Chapter 1

OVERVIEW OF IPCL

1

1.1 INDUSTRY PROFILE

IPCL – Indian Petrochemical Corporation Limited

Background:

IPCL, Indian Petrochemicals Corporation Limited is a pioneering petrochemicals company in

India, was incorporated on 22 March 1969.

It is a leading integrated manufacturer of polymers, synthetic fibers & fiber intermediates &

chemical products from hydrocarbon feed stock. They also manufacture catalysts &

adsorbents.

IPCL was established in March 1969 as a government of India undertaking, with the

objective of promoting the development of the petrochemicals industry in India, develop

Indian market & distributes its products.

The company owns & operates three petrochemical complexes, a naphtha-based complex at

Vadodara, & a gas based complex each at Nagothane near Mumbai & Dahej on Narmada

estuary in the bay of Khambhat. The construction of IPCL’s first petrochemicals complex

began at Vadodara in 1970. Commercial production commenced in 1973. IPCL’s second

petrochemicals complex was commissioned in 1992 at Nagothane & the third complex at

Gandhar was commissioned in 1996. In August 1992, the company’s shares were listed on

all major stock exchanges in India.

In June, 2002 Reliance Group acquired 46% equity stake in IPCL, pursuant to the

disinvestments of IPCL’s equity by the Govt. of India. In the first year under the Reliance,

IPCL record 18% growth in output. The company’s three production unit, one Naphtha based

cracker at Vadodara, & two gas based cracker, one each at Gandhar & Nagothane have

recorded 14%, 29%, & 9% growth in production respectively. The company produces over

1.6 million tones of merchant products & generates a turnover close to Rs.100 billion.

2

1.2 INDIAN PETROCHEMICALS INDUSTRY

IPCL is currently the second largest petrochemicals company in India.IPCL was ranked as

the 29th largest company in India in terms of sales, with net sale in fiscal 2006 of Rs84690

million. In fiscal 2006, 70% of its net sales were from polymers, 14% from fibers & fiber

intermediates, 14% from chemicals & 2% from trading, other activities. IPCL derived 90%

of its net sales in fiscal 2006 from the sale of its products in the Indian market. IPCL has also

exported their products to the various countries across the globe.

India’s petrochemicals industry is relatively young, having started in 1960s. Demand for

petrochemical products is related to general economic growth, substitutability of competing

materials & the prices of petrochemicals feedstock, end products & competing products. The

rapid growth in the demand for petrochemicals in India.

The domestic polymer industry has a few manufacturers & many consumers. As of 2001-02,

nearly 85% of the polymer capacity in the domestic market was with the top three

participants (RIL, IPCL, HPL). Between RIL & IPCL, IPCL accounted for about 67% of

domestic polymer capacity.

Production capacity of polymer is widely distributed in the international polymer market with

the top 10 polyfins producers accounting for less than 50% of the global capacity. In 2002,

the global PE capacity was estimated at 67.5 million TPA, of which capacities for HDPE,

LDPE, and LLDPE were estimated at around 29.6 million TPA, 19.3 million TPA & 18.5

million TPA respectively. North America was the largest producer of PE while the Middle

East & Asia accounted for only 8.6% pf global PE production; its market share is expected to

increase on account of significant ongoing capacity additions. The leading PP manufacturers

are Atofina, Basell, Boreallis, BP, ExxonMobil, Reliance group & Sabic.

3

1.3 LOGO

IPCL, as a corporate entity, is and what it shall strive to be. This symbol or logo reflects that

IPCL is a single matrix of many diversified activities and products, emerging from one

source and branching out in different directions, yet retaining its unity and identity. The lines

flow upwards and outwards from a common base into infinity, reaching for unending growth,

universal goodwill, general prosperity and excellence in everything. The green color used in

the design reinforces the theme – aspiration and growth, rooted in the earth and in harmony

with the other elements – water, light, air and space.

4

1.4 VISION

Be a globally preferred business associate with responsible concern for ecology, society and

stakeholders’ value. We shall strive to generate best value for all associates we deal with, by

constantly innovating and updating ourselves with best practices from across the world.

“Think big, Think fast, and Think ahead. Ideas are no one’s monopoly”.

1.5 MISSION

Continuously innovate to remain partners in human progress by harnessing science and

technology in the petrochemicals domain.

Continuously Innovative

This concept is ingrained in IPCL’s culture. The founder chairman of Group Shri Dhirubhai

Ambani said, “Only when you dream it, you can do it” underscores our drive to become

better and bigger company.

Partners in human progress

The products we make, find their way into products that help people with improved

lifestyles. All of us at IPCL must understand and take pride in this. We must also use this

concept to further connect IPCL with the external markets we serve. When we think in terms

of markets we serve, we become more outside in focused and we can better seek growth

opportunities.

Harnessing science and technology

We must put our knowledge in science and technology to work, to create solutions for our customers and for society.

5

1.6 VALUES

Integrity

The relationships that are critical to our success depend entirely on maintaining the highest

ethical and moral standards. As a vital measure of integrity, we will ensure the health, safety

of our communities, and protect the environment in all we do.

Respect for people

We believe in the inherent worth of people and will honor our relationships. We, the

employees of IPCL, are the engines of value creation. Our imagination, determination, and

dedication are essential for growth. We will work to celebrate and reward the unique

backgrounds, viewpoints, skills and talents of everyone at IPCL. Respect for people is

measured by how we treat each other, by the contributions that flow from our diversity, by

the productivity of our relationships, and by a job well done, no matter what the job is.

Our customers are our partners in creating value; their loyalty is our greatest reward. Our

shareholders are the beneficiaries of our success; their on-going commitment to us is based

on returning to them consistent superior returns over time. We will strive to answer people’s

most vital needs: for food, water, shelter, transportation, communication, health and

medicine.

Unity

We are one company, one team. We believe that succeeding, as one enterprise is as important

as succeeding independently. Balancing empowerment and interdependence makes us strong.

We will work together; build relationships to create greater value for the customers.

6

Outside-in-focus

We believe that growth comes from looking at opportunity through the eyes of the customers

and all those we serve. Taking an “outside-in” view ensures that our efforts

are always relevant and that our unique talents are applied to “real world” opportunities.

We will see through the eyes of those whose lives we affect, identifying unmet needs and

producing innovative and lasting solutions. We will bring to this task all of our experience

and knowledge.

Agility

At IPCL, we believe our future depends on speed and flexibility- mental, emotional and

physical. Responding resourcefully to society’s fast-changing needs is the only road to

success. We will meet the forces of change with power and grace. We will make necessary

corrections that demonstrate flexibilities as well as courage, and that highlight our ability to

keep ourselves aligned with a world in motion.

Innovative

We believe that meaningful productive change; solving problems; only comes by looking at

challenges and opportunities from new angles and exercising our curiosity. In the name of

innovation, we will make science a way of living. We will not only harness the science of the

physical world, but the science of the mind and heart. Our job is to unlock the answers that

make a fundamental difference to peoples’ lives. We will use technology to help lead society

forward. We will conceive, design, engineer, and execute solutions that remove barriers to

human potential and productivity.

These values guide IPCL’s vision, mission and all our transactions.

7

1.7 QUALITY POLICY

“We at IPCL are committed to meet customers’ requirements through continual improvement

of our Quality Management Systems. We shall sustain organizational excellence through

visionary leadership and innovative efforts.”

Continual Improvement

This concept finds its roots in our mission and is ingrained in IPCL’s culture. Continual

improvement will lead to higher reliability in quality of products and services needed by our

customers. This will make us outside in focused and provides us with the needed drive and

direction in achieving excellence in managing our business.

Visionary Leadership

This means that we shall collectively work to sustain excellence. Our vision is to develop

enabling leaders who will carry our people to sustain excellence, to scale newer and higher

benchmarks.

1.8 ENVIRONMENT POLICY

The environment policy declared by IPCL reads as follows: -

Aims to maintain relevant environment norms as per prevailing statutory standards. Strives to

conserve natural resources and to minimize waste generation in petrochemical operations.

Contribute to a green economy for continual improvement and sustainable development in

minimizing environmental impacts by technological innovation and research.

Encourage environmental awareness in employees and society for vigilant hazard

management and prevention of pollution.

8

1.9 SAFETY & HEALTH POLICY

The safety & health policy declared by IPCL reads as follows: -

Professionally manage and comply with the statutory provisions by giving high priority to

health, safety and environment control programs.

Ensure that technology absorbed, assimilated, upgraded and developed by the company lays

emphasis on safety in and around the workplace.

Ensure continuous improvement in safety and health aspects by carrying out safety audit, risk

analysis etc.

Constitute safety committees to promote safety awareness and ensure participation of

employees in safety and health related functions.

Organize structured training programs on continuous basis to educate employees and

neighboring society on safety, health and loss prevention and control aspects.

Ensure codification of safety standards and extend services to parties associated with the company on safety aspects.

Recognize contributions made by an individual employee towards safety and health aspects.

9

1.10 BEYOND BUSINESS

INSTITUTION BUILDING

IPCL has helped in establishing several institutions, which in turn help to sustain growth of

the petrochemical industry.

A pioneering data bank providing information and consultancy services in the area

of petrochemicals both in India and abroad.

National committee on use of plastics in agriculture (NCPA) was constituted in 1981

and since its inception; IPCL has been actively supporting it with manpower and

infrastructure. NCPA has been instrumented in propagating use of plastics in

agriculture universities in different states.

Petrochemicals Management Development Institute (PMDI) was established in

November 1991, to serve overseas training contract and create human resources for

outside organization and for IPCL

Plastic Processing operator training: A scheme to general trained workforce for

plastic processing industry, jointly with ITIs, Ministry of Labor and State

Governments.

10

ARTS AND SPORTS

IPCL has a tradition of supporting activities related to arts, aesthetics and sports.

A beautiful piece of contemporary sculpture by Shri Nagji Patel is a landmark in the

city of Vadodara. It is also symbolic of IPCL’s deep commitment to promote art and

culture.

Fig. 1

A huge sports complex matching international standards has been developed at

Vadodara. It has held men’s and women’s world cup cricket matches, international

tennis tournaments besides being a venue to various national and state level games.

Some of the IPCL players have made their mark at state and national level in various

sports.

Fig 2

A giant mural adorns IPCL’s open-air theatre at Vadodara.

IPCL organizes regular camps for painters, graphic artists and sculptors. A Konkan

craft festival was also organized at Nagothane in 1993.

IPCL has sponsored a book on the ‘Contemporary Art of Vadodara’.

11

SOCIO-ECONAMIC DEVELOPMENT

The company, as a matter of policy, continues to meet some of the basic needs of the villages

surrounding the complexes and developmental work is prioritized according to the needs of

the people in the peripheral villages. The Company’s Social Welfare and community

Development initiatives focus on the key areas of education, health care and the overall

development of the communities in which the company operates. These initiatives are

undertaken directly by the company and also through legally constituted trusts and welfare

bodies. SVADES (Society for Village Development in Petrochemicals Area), MADER and

JADER trusts have been established for up gradation of infrastructure facilities and

developing the rural community in the vicinity of IPCL Complexes. The company has been

quick to place all its resources at the service of the nation and community in time of crisis

and emergency.

Health camps, Family Planning Camps, Dispensary and Mobile Medical Vans are provided to neighboring villages.

Nursery and Industrial Training Institutes

Cattle Development Center and Vaccination camps.

Providing subsidized sanitation facilities to rural families.

Providing facilities like school building, books, and furniture for libraries play grounds,

wells, approach roads and subsidized bus-service to school children.

12

Scholarships for graduate and post graduate students from Gujarat.

Technical assistance to the national institute for the blind.

Provision of drinking water at Nagothane villages.

Vocational training programs for the youth and women.

Tree plantation, diagnostic, eye camps, educational tours, training farmers etc.

ENVIRONMENTAL PRESERVATION

IPCL professes the doctrine that any economic activity should not erode the very foundation

of such activity. Development should therefore be with due regards to environment

protection and not at the cost of it. IPCL has formulated a clear and focused safety, health

and environment policy, which reinforces the corporate commitment to these facets of

business.

IPCL has:

Adopted elaborate water treatment and air monitoring at all sites.

Developed microorganism for bio-degradation of cyanide water.

A multi-purpose hazardous waste incinerator.

Developed a 27-acre experimental farm at Vadodara where vegetables are grown and the

use of treated effluents for agricultural produce studied.

A living museum of trees where 70 species proliferate over 40 acres of land.

Created an artificial lake from treated wastewater, which attracts over 100 species of

birds from all over region.

13

1.11 SWOT ANALYSIS OF IPCL

Strengths

Manpower with rich experience in managerial, technical & commercial fields.

Plants located on the west coast where the downstream industry is concentrated.

Both liquid & Gas fired crackers.

Diverse product range.

Global sized plants at Baroda, Gandhar & Nagothane complex.

Extensive sales network & infrastructure facilities.

Noteworthy safety & environment records.

Weaknesses

Aged & smaller sized plants at Baroda Complex.

Feedstock’s supply constraints at Gandhar & Nagothane.

Dependence on sole suppliers for natural gas & C21C3.

Commodity business subject to cyclically.

Dependence on external sources for feedstock.

Opportunities

Huge growth potential in Indian Polymer Market.

Excellent Research & Development facilities.

Scope for expansion especially at Gandhar Complex.

Revamp of old plants located at Baroda.

Proactive enhancement to global standards.

14

Strong outlook for global petrochemical Industry.

Changed employee’s expectations.

Proactive Industrial Relation Strategy.

Threats

Uncertainties on Natural Gas Pricing.

Competition from “low cost” Middle East producers.

High rate of technological obsolescence.

Environmental concerns on plastics been incorporated as an appraisal parameter.

15

1.12 ORGANIZATIONAL STRUCTURE OF IPCL

Chairman(Mr. Mukesh Ambani)

Whole Time Director(Mr. S.K, Anand)

↓ ↓ ↓ Baroda Gandhar Nagothane Complex Complex Complex ↓ Site President ↓

Senior Vice President ↓

Vice President ↓

General Manager ↓

Senior Manager ↓ Manager ↓

Executive ↓ Staff

16

1.13 PRODUCT FLOW DIAGRAM OF VADODARA COMPLEX

Fig. 3

INDIAN PETROCHEMICALS CORPORATION LIMITED

(VADODARA COMPLEX)

17

1.14 PRODUCT LINE OF IPCL BARODA COMPLEX

Commodity Chemicals:

Acetonitrile Ammonium Sulphate

Benzene Butyl Acrylates

Benzene Carbon Black Feed Stock

Ethylene Caustic Soda

Ethyl Acrylate Methyl Acrylate

Orthoxylene Propylene

Solvents:

Cixon

Hepton

Solvent CIX

Polymers (Commodity Plastic):

Indothene Koylene

Indothene CC Koylene CP

Indothene HD Koylene ADL

Indothene LL Koylene ADL-CP

Indothene LDPE Koylene PVC

Indovin Koylene RCP

Rubber:

Cisamer 01

Cisamer 1220

Petrez

Fiber & Fiber Intermediates:

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Acrylonitrile

Dimethyl Terpthalate

Ethylene Glyco

Indacryl

Supacryl

Catalysts & absorbants:

Catal

Catsiv

Speciality Catalist

Surfactants:

Ethylene Oxide

Linear Alkyl Benzene

19

1.15 PRODUCT PORTFOLIO

(Capacities in MTA)Products Vadodara

ComplexNagothanaComplex

GandharComplex

Ethylene 1,30,000 4,00,000 3,00,000Propylene 1,07,460 63,000 38,000Butadiene 37,700 - -Butane-1 - 15,000 -Benzene 23,600 - -Cixon 12,000 - -

Carbon black feedstock

17,900 - -

Acrylonitrile 30,000 - -Indothene LD 80,000 - -

Indothene LL/Indothene HD

- 2,20,000 -

Indothene HD - - 160000Koylene 30,000 60,000 -

Koylene CP 25,000 - -Koylene ADL 75,000 - -

Indovin 55,000 - 1,50,000Cisamer 50,000 - -

Ethylene Oxide 10,000 5,000 10,000Ethylene Glycol 7,000 50,000 1,00,000

Indacryl 12,000 - -Supacryl 12,000 - -Acrylates 10,000 - -

Linear alkyl benzene 43,500 - -Caustic soda - - 1,30,000

Chlorine - - 1,15,000Power (mwh) 89 87 154.5

20

1.16 APPLICATION OF PRODUCTS

Solid Products

Main uses of polymers:

Product Uses

LDPE/LLDPE Consumer packaging/film, extrusion wires, cable coatings, heavy-

duty bags, garbage bags, milk & shopping bags.

HDPE Fertilizers/household packaging, woven sacks, cartons, crates,

luggage, pipes, paints, storage bins etc.

PP Cement packaging, monofilament yarn, and ropes, fishing nets.

PVC Water pipes, electrical conduit/wires, cables, sheets, footwear,

flexible films

PBR Automobile tyres & tubes, conveyor belts, footwear.

Main uses of fiber & fiber intermediates:

Products Uses

AF/DSF Textiles, knitting yarns, sweeter.

MEG Polyesters, Anti freeze.

CAN Acrylic fiber, Acrylates, engineering polymers.

DMT Polyester staple fibers, polyester filament yarns, polyester.

21

Liquid Products

Main uses of chemicals:

Products Uses

LAB Raw material for household, industrial detergents, personal

care products.

EO/BENEZENE/TOLUENE Phenol, dyestuff, pharmaceuticals, paints, industrial uses,

caprolactum

Caustic Soda Alumina/paper.

22

Chapter 2

MARKETING DEPARTMENT

23

Financial success often depends on marketing ability. Marketing deals with identifying and

meeting human and social needs. Finance, operations, accounting and other functions will

not really matter, if there is not proper marketing is not done for product. The demand,

competition, distribution channel and many other things are very important for the success of

any company. The following are some important information of marketing department of

IPCL.

List of competitors:

IPCL is a petrochemical company which produces only intermediate products or industrial

products. Generally it doesn’t face much competition. In spite of this, the following are some

of the industries which pose as competitors of IPCL.

Haldia petrochemicals

GAIL (Gas Authority of India Ltd.)

Indian Alkalies

Pashupathy Alkalies

IOC (Indian Oil Corporation)

Promotional measures:

IPCL being an intermediate industrial products manufacturing company, it does not need

more promotional efforts than occasional communication through trade journals, internet,

seminars, symposiums, trade exhibitions etc. So there is no need to invest huge amounts as

promotional expenses.

24

Sales Revenue:

The sales revenue for the year 2005-06 is Rs.12362.20 Crores as compared to 9385.55 Crores

in last year (2004-05).

Competitive approach:

IPCL manufactures intermediate products which serve as raw materials for industries

producing finished products. As a result of this, IPCL enjoys almost a monopolistic status.

The company provides highest priority and is committed to meet customers’ requirements to

the maximum extent.

The company has a formal mechanism for customer grievance redressel and prompts

customer services. Therefore IPCL is being more customers oriented and takes care that all

its loyal customers are served satisfactorily. And now, IPCL’s main competitive approach is

stepping forward from customer satisfaction to customer delight.

Pricing policy

Ex factory as well as ex point selling pricing is inclusive of excise duty

For payment of excise duty, freight should not be included

Excise duty shall be paid for ex factory sales

Quantity discount is applicable will not be deducted

Cash discount if applicable is to be allowed

Prices of prime goods are higher

Prices are inclusive of standard packing charges

More the quantity purchased more the discount

Cash discount is given in the form of early payment incentives

Additional discount is given to exporters

Credit policy for customers and dealers

Cash sales, interest @ 24 % will be charged for delayed payment.

25

Marketing operations and Planning (MOP):

MOP group is the backbone of every organization. It is responsible for warehousing and

management from different plants to consumers. Mop’s principle task is logistics

management. The logistics movement of solid, liquid, gaseous products is done either by

roadways, railways, or even by pipelines. Regional offices collect orders and submit the

requirements. The other activities include processing freight bills, coverage of insurance

policies, appointment of surveyor, hiring of warehouses, appointment of cost& freight, etc.

Objectives of marketing department:

Strategic market development

Formulations of marketing plans/ cash flow plan

Competitors’ strategy updated

Expert marketing as a tool of value addition

Set up of an effective and efficient system for expenditure

Prepare all necessary production and sales reports

Floating various tenders and preparation of tender documents

Strategic integration of developmental plans

26

Chapter 3

HUMAN RESOURCE DEPARTMENT

27

The Company regards its human resource as one of its prime resources. A continuous effort

for improving contribution of its human resources towards attainment of organization goals

has been the area of focus. Fiscal 2004-05 was a year of stabilization and consolidation in the

process of change management, growth and development. The human resource processes and

systems are being geared for business focused and competency driven performance.

IPCL’s employee strength as on 31st March 2006 is 13000 employees as compared to 11,088

strength on 31st March 2005.

Human Resource planning, recruitment and selection:

Human Resource Planning is one of the most primary activities carried out at IPCL. Planning

is done by maintaining a ‘Stock of Sanction, Filled and Vacant’ (SFV) File. This file

maintains a track of the requirements of personnel’s in the organization. It is regularly

reviewed by the top management. As and when the need arises, arrangements are made for

the recruitment of the personnel’s.

Generally Reliance is doing centralized recruitment at Mumbai. IPCL generally goes to the

reputed campuses for recruitment purpose. It does not go for advertisement in the newspapers

or media or any such other ways of recruitment. IPCL’s one of the foremost criteria for

selection of employees is competency. It selects those people who are competent and

knowledgeable enough to perform their duties effectively and efficiently.

Performance appraisal system:

IPCL undertakes performance appraisal at regular intervals without fail. Here annual

confidential reports are filled wherein the details of the work done by the employees are

entered. In this way, a track of the performance of individuals in the organization is

maintained. For supervisors, Performance Management System is in practice. In this, the key

result areas are listed down and the performance is evaluated and rated keeping in view these

core areas. Setting up of development centers for assessment of competencies, identification

of gaps and charting out further interventions is in progress. Thus the Performance Appraisal

System in IPCL is contributing its full-fledged efforts to improvise the performance of its

employees.

28

Promotion and transfer policy:

The promotion at IPCL is time bound. The vintage period is generally 6 years. For

supervisors the vintage period is 4 years. Once an individual is promoted to General Manager

post he gets 2 years residence period. If there is no vacancy available the employees are

simply upgraded. And if vacancies are available, the employees are promoted as per the

requirement of the company policy. The transfers are done as per needs of the company.

Welfare activities:

The welfare activities at IPCL include the following:

Medical Benefit- The expenses beared by the employees on medical treatment (including

the family members) is reimbursed as per the company policy.

Accident Insurance Scheme

House Building Advance

Car Loan at subsidized rate of interest

Benevolent Fund

Free provision of uniform, apron, towel, jersey, raincoat, gumboot, safety shoes, soaps,

napkins etc.

Apart from its welfare activities towards its employees, IPCL also carries out community

welfare activities in the villages surrounding its three complexes at Vadodara, Nagothane and

Gandhar through various initiatives in the areas of education, health, agriculture, employment

generation and infrastructure development.

Industrial Relation:

IPCL is associated with three unions:

AITUC Communist

INTUC Congress

HMS

29

IPCL’s relations with these unions are quite cordial. Only in 1992 there was a major strike

which was resolved soon.

Administrative activities:

The administrative activities such as transport, securities etc. are taken care by the Reliance

Group Security Services (RGSS).

Computer applications in HR:

(SAP support to HR)

All the HR activities are carried out through the Self Development Module (SDM) in SAP.

There is a separate department known as ‘SAP HR’. This department does Enterprise

Resource Planning. It takes care of Personnel Administration/Organizational Management,

Payroll, Time Modules and Employees Self Service (ESS). The implementation of this portal

has resulted in efficient data support for decision-making.

Quality assurance:

The business environment in our country today is more competitive than ever before. The

globalization of markets places the need to excel day after day. To succeed in this

environment, IPCL has embraced a methodology called ‘Six-Sigma’ to ensure that the

business processes that serve the different stakeholders are regularly reviewed with reference

to the best achieved or a benchmark of a similar business entity. Six-Sigma is fast becoming

a passion at IPCL. It is a systematic methodology which enables the organization to put the

challenges in correct perspective and ensure superior overall performance faster with high

quality and acceptability.

30

Six-Sigma Technology used in IPCL:

General introduction of six-sigma

The 18th letter of the Greek alphabet, Sigma is the symbol for standard deviation, A measure

of variation .Sigma has a history and is:-

A Vision

A Philosophy

A Management System

An Aggressive Goal

A Benchmark

A Disciplined Date Based Methodology for improvement

A tool Box

A vehicle for Customer Focus

IPCL has also adopted the benefits from the implementation of ISO 9001. ISO 9001 is a

series of models for Quality Assurance. It defines the procedures to ensure that the

organization meets the requirements of its customers. The following are benefits of ISO

9001-

Within IPCL:

Improves operational efficiency by defining processes for management of activities like

product planning, provision of resources, product realization etc.

Reduces confusion and emergencies as activities are documented and updated.

Reduces cost and wastage.

It improves work culture and makes work a pleasure.

31

Chapter 4

FINANCE DEPARTMENT

32

Finance is the life blood of any business undertaking. Effective financial management is the

outcome of proper management of investment of funds in business. Funds can be invested for

permanent or long term purpose such as acquisition of fixed assets, diversification and

expansion of business, renovation or modernization of plant and machinery and research and

development.

Funds are also needed for short term purpose, that is, for current operation of business. For a

manufacturing unit one has to manage the procurement of raw material, payments of wages,

and salaries to employees and for meeting routine expenses.

The various departments under the roof of Finance Department are as under:-

Corporate Finance

Material Finance

Marketing Finance

Operation Finance

Administration Finance

Excise & Custom Department

Pay-roll Section

Public Finance

Internal Audit

Central Account & Taxation

Project Finance

Treasury Finance

Provident Fund

33

Organizational Hierarchy of Finance and Operation

Operational Salary Cash and Administrative TravelingFinance Dept. Cheque Finance And Dept. Treasury Dept. Medical

Dept. Dept.

FGS Import RM Chemical Dept Finance Indigenous Dept. Engineering Medical Administrative

Material

FinanceDept.

GeneralManager(Finance)

SeniorManagerFinance

SeniorManagerFinance

VicePresident

(F&O)

34

Dept. Dept. Store Dept. Procure. Goods Procure Accounting Dept. Dept.

Packaging Dept. Dept.

Sources and Application of funds:

Balance sheet for last two years:

BALANCE SHEET OF LAST TWO YEARS

  (Rs in crore) (Rs in crore)

  As on 31st March, 2006

As on 31st March, 2005

SOURCES OF FUNDS    

     

Shareholders' Funds    

Share Capital 249.05 249.05

Equity Share Suspense 39.12 -

(Refer note no. 4(a) (ii) of Schedule 'O')    

Reserves and Surplus 4681.92 2672.00

  4970.09 2921.05

Deferred Tax Liability 1100.61 1101.16

     

Loans Funds    

Secured Loans 596.24 659.85

Unsecured Loans 650.17 100.40

  1201.41 760.25

     

Liability for Leased Assets 459.98 493.39

TOTAL 7732.09 5275.85

     

APPLICATION OF FUNDS    

     

Fixed Assets    

Gross Block 11201.77 9785.77

35

Less : Depreciation 3577.67 3126.17

Net Block 6060.61 5783.31

Capital Work in progress 42.62 58.80

  5958.37 5063.80

Investments 179.82 165.33

     

Current Assets, Loans and Advances    

Current Assets    

Inventories 1226.13 623.12

Sundry Debtors 450.48 701.06

Cash and Bank Balances 1079.57 664.82

  2756.18 1989.00

Loans and Advances 1652.55 456.58

  4408.73 2445.58

     

Less : Curent Liabilities and Provisions    

Current Liabilities 2384.10 1999.47

Provisitons 430.73 399.39

  2814.83 2398.86

     

Net Current Assets 1593.90 46.72

     

TOTAL 7732.09 5275.85

36

Profit and Loss Account for last two years:

PROFIT AND LOSS STATEMENTS FOR THE LAST TWO YEARS

    (Rs in crores)

INCOME 2005-2006 2004-2005

Turnover 12362.20 9385.55

Less : Excise duty Recovered on Sales 1439.80 1186.43

Net Turnover 10922.40 8199.12

Other Income 266.93 132.17

Variation in Stock 232.41 2.92

  11421.74 8334.21

EXPENDITURE    

Purchase 111.97 63.65

Manufacturing and other Expenses 9019.30 6576.91

Interest 134.79 162.30

Depreciation 561.49 505.70

  9827.55 7308.56

Profit Before Tax 1594.19 1025.65

Provision for Current Taxation 304.00 105.99

Provision for Deferred Tax 121.80 133.93

Provision for Fringe Benefit Tax 4.64 -

Profit After Tax 1163.75 785.73

Add : Balance brought forward from last year 992.65 772.82

Add : Debenture Redemption Reserve writtern back 5.25 57.22

Add/(Less): Taxation for earlier years (5.96) 4.41

Amount Available for Appropriations 2155.69 1620.18

APPROPRIATIONS    

General Reserve 600.00 500.00

Transfer to Debenture/Bond Redemption Reserve 24.12 -

Proposed Dividend on Equity Shares - 111.70

Interim Dividend on Equity Shares 136.52 -

Tax on Interim/Proposed Dividend 19.15 15.83

37

Balance carried to Balance Sheet 1375.90 992.65

Basic & Diluted EPS of Rs. 10 each (in Rs)    

- Basic Earnings per Share 40.29 31.83

- Diluted Earnings per Share 40.21 31.83

Budgeting:

Budgeting is a method of bridging the gap between ‘what you want’ and ‘what you are likely

to get’. It is always desirable that production is equal to sales. Budgeting is a process to reach

this target. Total consumption is the summation of raw materials, fuels, utilities and other

items. The difference between the sales value and the total value of the consumption is the

margin. And this margin is, what is stated earlier, ‘what you want’.

At IPCL two types of budgets are prepared – ‘Revised Budget’ and ‘Budget Estimates’. The

Revised Budget is prepared for the current year and the Budget Estimate is prepared for next

year. These budgets are sent to the finance department, which is in turn sent to the Board of

Directors meeting for approval.

All the departments including the plants prepare budget for their respective department and

sent it to the Corporate Finance group. This department goes through all the budgets through

MIS. Then, as per the requirement of the plants and based on the annual report, funds are

allotted to the departments.

Accounting:

(SAP support to Accounting)

SAP is a compilation of different modules in which almost all the functions of any organization can be done like accounting, HRM, marketing, etc. In the SAP accounting all the accounts are coded. Codes are generally of 7 digits. The starting code numbers of assets is 5, liabilities is 3, expenses 7, income 6. The account in each category is coded accordingly. For example freight is an expense so its code will start with the number 7. All the accounts under a particular category are compiled together under their starting code number.

The accounting system at IPCL is SAP oriented. Each and every transaction is done through

SAP. The important Accounting Policies are as under:

38

The financial statements are prepared under the historical cost convention in accordance

with the generally accepted accounting principles in India and the provisions of the

Companies Act, 1956.

Fixed Assets are stated at cost, less accumulated depreciation including impairment loss.

Depreciation on fixed assets is provided on straight line method at the rate prescribed in

the Companies Act, 1956.

Transactions denominated in foreign currencies are normally recorded at the exchange

rate prevailing at the time of the transaction.

Long term investments are stated at cost.

Items of inventories are measured at lower of cost or net realizable value. Cost of

inventory comprises of all cost of purchase, cost of conversion and other cost incurred in

bringing them to their respective present location and condition. By-products are valued

at net realizable value.

Turnover includes sale of goods, services, excise duty and sales during trial run period.

Company’s contribution to provident fund, family pension and gratuity and leave

encashment benefits are charged to Profit and Loss Account.

Compensation to employees who have opted for retirement under the voluntary

retirement scheme of the company is charged off to Profit and Loss Account.

Premium on redemption of bonds / debentures are adjusted against the Securities

Premium Account.

An asset is treated as impaired when the carrying cost assets exceeds its recoverable

value. An impairment loss is charged to the Profit and Loss Account in the year in which

an asset is identified as impaired.

39

Chapter 5

LOGISTICS MANAGEMENT

40

5.1 INTRODUCTION OF LOGISTICS

DEFINITION:

“Logistic means management of the flow of goods or material from point of origin to point

of consumption and in some cases even to the point of disposal.”

The Council of Logistics Management (CLM) defines:

Logistics is that part of supply chain process that plans, implements and controls the

efficient, effective flow of and storage of goods, services and related information from the

point of the point of consumption in order to meet the customers requirement.

Distribution Channel:

Fig. 4

FLOW OF INFORMATION

FLOW OF VALUE (GOODS & SERVICES)

FLOW OF CASH

SUPPLIER TRANSPORTER

TRANSPORTER

MANUFAC-TURING SITE

CUSTOMERDISTRIBUTION CENTRE

SUPPLY CHAIN MANAGEMENT

INBOUND LOGISTICSOUTBOUND LOGISTICS

41

Logistics gained recognition since World War 2 when marketing became predominant over

manufacturing, requiring concentrated attention to customer wants. Concurrently, logistics is

the delicate fulcrum-balancing product with consumption. Hence it plays a very important

role in international competition.

The word “logistic” means “the movement, storage and supply of troops and equipment.”

The important point about Logistics is that it is much more than transportation or the mere

physical movement of goods. International logistics decision affect the number and location

of production and storage facility, production schedule, inventory management and even if

firm’s level of involvement in international competition. In other word we can say that it is

closely associated with the ‘Just in Time (JIT) management technique.’

Basically, logistics is the ability to get the right product at the right place at the right time.

Overall it is the planning, organizing, controlling and execution of the flow of goods from

purchasing through production and distribution to the final customer in order to satisfy the

requirements of the market. It combines production, distribution and transportation on global

basis.

So, the basic function of Logistics in international competition, is to create “Place and Time

utility” in goods, locating them at the right place, at the right time and also in right quantity

to customer demand.

IMPORTANCE AND USE OF LOGISTICS

The most important point about logistics is that it is much more than transportation or

physical movement of goods. Basically, the art of logistics is the ability to get the right

product at the right place at the flow of goods from purchasing through production and

distribution to the final customer in order to satisfy the requirements of the market. It

combines production, warehousing distribution and transportation on global basis.

42

5.2 PRIME ACTIVITIES OF LOGISTICS

The key activities of logistics are:

1) Transportation:

For most firms, transportation is the most important logistics activity, simply because it

absorbs, on the average, approximately two thirds of logistic costs. It is essential because

no modern firm can operate without providing for the movement of its raw materials

and / or finished products in some way.

“Transportation” refers to the various methods for moving a product. Truck, rail water

and air are just a few of the popular choices. Management of the transportation activity

usually involves the making of choices regarding the method of shipment, the routings,

and the utilization of vehicle capacity.

2) Inventory Maintenance:

It is usually not possible or practical to provide instant production or instant delivery to

customers. In order to achieve a reasonable degree of product availability, inventories

need to be maintained as buffers between supply and demand. The extensive use of

inventories results in the fact that, on the average, they account use of approximately on

third of logistics costs, making inventory maintenance a key logistics activity.

3) Order Processing:

Order processing costs tend to be minor compared to transportation or inventory

maintenance costs. Nevertheless, it is a primary logistics activity. Its essential nature

comes from the fact that there is a critical time element in getting goods and services to

customers. Also it is the primary activity that triggers product movement and service

delivery.

43

Supporting activities of logistics are:

- Warehousing.

- Materials Handling.

- Protective Packaging.

- Acquisition.

- Product Scheduling.

- Information Maintenance.

LOGISTICS SUPPORTS MARKETING

The “four P’s” of the marketing mix require that for a firm to be successful any marketing

effort must integrate the ideas of having the right product, at the right price, publicized with

proper promotion, and available in the right place.

Logistics plays a critical role particularly in support of getting the product to the right place.

Primary goal of logistics is to provide customer service. Achieving customer satisfaction

requires an integrated effort both internally and with suppliers and ultimate customers and

these can be achieved with the help or Logistics Management. Following figure summarizes

the tradeoffs required between and among the major elements of the marketing mix and

logistics.

44

COST TRADE-OFFS REQUIRED IN MARKETING AND LOGISTICS

Fig. 5

INVENTORY CARRYING COSTSINVENTORY MANAGEMENTREVERSE LOGISTICSPACKAGING

LOT QUANTITY COSTS MATERIAL HANDLINGPROCUREMENT

PRODUCT

PROMOTIONPRICE

PLACE /CUSTOMER

SERVICE LEVELS

TRANSPORTATION COSTS

TRAFFIC & TRANSPORTATION

WAREHOUSING COSTSWAREHOUSE & STORAGEPLANT & WAREHOUSE SITE

ORDER PROCESSING & INFORMATION COSTSORDER PROCESSINGLOGISTICS COMMUNICATIONSDEMAND FORECASTING /PLANNING

MARKETING

LOGISTICS

45

LOGISTICS MANAGEMENT

Logistics is a very essential function of marketing. It plays a very important role to make

customer satisfied with timely delivery at optimum cost.

Logistics function includes mainly transportation, warehousing & insurance part of goods to

be delivered. “Logistic function itself means the right goods at right place at right time.”

Unless & until we efficiently delivered the goods at the customers’ destination, our

customers are not satisfied & this becomes possible, only through logistic function.

Marketing mgmt. includes the management of mktg. Mix i.e. the 4 P’s a) Product, b) Price,

c) Place & d) Promotion.

Place aspect is taking care of the distribution part of goods to the market & includes the

logistic function as well. Nowadays, physical distribution has expanded into the wider

concept of Supply Chain Management (SCM). SCM starts before physical distribution. It

involves procuring the right inputs, converting efficiently into finished products &

dispatching them to the final destinations.

Marketing Logistics involve planning the infrastructure to meet demand then implementing

& controlling the physical flows of materials & final goods from points of origin to points of

use to meet customer requirements at a profit.

Mktg. Logistic involves several activities. The first is sales forecasting, on the basis of which

the company schedules distribution, production & inventory levels. Finished goods flow off

the assembly line & pass through packaging, in-plant warehousing, shipping –room

processing, outbound transportation, field housing & customer delivery & servicing.

Producers of physical goods & services must decide on mkt. logistics- the best way to store

& move their goods & services to the market destinations. The logistical task is to co-

ordinate the activities of suppliers, purchasing agents, manufacturers, marketers, channel

members & customers. Major gains in logistical efficiency have come from advances in

information technology.

46

Chapter 6

ROLE OF “SAP” IN THE OUT BOUND LOGISTICS PROCESS FOR SOLID MATERIALS

47

Sub-Cycle Definition

TPN Truck parking entry (checking of documents by RGSS)

WBN Weighbridge entry by RGSS

TOL Truck order linking at ware house

VLO2 Materials pick up note. Placement of material & manual loading by labour

ZIPS Invoice generation

WBX Weighbridge bridge exit by RGSS (checking of net weight)

MGX Main gate exit

TPN

Truck parking entry is done at BC-05 (gate no. 5) where the reporting number is provided.

The order number, L.R. number and total quantity to be loaded is entered in the ‘remarks’

column which helps the storekeeper to find out which grade of material is required in what

quantity. At Gate no. 5 the RGSS instructs the truck driver to remove all unwanted items

such as stove, rubber tubes, incense sticks (agarbatti), match box, cigarette, bidi, tobacco, pan

masala, stephny etc. Then the truck is sent to gate no. 7 from outside (outside IPCL

complex).

WBN

At the gate no. 7, the security checks the truck thoroughly for the spark arrester and shoes for

the driver and cleaner. If any unwanted item is there in the truck, it is removed before the

truck enters the gate. After entering from gate no. 7 the truck goes to the weighing bridge.

Here, the empty truck is weighed and WBN (weight bridge entry) is prepared. Thereafter, the

truck is parked in queue for loading.

TOL

Once the WBN is done the truck driver brings the TPN and requisition slip for TOL. The

storekeeper links the truck order and prepares the material pickup note which states how

much quantity to pick and from which storage location. The stock supervisor identifies the

material and instructs the forklift operator to bring it to the loading point. The supervisor

instructs the truck-driver to bring the truck at the loading point.

The labourers pick the bags from the palette and place it in the truck. When the truck is filled,

the loading supervisor signs the material pick-up note and it is sent to the warehouse office

for the preparation of the invoice.

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INVOICE PREPARATION

The storekeeper prepares the invoice, the border form in case the material is being sent

outside the borders of Gujarat and a quality certificate.

The invoice is signed by the warehouse in-charge and handed over to the truck-driver. In case

there is a border form, it is signed by the truck-driver and a copy of the same is retained with

us.

WBX

The filled truck goes for weighing again.

The WBX gives the gross weight; the net weight is ascertained on the basis of this.

If the net weight is falling within the ascertained range i.e. weight of empty truck + weight of

quantity loaded+ weight of empty bags ± 20 kg, then the truck is allowed to exit (Main gate

exit). In case the net weight doesn’t fall within the limits then the difference is adjusted either

by adding or removing the appropriate quantity of material. After that only the truck is

allowed to leave the complex.

MGX

Main gate exit is recorded for monitoring and security reasons. It helps to identify how much

time the truck took to leave after WBX is done.

49

6.1 ORDER FLOW FOR OUTBOUND LOGISTICS

ORDER – FLOW CYCLE:

Fig. 6

Regional Office Block

Head Office Block

MOP Block

Credit Block

Loading of truck at warehouse

Customer Placing / Receiving the Order

ORDER

ORDER

ORDER

ORDER

ORDER

DELIVERY

50

Procedure

Customer can book the order from any of the 5 regional offices of the I.P.C.L. customers

have to make advance payment through check / D.D. / cash.

The major functions of different Regional offices are to receive payment, to make the sales

orders and to calculate relevant taxes and discounts and attend to customer complaints. If all

conditions are satisfied then Regional officers enters the customer order in SAP system.

At the head office the concern Business group receives the customer orders from five

Regional offices located all over the India. The major functions of Business group are to

decide the prices of different materials, customer wise allocation and region wise allocation

of the materials.

After checking the availability of materials Business group releases the pending order

through SAP system to MOP (Marketing, Operation & Planning) department.

The major functions of MOP are to check the availability of material in different warehouses,

to make the dispatch plan, to release the dispatch plan to the concern transporters and to see

that the respective loading for the day gets over well in advance. The final dispatch plan is

prepared and given to the transporters in the previous day evening. MOP also gives some

additional dispatch plan throughout the day, which again depends on the order that comes

from the head office. Transporters have to place their trucks for the additional plan given

throughout the day.

The Product Transfer Department (PTD) releases the material to respective transporters and

in turn transporters deliver the material to customers.

51

Chapter 7

TRANSPORTATION

52

Transportation function is the part of any logistics management. The marketer is required to

take effective decisions. Transportation of the goods will affect product pricing, on-time

delivery, performance & the condition of the goods when they arrive, all of which affects

customer satisfaction.

The transportation of material from Baroda complex to various destinations is outsourced to

Reliance Logistics Ltd. Reliance Logistics in turn subcontracts it with various transporters on

ARC basis, which can be extended for a period of 3 months on existing terms and conditions.

We identify the regions where our customers are located. Then we estimate the amount to be

dispatched to these regions directly to our customers and to our warehouses during the year.

Tenders are invited and on the basis of the lowest quote the contract is given. We have many

transporters as our customers are spread across the nation and no particular transporter can

provide services covering the entire nation.

The list of IPCL transporters is as follows:

SR NO. TRANSPORTER NAME

1 BEST ROADWAYS LMITED2 BAHUBALI TRANSPORT CORPORATION3 BLR INDIA LTD.4 CHARTERED CARRIES LTD.5 COSMO CARRYIN CARRIERS6 DELHI ASSAM ROADWAYS CO. LTD.7 DELHI GUJARAT FREIGHT CORP.8 GARG TRANSPORT COMPANY9 GLOBE TRANSPORT CO.PVT.LTD.10 JAM TRANS CORPORATION11 NARSI NENSHI & SONS12 NEW GUJARAT FREIGHT CARRIERS13 ORRISSA BENGAL CARRIER14 PIONEER ROAD CARRIERS15 RELOGISTICS PVT.LTD.16 SAR PARIVAHAN PVT. LTD.17 SHREEJI TRANSPORT CO.18 SPEED CARRIERS PVT. LTD.19 TRANSLINES CORPORATION

53

The transporter appoints a representative who will be at IPCL Gate No. 5. Our senior

executive of the marketing dept. hands over a list to this representative, called ‘babu’, every

evening. This list contains the number of trucks required for various destinations along with

the truck capacity for the following day.

The next morning the transporter either sends his trucks or contacts the various transport

brokers for availability of trucks. After negotiating over the rates with the brokers the trucks

are sent to IPCL. These trucks first report to their respective ‘babu’ at gate no.5 who

completes certain procedures for verification and identification purposes.

Thereafter, the truck goes through the activities of TPN to MGX. The truck is sent to the

respective warehouse where it is filled and finally goes out of IPCL.

54

7.1 TRANSPORTATION CONTRACT

For the transportation of IPCL’s products Reliance Logistics Pvt. Ltd awards the

Transportation Rate Contract to financially sound & experienced transport companies. The

total quantity of solid products from all the three complexes of IPCL is around a million

tones p.a. the products are packed in bags.

The tender document has two parts—namely, a) Technical bid b) commercial bid. A tender

committee evaluates the tender. The committee among other things verifies the fulfillments

of the statutory requirements, such as tax clearance certificate, solvency certificate, certificate

of incorporation of a company, certificate of registration of partnership, latest balance-sheet

&/or statement of account along with IT returns.

Attested photocopies of registration in the name of the firm, partners, and proprietor are also

to be enclosed with the tender, accompanied by an Earnest Money Deposit of appropriate

amount. The tenderers are also required to provide detailed information such as registered

name of the firms, composition of the firm, details of general facilities namely the address,

year of establishment, contact person, telephone no., fax no., e-mail address.

GENERAL CONDITIONS OF THE CONTRACT

The tenderer is required to quote competitive & workable rate for operating throughout

the contract period.

Successful tenderers are given the work order. They are required to provide a Security

Deposit towards fulfillments of the contract, which could be in cash or bank guarantee.

SPECIAL CONDITIONS

Period: The contract is valid for a period of one year which can be extended for further

period for the same terms & conditions, or terminate at any time without assigning any

reason thereof.

55

Capacity & suitability of trucks:

a) The trucks provider should be in roadworthy condition & maintain all features

necessary for smooth & safe transportation of products over long distance. The

loading capacity of all trucks as governed by RTO registration book.

b) The truck should be occupied with all necessary permit & licenses (e.g. inter state

road permit)

c) The trucks should be fit to carry the products over long distances without

transshipment.

d) The interior of truck should be smooth & at the sides as well as at bottom, so that the

bags should not get damaged during loading transit & unloading.

e) The tarpaulin has to be put at the bottom & after loading material it is to be covered

properly by another tarpaulin to protect it from rain/Sun.

Contract rates: the quoted rates of the tenders are on FOR (Free On Road) destination

basis including loading, unloading & stacking of consignment inside the warehouse as

per the requirement of the corporation or its dealers/consignment stockiest/ customers as

the case may be.

Road tax, entry tax, good tax, RTO tax & all other taxes, levies, surcharges except octroi,

that are imposed during contract period by any central/ state/ municipal or other bodies

shall be payable by the transporters.

SALIENT FEATURES OF TRANSPORTATION CONTRACT

Placement of trucks & indent of trucks:

a) The transport contractor is responsible for providing required no. Of trucks as per

indent for each destination within specified working hours.

b) It will be the contractual responsibility ascertained, such requirement from IPCL daily

for the following day.

Non-placement penalty:

a) If the transporter fails to prevail a certain % of indent for a sector daily, non-

placement penalty can be levied.

56

b) Truck reporters without licenses & proper documents will not be allowed for loading

& will be treated as non-placement.

Open mkt. hiring: in case contractor fails to provide required no. Of trucks on day-to-

day basis, the corporation has the right to hire trucks at open mkt. rates & deduct the

difference of rates from the defaulting contractors.

Termination of contract: transporter who fails to place indented trucks as per the terms

may be suspended or terminates & the security deposit shall be forfeited.

Transshipment &/or part delivery of consignment during transit is strictly prohibited.

The contractor shall comply with all the statutory requirements as stipulated in various

acts & Laws regarding casual labor deployed by him by various activities connected with

the contract. The contractor shall be solely responsible for non-compliance with any such

statutory requirements.

PROBLEMS FACED BY THE TRANSPORTERS

Difficulty in getting the desired no. of vehicles from the market due to seasonal

fluctuations.

Certain drivers are reluctant to carry IPCL’s products due to high value associated risks

& also considerably longer turnaround time.

When seasonal farmed products are available for export from Baroda, the truck drivers

give preference to such products where the risk is less & the incentive is more.

The transporters are of the opinion that their freight bill payment cycle is longer. Thus

making their working capital position tight.

The drivers feel that the strict checking of the documents, license, permits etc. is not

comfortable as in the most documents are not available in original form.

Sometime they are not receiving order in advance so they find it difficult to arrange for

the trucks on the same day.

57

TRANSIT TIME & DELIVERY

The consignment must be delivered & stacked at destination warehouse, within the permissible transit period, to be recuned from next day of dispatches from the day of delivery at the destination. If there is any failure in reaching the material as per the transit period, a penalty will be levied.

Permissible transit period – Vadodara complex

Sr.no. Destination Transit days

VADODARA RO1 VADODARA 12 SURAT 13 VALSAD 14 VAPI/DAMAN/SILVASSA 15 INDORE 26 BHOPAL 27 GWALIOR 38 JABALPUR 3

AHMEDABAD RO9 AHMEDABAD 110 KALOL 111 RAJLOT 112 Bhavnagar 113 Jaipur 314 Jodhpur 315 Udaipur 1

MUMBAI RO16 Mumbai 217 Aurangabad 218 Jalgaon 219 Nasik 220 Solapur 321 Nagpur 322 Pune 223 Goa 424 Bangalore 425 Mangalore 426 Hydrabad 327 Nandyal 328 Gantur 429 Vizag 430 CHENNAI 5

58

31 MADURAI 532 SALEM 533 PONDICHERY 534 KOCHI 535 COIMBATORE 536 CALICUT 5

KOLKATA RO37 Kolkata 638 Raipur 439 Patna 640 Ranchi 641 Balasore 642 Cuttack 643 Jamshedpur 644 Guwahati 1045 Bhuvaneshwar 5

DELHI RO46 Delhi 347 Faridabad 348 Kanpur 549 Dehradoon 450 Agra 351 Varansi 552 Gurgaon 353 Ghaziabad 354 Ludhiana 455 Jammu 6

59

7.2 DISTRIBUTION CHANNELS

The Distribution channel for solid products is shown in the following block diagram.

Fig. 7

The distribution is basically done through road with the help of trucks. IPCL has made a

contract with some transporters for transporting its goods to the different cities in India. IPCL

follows 1 level channel for distributing its goods throughout the country. IPCL Sales its

goods through distributor warehouses located in different cities of India. It also provides door

delivery for its goods to its customers.

IPCL follows three types of distribution strategies.

1. Stock Transfer.

2. Direct Sales.

3. Export.

There are total 5 regional offices of IPCL they are located in Ahmedabad, Bombay, Chennai,

Delhi and Kolkata

Major SALES CENTERS:

The major sales centers of IPCL are Vadodara, Daman, Jaipur, Bangalore, Hydrabad, Kanpur, & Ludhiana.7.3 DISPATCH PROCESS

Plant Warehouse

EXPORT

CUSTOMER

CUSTOMER

CUSTOMER

CUSTOMER

Stock Transfer

DISTRIBUTORS WAREHOUSE

IPCL WAREHOUSE

60

Dispatch Process comprises of the activities undertaken at the warehouse for the delivery of

the product.

That includes all the activities from TOL to INV. So in a way, dispatch process includes all

the activities considered for computing the cycle time.

So we can say that the Dispatch Process is the part of Logistics which is very essential in the

out bound logistics management.

Reducing the time involved in it and increasing the efficiency and productivity will lead to

the benefit of fast dispatch.

For accurate and quick dispatch the most important factor is the warehouse management. For

dispatch of any product the first thing is the availability of that product in sufficient quantity

and the last thing is the main gate exit of the truck after making the invoice.

There are three types of dispatch taking place from the warehouse:

1. Domestic sales

2. Stock transfer

3. Export

61

Chapter 8

WAREHOUSE MANAGEMENT

Warehousing is the process of storing goods within a storage facility and to look after stored

goods. But Warehouse Management is a wider term, which monitors the progress of products

through the warehouse. It involves the physical warehouse infrastructure, tracking systems,

62

and communication between product stations. Warehouse management deals with receipt,

storage and movement of goods, normally finished goods, to intermediate storage locations

or to final customer.

The IPCL warehouses are of finished goods. So here the warehouse management is

concerned about sending the goods to the consumers, distributors or to the IPCL warehouses

away from manufacturing complexes.

Major activities involved in the Warehouse Management are:

Receiving of goods

Moving of goods to the loading points

Loading of goods

Maintaining the warehouse

The IPCL employees are doing the entire warehouse management Out of seven warehouses

at IPCL Baroda Complex only two warehouses (PP-4, PBR-2) are given to a contractor for

warehousing activities. Gradually they are planning to give a contract to a contractor for

remaining five warehouses.

There are Loading Supervisors, Khalasies, Cleaning Staff, labors, forklifts and forklift

operators in the warehouse. The role of IPCL employees in the warehouse is to take care of

all the documentation work and to keep a watch on loading activities as well as warehousing

activities being carried out by the labour and warehouse employee.

The dispatch activities works for 6 days per week, and on an average 350 MT are loaded a

day.

There are two shifts working, 8:30 am to 5:00 pm and 2:00 pm to 10:00 pm. The scheduled

timing for all the labours of contractor is 9:30 am to 10:00 pm. But the forklift operators,

storekeeper work in shift (general shift and second shift). For general shift two forklifts and

two operators and for evening shift two forklifts and two operators are to be provided. So for

the time between 2:00 pm to 5:00 pm there are four forklifts and four operators.

Now let’s see the every day’s procedure to manage the warehouse.

Receiving of goods

63

Every day in the morning a Receipt for Goods Received is handed over to the loading

supervisor by the bagging department. The goods that are packed and put on the pallet are

stored in the warehouse by the forklift operator of bagging area and the IPCL employees give

him the information regarding the storage location.

Now the Loading Supervisor will check the goods kept according to the receipt received

which contains the storage location of goods kept. And then the receipt is given to the IPCL

employees to enter the information in the SAP system. So the information regarding which

grade of goods is kept where that can be known with the help of the SAP system.

Moving of goods to the loading points

With the reference of the Daily Dispatch Plan the major grades in order for the day is known,

and according to that those materials are brought nearer to the loading area for the quick

loading.

The IPCL employees make when the truck arrives to warehouse after TPN and WBN, the

TOL and Material Pick up Note. TOL is not a physical document, so other than that

documents are given to the loading supervisors. According to the Material Pick up Note

issued, the Loading Supervisor will ask the forklift operators to bring the pallets to the

particular loading point.

Loading of goods

The Loading supervisor will observe the number of pallets kept and loaded, he will also look

after the number bags on the pallet and labors. As and when the loading of required material

is done the documents are sent back to the warehouse office, where IPCL employees work,

and then invoice and quality certificate is made. After that the truck is sent for the WBX.

Maintaining the warehouse

They have appointed a sweeper for marinating the cleanliness of warehouse. The warehouse

in charge has to look for the condition of the pallets, condition of the forklifts, availability of

forklifts and his employees. If any error is found in the activities then he is only the

responsible person there.

There are three types of registers maintained by the corporation:

64

RG 23C register: RG 23C is an excise register maintained at the complex. Excise duty is

debited into this register for all capital goods. Normally debit is made once in the every

fortnight for all invoices prepared during the fortnight. Credit can be availed from

register.

RG 23A register: RG 23A is an excise register maintained at complex. Excise duty is

debited into this register for all Raw material Normally debit is made once in every

fortnight for all invoices prepared during the fortnight. Modvat credit can be availed from

the register.

BOND register: bond register displays the sequence of transactions availed against that

Bond. It can be debit or credit. Each transaction has a sequence no. Entries made in Bond

register is in the order of the sequence no. The sequence no. Is different for debit & credit

transaction.

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Chapter 9

PACKAGING

66

Finished products are received from the plant by the PTD (Product Transfer Department)

which function is the interface between the Mktg. Dept. & the Production dept. however, in

the recent restructuring of the functional activities of IPCL, there is a plan to eliminate PTD.

The finished products from the plants are transferred in the silos, from where the produces

are coming through the pipeline for the final finishing & bagging purpose. After the quality

checked, the dispatch able qty. is shown under ‘unrestricted, qty. in SAP. This is the qty.,

which is planned for dispatching by MOP.

IPCL’s products are bagged in LDPE bags. The packaged material used by IPCL is

environmental friendly as it can be recycled for further use. One wooden /plastic pallet

carries 40 bags of 25kgs. Each i.e. 1Mt weight.

The content on the bag carries---

Name of the manufacturer

Product & brand name

Grade

Gross & net weights

Batch no.

Month & year of manufacturing

Instructions

Batch no. Will help in the case of any quality complaint from the customer, to trace out the

cause of the complaint. Proper care is taken while transporting the material, in order to

prevent any damage to the bags or the materials.

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MOVEMENT OF CHEMICALS

The key concern of the chemical industry is to do everything possible to ensure that nothing

goes wrong during the transport of its products. International trade, exports & imports

demand the chemicals to be moved in & moved out of ports. In fact, road is by far the most

important way of moving chemicals. Rail is used less, the major reasons being that the rail

network is overloaded with movement of food grains, coal, ore, petroleum products etc.& is

relatively smaller than the road network. In addition relatively few factories have direct

access to Railway.

Pipeline are rarely used to link major centers of chemicals manufacturing it may not be

economically feasible, or even socially desirable to cross the country with them. On the road,

chemicals are either carried in bulk tenders, mostly in liquid form, or in packages such as

drums, cylinders or bottles.

SAFETY MEASURES:

Personal protection equipments: helmet, gloves, mask, safety shoes, face shield, earplugs,

and safety belts.

Vehicle safety measures: tanker owner should get explosive passing issued by chief

controller of explosives.

Fire water sprinkler

Pressure test certificate

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DOCUMENTATION WHILE LOADING.

AT the time when the trucks are coming for loading purpose there are certain documents

required & which are must, otherwise the corporation has the right to reject the truck for the

loading.

First of all the driving license of the driver of the truck is checked, the condition of the driver

as well as the truck is checked by the security, whether the truck is in the good & roadworthy

condition or not, the required no. Of the tarpaulin is available or not, the engine of the truck

is in working condition, all these formalities are checked by the security

& then the truck is allowed for the entry in the parking plaza.

Once the truck is in the parking plaza, the permit is checked. The permit must contain

PUC (pollution under control certificate)

Certificate of registration (RC book)

Insurance policy

National permit for the inter state transit

LORRY RECEIPT

The most important document while any truck comes for the loading purpose. The

transporter issues the lorry receipt while his truck is come for the dispatch & receipt of the

goods against the order.

Lorry receipt shows the brief about the truck, details about consignee as well as consigner,

insurance detail, description regarding the material for dispatch etc.

Lorry receipt is very important document in case if any abnormal situation arises while

transit, if any accident arises with the loaded truck & in case of the insurance claim the lorry

receipt is the first requirement. Even at different check posts also the lorry receipt is being

checked.

Lorry receipt & other documents are to be furnished as per IPCL’s requirements. In case of

export consignment such issuance will be governed by the provision of various customs &

excise laws.

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Chapter 10

EXPORT PROCEDURE

70

Selling outside the country is very difficult than to the domestic market. In foreign market we are not in the direct contact with our customers. To export in the foreign market needs competitiveness & quality assurance.

IPCL is having good amount of exports in the foreign countries. IPCL’s products are well in the demand of the foreign market. Earlier IPCL had its business associates for the foreign trade but after acquired by the RIL it handles all the export directly without any intermediates.

STEPS:

1) Purchase order: the IPCL receives order through sending quotations to the vendor

country, which is in the requirements.

2) Acceptance of contract/ order

3) Letter of credit

4) Block order release

5) ARE - application of removal of excise duty.

DOCUMENTS

The documents required for the export are as follows:

Certificate of origin: certificate of the origin is required by the importing country to

check whether the goods are from their original country & company, to avoid re-export.

Packing list: packing list contains the total weight of the goods, their packaging aspect

etc.

Letter of credit: letter of credit is the sort of the bank guarantee on behalf of the exporter

to the importer.

Bill of lading: bill of lading is issued by the shipping company which contains the detail

regarding the net goods receipt for the loading form the port to the respective destination.

Shipping bill: shipping bill is the important document for custom purpose. At the time

when goods are about to depart form the port the custom authority must check it. They

checks the quality, the quantity, they can even check the sample. After the checking

approved by the custom authority the consignment is authorized to export, & the export is

known as “Let Export”.

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Test certificate: in case of exporting of chemicals the importing country may asks for the

test certificate to check the various parameters as per their specification required in the

order.

Commercial invoices: the most important document in domestic as well as in the export

of the goods. There are 3 copies of the invoices of the invoice are required in case of the

export. In the invoice all the details regarding the goods, their qty., the rate, the amount,

other levies etc. are mentioned.

Insurance policy: in case of CIF basis of export the insurance policy is taken by the

exporter till the consignment reaches its destination. All the cost of insurance premium is

beared by the exporter.

The major foreign markets for IPCL are China, Vietnam and The European Union, which

accounted for approximately 51%, 19% and 8%, respectively.

LAB, BENZENE, MEG, LDPE, is generally exported from IPCL Vadodara complex.

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Chapter 11

CYCLE TIME MANAGEMENT

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11.1 OBJECTIVE OF THE STUDY

The major objective of the study is to study the cycle time of the LDPE warehouse and to

reduce the cycle time. For this purpose the activities from TOL-INV are considered as the

cycle. As per the commitment given to ISO cycle time is 120 minutes on an average. The

average cycle time for the month of May 06-07 was 138 minutes.

Other objectives

- To identify the causes for higher cycle time

- To understand the practical difficulties faced by the people working in the warehouse.

- And finally find out ways and means to improve the dispatch process.

The motive behind reducing the cycle time is to improve the customer satisfaction and better

utilization of the resources. As the famous saying goes ‘time saved is money earned’! If the

time taken to lift the material from the storage locations and put it in the trucks is reduced,

the average inventory carrying costs will come down. Also, the number of trucks filled per

day will increase.

If the ideal cycle time is achieved it will ensure standardization.

Benefits of achieving desired cycle time

The achievement of the desired cycle time will result in the following benefits:

1. By reducing the cycle time we can reduce the total inventory carrying cost.

2. If the cycle time reduces, each truck can be filled in a lesser time and therefore we can

maximize the number of trucks filled per day.

3. We can reduce the number of empty trucks sent back and therefore save the revenue loss.

4. It will improve the productivity of employees. If we are able to meet the ISO

requirements it will also result in a psychological advantage - our employees will have a

feeling of achievement and therefore will take pride in being a part of IPCL. This sense

of belongingness can lead to increase in employee productivity.

5. Security issues related to providing night halt to the truck drivers can be eliminated. This

will give them a pleasure to work with IPCL and thus, we will have good rapport with the

transporters.

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6. The transporters will be willing to deal with our company in future and will provide us

better services.

7. The material will reach the end customer promptly and therefore customer satisfaction

objective will be achieved.

8. ISO requirement of 120 minutes, if it is met it will help in keeping up the public image of

our company of being an ISO certified company. Also, our stakeholders (customers,

suppliers, employees and shareholders) will have greater faith in us.

9. National gain if the trucks are relieved earlier from IPCL, they can be put to other uses

sooner.

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11.2 SCOPE OF THE STUDY

Our study is limited to LDPE warehouse only and that too only the cycle time i.e. from TOL

to INV.

So the findings and suggestions cannot be generalized for all the warehouses of IPCL to a

large extent.

The time period of the study is just 4 weeks. We have tried our best to make the most of the

available time but if more time was available definitely we would have been able to connect

to all the linked aspects of the warehouse.

Not only this, we got an opportunity to interact with people having rich knowledge in various

fields that is Marketing, Warehouse, Civil engineering. Also we had conversations with

warehouse Contractor, truck drivers, labourers, and Transporters and RGSS staff. This

helped us to develop a practical perspective towards each problem and make pragmatic

recommendations.

There could be some gaps because of the limited access to information.

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11.3 METHODOLOGY

The two main approaches used during our study are BPR and Work-study.

BPR

It basically focuses on what are the goals and ultimate objectives. Thereafter, the existing

process, procedures, systems and methods are analyzed to find out where is the liaison. Once

it is identified, ways and means are developed to overcome it.

The necessary changes in any or all of process, procedures, systems and methods are adopted

in order to achieve our set goals.

During the period of our assignment, we studied the various aspects of the dispatch process

and related activities in LDPE warehouse.

In order to understand the procedures in a comprehensive manner, we had interactions with

various groups of people related to the dispatch process directly or indirectly.

The mission of this project was to bring down the ‘TOL-INV’ cycle time.

We noted the average cycle time and identified the main factors responsible for increasing

the cycle time.

Thereafter, we had brain storming sessions and discussions with our guide and warehouse

staff to find out solutions to eliminate those factors.

Major areas where change is required are focused upon keeping in mind there significance

and consequences of such changes.

Dialogues with the end user and continuous critical evaluation helped us to make our

suggestions practical and feasible.

Work Study

Work Study includes time study and motion study.

The process in question requires use of physical labour as well as machines. Therefore, it

becomes mandatory to use work-study approach.

This included noting the use of machines and there significance in the entire cycle and the

method of working of the labourers. The most important and inevitable movements were

identified. Also, there was an attempt to find out unnecessary movement of either labour or

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machines or both. Normal and actual time taken to complete each task was determined. A

few suggestions have been made to eliminate the unnecessary activities, to improve or

redesign the method of accomplishing a particular task in order to reduce the time taken to

complete it.

11.4 DATA COLLECTION

Data was collected by three means as follows:

1. SAP

Daily dispatch reports and cycle time computed through the SAP system used by the

company was one major source of information. Since the data was available through SAP,

the authenticity and reliability of the data is not questionable at all.

2. Observation

All information cannot be available through computerized systems. Sometimes human

observation helps much more than any other means of collecting data to know the true

picture. Also it is said that ‘seeing is believing’! Thus, in certain cases we undertook

observation to verify the data collected through other means. This ensures that the data used

was not based on biased opinion of any particular group.

3. Questionnaire

Questionnaire for IPCL staff was designed in order to collect information that demanded

objectivity to a large extent.

The purpose of the questionnaire was to get the information from the people who were

responsible behind the cycle time.

The questionnaire was handed over to the IPCL staff to be filled in by them. But in case of

the contractor’s staff, they were not able to fill in the responses themselves. So, we asked

them the questions and filled in responses on our own. In order to eliminate any

manipulations, two people approached the respondents; one person asked the question and

the other filled in the responses.

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4. In-depth interview

We needed profound knowledge of the entire system in order to be able to comment on it.

For this purpose we conducted depth interview with some people who possessed rich

knowledge and experience in their area of work.

These included –

‘Senior store keeper’ who had 22 years of experience at IPCL warehouse, Warehouse in-

charge’ who had rich experience of working with IPCL “Architect” of IPCL, Baroda

complex,

‘Senior store keeper, LDPE’ having detailed vision of the problems faced by our transporters

and last but not the least our guide ‘Senior Executive’, MOP dept. who again has an

experience of 20 years of career in the marketing dept. along with rich knowledge of

economics, politics, global market, geographical accuracy and human psychology.

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11.5 FINDINGS

The factors responsible for increasing the cycle time are divided into three categories as

management related, contractor related and transporter related. This is done in order to find

out which factors are under our control so that they can be dealt at the earliest.

Management related

Contractor related

Transporter related

Management related

Lack of checking: since there is only one supervisor (store keeper) looks after the

loading activities so he is not able to pay attention when there is a too much load. Which

has major impact on the cycle time

Arrangement of finished goods: since LDPE warehouse is having a 8 grades of a

finished goods(majority of demand is of 3 grades only) the arrangement of those goods

should be done properly. The arrangement of a good should be in such a way that highly

demanded goods should be placed in the front rows and the goods which are having low

demand should be kept at the back

Utilization of the BA07 vacant place: The BA07 area where they are suppose to put the

finished goods they are putting palette. It would be better that if they place the goods

which are at the back rows (BC 105 – 140) can be put there so that forklift will have to

travel less distance and they will be able to complete the loading early

Usage of forklift: Some times they are carring more weight on the forklift. The capacity

of the forklift is 1.5 ton. But it lifts 2 tons at once. This deteriorates the condition of the

forklift and therefore hampers its performance.

Lack of proper planning by Supervisor: The Supervisor should place the material to

the loading point before truck comes since he has all the order in advance. But they are

waiting for the arrival of the truck then they start putting material at the loading point.

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Warehouse layout The existing layout has certain drawbacks. The layout should be such

that the forklift can go inside and put the material into the trucks. For that the dock

leveler should be used which will help the fork lift to go inside. And out of 10 loading

points only 6 points are covered by the roof rest of the 4 should have a protection from

the rain. During rainy season if only 6 loading points are working then we would have

too much chaos over there.

Attitude of management Lack of co-ordination between MOP staff and PTD staff

results into lack of proper management. Here at IPCL BC people are still living in the

Government organization era, privatization’s effect is very low in work culture Of people

having casual approach towards work, they are passing their work to Others not all but

few one it increases the processing tine

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Contractor related

Labour absenteeism The major problem is posed by high absenteeism of Labour. The

total number of labourers per day to be provided at the LDPE warehouse as per the

contract is 40. But the supervisor fails to arrange for the required number. On an average

the number of labourers present per day is 24. The total number of labourers present on

any day is divided into 3 groups, each group at one loading point. Therefore, at any given

time there are maximum 3 loading points working simultaneously.

Attitude of labour: Most of the labour’s are coming after 11 o’clock (though they

have to be there in a campus before 9:30) so they are not willing to start the work at 11

am because they will have lunch break soon. This further delays the loading of trucks.

The labourers form three groups everyday. And they are not flexible. In other words, if a

person has finished his work, he will not go and help another group to finish the work

sooner.

Service rate of warehouse labour: Service rate of outbound logistic system at IPCL

Baroda Complex is lesser than the arrival rate of the truck. In system there is queue.

Because of that truck has to wait idle. Which is the major factor affecting cycle time.

Attitude of contractor Since the contract is given on tender basis, the contractor takes us

for granted that the company has no other option as his enterprise had quoted the lowest

tender. With this attitude he takes liberty and does not fulfill his commitment. Reducing

the cycle time or company growth is his last concern.

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Transporter related problems

Delay in arrival of trucks The trucks do not arrive on time as per the indentation

provided in the contract with the transporter. As a result of this, there are very less trucks

to be loaded from 8.30 a.m. to 11.00 a.m. and there is bunching of trucks between 2 p.m.

to 5 p.m. Because of this lot of work is pushed towards the end of the day.

GRAPH 1

The following Graph gives an account of the cycle time during different periods of the day

for the month of may 2007 for LDPE warehouse.

GRAPH 2

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It is evident that the highest cycle time is during 5 pm to 8 pm. Also, it is observed that the

lowest cycle time is during the last time slot i.e. 8 pm to 10 pm. The cycle time starts

decreasing towards the evening

We can see that the maximum number of trucks’ TOL is done between 12 noon to 3pm and

minimum is between 8.30 am to 10 am.

The number of trucks reporting decreases after 2 pm. This is majorly because all the trucks

find some consignments by then. Only those trucks which are unavailable to find a

consignment of their destination or have arrived late in the city report in the afternoon.

From the above graphs we can conclude that during the loading hours, the number of trucks

arriving during a particular time period does affect the cycle time. But the exception is the

last time slot. Though the number of trucks to be filled has not decreased, the cycle time has

decreased tremendously. The invisible hand behind this phenomenon is the motivation to

complete the work as soon as possible in order to be able to go home early.

Other problems

They gate is closed from 8:15 to 8:45,2 to 2:15 and 5 to 5:15 so during those time if any

truck comes during that time it will have to wait outside which will increase the overall

cycle time.

Technological aspect in packing – Cause of less modernization at warehouse for

bagging the variation take place at Weigh Bridge. Cause of that weighs bridge official

has to take weight of truck more than once and even some times truck is rejected also. In

order to correct these situation lots of efforts are to be by unloading the defective

Since there is only one weighbridge so there is a lot of time being spent at the

weighbridge. There is a long queue of trucks at the weighbridge.

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11.6 CONCLUSION

From the above information we conclude that there are multiple factors responsible for

increasing the cycle time. Moreover, some of the factors are beyond our control such as those

related to transporter or contractor.

In order to improve the cycle time we need to first plug out those factors that are under our

control. These are the ‘management related’ factors. Hence, first and foremost we should

deal with them and make changes from our end to help minimize the cycle time. This will

make our position stronger in order to demand changes from others i.e. transporters and

contractor.

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11.7 RECOMMENDATIONS

Possible without additional resources

Supervisor should be there when truck are getting loaded so that labor works properly

and damage of bags and loading time can be reduced. Labor sits idol until all the material

is brined at loading point. Supervisor should force them to start loading as soon as first

pallet or carrot has been brined at loading point.

The entry and exit of liquid truck should be done from the liquid point i.e. Gate No 4.

So that there would be less number of trucks to handle at gate 5, which will defiantly

going to help in reduction of time.

There should be greater emphasis on punctuality and discipline. If all the different groups

of workers related to the dispatch process are available on time, work will not suffer.

In order to ensure punctuality, electronic punching should be introduced for the

contractors and labourers.

Penalty should be imposed on all those who fail to perform their duty. The terms of the

contract need to be altered so as to stress upon the need for daily availability of the

minimum number of labour sometimes, negative reinforcement helps to get the work

done.

The truck should be parked alternatively if there is not much load. This will reduce the

chaos at the loading point since more space will be available for loading and carring the

material by the labour.

The warehouse in charge should conduct a timely inspection in a day to observe the

loading activity and the staff members also; he should not be sitting in his office all the

time. The truck should be parked alternatively if there is not much load. This will reduce

the chaos at the loading point since more space will be available for loading and carring

the material by the labour.

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The warehouse in charge should conduct a timely inspection in a day to observe the

loading activity and the staff members also, he should not be sitting in his office all the

time.

The total material should not be placed at the loading point together. Instead, after 2

rows’ pallets are emptied then they should be removed and the next pallets should be

placed as close to the loading point as possible. This will reduce the distance to be

covered by the labourers to lift the bag and fill the truck.

Warehouse people already have their dispatch plan so that they can know about their

daily work. The warehouse person should bring material at loading point in the morning

before truck came for loading except start bringing material after truck came and wait for

material to be brined for lading.

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BAGGING

BA

BB

BA

BC

BC

BB

Forklift maintenance

Warehouse In-charge’s office

Store Keeper’s office

Senior Manager’s office

Battery Charge Room

Bagging Office

Loading Point

Forklift runway

Toilet

Storage location

Exit Gate Khalasi’s Rest Room

Additional resources required (EXITING LAYOUT)

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Proposed Warehouse layout

There are some changes required in the warehouse. If we design a warehouse in such a

way that a forklift can go inside and put material in to a truck that would really help to

improve cycle time. Which will also need less labor. And on an average 16 tone trucks

will be filled in a 28 minutes, which currently takes 40 minutes. So 30% saving in time is

there. For that some investment is required but this is one time investment and the benefit

of it will be available all the time.

1. The transporters contract should lay more emphasis on demand for truck between 8.30 to

10 a.m. so as to minimize idle time at the warehouse during those hours and avoid

bunching of trucks towards the second shift.

2. The forklift should be of better condition. We should pay higher in order to minimize our

revenue loss due to poor condition of the forklifts.

3. Those employees who perform outstandingly in order to reduce the cycle time should be

duly rewarded.

Others

4. Also, there should be a rest room for the truck drivers.

5. The captions should be written in Gujarati, the labourers can’t read English.

11.8 LIMITATION OF STUDY89

Used vary small sample size i.e. only on month data was used.

Time period of study was during general shift hours i.e. between 8a.m. to 5p.m. So could

not observe the activities till 10p.m.

The project was done only for 4 weeks had there been more time we would have come

out with better practical solution.

Since the LDPE warehouse is located very far we needed to spend too much time on

traveling.

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APPENDIX

GAP ANALYSIS BETWEEN MANAGEMENT PERSPECTIVES& CONTRACTOR PERSPECTIVES (Questionnaire)

FOR MANAGEMENT

Is the number of forklifts provided in each shift sufficient?

Yes____ No____

What is the optimum number of labor required to fill one truck of 16 MT?

Specify_____

At what time the following groups start working?

Loading supervisors ____________Forklift operators ____________Labourers ____________

At what time the loading activity starts? __________

What are the peak loading hours and what are the lean loading hours?

Peak hours___________ Lean hours__________

What are the timings for Lunch Break and Tea break?

Morning Tea Break Lunch Break Evening Tea BreakFor management _________ _________ _________For labors _________ _________ _________For forklift operators _________ _________ _________

What are the responsibilities of Loading Supervisor?

Please specify___________________________________________

Which is the weakest link in the entire dispatch cycle?

Please specify___________________________________________

Which is the one step to be taken by contractor to improve cycle time?

Please specify______________________________________________

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Do you think that the reporting of the trucks is in satisfactory proportion?

Yes______ No______

On going through the truck movement query report, we find that the cycle time is unusually longer during the noon hours, why?

Please specify_______________________________________________

Which are the factors mostly responsible for the higher cycle time?

Please specify 1)______________________________________________

2)______________________________________________

3)______________________________________________

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FOR CONTRACTOR

Is the number of forklifts provided in each shift sufficient?

Yes____ No____

What is the optimum number of labor required to fill one truck of 16 MT?

Specify_____

At what time the following groups start working?

Loading supervisors _______________Forklift operators _______________Labourers _______________

At what time the loading activity starts? __________

What are the peak loading hours and what are the lean loading hours?

Peak hours___________ Lean hours__________

What are the timings for Lunch Break and Tea break?

Morning Tea Break Lunch Break Evening Tea BreakFor management _________ _________ _________For labors _________ _________ _________For forklift operators _________ _________ _________

What are the responsibilities of Loading Supervisor?

Please specify___________________________________________

What are the problems faced by a Loading Supervisor?

Please specify___________________________________________

Which is the weakest link in the entire dispatch cycle?

Please specify___________________________________________

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Which is the one step to be taken by contractor to improve cycle time?

Please specify______________________________________________

Do you think that the reporting of the trucks is in satisfactory proportion?

Yes______ No______

On going through the truck movement query report, we find that the cycle time is unusually longer during the noon hours, why?

Please specify_______________________________________________

Which are the factors mostly responsible for the higher cycle time?

Please specify 1)______________________________________________

2)______________________________________________

3)______________________________________________

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ABBREVIATIONS

BG – Business Group

BPR – Business Process Reengineering

HDPE – High density polyethylene

INV – Invoice generation

IPCL – Indian Petrochemicals Corporation Limited

LAB – Linear alkaline benzene

LR – Lorry Receipt

MGX – Main gate exit

MOP – Marketing Operations and Planning

MT – Metric tons

MTA – Metric tons per annum

PBR – Poly butadiene rubber

PE – Polyethylene

POR – Pending order report

PVC – Poly vinyl chloride

LDPE – Low density polyethylene

PTD – Product Transfer Department

RGSS – Reliance Global Security Services

RIL – Reliance industries limited

ISO – International organization for standardization

TOL – Truck order linking

TPN – Truck parking entry

USA – United States of America

WBN – Weigh bridge entry

WBX – Weigh bridge exit

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LIST OF GRAPHS

Graph 1 Concentration of trucks time wise

Graph 2 Distribution of trucks time wise

LIST OF FIGURES

Fig: 1 Famous sculpture

Fig: 2 Sports Complex of IPCL

Fig: 3 Product Flow Diagram of IPCL

Fig: 4 Supply Chain

Fig: 5 Interrelations between Marketing & Logistics

Fig: 6 Order Flow Cycle

Fig: 7 Distribution Channel

Fig: 8 Warehouse Layout

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BIBLIOGRAPHY

1. Johnson Henry, Penellebry, Wheeler William A., “Business Process Reengineering”

2. Dewitt William, Mentzer John T. (Editor), “Supply Chain Management”

3. Donald J Bowersox,David J. Closs, “Logistical Management”

4. www.IPCL.co.in

5. www.ril.com

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