cash management ultra tech-cement

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Cash Management Services

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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.

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TABLE OF CONTENTS

Serial no. Topics Covered

1 INTRODUCTION

List of Directors

Achievement of BCL-SCW & BVC

Product Profile

2 Overview of Finance Department

Functions and Responsibilities, Feasibility Study & Project

Reports , Budgeting, Cash Flow Statement, Working Capital,

Purchase, Pricing Policy

3 RESEARCH METHODOLOGY AND DATA COLLECTION

4 Cash Management System

BENEFITS OF CMS IN DIFFERENT AREA

CMS by SBI

CMS by HDFC

5 SWOT Analysis

6 SCOPE AND METHODS ADOPTED

7 RESULTS AND CONCLUSION

8 BIBLIOGRAPHY

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INTRODUCTION O F 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.

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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.

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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 1986-

87. 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, 1998-

99, 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 & 1993-

94. 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.

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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 - 1959

ULTRA TECH Cement Work1 - 1967

Durgapur Cement Works - 1974

ULTRA TECH Cement Works - 1982

Chittor Cement Works - 1986

SCW-Conversion Plant - 1989

Raebareli Unit - 1998

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FOUNDERS OF M. P. ULTRA TECHGROUP :

LATE. SHRI. M. P. ULTRA TECH LATE. SMT. PRIYAMVADAJI

ULTRA TECH

BOARD OF DIRECTORS:

MR. RAJENDRA S. LODHA (CHAIRMAN) MR. B.R. NAHAR (E.D.)

MR. N. K. KEJRIWAL MRS. NANDINI NOPANI

MR. HARSH V. LODHA MR. PRACHETA MAJUMDAR

MR. VIKRAM SWARUP MR. ANAND BORDIA

CHIEF FINANCIAL OFFICER

Shri P.K. ChandACTING COMPANY SECRETARY

Shri Girish Sharma

AUDITORS

H.P. Khandelwal & company charted Accountants

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Achievements

1. SCW, BVC & DCW have got ISO 9002 quality certification, covering the entire

range of production & marketing.

2. Best Energy performance award in 1995-96 & 1994-95.

3. Second best improvement in energy performance award in 1995-96.

4. Top export award in 1994-95.

5. First prize in productivity to CCW in 1993-94.

6. Special Export award in 1993-94.

7. Best Energy performance award to SCW in 1993-94.

8. Special export in 1992-93.

9. 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 24

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.

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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. Develop the best plan to obtain the external funds needed.

4. 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.

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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.

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Making The Decision

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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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.

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

Corporation.

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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

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Costly

Unsecured & Risky

Feature of CMS

Fastest movement of funds. Creditors

Reducing transit float to the minimum. Suppliers

Competitive cost

MIS Support for proper fund planning

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Features of CMS

Collection Management Payment Management


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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

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Representative

of Depots

H.D.F.C. Branch

Message

MIS Reports to Satna

Credit customers

account at Pooling

Branch at Satna

Instruments

to clearing

section

CMS

Centre

Mumbai


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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

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C h e q u e N o D e p o s itA m o u n t /D a t e

T o t a l I n s tr u m e n tB a n k / D e p o s ito r

T o t a l D e p o s i tA m o u n t .

G e n e r al C le a r in g C h e q u e s

Jaba lpu r C i t y0 1 6 6 3 8

3 3 , 4 2 6 . 0 02 8 . 0 7 . 0 3

1U B I/ S h a h S t o re

3 3 , 4 2 6 .

L o c a l C l e a r in g ( S B I) C h e q u e s

Jaba lpu r C i t y6 4 8 5 2 9

1 , 0 3 , 7 9 0 . 0 0

S t a t e B a nk o f I nd ia/ Pe r feC e m e n t

1 , 0 3 , 7 9 0.0

C o n t d


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CREDIT REPORT - SPECIMEN

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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 Paid19415 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

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D eposit D ep D t Inst.N o Inst. D t. Inst.AmtDrawee

Bank

DraweeBranch

Jabalpur

ON Branch C heques

007102689 28.07 .03 035418 23.07.03 50,000.00S BI

Jabalpur

Reaso n for Retn

Insuffic ien t funds D evA gency

Tota l R eturns for the Location 50,000.00

Produc t W ise Sum m ary

P roduc t Tota l Instrum ent To ta l Am t R etu rn

O n Branc h 1 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 50 PAISE

ADVANCE LOCATION 20 PAISE

Remittance Charges-: (Paise per thousand)

Category A : 3 PaiseCategory A : 3 Paise

Category B : 5 PaiseCategory B : 5 Paise

Category C : 10 PaiseCategory C : 10 Paise

Category D : 15 PaiseCategory D : 15 Paise

Category E : 25 PaiseCategory 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.

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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 / CD-

ROM 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. LOACATION

1. DEORIA

2. BAREILLY

3. VARANASI

4. FAIZABAD

5. JABALPUR

6. GONDA

7. ALLAHABAD8. GORAKHPUR

9. LUCKNOW

10. KANPUR

11. JHANSI

12. PATNA

13. SULTANPUR

14. BANDA15. RAMPUR

16. AZAMGARH

17. MOTIHARI

18. MUZAFFARPUR

19. GWALIOR

20. BAHRAICH

21. REWA

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C.M.S. Charge

LOCATION C.M.S.charges(Paisa per 1000)

Kanpur Nil

Lucknow Nil

New delhi Nil

Allhabad Nil

Bareilli Nil

Patna Nil

Azamgarh 0.45

Bairach 0.45

Banda 0.45

Deoria 0.45

Faizabad 0.45

Gonda 0.45

Gaya Nil

Gorakhpur Nil

Jhansi Nil

Mirzapur 0 .45

Muzzaffarpur Nil

Sultanpur 0.45

Varanasi Nil

Jabalpur Nil

Rampur 0.45Gwalior Nil

Katni Nil

Motihari 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 SBI

1. CMS charges are nil where HDFC

branch are available.

CMP charges apply by bank where

SBI branch are available.

2. HDFC provide the service by

correspondent bank where HDFC

branch not available.

SBI do not provided the service

where SBI branch not available.

3. HDFC service time is more than

SBI.

SBI service time is less than HDFC.

4. In CMS report of HDFC with A/c

no. & date, Party name and time is

also mentioned.

In CMP report of SBI only A/c no.

& date is 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

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43

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

Yes

No

46

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

Unpaid cheques are

returned back

Clearanc

e at

HDFC

Amount istransferred to main

branch Mumbai for

further processing


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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

No

Yes

48

Deposit of chequese

by Depots at

H.D.F.C. local

branch

Fund is transferred

to H.D.F.C. main

branch at Mumbai

Fund is transferred

to respective

Division of BCL

Clearanc

e at

H.D.F.C


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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

April May June July

Interest

Loss

Location

Total

Interest

Loss

Location

Total

Interest

Loss

Location

Total

Interest

Loss

Location

Total

Bahraich 6347.3

8

1448733

1

- 1440933

1

- 2421341

2

2055.5

5

20242965

Banda 2446.7

4

7909313 1020.7

9

7860116 3835.4

2

1489327

6

6161.9

5

6404441

Basti 1562.8

3

4879876 97.64 1379060 199.45 1199133 - -

Mozzfarpur 1274.7

6

9434945 1022.7

6

1176625

3

263.85 1061998

1

2476 9201182

2) 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

cash management ultra tech-cement

Documents