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APROJECT REPORT ON
“FIXED ASSET MANAGEMENT”Of
SISTEMA & SHYAM’s GROUP
Sistema Shyam TeleServices Ltd.
Submitted inSUMMER INTERNSHIP
IN PARTIAL FULFILLMENT OF THE REQUUIREMENT FOR AWARD OF MASTER OF BUSINESS ADMINISTRATION (MBA)
TWO YEAR FULL TIME PROGRAMME
UNDER GUIDANCE OF
FACULTY GUIDE COMPANY GUIDE
Mr. SAI GUNARANJAN BOSE Mr. VIVEK SINGHALACADEMIC HEAD Mr. PRAMOD GUPTAIIPM, JAIPUR
SUBMITTED BY:
SWATI GUPTAMBA (09-11)
UID No. : JA0911FW10010ISBE-NG
DECLARATION
I SWATI GUPTA student of the Master of Business Administration hereby declare that all information, facts and figures in this report are my own findings and experience at the “Sistema Shyam TeleServices Ltd (SSTL)”.
I also hereby declare that all the facts, figures and information given in this report are absolutely correct.
This information has been used for purely academic purpose.
SWATI GUPTAM.B.A. (Finance)
IIPM, Jaipur
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PREFACE
This summer training provides a student with an opportunity to understand in full the real life working environment, which is a bit different from normal theory classes. Our class knowledge attains maturity and perfection through application in the practical field application of management principle in all branches whether personnel, finance, information technology etc results in more sufficient and effective utilization of available resources.
One learns through practice, management in best learn if the students, handles it systematically, practical training is supposed to serve as a starting point will held the student gain off confidence and a familiarity with the subject.
The summer training program is an integral part of MBA course in Indian Institute of Planning & Management (IIPM), Jaipur.
I have done my summer training for Sistema Shyam TeleServices Ltd (SSTL), Jaipur. My topic of study was “FIXED ASSET MANAGEMENT”
I have no hesitation in saying that this study has given me the confidence to face the real market world.
I have tried my best to do honesty and justice to the topic and any weakness and shortcomings are unintentional and are regretted.
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ACKNOWLEDGEMENT
I take this opportunity to express my sincere thanks and deep gratitude to all those people who extended their whole hearted co–operation and have helped me in completing this project successfully.
First of all, I express my sincere gratitude to Mr.Vivek Singhal (GM- Finance) & Mr. Pramod Gupta (Manager- Commercial) for giving me an opportunity to work under their guidance.
I also express my gratitude to Mr. Om Prakash Jain (Senior Manager- Finance) and Mrs. Sudha Khandelwal (Senior Executive) for all the help and guidance extended to me by them at every stage of my training. Their inspiring suggestions and timely guidance enabled me to perceive the various aspects of the project in a new light.
I would also like to thank Mr. Manish Tiwari (Dean- IIPM) and Mr. Sai Gunaranjan Bose (Academic Head- IIPM) for their constant support during the entire Project.
Finally, I would also like to thank all members of the organization for having guided and encouraged me at various stages throughout the duration of the project. In all I found a congenial work environment in Sistema Shyam TeleServices Ltd. (SSTL) and completion of the project will mark a new beginning for me in the future.
Swati Gupta
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CONTENTS
S. No. Particulars Page No.
1. Executive Summary 6
2. Objective & Scope of Project 7
3. Company Introduction 8-24
4. Introduction of the Topic 25
Process overview 26 Initiation of process 26 Termination of process 26
Process Objective 26 Scope 27 Key Functional Departments 27 Key Inputs 28 Process Outputs 28 Process Narrative 28-34 Key performance Indicators 35 Key Risk Elements 35
5. Research Methodology & Data Analysis 36-37
6. Findings & Conclusions 38-41
7. Illustrations & Annexure 42-47
8. Bibliography 48
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EXECUTIVE SUMMARY
Sistema Shyam Tele Services (SSTL) is a joint venture company between Sistema
{LSE: SSA} of Russia and Shyam Group of India. Sistema is the majority share
holder in this joint venture with a 73.71% equity stake, along with the Shyam
Group, holding a 23.79% stake and the rest 2.5% being public partake. SSTL has
spectrum to provide mobile telephony services in all the 22 circles across the
country. Presently SSTL offers mobile telephony services in the Rajasthan, Tamil
Nadu, Kerala as well as the Kolkata circles. MTS is the 8th largest telecom brand
in the world and has recently been voted as the 71st ranked brand out of 100 top
global brands in the world by Millward Brown.
The company is primarily focused to accomplish Pan-India rollout plan within
scheduled time frame work. The Company holds UAS license for all 22 telecom
circles for Pan-India rollout that would encompass around 600 district headquarters
and 4 metros. Major competitors of MTS are Reliance, Bharti Airtel, Tata
Teleservices, Idea Cellular, Vodafone and BSNL.
The project undertaken is regarding Standard Operating Procedure for “Fixed
Asset Management”. The objective of this process is to ensure adequate control
over material receipts, issues and control over physical inventory held at the
warehouse /sites. He process also covers the steps involved to ensure accurate
measurement and recording of costs to be capitalized and depreciated. The process
also aims at ensuring adequate control over tagging, physical verification,
movement/site returns and disposal of assets. While doing so it also ensures proper
identification and classification of assets.
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OBJECTIVE AND SCOPE OF STUDY
OBJECTIVES
1. To understand the Accounting and financial activities carried Out in SISTEMA SHYAM TELESERVICES LTD.
2. To analyze the FIXED ASSET MANAGEMENT in the Organization.
3. To ensure adequate control over physical inventory and proper identification & classification of assets.
5. To understand the concept of various Documents and their respective Accounting and financial impact.
SCOPE
I had done my project training in MTS at Jaipur. The topic given to me was regarding FIXED ASSET MANAGEMENT of the company. The study conducted by me has helped in enhancing my skill and thinking power.
The main scope of this study is to ascertain physical inventory and various methods to maintain an adequate control over recording and verification of fixed assets.
As a researcher, during this training period I had co-related my theoretical aspects into practical one. After knowing the actual problem, now I am able to solve it in effective and efficient manner.
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COMPANY INTRODUCTION
SISTEMA SHYAM TELESERVICES LIMITED (FORMALLY KNOWN AS
SHYAM TELELINK LIMITED)
Sistema Shyam Teleservices Limited (formally known as Shyam telelink limited)
Limited (STL) was awarded the license to operate Basic Telephony Services in
Rajasthan under the fixed license fee regime in 1996. Sistema Shyam Teleservices
Limited (formally known as Shyam telelink limited) started its basic telephone
services in Rajasthan under the brand name “RAINBOW” in June 2000 at Jaipur.
The company migrated to the Unified License Regime in November 2003. In the
Unified License Regime, the company can provide basic as well as mobile
telephony services in the Telecom Circle of Rajasthan. Shyam offers its services in
more than 100 cities, and has one of the best brand recalls in Rajasthan Shyam
offers to its customers, services based on multiple technologies, which has been
possible because of exhaustive optical fibre backbone of over 3,500 Kms. This has
helped STLL to grow as an integrated service provider.
Presently the company has received the licenses for all 22 circles in India. Sistema
Shyam Teleservices Limited (formally known as Shyam telelink limited) has
brought the best technology to the doorstep of the people of Rajasthan. STL has
tied up with various world leaders like lucent Technologies, IIT Chennai, IBM,
Sun Microsystems etc. The company is listed on the Delhi, Mumbai, Kolkata,
Saurastra, and other national stock exchanges .The basic objective of Sistema
Shyam Teleservices Limited (formally known as Shyam telelink limited) is to
provide one window access to Basic Telephony, Broadband Internet,
8
Entertainment, and E/M- Commerce through high speed state-of-the-art-network.
Sistema Shyam Teleservices Limited (formally known as Shyam telelink limited)
is providing connectivity to its subscribers using both wireless and wired media in
access network. The wireless connectivity is being provided using Code Division
Multiple Access (CDMA), and or CorDECT.
Russian Telecoms and holding firm Sistema acquired a 10% stake in Sistema
Shyam Teleservices Limited (formally known as Shyam telelink limited) for a total
cash consideration of US$ 11.4 million at the end of September 2007. Sistema,
aims to become one of India's top five mobile operators and have 60m subscribers
by 2017.Sistema is the largest private sector consumer services company in Russia
and the CIS. It was founded in 1993, today it has the 7th largest subscriber base in
the World, and the corporation develops and manages a portfolio of market-leading
businesses in selected service-based industries. In total, companies controlled by
Sistema serve more than 80 million consumers in Russia, the CIS and Eastern and
Western Europe. Sistema's shares are listed under the symbol "SSA" on the
London Stock Exchange, under the symbol "AFKS" on the Russian Trading
System (RTS) and the Moscow Interbank Currency Exchange (MICEX), and under
the symbol "SIST" on the Moscow Stock Exchange (MSE).In October 2007,
Sistema signed a share purchase agreement for the acquisition of an additional
41% stake in Sistema Shyam Teleservices Limited(formally known as Shyam
telelink limited)and a call option agreement, which gives Sistema the right to
increase its stake in Sistema Shyam Teleservices Limited(formally known as
Shyam telelink limited)from 51% up to a maximum of 74%.The Russian company
has been scouting for a foothold in India for several years now. Earlier, Sistema
had tried to pick up a stake in Aircel Cellular, but the deal fell through. It was also
9
in race for Hutchison's stake in Hutch-Essar. Sistema, which was founded in 1993,
is the largest private sector consumer services company in Russia. Later in
December 2007, Sistema received an approval for the acquisition of the blocking
stake in Sistema Shyam Teleservices Limited (formally known as Shyam telelink
limited) from the Foreign Investment Promotion Board (FIPB) of India. As a result
of the acquisition of the additional 41% stake, the overall purchase price totaled
US$ 58.1 million. By June 2008 Sistema has upped its stake in Shyam Telelink, to
73.1% from 51%. Sistema plans to invest USD 5bn billion dollars in India in the
next three years, targeting telecoms but also real estate, high technology and
banking. Sistema is one of several foreign players keen to establish themselves in
India's booming telecoms market.
RAINBOW IS NOW MTS
Product Portfolio
Sistema Shyam Teleservices Limited (formally known as Shyam telelink limited)
limited unconditionally Strives on continuous basis to provide seamless coverage,
widest range of innovative products and services at competitive prices and quick
response to its increasing customer base.
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The Product Portfolio of the company is providing state of art products and
services like Fixed Phones (Wireless & Wire line), Mobile Phone (Limited
mobility and Full Mobility within Rajasthan), ISDN PRI &BRI, Lease Lines,
Broadband, STD PCO & Coin collection Box (Prepaid & Post paid). The value
Added Service segment is witnessing a tremendous growth and company is also
generating maximum mileage through the same services. The Value Added
Services are designed as per the tastes and preferences of the customer which not
only make them happy and delighted but also sustain the ARPU growth. The
company is also foraying in Broadband segment aggressively by enabling it to
complete wire line network with Broadband ADSL 2+ to deliver speeds up to 24
mbps.
The Company has distinguished itself from other Fixed Wire line & CDMA
operators by providing for money to its customers through launching a plethora of
Value Added Services. Sistema Shyam Teleservices Limited (formally known as
Shyam telelink limited) was amongst the many first to launch these services on
Fixed Line Telephony in the country. The gamut includes the following services:
Live Pandit online Services, RAINTONES-Caller Ring Back Tone Service, JUST
TALK- Voice Portal Service, SMART TALK – Multi Party Conferencing,
PARALLEL RINGING , SELECTIVE RINGING, KICK OUT & Prepaid Billing
Module for individual & STD PCO Customers.
Company also offers a broad range of Internet products including: Data on Wire-
ADSL, enables faster internet access up to 24 Mbps, Data on air- PSDN, which
enables a CDMA phone user to access data services (Internet) in a limited
demographic area with speed up to 144 kbps, Data on Cable- CABLE
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CorDECT :A technology mix of normal Cable connection and CorDECT
technology for providing high speed Internet, Dedicated Lease Line Services –
These are the committed Internet access at desired speeds and with assured
performances. The company has over 24000 Internet customers.
Market Scenario
The State of Rajasthan is one amongst the largest Telecom circles and registering
an incredible growth in Fixed Line as well as Mobile telephony. The current tele-
density trend shows that there is still immense potential for Fixed & Mobile
Services in Rajasthan province. The total number of phones in Rajasthan had
surpassed the figure of 9.86 Million by March 2007. The total phones consists
76% Mobile phones and 24% fixed phones. The main competitors in Wire line
Fixed Telephony are BSNL and Airtel and in Mobile Telephony (GSM /CDMA),
faces competition from Airtel, Vodafone, Reliance, Tata and Idea. The Company is
having very aggressive plans to move forward in Broadband product category by
deploying ADSL network in the state.
Sistema Introduction
Sistema is the largest public diversified corporation in
Russia and in CIS, which manages fast growing companies
operating in the consumer services sector and has over 100
million customers. Sistema develops and manages market-
leading businesses in selected service-based industries,
including technology, banking,
Telecommunications, real estate, retail, media, tourism and healthcare.
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Since its inception in 1993 Sistema has evolved into an international group with
expanding geographical representation focusing on consumer services, through
organic as well as inorganic growth. Subsequent to an IPO in February 2005, 19%
of its shares are traded on London Stock Exchange in the form of Global
Depository Receipts (GDR) under the symbol SSA. It is also listed on the Moscow
Stock Exchange and the Russian trading System.
Investor Relations
Ownership of Sistema Shyam Tele Services Limited
Sistema Shyam Tele Services Limited Equity
Structure
Sistema (LSE : SSA) – 73.71%
Shyam Group – 23.79%
Public – 2.5%
About the Company
Sistema Shyam Tele Services (SSTL) is a joint venture company between Sistema
{LSE: SSA} of Russia and Shyam Group of India. Sistema is the majority share
holder in this joint venture with a 73.71% equity stake, along with the Shyam
13
Group, holding a 23.79% stake and the rest 2.5% being public partake. SSTL has
spectrum to provide mobile telephony services in all the 22 circles across the
country. Presently SSTL offers mobile telephony services in the Rajasthan, Tamil
Nadu, Kerala as well as the Kolkata circles. In a recent development, SSTL tied up
with Mobile Tele Systems OJSC of Russia to bring the globally acclaimed telecom
brand-MTS-to India. MTS is the 8th largest telecom brand in the world and has
recently been voted as the 71st ranked brand out of 100 top global brands in the
world by Millward Brown.
The Company ‘SISTEMA Shyam Tele Services Ltd. (SSTL) was founded in 1998
and operating in the state of Rajasthan since 2000. SSTL obtained a unified Pan-
Indian license to provide cellular services in March 2008 and now has spectrum in
all 22 Indian Telecom circles, covering 28 administrative states and 7 union
territories with a population of approximately 1.1 billion people.
SSTL the first telecom operator to acquire the fastest 100,000
customers in the state of Rajasthan.
History of SSTL
The company started Telecommunication services in the state of Rajasthan through
wireless and wire line network from the Year 2000 under the brand name
"Rainbow". Rainbow offers VOICE, DATA and IMAGE services. The customers
of the company include Corporate, Hotels, Banks and High Network Individuals in
14
the state. The company provides high bandwidth and self protected backbone
which provide highly reliable super highway connecting various cities in the ring.
Change of Company Name
Pursuant to provision of Section 21 of the Companies Act, 1956, the name of
company has been changed from “Shyam telelink limited” to “Sistema Shyam
Tele Services Limited” w.e.f. 22nd January, 2009. The name was changed in
order to reflect the joint venture between Sistema JSFC & Shyam Group. This is
reiterated that SISTEMA is one of the largest public diversified corporation in
Russia and the CIS, which manages fast growing companies operating in the
consumer service sector and SHYAM Group is a premier telecommunications
equipment design & manufacturing organization in India with an eye on the global
markets, and also in order to make all concerned aware of this Joint Venture.
SSTL Presence in India
The company has recently launched full mobility services in the state of Rajasthan
by deploying a state of art CDMA network of more than 830 BTS. About 609
more BTS are in pipe line and will be operational by end of July 2009. Currently
SSTL has more than 10, 00,000 (Voice & Data) SATISFIED CUSTOMERS on its
network. SSTL has the distinction of having majority of big corporate, MNCs,
Government Departments, Defense services, Banks, Five star hotels etc.
The Company has obtained an in-principle approval to use GSM technology under
the existing UASL license of Rajasthan circle on October 18, 2007 from the DoT.
15
The Company has paid INR 32.25 Cr. as a onetime charge for use of GSM
spectrum and would be paying revenue share license fees on an ongoing basis
under the original terms of the UASL agreement. The Company is in the process
of setting up the infrastructure for launching the services on the alternate
technology. The company is in process of launching CDMA network of more than
19,000 BTS in across India by end of Mar 2010.
Global Recognition
Top 100 Most Powerful Brands
MTS launched its current brand in 2006, building on the reputation as the leader
and highest quality operator in the region. The brand was developed to attract
customers in a variety of cultural, socio-geographic and income segments with the
consistent message of quality and leadership. To facilitate further growth and
recognition of the brand, MTS recently adopted new Brand Standards to
communicate the brand consistently in all messaging and launched a new slogan
“Operator Svyazi” to reinforce its perception as a strong, trustworthy and quality-
focused company.
The strength of the brand has been consistent and has been recognized
internationally in both 2009 & 2008 in BRANDZ™ Top 100 Most Powerful
Brands, a ranking published by the Financial Times and Millward Brown, a
leading global market research and consulting firm. MTS was ranked as the 71st
Most Powerful Brand in 2009 & 89th Most Powerful Brand in 2008.
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Business Week Info Tech 100
In May 2008, MTS was included in the InfoTech 100 ranking of the best-
performing tech companies by Business Week. MTS was ranked as the 14th
company globally, based on four criteria: shareholder return, return on equity, total
revenues, and revenue growth. MTS became the highest-ranked company from
Russia, and above such companies as AT&T, LG and Microsoft.
Trusted Brand 2008
In June 2008, MTS was recognized by Reader’s Digest as the most Trusted Brand
among mobile operators in Russia. The European Trusted Brands 2008 survey was
conducted in 16 countries in 14 different languages. In Russia, over 40% of
consumers nominated MTS as the most Trusted Brand in “Mobile Phone Network”
category.
World Communication Awards
In September 2008, MTS received three nominations for the World
Communications Awards 2008. The Company made the shortlist in the “Best
Brand”, “Best Mobile Operator” and “Best Project Management” award categories.
GSMA BOARD
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In April 2008, the CEO of MTS joined the Board of the GSM Association
(GSMA), the global trade association for the mobile industry. GSMA's board
members include 25 operator representatives, the Chair of the Executive
Management Committee - the body that manages the Association's ongoing
activities in the area of products and services - and the GSMA CEO Rob Conway.
Board members include executives of such leading global operators as China
Mobile, AT&T, Orange, Telefonica O2 Europe, T-Mobile, Vodafone, and Telenor
Mobile.
GSMA 13 th Annual Global Mobile Awards
In January 2008, MTS became the first Russian company to receive a nomination
in the 13th Annual Global Mobile Awards hosted by the GSM Association
(GSMA). MTS was recognized for its WAP-portal — wap.kids.mts.ru — designed
specifically for children in the d«Best Mobile Infotainment Portal for
News/Entertainment» category.
Corporate Governance
MTS was ranked as the most transparent company in Russia by Standard & Poor’s
in 2005, 2006 and 2007. The ranking was based on the analysis of ownership
structure and shareholders’ rights, financial and operational openness and
composition and procedures of the Board of Directors and Management
Committee.
PAN India Expansion & Project Status
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The Indian Telecommunication Industry has emerged as the fastest growing
telecom markets in the world and is poised to deliver swift growth as a result of
several economic reforms that have lead to strong GDP growth. High per Capita
income is also giving impetus for telecom growth. India still remains largely under
penetrated market with over a billion people and it is one of the most attractive
telecom markets in the world today. India is all set to achieve approximately 540
million mobile subscribers by 2010 with compounded annual growth rate 28
percent. Innovation in pricing of services and handsets were the two main factors
contributing to the growth of mobile services in the country. The revenue from
mobile services is expected to increase up to $35 billion by 2010 compared to
$22 billion in FY07.
Keeping in view the growth of telecom sector in India, Company aims to
strengthen its operation on Pan India basis and putting its prominent efforts to
expand its operation to new 21 Circles for which UASL Licenses and Start up
Spectrum have been granted to the Company by DoT. The Company has engaged
various consultants for finalizing Strategy, Business Plan, Network Roll Out
and other plans. The Company has also completed the vendor selection
process for Pan India Network Equipment supplies and installation.
The Company has already completed the first phase of expansion of its business
operations in Rajasthan. The Roll out of Pan India operations is also under
process and to be completed in next 9-12 months time. The Company is
planning to start its operations from south and east first after expansion in
Rajasthan. The network design for Pan India services includes one of the advance
communication infrastructures considering the growth and supporting the mobile,
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fixed, cable, broadband and value added services. It is also proposed to offer
roaming services to the customers in the new circles through covering the
maximum possible area.
Major Players in Telecom Industry
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1. RELIANCE
2. BHARTI AIRTEL LIMITED
3. TATA TELESERVICES
4. IDEA CELLULER
5. VODAFONE
6. BSNL
Analysis of telecom players
Telecom industry is a vast field today we include fixed phone, wireless phone, internet service, VSAT, DTH and service providers in telecom industry but for my convenience I focus only wireless phone service only. In wireless service there are many companies out of them few are below---
Reliance Communication Limited is a part of the Reliance Anil Dhiru bhai Ambani Group. Reliance Communication is India’s largest integrated
21
fully converged communications service provider in the private sector with an individual, enterprise & customer base of over 40 million. Reliance Communication is one of the top two operators in the Indian wireless market, the largest growing wireless market in the world. Reliance com is one of the largest wealth craters with market capitalization of over Rs.1, 00,000 Cr.
Reliance Communication has the largest capacity network in the country, the most future ready integrated and converged network that can support even following 3G, 4G telephony and broadband services. More than half of the world’s population connects with each other on the Reliance network. Every third call that comes in India is carried on Reliance’s network. Reliance Communication is the preferred network of over one million customers in USA, UK, Canada, Australia and New Zealand.
Bharti Airtel Limited is a leading Indian telecommunication service provider with 49.01 million customers. The company has three strategic business units’ i.e. mobile services, broadband and telephone services and enterprise services. Mobile services unit consists largest portion of the company business, both in terms of total revenues and total customers, Bharti Airtel offers mobile services in all 23 telecom circles of India and is therefore the first private mobile services operator to have an all India presence. The Company’s mobile customer base accounts for a 22.9% share of the overall wireless(GSM+CDMA) market as on march 31, 2007 and has a presence in 4676 census towns and in 2,07,327non-cenus towns and villages, covering an addressable population of 59% of the total population.
Broadband and Telephone Services (B&TS) provides a wide gamut of voice and data services through a wire line network. Bharti Airtel is the first private
22
operator to provide fixed line and broadband services over the same copper wire. It provides innovative, cost effective solutions for corporate, small business enterprises and individual homes. Given the high cost of creating a wire line network, B&TS has adopted a focused approach to network creation and customer’s acquisition. Currently B&TS provides services in 94 cities across 22 telecom circles. The unit had 1.75 million voice customers. It has a capacity of more than 3 million tags with a cumulative investment of over Rs.40 bn.
TTML is a part of the Rs. 1, 20,000 crore (US $ 29 billion) Tata group that has over 87 companies, over 3, 30,000 employs and more than 2.8 million shareholders. Most of the people think that TTML and TATA Indicom both are the same companies but it is not true, TTML is a listed company and it is a SBU of TATA Indicom, and TTML presence in Maharashtra and Goa only.
Formally huge tele.com (India) ltd. That company was renamed to Tata Teleservices Maharashtra Limited, subsequently to the acquisition of 70.85% equity shareholding by Tata group in December 2002.
TTML provides mobile, fixed wireless phone (FWP), public telephone booths and wire line services. Broad band data network & application services include leased line, DSL, Wi-Fi, Ethernet, managed gateway services and conferencing services. TTML is a market leader in commercial, residential and PCO market in Maharashtra circle.
23
IDEA cellular is a part of the Aditya Birla Group, India’s first truly multinational corporation. IDEA cellular is a leading GSM mobile service operator with pan India licenses with a customer base of 40 million in 15 services areas. Idea enters in market so late but it gain better competitive advantage in market because the support of its parent group and by adopting the focus market strategy.
Introduction of the Topic
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Sistema Sistema Shyam Teleservices Limited (formally known as Shyam Telelink Limited)
Finance Department
STANDARD OPERATIONG PROCEDURE FOR FIXED ASSET MANAGEMENT
Process Overview: Material is received at the warehouse / site on the basis of a purchase order /work order issued by commercial Department. On receipt of material / completion of work and related documents (invoice/challan/work certificate) a Goods Receipt
25
Note/Services Receipt Note (GRN/SRN) is prepared by the stores personnel. For Direct Delivery to site a corresponding Material Transfer Note (MTN) is prepared simultaneously indicating material issued from stores. Therefore, Finance personnel records inventory in Capital Work in Progress (CWIP) basis the GRN/SRN report generated from system.
Material issue is undertaken by the stores personnel on the basis of an approved Material Requisition Note (MRN) received from the user department. A Material Transfer Note (MTN) is prepared on issue and the MTN report, along with details of site to which material is issued, is forwarded to finance. The Site on air report along with specifications of asset installed, and site commissioning date is obtained from networks which is subsequently reconciled lying in CWIP are transferred to Fixed Asset Register(FAR). The Commissioning date certified by network department is taken as the date of capitalization in FAR. Assets other than cell sites are capitalized from the put to use date as certified by the user department.This process documents the standards, guidelines and tracking methodologies for the flow of inventory till the time it is capitalized and updates in FAR. The document also highlights the risks inherent in the process that should be covered by the materials/ Commercial and Finance team.
Initiation of process: User department raises a Material Requisition Note (MRN) based on material requirement.
Termination of process: All assets put to use/ sites on air are adequately monitored and are reflected in the FAR at accurate values.
Process Objective: The objective of this process is to ensure adequate
control over material receipts, issues and control over physical inventory held at the warehouse /sites. He process also covers the steps involved to ensure accurate measurement and recording of costs to be capitalized and depreciated.
The process also aims at ensuring adequate control over tagging, physical verification, movement/site returns and disposal of assets.
26
While doing so it also ensures proper identification and classification of assets.
Scope:
Scope of the process covers:
Handling of material receipts and issues at warehouse/site Physical controls over inventory held at warehouse CWIP accounting ,excluding cenvatable tax component Reconciliation of CWIP GL with CWIP register Capitalization of Fixed Assets with categorization of assets. Reconciliation of FA GL with FAR Inter location movement of assets Return to warehouse Disposal of assets Physical verification and reconciliation of book vs. physical asset.
Key Functional Departments:
Department Key ResponsibilityNetwork Information on cell site commissioning/expansion
and cell site configuration along with asset installed details.
Materials/Commercial Material Transfer Note (MTN) report along with supporting documents
Details on asset disposal captured in Asset Disposal Form (ADF)
IT Installation certificates for asset capitalizationUser department Asset Movement Form (AMF) in respect of
inter location movement of assets.
27
Key inputs
GRN/SRN report from system MTN report giving details of site wise material issues Information on cell site commissioning/expansion and cell site configuration
along with asset installed details Details on material returns to warehouse/inter location asset movement/ asset
disposal
Process outputs
Creation of vendor liability for material receipt CWIP record giving details of inventory location (store/site) and date of receipt
for generation of ageing report. Updated FAR
Process Narrative
The process documents the method of tracking material receipts, issues and control over physical inventory. The organization aims to ensure accurate accounting for the same, while maintaining operational efficiency.
I) Material Receipts:
User department raises an MRN, capturing specifications and quality details of material required. The User Department Head approves the MRN as per the policy and subsequently forwards to commercial for use of material. Commercial personnel checks whether the requirement can be met out of the existing inventory stock at the warehouse. If sufficient inventory stocks are not available, the user department is asked to raise an indent. At the time of raising the indent the user department personnel specifies the material category as capital item or revenue
28
item based on the standard item master maintained. All indents raised are approved by the User Department Head centrally, excluding certain opex items as per policy. A Purchase order (PO) is issued against the indent (also specifying the item category- capex/ opex) and material is received.
At the warehouse:
In case of receipt of receipt of material at the warehouse, the warehouse in-charge verifies whether the quality specifications and value of material delivered as per the PO. If the material delivered does not meet the stipulated specifications, the material may be rejected as per the policy. In case of a rejection of material, the warehouse in-charge marks the same on the delivery challan/invoice and informs the User Department and vendor of the same. Subsequently, the warehouse in-charge makes an entry in the Material Return Register (MRR), capturing details of the delivery and material details of the rejected material. The rejected material is stored separately and returned through issue of a non-returnable gate passIf no discrepancies are observed, the warehouse in-charge updates the inventory register and raises a Goods Receipt Note (GRN) in System (FOC material received is separately noted). Material received is stored as per the prescribed stacking norms to ensure easy traceability and access.
At the location:
In case of receipt of material directly at the location, the Site Engineer/User Department Personnel verifies the material specifications vis-à-vis the invoice/challan delivered. If the quantity of the material is not as per invoice/challan the Site Engineer/User Department personnel marks the excess/shortage on the delivery challan/invoice and forwards the invoice/delivery challan to network personnel/ User Department personnel for approval.Network/User Department personnel approve the document and forward the same to the warehouse in-charge. The warehouse in-charge validates the invoice quantity vis-à-vis the PO quantity or as mentioned in the delivery schedule provided in the PO.
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If invoice quantity is greater than the PO quantity the warehouse in-charge informs the vendor and User Department of the same. If a consensus is reached as per policy to accept the extra quantity the User Department personnel amend the Indent raises a fresh indent for the additional quantity and forwards it for requisite approvals to User Department Head. Thereafter, the commercial department amends the PO and relevant commercial personnel as per policy.
If the invoice quantity is lesser than the PO quantity the warehouse in-charge informs the Vendor and User Department of the shortage and escalates the incomplete delivery as per PO schedule, as per policy.
For the material being accepted, the warehouse in-charge raises a Goods Received Note (GRN) in System. Simultaneously, the Warehouse in-charge raises a Material Transfer Note (MTN) for the material. He/she indicates the location where the material has been received on the MTN. Thereafter, he/she updates the inventory register indicating the receipt and issue of material. Subsequently, the warehouse in-charge forwards the MTN details to Finance personnel, for updating the CWIP register.
Completion of work as per work order:
In case of work performed against a work order issued, the Project Manager (PM) issues a Work Completion Certificate (WCC) and forwards the same to warehouse in-charge, along with relevant documents, which are approved as per policy.
The warehouse in-charge prepares a Service Receipt Note (SRN) in System and raises an MTN for services received. The warehouse in-charge indicates the location where the services have been received on the MTN.
II) Inventory ageing and physical control
Warehouse personnel prepares an inventory ageing report as per defined frequency capturing details such as item specification, vendor, quantity, date of receipt, GRN
30
details, user department etc. He/ she forward the ageing report to the respective user departments for feedback. User department specify whether the material is usable or is to be scrapped/transferred. Thereafter, the process for disposal of material or transfer of material is initiated as indicated by the user department.
A joint physical verification of inventory is undertaken by Commercial and Finance personnel as per the defined schedule. The verification is to reconcile physical stock vis-à-vis stock reflected in the inventory records. If a variation is noted, corrective action is taken as per policy.
III) Capital Work in Progress (CWIP) Accounting
Finance personnel receive GRN/SRN and approved invoice for materials/ services received and passes an accounting entry for creating vendor liability and updates CWIP inventory. The inventory cost accounted for in CWIP account excludes the cenvatable tax component mentioned in the invoice. At the end of every month finance personnel generates GRN/SRN report from SYSTEM, and reconciles the same with invoices booked for the month. Thereafter he/she identifies all GRNs/SRNs for which an invoice has not been received during the period and forwards the same to Commercial personnel for validation. Once approved, Finance personnel provisions for vendor liability for material/services against which no invoices have been booked. Also he/she updates CWIP with the same.Periodically finance personnel calculate ageing of CWIP inventory based on date of receipt of goods as per GRN/SRN. He/ she identifies reasons for slow moving/ non moving items for material lying at locations, e.g. material lying at/ expenses incurred for an abandoned site. The Finance personnel may consider taking corrective actions e.g.Explore possibility of reallocation of material, disposal or write off (where re-use/ re-allocation are not possible).
IV) Issue and dispatch of material:
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On receipt of approved MRN from the user department the warehouse in-charge prepares an MTN. He/she indicates the location to which material is to be transferred as per the MRN. Thereafter, warehouse in-charge updates inventory quantity in the inventory record and dispatches the material. He/she also forwards the MTN details to Finance personnel for updating the CWIP register.
Warehouse in-charge also prepares a monthly report of MTNs issued, capturing details of material issued and location of transfer. He /she forward this report on a monthly basis to finance personnel, for ensuring comprehensive updating of the CWIP register.
V) Updating of Fixed Asset Register and capitalization of assets including provisional capitalization:
Finance personnel receives site on-air report and commissioning certificate/put to use date, along with asset configuration details, from the PM/ user department on a periodic basis. PM/ user department also forwards expansion and upgrade details. In case there is no expansion or upgrade for the defined period a nil declaration report is submitted to finance personnel. Finance personnel receive a monthly MTN report from Commercial personnel and reconciles the same with inputs received from PM/user department to identify items to be capitalized. Also, he/she ascertains the category and useful life of the asset as per guidelines provided in the accounting manual.
A finance personnel transfers items to be capitalized from CWIP to FAR and passes accounting entries for the same.
VI) Asset Tagging
Finance personnel generate serial numbers for all assets to be tagged. Serial numbers capture relevant asset details as per the format. Finance personnel subsequently oversee fixing of labels on physical assets by external agency. Thereafter, finance personnel carries out a random sample check for accuracy of
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asset tagging performed by the appointed agency. Any discrepancies noted are corrected.
VII) Inter location movement of asset As per requirement, User Department personnel fills out the Asset Movement Form (AMF) specifying the asset serial number and description, existing location and location of transfer. The AMF is approved as per policy and the asset is transferred. If the asset is being transferred to another location, user department personnel send the AMF to Finance personnel. Finance personnel update the FAR capturing movement details on a monthly basis.
VIII) Return of Assets to Warehouse
If the asset is being returned to the warehouse, the user department personnel forward the AMF to warehouse in-charge. Warehouse in-charge makes an entry in the Material Return Register (MRR).
In case an MRN is received for issue of returned goods within specified period, warehouse in-charge raises an MTN capturing location of transfer. He/ she dispatch material to the specified location as per MRN and forwards MTN details to Finance Personnel. Finance personnel capture asset movement details in FAR. If the asset is to be retained at warehouse, warehouse in-charge updates the inventory details and forwards the same to Finance personnel for de-capitalization. Finance personnel de-capitalize the asset, by transferring the asset from FAR to CWIP, as per policy.
IX) Asset Disposal
An asset may be identified as obsolete as per the policy on identification and disposal of scrap material. Details of such assets are captured on the AMF by the user department and forwarded to warehouse in-charge. The warehouse in-charge
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fills out an Asset Disposal Form (ADF) and forwards the same to finance personnel.Also, for assets identified for disposal in the feedback received from user departments on inventory ageing, the warehouse in-charge fills out an ADF and forwards the same to finance personnel.
Thereafter, the Finance personnel calculate the WDV for the asset to be disposed and invite quotations for sale of the asset as per policy. Subsequently, he/she performs a comparative analysis of quotes received and forwards the same to the relevant authority, as per policy, for selection of a buyer. Once a buyer is identified Finance personnel obtains the sale consideration from the buyer and generates a sale invoice for the same.Finance personnel oversee delivery of the asset to the buyer. Subsequently, he/she updates the FAR, capturing details of the sale and passes an accounting entry for disposal of asset.
X) Physical Verification of Assets
As per physical verification schedule, Finance personnel generates a list of assets from FAR and forwards the same to external agency appointed for physical verification of assets. The appointed agency submits the observations of the physical verification capturing details of variance e.g. variance of quantity or specification of book v/s physical asset. Thereafter, Finance personnel pass relevant accounting entries and updates FAR.
Key Performance Indicators
1. Timely and accurate updating of CWIP and FAR2. Timely and accurate tracking of asset movement and return3. Enhanced inventory and warehouse controls
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Key Risk Elements
1. Delay in updating material receipts and issues2. Inadequate feedback received from User Department pertaining to inventory
ageing.3. Inadequate tracking of asset movement4. Inadequate RFQ process for asset disposal.
35
RESEARCH METHODOLOGY
&
DATA ANALYSIS
RESEARCH METHODOLGY
36
A detailed survey of employees working in SSTL was carried out to know
their opinion regarding the Fixed Asset Management Process and to study &
analyze those policies to reach to a conclusion. The details of the methodology are
stated below:
Type of research :
Descriptive Research
Sampling Technique:
Random Sampling
Universe & Sample Size:
10 employees (Universe)
5 employees (Sample Size)
Method of Data Collection
The data has been divided into two parts:
o Primary Data:
Conducted personal interviews with the respondents
o Secondary Data:
Website of MTS India
Annual Reports
FINDINGS & CONCLUSIONS
37
FINDINGS
Q-1 Do you intimate/specify about the goods if it is not as per the specification made by the indenter?
YESNO
Q-2 Do you intimate account about the actual date of put to use of asset?
YESNO
Q-3 Whether the assets are physically verified at different intervals?
38
YESNO
Q-4 Are the assets in your possession are properly tagged?
YESNO
Q-5 In case of transfer of asset from one place to another do you intimate the finance?
39
YESNO
CONCLUSIONS
40
In my report I learn that SSTL is running by the experienced people that are
capable enough to take the competitive advantage in market.
F&C department’s process is good but it is not feasible to make the
documents in EXCEL.
When our MIS is hamper due to technical problems so it is suggested to
company to make another system as a supportive so we can do our work
without inconvenience.
The Company can use software’s like SAP(System Analysis and Program
Development)
ILLUSTRATIONS & ANNEXURES
41
Questionnaire
NAME:
DESIGNATION:
DEPARTMENT:
CONTACT NO:
Q-1 Do you intimate/specify about the goods if it is not as per the specification made by the indentor?Answer- 1. YES 2. NO
Q-2 Do you intimate account about the actual date of put to use of asset?Answer- 1. YES 2. NO
Q-3 Whether the assets are physically verified at different intervals?Answer- 1. YES 2. NO
Q-4 Are the assets in your possession are properly tagged?Answer- 1. YES 2. NO
Q-5 In case of transfer of asset from one place to another do you intimate the finance?Answer- 1. YES 2. NO
Format of excel POSISTEMA SHYAM TELESERVICES LIMITED
Plot - 3, Rainbow Tower, Amrapali Circle,
42
Jaipur, Rajasthan. PIN - 302021 Phone:0141- 5100373, Fax: 0141- 5100390
PURCHASE ORDER(Indigenous)
TO : OUR P.O. NO: DATED: YOUR QUOT.NO: PAN.NO: DATED: TIN NO: INDENT NO. : Mobile NO. Indentor's Name KIND ATTN : P. O. Number must be quoted on all correspondence i.e. Challan, Invoice etc.
RST/CST/1421/04108Dear Sirs,We are pleased to place our order for the following items in accordance with the terms and conditions stated overleaf:
S. NO. D E S C R I P T I O N Qty. (In
Nos.)UNIT PRICE AMOUNT
(Rs.) (Rs)
ORDER VALUE 0.00
(IN WORDS) : Rs. Special Instruction:-1-Bills submitted without attaching signed copies of the PO will not be considered for payment processing.2-Packing has to be done as per instructions given by SSTL.3- Material has to be supply as per the approved sample; In case of any deviations from the sample material may be rejected.4- 500 No’s wall clock is delivered before 16-April-09.Price Basis F.O.R. - SSTL Jaipur Basic Value Delivery 8 Days from the date of PO Discount N/AMode of Dispatch By Road Excise Duty N/AMode of Payment By Cheque TAX / CST
Payment Terms100% within 30 days of submission of Invoice.
Total 0.00Consignee Address : M/s SISTEMA Shyam Teleservices Limited Plot No -155,Jhotwara Ind.Area, Jaipur, Rajasthan. PIN – 302021
(Authorized Signatory)(Authorized Signatory)
Regd. Office : B-2D, SHIV MARG, BANI PARK, JAIPUR – 302016
Format of excel WOSISTEMA SHYAM TELESERVICES LIMITED
Plot - 3, Rainbow Tower, Amrapali Circle,Jaipur, Rajasthan. PIN - 302021
43
Phone:0141- 5100373, Fax: 0141- 5100390
WORK ORDER(Indeginious)
TO : OUR W.O. NO: DATED: YOUR QUOT.NO: DATED: INDENT NO. : Mobile NO. Indentor's Name TELEFAX NO. KIND ATTN : P. O. Number must be quoted on all correspondence i.e. Challan, Invoice etc. TIN No. - 08162104055
RST/CST/1421/04108 Dear Sirs,We are pleased to place our order for the following items in accordance with the terms and conditions stated overleaf:
S. NO. D E S C R I P T I O N Qty. (In Pcs.)UNIT
PRICE AMOUNT(Rs.) (Rs)
ORDER VALUE 0.00
(IN WORDS): Rs.
Price BasisF.O.R. - SSTL(Rainbow Tower) Jaipur Basic Value
Delivery 1-2 Days from the date of WO Discount N/AMode of Dispatch By Road Excise Duty N/AMode of Payment By Cheque TAX
Payment Terms100% within 30 days after delivery
Total Consignee Address : M/s SISTEMA Shyam Teleservices Limited Plot No -155,Jhotwara Ind.Area, Jaipur, Rajasthan. PIN – 302021 (Authorised Signatory)( Authorised Signatory)
Regd. Office : B-2D, SHIV MARG, BANI PARK, JAIPUR – 302016
CC: Accounts / Purchase / Stores
Format of GRNSISTEMA Shyam Teleservices Ltd.
Goods Receipt Note( Plot No. 155, Jhotwara Industrial Area, Behind Ganesh Floor Mills, Jhotwara, Jaipur- Ph. 0141-5142699, 0141-5182258 JAIPUR RAJASTHAN)
CST/LST No.:Status Approved
44
Vendor Name: GRN No.: GRN/JTW/2008/Address: GRN Date :CST/LST No.: PO No.:Transporter Name: PO Date :Lorry No. Ref Doc No.:LR/RR No.: Ref Doc Date: RC No.: RC Date :
S No.
Item Name
/UOM
Pending Order Qty
Challan Qty Received Qty Rejected QtyAccepted
Qty
Inspection Details:
Inspected By: Approved By:
Prepared By: Approved Dated:
Regd. Office: B-2D, Shiv Marg, Banipark, Jaipur – 302016
Format of SRNSISTEMA Shyam Teleservices Ltd.
Goods Receipt Note( Plot No. 155, Jhotwara Industrial Area, Behind Ganesh Floor Mills, Jhotwara, Jaipur- Ph. 0141-5142699, 0141-5182258 JAIPUR
RAJASTHAN)
CST/LST No.:
45
Status ApprovedVendor Name: SRN No.: SRN/JTW/2008/Address: SRN Date :CST/LST No.: WO No.:Transporter Name: WO Date :Lorry No. Ref Doc No.:LR/RR No.: Ref Doc Date: RC No.: RC Date :
S No.Item
Name /UOM
Pending Order Qty
Challan QtyReceived
QtyRejected
QtyAccepted
Qty
Inspection Details:
Inspected By: Approved By:
Prepared By: Approved Dated:
Regd. Office: B-2D, Shiv Marg, Banipark, Jaipur – 302016
Corporate Information
Board of Directors
Mr. Ron Sommer ChairmanMr. Sergey Cheremin Dy. Chairman
Depositories
National Securities Depository Ltd. 4th Floor, Trade World
46
Mr. Vsevolod Rozanov Whole Time DirectorMr. Rajiv Mehrotra DirectorMr. Ajay Khanna Managing DirectorMr. Alok Tandon Managing DirectorMr. Suman Sehgal DirectorMr. Mikhail Shamolin DirectorMr. Madhukar Director
Kamala Mills Compound Senapati Bapat Marg, Lower Parel Mumbai-400 013 Ph: 91-22-24994200 Fax:91-22-66608035/24976351 Central Depository Service (India) Ltd. Phiroze Jeejeebhoy Towers, 17th Floor, Dalal Street, Mumbai-400 001 Ph.: 91-22-22723333-3224 Fax: 91-22-22723199/22722072
Company Secretary
Mr. Rashid J Malik
Equity Shares Listing
Equity shares of the company are listed at Mumbai & National Stock Exchange.
Auditors
M/s S.R. Batliboi & AssociatesChartered Accountants,Golf View, Corporate Tower B,Sector 42, Sector Road,Gurgaon (Haryana), India
Internal Auditors
M/s Mehra Goel & Co.Chartered Accountants,505, Chiranjiv Towers,43, Nehru Place,New Delhi-110019, India
Bankers
ICICI Bank Punjab National Bank Bank of China Indian Bank ABN Amro Bank VTB Bank Yes Bank
Corporate Office
MTS India Towers, Plot No.334Udyog Vihar, Phase – lV,Gurgaon (Haryana), IndiaWebsite: www.mtsindia.inTel: 91-124-4812500Fax: 91-124-4812825
Registrar And Transfer Agents
Indus Portfolio Pvt. Ltd.G-65, Bali NagarNew Delhi-110015E-mail: [email protected]: 91-11-25172115, 25422805, 25422801Fax:91-11-25449863
Registered Office
B2-D, Shiv Marg Bani Park,Jaipur-302 016, Rajasthan, IndiaTel: 0141-5100510
BIBLIOGRAPHY
Websites:
47
www.mtsindia.in
www.mtsgsm.com
http://www.sistema.com/businesses/telecom/shyam
http://www.itvarnews.net/news/9660/MTS.html
www.isourceupdates.com
Others:
Annual Report
Interview of Respondents
48
