1

Date

Project on
EFFECTIVENESS OF TRAINING PROGRAM
OF
GRASIM INDUSTRIES LIMITED
Staple Fibre Division

MHAKAL INSTITUE OF TECHONOLGY & SCIENCE

UJJAIN
BATCH (2008-10)

Submitted To Submitted By
MR:-GAUTAM MUKERJI SOURABH DAVE

ACKNOWLEDGEMENTS
 2

I would like to thank MR:-GAUTAM MUKERJI

(General Manager-HRD) for granting me permission to do my training in
HRD DEPERTMENT.
MISS RIDI for their valuable time and constant encouragement which
help us carry out our project and complete it successfully.

I would like to thank Mr NAYAN, , these all member were help me

during my training. all member are very supporting they always help in
my learning during in training. I learn many thing in GRASIM.

Last but definitely not the list, would like express gratitude towards for
MHAKAL INSTITUE OF TECHONOLGY & SCIENCE
UJJAIN
Providing us with a platform that enabled to work on such Summer
Training in GRASIM that training and my Master of Business
Administration after complete my education. That will give me a good
platform to start my career in industry.
 3

DECLEARATION
I am Sourabh Dave here by declare that the present summer project
titled “EFFECTIVENESS OF TRAINING PROGRAM
” is based on work learn in GRASIM INDUSTRY and which thing I
learn in my college and indebtedness to other work. I have been duly
acknowledged at relevant places.

PROJECT GUIDE STUDENT

Prof:-Mrs. Harshita Soni Sourabh Dave

MITS
MITS
MBA- III SEM
Place: Ujjain

DATE:
 4

EXECUTIVE SUMMARY

Books are the treasures of knowledge and a theoretical base is pivotal for
understanding the realities of practical field. But, at the same time,
practical knowledge is crucial for having an insight into the
implementation of theory in corporate world.
With the privilege of an opportunity provided to us by Grasim Industry,
for the fulfillment of our purpose "bridging the gap between theory and
practical", we undertook one month summer training at HRD department
of Staple Fiber Division of Grasim Industries Ltd. Nagda. During this
TWO-month training, we conducted a study of project, about
EFFECTIVENESS OF TRAINING PROGRAM

Under the project EFFECTIVENESS OF TRAINING PROGRAM, first of all

we were provided with the annual report of two years to analyze, so that
we could get acquainted with the terms relating to the staple fiber
business, financial condition depicted by Balance Sheet and Profit and
Loss Account of the company, figure relating to import and export etc.
We were given the proposed cash budget and capital expenditure budget
after taking in to account assumption relating to credit period allowed,
credit period received etc., for all the department of V.S.F. Using the
financial statement, we then conducted a compare analysis of ratio of two
years, and on this basis of these, interpreted the financial position of
company.

We also determined the working capital operating cycle for the company,
in which we made of accounts payable period, inventory period and cash
cycle.
 5

COMPANY PROFILE
GRASIM Industries Limited, a flagship of the Aditya Birla Group, is
among India’s ten largest companies in the private sector in India in
terms of assets and sales. Grasim was incorporated on 25 August 1947 in
Madhya Pradesh before 10 days the country got its Independence. At that
time India was dependent on developed nation for its requirement of
many consumer goods and textile were one of the important ones.
Foreign Exchange earned from export of basic Raw Material was being
used to import value add consumer goods. GRASIM therefore took
decision of setting up a Rayon waving unit at GWALIAR in the year1948
based on imported Rayon. The unit started production of Rayon fabrics in
1950.In the Cellulose Fibre business Company has 21% Share in global
market

In addition to spun dyed fibers Company has significantly enhanced

special Fiber portfolio covering all generation of man made Cellulose
Fibre. It intent is to equally significant producer of fibre for non-woven
application. Company
So Company has embarked Brownfield expansion in India, Thailand,
Indonesia, and China, and a Greenfield project at Egypt.

In India a 63875 TPA capacity expansion is coming up at GRASIM

Staple Fibre plant in Kharach (Gujarat).Alongside the process of
obtaining regulatory approvals for a TPA Brownfield expansion at
Harihar (Karnataka).

Viscose Staple Fiber

In 1954 the company ventured into the production of VSF (viscose staple
fibre), a man made fiber used in textiles production. Since then Grasim
has continued to be India’s largest manufacturer of VSF-meeting over
80% of the country’s VSF requirements.

Grasim is also one of the world’s lowest cost producers of VSF – due to
its vertically integrated operations, producing most of its requirements of
two principal raw materials –caustic soda and rayon grade pulp. For the
year 1998-99, vsf accounted for over 30% of Grasim turnover.
 6

CEMENT DIVISION
Grasim is third largest producer of Grey cement in India (installed
capacity of 11.33 million MTPA) and is also South Asia's largest
producer of White Cement (installed capacity of 0.36 million MTPA). In
1998-99 Grasim consolidated its cement business by acquiring the
cement operations of Group Company Indian Rayon and by taking up
strategic stakes in two other companies. The consolidation and the
resultant economies of scale, improved logistic and operational synergies
have strengthened the company's position. The company's national
presence coupled with strong regional brands will allow it to improve
utilization of its existing cement assets.

CHEMICALS
As a backward integration chemical division was commissioned in Nagda
(M.P.) on 12th of Oct. 1972 to manufacture Caustic Soda, Chlorine and
its allied products. Initially a 100 TPD capacity plant was established
with De Nora, Italy's technology based on the mercury cell process and
there after in 1989 capacity was further enhanced to 350 TPD with two
independent cell houses. For gainful utilization of chlorine, as largest
merchant mercury cell process and there after in 1989 capacity was
further enhanced on 350 TPD with two independent cell houses. For
gainful utilization of chlorine, as largest merchant seller, the unit has
expanded its operation by forward integration in to production of SBP,
PAC and CSA.

Textiles
The business with which Grasim commenced operations - the Company's
main product is suiting fabric made from different blends of polyester,
wool, viscose and silk. Its key brands Grasim Gwalior and Graviera are
household names.

Sponge Iron
Under the diversification programme, the company has commissioned a
Gas based Sponge Iron Plant at Raigarh District in Maharashtra having a
capacity of 9, 00,000 MT per annum. This is a 100% import substitute
project.
Production of Sponge Iron during the year under review reached 5,
59,567 MT as compared to 6, 63,998 MT achieved in the previous year.
In order to ensure full capacity utilization and meet contingencies up to
26% shortfall in the availability of natural gas, the plant has been
upgraded to enable use of Naphtha as an alternate fuel.
 7

Viscose Staple Fibre

Grasim is India's pioneer in Viscose Staple Fibre (VSF), a
manmade, biodegradable fibre with characteristics akin to cotton.
As an extremely versatile and easily bendable fibre, VSF is widely
used in apparel, home textiles, dress material, knitted wear and
non-woven applications. GRASIM Fiber Plant with an aggregate
capacity of 270,100 TPA. The division's continuous efforts towards
developing new applications and superior quality VSF in terms of
feel, comfort, fashion and hygiene have paid rich dividends.
Grasim has earned prestigious awards for its innovative range of
textures and blends. Its zinc-free process to make viscose staple
fibre has been patented.

Nagda
Nagda is its largest unit producing a wide range of VSF to suit
customer requirements in terms of length, denier and colour and
also second and third generation fibres like Modal, Excel and
Solvent Spun fibres, respectively. Nagda is also the largest
producer of spun-dyed specialty fibre in the world.

Harihar
The Harihar unit houses facility for manufacture of both VSF and
rayon grade pulp, the basic raw material for VSF. The company's
Rayon Grade plant was the first in India to use totally indigenous
wood resources with in-house technology for producing rayon pulp
with an innovative oxygen bleaching
process to reduce the use of chlorine.

Kharach
The VSF plant at Kharach, set up in 1996, employs the most
modern technology giving it a competitive edge in the export
market.

Joint Ventures (JV)

Grasim has the following overseas joint ventures:

AV Cell and AV Nackawic in Canada

AV Cell supplies dissolving grade pulp to the Group’s VSF units in
 8

India, Thailand and Indonesia. AV Nackawic is being converted to

DGP facility to meet the captive pulp requirement.

Birla Lao Pulp & Plantation Limited in Laos

To further strengthen the backward integration in pulp, Birla Lao

has been formed as a JV with other associate companies for
raising captive plantations at Laos. This will provide a low cost
source for wood to meet future requirements of a green field pulp
plant in due course of time.

Birla Jingwei Fibres Company Limited in China

The JV with Hubei Jingwei Chemical Fiber Company Ltd. was

formed in 2006 for manufacturing VSF. Currently, this plant has a
capacity to produce 33,000 tpa.

This spread and scale of operations make the Group's VSF

operations very cost competitive. Moreover, vertical integration into
plantation, manufacturing of rayon grade pulp and horizontal
integration into production of principal raw material
required for VSF production, namely, caustic soda, intermediate
inputs namely CS2, sulphuric acid along with captive power and
steam generation facilities, further enhance its competitive edge.

Research & Development

Grasim has established a very strong R&D base covering different
stages of the value chain.

Grasim Forest Research Institute, Harihar is involved in R&D of

forestry. Birla Research Institute for Applied Sciences (BRI),
Nagda is involved in the development of different generations of
cellulosic fibres. Textile Research Application Development Centre
(TRADC) at Kharach, an NABL accredited Lab, is involved in
addressing research and development related to downstream
 9

textile value chain comprising various fibres, yarns, processing,

garments, etc.

With the capability to offer the entire range of cellulosic fibre under
the umbrella brand of “Birla Cellulose”, Grasim has positioned itself
as a dependable supplier of cellulosic fibres for “Feel, Comfort &
Fashion” across global markets. To
penetrate into niche market segments and to grow further, the
division has ventured into the production of high performance
viscose fibres aptly named Viscose Plus, High Wet Modulus Fibres
(Modal) and new generation Solvent Spun Fibres and Birla Excel.
The company has chalked out expansion plans,
which will increase the capacity by 95,000 tpa, including capacity
for producing specialty fibre.

Grasim is also the largest producer of Sodium Sulphate, a

byproduct of VSF manufacture. This chemical is widely used in the
paper and pulp, detergent, glass and textile industries.

Capacities at a glance
Division Capacity
Viscose staple fibre 270,100 tpa
Rayon grade pulp (Harihar) 70,000 tpa
 10

FUTURE STRATEGIES OF
GRASIM INDUSTRIES (FIBER)

Aditya Birla Group’s Grasim Industries is commercially launched its

third generation viscose fiber Excel. The company’s main viscose fiber
plant at Nagda in Madhya Pradesh has taken up trial production of the
new generation textile fiber intended to cater to the high-end fabrics
application. initially, the plant is likely to produce 10-12 tones of ‘excel’
fiber per day.

Premium fiber

The new fiber, after its viscose and model ranges, will be positioned as the
premium cellulose fiber that would be used for manufacturing of high end
apparels such as shirting or denim fabrics that are expected to carry higher
fabric strength and the bouncy look Mr Kaul and other top official of Grasim
Industry were in Tirupur where the ‘Birla cellulose’s fabric design studio’ was
inaugurated- the first one to be set up in south. The design studio, which will
have varied viscose /model fiber based fabric and garment sample, will serve
as a resource center for the Tirupur knitwear exporters. ”Since Grasim is
already working with several apparel brands and also fashion designers, the
sample displayed at the design studio can be easily identified as the latest
fashion trends for the benefit of buyers,

Research Center

In order to aid the domestic textile industries competitiveness Birla

Cellulose has set up its own textile research and applicant development
centre at Kharach near Surat at a cost of 35 crore.

This centre support Indian brands to perfect its product manufacturer to

achieve global standard.
 11

ADITYA BIRLA GROUP – A BRIEF PROFILE

The Aditya Birla Group is India's first truly multinational corporation. Global
in vision, rooted in values, the Group is driven by a performance ethic pegged
on value creation for its multiple stakeholders. A US$ 24 billion
conglomerate, with a market capitalization of US$ 23 billion, it is anchored by
an extraordinary force of 100,000 employees belonging to over 25 different
nationalities. Over 50 per cent of its revenues flow from its operations across
the world. The Group's products and services offer distinctive customer
solutions. Its 85 state-of-the-art manufacturing units and sect oral services
span India, Thailand, Laos, Indonesia, Philippines, Egypt, Canada, Australia,
China, USA, UK, Germany, Hungary, Brazil, Italy, France, Luxembourg,
Switzerland, Malaysia and Japan.

A premium conglomerate, the Aditya Birla Group is a dominant player in all of

the sectors in which it operates. Among these are viscose staple fiber, metals,
cement, and viscose filament yarn, branded apparel, carbon black, chemicals,
fertilizers, insulators, financial services, telecom, BPO and IT services. Globally
the group is:

:: The world’s largest aluminum rolling company

:: One of the biggest producers of primary aluminum in Asia
:: No.1 in viscose staple fiber
:: The third largest producer of insulators
:: The fourth largest producer of carbon black
:: The eleventh largest cement producer

:: The best energy efficient fertilizer plant

:: Among the world's top 15 and among India's top three BPO companies
 12

STAPLE FIBER DIVISION, NAGDA

The focus on Staple Fiber Division, Nagda is necessitated out of the fact
that my summer training was held at this place.

V.S.F. production commences at Nagda (M.P.) in 1954 near Ujjain city.

It is situated on a 150-acre site and is the largest in the world.

The company has its three plants located in India at Nagda in M.P. as
SFD, Kharach in Gujarat as Birla Cellulose and Harihar in Karnataka as
Grasilene Division with a combined installed capacity of 220,775 tones
per annum and two plants located abroad at Thailand as TRC and IBR in
Indonesia.

Nagda is only the largest producer of spun dyed and specialty fiber in
world.

Branded as 'Birla Viscose', it is positioned as a distinct and premium

viscose staple fiber in global market. A favorable change in bled ratio,
positioning V.S.F. at the premium end of the fiber market as 'Fiber for
Feel, Fashion and Comfort' are other step to take this business forward.

Grasim is also India's largest producer of Sodium Sulphate a by - product

of V.S.F. manufacture. This chemical is widely used in paper and pulp,
detergent glass and textile industries.
The Harihar unit produces Rayon Grade Pulp, the basic raw material for
V.S.F. production and V.S.F.

The V.S.F. plant at Kharach, set up in 1997, employs the largest state of
the art technology, giving it a competitive edge in export market.

COMPETITIVE POSITION
 13

As far as competition to V.S.F. is concerned, presently there is no other

producer of V.S.F. in India. As such, in the same product line, there is no
competition to V.S.F. But the competition to V.S.F. comes from
Polyester and Cotton, which are textile fibers and act as substitute to
V.S.F. The competition further gets accentuated because of the fact that
Polyester and Cotton are relatively cheaper.

MARKET SHARE
Grasim India's pioneer in viscose staple fiber, a man made, and extremely
versatile fiber with characteristics akin to cotton is easily blended with
other fabric. Today, Grasim is India's largest and lowest cost
manufacturer of V.S.F. - meeting over 90% of the country's requirement
and enjoying around 24% market share worldwide. The V.S.F. business
globally accounts for 11% of the group's turnover.

Mission
 To improve overall operating efficiency through continuous
improvement and innovative cost reduction.
 To strive for excellence in all spheres through WCM practices.
 To assure safe and environment friendly operations.
 To institutionalize internal and external customer delight.
 To focus on value adding HR practices

QUALITY POLICY
Grasim Industries Limited, Nagda is committed to manufacture quality
products to the satisfaction of its customers.
The company aims at continuous improvement of technology for higher
productivity, cost effectiveness and consistent quality of products. This
achieved by:
1. Dedicated efforts to build quality in the activities performed at all
levels in the company.
2. Adoption of quality management systems standards.
3. Continuous improvements through participate management and
human resource development.
14
 15

PROJECT OBJECTIVE
As we know the whole function of HR department depends upon the HR
Practices of the organization. The HR management is done according to the
HR Practices of the company. Which things to be done and which things
should not be done depend upon this only. It also helps the organization to
achieve the target of the organization.

The HR policies of the organization have been mentioned in the HR Practices.

All the rules & regulations for the employees have been also mentioned in
this. All the welfare of the employees’ processes is also mentioned in this.
So the study of the HR Practices means basically the brief study of all HR
functions in the organization. I believe the HR Practices is a vital part of an
organization, which helps the organization to achieve the goal of the
organization.

All companies are having their HR Practices but the company who is
having the best, is the most successful company among its competitors. So
the company can get success within its competitors by applying best, effective
HR Practices.

The main objective of the project is

1  T o understand the HR practices followed & Process of Performance

Appraisal

2 To know what are the uses of HR practices for any organization.
H
 ow these HR Practices help any organization to know its stand in
The market and to be competitive by implementing good HR Practices
for their employees

3 T o understand how the organization would achieve its goals by

implementing good HR Practices.

4 To understand the work culture of the organization.

16
 17

3. Training and Development

The needs of individual are objectively identified & necessary interventions are
planned for
identified groups, which get rolled out in a phased manner through training calendar.
The training and development program is charted out to cover the number of trainees,
existing staff
etc. The programs also cover the identification of resource personnel for conducting
development
program, frequency of training and development programs and budget allocation.
Training and
development programs can also be designed depending upon job requirement and
analysis.
Selection of trainees is also facilitated by job analysis.
The company has a strong focus on manpower training according to their
requirements. The
internal training department aims at improving the skill sets relevant to the work
profile of
employees.
This includes improving communication
Different skills
E-mail programming
Operation systems.
The design of the training program can be undertaken only when a clear training
objective has
been produced. The training objective clears what goal has to be achieved by the end
of training
program i.e. what the trainees are expected to be able to do at the end of their training.
Training
objectives assist trainers to design the training program.
IBSAR Navi Mumbai (satishpgoyal@yahoo.co.in) Page 34
Training Design-
The trainer – Before starting a training program, a trainer analyzes his technical,
interpersonal,
judgmental skills in order to deliver quality content to trainers.
The trainees – A good training design requires close scrutiny of the trainees and their
profiles.
Age, experience, needs and expectations of the trainees are some of the important
factors that
affect training design.
Training climate – A good training climate comprises of ambience, tone, feelings,
positive
perception for training program, etc.
Trainees’ learning style – The learning style, age, experience, educational
background of trainees
must be kept in mind in order to get the right pitch to the design of the program.
Training strategies – Once the training objective has been identified, the trainer
translates it into
 18

specific training areas and modules. The trainer prepares the priority list of about what
must be
included, what could be included.
Training topics – After formulating a strategy, trainer decides upon the content to be
delivered.
Trainers break the content into headings, topics and ad modules. These topics and
modules are
then classified into information, knowledge, skills, and attitudes.
Sequence the contents – Contents are then sequenced in a following manner:
• From simple to complex
• Topics are arranged in terms of their relative importance
• From known to unknown
• From specific to general
• Dependent relationship
Training tactics – Once the objectives and the strategy of the training program
becomes clear,
trainer comes in the position to select most appropriate tactics or methods or
techniques. The
method selection depends on the following factors:
IBSAR Navi Mumbai (satishpgoyal@yahoo.co.in
• Trainees’ background
• Time allocated
• Style preference of trainer
• Level of competence of trainer
• Availability of facilities and resources, etc
Improve performance
in) Page
lities ) 35
IBSAR Navi Mumbai (satishpgoyal@yahoo.co.in) Page 36
“Training & Development is any attempt to improve current or future employee
performance by
increasing an employee’s ability to perform through learning, usually by changing the
employee’s
attitude or increasing his or her skills and knowledge.”
MEA!I!G OF TRAI!I!G & DEVELOPME!T ACCORDI!G TO UTCL: -
The need for Training and Development is determined by the employee’s
performance deficiency,
computed as follows.
Training & Development Need = Standard Performance – Actual Performance
Training: Training refers to the process of imparting specific skills. An employee
undergoing
training is presumed to have had some formal education. No training program is
complete without
an element of education. Hence we can say that Training is offered to operatives.
Development: Development means those learning opportunities designed to help
employees to
grow. Development is not primarily skills oriented. Instead it provides the general
knowledge and
attitudes, which will be helpful to employers in higher positions. Efforts towards
development
 19

often depend on personal drive and ambition. Development activities such as those
supplied by
management development programs are generally voluntary in nature. Development
provides
knowledge about business environment, management principles and techniques,
human relations,
specific industry analysis and the like is useful for better management of a company.
The Training Inputs are
Skills
Education
Development
Ethics
Problem Solving Skills
Decision Making
Attitudinal Changes
IBSAR Navi Mumbai (satishpgoyal@yahoo.co.in) Page 37
Importance of Training & Development
Helps remove performance deficiencies in employees
Greater stability, flexibility and capacity for growth in an organization
Accidents, scraps and damages to machinery can be avoided
Serves as effective source of recruitment
It is an investment in HR with a promise of better returns in future
Reduces dissatisfaction, absenteeism, complaints and turnover of employees
Needs of Training
Individual level
Diagnosis of present problems and future challenges
Improve individual performance or fix up performance deficiency
Improve skills or knowledge or any other problem
To anticipate future skill-needs and prepare employee to handle more challenging
tasks
To prepare for possible job transfers
Training given on
Safety aspects
Behavorial aspects
Technical aspects
Communication skills
IBSAR Navi Mumbai (satishpgoyal@yahoo.co.in) Page 38
Identification of Training Needs (Methods)
Individual Training Needs Identification
1. Performance Appraisals
2. Interviews
3. Questionnaires
4. Attitude Surveys
5. Training Progress Feedback
6. Work Sampling
7. Rating Scales
Group Level Training !eeds Identification
 20

1. Organizational Goals and Objectives

2. Personnel / Skills Inventories
3. Organizational Climate Indices
4. Efficiency Indices
5. Exit Interviews
6. MBO / Work Planning Systems
7. Quality Circles
8. Customer Satisfaction Survey
9. Analysis of Current and Anticipated Changes
Benefits of Training !eeds Identification
1. Trainers can be informed about the broader needs in advance
2. Trainers Perception Gaps can be reduced between employees and their supervisors
3. Trainers can design course inputs closer to the specific needs of the participants
4. Diagnosis of causes of performance deficiencies can be done.
IBSAR Navi Mumbai (satishpgoyal@yahoo.co.in) Page 39
5. Talent Management
It is a holistic and systematic process, across the group. It is built on the work done so
far on
people processes, and has a Talent Identification and Talent Development Strategy for
all the 3
levels of management i.e. Senior, Middle & Junior Management. This is facilitated by
Development Assessment Center followed by Individual Development Plan, enabling
planned
succession and career management.
The talent management process includes HR process for
Recruitment,
Performance,
Compensation,
Succession planning,
Learning and other capabilities around self-service,
Analytics
IBSAR Navi Mumbai (satishpgoyal@yahoo.co.in) Page 40
Reporting.
With businesses going global and competition becoming intense, there is mounting
pressure on
organizations to deliver more and better than before. Organizations therefore need to
be able to
develop and deploy people who can articulate the passion and vision of the
organization and make
teams with the energy to perform at much higher levels.
Talent management is a key business process and like any business process takes
inputs and
generates output.
Talent management is a professional term that gained popularity in the late 1990s. It
refers to the
process of developing and fostering new workers through onboarding, developing and
keeping
 21

current workers and attracting highly skilled workers to work for your company.
Talent
management in this context does not refer to the management of entertainers.
Companies that are engaged in talent management (human capital management) are
strategic and
deliberate in how they source, attract, select, train, develop, promote, and move
employees through
the organization. This term also incorporates how companies drive performance at the
individual
level (performance management).
The term talent management means different things to different people.
To some it is about the management of high-worth individuals or “the talented”.
To others it is about how talent is managed generally - i.e. on the assumption that
all people have
talent which should be identified and liberated.
Talent management decisions are often driven by a set of organizational core
competencies as well
as position-specific competencies. The competency set may include knowledge, skills,
experience,
and personal traits (demonstrated through defined behaviors)
IBSAR Navi Mumbai (satishpgoyal@yahoo.co.in) Page 41
 22

OPERATING CYCLE PERIOD (Rs In Crore)

Particulars FY 2006 FY 2007
Debtors Collection Period (D)
Opening Book Debts 107..23 94.06
Closing Debtors 94.06 127.1
Average Debtors 100.65 110.58
Sales 1195.85 1333.83
Average Sales / Days 3.28 3.65
D = Average Debtors 100.65 110.58
Average Sales / Days
No. of days 31 Days 30 Days

Particulars FY 2006 FY 2007

Creditors Payment Period ( C )
Opening Creditors 94.19 89.69
Closing Creditors 89.69 104.41
Average Creditors 91.94 97..5
Purchases 606.83 697.73
Average Purchase / Days 1.66 1.91
C – Average Creditors 91.94 97.05
Average Purchases 1.66 1.91
No. of Days 55 Days 51 Days

Particulars FY FY 2007
2006
Operating Cycle Analysis
Raw material and Stores storage Period 22 36
Work-In-Progress Period (W) 1.1 1.15
Finished goods Storage Period (F) 26 11
Debtors Collection Period (D) 31 30
Creditors Payment Period 55 51
Operating Cycle Period (R+W+F+D-C) 25.1 27.15

]
 23

OPETATING CYCLE ANALYSIS (Rs In Crore)

Particulars FY 2006 FY 2007
I Raw material &Stores storage Period (R)
Opening Balance of Raw Material 29.90 41.72
Closing Balance of Raw Material 41.72 85.24
Average Stock of Raw Material 35.36 63.48
Raw Material Consumed p.a. 581.2 644.8
Average Raw Material Consumed / Days 1.59 1.77
R =Average Stock of Raw Material & stores 35.66 63.48
Average Raw Material Consumed /Days 1.59 1.77
No. of Days 22 36

Particulars FY FY 2007
2006
I Work-In- Progress (W)
I
Opening Balance of W-I-P 2.46 2.67
Closing Balance of W-I-P 2.67 3.24
Average W-I-p Inventory 2.57 2.96
Cost of Production 858.87 940.42
Average Cost of Production 2.35 2.58
R =Average W-I-P Inventory 2.56 2..96
Average Cost of Production /Days 2.35 2.58
No. of Days 1.1 1.15

Particulars FY FY 2007
2006
II Finished Goods Storage Period (F)
I
Operating Balance of Finished Goods 93.36 36.83
Closing Balance of Finished Goods 36.83 19.55
Average Finished Goods 65.10 28.19
Cost of Sales 915.50 972.56
Average Cost of Goods Sales /Days 2.51 2.66
R =Average Finished Goods 65.10 28.19
Average Cost of Good Sold /Days 2.51 2.66
No. of Days (F) 26 11
 24

COST SHEET FY 2006 (Rs. In crore)

Particulars Quantity Rs /T Amount
(MT)
(A) Cost of Production
1. Raw Material Consumed
(a) Pulp Cost 133262 29986 399.59
(b) Caustic Soda 72254 15480 111.85
(c) Sulphur 52529 5672 29.79
(d) Other Raw Material 39.95
Total 2508045 50238 581.20
2. Employee Cost 81.63
Less :-VRS -2.46
Total 79.17
3. Manufacturing Cost
(a) Stores & Spares 34.08
(b) Power & Fuel 127.09
(c) Packing Material Consumed 5.81
(d) Others Manufacturing Expenses 11.57

Total Manufacturing Expenses 178.52

4. Administrative &other Expenses 19.68
(Exclusive Selling Expenses)
Total Cost of Productions (1+2+3+4) 858.57
(B) Cost of Good Sold
1. Cost of Production 858.57
2. Decrease / Increase in Stock 40.21
Cost of Good Sold 898.78
(C) Cost of Sales
1. Cost of Good Sold 858.57
2. Selling Expenses 16.72
Total Cost of Sales 915.50
(D) Net Sales Realization
Net Sales 1195.50
Other Income 19.39
Net Sales Realization 1214.89
(E) Operating Profit 299.74
Less :-VRS -2.46
(F) PBIDT 297.28
Less :- Interest -35.42
(G) PBDT 261.86
Less :-Depreciation -29.18
(H) PBT 232.68
 25

COST SHEET FY 2007 (Rs. In crore)

Particulars Quantity Rs /T Amount
(MT)
(A) Cost of Production
2. Raw Material Consumed
(a) Pulp Cost 135672 32962 447.20
(b) Caustic Soda 73478 16720 122.85
(c) Sulphur 52886 4824 25.51
(d) Other Raw Material 49.27
3.53
Total 262036 54486 648.36
2. Employee Cost 91.63
Less :-VRS -2.93
Total 88.20
4. Manufacturing Cost
(a) Stores & Spares 33.88
(b) Power & Fuel 6.33
(c) Packing Material Consumed 125.87
(d) Others Manufacturing Expenses 11.47
Total Manufacturing Expenses 176.75
4. Administrative &other Expenses 27.11
(Exclusive Selling Expenses)
Total Cost of Productions (1+2+3+4) 940.42
(B) Cost of Good Sold
1. Cost of Production 940.42
2. Decrease / Increase in Stock 11.70
Cost of Good Sold 952.12
(C) Cost of Sales
1. Cost of Good Sold 952.12
2. Selling Expenses 20.44
Total Cost of Sales 972.56
(D) Net Sales Realization
Net Sales 1333.14
Other Income 9.31
Net Sales Realization 1342.45
(E) Operating Profit (C-B) 370.58
Less :-VRS 2.93
(F) PBIDT 367.65
Less :- Interest 44.11
(G) PBDT 323.54
Less :-Depreciation 33.12
(H) PBT 290.42
 26

CURRENT ASSETS Rs in crore

S.No. CURRENT ASSETS FY2006 FY200
1 INVENTOARY
I Raw Materials (include stores &other items used
in the process of mfg.) 26.6 -
(a) Imported 15.09 85.24
(b) Indigenous
II Finished Goods 36.86 19.55
III By Products 1.81 7.3
IV Process Stock 2.67 3.24
V West 20.21 0.388
VI Store Spare Part, Packing Material 17.86 7.4
Total Inventory 101.12 123.26
2 Sundry Debtors 94.06 127.10
3 Cash and Bank Balance
4 Loan and Advance
Unsecured Loans 1.23 1.41
Advance Receivable 25.09 30.70
Total Loan and Advances 26.32 32.11
5 Outstanding Expenses 0.40 1.37

TOTAL CURRENT ASSETS 222.00 283.96

 27

CURRENT LIABILITIES Rs In Crore

CURRENT LIABILITIES FY2006 FY2007
Sundry Creditors
Purchases Raw Material Packing, Fuel 36.05 25.11
Accrued Expenses 43.77 70.9
Statutory Liabilities 6.34 4.67
Other creditors 3.55 3.67
Total Creditors 89.71 104.35
Security and Other Deposit 4.00 1.60
Advance From Customers 7.57 7.00
Interest Accrued but not due for payment 3.19 5.39
CURRENT LIABILITIES 104.47 118.34
Less:- Provision for Current 0.04 0.04
104.43 118.30
TOTAL CURRENT LIABILITIES
 28

RATIOS
S.No Particulars FY2006 FY2007

LIQUIDITY RATIOS
1 Current Ratio
i Current Assets 222.00 283.96
ii Current Liabilities 104.43 118.30
Current Ratio (i/ii) 2.15 2.40

2 Acid Test Ratio

i Current Assets 222.375 283.18
ii Inventory 101.12 125.26
iii Prepaid Expenses 0.77 0.96
iv Current Liabilities 104.46 118.46
Acid Test Ratio [i – (ii +iii) / iv] 1.15 1.06

ACTIVITY RATIOS FY2006 FY2007

1 Inventory Turnover Ratio
i Gross Turnover 1913 2294.6
ii Average Inventory 104.43 118.30
Inventory Turnover Ratio (i / ii) 16.07 20.45

2 Average Collection Period

i Average Receivables 100.65 110.57
ii Total Sales 1192.46 1338.32
Average Collection Period (i * 365 / ii) 31 Days 30 Days

3 Receivables Turnover Ratio

Total Sales 1192.46 1338.32
Average Receivables 110.57 100.65
Receivables Turnover Ratio (i / ii) 10.78 13.29
 29

ACTIVITY RATIOS FY2006 FY2007

4 Payable Turnover Ratio
i Total Purchases 606.83 697.73
ii Average Payable 91.94 97.05
Payable Turnover Ratio ( i /ii ) 6.60 7.18

5 Average Payable Period

i Total Purchases 606.83 697.73
ii Average Payable 91.94 97.05
Average Payable Period (i *365/ii) 55 Days 51 Days

6 Working Capital Turnover Ratio

i Net Sales 1192.46 1338.32
ii Net Working Capital 115.98 162.72

Working Capital Turnover Ratio (i / ii) 10.20 8.22

7 Current Assets Turnover Ratio

i Cost of Good Sold 898.78 952.12

ii Current Assets 220.37 281.18

Current Assets Turnover Ratio (i / ii) 4.07 3.39

8 Fixed Assets Turnover Ratio

i Net Sales 1192.46 1338.32

ii Net Fixed Assets 200.51 257..27

Fixed Assets Turnover Ratio (i / ii) 5.94 5.20

9 Total Assets Turnover Ratio

i Net Sales 1192.46 1338.32

ii Total Assets 421.63 541.20
Total Assets Turnover Ratio (i / ii) 2.83 2.47
 30

VARIOUS DEPARTMENTS IN V.S.F DIVISION

SAP Production Accounts Quality

Information & Control
Technology Finance

Research
&Development
Human
Resource
Marketing Purchases
Administration Engineering
Services
 31

Work
environment
(ss)
JIT and stock
Waste reduction
(MUDA)
Elimination
High performance
teams:
BENCH MARKED
INNOVATIONS Equipment
Information RELIABLE effectiveness
system, LEARNING
technology ADAPTABLE
and cash flow WCM: CREATING
VALUE
Customer
driven:
internal and
Liaison and external
understanding Quality first:
SQM and best
practices
 32

ANALYSIS OF DATA

R A W M A T E R IA L F O R
P R O D U C T IO N O F 1 -T O N E F IB E R

10
8
6
4
2
0 P u lp C a u sti c so d a C s2 S u l p h u r i c S te a m
a c id
 33

Comperision Between Liquidity Ratio

2.5
2
1.5
1 2006
2007
0.5
0
Current Ratio Acid Test
Ratio

Assets Turnover Ratio

6
5
4
3
2006
2 2007
1
0
Current Fixed Total
Assets Assets Assets
 34

STRUCTURAL RATIOS

25

20.63

20

15
11.94
10.77 2006
2007
10
6.29

3.64 3.85
5
1.9
1.72

0
Current Asset to Cash to Current Receivables to Inventory to
Total Asset Asset Current Asset Current Asset
 35

TURNOVER RATIO

25

20

15
2006
10
2007
5

0
Inventory Working Recevable Payable
Capital

Average Period

60
50
40
30 2006
20 2007
10
0
Payable Period Collection Period
Unit in Days
 36

Production Comperission

800000
700000
Viscose Stapel Fiber
600000
500000 Grey Cement
400000 White Cement
300000
Sponge Iron
200000
100000
0
2003-04 2004-05 2005-06 2006-07
Tones

Note :- Grey Cement 1=100 in that Graph i consider 1unit

Of Grey Cement 100 unit due to long data in Grey Cement
 37

Turnover Analysis

800000
700000 Viscose Staple
600000 Fiber
500000 Grey Cement
400000 White Cement
300000
200000 Sponge Iron
100000
0
2003- 2004- 2005- 2006-
04 05 06 07
Tonnes

Note :- Grey Cement 1=100 in that Graph i consider 1unit

Of Grey Cement 100 unit due to long data in Grey Cement

Net Sales Comparision

15000

10000
Net Sales
5000

0
2003-04 2004-05 2005-06 2006-07
Tonnes
38
 39

Group companies
::Grasim Industries Ltd.
:: Hindalco Industries Ltd.
::Aditya Birla Nuvo Ltd.
::Ultra Tech Cement Ltd.

1. Indian companies
PSI Data Systems Ltd.
Aditya Birla Minacs Worldwide Limited
Essel Mining & Industries Ltd.
Idea Cellular Ltd.
Aditya Birla Insulators Ltd.
Aditya Birla Retail Limited
Bihar Caustic and Chemical Ltd.

2 International Companies
(a) Thailand
Thai Rayon Ltd.
Indo Thai Synthetics Ltd.
Thai Acrylic Fiber Ltd.
Thai Carbon Black Ltd.
Aditya Birla Chemical (Thailand) Ltd.
Thai Peroxide Ltd.

(b) Philippines
Indo Phil Textile Mills Ltd.
Indo Phil Cotton Mills Ltd.
Indo Phil Acrylic Mfg. Corp Ltd.
Pan Century Surfactants Inc Ltd.

(c) Indonesia
PT Indo Bharat Rayon
PT Elegant Textile Industry
PT Sunrise Bumi Textiles
PT Indo Liberty Textiles
PT Indo Raya Kimias

(d) Egypt
Alexandria Carbon Black Company S.A.E
Alexandria Fiber Company S.A.E

(e) China
 40

Liaoning Birla Carbon

Birla Jingwei Fibres Company Limited
Aditya Birla Grasun Chemicals (Fangchenggang) Ltd.s

(f) Canada
AV Cell Inc
AV Nackawic Inc

(g) Australia
Aditya Birla Minerals Ltd.

(h) Laos
Birla Laos Pulp and Paper Plant
(I) North and South America, Europe and
Novelis Inc.

(g) Joint ventures

Birla Sun Life Insurance
Birla Sun Life Asset Management Company Ltd
Birla Sun Life Distribution Company Ltd.
Tanfac Industries Ltd.

GROWING WITH PUBLIC AND ENVIRONMENT

 41

On he social front, a value-bases caring corporate citizen, the Aditya

Birla group inherently believes in trusteeship concepts of management. A
part of the group's profits are ploughed back into meaning full welfare-
driven initiatives that make a qualitative difference to the lives of
marginalized people. Carried out under the aegis of the Aditya Birla
center for community initiatives and rural development, it is spearheaded
by Mrs. Rajshree Birla.

The Aditya Birla Center for Community Initiatives and Rural

Development
For nearly 50 years now, the Aditya Birla Group have been and continue
to be involved in meaningful, welfare driven initiatives that distinctly
impact the quality of life of the weaker section of the society, surrounding
hundred's of villages in proximity to our plants spread all over India.
Village that are among the poorest.

Our works is carried out under the aegis of "The Aditya Birla Center for
Community Initiatives and Rural Development" - the apex body
responsible for development projects, spearheaded by Mrs. Rajshree
Birla, who is the chairperson of the center.

Corporate Social Responsibility Philosophy

They believe in trusteeship concept of management, simply put, in the
context of management Simply put in the context of social responsibility
it entails plugging part of the profits in to programmers, which results in
the larger good society,
Our legendry leader the late Shri Aditya Vikram Birla ingrained the
concept of sustainable live hood into it, in the year 2000. Mr. Kumar
Mangalam Birla, Our Chairman, spawned the concept of the triple-
bottom line accountability, which entail factoring three key aspects
economics success, environmental accountability and social
responsibility, for ensuring sustainable success.

In a holistic way, the interests of the entire group's stakeholders have

been textured into the group's fabric.

Thus the group takes its social responsibility very seriously, far
transcending mere chequebook philanthropy; corporate social
responsibility is accorded as much importance as a business project,
There fore, the group's social vision forms an integral part of the business
vision of its group companies. Each company has an ongoing one year
plan and a 3-year rolling plan, presented at annual planning and
 42

budgeting meet. All projects are assessed under the agreed strategy,
periodically monitored, measured against targets and budgets, with their
finding shared through out the group.

Birla's Vision
"To actively contribute to the social and economical development of the
communities in which we operate. In so doing build a better, sustainable
way of life for the weaker section of the society and raise the country's
human development index".
Mrs. Rajshree Birla

PROJECTION IDENTIFICATION MECHANISM

Over three decades ago, Milton Friedman, the Nobel Prize winner, said:
"There is one and only one social responsibility of business — to use its
resources and engage in activities designed to increase its profits." Prior
to him, in the early 1920s, John Keynes had said: "The business of
business is to do better business and transfer its benefits to its consumers
and stockholders."

Economic debates are increasingly influenced by societal issues, such as

health, education, and livelihood.
For us in the Aditya Birla Group, CSR is very much a part of the overall
business portfolio. All our group's community work is carried out under
the banner of The Aditya Birla Centre for Community Initiatives and
Rural Development, which I am privileged to lead. It is anchored by our
corporate communications team and we have 150 people working
exclusively for our social projects. We work in around 3,700 villages and
reach out to approximately two million people every year. Of these, more
than 60% live below the poverty line.

Their first need is to have access to water. Second, agriculture and other
means of sustainable livelihood. Third, health, and then, education. These
have, therefore, become the areas of our focus. Though I must confess we
are giving education an enormous thrust, because we feel it is only
through education that we can help them surmount their problems.
Annually, as a group, we spend approximately Rs 65 crore on our social
projects. This includes the running of 33 schools in the interiors and 16
hospitals.
Let me share with you what we have learnt.
 43

First, in all our teams, we have inculcated a strong commitment to

listening to the communities. So, all projects are planned in a
participatory manner, in consultation with the community, assessing their
basic needs, prioritizing these and then working on the project plan.
Implementation becomes the responsibility of the community and the
team. The projects are constantly monitored and village meetings are held
to get feedback.
Design real solutions for real people — this has been our second insight.
Sometimes we have found projects are designed for the 'feel-good factor,'
which is really of little benefit to the people. The ground realities are very
different. For instance, when polio immunization camps were conducted
in the villages, people from the deep interiors could not bring their
children, because they simply could not walk 15 km to the camp. So we
have begun arranging for vans and even bullock carts to bring the
children to the medical camps. This year, out of the five lakh children we
helped immunize against polio, nearly three lakh had to be brought from
their huts to the camp. Likewise in the mother-and-child care project,
where we are espousing planned families. At our unit in Jagdishpur, we
have set up 24 outreach clinics. These clinics are serviced by lady doctors
who provide ante-natal, post-natal and child care. Because we offer a
bouquet of real solutions, our team has been able to convince 18,000
women, belonging to four blocks, to go in for planned families.
Our third learning is that willingness to correct mid-course is critical as
well. Nine years ago, when we first set up our
centre and collectively measured what our 60
units were engaged in, we found there was no
cohesiveness. Each unit did a project in an ad
hoc manner. Through the centre, we knit all
the units and spelt out clear focus areas. As a
consequence today, all our units work in five
key areas. First, healthcare, inclusive of
mother and child care. Second, education. Third, self-reliance through the
engine of sustainable livelihood, including agriculture and women
empowerment. Fourth, infrastructure support. And fifth, espousing social
causes.
Our fourth insight is that creating an inclusive feeling is extremely
essential. When we began our project with Habitat for Humanity, which
aims basically to build houses for the rural poor, we ensured that villagers
contributed significantly to their own houses. In the houses built by
Habitat For Humanity with us, the villagers provide their land and their
sweat equity — another term for labor — and get an interest-free loan of
Rs 15,000. This has to be repaid in 15 years. Through this inclusiveness,
 44

SWOT ANALYSIS
STRENGTHS-
 World’s largest producer of V.S.F
 Leader in ready to wear branded apparel
 Cost effective
 Sound infrastructure
 Various manufacturing locations enable GRASIM to reach out major
chunk of market.

WEAKNESSES-
 Customers and market driven (orientation) process is slow
 Market area/coverage, sometimes disturbed by small producers

OPPORTUNITIES-
 Global expansion
 Continuous innovations, for example, ice touch fabric in 2002
 In India , the group is single largest producer of viscose filament yarn
 Demand for V.S.F is ever increasing because of its hygroscopic nature
which is ideal for tropical countries like India.
THREATS-
 Competition in domestic as well as global market, company is facing
competition with natural synthetic fibers like cotton, polyester, acrylic
etc.
 Scarcity of raw material , that is , wood pulp ( eucalyptus and bamboo
trees)
 45

 Threat of re-opening of small competitors operations.

RECOMMENDATIONS

Viscose and Grasim have long been synonymous. The overbearing

presence of Grasim Industries Ltd. in the staple fiber market has long
been acknowledged by the textile industry. Structural health of working
capital of the company is improving continuously. Based on my analysis
and observation, following areas requires attentions.
* Company's raw material storage period can further be reduced as it
blocks funds and company has to incur extra carrying cost.
* Stores and spared inventory holding time is also long which can be
controlled through proper planning and vigilance.
* Introduction of B-to -B, E-Commerce for exchange of documents
with supplies, clients and partners. B-to-B speed up the workflow
in the organization. A complete B-to-B transaction almost
eliminates the cost involved in paperwork and painting as a entire
procedure is in electronic format with due B-to-B the company can
save considerably in achieving.
In case of Export/Import, EDI (Electronic Data Interchange) can
be effective tool for transfer of data, invoice and to make payments, till
will not only reduce the lead time and inventory holding period, even cost
will fail.
Introduction of e-commerce will not only make company
competitive but also reduce inventory holding period and extra cost.
 46

RESEARCH METHODOLOGY

1. Preliminary Discussion
Preliminary discussions were held with members of Materials
management Department, Sales Dept. and Finance Dept. to
understand the accounting of creditors, debtors, assets, expenses
and inventory control, and cash flow procedure. The basic idea was
to get acquainted with the full procedure of accounting of various
assets and liabilities affecting balance sheet and CMA report.

2. Referring to Books
Books were also referred to have understanding of working capital
management and ratio analysis.

3. Referring to Documents
After all these learning and understanding, documents were
referred to namely balance sheet, CMA report. For better
understanding, invoices, journal vouchers, letter of credit, bank
guarantee and MIS reports were studies.

4. Data collection
For this study, secondary data are used available from various
documents. The following documents have assisted in the project :-
 Annual Report of the company.
 Annual compilation registers comprising detailed description
of profit and loss accounts and balance sheets of SFD
Nagda.
 Quarterly Balance Sheets and P&L Accounts.

5. Preparation of CMA Report.

Finally on the basis of preliminary discussions and referring to
documents. CMA statements were prepared and final reports were
analyzed through ratio analysis. Definitive views about the entire
gamut of working capital management were formed. The various
issues connected with working capital management were
understood.
 47

LIMITATIONS
The Study had a few limitations, which are as follows: -
1. The main constraint was that of time. Since orientation and projects
were held simultaneously, the resources were divided both in terms
of energy and time. This coupled with approaching deadlines put
pressure on this project. As a result in-depth study was not
possible.
2. As working capital management is a vast area for better
understanding the working capital management process at Grasim
required long discussions with the project guide, which were not
possible due to his busy schedule.
3. Limited study material on working capital management was
available.
 48

BIBLIOGRAPHY

1. Pandey, I.M. Financial Management. New Delhi:-Vikas Publishing

House, 2000.
2. Through Internet on website WWW.ADITYABIRL.COM
3. Working Capital Management (IGNOU Study Material). New
Delhi: Dee Kay printers, 1995.
4. Accounting and Finance for Managers (IGNOU Study Material).
New Delhi: M/s Gita Offset, Printers, 1995.
5. Annual Reports of Grasim Industries Ltd.
49
50
51
52