Cash Management Services

DECLARATION

I hereby declare that I have accomplished project report in the field of finance in Cash Management System of ULTRA TECH Cement is of my accurate work. This report is based on secondary data. I thanks who made so many to extend their helping hands to complete my job successfully. It has not been submitted to any other university or institute for the award of any degree/diploma etc.

TABLE OF CONTENTS

Serial no. 1

Topics Covered INTRODUCTION List of Directors Achievement of BCL-SCW & BVC Product Profile

Overview of Finance Department Functions and Responsibilities, Feasibility Study & Project Reports , Budgeting, Cash Flow Statement, Working Capital, Purchase, Pricing Policy

3 4

RESEARCH METHODOLOGY AND DATA COLLECTION

Cash Management System

BENEFITS OF CMS IN DIFFERENT AREA

CMS by SBI CMS by HDFC 5 6 7 8 SWOT Analysis

SCOPE AND METHODS ADOPTED RESULTS AND CONCLUSION BIBLIOGRAPHY

INTRODUCTION OF ULTRA TECH CORPORATION LTD.

Overview
Founded in1919 by the visionary industrialist Shri G.D. Ultra tech, at the outskirts of the Kolkata, ULTRA TECHjute manufacturing company Ltd. Was the first company of the ULTRA TECHIndustrial Conglomerate. Under the stewardship of his nephew Shri M.P. Ultra tech, the company diversified and expand its business interest beyond jute, to encompass cement PVC coated fabric, PVC floor covering and auto trims. After the demise of Late Mr. M.P. ULTRA TECHin 1990, his wife, Mrs. Priyamvada ULTRA TECHtook over as chairman of ULTRA TECHCorporation and continued to lead the company till her death on 3 July 2004. She was an entrepreneur of distinction strong business acumen and, under her leadership; the company crossed the Rs. 1,300-plus turnover mark. The company renamed ULTRA TECHCorporation Limited, to reflect the wide range of operation, is the flagship company of the M. P. ULTRA TECHgroup. The strategic focus of the company has been on steady growth by developing and assimilating technologies of tomorrow to manufacturing an ever widening range of value-added product, while striving for complete customer satisfaction in India and abroad. ULTRA TECHCorporation Limited is proud of safe work practice followed at all its factories and go downs. As an enlightened corporate citizen, ULTRA TECHCorporation Limited is keenly aware of social responsibilities too, and provide education and health care facilities for its employees, their families and the community at large. Its export in 2004-05 stood at Rs. 85.28crores. Over the year, BCLs business has grown from strength to strength.

Overview : Cement Industry

The cement division of ULTRA TECHCorporation Limited has seven plants, two each at Satna (M.P.) Satna Cement Works & ULTRA TECHVikas Cement, Chanderia (Rajasthan) ULTRA TECH Cement Works & Chanderia Cement Works, and Durgapur (W.B.) Durgapur Cement Works & Durga Works & Durga Hitech Cement and one at Raebareli (U.P.) the total capacity of these plants is 57.80 lakh tones. This plant manufacture varieties of Cement like Ordinary Portland Cement (OPC),43 & 53 grade, Portland Pozolanna Cement (PPC), Fly Ash based PPC, Low Alkali Portland Cement, Portland Slag Cement, Low Heat Cement and Sulphate resisting Portland cement.

The cement is marked under the brand name of ULTRA TECH Cement KHAJURAHO, ULTRA TECH Cement CHETAK, ULTRA TECH Cement and ULTRA TECHpremium cement, bringing the product under a common brand of ULTRA TECH Cement while retaining the niche identity of Khajuraho (for the OPC product of Satna), Chetak (for OPC product of Chanderia) and Samrat of blended cement, i.e. PPC & PSC, for all the units.

The division export large quantity of cement to Nepal and Bangladesh, under the brand name of Khajuraho, Samrat, Camel, Royal tiger. The special variety of SAMRAT cement, begun produced by the company is ideal for mass concrete. RCC / pre-stressed pre-cast structure (for reduced thermal crack), increased water tightness of concrete, increase resistance to Sulphate soils and aggressive water and increased resistance to alkali aggregate reaction beside corrosion resistance properties.

SCW, BVC and DVC have received the ISO 9001-2000 quality system certification, covering the entire range of production and marketing. SCW & BVC have received the IS / ISO 14001 certificate, an international recognition for Implementation of Environmental Management System BVC have got the Best productivity of Performance award from NPC during 1986-88, NCCBM recognized it for best in energy performance during 198687. It received National Safety Award for outstanding performance in achieving the longest accident free-period during 1994. In 1996, it received the runner cup under scheme 1 of National Safety Award, for the lowest average frequency rate accident. BVC has also received Fuller Energy Conservation Award as first for Lowest Thermal Energy Consumption (for group B category plants) for three consecutive years i.e. 1997-98, 199899, 1999-2000. SCW has been adjudged by NCCBM the Best In Energy Performance during 1993-94, 1994-95, 1995-96, 1997-98. It was the second best for Improvement in Energy Performance during 1996-97. SCW has also got Fuller Energy Conservation Award as first prize for Lowest Thermal Energy Consumption (for group A category plants) for three consecutive years i.e. 1997-98, 1998-99, & 1999-2000.

BCW & SCW have received the ISO 9001-2000 certification for Quality Management system, covering the entire range of production and marketing and also have received the IS / ISO: 14001 certification for BCW & CCW have bagged various awards from NCCBM. CCW have received the Best Productivity award during 1989-90 & 199394. NCCBM recognized it for Best Improvement in Thermal Energy Performance during 1993-94. It has won Lal Bahadur Shastri Memorial National award for Excellent Pollution Control Implementation for 2001-02 by International Greenland Society. BCW was

awarded Best Improvement in Energy Performance and Best Improvement in Thermal Energy Performance during 1992-93.

The Rajasthan Government gave Bhama Shah Samman it during 1996. VEC-IIT Madras chose Chanderia unit for excellence in Improving Machinery Health Condition during 1997. VEC, Chennai chose Chanderia unit for sustained implementation of condition monitoring and continued Machine Health Improvement Award during 2001-02. The Central Board awarded the Worker Education Trophy for worker education, Udaipur Ministry of Labor, Government of India for excellent contribution and Implementation of workers training during 1998-99 and again in 2001-02. BCW has received excellence award in Cement Sector from the Rajasthan State Council, Jaipur, during 2002-03.

The DWC plant has received IS / ISO 9001-2000 license for Quality Management system certification (accredited by road voor accredited Netherlands). The capacity of the 6,00,000 tons plant increased by another 10,00,000 tons, making it the largest plant in West Bengal. The new grinding unit, Durga Hitech Cement, has one ball mill of 165 TPH capacities. This environment-friendly project, commissioned in 2005-06, utilized thermal power station fly ash to produce PPC. DCW recorded 114% capacity utilization in 2004-05, emerging as the highest growing cement unit in the eastern region. Cement plant were set up in MP and Rajasthan and Grinding units in West Bengal and UP. Satna Cement Works ULTRA TECH Cement Work1 Durgapur Cement Works ULTRA TECH Cement Works Chittor Cement Works SCW-Conversion Plant Raebareli Unit 8 1959 1998 1967 1974 1982 1986 1989

FOUNDERS OF M. P. ULTRA TECHGROUP:

LATE. SHRI. M. P. ULTRA TECH ULTRA TECH BOARD OF DIRECTORS: MR. RAJENDRA S. LODHA (CHAIRMAN) MR. N. K. KEJRIWAL MR. HARSH V. LODHA MR. VIKRAM SWARUP CHIEF FINANCIAL OFFICER Shri P.K. Chand ACTING COMPANY SECRETARY Shri Girish Sharma AUDITORS

LATE.

SMT.

PRIYAMVADAJI

MR. B.R. NAHAR (E.D.) MRS. NANDINI NOPANI MR. PRACHETA MAJUMDAR MR. ANAND BORDIA

H.P. Khandelwal & company charted Accountants

Achievements

1.

SCW, BVC & DCW have got ISO 9002 quality certification, covering the entire range of production & marketing.

2. 3. 4. 5. 6. 7. 8. 9.

Best Energy performance award in 1995-96 & 1994-95. Second best improvement in energy performance award in 1995-96. Top export award in 1994-95. First prize in productivity to CCW in 1993-94. Special Export award in 1993-94. Best Energy performance award to SCW in 1993-94. Special export in 1992-93. Top export award for 1990-91 & 1991-92.

10. Second Best Performance in 1991-92. 11. Best Performance award in 1989-90.

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Product Profile

At Satna Cement Works & ULTRA TECH Vikas Cement the dry process of Cement production followed which is termed as a modern technology. The Entire Manufacturing process is controlled through a microprocessor based programmable logic control system to maintain a constantly uniform quality of Cement & high rate of production. The entire operation of plant is controlled in a single control room. SCW plant, which was initially, a plant using a wet technology for cement production was changed an to a dry one in the year 1989. These modern plant have also taken adequate core to prevent the environment policy & dust nuisance to its surrounding areas. These cement mills have electrostatic precipitator (ESP) installed to check dust emission & to ensure health hazard free atmosphere. Both the plant uses the global technology for the production of goods & consistent quality cement. The Stacker Reclaimer Technology & the alkali by pass system along with other sound technology make the manufacturing process of ULTRA TECH Cement Khajuraho a highly competitive & unique one.

The various varieties of cement produced at these plants are:

1) Ordinary Portland Cement (33, 43, 53 grade) 2) Portland Pozzolana Cement (PPC) 3) Low alkali Cement. 4) Sulphate resistant Cement. 5) Special Cement for Indian Railway Sleeper (IRS-T-40)

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The benefits of using high quality cement manufactured by the company are :

1) Ideal for mass concrete structure. 2) Reduce thermal cracks. 3) Increased water tightness of concrete. 4) Higher fineness, ideal for plastering. 5) Increased resistance for sulphate attack & aggressive water. 6) Increased resistance to alkali aggregate reaction. 7) Improved durability.

General Review of company

The year 2005-06 was the most successful year of the company since its inception in terms of financial performance. The company, maintaining stable growth, posted 7% increased in turnover to Rs. 1433.44 crores as compared to Rs. 1342.64 crores in the pervious year. The interest cost further reduced during the year Rs. 13.62 crores as compared to Rs. 21.69 crores in the previous year. Profit before tax recorded at 54% jump when up to Rs. 144.09 crores from Rs. 93.70 crores in the previous year. The company recorded the highest ever turnover, cash profit, profit before tax and profit after tax during the year. The management continued its effort to control and reduce cost across all the division at all levels. Profitability of the company improved due to increase in volumes, sales price realization and better operating efficiencies.

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Corporate Matters
Thermal power plant of 27 MW each for captive use at the companys units at Chanderia and Satna were installed and put to use during the year. These power plant are expected to reduce the power cost significantly and increase the operational efficiencies. The companys new unit: Durga Hitech Cement, adjacent to the existing plant at Durgapur, West Bengal was also commissioned for commercial production on December 2005. The company has taken up steps to enhance the capacity of clinker production at its plant in phases. The project once executed, will result in saving in fixed running cost and existing infrastructure like railway siding and power plant will also be used optionally. Effort to shift Soorah Jute Mills to Ultra techpur from heart of Kolkata city for economic viability, operational efficiencies and environmental issues are continuing. 24

13

OVERVIEW OF FINANCE DEPARTMENT OF COMPANY

Overview
As I was working in finance department in ULTRA TECHCorporation Ltd. So it is important to give brief overview of what are the function and working of a finance department in cement industry. Mainly in the manufacturing industry all department are closely integrated with finance department and its important to discuss its functioning related to various department.

Functions and Responsibilities

Functions and responsibilities of the finance and accounts wings include the following.

1.

Determine the financial resources required to meet the corporation operating and capital expenditure program.

2.

Forecast how much of there of these required would be met by internal generation of funds by the corporation and will have to be obtained outside the corporation.

3. 4.

Develop the best plan to obtain the external funds needed. Establish and maintain the system of financial control governing the allocation and use of funds.

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5.

Analysis of financial result of all the operation reports the fact to management and make recommendation concerning future operations.

6.

Carryout special studies with a view to reduce cost improve efficiency and profitability.

The above are dealt with in detail here under.

Feasibility Study and Project Report

In regards capital expenditure relater to new project or expansion feasibility studies and details project report are to be prepared by the management and the financial wing to ensure should examine these reasonable profits. The financial resources for meeting the expenditure would be available.

Budgeting
Long term operating cornering period of 10 years indicating the likely profit loss earned during period. Preparation of long term capital expenditure budget covering a period of about 5-10 years and advice the management in regards to the timing of the incurrence of capital expenditure. Capital expenditure budget in regards to the capital expenditure that is expected to be incurred during the year. The preparation of the arrival-operating budget. The budget returns that flow out of the comprehensive budgetary system in operating.

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Cash Flow Statement:

Baled on the long term budget the financial wing would prepare a cash flow statement indicating the inflow and outflow statement indicating the inflow and outflow of cash during the period similarly it will also prepare a detailed monthly cash flow statement for the year based on the annual budgets.

Working Capital
It will also make an assessment of the total working capital and working capital requirement for the fiscal year and advice the management regarding the sources of financing the working capital requirement.

Purchase:
Finance wing will be associated on a matter relating to purchase of equipments, machinery etc. it would also lay down suitable procedure for purchase to ensure that adequate control is exercised over such purchase and that there is no un-economic purchase.

Pricing Policies:
It will also advice the chief executive on pricing policies taken by the organization in regards to the selling price of power inter department issues charging of material to job contract.

Service Condition:
It would advice the management on all the service matter having financial implication such as scale of pay dearness allowance, bonus, gratuity etc.

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Accounting Matter
General finance and accounts being is in charge of allows, budgets and internal audit of the corporation. It shall maintain adequate records of assets n liabilities and transaction of the corporation see the adequate internal audits there of the correct and regular made and recommended and enforced duly approved method and procedure where by the business of the corporation with the maximum safety efficiency and economy.

It shall examine all proposal disbursement from the corporations fund and approve in the advance payment required take made in accordance with the prescribed administrative and accounting requirement and procedures.

Stores Account:
Finance and account wings are responsible for the maintenance of adequate system of stores accounts. It would assists the management in determining the minimum, maximum and ordering levels of various items and also be responsible for the introduction and for operation of the ABC method of control with a view to reduce. The inventory holding is the optimum level. It will also be responsible to ensure that the verification of stocks of various items of stores is carried out by ensuring. 1. That physical stack of selected items is verified everyday. 2. That each item of stock is verified at least once a year. 3. That the surprise element in regard to stock verification is maintained. 4. Internal audit: it will be organized on effective internal audit department and will process the report submitted by the internal audit and place the same before the chief executive. 17

5. Annual accounts and audit: it will ensure that the annual accounts are prepared in time according to provision of law. It will attend to all matters relating to the statutory audit and the audit by the controller and audit general. 6. Tax matters: it will be responsible for attending to all tax matters relating to the corporation.

Special Studies
It may take up from time to time special studies particularly with reference to economics in administration and other overhead expenditure and such other areas, which have a bearing on the profitability of the corporation. It may also take up for study the administrative, accounting and other procedures prescribed with a view to. 1. Eliminate unnecessary movement of paper and 2. Reduce clerical work.

Reporting
The following reports are taking submitted to the management 1. Resource employed. 2. Summary of the cash flow for the quarter. 3. Forecast of the cash flow for the next quarter. 4. Capital expenditure incurred during the quarter compared with sanctioned amount, Budget estimate etc. 5. Any other report prescribed by the undertaking relating financial matters.

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Head Office Finance & Accounts wing.

1. Establishment 2. Bills & banking 3. Management information systems & financial Concurrence. 4. Assets accounts. 5. Book keeping and compilations. 6. Budget and finance.

RESEARCH METHODOLOGY AND DATA COLLECTION

Data collection
All the data are collected by the secondary sources most of the data collected by the website of the company and the news bulletin as well as the magazine of the company. The some data about the CMS services and the terms and the condition and the adoption of that service are collected by the meetings of HDFC and SBI bank managers and the detailed notes are prepared with help of the web site of the banks which provides the cash management products

Research process
First I select the topic of report and doing the survey of the company with help of company site then identify main problem of preparing report by the secondary resources of data after that I was work for the selection of all fact data then designed a suitable project report regarding the available recourses of data then collect the sample of data and then analyzed all the collected data with sound mind and prepared a report honestly. Tentative selection of the topic of research. 19

Initial survey of literatures. Defining or selecting the research problem. Extensive literature survey. Specification of the information required: Formulating the hypothesis Design of the research project. Sample Design Collection of data. Execution of the project. Analysis of Data Testing the hypotheses. Reviewing at generalizations. Preparation of the report

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Making The Decision

CASH MANAGEMENT SERVICE

Overview of cash management service of ULTRA TECH

HDFC provides cash management services to corporate clients . (Funds Available in Shortest Time) from 198 collecting location across the country with pooling facility at different branches as per client choice, which is physically connected to out central hub at Mumbai. H.D.F.C.s product is aimed at enhancing liquidity, reducing costs and providing opportunities for profit for their client. The product is technology-driven and the entire network is linked through VSATs / leased lines. Under H.D.F.C., funds are transferred directly to the client main account (at any one or more of the 65 pooling centers) from various collection centers on the same day that they are cleared at the centers. H.D.F.C. also offers disbursement / payment services through a separate debit transfer module to facilitate payment at various expenditure centers & plant location. On a daily basis detailed MIS reports, covering location-wise presentation, location-wise credit and cheque returns, are made available to corporate head offices as well as to the local offices / representatives at the various centers of the client through Email. H.D.F.C. also customize the MIS report to suit the clients requirements. Daily / monthly reports are sent to client through E-Mail. Full reconciliation support is provided centrally from H.D.F.C.s hub at Mumbai through a dedicated team. With a huge volumes routed through this product, H.D.F.C. is the acknowledged leader in the collection services, which basically at collection of sales proceeds electronically for companies having a wide market network spread all over the country.

21

Flow Chart of Transfer of Funds from H.D.F.C. to ULTRA TECH Corporation.

H.D.F.C. Allahabad

H.D.F.C. Varanasi

H.D.F.C. Delhi

H.D.F.C. Patna

H.D.F.C. Main Branch Mumbai

Raibareli Division

Satna Cement Division

Main Branch Kolkata

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What is CMS?
Cash Management Service is a service provided by bank to corporate clients for collection & payment of funds. Cash Management Service is the process of optimizing receivable and Payables while ensuring predictability in the cash flows CMS was introduced by corporation bank in 1982. Cash Management Product is the service provided by banks for Collection/payment keeping following targets: Speedier movement of funds resulting in faster access to funds Cost Saving MIS Support for Internal Control, Bank Reconciliation & Proper Fund Planning

Why OPT CMS.

SCW is a cement manufacturer who sells their cement through their

depot network at various locations situated in MP, UP, Bihar, Jharkhand, Uttranchal & West Bengal. Against above sales, funds are collected in the form of Cheque/ Demand Draft.

Traditional Approach of CMS.

In the earlier time for payment and collection. We used to use Cheque and DD that was. Time taken

23

 Costly Unsecured & Risky

Feature of CMS

Features of CMS

Collection Management

Payment Management

Fastest movement of funds. Reducing transit float to the minimum. Competitive cost MIS Support for proper fund planning

Creditors Suppliers

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Procedure of CMS

Our representatives at Depot presents cheques/demand drafts with the dedicated CMP collection branches at various locations.

Collection branch transmits summary of instruments presented to CMP Centre, Mumbai for onward transmission to clients office for MIS purpose

On completion of clearing, confirmation of credit and details of cheques returned are sent to CMP Centre, Mumbai for crediting \ debiting clients account.

Details of credit/returned instruments report transmitted to clients through CMP Centre, Mumbai

Process of CMS

CMS Centre Mumbai Representative of Depots Message MIS Reports to Satna Credit customers account at Pooling Branch at Satna H.D.F.C. Branch Instruments to clearing section

25

Types of Instruments
1. General clearing 2. local clearing 3. On branch clearing 4. Other branch clearing

Drawn on the Branch Credited on the same day High Value Clearing Credited on the same day General Clearing - As per norms of clearing Outstation Cheques/ Demand Drafts are however not accepted under this system

MIS SUPPORT
Location wise Instruments Presentation Report Location wise Credit Report Client Wise Instrument Return Report

REPORTS
PRESENTATION REPORT DEPOSIT REPORT RETURN REPORT

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PRESENTATION REPORT SPECIMEN

Cheque No

D e p o s it T o ta l In s tru m e n t A m o u n t/ B a n k / D e p o s ito r D a te G e n e ra l C le a rin g C h e q u e s J a b a lp u r C ity 3 3 ,4 2 6 .0 0 1 016638 2 8 .0 7 .0 3 U B /I S h a h S to re L o c a l C le a rin g (S B I) C h e q u e s J a b a lp u r C ity 648529

T o ta l D e p o s it A m o u n t.

3 3 ,4 2 6 .0 0

1 ,0 3 ,7 9 0 .0 0 S ta te B a no f In d ia P e rfe c t k / C em ent

1 ,0 3 ,7 9 0 0 .0 C o n td 2

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CREDIT REPORT - SPECIMEN

Client : BIRLA CORPORATION Branch : ALLAHABAD ------------------------------------------------------------------------------SBI BCL PRESENT. VALUE -------INSTRUMENTS-----REF. REFERENCE DATE DATE TOTAL AMOUNT REMARKS ------------------------------------------------------------------------------17253 000597 23/01/2007 23/01/2007 3 1,20,000.00 Paid 19414 000591 22/01/2007 23/01/2007 1 1,20,000.00 Paid 19415 000592 22/01/2007 23/01/2007 1 3,77,000.00 Paid ------------------------------------------------------------------------------Location Total .. .. .. .. 5 6,17,000.00

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CLIENT WISE INSTRUMENTATION RETURN REPORT - SPECIMEN

D ep o s it Jab alp ur

D ep D t

In s t.N o

In st. D t.

In st.Am t D raw ee B an k

D ra w e e B ra n ch

O N B ra n ch C h eq u e s 0071 026 892 .07 .03 28 R eason for R etn

0354 18

23.0 7.0 3

5 0,0 00.0 0 SBI D evA genc y 5 0,0 00.0 0

Jab alp ur

Ins ufficient funds

T ota l R eturns for the Location P roduc t W ise S um m ary P roduc t O n B ranch

T ota l In strum e nt 1

T o tal A m t R etu rned 50 ,000 .00

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BENEFITS OF CMS IN DIFFERENT AREA

TO CUSTOMERS-:

Better Cash Management Regular Computerized MIS/Reports Instant Liquidity Faster and Higher turnover Higher Income and Profitability

TO INDUSTRY-:

Time saving Proper fund planning Cost saving

TO BANK

Fully control of own a/c Transecting. Reduce idle fund Optimize return Time and cost efficient Geographical coverage

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CMS SERVICES PROVIDED BY SBI.

SBI has the banking network of over 9,000 branches and this enables it to deliver the financial solution at your suppliers doorsteps, across the span of the country.

SBI - F.A.S.T CASH MANAGEMENT PRODUCT - STATE BANK OF INDIA

STATE BANK OF INDIA provides cash management services to Corporate Clients under the brand name SBI-FAST (Funds Available in Shortest Time). SBI FAST ensures optimization of collections and payouts while ensuring predictability in the cash flows. SBI FAST ensures getting Funds in time, quick transfers, account reconciliation, easy disbursements, controlled processes and customized MIS. SBIFAST eliminates the inherent delays of the traditional funds transfer mechanism and enhances liquidity to ensure optimum planning and utilization of funds. Banks are also offer File upload facility on our web based portal and are in the process of providing complete Host to Host facility

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Unresolved Issues with SBI System

No remittance facility is available (other than traditional system like TT) at locations where SBI does not have CMP facility. This results into delay in collection of funds at Satna and company has to reimburse DD charges to the parties which has been about Rs. 67 Lacs during 2006-07 Even SBI with CMP facility does not have trained & experienced man power at some of the locations which results in delay

CHARGES OF SBI-:
REMOTE LOCATION ADVANCE LOCATION 50 PAISE 20 PAISE

Remittance Charges-: (Paise per thousand)

Category A : 3 Paise

Category B :

5 Paise

Category C :

10 Paise

Category D :

15 Paise

Category E :

25 Paise

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Categories are based on our turnover and infrastructure available at concerned branches of the banks

(Negotiation of Remittance Charges by our Head Office is under process)

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Offers of CMS by H.D.F.C.

Guaranteed transfer of collection proceed on the same day the funds are

cleared at CMS collection center located all over the country to the central account of corporate at a designated pooling center. No accounts need to be maintained at the collection centers.

Day-end-Balance sweep of balance in operative account maintained at CMS

centers to facilitate local disbursement.

Transfer of Day-end-Balance in collection accounts maintained at various

CMS centers to main account.

Customize credit to clients account at Mid-day and end-of-the-Day.

Customize MIS on collection across the country, including forecast of

expected credit, through E-Mail on the same day.

Centralized Reconciliation Statement.

Benefits to ULTRA TECHCorporation with CMS

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Centralized Control of cash Cost Reduction Enhanced Liquidity Interchange of Information between treasury & operating units Reduced excess cash balance Cash forecasting & scheduling Effective control over disbursement Efficient Financial Management

H.D.F.C. HANDLES

COLLECTION

Collection of instrument tendered at various CMS collection center. Depending on the clearing practices prevailing at the various center (i.e. Day-0, Day-1, Day-2), credit is offered, as mandated, to the clients main account at the pooling center the same day as cleared.

Instrument can be deposited at the collection centers either by the dealers/distributors/representatives or through couriers as per the arrangement.

Client is not required to open any account at the center from which the facility is availed.

Collection of instrument is High Value Clearing / MICR clearing, drawn on local branch and drawn on other local HDFC branches. 35

Disbursements (Debit Transfers)

Debit balances in operating accounts, where withdrawals are permitted up to a prefixed daylight limit, maintained at CMP centers transferred to the main account at the end of the day.

The facility dispenses the use of allocated limits and thereby ensures better control, for the client, over debits.

Customized MIS

Daily presentation / credit / return reports provided to the representative /

dealer at the local center. Daily location-wise / product-wise presentation / credit / return report

provided to the corporate office through E-Mail. Customized weekly / fortnight / monthly consolidated reports in soft-form,

compatible with the client accounting system, through E-Mail / Floppy / CDROM as required, for easier and speedier reconciliation. Daily credit forecast report though E-Mail. Uncluttered / Pure MIS is our USP since the product is entirely through

HDFCs own network.

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Pricing
The pricing of the product is competitive but the volume driven and depend on

the location, type of the facility and amount of individual instruments.

Special Features
Exclusive CMP Cells at collection centers. Large network of collection center (Metro / Urban / Semi Urban / Rural) spread throughout the country linked up through VSATs / Leased lines. The collection network currently covers 320 locations, being expanded on a continuous basis, based on clients requirements. Uncleared funds facility. Mid-day credit from high value centers to selected clients. Option of pooling at any fully computerized branch of the bank. No correspondent arrangement, collection are handled exclusively through our own network and hence cost effective. Facility for courier pick-up of instrument from client local office. Centralized dedicated client support desk at CMS center, Mumbai for single point reconciliation support, prompt attention to your queries. Scope for unlimited expansion of collection network though SBI branches.

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List of Collection Centre:

Sr.
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21.

LOACATION
DEORIA BAREILLY VARANASI FAIZABAD JABALPUR GONDA ALLAHABAD GORAKHPUR LUCKNOW KANPUR JHANSI PATNA SULTANPUR BANDA RAMPUR AZAMGARH MOTIHARI MUZAFFARPUR GWALIOR BAHRAICH REWA

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C.M.S. Charge
LOCATION Kanpur Lucknow New delhi Allhabad Bareilli Patna Azamgarh Bairach Banda Deoria Faizabad Gonda Gaya Gorakhpur Jhansi Mirzapur Muzzaffarpur Sultanpur Varanasi Jabalpur Rampur Gwalior Katni Motihari C.M.S.charges(Paisa per 1000) Nil Nil Nil Nil Nil Nil 0.45 0.45 0.45 0.45 0.45 0.45 Nil Nil Nil 0 .45 Nil 0.45 Nil Nil 0.45 Nil Nil 0.45

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NOTE: if any location neither H.D.F.C. BANK NOR CO-ORDINATOR & instrument collected &cleared through by correspondent bank then C.M.S. CHARGES WILL BE APPLY RS.2PER THOUSAND.

HDFC Vs SBI REGARDING CMS

Sr HDFC . 1. 2. SBI CMS charges are nil where HDFC CMP charges apply by bank where branch are available. HDFC provide the service SBI branch are available. by SBI do not provided the service

correspondent bank where HDFC where SBI branch not available. 3. 4. branch not available. HDFC service time is more than SBI service time is less than HDFC. SBI. In CMS report of HDFC with A/c In CMP report of SBI only A/c no. no. & date, Party name and time is & date is mentioned. also mentioned.

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CONCLUSION OF CMS

The CMS service has mostly provided by the HDFC,SBI,IDBI,and ICICI banks there are two side of benefit by cms first to the company which adopted the cms services and second to the banks which gives the better services to customer as a remittance charges . Due to the cms the float of the money are minimized which gives the directly profit to the company as an investment return the cms also provides some credit to the company without interest for a period of time which increase the capital of compny for the production The cms services support to the MIS which help to information about clarification of instrument on this basis of it company can prepare reports like presentation credit and return reports which identified the cash flow and also help to the investment daily basis.

SWOT ANALYSIS OF CMS-:

STRENGTH-

Good dealers network. Attractive services. Ready availability. It help in forecasting.

WEAKNESS-

I Probability of dishonored cheques. n at par cheques the banks charges is 50 paisa per 1000.

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 Late transaction by banks.

OPPORTUNITIES-

IF THE SBI PROVIDED CMS IN BOTH LOCATION (REMOTE & ADVANCE) THEN THE NO. OF CUSTOMER WILL BE INCREASES.

THREATS-

SOME OTHER SERVICES RTGS SERVICE REAL TIME GROSS SETTLE NEFT SERVICE NATIONAL ELECTRINIC FUND TRANSFER

SCOPE AND METHODS ADOPTED

Overview

First of all understand the problem of a company one should analyze the process in which problem lies. So first of all we will study the supply chain or logistics part in accordance with sales of ULTRA TECHcorporation and then we will study the inflow of funds from outside the company to within the company after the sale of cement.

Flow diagram of Sales of Cement from BCL to its Distributor and inflow of funds from distributor to BCL through CMS 42

Main Branch Mumbai HDFC at Delhi HDFC at Panna

Satna Cement Division

Depot Patna

Depot Delhi

Distributor A

Distributor B

Distributor C

Distributor D

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In the above given diagram first of all manufacturing and packaging of cement is done in Satna Cement unit of ULTRA TECHCorporation Ltd, than that cement is transferred from Satna cement works to respective depot through rail or road routes as per convenience. Then whomsoever distributor want to purchase cement from these depot has to be registered at these depot and they have to give some required deposit at these depots. Then whenever these distributor need their required amount of cement has to make payment in advance. If distributor does not belong to that particular city at which the depot is located then only DDs are accepted from those distribution and other local distributor can make the payment through local bank cheques. Now these cheques and DDs are collected at different depot level and deposited in local H.D.F.C. under CMS for clearance. Then if the cheques / DDs are cleared amount is transferred from these local banks to H.D.F.C. main branch Mumbai and unpaid cheques / DDs are returned back and depots are intimated for not cleared cheques / DDs.

Problem Definition and Details

In an industry mobilization of funds is very much important, that also when funds run in millions or rupees. Every company want to complete its working capital lifecycle as fast as it can, so to do that they make credit purchase from these suppliers whereas they takes advances from there customers. Taking credit from there suppliers whereas they takes advances from there customers. Talking credit from supplier does create a problem but making a customer payment in advance as he also a businessman creates problem areas. From customer point of view he would also like take to take some credit from the company but as per BCLs rule cement is only supplied after the payment is made. So taking advance

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from customer makes him to find the loopholes of the company so he can take advantage and make some delays in payments. Due to which following problem arises.

Problem Statement 1

Some times when distributor have to make payment in advance and they dont have sufficient funds, they draws the cheques of required amount and deposit it with depot and get the supply of cement. When these cheques are sent for clearance they become unpaid and return back from the bank. Thus we intimate the distributor to make the repayment of unpaid cheques, in between these procedures distributor get their credit time.

Methodology Adopted

First of all analyze this problem we have to understand the accounting procedures which are followed by particular depot.

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Flow Diagram

Distributor present cheques to depot

Cheque is recorded in bank voucher slip at depots and collected

Cheques are attached with pay in slip of CMS and sent to bank for clearance

Clearanc e at HDFC

Unpaid cheques are returned back

Amount is transferred to main branch Mumbai for further processing

Yes

No

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Therefore to verify that whether a distributor is making repetitive false payment, we have to go though a vouching process in which we have to analyze the bank voucher slips and that how many times a distributor cheques are getting unpaid. If the same distributor cheques are getting unpaid then a report is prepared with all the documents and is sent to depots for further proceedings. Then the distributor is penalized on that amount and he has to pay interest on that amount. But the amount of interest is not a proper solution because that amount runs in few hundreds whereas the amount blocked i.e. working capital runs in lacs. So different measures are taken to avoid those circumstance.

Problem Statement 2

When a distributor blocks fund the amounts in lacks but when the funds being blocked by the banks the amount are in crores. As discussed earlier ULTRA TECHcorporation funds are mobilized through HDFCs product CMS. So to have a further discussion first of all we should study the flow of funds at CMS.

Methodology Adopted:

First of all to analyze this problem we have to understand the accounting procedures which are followed at those particular depots.

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Flow Diagram

Deposit of chequese by Depots at H.D.F.C. local branch

No Clearanc e at H.D.F.C

Fund is transferred to H.D.F.C. main branch at Mumbai

Fund is transferred to respective Division of BCL

Yes

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In CMS transferred at HDFC cheques/DDs are send for clearance to various banks of which cheques belongs. Every CMS center of HDFC had given a time limit for clearance of amount according to different places. But it happens that cheques are not in that stipulated time which has been prescribed by that bank. Therefore to check whether all the centers of HDFC are clearing the funds in given time period we have reconcile the statement given by the bank for clearance of cheques by looking into the time period taken by clearance of those cheques.

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RESULTS AND CONCLUSION

Report For Problem 1

Few suggestions that has been given by me in the report are as follows:

1.

All the depots must be integrated with an ERP system so as to minimize data redundancy.

2.

As the depots maintain there accounts on paper therefore to analyze the accounts was difficult. So all the depots should be computerized.

3.

Many of the vouchers were missing as they were transferred from depots to SCW.

Computerization can solve this problem as data can be sent electronically through E-Mails. 4. As voucher were hand written due to which there were many errors in cheques numbers in book voucher slips, computerization can solve the problems.

Report and Suggestions For Problem 2

By analyzing four months data of CMS i.e. of April, May, June, and September months the following outcomes has been drawn.

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1) Here are the amounts for all four months and all the depot transfers:

RESULTS Branch Name Interest Bahraich Loss 6347.3 8 Banda 2446.7 4 Basti 1562.8 3 Mozzfarpur 1274.7 6
2)

April Location Total 1448733 1 7909313 1020.7 9 4879876 97.64 Interest Loss -

May Location Total 1440933 1 7860116 3835.4 2 1379060 199.45 Interest Loss -

June Location Total 2421341 2 1489327 6 1199133 Interest Loss 2055.5 5 6161.9 5 -

July Location Total 20242965

6404441

9434945

1022.7 6

1176625 3

263.85

1061998 1

2476

9201182

From above given figure we can clearly state that there are few branches of H.D.F.C. which are not working properly and specially the Banda, Bahraich & Muzzafarpur, so expect these branches all other branches are working properly. We should give them the sorted data so that they can give their clarifications.

3)

The interest in month of April, May and June is calculated on 10.75%, whereas due to rise in percentage of interest it has been calculate on 11% in month of September.

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4)

As all branches are working properly except few and also the calculated amount is very less as compared to transaction amount, so we should not charge interest but should levied only when they do not improvise.

5)

Many small branches like Banda, Deoria, Sultanpur etc has 1 day limit for clearance of Cheques / DDs whereas main branch like New Delhi, Mumbai, Allahabad, Varanasi, Lucknow etc has 2 day limit. So we should ask them to switch to 1 day instead of 2 days so we can reduce the life cycle of working capital by 1 day.

As per above given figures the important part is not the interest but the amount blocked by the bank.

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Bibliography

Website www.google.com Data collected from HDFC web site Data collected from SBI web site www.satnacement.com. www.kesocorp.com

Magazines

Agenda items

CMA documentation bulletin

Cement statistics

NEERI

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