Alkesh ppt reliance summer training report on working capital

Presentation On

Summer Internship Project At

Reliance Industries Ltd

Prepared By:

Alkesh MistryM.B.A Sem-ll

Enrolment No-147370592045

Contents Sr. No Particulars

1 General Information

2 Production Department

3 Human Resource Management

4 Finance Department

5 Marketing Department

6 Research Methodology

7 Data analysis &Interpretations

8 Suggetions

Reliance Industries Limited:• The Reliance Group, founded by Dhirubhai H. Ambani (1932-2002), is India's largest private

sector enterprise, with businesses in the energy and materials value chain. Group's annual revenues are in excess of US$ 66 billion. The flagship company, Reliance Industries Limited, is a Fortune Global 500 company and is the largest private sector company in India.

• Backward vertical integration has been the cornerstone of the evolution and growth of Reliance. Starting with textiles in the late seventies, Reliance pursued a strategy of backward vertical integration - in polyester, fibre intermediates, plastics, petrochemicals, petroleum refining and oil and gas exploration and production - to be fully integrated along the materials and energy value chain.

• The Group's activities span exploration and production of oil and gas, petroleum refining and marketing, petrochemicals (polyester, fibre intermediates, plastics and chemicals), textiles, retail, infotel and special economic zones.

• Reliance enjoys global leadership in its businesses, being the largest polyester yarn and fibre producer in the world and among the top five to ten producers in the world in major petrochemical products.

• Major Group Companies are Reliance Industries Limited, including its subsidiaries and Reliance Industrial Infrastructure Limited.

http://www.ril.com/

http://www.riil.in/

"Growth has no limit at Reliance. I keep revising my vision.Only when you can dream it, you can do it.“

Dhirubhai H. AmbaniFounder Chairman Reliance Group December 28, 1932 - July 6, 2002

Shri Mukesh D. AmbaniChairman & Managing Director

Mission, vision, values and policy statement:

• MISSION To continually offer value added and innovative petrochemical products as raw materials

for global and domestic customers, maintaining a constant customer focus and an enduring concern for the environment and for stakeholder needs and values.

• VISION We at Reliance shall continue to contribute to Reliance Industries Limited in sustaining its

marketing leadership position in India. • VALUE Visionary leadership, customer focus, agility, integrity, innovation, data based

management, social responsibility, organizational and personal learning, valuing, human resources, focus on result and creating value, system perspective.

• QUALITY POLICY Reliance is committed to meeting customer requirement through continual improvement

for its quality management systems. Reliance shall sustain organizational excellence through visionary leadership and innovation efforts.

Net Profit: $ 3.8 billion (23,566 crore)

• Annual revenue• $ 62.2 billion (3,88,494 crore)• 148 Major products and brands across energy and service sectors• 8th Largest Producer of MEG, globally• 2nd Largest Producer of polyester ,fibre/yarn, globally• 5th Largest Producer of PTA, globally• 6th Largest Producer of PP, globally• 7th Largest Producer of PX, globally• 2,621 Retail stores across India

Performance graph over Five years:

2010-2011 2011-2012 2012-2013 2013-2014 2014-20150

50,000

100,000

150,000

200,000

250,000

154,093

169,445182,030

198,670

218,482

Net worth(Rs. Crore)

Net worth(Rs. Crore)

Production Department

Departmental structure:

AVP, contract and purchase

GENERAL MANAGER (purchase)

EXECUTIVE MECHANICAL

(ITEM)

EXECUTIVE ELECTRICAL

(ITEM)

EXECUTIVE ADMINISTRATIVE

(ITEM)

Production Activities:

• Receiving the purchase requisition from the various department• Preparation of the purchase order.• Finalize the vendor for the different material.• To keep watch on the material procured.• To check the L/R and Challan of the trucks.• To take care of the procured material, and to place it identical

place where it is used to put.• Take note of each and every item procured.• To verify the stock time by time.• Maintaining follow-ups with the vendors.

product Main inputs Main output By products

Chlor Alkali Plant (CA) Industrial Grade Common Salt

High Purity Washed Salt Upgraded Wash Salt

Caustic Soda Lye – 100% Chlorine Caustic Soda Flakes/Prills

Hydro Chloric Acid - 30% Sodium Hypo Chlorite

(Hypo) Dilute Sulphuric Acid – 78%

Ethane Propane Recovery Unit (EPRU)

Semi rich Gas Ethane – propane (C2C3) Flash gas

Gas Cracker Unit (GCU) Ethane-Propane(C2C3) Propane

Ethylene Propylene

Mixed Oil Raw Aromatic Rich Feed

Stock (RARFS) Fuel Gas/Mixed C4

(MXC4)/TAR

Ethylene Oxyde & Ethylene Glycol(EO-EG)

Ethylene Oxygen

Mono Ethylene Glycol(MEG) Ethylene Oxide(EO)

Di-Ethylene Glycol(DEG) Tri-Ethylene Glycol(TEG) Tri-Ethylene Glycol

Bottom(TEGB)

High Density Poly Ethylene(HDPE)

Ethylene Butene

• High Density Poly Ethylene(HDPE)

HDPE Machine Reject HDPE Plant Sweep/Poly

Powder HDPE Wax Reject/Off Gas

Ethylene Di-Chloride & Vinyl Chloride Monomer(EDC/VCM)

Ethylene Chlorine Ethylene Di Chloride(EDC)

Ethylene Di Chloride(EDC) Vinyl Chloride

Monomer(VCM)

Hydro Chloric Acid – 25% EDC-Bottom(EDCB) EDC Light Ends(EDCL)

Poly Vinyl Chloride (PVC) Vinyl Chloride Monomer(VCM)

Poly Vinyl Chloride(PVC) PVC Plant Sweep/Wet Resin

Ethylene Vinyl Acetate(EVA) Ethylene Vinyl Acetate

Ethylene Vinyl Acetate(EVA) HDPE Wax/Plant Sweeping HDPE Machine Reject

Ultra High Molecular Weight Poly Ethylene(UHMW)

Ethylene Varsol

UHM2504 UHMPS

Flow chart

Semi-rich gas & natural gas EPRU

C3C3MIX

C2C3 propane

(imported)

Gas cracker unit

EVA plant

EO-EG plant

HDPE plant

VCM plant

VCM

Chlor-Alkali plant

C12

Caustic soda

30% HCI

PVC plant PVC

HDPE

MEG

EO

EVA

ethylene

salt

Variance in stock

Propylene to VMD

Ethylene to VMD

Learn gas to GAIL

MATERIAL HANDLING EQUIPMENT

• FORK LIFT• LOADER• TRACTOR• JCB• LIQUID STORE TANKS• PIPES• HAND TROLEY• PALLET TROLEY• KRANES • BULLETS QUALITY ASSURANCE MEASURES • To ensure consistent quality of products standards suppliers are selected & vendors rating are

done.• Each raw material is tested in the quality control department.• Calibration on process parameters of raw materials, intermediate product & finished goods.

Department structure:

HEAD OF DEPARTMENT

SENIOR MANAGER(1)

EXECUTIVE MANAGER(1)

GENERAL MANAGER


SENIOR MANAGER(2)



HELPER(1)

Budget control system/process:-

• Revenue budget• Manufacturing budget• Procurement budget• Fixed cost budget• Expenditure budget

Accounting method/system:

The major modules are:• Cash management• Cheque management• Budget• Costing• Account receivable• Account payable• General ledger

Sources of Working Capital:Short-term sources:

• Commercial Bank• Indigenous Banks• Trade Creditors• Installment Credit• Advances• Account Receivable• Credit• Accrued• Differed Income • Commercial Paper

Long Shares –term Sources

• Debentures

• Public Deposits

• Plugging back to profit

• Loans from Financial Institution

ACCOUNTS PAYABLE SECTION

• Review and analysis of PO/WO/ARC issued by purchase department.

• Receipt of bills from procurement suppliers or services provider.

• Review and analysis of GRN.• Bills sent to plant or user department for certification.• Bills received from plant or user department duly

certified.• Verification of bills with PO/WO/ARC.• Payment of verified bills.

Marketing department structure

HODVP

SGM(HDPE)

EXECUTIVES

NON- SUPERVISORY

STAFF

GM(PVC)

EXECUTIVES

NON- SUPERVISORY

STAFF

GM(CHEMICAL)

MANAGER

EXECUTIVES

NON- SUPERVISORY

STAFF

GM(LOGISTIC)

NON- SUPERVISORY STAFF

ACTIVITIES PERFORMED BY MARKETING DEPARTMENT:

• Trucking order linking:- in RIL specific transporters are allocated to specific regions. For example; in Dahej local transporters are selected for the transporting activities. Thus, the local transporters are only allocated for the transport. They also check the actual materials with the ordered quality and other specification.

• Lot allocation:- goods are exported to the FIFO method.• Material type:- only prime grade material are used for the export• Preparation of material pick up note• Invoice generation• Quality certificate• Border gate pass• Lorry receipt• Documentation

Competitors of reliance petrochemicals

• Finolex, haliya, for the product PVC• GAIL (India)• MEG Indian glycol

Target Market & Shares:.

• It has 75% of market share in its types of product, while the rest covered by the Small vendors & private Company.

Human Resource Department

Work In HR Induction

Training and Development

Promotion

Transfer

Departmental inquiry (on job / off job)

Performance Appraisal

Wage and Salary

Grievance handling

Implementation of various statutory compliance

Personal development plan & succession planning

Employee Welfare activity

Employee retention / employee exit interview etc.

Media management

Inter department liaisons

Transportation

General insurance

Industrial relation

Recruitment & selection

Function of time office• In human resource management, time office plays an important key role. The main

function of time office is to maintain the details of the employees of the company. Time office maintains records like the In-time and out-time of the employees. It also helps in calculating the working hours of the employees in a factory and on the basis of that the salary of the employees are made. Reliance uses the finger print machine for daily attendance. The attendance card contains the following details.

• Employee name • Employee card number• In - time• Out – time• Authorize signatory• Upgrading leave with register• Maintaining overtime register• To display notice• Issue of leave card, see of card including balance of leave in the beginning of year• Induction & orientation of new comers with the organization, leave rules and

documentation requirement• Distribution of pay slip

Company leave policy: Work shifts:-Type of leaves DaysPersonal live 24

Sick live 10

Casual live 08

Region live 02

Study live -

Extra ordinary live -

Maternity live -

Accident live -

DP live -

Family planning live -

Sr. no. Shift Timing

1. General shift 8:30AM TO 5:00PM

2. First shift 6:00AM TO 2:00PM

3. Second shift 2:00PM TO 10:00PM

4. Night shift 1O:00PM TO 6:OOAM

DETAILS IN EMPLOYEES PERSONAL FILE:The employee’s personal file is maintained under register. It is not maintain in the computer. The employee’s personal file contains the following data.

• Application, address and telephone no fill up pre employment data form.• Birth date proof (L.C)• PAN no. & e-mail ID• Education certificate• Relieving letter (previous / present employer)• Experience letter• Salary slip (last company)• P.F. declaration form• Employee code• Confirmation letter• Medical fitness certificate• Service bond• Photograph 3 no. (for personal file I card, photo register)• Designation• Reference

Talent management:Talent management is identification and development process. It is defined as “talent management refers to the conscious and deliberate approach under taken to attract, develop and retain people with the capacity and capability to meet current and future organizational needs.

• Need of talent management:• Uninterrupted availability• Development opportunities• Grow in their careers• Talent pool• Leadership pipeline• Capable successors

CONCEPT OF WORKING CAPITAL• The working capital meets the short term financial requirements of a

business enterprise. It is the investment required for running day-to-day business. It is the result of the time lag between the expenditure for the purchase of raw materials and the collection for the sales of finished products. The components of working capital are inventories, accounts to be paid to suppliers, and payments to be received from customers after sales. Financing is needed for receivables and inventories net of payables. The proportions of these components in the working capital change from time to time during the trade cycle. The working capital requirements decide the liquidity and profitability of a firm and hence affect the financing and investing decisions. Lesser requirement of working capital leads to less need for financing and less cost for capital and hence availability of more cash for shareholders. However the lesser working capital may lead to lost sales and thus may affect the profitability.

OBJECTIVES OF THE STUDY:• Primary Objectives:• To study the impact of working capital management at RELIANCE INDUSTRIES Ltd.

• Secondary Objectives:• To analyse the gross & net working capital of the firm for last 5 years.• To identify the factors affecting working capital requirements of the

RELIANCEINDUSTRIES LTD. • To study the liquidity position of the firm.• To study the optimum level of current assets and current liability of company.• To determining the relationship between the current assets and current liabilities.• To study the various issues in working capital management with the use of some

ratios.• To study the important component of working capital management & receivables

management

RESEARCH DESIGN: Research has chosen a descriptive study to carry out a research to get in depth knowledge.

DATA COLLECTION METHOD Secondary data collection method: Company Financial Data Books Annual Report Internet Magazines RESEARCH AREA Research area is Reliance Industry Ltd. Dahej Manufacturing Unit.

PROJECT PERIOD This research study is 3rd June To 15th July.

LIMITATION RELEVANCY OF DATA: Data is not enough for working capital management and also time is limited for study. The main finance department is in Mumbai department but not available in Dahej department.

CASH AND BANK BALANCES ANAYSISYear 2014-15 2013-14 2013-12 2012-11 2011-10

Current account 1,002 996 740 875 590

Deposit account 10,554 35,607 48,792 38,709 26,530

cash on hand 15 21 15 14 15

Total Cash and bank balance

11,571 36,624 49,547 39,598 27,135

2010-2011 2011-2012 2012-2013 2013-2014 2014-20150

10000

20000

30000

40000

50000

60000

27135

39598

49547

36624

11571



INVENTORY ANALYSIS (Rs in cr)2014-15 2013-14 2013-12 2012-11 2011-10

Stores and Spare Parts

2,872 2,789 3,794 3,333 2,849

Raw and Packing Materials

18,974 23454 21,702 19,350 14,576

Work-in-Progress 5,209 6546 6,361 5,274 4,909

Finished Goods 9,409 10,071 10,819 7,944 7,376

Stock-in-Trade 87 72 53 54 115

TOTAL INVENTORY

36,551 42,932 42,729 35,955 29,825

2010-2011 2011-2012 2012-2013 2013-2014 2014-20150

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

29,825

35,955

42,729

36,955

29,825

TOTAL INVENTORY

TOTAL INVENTORY

1. Raw Material Conversion Period: Average Raw material Inventory

Raw material consumption period

Particulars 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Average R.M. Inventory

206.04 229.43 279.75 330.83 351.19

R.M. Consumption

8.96 12.75 18.65 20.68 16.72

R.M. Conversion Period

23 days 18 days 15 days 18 days 21 days

2010-2011 2011-2012 2012-2013 2013-2014 2014-20150

5

10

15

20

25 23

18

15

18

21

Raw Material Conversion Period

Work in Process Conversion Period: Average WIP Inventory

Cost of Production

Particulars 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Average W.I.P Inventory

131.02 121.32 159.5 175.03 150.03

Cost of Production per day

14.56 24.26 39.86 29.17 50.01

W.I.P Conversion Period


2010-2011 2011-2012 2012-2013 2013-2014 2014-20150123456789

109

54

6

3

Work in Process Conversion Period

Finished Goods Conversion Period:Average finished goods Inventory Costs of goods sold

Particulars 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Average Finished Inventory

431.265 875.65 1152.51 1032.275 1251.50

Cost of Goods Sold

5.90 8.51 12.01 14.96 23.17

Finished Goods Conversion Period


2010-2011 2011-2012 2012-2013 2013-2014 2014-20150

20

40

60

80

100

120

74

10396

69

54

Finished Goods Conversion Period

Inventory Conversion PeriodParticulars 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

R.M. Conversion Period


W.I.P. Conversion Period


F.G. Conversion Period


Inventory Conversion Period


2010-2011 2011-2012 2012-2013 2013-2014 2014-20150

20

40

60

80

100

120

140

106

126115

9378

Inventory Conversion Period

Total Inventory Turnover Ratio:Total inventory turnover ratio is concerned with the cost of goods sold and average inventory. Total inventory turnover ratio is shows how many times inventory is replaced during the year symbolically, Costs of goods sold (sales) Average Inventory

Particulars 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Inventory Turnover Ratio

4.32 times 3.71 times 4.29 times 4.52 times 6.59 times

2010-2011 2011-2012 2012-2013 2013-2014 2014-20150

1

2

3

4

5

6

7

4.323.71

4.29 4.52

6.59


Work in Process Turnover Ratio:Work in process turnover ratio is concerned with the cost of goods sold and average work in process inventory. Work in process turnover ratio shows how many times work in process inventory is replaced during the year. Symbolically, Cost of production

Average WIP Inventory

Particulars 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Work in Process Turnover Ratio

11.11 times 19.99 times 24.99 times 16.67 times 33.32 times

2010-2011 2011-2012 2012-2013 2013-2014 2014-20150

5

10

15

20

25

30

35

11.11

19.9899999999999

24.99

16.67

33.32

Finished Goods Turnover Ratio:Finished goods turnover ratio is concerned with the cost of goods sold and average finished goods inventory. Finished goods turnover ratio indicates how many times finished goods are replaced during the year. Symbolically, Costs of goods sold

Average finished goods inventory

Particulars 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Finished Goods Turnover Ratio

1.37 times 1 times 1.04 times 1.45 times 1.85 times

2010-2011 2011-2012 2012-2013 2013-2014 2014-20150

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

1.37

1 1.04

1.45

1.85



DEBTORS ANALYSISYEAR 2010-11 2011-12 2012-13 2013-14 2014-15

DEBTORS 15,696 16,939 9,750 9,411 5,315

2010-11 2011-12 2012-13 2013-14 2014-150

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

15,69616,939

9,750 9,411

5,315

DEBTORS

DEBTORS

STATEMENT OF WORKING CAPITAL

PARTICULAR 2014-15 2013-14 2013-12 2012-11 2011-10

CURRENT ASSETS

Inventories53,248.00 55,997.00 54,601.00 46,692.00 38,520.00

Sundry Debtors 5,315.00 9,411.00 9,750.00 16,939.00 15,696.00

Cash and Bank Balance 12,545.00 37,984.00 50,456.00 40,731.00 30,139.00

Loan and Advances 34,007.00 31,215.00 21,263.00 20,056.00 15,294.00

Total Current Assets (A) 105,115.00 134,607.00 136,070.00 124,418.00 99,649.00

CURRENT LIABILITIES

Liabilities127,261.00 90,653.00 84,943.00 69,488.00 67,671.00

Provisions6,946.00 4,736.00 5,088.00 4,824.00 4,956.00

Total Current Liabilities (B) 134,207.00 95,389.00 90,031.00 74,312.00 72,627.00

Net W.C(A-B) (29,092) 39,218 46,039 50,106 27,022

2014-15 2013-14 2013-12 2012-11 2011-10

-40,000.00

-20,000.00

0.00

20,000.00

40,000.00

60,000.00

80,000.00

100,000.00

120,000.00

140,000.00

160,000.00

105,115.00

134,607.00 136,070.00

124,418.00

99,649.00

134,207.00

95,389.0090,031.00

74,312.00 72,627.00

-29,092

39,21846,039

50,106

27,022

Total Current Assets (A)Total Current Liabilities (B) Linear (Total Current Liabilities (B) )Net W.C(A-B)

• The Working Capital position of the company is on fluctuating trend in last five years. In these five years it changes positively and negatively. Its show increase in 2010-11 and high increasing trend in year 2011-12 which are 50,106 . In last two years its gone in positive which is 46,039 in 2012-13 and 39,218 in 2013-14. Totally Net Working Capital show negative in last year in 2014-15 its saw nagetive.

• The working capital is reviewed regularly at the interval that is also monthly. The technique of fund flow statement is followed to review the working capital position. The highest investment is been had on the components of current assets of finished goods and debtors.

• For the raw materials trade credit are for 30 days and for packing materials 60 days. Salary is paid on last working day of month.

• The sources of short tome finance used by the firm are Trade credit and accruals, Bank finance, Working capital loans from financial institutions, Inter corporate deposit, Factoring.

• For the bank finance company use cash credit / bank over draft, purchase / discount bill, working capital loan, letter of credit.

• Cash and Bank Balance of the Company increase in 2010-11 To 2013-14 year but in Last year 2014-15 it decrease that is 12,545.

• The tools used for the inventory control is ABC Analysis. The method of inventory turnover analysis does the company use is to compare inventory turnover ratio with that of competitor. The company use ERP (SAP) as the computer system for inventory management.

• For credit evaluation for credit granting the firm focuses upon the ‘c’ i.e. character and capacity. The techniques used for credit evaluation is totally based upon past performance. The firm does not provide cash discount to the customer for early payments.

• Sundry debtors are not having a stable condition, its increase & decrease year by year.• Company show negative working capital for the last year only of the study due to decreasing in current

assets and increasing in current liabilities. After second year the working capital for the company positive continuously due to increase in CA & decrease in CL.

• The knowledge and experience that I have gained here was unforgettable and would surely be helpful for my further career pursuance. Here, by I conclude that, it was a great experience for me to undergo training at RELIANCE INDUSTRIES LTD. whereby I have leant about the company and various functions of the company.

• The study shows the overall performance of the company is satisfactory, up to some extent it’s not satisfactory. The company being mostly dependent on the working capital facilities. The analysis and interpretation of various data relating to working capital management helped to reach a conclusion that the working capital of the company was started to increase year by year, which is good for the company.

• Its show negative working capital in Last year. Its down in negative, it shows bad liquidity position. Working capital indicates that company has not the ability of payment of short term liabilities. Working capital decreases because of increment in the current liability is more than increases in the current assets. Company current assets were always more than requirement it affect on profitability of the company.

• The RELIANCE INDUSTRIES Ltd. is managing the WORKING CAPITAL well but in Last year its negative so I think there is still a scope for improvement, so from my point of view they should consider following points in order to manage the working capital more effectively:

• The company shows negative working Capital for Last years, so company has to try to improve their positive scenario. Reducing stock and increase in the average payment period can help this up to some extent.

• The company should take necessary measures to check the current liabilities.• The company liquidity position is satisfactory, so they have to maintain better liquidity

position to increase growth rate of the company.• The current assets should be managed more effectively so as to avoid unnecessary

blocking of capital that could be used for other purpose.• The Debtors Collection Period is increasing & decreasing year by year so I think they should

try to reduce the days required to collect payment from debtors by speeding up the collection from debtors, they can also use the method of cash accelerating like they can offer cash discounts to their customers and prompt billing.

• The Payable Deferral Period is increasing which is good for the company as they are able to delay payment to their suppliers, but still it can be improved by maintaining close relationship with suppliers.

• Short-term borrowings and trade payables are increase with large variance so company try to control and the net profit is increase year by year accept the first year.

• The Inventory to Current Asset Ratio of the company is good, but it can be maintained by keeping the inventory level optimum. The Company is using only one inventory control system i.e. ABC analysis, so from my point of view they should use more techniques like SOS (Seasonal Off-Seasonal) analysis the in order to control the inventory.

REFERENCES :• FINANCIAL MANAGEMENT -- KHAN & JAIN, TATA McGraw HILL• FINANCIAL MANAGEMENT -- I. M. PANDEY, VIKAS PUBLISHING • R. J. Lambrix and S.S. Singhvi, “Managing the Working Capital Cycle”, Financial

Executive, June 1979, pp.32-41.• Annual Report

• WEBLIOGRAPHY :• http:/www.ril.com• http://www.ril.com/getattachment/2fed525a-ed38-4e53-9f62-b7b800432700/Financial-

performance-for-the-quarter-year-ended-3.aspx• http://www.ril.com/InvestorRelations/FinancialReporting.aspx• www.financialdictionary.com

http://www.ril.com/getattachment/2fed525a-ed38-4e53-9f62-b7b800432700/Financial-performance-for-the-quarter-year-ended-3.aspx

http://www.ril.com/getattachment/2fed525a-ed38-4e53-9f62-b7b800432700/Financial-performance-for-the-quarter-year-ended-3.aspx

http://www.financialdictionary.com/