RESERVES & SURPLUS 5956.71 7127.83 6523.35

BORROWINGS 1111.31 990.57 509.85

NET FIXED ASSETS 2767.56 3358.3 2935.78

TURNOVER 28447.98 38120.27 35525.68

PROFIT BEFORE TAX 1665.17 1501.05 712.95

DIVIDEND 15% 15% 15%

NET EARNINGS AFTER TAX 288.12 334.78 121.28

per share in Rs.

NET WORTH 1924.13 2497.2 2535.93

per share in Rs.

SUMMARISED BALANCE SHEET FOR THREE YEARS

2000-01 2001-02 2002-03

OWN FUNDS

SHARE CAPITAL 1090.03 2017.66 2763.99

RESERVES & SURPLUS 5956.71 7127.83 6523.35
DEFERRED TAX LIABILITY (NET) 763.46

TOTAL 7046.74 9145.49 10050.8

LOAN FUNDS

22
SHORT TERM LOAN 3678.98 3691.67 2511.71
FUNDS EMPLOYED 3678.98 3691.67 2511.71

TOTAL 10725.72 12837.16 12562.51

APPLICATION OF FUNDS

FIXED ASSETS 2767.56 3358.3 2935.78

INVESTMENTS 484.75 617.05 683.04
WORKING CAPITAL 7473.41 8861.81 8943.69

TOTAL 10725.72 12837.16 12562.51

SUMMARISED PROFIT & LOSS ACCOUNT FOR THREE YEARS

2000-01 2001-02 2002-03

TURNOVER 28447.98 38120.27 35525.68

GROSS INCOME 6784.96 7647.77 6694.1

SELLING & ADMINISTRATIVE 4383.7 5013.74 4857.26

EXPENSES

INTEREST 186.73 436.57 367.21

DEPRECIATION 510.82 671.38 719.21

PROVISION/WRITE OFF 38.54 25.03 37.47

23
TOTAL 5119.79 6146.72 5981.15

PROFIT BEFORE TAX 1665.17 1501.05 712.95

PROVISION FOR TAXATION 610 275 268.79

PROFIT AFTER TAX 1055.17 1226.05 444.16

PROFIT BEFORE TAX

For 5 Years From 1998-99 to 2002-03

(Rs. In Lakhs)

24
1800
1665.17
1600
1501.05

1400
1291.56

1200
1111.66

1000

800 712.95

600

400

200

0
1998-99 1999-00 2000-01 2001-02 2002-03

RESERVES AND SURPLUS

For 5 Years From 1998-99 to 2002-03

(Rs. in Lakhs)

25
 8000
7127.83
7000
6523.35

5956.71
6000

4962.09
5000
4286.38
4000

3000

2000

1000

0
1998-99 1999-00 2000-01 2001-02 2002-03

The Division-wise FINANCIAL PERFORMANCE is detailed below:

LIQUOR DIVISION:
The liquor division achieved turnover of Rs.20763.40 lakhs during the year under
review. During the year, the performance was satisfactory, inspite of unfriendly
market conditions.

26
The State government has formed the Karnataka State Beverages Corporation
ltd., for channelising the sale of liquor in the State with the result the liquor
business of your Company ceased to continue from 1.7.2003. The wholesale
business in Bangalore has also been discontinued from 1-07-2003. A majority of
the staff attached to the erstwhile liquor business of your company has been
taken on a deputation basis by the said new corporation.

ARRACK DIVISION
The division achieved a turnover of Rs.3794.80 lakhs during the year under
review as compared to Rs.3797.55 lakhs achieved during the previous year. The
division exercised adequate control to contain the production wastage to a bare
minimum as in the previous years and to sell fully matured arrack to the
maximum extent.

INDUSTRIAL PRODUCTS DIVISION

The division achieved a turnover of Rs.1425.34 lakhs during the year under
review and the main contribution came from sale of “HOT SPRING” solar water
heating systems.

PAPER DIVISION
The paper division recorded a total turnover of Rs.1994.65 lakhs during the year
under review compared to Rs.2165.80 lakhs achieved during the previous year.
The decline in turnover was due to unfavourable market conditions. The division
achieved a turnover of Rs.197.39 lakhs for stationary products as against
Rs.257.20 lakhs during the previous year.

LOTTERY DIVISION
The lottery division’s performance during the year under review was Rs.4545.67
lakhs as against Rs.4757.60 lakhs achieved during the previous year. The gross
revenue to the State Government stood at Rs.1167.92 lakhs as against
Rs.1219.85 lakhs during the previous year.

27
HIRE PURCHASE DIVISION
The hire purchase division achieved a turnover of Rs.1040.94 lakhs during the
year as compared to the achievement of Rs.1159.74 lakhs during the previous
year. The reduction in the limit of loan allowed to group D employees, restriction
imposed to the employees of certain department due to heavy overdues and also
the reduction in two-wheelers sales due to stiff competition from other finance
companies including commercial banks are attributable to the overall reduction in
the sales.

TOURS AND TRAVELS DIVISION

The division achieved a turnover of Rs.502.26 lakhs as against Rs.395.04 lakhs
achieved during the previous year registering a growth of 27%. The division has
been accredited with IATA recognition. The division introduced KSRTC online
booking services and also group bookings of conducted tours and packages
through its tour operators during the year under review.

BANGALORE AIR CARGO COMPLEX

The division earned revenue of Rs.1952.74 lakhs during the year under review as
against Rs.1709.75 lakhs during the previous year.

4.2 PERSONNEL DEPARTMENT

MSIL has a separate department for monitoring the human resource of the
organization i.e., the Personnel Department. The total strength of the
organization is 674 employees.

28
The personnel HR department of MSIL concerns itself with the task of ensuring
that people working for the company are always physically and mentally fit and
competent. It develops/evolves policies & procedures and communicate such
policies to its employees, takes care of recruitment, training, salary and benefits
planning, motivation of staff etc.,. It also takes care of the salary/wage
preparation, maintenance of attendance, leave and personnel records. The
department also ensures the security and safety of the organization by interfacing
the security department.

SWOT Analysis of the Manpower at MSIL:

There are about 674 skilled, and experienced employees at MSIL working for
past many years.

Strength:
Experienced personnel in relevant field.

Weakness:
Disproportionate composition of personnel in relation to functional areas.

Opportunities:
a) To train the man power in specific functional areas such as sales, accounting,
quality assurance, inventory management, computers etc., so that
disproportionate composition of personnel is overcome at intra & interdivisional
levels. This enables job enrichment as well as job rotation.
b) Induction of skilled personnel in relevant areas of operation at appropriate
levels by way of:
 Recruitment
 Deputation

29
  Indirect Induction i.e., like dealer sales representatives in respect of sales
function, involvement of third party inspection in respect of quality
assurance etc.
Threat:
1. Resistance to change.
2. Policies of the Government.

General Functions of the Personnel department:

a) Recruitment
b) Reservations
c) Induction
d) Placement
e) Keeping track of Service Records
f) Increments
g) Transfers and Promotions
h) Retirements.

Wage and Salary Administration: It keeps track of the-

• Attendance
• Leave records
• Preparation of payrolls
• Salary advances
• Statutory deductions-PF, ESI
• Voluntary deductions

30
Welfare Scheme:
MSIL has personally provided with many welfare schemes to the employees for
their benefits, to encourage them to work better and to accomplish the company’s
functions and goals. They include:
 Medical Benefit
 Accident Scheme
 Group Savings Scheme
 Super annuation for officers risk, EDLI scheme

Medical Scheme:
In case of emergences like open-heart surgery, etc the entire expense is borne
by the company.
Incase of non-emergency maximum limit of Rs.1.5 lakhs is granted.
For the employees dependents 50% of the expense is reimbursed.

Recruitments:
In the year 1986, government of Karnataka has banned on the recruitment
programme of MSIL. Since then there is no recruitments happening in the
company. Presently limited recruitments are open to the SC/STs. Last year out of
the 21 vacancies in the company only 19 were filled up. MSIL has its own rules of
Recruitment process.

Salaries:
Salaries to the employees are paid as per the fixed salary scale given by the
government, which is as under:

31
Staff Salary Scale:

Category I - 2500-50-2700-75-3450-100-4450-125-4825

Category II - 2850-75-3450-100-4450-125-5325

Category III - 3225-75-3450-100-4450-125-5700-150-6300

Category IV - 3750-100-4450-125-5700-150-7200-200-7400

Category V - 4250-100-4450-125-5700-150-7200-200-8200

Category VI - 5200-125-5700-150-7200-200-8800-260-9580

Officers & Executives Salary:

O1 – 6450-150-7200-200-8800-260-10880-320-11840

O2 – 8600-200-8800-260-10880-320-13440

E1 – 10620-260-10880-320-13440-380-14960

E2 – 11840-320-13440-380-14960-440-16720

E3 – 13440-380-14960-440-16720-500-18720

E4 – 13820-380-14960-440-16720-500-19720

Other Benefits:
Apart form salary and frienge benefirs like PF, gratuity, Medical allowance,
Insurance and Incentives, employees are also provided with other benefits like:
• Education allowance
• Paper allowance
• Tea/coffee and snacks
• Canteen, etc

32
Benefits given to the Executives are as follows:
• Flats/Housing
• Conveyance-cars
• Telephone/mobile phones
• Others

Employee Motivation in the organization:

In order to motivate the employees in the organization to work better apart from
salary and allowances the above said benefits are provided to them. Incentives
are given to the employees depending upon the volume of the turnover in the
organization.

Sick Leave & Paid Leave:

Basically three types of leave are provided to the employees:
1. Casual leave
2. Sick Leave
3. Other leaves - paid leave, etc.

Facilities to the Women Employees:

MSIL’s Women’s Association works on the well being of the women employees
on the job. On the request of this association a lady medical representative is
being appointed for their examination. All the requests, desires of this association
is fulfilled by the management.

TRAINING AND DEVELOPMENT:

Training acts as an important activity in any organization. It is the process of

imparting the knowledge to the employees. Well-trained employees are the
assets of the organization.

33
MSIL is not involved in much of the training activities. MSIL provides training to its
employees once in a year, and a gap of 5 years is given between each training
and if need arises the training is provided as per the need.

From past 2-3 years MSIL is providing training for Marketing and Administration
fields.
Trainings provided:
 In-house training i.e., training within the working environment
 External training i.e., outside the work place wherein special seminars,
programs lectures, workshops and other management programmes are
given by the professionals from the IIM, XRIL, TATA, etc.
 Professional training is given by employing professionals in specific fields.
 Computer training is being given to all the employees irrespective of the
staff and the Executives.
 The Government is also giving free training to the employees.

LABOUR UNIONS:

There are 2 trade unions in MSIL, which handles the grievances of the
employees and the officers. The employees themselves elect these unions. They
work on all the activities related to the employees, their salaries and other welfare
benefits of the employees. They arrange meetings with the management
regularly to discuss on all the matters relating to the employees.
The major problem is the inter-union rivalry arising because of the existence of
the two unions, wherein the strength in the first union is 560 and 20 in the other
union.

34
3.3 MARKETING/SALES DEPARTMENT:

Marketing is the heart of MSIL. All its activities begins and ends with marketing.
MSIL is into marketing of note books, stationeries, lottery tickets, solar water
heaters, silk etc.Marketing in MSIL is done through various depots spread allover
the state. MSIL has efficient sales executives, sales representatives.

The department identifies the needs of the customer. Functions such as Market
Research, Advertisements, Sales promotion and corporate communications are
part of this department for each of its functional divisions. This department is the
core of the entire organization.

ADMINISTRATION DEPARTMENT:

The department is concerned with administrative functions like handling of paper

work involving data capture, information retrieval, processing and recording data,
handling inward and outward mail, payment of telephone bills, maintenance and
upkeep of office equipments like Air-conditioners, telephones, computers etc., it
looks after vehicle maintenance and the proper utilization of the staff involved in
these activities throughout the organization. The department also gives
importance to cleanliness of the entire office premises by keeping it neat and
clean.

ESTATE DEPARTMENT:

The estate department of MSIL is responsible for overall maintenance of

organizations building. It supervises and overseas the use of space. So, that
maximum productivity and effectiveness may be achieved at minimum cost. It
also sees to the payment arrangement of the office premises-with good interior
decoration and lighting, comfortable seating etc.

35
SECURITY DEPARTMENT:

The security department ensures the physical security of the organizations

assets. It also see to the safe custody of goods at various godowns, stores and
depots located at different places. The department ensures the observance of
safety precautions/measures to avoid accidents. Shift timings for security
personnel’s is planned by the department. If necessary, round-the-clock security
is arranged by the department.

EDP DEPARTMENT:

This department deals with the computerization operations of the task in some
fields like processing of payroll or any of the finance and accounts functions.

36
 3.4 VARIOUS DIVISIONS AT MSIL

AIR CARGO PAPER

DIVISION DIVISION

LOTTERY
DIVISION LIQUOR
DIVISION

TOURS & EXPORT

TRAVELS MSIL DIVISION

HIRE
SILK
PURCHASE
SHOWROOM
S

CONSUMER
PRODUCTS INDUSTRIAL
PRODUCTS

MSIL’s operations are divided into distinct divisions-

Each self-sustained but working towards, and in harmony with,
A common corporate philosophy.

37
 PAPER DIVISION

Concern for students

MSIL’s association with the student community dates back to 1977 when the
company was entrusted with the responsibility of distributing subsidized not
books. A special marketing programme was conceptualized and thus the brand
‘Lekhak’ was born. Subsequently, ‘Lekhak’ became the brand leader and a
household name for note books in Karnataka. As an extension of this brand, a
complete range of school and office stationery was also introduced. Keeping in
true with the times, the division also offers computer stationery. MSIL’s
involvement with students was further strengthened through the popular “Lekhak
Student of the Year contest”.

The ‘Vidya’ notebooks have carried on this tradition of quality at reasonable

prices and have also emerged as the brand leader in the current scenario. The
recent addition of a range of colourfull schoolbags in various sizes and attractive
designs have now been making waves. During the peak season, this division
brings notebooks within easy reach of the students by operating special depots.
The notebooks are manufactured by over 100 small-scale industries, which
create employment to a large number of skilled labourers.
Cargo Complex. Operations at this new Air Cargo Complex are expected to start
by end of December 2001.

The Company encourages the supply of notebooks directly to schools/colleges

and co-operative societies. These notebooks have not only made deep inroads
into Tamil Nadu, Kerala and Maharashtra but are also exported to several South
African countries.

38
Paper Division Preamble:
The paper division started its small beginning in the year 1974 under 20 point
economic programme initiated by central government. Under this programme, the
Central government allotted certain quantity of concessional paper for the use of
student community. The Concessional paper was used for conversion of
notebooks and was sold to the students of Karnataka at a concessional rate.
Since this was a social service to the student community, MSIL took up the work
in the right earnest and continued the committed service to the student
community even to this date, which is more than what the state government
expected MSIL to do. However, during the late 80’s the supply of concessional
paper also was completely stopped by the central government. This provided an
opportunity to launch `VIDYA` brand of notebooks in place of “LEKHAK”. The
VIDYA unlike the LEKHAK was altogether a new brand made out of paper
purchased in open market and was priced competitively keeping in mind the
quality attributes of this product.

Unlike LEKHAK notebooks, which were being sold only to the license holders, it
was required to develop different marketing system for VIDYA brand of
notebooks. The company therefore, appointed stockiest network all over
Karnataka to ensure that the secondary distribution is done by MSIL stockiest
and representatives to enable the students to get their requirement of VIDYA
notebooks from the nearest retailer. The company in their fold 262 stockiest who
have successfully contributed to the marketing of VIDYA notebooks over past 2
decades. MSIL paper division has expanded its operation not only in school
stationery segment but also in office
Stationer segment and is effectively catering to the various needs of our
consumers.

The LEKHAK stationery products are well known for the quality as it has
affordable price. These are being manufactured/ procured through various
converters/suppliers appointed under government sponsored `VISHWA`

39
programme and general category converters/suppliers. At present they have 58
VISHWA converters and 83 small-scale units who are registered with MSIL. The
division is making all out efforts to get these units busy through out the year by
providing the job work.

Although note book sale is seasonal, the Divisional is providing adequate job
work to convert office stationery items like files, file wrappers, ledgers, envelopes
etc. Still there is enough capacity to undertake requirements of all Government
departments. If entire stationery requirements of the state owned organization\
Public Sector Undertakings and all Government Departments are met through
MSIL, then the Divisional will be in a position to job work to all the Vishwa
converters and SSI units throughout the year on perennial basis.

MARKET SCENARIO:

1. School Stationery: is divided into Note books and stationery

(a) NOTE BOOKS: The sale of note books is highly seasonal and is confined only
to 3-4 months in a year i.e., between April to July. The note book industry on an
average products note books for about 6 to 7 months in a year.

(b) STATIONERY: This segment unlike notebook segment is highly branded.

The presence of national brands like Camlin, Natraj, Camel, Apsara, luxury,
Reynolds etc., only indicate that this segment is highly organized.

2. Office Stationery:
The office stationery segment is the largest compared to school stationery
segment. Accordingly, it is characterized by the presence of various product lines
ranging from flat files to box files, duplicating paper to Xerox paper; stencil paper
to carbon paper, computer stationery to consumable etc.

40
 LOTTERY DIVISION

The Beginning
The Lottery Scheme in Karnataka was introduced during 1969-70, after obtaining
necessary permission from the Government of India, Ministry of Home Affairs,
New Delhi. The Scheme is governed by the Karnataka State Lottery Rules, 1983.
The Private

Lotteries are controlled by the Karnataka Lotteries and Prize competitions Control
and Tax Act, 1951. The printing of lottery tickets, holding of draws and distribution
of prizes is done by the Director, Karnataka State Lottery. In the Directorate, the
employee strength consists of one Class I, one Class II and 6 officials.

Sole Selling Agency

The Government owned Company, i.e., Mysore Sales International Limited, has
been appointed as Sole Selling Agents for the sale of Karnataka State Lottery
tickets. MSIL has been authorized to appoint any number of sub-agents for the
sale of tickets within or outside the State. As on date, more than 4,000 sub-
agents through the representatives of MSIL in the Southern States and through
their Branch Offices at New Delhi, Calcutta and Bombay in the Northern, Eastern
and Western regions respectively.

Printing of tickets
The tickets are printed at Canara Security Press, Manipal that has full security
measures. The tickets are foolproof. Since Government is taking all precautions,
not a single duplicate ticket has come to the notice so far. However, there have
been cases of tampering of tickets, but these are detected promptly during the
course of verification and claims are rejected. The designs and artworks, etc are
prepared by MSIL in consultation with Marketing Consultants &Agencies Limited
(a Government of Karnataka Undertaking) and sent to the printers, The tickets

41
printed at Manipal are delivered to MSIL, Bangalore. The printing charges are
borne by the Government.

Holding of Draws
The draws are held under the supervision of the Managing Committee appointed
by the Government in the presence of the public only. The equipments used by
the RBI for prize Bond Scheme are used for holding the lottery draws. The draws
are held at Bangalore and outside the Capital also. At present 2 Bumper Draws
are conducted outside Bangalore every month. The proposals for the draw places
are given by MSIL, which is approved by the Director, Karnataka State Lottery.
Before holding the draw, MSIL is required to furnish the list of unsold tickets. The
Bumper Prize, I and II Prizes should go to the sold out tickets only.

Results
The results are released to the newspapers by MSIL. The results are published in
almost all the important newspapers all over India, the very next day of the draw.
The expenses on publicity and advertisement are borne by MSIL.

Payment of prizes
MSIL has been authorized to make payment up to Rs.1000/- on behalf of
government. Prizes above Rs.1000/- are paid by the Directorate. Ninety days
time from the date of draw is allowed to claim the prizes. A grace period of thirty
days is allowed. The Director, State Lottery, can admit the claim if the reason for
the delay is explained satisfactorily. Beyond 4 months in any case, the claim is
not considered and the prize amount stands forfeited to the Government.

Audit of Accounts
The accounts of MSIL and Directorate of Small Savings & State Lottery are
audited by the Accountant General of India every year.
MSIL has been performing well in the last 25 years and is meeting the targets
fixed by the Government inspite of stiff competition from other State Lotteries.

42
There is a steady growth in the turnover as well as in the revenue accrued to
Government out of the Karnataka state Lottery Schemes since its inception in
1969. The value of tickets sold during the year 1993-94 was Rs.21.19 crores and
the revenue accrued to Government was Rs.6.89 crores.

At present, the following 7 types of conventional draws are being conducted:

a. Special Bumper Draws

b. Super Bumper Draws
c. Monthly Bumper Draws
d. Nandi Bumper Draws
e. Krishna Bumper Draws
f. Kabini Main Draws
g. Kapila Weekly Draws

MSIL has a wide sales network consisting of above 150 main dealers, 4,000 sub-
agents and more than 1,00,000 sellers all over India including physically
handicapped persons, who are directly or indirectly serviced by our field force
regularly. Most of the sub-agents have been in the business with MSIL for more
than two decades. These sub-agents are also encouraged and motivated to take
up sales promotional activities in their respective markets. They are also guided
to cover village shandies and sell tickets through mobile units. The Karnataka
State Lottery draws have been conducted in almost all the District/Taluk
Headquarter Towns in Karnataka. By the fair method of conducting the Draws in
the presence of the public, holding of draws in time, announcing results on the
very next day of the draw and quick disbursement of prizes, it has earned the
reputation as “The Most Trusted Lottery” in the country. Necessary Product/Draw
publicity is also given through Press, Radio, T.V., Hoardings, etc. Display
contests are also conducted in selected towns whenever the draws are held
outside Bangalore. Publicity materials such as Posters, Streamers, Banners, etc,
are regularly supplied to sub-agents and it is ensured that these materials are

43
displayed effectively. Karnataka is the only State in the country, which has such a
wide marketing arrangement for the State Lottery Schemes.

Apart from a steady growth in the revenue accrued to Government from the
Karnataka State Lottery Schemes, the Scheme has helped the Government
indirectly in reducing the unemployment problem to some extent.

As a matter of State Policy, the Government has not given permission to run or
sell the tickets of private lotteries in Karnataka. The requests received on this
behalf have been rejected by the Government. The guidelines issued by the
Government of India, even though not mandatory, are broadly followed in
Karnataka.

Making dreams come true

Having been associated with the marketing of lottery tickets right from inception,
the Division has over 30 years of experience in this highly competitive market. In
an area beset with a large number of private agencies, MSIL has created a
distinct identity for Karnataka State Lottery (KSL) – making it the most trusted
lottery in the country. With regular draws held with public participation, immediate
announcement of results and prompt disbursement of prize money, KSL is
recognized as the best managed lottery in India.

This Division operates through 1,600 accredited dealers and provides direct
employment to more than 32,000 people. Special consideration has been made
to provide mobile sales units to handicapped persons.
Lottery schemes planned by the Division cater to all income groups with tickets
ranging from Rs.2/- to Rs.100/-, making thousands of dreams come true. With the
Government planning to introduce online lotteries, the Division looks forward to
increased business, leading to higher revenue to the State.

44
 LIQUOR DIVISION

In 1989, when the Government of Karnataka felt the need to streamline the
distribution of liquor in the State, MSIL was the choice as the sole Distributor.
Consolidating its role in the post-liberalization period since 1997, today MSIL
handles distribution for nearly 30 manufactures of popular and leading liquor
brands from Karnataka and other States. And serves as the sole distributor for all
liquor imported into Karnataka from other States. This role is being extended to
imported liquor bottled abroad also.

MSIL’s distribution infrastructure with its own network of over 20 depots spread
across the State covers activities reaching out to wholesale and retail operations.

LIQUOR DISTRIBUTION
In 1989 when the Government of Karnataka felt the need to streamline the
distribution of liquor in the State, MSIL was the choice as the Sole Distributor.
MSIL has consolidated its role in the liquor trade in the post liberalization period
since 1997 and handles distribution for nearly 30 Liquor Manufactures of popular
and leading brands of liquor from Karnataka and other States. MSIL serves as
the sole distributor for all liquor imported from other States into Karnataka which
role is being expanded to imported liquor bottled abroad as well. MSIL provides
distribution infrastructure through its own network of over 20 depots spread all
over the State with the activity also reaching out to wholesale and retail
operations.

MSIL also manufactures and supplies arrack in the two Northern Revenue
Divisions of Karnataka viz., Gulbarga and Belgaum through its six arrack
processing units since 1993. It has arrack processing units situated at Bidar,
Gulbarga, Bellary, Kustagi, M K Hubli and Ugarkhurd. Arrack is processed under
the supervision of excise authorities and is supplied to approved arrack
contractors as per the excise permits catering to the requirement of 12 districts of

45
Nothern Karnataka. As a result it has developed professional expertise and
infrastructure to handle the jobs resulting in increased revenue to the state.

MSIL contributed about Rs. 85 lakhs per year towards the licence fee to the
department of excise in 2000-01 besides payment of excise levies on the sale of
liquor. MSIL supplies liquor as per the permits issued by the department of
excise, Government of Karnataka.

MSIL also has a wholesale depot in Bangalore catering to the requirement of Star
Hotels and Clubs in Bangalore City and it is planned to extend this activity to
Belgaum and Mysore cities. The licence fee payable to the Government of
Karnataka is Rs. 10 lakhs per wholesale depot per year. MSIL also has two retail
outlets in Bangalore located in the premises of Janata Bazaar, KG Road and the
Food World complex in Cunningham Road offering genuine liquor to consumers.

The Indian made liquor achieved its highest turnover of Rs. 20716.11 lakhs
during the year 2001-02 as compared to Rs. 12882.17 lakhs during the previous
year and attains the growth of 60.81% over the previous year. The growth was
inspite of unfriendly market conditions. The liquor division opened a new retail
liquor outlet under a joint venture viz., ‘Not Just Wine & Cheese’ in Bangalore.
This modern outlet offers a wide range of reputed brands to the customers.

Further the Government appointed MSIL as the sole distributor for the import of
liquor bottled abroad. The sale of imported foreign liquor has not commenced
due to high duty structure and other related issues. In order to redress the
situation, the Government and the Excise department were moved to reduce the
duty structure and label registration charges. MSIL is expecting favorable
decision from the Government and expects to generate sufficient business from
the sale of liquor imported bottle abroad during the current year. There are large
number of suppliers and manufacturers who are ready to do business with MSIL
if the duty structure is reduced by the Government.

46
Further there was an overall improvement in the performance of arrack division
by way of reduction in the production wastages from 0.054% to 0.030% and
improvement in sachetting LDPE film yield. The installation of additional vats in
the arrack unit was taken up by the company as a priority area in order to
eliminate the payment of penalty.

MSIL started as a liquor distributor in November 1989. In 1989, Karnataka excise

act was passed, which encouraged the distribution of all liquor through MSIL. In
July 1993, it started as a distributor of arrack also. From 30th June ‘03, liquor
distribution was taken away from MSIL. Government took away IMFL (Indian
made foreign liquor) from 1sr July. Presently, MSIL handles distribution of only
Arrack.

The investment is very huge. Stock handling is around 30-35crores. It operates

throughout the state through 22 depots, wholesalers and retailers. In Bangalore
there are 80-100 whole sellers and there are other whole sellers in all the district
headquarters. Msil gets a fixed benefit of 5% margin on the sales.

Brands:

It deals with the distribution of 20-30 major popular brands.

Eg: Khodays, Peter Scotch, etc.
Msil deals in Whisky, Brandy, Rum, Gin, etc.
To deal in the same MSIL gets various licenses from the excise department like:
Distribution License, Wholesale license, and Retail license.

Presently, distribution of liquor is taken over by the Karnataka State Beverage

Corporation, which is the sole distributor throughout the state.

47
List if Distillery-wise Brands Distilleries:

I. Khoday India Limited, Bangalore.

II. Khoday RCA Industries

III. Khoday Breweries Ltd., (Distillery Division)

IV. Khoday Breweries Ltd., (Brewery Division)

1. Peter Scot Malt Whisky

2. Red Knight Whisky

3. Old keg Whisky

4. Khoday No.1 Whisky

5. Hercules Deluxe 3 XRUM

6. Hercules XXX Rum

7. Khoday XXX Rum

8. Bianco White Rum

9. Sovereign Brandy

10. Constatino Brandy

11. Hercules Strong Beer

12. Buntens Lager Beer

13. Royal Challenge Premium Larger Beer

14. Haywards 2000 Extra Strong Beer

15. Haywards 5000 Extra Strong Beer

16. Haywards Lager Beer

17. Laltoofan Premium Strong Beer

18. Posy Pelican Lager Beer

48
 TOURS & TRAVELS

The main aim of MSIL’s Travels & Tourism department is to promote Karnataka
Tourism, was started in the year 1991. It was basically into Air ticketing and was
tied-up with Indian Airlines. It acts as a sub-agent to the State Government. It
basically caters to the needs of the government officials. It works for both
International and Domestic travel purposes. It is affiliated to the IATA. Presently,
it also takes up the ticket bookings/reservations for KSTDC and IATA.

MSIL’s tours and travels department is also tied-up with ORBIT tours and travels
for International pacakage, and also with other airlines like Indian airlines, Jet
airways, British airlines, etc. It also provides the facilities of Hotels, Resorts and
lodges bookings for the tourists.

Taking people places

As an IATA approved travel agent, this Division caters to the travel needs of
several Government officials and State Boards and Corporations. In association
with Orbit of Mumbai, MSIL has been promoting package tours to various trade
fairs abroad. The Division is also a Booking Agent for the conducted tours of
ITDC, KSRDC and Jungle Lodges and Resorts Ltd., to take tourists to enchanting
places in Karnataka and beyond.

The division accreditied with IATA recognition and steps are being taken for
booking/issuing international air tickets. The companies Mumbai and New Delhi
branches have been equipped to promote Karnataka Tourism. Travel desks have
been set up at Mysore & Mangalore for increasing tourism related activities. Also,
as general sales agent of Mumbai M/S Orbit, the division has been promoting
international package tours to trade fairs all over the world.

49
Tours & Travels Activities:

1. Booking of international/domestic air ticket to Government departments,

officials of public sector undertakings and private institutions.
2. Organizing international business tours, executive tours, trade fairs and
regular tours to various countries-Australia, USA, Europe, Dubai and
Srilanka in association with M/s ORBIT, Bombay based organization.
3. Conducting tours and sight seeing arrangements-Belur, Halebid,
Shravanabelagola, Mysore, Srirangapatna, Nanjungud, Bandipur, Ooty,
Mantralaya, T.B. Dam, Hampi, Gokarna, Jog Falls, Nagarhole, Mercara,
Nisargadhama, Tirupathi, Kodiknanl, Maduari, Palani, Hogenakal Falls,
Yeracud, North Karnataka tour & South Canara tour, Srishailam, Mysore
sight seeing, Nandi Hills, Bannerghatta and Bangalore sight-seeing and
temple tour around Bangalore, in association with M/s. Karnataka State
Tourism development corporation and India Tourism Development
Corporation Ltd.
4. Organising conventions and conferences and also individual bookings in
places like Kabini river lodge, Cauvery fishing camp, BR Hills wilderness
camp, Kali wilderness camp and Devbagh beach resort.
5. Special tours for Goa, Simla, Manali and Kerala.
6. Organising for hotel accommodations (Three & Five Star and Resort
Bookings) on the above all the places.
7. Rental car bookings and organizing group tours in Karnataka.
8. Handling passports and visa documentations.

MSIL participates in various Tours & Travels exhibitions, send various literatures
by post, various Ads are being provided to promote its activities. It has a branch
in Bombay and Delhi, which is tied-up with Tourism department of government of
Karnataka in order to promote Karnataka tourism.

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 HIRE PURCHASE

Making every house a home

Today, when acquisition of consumer durables has become an essential part of
life, MSIL helps the Government employees to take home the latest household
durables and articles through the MSIL Homaker scheme.

This easy and reliable hire purchase scheme offers television sets, washing
machines, refrigerators, audio systems, VCRs, computers, mixies, stoves, gas,
lamps, mobile phone etc., of renowned brands on easy monthly installments and
at reasonable interest rates. A range of two wheelers and cars are also available
with a longer repayment period.

To make this scheme accessible to many people, centers have been opened at
Mysore, Hubli, Gulbarga and Mangalore. Today, over 39,000 homes have been
already benefited by this scheme.

Hire purchase Scheme

The scheme was launched in Bangalore during 1989. Under the scheme a range
of consumer durables and two wheelers are offered on monthly easy installment
plan to the employees of State owned Undertakings.

As on date 39,000 government employees have already benefited. To extend the

facility to more employees Hire Purchase unit offices have been opened at
Mysore, Hubli, Gulbarga and Mangalore.

The division achieved turnover of Rs.1159.74 lakhs during the year as compared
to Rs.1089 lakhs during the previous year, thereby registered a marginal growth
of 6.48%. The division also conducted hire purchase exhibition-cum-sales
campaign in Bangalore & Mysore to have an extensive coverage in these areas.

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However, the locations of the hirers in interior places, unauthorized absence,
suspensions, transfers, etc of the hirers have resulted in the delay recovery of
over dues from the hirers, but with constant follow up and recovery action, the
division is hopeful of reducing these accumulated over dues.

Products offered under the Scheme

Audio systems, Televisions, CD players, VCD players Refrigerators, Washing
machines, Cooking range, Electric rice cooker, Micro wave ovens, Domestic
ovens, Hot plates, Fans, Air Conditioners, Air Coolers, Grinders, Mixies, Gas
Stoves, Mobile Phones, etc.

 Personal computers, Furniture, silk sarees & Dress materials

 Hot spring solar water heaters, sewing machine, etc

Purchase Terms & Conditions:

Eligibility:
1. All permanent employees of the State Government and State owned
undertakings who have not completed 55 years of age are eligible to avail
the facility.
2. The employees availing the facility should provide a guarantor who is
working in the same department office.
3. The monthly installment amount shall not exceed 1/3 of the net salary.

Payment
4. Down Payment option of 15% to 45%.
5. Repayment plans – 12, 18, 24, 30 and 48 months.
6. A flat rate of interest 13.5% and 11% on consumer durables and two
wheelers respectively.
7. The monthly installment amount would be payable under Salary Deduction
through the concerned department drawing officer.

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General
8. The application for availing the facility by the employee should be
submitted in the prescribed form.
9. Monthly salary certificate should be attached.
10. Finally, the Hire purchase agreement, duly signed by the hirer, company
and the guarantor should be submitted.

Processing of Applications
Completed applications in all respect are processed within 3 days at Hire
Purchase unit offices. Release order will be issued on respective dealer/company
immediately after signing the Hire Purchase agreement.

The Finance Secretariat by a Notification dated 2nd February 2001 has passed a
Government order, Ammendment to Article 94 of Karnataka Financial Code
1958, which says ‘Whenever a Government servant who has purchased goods
from Mysore Sales International Ltd under Hire Purchase Scheme, expired or
retired from service voluntarily or as per rules, before the dues are not fully
recovered, in such cases, the dues towards MSIL shall be recovered out of the
D.C.R.G admit admissible to him.

After sale Service

Prompt after sales service is provided by the respective dealer/company.
Registers are available at hire purchase unit offices to receive customer
complaints. Dealer wise customer complaints are analysed periodically and
remedial action taken to the customer satisfaction.

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 SILK SHOWROOMS
MSIL MANDARA

A Convergence of fine silks

Of late, MSIL has entered the shimmering world of silks with showrooms at
Mumbai and Bangalore. ‘Mandara’ the recently opened elite showroom in a
central location in Bangalore has a vibrant collection of silks from across the
country.

The MSIL Silk Emporium at Mumbai promotes pure Mysore silks, georgettes,
crepes and handloom silks from Karnataka. ‘Mandara’ an exclusive showroom for
exquisite silks opened on 29th January 2001. The showroom is centrally located
with ample parking facility. Mandara serves at single point where all the vibrant
collection of silks from across the country is available.

The range includes: Kanchipuram, Crepes and Georgettes, Handloom Silks,

Apoorva Silks, Pochampalli Silks, Valkalam Silks, Embroidered Silks, Benaras
Silks, Bandinis, Kolkata and Assam Silks, Jacquards, Silk Salwar Sets, Silk Dress
Material, Silk Scarves and Ties, Dupion Silk Shirts.

Mandara – The silk point showroom for the sale of silk sarees, which is under the
control of the division, achieved a turnover of Rs.40.75 Lakhs.

MSIL acts as a Consignee agent for KSIC, Priyadarshini. MSIL procures silk
textiles from the local suppliers. MSIL fixes rates, offers discount depending on
the market requirement and supplies to the consumers. It offers many schemes
for the government employees.

To improve its sales, advertising through papers, television, radio, etc, sales
persons are appointed and various exhibition-cum-sales are arranged.

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 INDUSTRIAL PRODUCTS DIVISION

MSIL’s Industrial Product Division is serving both the domestic and the non-
domestic customers from the past 10 years in the solar water heaters through out
the state.

A concern for the environment

The division provides technical and marketing support to its principals and
product application guidance to its customers. The Division is marketing MSIL
hotspring, which provides hot water free of cost, helping the consumers to save
substantially on power bills.

Today, MSIL Hotspring can be spotted on the rooftops of many hospitals,

industries, hostels and individual houses. The technical advice of its team of
engineers and prompt after-sales service are the highlights of this Division.

MSIL represents M/s Das Lagerway Wind Turbines Ltd (an Indo-Dutch joint
venture company) in setting up windmill projects in Karnataka and are the sole
selling agents for sale of Wind Turbines of various capacities. M/s DLWTL
produces clean, green energy, which is environment-friendly.

Cellulose acetate moulding granules, L.T. shunts capacitors and NMC automatic
power factor control relays are also marketed by MSIL in Delhi and Northern
regions.

Committed to promote solar energy, the free and eco-friendly source of

renewable energy, an ISO 9002 company, is offering new updated version of the
popular brand of solar water heaters Hotspring and Solarizer. Manufactured at
the new ultra modern integrated plant set up by M/s. ESSPL, these solar water
heaters will have the best of features. Conforming to BIS standards, they have
copper collectors for quick heating, reinforced stainless steel tanks with internal

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support for protection against sagging and bring substantial savings in power
bills. Highly efficient and durable, Solar water heaters are as reliable as the
sun itself.

Range
 Domestic systems ranging from 100 to 400 LPD
 Non-domestic systems ranging from 500 to 3000 LPD

Applications
 Homes
 Hotels
 Canteens
 Hospitals
 Hostels
 Industrial applications.
Soft Loans available at an interest rate of 2.6% p.a for domestic systems and
6.5% p.a. for non-domestic systems.

Strengthened by the most modern manufacturing facility MSIL together with

EMMVEE, looks forward to adding to its happy band of more than 20,000
satisfied customers. To conserve energy and to usher a cleaner and greener
environment.

Working:
Firstly, MSIL through its salespersons, supervisors takes orders from the
customers, then places order to EMMVEE solar systems to make the solar
systems with the given specifications by the MSIL. After the solar systems is
produced they are delivered and fitted-on to the customers by the factory, and the
due acknowledgement from the customers is received by the factory and is
passed-on to MSIL, then MSIL makes payment to the factory.

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Its product ranges from 100-400 liters for Domestic purposes, and 500 and above
liters for non-domestic purposes. The 100-liter heater is priced Rs.14,750. It
deals through its dealers all over the State. There are 9 dealers in Bangalore and
there are dealers all over the state in Shimoga, Belgaum, Raichur, etc.

MSIL charges commission for this, and invests its part of the profits in ASPs i.e.,
Advertisement and Promotional activities through newspapers, exhibitions,
magazines, etc.

Payments:
IREDA – Indian Renewable energy development authority gives loans to the
customers to make the payment through banks like:
Canara Bank, Syndicate bank, Andra bank, Maharastra bank, Punjab National
Bank, Punjab Sindh Bank, where 15% is down payment, for the rest 85% loan is
granted, interested is 5% on the reducing balance for 5 years.

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 BANGALORE AIR CARGO COMPLEX

Professional handling of International Cargo:

Appointed as Custodians under Section 45 of the Customs Act 1962, MSIL,
through its Bangalore Air Cargo Complex, today handles over 35,000 tonnes of
import and export cargo annually – a giant leap from a modest 1000 tonnes
during its first year of operations in the year 1977. To accommodate the ever
increasing volume of air cargo and to serve the exporters and importers of the
State better, MSIL has been continuously augmenting the warehousing space
with matching increase in infrastructural facilities. A major landmark has been the
establishment of a separate Export Cargo Terminal in 1995. Today, the BACC
has a combined storage area of over one lakh sq. ft., from an initial 41,000sq. Ft.

To facilitate the export of floriculture products, MSIL, in collaboration with the

Agricultural and Processed Food Products Export Development Authority
(APEDA), has set up a state-of-the-art Cold Storage Plant of 20 MTs capacity.
This compact unit has the latest hydraulic workstation to facilitate damage-free
palletisation of the fragile cargo. The future years will see increased warehousing
space and improved infrastructural facilities.

To further improve the facilities for the importers and exporters of Karnataka in
general and Bangalore in particular, MSIL entered into a joint venture with M/s
concor, called “Joint Working Bangalore Air Cargo Complex”.

Handling Procedure Bangalore Air Cargo Complex:

General
• Office of the additional commissioner of Customs and 4
Dy.Commissioners of Customs is located in the main complex. Office of
the Dy.Commissioners of Customs-Exports is located in the Export Cargo
Terminal.

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 • Most of the Bills of Entry and shipping bills are field and processed through
the Electronic Data Interchange (EDI) operated by the Customs
Department situated in the main Complex with linkage to the Export cargo
terminal. The EDI Service Center is operated by MSIL. About 34 Computer
operators are deployed to ensure the fast processing of bills.

Clearance
Cargo can be cleared within the shortest possible time upon production of proper
documents by the importer or his Customs House Agent (CHA). All parcels/cargo
would necessarily require Customs verification/clearance. The Accounts
department is fully computerized which enables quick computation of charges
payable, which in turn, helps in quick clearance of cargo. The General cargo
clearance takes place between 10 AM to 8.30 PM but in certain circumstances,
clearance of cargo is allowed beyond 10 PM facilities for immediate clearance of
perishable cargo exists at the complex.

Functions & Facilities given by BACC

MSIL functions as the custodian of:

• Import Cargo
• Perishable Import Cargo
• Unaccompanied Baggage
Valuable Import items like Gold, Gold Jewellery & diamonds

MSIL serves as the Terminal of

• Separate godowns for exports, imports & unaccompanied baggage

• Examination halls for exports & imports
• Experienced staff at all the godowns
• Sufficient handling equipment for the cargo

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The responsibilities of MSIL:

• Receive import & export cargo

• Keep the cargo under safe custody
• Present the cargo, when requisitioned by customs, for customs
examination and clearance

Collect the handling, demurrage and other charges from importers or their
customs house agents and issue export to carriers i.e., the international airlines.

ROUP – Air Cargo Complex, to put up an additional Air cargo Complex inside the
Airport in the space provided by M/s HAL, adjacent to the Airport Tarmac. All air
cargo that will be handled by the new airlines operating via Bangalore Airport
would be processed at this Air Cargo Complex.

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 3.5 SWOT ANALYSIS

MSIL has total strength of 674 employees.

Strength:
1) Experienced personnel in relevant fields. MSIL, today has over 674
employees who are responsible for the smooth and successful functioning
of all the divisions at MSIL.
2) Competitive Supplier base – raw materials
3) Production centers located all over Karnataka
4) The divisions have well experienced personnel to handle conversion
accounting, cost accounting and financial accounts.
5) The profitability figures for past three years reflect positive trend indicating
adequate cost control even under adverse market conditions.
6) All depots are well connected with rail and road and communication
systems.

Weakness:
1) Disproportionate composition of personnel in relation to functional areas.
2) Manual accounting limits timely action due to delay in getting MIS reports.
3) Limited exposure to computer environment.

Opportunities:
1. To train the man power in specific functional areas such as sales, accounting,
quality assurance, inventory management, computers etc., so that
disproportionate composition of personnel is overcome at intra & interdivisional
levels. This enables job enrichment as well as job rotation.

2. Induction of skilled personnel in relevant areas of operation at appropriate

levels by way of:
 Recruitment

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  Deputation
 Indirect Induction i.e., like dealer sales representatives in respect of sales
function, involvement of third party inspection in respect of quality
assurance etc.
3. Integrated computerization will result in better systems management/efficiency
level and better customer satisfaction.

THREAT:
1. Resistance to change
2. Policies of the Government
3. Time taken to adapt to computerized environment.

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 CHAPTER 5

SUGGESTIONS AND RECOMMENDATIONS

Today, when the world has entered a new millennium, MSIL is unabatedly forging
ahead with fresh zeal, banking on its expertise to manage the dynamics of
change. MSIL, which deals in various products just acts as a distribution agent. It
procures the goods from various dealers and distributes the same to the retailers
and the consumers. While in this act it charges a certain percent of commission.

MSIL is a household name in Karnataka. It has a brand loyalty in case of its

books i.e., ‘VIDYA’ AND ‘LEKHAK’. All its wide range of products are available
all over Karnataka through its large network. Its products are priced quite
reasonably and is highly competitive.

MSIL specially benefits the government employees specially incase of its Travel
and Tours division, Hire Purchase division by providing various facilities to them.
MSIL’s Lottery division has made many people’s dream come true, by providing
them to win a good sum of lottery at an affordable price.

Suggestions:
1. The issue of “Resistance to change” as regards to attitude of employees
needs to be addressed by the Personnel Department through effective
workshops and other Training Programmes.

2. Creation of centralized Warehousing facility may be desirable for its

products in order to have control over the movement of the products
specially incase of note books, liquor, arrack, etc.

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3. In order to ensure scientific method of Storing FIFO (First in first out)
method of inventory management must be followed in order to increase
the net storage space available. As it will ensure that the goods which
comes first will also move out first there by ensuring that old stocks will not
be retained with the company.

4. The company should also go in for advertising and promotional measures

so as to create awareness in the minds of the customers. These
promotions should be developed so as to change the perceptions in the
minds of the customers that the quality is good and is also lot cheaper
when compared to the competitors. Here the money should be seen that
they are properly spent especially during the seasonal demand.

5. Since there is cut throat competition in the field of stationery MSIL must
give good Cash Discount, Credit Sales so as to survive and to attract more
customers and to increase the market share.

6. In order to ensure that the books are not damaged they should be properly
packed to ensure that the quality of the goods will not be compromised.

7. Since the share of lottery division is gradually decreasing due to the

introduction of online lotteries like play win, super lotto, etc, MSIL’s lottery
division should workout and introduce many new attractive draws in order
to regain its share of profits.

8. MSIL’s personnel department should work and suggest many more

benefits and other motivational and training activities in order to make their
work better and improve the co-ordination and the communication
between the employees.

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 9. MSIL should try to minimize its trade union number to one in order to
remove the inter union rivalry arising because of the existence of two
unions, and to bring about pleasant working condition.

10. MSIL should try to add some more products to its credit and serve people
better.

CONCLUSION:

From a modest turnover of just RS. 1.5 crores in 1966, MSIL has today achieved
a turnover of Rs. 280 crores. And, is one of the very few public sector
undertakings to earn substantial profits continuously. Akeen sense of business
acumen, trade experience, managerial effectiveness and credibility are a few of
the hallmarks of this marketing giant. And, its ability to manage a diverse range of
products and services through innovative marketing strategies is the secret of its
success. In a business where the prime motivator is people, MSIL has developed
flexibility in its thinking and management, enabling it to tackle every fresh
challenge with an innovative approach. To stay in rhythm with the changing taste
and values.

Keeping pace with the winds of rapid industrialization that are sweeping
Karnataka, MSIL is today resting on a strong footing of excellent performance
coupled with deep rooted trust and confidence amongst its clientele. MSIL takes
on every challenge with enthusiasm. And finds innovative solutions, by
diversifying appropriately and updating constantly. With progressive policies and
strict financial discipline, MSIL is poised for a quantum leap in the days ahead.

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