Inventory Management at RIL

2010
1 of 2
Training Report
Industrial training at RIL (VMD)
An overview of the general operation system at

Reliance VMD with special reference to
“Procurement and inventory Management

(Materials Management)”
GUIDED BY:
Prakash patel A.K. RASTOGI

(Internal Guide) (External Guide)
SUBMITTED BY:
Chauhan Chirag
(M.B.A. 1 st Year 2 nd Semester)
C.K.Shah VIjapurwala Institute of Management
Approved by AICTE & Affiliated to GTU
R.V.Desai Road, Pratap Nagar,
Vadodara -390 004.

DECLARATION
I, Chauhan Chirag, hereby declare that the report on “Summer Training” entitled
“Materials Management” is a result of my own work and my indebtedness to other
work publications, if any, have been duly acknowledged.
Place: Vadodara
Date: 17/7/2010 Chauhan Chirag
Prepared By: - Chirag Chauhan 2

ACKNOWLEDGEMENT
It is almost a ritual to begin the project report with an

“ACKNOWLEDGEMENT” and our heartfelt to all those who directly or indirectly
made our project a great learning experience, indicating me the values and importing
the skills and hard work required for project.
Many have contributed to the successful preparation of this report. We would

like to place on record our grateful thanks to each one of them. We have great
pleasure in submitting this report on “Inventory management” as part of our 2 nd
semester project work.
I am thankful to Mr.A.K. Rastogi for his valuable guidance before and during
my project work. And for his keen interest untiring effort, unfailing courtesy
encouragement and efficient guidance in completing the project in such and elegant
form. I am also thankful to all faculty members of CKSVIM as they provide true
support and courage.
I would like to express my humble thanks to Mr. SAWANT (Training Officer)

without whom my training at RIL, Vadodara Complex would not have been possible
at all.
At last but not the least, I take an opportunity to appeal my profound gratitude
to my adorable and beloved parents for their everlasting love, strong moral support,
encouragement and personal sacrifice without which I was unable to reach the
present status of education. Without encouragement of parents and friends I would
stand nowhere in sphere of life.
Chauhan Chirag

PREFACE
The C.K.Shah Institute of Management, Vadodara gives the students an

Opportunity to have an insight of any large scale unit so that we get the exposure to
an actual managerial environment of company. I am lucky to have summer training
in a company like RIL which is considered to be one of the “largest establishments”
in India.
During this period, I had overview of the finance department within which I
could make a detail study of all the section comes under the roof of finance in RIL.
This training will help me to correlate theoretical knowledge and its practical
applications. It was a thrilling experience while studying working of RIL and
understanding it. This program has led me to realize the contribution of RIL to the
Petroleum Industry of India.
I am grateful to the senior executives of RIL for their cooperation and interest
in my project without which it could not have been possible to go ahead with my
assignment.
With great pleasure, I present this project which consists of a brief study of
inventory management in RIL.
Chauhan Chirag

EXECUTIVE SUMMARY
I, Chirag Chauhan student of C.K.Shah Institute of Management, Vadodara, have

completed summer training as a part of MBA program of 6 weeks at RIL Vadodara.
I have completed my training at material (finance) department. My area of work was

on Inventory Management .I undertook a unique, step-by-step methodology for
preparation of the report. Reference books, RIL internal portal, website, and the data
available at central stores really help me to make this report valuable.
In this report first I have given the general information regarding the company. It
includes the history of company; its disinvestments, milestones, board of directors,
quality policy, financial position of the company, and the products. I have also given
the functional department of the company like Production department, stores,
finance department, etc.
In the second part, I have focused on my core project regarding the procedure
followed for the inventory management at RIL. In the end, the conclusion and the
bibliography are given. The report totally depends on the secondary data and it may
be possible that the data from which the report is made may not appear in the report
because some data is confidential for the company.

Index
Sr. No. Subject Page

No.
A General Project
1 Declaration 2
2 Executive summary 5
3 Chemical Industry Profile 8
4 Reference information 12
5 Reliance Industry Profile 13
6 Product Flow Chart 17
7 Organizational Hierarchy/ Profile 18
8 SWOT Analysis 20
9 Company Profile 21
10 Company logo 24
11 MileStones 25
12 VMD Plant 28
13 Product Details 29
14 Major Competitors and customers 25
34
B FINANCE DEPARTMENT
1 Financial Department Hierarchy 36

2 Budgeting Process 37
3 Accounting System 38
4 Section wise Function of Department 39
5 Cash and Bank Section 39
6 Payment Section and Central Accounting 40
7 Income Tax 40

8 Procurement 41
9 Costing 41
10 Payroll 42
C PROJECT ON MATERIALS MANAGEMENT

1 Scope and objective 43
2 Introduction to Materials Management 44
3 Procurement 44
4 Procurement Planning 44
5 Purchase to Issue Procedure Cycle 55
6 PR Creation and PO Creation 57
7 Inventory Management 65
8 Tools For Inventory Control 67
9 Techniques of Inventory Management 76

Petrochemical Industry
The petrochemical industry in India has been one of the fastest growing industries in
the country. Since the beginning, the Indian petrochemical industry has shown an
enviable rate of growth. This industry also has immense importance in the growth of
economy of the country and the growth and development of manufacturing industry
as well. It provides the foundation for manufacturing industries like construction,
packaging, pharmaceuticals, agriculture, textiles etc.
The Indian petrochemical industry is a highly concentrated one and is oligopolistic in

nature. Even a few years back, only four major companies viz. Reliance Industries
Ltd (RIL), Indian Petrochemicals Corporation Ltd. (IPCL), Gas Authority of India Ltd.
(GAIL) and Haldia Petrochemicals Ltd. (HPL) used to dominate the industry at a
large extent. The amalgamation of IPCL with RIL has made the industry more
concentrated further, as they jointly account for over 70% of country's total
petrochemical capacity. However, the scene is a bit different for the downstream
petrochemical sector, which is highly fragmented in nature with over 40 companies
exist in the market.
The Characteristics of Indian Petrochemical Industry
Petrochemical Industry in India is a cyclical industry. This industry, not only in India
but also across the world, is dominated by volatile feedstock prices and sulky
demand. India has one of the lowest per capita consumptions of petrochemical
products in the world. For example, the per capita consumption of polyester in India
lies at 1.4 kg only comparing to 6.6 kg for China and 3.3 kg for the whole world.
Similarly, the per capita consumption of polymers is 4 kg in India, whereas the per
capita consumption is around 20 kg for the whole world.

The Growth
The petrochemical industry in India came into existence during 1970s. The 1980s
and 1990s saw some rapid growths for Indian petrochemical industry. The biggest
reason for this growth was the high demand for petrochemicals in India, which grew
at an annual rate of 13 to 14% since late 90s. It also called for rapid expansion of
capacity. The BMI forecast of average annual growth in India over 2007-2011 is 14
to 16%. However, the industry suffered setbacks during 2008 due to surge in the
price of crude oil. It will be tough for Indian petrochemical industry to plug the deficit
of 5mn TPA of ethylene and 4mn TPA of polymer by 2012 (according to the
predictions of the government).
The Present Scenario Presently India has three gas-based and three naphtha-based
cracker complexes with a combined annual capacity of 2.9 MMT of ethylene.
Besides this, there are also 4 aromatic complexes with a capacity of 2.9 MMT of
Xylenes.
The production of 5.06 MMT polymers during FY09 accounted for around 62% of the
total production of key petrochemicals. It also achieved 88.5% capacity utilization.
The industry also produced 2.52 MMT of synthetic fibers during FY09 with a 73% of
capacity utilization.
Key Segments
Petrochemical industry is constituted of the following key segments:
 Polymers: The demand for polymers saw a growth of 13.4% during 2007,
comparing to a demand growth of 5.6% in 2006. According to the
prediction of Chemicals and Petrochemicals Manufacturers' Association
(CPMA), the demand growth for polymer would further be augmented to
over 15% in the coming year.

 Polyester Intermediates: The combined production of 5 fibre
intermediates (CAN, DMT, Caprolactum, MEG and PTA was 3,417 KT
during 2007. Among those, PTA and MEG accounted for 69% and 27%
respectively, while the rest were DMT, Caprolactum and CAN.
 Aromatics (Paraxylene): The demand for Paraxylene (PX) saw a growth

of 18% during 2007. According to the prediction of CPMA, it is expected to
grow at the same rate in the coming year as well.
 Benzene, Toluene, MX and OX: The demands for Toluene and OX saw a
contraction rate of 4% and 10% respectively during 2007. However,
Benzene and MX saw a positive growth though.
Top Petrochemical Companies in India

Though the Indian petrochemical industry is highly dominated by only a few players,
however, there are a number of petrochemical companies in India, doing their share
of business. Some of the top companies can be listed as below:
 Reliance Industries Ltd.( Indian Oil Corporation)
 Haldia Petrochemicals Ltd.
 Gas Authority of India Limited
 National Organic Chemical Industry Ltd.
 Bongaigaon Refinery and Petrochemicals Ltd.
 Manali Petrochemical Limited
 I G Petrochemicals Limited
 The Andhra Petrochemicals Limited
 Tamilnadu Petro products Limited

REFERENCE INFORMATION
 Name of the Company:- Reliance industries limited
 Registered Office:-
3rd Floor, Maker Chambers IV,
222, Nariman Point,
Mumbai 400 021.
 Vadodara Complex:-
P.O.: Petrochemicals,
Dist.: Vadodara - 391 346.
Tel: 91 - 265 - 3067221
Facsimile: 91 - 265 – 3067333
 Web-site:- www.ril.com
 E-mail:- investor_relations@ril.com
 Size of the Organization:- Large organization
 Bankers:-
STATE BANK OF INDIA
BANK OF BARODA
HDFC BANK
ICICI BANK
AXIS BANK
 Listed at:-
Bombay stock exchange
National stock exchange

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

private sector enterprise, with businesses in the energy and materials value chain.
Group's annual revenues are in excess of US$ 44 billion. The flagship company,
Reliance Industries Limited, is a Fortune Global 500 company and is the largest
private sector company in India.
Backward vertical integration has been the cornerstone of the evolution and growth
of Reliance. Starting with textiles in the late seventies, Reliance pursued a strategy
of backward vertical integration - in polyester, fibre intermediates, plastics,
petrochemicals, petroleum refining and oil and gas exploration and production - to be
fully integrated along the materials and energy value chain.
The Group's activities span exploration and production of oil and gas, petroleum
refining and marketing, petrochemicals (polyester, fibre intermediates, plastics and
chemicals), textiles, retail and special economic zones.
Reliance enjoys global leadership in its businesses, being the largest polyester yarn
and fibre producer in the world and among the top five to ten producers in the world
in major petrochemical products.
Major Group Companies are Reliance Industries Limited (including main subsidiary
Reliance Retail limited) and Reliance Industrial
Infrastructure Limited
"Growth has no limit at Reliance. I keep revising my

vision.
Only when you can dream it, you can do it."
Dhirubhai H. Ambani
Founder Chairman Reliance Group
December 28, 1932 - July 6, 2002

Dhirubhai Ambani founded Reliance as a textile company and led its evolution as a
global leader in the materials and energy value chain businesses. He is credited to
have brought about the equity cult in India in the late seventies and is regarded as
an icon for enterprise in India. He epitomized the spirit 'dare to dream and learn to
excel'.
The Reliance Group is a living testimony to his indomitable will, single-minded

dedication and an unrelenting commitment to his goals. Under Shri Dhirubhai
Ambani's visionary leadership, the Reliance Group emerged as the largest business
conglomerate in India, and carved out a distinct place for itself in the global pantheon
of corporate giants. The Group's track record of consistent growth is unparalleled in
Indian industry and perhaps internationally too. Today, the Group's turnover
represents nearly 3 percent of India's GDP.
Manufacturing Facilities
Reliance Industries Limited operates world-class manufacturing facilities across the

country at Allahabad, Barabanki, Dahej, Hazira, Hoshiarpur, Jamnagar, Nagothane,
Nagpur, Naroda, Patalganga, Silvassa and Vadodara.
Allahabad Manufacturing Division is located in Allahabad, Uttar Pradesh. It is

equipped with batch polymerization and continuous polymerization facilities.
Barabanki Manufacturing Division is located near Lucknow, Uttar Pradesh. It

manufactures Black Fibre.
Dahej Manufacturing Division is located near Bharuch, Gujarat. It comprises of an

ethane / propane recovery unit, a gas cracker, a caustic chlorine plant and 4
downstream plants, which manufacture polymers and fibre intermediates.

Hoshiarpur Manufacturing Division is located in Hoshiarpur, Punjab. It manufactures
a wide range of PSF, PFF, POY and polyester chips.
Hazira Manufacturing Division is located near Surat, Gujarat. It comprises of a

Naphtha cracker feeding downstream fibre intermediates, plastics and polyester
plants.
Jamnagar Manufacturing Division is located near Jamnagar. It comprises of a

petroleum refineries and associated petrochemical plants. The refineries are
equipped to refine various types of crude oil (sour crude, sweet crude or a mixture of
both) and manufacture various grades of fuel from motor gasoline to Aviation
Turbine Fuel (ATF). The petrochemicals plant produces plastics and fibre
intermediates.
Nagothane Manufacturing Division is located in Raigad, Maharashtra. It comprises of

an ethane and propane gas cracker and five downstream plants for the manufacture
of polymers, fibre intermediates and chemicals.
Nagpur Manufacturing Division is located in Nagpur, Maharashtra. It manufactures

polyester filament yarn, dope-dyed specialty products of different ranges, fully drawn
yarn and polyester chips.
Naroda Manufacturing Division is located near Ahmedabad, Gujarat, is RIL‟s first

manufacturing facility. This synthetic textiles and fabrics manufacturing facility
manufactures and markets woven and knitted fabrics for home textiles, synthetic and
worsted suiting and shirting, ready to wear garments and automotive fabrics.
Patalganga Manufacturing Division is located near Mumbai, Maharashtra. It

comprises of polyester, fibre intermediates and linear alkyl benzene manufacturing
plants.

Silvassa Manufacturing Division is located in the Union Territory of Dadra and Nagar
Haveli. It manufactures a wide range of specialty products such as Recron Stretch,
Linen Like, Mélange, Thick-n-thin and Bi-shrinkage yarns.
Vadodara Manufacturing Division is located in Vadodara, Gujarat. It comprises of a

Naphtha cracker and 15 downstream plants for the manufacture of polymers, fibers,
fibre intermediates and chemicals.
Each of these complexes has world class manufacturing facilities

Product Flow Chart

PRESENT PROFILE
Founcer chairman Reliance group
1932-2002
Board of Directors of Reliance Industries Limited
Shri Mukesh D. Ambani

Chairman & Managing
Director
Shri Nikhil R. Meswani Shri Hital R. Meswani Shri PMS Prasad

Executive Director Executive Director Executive Director

Shri P.K.Kapil Shri Mansingh L.
Shri Ramniklal H. Ambani
Executive Director Bhakta
Shri Yogendra P.
Dr. D. V. Kapur Shri M. P. Modi
Trivedi
Dr. Raghunath
Prof. Ashok Misra Prof. Dipak C Jain
Anant Mashelkar
ACHIEVEMENTS
 Best Petrochemicals Company World-wide: 1990 (Cl , London)

 ICMA award for Forward technology development: 1981, 1985, and 1991.
 DGTD award for Biotechnology Process 1994.
 Corporate Performance Award ET HBSAI: 1994-95
 Sward of Honor from British safety council.

SWOT ANALYSIS:
RIL Strengths
 Manpower with rich experience in managerial, technical and commercial

fields.
 Plants located on the west coast, where the downstream industry is
concentrated.
 Both liquid and gas fired crackers.
 Diverse product range.
 Extensive sales network and infrastructure facilities.
 Noteworthy safety & Environment records.
RIL Weaknesses
o Aged and smaller sized plants at Vadodara.

o Feedback supply constraints at Gandhar & Nagothane.
o Dependence on the sole suppliers for Natural gas & C2/C3.
o Commodity Businees- subject to cyclicity.
o Dependence on the external sources for feed stocks.
RIL Opportunities
o Huge growth potential in the Indian Polymer market.

o Excellent Research & Development facilities.
o Scope for expansion and Revamp of the old plants located at Baroda.
RIL Threats
o Universities on natural gas pricing.

o Competition from “low cost” Middle East producers.
o High rate of technological obsolescence.
o Environmental concerns on plastics.

Company Profile – (IPCL) Reliance industries Limited
HISTORY
Indian Petrochemicals Corporation Limited (IPCL), a Company under the

Companies Act with Registered Office at Jawaharnagar (near Vadodara) in Gujarat
was registered on March 22, 1969. It was assigned the responsibility of setting up
two upstream mother units and two downstream units near an established public
sector refinery, Gujarat Refinery of Indian Oil Corporation on the outskirts of
Vadodara in Gujarat. The first board meeting of the board of directors of the
company was held on March 26, 1969 at New Delhi. The private sector
entrepreneurs who were initially allocated six downstream units during that period
were reluctant to invest in this industry. The industry was highly capital intensive,
involved handling and processing of hazardous material, involved development of
nascent markets and managing new technologies with a skill base that was
inadequate. Hence they were doubtful about the prospects in the industry and were
unwilling to invest. On the other hand, the government realized the importance of
integrated nature of the entire project. Finally, in contrast to the original concept of
involving the private sector, the Government allocated these six downstream projects
also to IPCL, by early 1971.
The Gujarat Aromatics Project, consisting of Xylenes plant and DMT plant
was set up at an investment of INR 271.3 Million, with funds provided by the
Government. Dimethyl Terephthalate plant was commissioned by March 20, 1973.
Mrs. Indira Gandhi, the then Prime Minister of India laid the foundation stone
for the Gujarat Olefins Project (Naphtha Cracker) on January 29, 1972. The
plant was commissioned on March 28, 1978. By March 15, 1979, IPCL achieved
the unprecedented feat of commissioning 11 plants in quick succession, at a
capital investment of INR 3.04 billion. Thus, a fully integrated petrochemical
complex under a single ownership, being the first of its kind in the Indian
peninsula, came into existence. Engineering India Limited (EIL) carried out
majority of detailed engineering and construction jobs for the complex at Vadodara.

The inauguration of these downstream plants marked the successful culmination of
the cooperation between Indian design, engineering and construction companies,
Indian and foreign equipment manufacturers, various government and private
research organizations and the international process license. This also meant a
beginning of an era for chemicals, thermoplastic elastomers, and synthetic fibers,
organic intermediates for drugs, insecticides, pharmaceuticals, dyestuffs and
synthetic detergents.
Today, out of the 15,000 plastic and detergent processors in the country
almost 12,000 owe their existence to IPCL, thanks to the Entrepreneur
Development teams that went out with their "magic lanterns," guiding, developing
and showing the path to prosperity to the willing but unaware entrepreneurs. The
petrochemical revolution was thus set in motion by IPCL in India.
IPCL adopted a strategy of growth through mutual development and took up

the task of developing the markets by educating prospective entrepreneurs on
various applications, sources of finances, machinery, markets for the end products,
etc., and helped them with project proposals and necessary assistance in setting up
processing units. Modern and well equipped Application Development Centers
(ADC) were set up ahead of commencement of production, to conceive, develop and
test the new products in the key product areas, viz. polymers, chemical and synthetic
fibers. These centers interacted with institutions, end users, processors and
machinery manufacturers to develop applications and new products.
IPCL also works closely with the host of organizations in agricultural sector, to
establish an effective distribution channel, to ensure timely availability of material to
end-users. IPCL is involved with the National Committee on use of Plastics in
Agriculture (NCPA) under Ministry of Agriculture. Apart from the aromatics and the
mother cracker, downstream plants spread include polyethylene, polypropylene,
acrylic fiber, Linear Alkyl Benzene, butadiene rubber etc.

The Vadodara complex has now grown to house 21 plants over nearly
500 hectares, which includes Acrylic Esters, Polyvinyl Chloride, Petroleum Resins,
etc.
Technology management and development has always been an important

plank in the strategy planning of IPCL. Catalysis/surface sciences and manufacture
of specialty catalysts in particular, have been identified as being critical to the
production processes in use. IPCL already had a strong research base on adsorption
and catalysis. It owned plants using adsorbents, some commodity and some
specialty catalysts.
In June 2002, the Government of India as a part of its disinvestment program

divested 26% of its equity shares in favor of Reliance Petro investments Limited
(RPIL), a Reliance Group Company, and India‟s fastest growing and most admired
private sector group founded by visionary entrepreneur Shri Dhirubhai H. Ambani.
RPIL acquired an additional 20% equity shares through a cash offer in terms of SEBI
and currently holds 46% of Company's equity shares.
Now it is known as reliance industries Vadodara manufacturing division.

The new board has six members nominated by reliance, two nominated by
government of India and four independent members

Company Logos
The first logo, which consisted of a tetrahedron - representing

the molecular structure of the simplest organic chemical,
methane - in a circle.
This decision of the government, “Everything under one roof”

inspired the second logo of IPCL. IPCL took up the challenge of
setting up the entire integrated complex at Vadodara
IPCL, as a corporate entity, is and what it shall strive to be.

This symbol, or logo, reflects what IPCL is a single matrix of
the many; a diversity of 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.
New Logo of RIL
The government of India handled over

management control to Reliance group
on June 4, 2002, since then the
company is being managed by
reliance.

MILESTONES SINCE INCEPTION
TABLE NO. 1
DATE EVENT
Mar 22, IPCL incorporated.

1969
Mar 26, First logo (seal) of the company adopted in the first board meeting.
1969
May 7, First technology transfer agreement was signed by IPCL Chairman cum
1970 Managing Director with Lummus Company, UK for Gujarat Olefins Project
(Naphtha Cracker)
Dec 14, First export of IPCL product. State Trading Corporation of India Ltd. (STC)
1973 exported IPCL's orthoxylene through Kandla Port.
Mar 28, Gujarat Olefins Project (Naphtha Cracker) Commissioned

1978
Mar 15, All plants of Vadodara Petrochemicals Complex Commissioned

1979
Aug 17, Government of India approved the setting up of a petrochemicals complex at

1984 Nagothane, (Maharashtra)
Jan 8, The foundation stone of Nagothane complex laid by Mr. Narian Dutt Tiwari,
1986 the then Minister of Industry, Government of India
Oct 24, First Bond issue totaling INR 400 million offered to public in India on October

1986 9, 1986. New company logo came in force. Issue closed on earliest closing
day, October 24, 1986. Received INR 960 million.
Oct 6, Mr. Rajiv Gandhi, Prime Minister of India laid the foundation stone for the
1989 petrochemicals and Chlor-Alkali complex at Dahej in Gujarat
Jun 3, IPCL enters into a joint venture with General Electric Plastic, BV Netherlands,
1991 making it the first time a multinational ties up with a Public Sector unit from
India, with equal equity holdings
Mar 23, The first lot of shares sold by government of India was transferred. Unit Trust
1992 of India with others became the first set non-government shareholders in
IPCL.
Nov 14, RIL received the prestigious Economic Times – Harvard Business School
1996 Association of India award for outstanding over all performance for the year
1995-96 in the public sector
Nov RIL received the Sword of Honor from the British Safety Council for its
1996 commitment to adopting high standards of safety in all its units.
Feb 25, The company offered FCCB's worth US $ 175 million; Conversion price is US
1997 $ 13 per GDS. The first issue from Asia to pierce Sovereign rating.
Mar 26, RIL became the largest producer of polyethylene with widest range on
1999 commissioning of 160,000 MTA High Density Polyethylene plant at Gandhar.
May 18, Advertisement for inviting Expression of Interest in divestment of 25 % equity

1999 of RIL by GOI.
Feb 10, The 300, 000 MTA ethylene cracker is commissioned at Gandhar
2000
Nov 18, The Govt of India decided to bifurcate RIL by selling Vadodara Complex to
2000 IOCL.

Nov 12, Government of India decided not to pursue sale of Vadodara Complex to IOC
2001 and decided to divest 26% equity to a strategic partner with a commitment to
divesting at least further 25%.
May 28, Government of India accepted bid by Reliance Petroinvestment Ltd., as it

2002 was the best bid received by the Government.
June4, Reliance Petroinvestment Ltd. paid Rs. 1491 corers to GOI; Mr. Mukesh D.
2002 Ambani was nominated as Chairman of the RIL by the winning bidder.
Sep 27, Mr. Mukesh D. Ambani, Chairman seeks approval for investments worth INR
2002 70 billion form shareholders at 33rd Annual General Meeting.
2004 Amendment Agreement between the Government and the Strategic Partner,
Reliance Petroinvestments Limited, a Reliance group company
2004 Government of India disinvested its balance shareholding
2005 Government of India withdrew its nominee directors from the Board of
Directors of Indian Petrochemicals Corporation Limited
2006 Amalgamation of six polyester companies i.e. Apollo Fibres Limited, Central
India Polyesters Limited, India Polyfibres Limited, Orissa Polyfibres Limited,
Recron Synthetics Limited and Silvassa Industries Private Limited with Indian
Petrochemicals Corporation Limited.
April 18, Merger of IPCL into Reliance of Group of Industry

2007
Sep 21,
2008 Reliance Industries Commences Production in KG-D6 Block.
2008 During the year, Reliance Retail Limited (RRL) continued its rollout of stores
across various verticals and formats. Reliance Retail today operates over 590
stores in 57 cities, spanning 13 states, with over 3.5 million square feet of
trading space.

2. FUNCTIONAL AREAS
PLANT LAY OUT OF BARODA MANUFACTURING DIVISION
The Vadodara Complex houses 21 plants on over nearly 500 hectares of land and
produces large variety of products consisting of Linear Alkyl Benzene, Acrylic Fibers,
Acrylic Esters, Ethylene Glycol, Polyvinyl chloride, Polyethylene, polypropylene,
Butadiene rubber, etc. The company's registered office is located in Vadodara
Complex and that was the first manufacturing facility setup by the company.
GREEN
ACN ACR VCM /
5
BELT PROPOSED PVC
RIL ( BC )
PIB
LAY-OUT P
P L Cent.
Water P
DSAF AF
P D
Supply B Store
Flare R
C P
R P
P Railway
E
Area for GTPP IOP T
Safety Siding
New project D
ESD
PBR Carbon LAB EG & LAB OCG

Cent.
II Fibre tank N2O2 W/S

Fire
area GOP GAP
P EQ FP
Technolgy Unit
Mat. P PAC
R&D
Dept IV PMDI
CSD

PLANTS
Name of Plant Commissioned CAPACITY (MT)

Year
Naphtha Cracker 1979 130000
LDPE 1979 110000
Mono Ethylene 1979 20000
Glycol/Ethylene Oxide
Butadiene Extraction 1979 54000
Polybutadiene Rubber 1979 30000 + 12000
Plant 1 and 2
Polybutadiene Rubber 1996 30000
Plant III
Benzene Extraction 1979 --Scraped
LAB 1979 --
Acrylonitrile Plant 1979 30000
Acrylic Fibre 1979 --Scraped
Monocomponent
Acrylates 1983 10000
VCM 1984 57300
PVC 1984 60000
Polypropylene 1988 25000
Copolymer Pant
Acrylic Fibre Bi- 1989 --Scraped
component Plant
Polypropylene Plant 1996 75000

TABLE OF PRODUCTS
Commodity Chemicals: Acetonitrile

Benzene
Butyl Acrylate
Caustic Soda Lye
Ethylene
2-Ethylhexyl Acrylate
Orthoxylene
Propylene (Polymer Grade)
Ammonium Sulphate
Butadiene
Caustic Soda Flakes
Carbon Black Feedstock
Ethyl Acrylate
Methyl Acrylate
Propylene (Chemical Grade)
Solvents:
CIXON
HEPTON
Solvent CIX
Surfactants:
Ethylene Oxide
Linear Alkyl Benzene
Commodity Plastics:
Indothene
Indothene LL
Indothene HD
Koylene

Koylene CP
Koylene ADL & Koylene ADL- CP
Indovin
Rubber and Hydrocarbon
Resin:
Cisamer 01
Cisamer 1220
Petrez
Catalysts and Adsorbants:
Catal
Catsiv
Speciality Catalyst
Fiber Intermediates:
Ethylene Glycol
Demethyl Terephthalate

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, ropes,

fishing nets.
PVC Water pipes, electrical conduit/wires, cables,

sheets, footwear, flexible films
PBR Automobile tires & tubes, conveyor belts, footwear.
Main uses of fiber intermediates:
Products Uses
MEG Polyesters, Anti freeze.
ACN Acrylic fiber, Acrylates, engineering polymers.
DMT Polyester staple fibers, polyester filament yarns,

polyester.

 Liquid Products
Main uses of chemicals:
Products Uses
LAB Raw material for household, industrial detergents,

personal care products.
EO/BENEZENE Phenol, dyestuff, pharmaceuticals, paints, industrial

uses, caprolactum
/TOLUENE
Caustic Soda Alumina/paper.
PRODUCTS AT A GLANCE
The products manufactured and marketed by the Corporation could be

classified into the following 2 major groups:
 POLYMERS:
Polymers that include plastic and rubber is a major product-line, not only by virtue
of the quantity and multiplicity of grades but also because of the very number of
small-scale customers spread all over India. Polypropylene and Polybutadiene
rubber are new to Indian market. These have been produced for the first time in India
by RIL.
 CHEMICALS
At present, about 31, different chemical products are being marketed, and the growth
in the product line has been possible mainly due to the development of value added
products from the return streams. Chemical intermediaries find wide and diverse
applications in various industries.

MAJOR COMPETITIORS
Product group Domestic Foreign

PBR NIL Sanghai petro,
Goodyear
Bridgstone
Polymers HPL Exxon mobil
GAIL Basell
Finolex Dow chemical
Supreme petrochemical Autofina
NOCIL BP-Amoco
Chemplast Equistar
DCM Shriram Philips-Chevron
Vardhaman Acrylic ltd. Sabic, Borealis
Chemicals GAIL, HPL Exxon mobil
BPCL, HPCL Dow chemical
IOC Basell
SAIL Sabic
Tamilnadu Petroproducts
Ltd.
Nirma Chemical
MAJOR CUSTOMERS:
Plastics: Nilkamal, Rainbow, Supreme etc.
Rubber: Appollo, MRF, Goodyear, JK Tyre, Vikrant, Ceat etc.

Finance is the lifeblood 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.
FINANCE DEPARTMENT HIERARCHY
VP
CFV
PO
AVP
GM / SGM
SM / MANAGER
EXECUTIVE
U.G.
SR.ASSISTANT

Organizational Hierarchy of Finance of RIL (VMD)
BUDGETING PROCESS:
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 RIL 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 SYSTEM:
The accounting system at RIL is SAP oriented. Each and every transaction is
done through SAP. The important Accounting Policies are as under:
 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..
 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.

 The Finance Department is divided into 9 different section
CE CENTRAL
ES AD ACCOUNTING
CASH and
INVENTORY
BANK
I
SE SECTION
ACCOUNT
RECEIVABLE RELIANCE
FINANCE
COSTING
DEPARTMENT
SECTION
I PROCUREMENT ACCOUNT
SECTION PAYBLE
TAXATION PAY ROLL
SECTION SECTION
CASH AND BANK SECTION:
Check out the details of banking transactions and maintain the balance of
bank. (Bank reconciliation statement). Bank section looks after deposits in cash and
bank account. It also collects checks from marketing department. Banks like HDFC,
SBI, AXIS BANK are involved in the transaction with RIL. Following are the basic
task perform by this section,
 To consolidate the bank account.

 Take into account the cash credit limit.

 Cash credits are monitored so that interest payment can be control.
 Cash flow statement is prepared.
 RIL is using E-payment for ease of payment. Credit limit of the company
depends on the negotiated day‟s contract.
PAYMENT:
All the bills that are raised come to this department for the sanction. Even
when raw materials are purchased, the supplier sends the bill to the purchase
department, which then sends to the finance department. It is here that all the
particulars are checked and approved. Only after the bills have been approved
payments will be made. Any department requiring any payment of the bill needs to
first send the bill here for approval. The company enjoys E-PAYMENT.
CENTRAL ACCOUNTING SECTION:
Central Accounting Section is the Heart of Finance. Activities of all other

section are connected with central accounting section. The different functions of this
section are: preparation of the BALANCE SHEET and the PROFITABILITY
STATEMENT. Financial statements and accounts prepare on annually as per the
requirements and send to SEBI and the stock exchange.
 Verify the Account maintain by all the department and make financial
analysis of the statement and also give suggestion and recommendation.
 They also involved in Annual Report preparation and provide all required
information to the management.
 Find out profitability ratio to check whether the company is going correctly
as per the targets.

Income Tax:
This section takes care of all tax related issues. They are involved in tax
planning and update all the laws with respect to taxation. This becomes very
important for the company because many decisions are taken; keeping in mind it‟s
tax implication. The budget in this respect has also to be made for the payment and
provision of advance tax.
 Involved in updating of taxation as per rules. Tax planning is under this
department as part of prior responsibility
Procurement:
This section deal with external parties such as dealers, manufactures,

and retail traders. It is also maintain the details sales and debtors account and
related adjustment.
Responsibilities of this section:-
 Vendor basis
 Market information
 Negotiation from vendor
 Import purchase order
Payment option:-
 Above 25000 permission from finance department

 Above 1000000 permission from PCR (purchase committee
recommendation)
Costing Section:
Make estimation of cost to the company (CTC) and budget in advance and try to
reduce the cost and improve efficiency.

 Costing is done not only for whole activity but also for individual items.
 This section prepares the monthly cost incurrence budget. They have to
ascertain the variable cost of the items being produced. This is because
the knowledge of the variable cost is very essential as if an item is sold
below the variable cost it would incur loss to the company.
 This section has a major hand in ascertainment of the prices of the items
because it provides data about the cost of production.
Payroll section:-
Main functions of this section are:

 Salary
 Overtime
 Income tax deduction of employees
 Statutory government payment like professional tax, LIC
 PF, loans and advances to employees
 Employee claims
 Pension
 Retirement dues like leave encashment, gratuity

SCOPE:-
 This study cover only Vadodara complex of RIL.

 It covers only running plants in Vadodara complex.
This study does not include any import materials in procurement part and in case of
inventory finished goods and work in progress are not included. It includes stores,
chemicals and packaging materials. Stores include instruments, electrical items,
equipments and mechanical items.
OBJECTIVE:-
 To understand materials management on the part of procurement and

inventory management.
 To know overall working and management on procurement part. And how
crucial role does procurement plays in deciding the core competencies of firm.
 Understand the need for investing in current assets , and elaborate the
concept of operating cycle

MATERIALS MANAGEMENT
RIL vadodara complex is the only unit in whole Asia, which is having 22 plants (out
of which 12 plants are working) in a single complex. RIL has various department like
finance, marketing, human resource, material procurement, research and
development and safety and security etc.
My focus of study is on finance (material) department. We all know that material is

required for the any organization and it cost about the 60% to 70% of the total cost of
the organization. The basic work of material management is to procure the material
to the required department and to maintain the stock. The materials that are
purchased are both indigenous and imported. The inventory can be classified in to
various categories.
 Raw material, chemical and catalysts.

 Fuel and lubricants.
 Instrumentation items.
 Mechanical consumables.
 Safety and fire items.
 Steel and cement.
 Packaging items.
 Scrap.
Materials management is divided in two parts:-
1. Procurement Management: - It starts from forecasted sales and ends with

payment to vendor/supplier subject to acceptance of material.
2. Stores Management : - Once material is received in stores at issue ward

maintaining their level auditing and supplying to different plants when require
is responsibility of Stores Department.

PROCUREMENT
Basic Concepts
Proper planning is an essential element of good procurement. The initial step in

procurement planning is the determination of what is needed, how much, where and
when. The objective is to provide quality goods through open and fair competition in
the required quantity and of the proper quality at the time and place needed, and to
secure such goods at competitive prices.
Procurement Planning Process
The purpose of procurement planning is to enable the organization to meet its

specific purchasing objectives, as well as the organizational goals. Effective
procurement planning will produce more efficient and economical procurements,
which will deliver products in an acceptable and timely manner. Procurement
planning is the process by which the efforts of all personnel responsible for
significant aspects of a project are coordinated and integrated in a comprehensive
manner. The formality and detail of the planning and preparation process will vary
with the size, complexity and value of the requirement.
Type of procurement plan
Procurement plans comprise of long-term and short-term plans as discussed below:
a) The Procurement Office shall make long-term planning covering 5 years or

more in order to lay the foundation for procurement to meet its long term
objectives. Long-term planning demonstrates that the organization manages
its funds in a professional way keeping in view its long term strategic
plans/perspective plans.

b) Short- term planning normally covers one year and is intended to procure
goods required for meeting annual targets for provision of services,
completion of projects and other maintenance needs which can be projected
for the whole year. Short- term planning ensures the optimal use of funds
throughout the year.
Subsequently it will ensure that the organisation will obtain good quality of products
and services at competitive prices and within the time required. The procurement
staff shall set up annual procurement plan to reflect what proportion of the projects
should be achieved and what should be purchased within the current budgetary
year. Such plans shall be used to obtain economies of scale and other benefits to
the organization.
1. What is procurement plan?
The procurement plan comprises of the following information:
1.1 Type of products/ goods required
1.2 Estimated quantity (number of units)
1.3 Estimated value/cost
1.4 Delivery date or expected date when the goods are required to be
delivered
1.5 Other relevant information, e.g., location where goods are required
2. Preparation of procurement plan
It is very important to prepare a plan that clearly sets out the framework for the
procurement to be done during the plan period. It involves taking fundamental
decisions on requirement of goods, procurement scheduling, choice of procurement
methods, provision of funds, etc. Initiating and planning procurement actions require

a team effort. The team must include officers from user office, procurement office,
technical experts, financing or donor offices or agencies.
2.1 Identify procurement requirement
User offices are responsible for identifying their procurement requirements based on
their ongoing projects, maintenance requirements and new projects and
programmes. The user offices will prepare the procurement requisition with
description of essential elements of the proposed purchase with schedule for
delivery and submit it to Procurement office. The requisition should be approved by
user authorities.
2.2 Prepare the requirement package
a) On receipt of requisition, the procurement officers may initiate the

discussion with the user offices to finalize the needs and timeframe.
b) The procurement officer shall make the best effort to:
· Identify and describe the needs correctly Check whether the requirements
comply with the organization goals and objectives
c) The corrections/modifications in the requisitions (quantity or quality), if any,

should be returned to user offices for approval.
d) Thereafter, the procurement officers will consolidate requisitions received

from different user offices to arrive at the purchasing quantity
e) Prioritise the procurements
f) Prepare the requirements packages, as needed. The contract packaging is

done to group the procurement requirements to ensure economy and
effectiveness in purchasing, minimize transaction cost, ensure better

monitoring and delivery of goods and services. However, the factors below
need to be considered before coming to the conclusion for contract packaging
of goods:
· The restrictions on the use of funds, in case the project involve co- financing.
· Delivery time: There might be long gaps between the desirable deliver times.
· The number of users: It is simpler to let each party contract for its own goods
especially when parties are independent belonging to different departments.
When making contract packaging decision, the procurement officers shall have to
consider about the ability of the local suppliers of goods and services and the likely
interests of foreign bidders to participate in the project. It may be possible to meet
both of these by appropriate sizing and timing.
Large projects may require funding from several sources. The various co financers
willing to support the project may have different limitations on the amount and ways
their funds could be used. Consequently the uniformity of procedures across project
components may have limited possibilities. The structure of procurement
arrangements and the way in which project needs are packaged require particularly
careful planning.

2.3 Market research
In developing new specifications and soliciting new products, the procurement

officers may have to conduct the marketing survey. Market survey helps identify:
· The products that is available to satisfy a requirement;
· Substitute or alternative products;
· Number of suppliers and their respective market shares;
· How to appropriately describe the requirements;
· Make realistic cost estimates and decide time schedules.
2.4 Procurement Scheduling
The Procurement Office after user consultations shall establish the timing when
goods are needed. Each method of procurement involves different steps and
different time requirements. Subsequently the period of time from initiation of the
requirement by the user to issuance of an award and receipt of supplies should be
adequately provided. The best way to calculate the lead time is to work backwards
from the desired date of delivery to determine whether sufficient time is available to
carry out the necessary procurement steps for each element. In some cases, it may
be possible to modify certain contract packages and procurement methods and
shorten the time needed until delivery in order to meet desired schedules. However,
shortening time frame in some stage of procurement, in bidding process for instance,
might lead to unfair practices. In such situations, the only possible solution is to start
the procurement process early by timely forecasting of needs.

2.5 Choice of Procurement Method
It is important to determine the procurement method as it will be a major factor in the

planning process. In this workshop the procurement methods that we will focus on
are open competitive bidding, limited competitive bidding, shopping and direct
contracting. The lead time of those methods differ significantly.
The choice of procurement method depends on:
· The nature of goods to procured
· The value of the procurement
· The likelihood of interest by bidders
· Critical dates for delivery
· Transparency of procedures proposed
Various types of procurement methods are discussed in Session 3.3- Auditing the
Selection of procurement methods.
2.6 Preparing procurement plans
After gathering information required, the procurement officer shall develop the
procurement plan in collaboration with user offices. The plan must outline the
objective of procurement, details of products proposal for procurement and address
operational requirement, and indicate any special requirements for quality and
reliability.
Moreover, the procurement officers, in collaboration with evaluation panel and other
technical experts as needed, prepare the selected evaluation factors, evaluation
methods and procedures that will be used in evaluating competing offers. (More
details will be discussed in following session.)

Procurement plans must include the related budget planning. Large projects may
have funding from several sources. During project execution involving several inter
dependant contracts, the original procurement plan should be regularly monitored
and updated. For example if slippage occurs in the award or execution of one major
contract, it may require rescheduling of other related contract awards and deliveries
of products.
3. Procurement Planning Benefits
The benefits of procurement planning are as follows:
· Identifying the needs correctly in time.
· Providing sufficient lead time and resources for using appropriate procurement
methods to get best value for money.
· Receiving acceptable goods in a timely manner.
· Obtain price reduction through consolidation of quantity.
Auditing the Planning Process
Auditing starts with identifying the risks associated with the planning process,
assessing the degree of risk in each case and managing the risk by developing an
appropriate audit procedure. Audit procedure comprises of developing appropriate
audit objectives, selecting a suitable sample and applying proper audit checks
relevant to given risk perception.
1. Risk associated with procurement planning
Firstly auditor should identify risks related to procurement planning. The risks could
affect on the achievement of procurement objectives as well as the organization
goals. Risk associated with procurement planning may include:

· Absence of sound, well established procurement policy and plan.
· Procurement decisions are made without any reference to the strategic plan, goals
and objectives of the organization.
· Requisitions are not sent to procurement office in time by the user offices.
· The requirements are finalized without consultation with user offices.
· Time provided for completion of procurement process is inadequate.
· Requirement assessed without taking into account existing stock levels.
· User and procurement officers are unable to determine the quality requirements
accurately due to lack of technical expertise.
· Potential suppliers can be excluded due to inadequate market survey.
· Duplicate requisitions may remain undetected due to lack of monitoring and

inefficient management information system.
· Purchasing expensive goods when cheaper and better quality substituted goods
are available and can be used
· Acquiring obsolete technology equipment due to insufficient market survey before

finalizing quality specifications.
· Users may underestimate the cost of goods to get the procurement proposal
approved from a lower authority.
· Procuring goods for initial stages without ensuring availability of funds for
subsequent stages of major projects.
· Not reviewing procurement plans despite major changes affecting the need for
procurement of goods.

2. Audit objective
After having identified risks related to audit area, auditor should develop audit
objectives to respond to those risks. Some of the audit objectives in procurement
planning could be:
To evaluate that:
· The procurement planning is efficient and effective to ensure delivery of required

goods on time in a cost-effective manner.
· Procurement planning provides best value for money.
· Requirements are correctly assessed.
· Planning process is transparent and the manner of assessment of needs and

justification for procurements are fully documented.
3. Audit checklist
For audit checks, please refer to the toolkit of procurement planning. Procurement
planning is done to enable the organization to meet its specific purchasing objectives
in an economic, efficient and effective manner.
Purchasing:-
There are mainly two categories of the materials.

a. SGM(stores and General consumables Materials )
b. Non SGM
a. SGM:-
It contains items such as
Bulk chemicals
SPAR (Spare parts)
CACL (Catalyst and Chemicals)

PAMA (Packaging Materials)
FTRM (Finished and Tradable Raw Materials) such as HCL, Naphtha, etc.
These materials are managed by stores. So their levels are being maintained by
stores department. The PR (Purchase Requisition) for the same is raised by stores
department.
b. Non-SGM:-
These are few items which are not regularly used and needed once in a while,
such as maintenance items needed in the case of plant shut down and all. Plant
raises PR for the particular materials link with maintenance order converted to
purchase order with the help of bill of material.
Purchasing Groups
 Feed Stock
 Chemicals & Catalysts
 Packaging
 Administration
 Consumables
 Electrical
 Instrumentation
 Pumps and Spares
 Heavy Equipment
Procurement Procedure:-
The steps involved in Procurement Procedure:
 PR- communication from Plant/Stores to Purchase department

 RFQ- communication from Purchase to Suppliers
 PO- contract with 3rd party
 GRN- Intimates to supplier that material is received

Purchase to issue Cycle
Purchase Requisition Note

(When plant require material)
Request Quotation
(Company ask for quotation from vendor)
Quotations comes
Selection of vendor
(On basis of terms and conditions expected by the company)
Put Purchase Order
Material comes
Material goes to the excise section

(Capture the invoices)
Material goes to security keeper

(They check the material are as per unit mention in invoices or not)
Material goes in stores Receipt Ward

(Here the material check against P.O.and labeling is done)
Material goes to the Inspection Ward

(They do quality check and prepare Inspection Report)

On the basis of the Inspection Report they prepare Goods Receipt Note and also
check Test Certificate send by vendor and then
Inspected Material
Go to Issue Ward Go to vendor

(If goods accepted) (If goods rejected)
Before sending goods to the Issue Ward goods are insured.

And for rejected goods they prepare Goods Rejection Note and also prepare O.G.P.
(Out Goods Note) and sent to the vendor.
For the liquid chemicals used as raw material storing process are as follows
Liquid chemical comes in tanker at gate
Tanker goes to excise section

(Capture the invoices)
Tanker goes to store

(Weight of the tanker with liquid and quality check of the chemical is done)
Unloading
(Tanker is unloaded to respective plant)
/Tanker again comes to the store after unloading

(Again weight of the tanker is done without liquid)
Difference between weight of tanker before and after unloading the chemical is the
actual quantity comes from the vendor.

This is the whole procedure for storing to issuing of the raw material. Thus stores
department works with the materials.
Purchase Requisition Note (PRN):-
PR, which is raised by Plant, has to be cleared to all 7 stages. Such as
A1- Creator
A2- Section Head
A3- Department Head
A4- CES (Central Engineering Section)
A5- Ste President
A6- Director
A7- Stores Head
Before releasing PR at stage A7, a critical review is done, spar ability has to be
checked in RMMCS (Reliance Material Master Control System), which means
material which we require is checked that whether it is available at other site of
the same specifications and is it spar able or not. If it is available and spar able
then PR is released from the all 7 stage and then it goes to purchase
department.
PR Creation
 Account Assignment
 Delivery Date
 Plant
 Purchasing Group
 Requisitioner
 Code

 Quantity
 Value
 MRP Control
 Valuation
 Fund Center
Request for Quotation (RFQ):-
Procurement department cones in picture once Purchase Request is

released at A-7 level. If the material is new and not purchased earlier a list of
vendors are selected to select this vendors we check which vendors supply this
material using SAP. RIL policy is to buy material from only approved vendor list
and hence we take approved vendors from SAP.
If a new Vendor want to supply material to RIL he/she need to go for Vendor
registration on line and has to submit scanned copy of required document and
obtain a vendor code.
So RFQ is sent to these approved vendors. It includes details like quantity,

specifications etc.RFQ is sent online and hence it reduces time to be spent for
waiting Quotation. But still 1 week of time is given to submit electronically
Quotations.
General Terms of QUOTATIONS
Packing and forwarding as applicable will be charged extra
All transaction will be negotiated through bank only unless otherwise agreed upon
Complaint if any of the goods supplied should be informed within 7 days of your
receipt
Deliveries: we are at liberty to supply goods sold by us in one lot or in separate lot
.The delivery time is subject to the usual FERCE MAJEURE clause which includes
strike, breakdowns, riots and other causes of delay beyond our control

Place of delivery: Delivery is made always in our ex-workshop MUMBAI in case we
deliver goods for Mumbai or to any other place it is understood that we are making
such delivery for and behalf of the buyer
Confirmation of order: All the orders placed with our salesman, agents, and others
are subject to our confirmation
Claims: Claims will be made be entertained only if brought to our notice in writing
within 7 days after receipt of goods and are in their original condition in that case we
admit our liability for reason of defective materials or defective workmanship the
buyer is only entitled for replacement which shall be made free of cost .We are not
liable for any other compensation whatsoever
Jurisdiction: All suits or disputes arising out of contract of negotiations will be

instituted in court of competent jurisdiction in Mumbai and in no other court.
Advance: A sum of rupees equivalent to 25% of the value of the oder should be
forwarded with the order
Vendor Selection:-
Once Quotations are received, checked for their specifications and those
who fulfill our specifications are evaluated in commercial terms. And the one
supplying at lowest price is selected. And yearly contract for fixed price is made
with the selected Vendor.
Purchase Order:-
Purchase order is placed with the approved and selected vendor for the
particular material.PR Order contains 3 documents:-
o Technical Specifications
o Financial Specifications
o Legal Specification

MANDATORY FIELDS
1. PR NO.
2. VENDOR CODE
3. PURCHASE ORGANIZATION
4. PURCHASING GROUP
5. DELIVERY DATE
6. PLANT
7. RATE
8. INCO TERMS
9. TAX CODE
10. FUND CENTE
Purchase order terms
1) Packing forwarding charges: extra 2%

2) Excise duty (as applicable)s
3) CST: Extra as applicable presently at 4% against form”c”.
4) Freight charges extra, kindly arrange to dispatch the goods through our
authorized transporters, M/S Time to share hanlus to its address of
correspondence.
5) Insurance by RIL as same as the goods are dispatched.
6) Please inform dispatch details to our material manager.
7) (Stores) to enable us to arrange transit insurance.
8) Manufacturer test certificate, guarantee certificate submitted along with the
supply.
Payments terms
1) Our standard payment terms is 100% payment within the 30 days of receipt
subject to acceptance of materials at RIL stores Vadodara by: E-payment
only As under: -

We have a mission to convert all vendors into e-payment route, in this
connection we have issued service of communication to all vendors.
2) WE have an e-payment (direct electronic credit to vendors a/c) facilities with

three banks, they are HDFC, ICICI, CITI Bank, The major requirement here is
that you have to open a/c with this banks. However e-payment through this
route are free of cost.
3) As the designated banks do not have branches at all the places across India
and so many vendors are to open a/c. So we explode the bank neutral, RBI
operated electronic payment system (RTGS) Real Time Gross Settlement to
SEFT Special electronic Fund Transfer where the vendor can have a/c in the
any bank but its branch should RTGS / SEFT enabled. The bank will charge
vendor a fee for receiving RTGS / SEFT facility.
4) Liquidated or Damages will be charged weekly 11% subject to maximum of
5% of order value will be levied in case of delayed supply.
TERMS OF VALUE ADDED TAX (VAT)
1) Please vote while preparing the invoice it is mandatory to mention sales tax
no. / VAT no, / TIN no. and date (as the case may be) of both sellers and
purchasers. Without this, input tax credit (ITC) will not be allowed and
invoice become defective.
2) Address of purchaser to be mentioned in invoice. Billing address and
shipping address of purchaser. In supplier invoice must be of the came state
in case of local purchaser for VAT state for ITC purpose. However supplier
may submit the invoice to purchasers account department at RIL Baroda
complex, as per the prevailing practice.
3) The carrier of the entering into the state of Gujarat shall carry dully filled in
form 404 in triplicate along with log book, a bill of sale of delivery note to
addition carry a goods vehicle record shut to trips hit.
4) During the movement of goods if any of the designated check port or barrier
is encouraged, the “original” form 404 shall be deposited with the check port

officer and “duplicate” to “triplicate” of the form403shall be got endorsed by
the check port officer.
5) Duplicate of the form 403 shall be forwarded to the consigner of the goods to
Triplicate copy of the form 403 shall be retained by the carrier of the vehicle
through its journey in the state of Gujarat.
6) Format of the form 403 is attached with PO
7) Clarification if any then pleas get it confirmed before dispatch of goods
RECIEPT PROCEDURE
JLIEX (EXCISE)
TPN (TRUCK PARKING ENTRY)
MMN – MATERIAL MASTER ENTRY ENTRY
TOL (TRUCK ORDER LINKING)
TRUCK ENTERS THE WAREHOUSE
WBN (WEIGH BRIDGE ENTRY)
ENTRY TRUCK IS WEIGHTED
QCM (QUALITY CONTROL ENTRY)
WBX (WEIGH BRIDGE EXIT)
MGX (MAIN GATE EXIT)

Various Types of Movements Commonly Used In MM Modules
Movement Activity T Code
101 Goods Receipt YMGR, YGR1, MB01
991 Goods Receipt without E-invoice MB01
501 Goods Receipt without P.O MB01
122 Rejection, return to vendor MB01
502 Removal without P.O MB01
321 User‟s Decision QA11
311 S. Loc to S. Loc transferee MB1B
201 Issue against Cost center MB1A
961 Issue against Pm order MB1A
CLASSIFICATION OF MATERIAL IN SAP
CODE MATERIALS
SPAR SPARES
CACH CHEMICALA& CATALYSTS
PAMA PACKAGING MATERIAL
FTRM FINISHED TRADABLE RAW MATERIALS
LABC LAB CHEMICALS

STORES CYCLE
 Receipt of material at Material Gate

 Excise Capturing
 Verification by RGHS
 Weighment
 GRN preparation by Receiving Section
 Offering material for inspection
 User Decision
 Stocking of material in respective wards
 Issue of material to users
TYPES OF STORES
 CENTRAL STORES
 CHEMICAL STORES
 BAULK CHEMICALS
 GAP STORES
 SCRAP YARD/ DISPOSAL

Process Flow
PR RFQ’s Tender Rate
Release Opening Comparison
Purchase PO Gate Receipt
Finalization Execution Entry &
Inspection
Acceptance Storage Issue
or
Rejection
3.2 INVENTORY MANAGEMENT
“Inventory is a very expensive asset that can be replaced with a less expensive
asset called „information‟. In order to do this, the information must be timely,
accurate, reliable, and consistent. When this happens, you carry less inventory,
reduce cost and get products to customers faster.” -J. David Viale

Objective of Inventory Management:
The main objective of the inventory management is to make the availability of the
inventory whenever required at specific place, with least cost and wastages. Costs
like ordering cost, carrying cost and idle stock cost etc are to be reduced. Following
point are to taken for inventory management.
 Requirement based on information from sale forecast and the production

schedule.
 Quantity in stock or order from stock ledgers and from pending purchase
order.
 Procurement time.
 Obsolescence / process changes.
The major reason for managing inventory is to reconcile the following conflicting
objectives:
 Maximizing Customer Service

 Maximizing Efficiency of Purchasing and Production
 Minimizing Inventory Investment
 Maximizing Profit
Thus, increasing return on Investment (ROI) and return on assets (ROA)
RIL vadodara complex is the only unit in whole Asia, which is having 22 plants in a
single complex. RIL has various department like finance, marketing, human
resource, material procurement, research and development and safety and security
etc.
My focus of study is on finance (material) department. We all know that material is

required for the any organization and it cost about the 60% to 70% of the total cost of
the organization. The basic work of material management is to procure the material
to the required department and to maintain the stock. The materials that are

purchased are both indigenous and imported. The inventory can be classified in to
various categories.
 Raw material, chemical and catalysts.

 Fuel and lubricants.
 Instrumentation items.
 Mechanical consumables.
 Safety and fire items.
 Steel and cement.
 Packaging items.
 Scrap.
Classification of inventory
Inventory can be classified in to different types
 Raw material
 Work in progress
 Finished goods
 Scrap
 Spares
 Tools
 Consumables.
Tools for inventory control
1. Codification
2. Receipt
3. Inspection
4. Storage and preservation
5. Issue
6. Scrap and disposal.

1. Codification
In codification the all inventories are been coded as per their identification. The
inventory can be needed for various purposes like
Project (PROJ)
Free of cost (FOC)
Scrap (SCRP)
Generic material (GENM)
First of all the codification request is been made for the new product, the form is
to be filled with all the information of the inventory and where it is used. After
getting the form inventory management department will check for the data
validation of the inventory, if any manipulation is there then they have to again fill
the form.
Then checking of the data is been done for the existing inventory if any existing
inventory‟s sub part is there. The code is been given of 10 numbers the first 2
digits are the main code, next 2 digit is for the model number of the inventory,
next 2 number is for the company code, and then next 3 digit is for the serial
number of the product, and net single digit is for the imported and indigenous
product. If the product is imported then the code will be 1 and if it is indigenous
then the code will be 3.
2. Receipts
After the order has been placed, the goods are been received. First of all the gate
security will check the truck number and they will provide them the TPN number
after taking that number the truck will go for the excise clearing where it will get
the excise ID from there. The excise person will make a entry of excise, after that
the MMN entry is done and then they will sent the goods to the stores department

where the GRN (Goods Receipt Note) will be made. Stores department will send
the goods for the inspection and on that base the inspection note is to be
prepared of acceptance or rejection of the goods. That is also known as user
decision and the goods will be consider as the RIL‟s property and if the goods are
rejected then they will make the MMX exit entry
3. Inspection
Inspection of all the materials is to be done on the basis of the purchase order
that have been placed, they will check for the quality and the quantity of the
material as per the purchase order. If all the criteria are ok then they will accept
the material and will send to stores or at the where it is required. And if the
material is inferior then they will reject that material and will quote the reasons for
the rejection of the materials.
4. Storage and preservation

After the materials are checked they are kept in stores or at the plant site, where
due care is been taken for the material so that they are not damaged or
Obsolescence. Chemicals and other hazardous material are kept well preserved
so that they may not prove vital for the health of the employees.
5. Issue
Issue of the materials is done as per the reservation made by the particular plant.
Each plant has to make a reservation for the material that they required and also
to show how much stock they have and how long it will last, the materials
department will make the verification of the reservation and as per the past
consumption record they will allot the materials to the plant.
6. Scrap and disposals

After the use of the materials some materials may turn to wastages or useless
due to some reasons. So they are to be scraped, not only the materials but also
any type of inventory like spares and mechanical will go Obsolescence with the
time passing and will be useless for the plant. First of the plant manager has to
prepare MRV (Materials Return Voucher) which include all the details of

inventory, with its code and type of inventory and where it is been used with the
approval of the head that this is not usable now should be scraped. For the
disposal of the scrap they will invite the tender and ask them to visit the scrap
yard, the acceptance of the tender will be done by the Mumbai office.
Costs oriented with inventory management
In an industry inventory costs almost 60% to 70% of its total cost, here RIL 58% of
total cost is on inventory. So due care is to be taken for inventory management so
that profitability can be increased. Following are the types of cost for inventory
management.
1. Ordering cost
Whenever the order is placed for the stock there is cost occurs, the cost will
differ as per the nature of inventory. The cost will differ as per the category of
the inventory, if it is of A type then more attention is needed so it will incur
more cost and so on for B and C.
2. Inventory carrying cost

Inventory carrying cost is always proportional to the investment in inventory
and it is, therefore expressed as a percentage of average investment in
inventory. Various costs are follows
 Capital cost
This is the largest component of the carrying cost and it represents
the cost of capital invested which includes the cost of borrowing
capital which is the borrowing rate or the bank lending rate.
 Storage cost
The chief elements of storage cost are the cost of space,

maintenance and repairs, lighting, wages of personnel, handling
charges and other.

 Obsolescence cost
The value of an item gets progressively reduced, as the life of inventory goes on.
Obsolescence is done due to life span of inventory, technology changes, and loss
due to handling.
 Insurance
Insurance cost is incurred against loss due to some unforeseen
circumstance like fire, pilferage and others.
 Stock out cost

This is the cost of not carrying the inventory, this is one type of
opportunity cost, as when demand occurs but system is out of
stock. Costs consist of loss of production resulting in idle machine
hour and idle operator our cost, extra cost expediting and exiting
purchase order, extra cost of transportation if faster means of
transport are to be substitute, profit lost due to loss of production.
 Overstocking cost
This is also an opportunity cost incurred as a result of investment in
inventory larger then normally necessary. Usually, the items in
stock are ultimately used. But they remain in inventory for an
appreciable length of time incurring additional carrying cost. Where
the items are not used, they become surplus and have to be
ultimately scrapped and sold at a loss.
Objective of inventory management
The main objective of the inventory management is to make the availability of the
inventory whenever required at specific place, with least cost and wastages. Costs
like ordering cost, carrying cost and idle stock cost etc are to be reduced. Following
point are to taken for inventory management.
 Requirement based on information from sale forecast and the production

schedule.

 Quantity in stock or order from stock ledgers and from pending purchase
order.
 Procurement time.
 Obsolescence / process changes.
Needs and importance
Needs of inventory management is essential for any organization, need of inventory

management arise due internal and external uncertainties, internal uncertainties like
top management decision, unpredictable demand, failure of supplies, and fluctuating
lead time. And external factors like government policy, transportation, changes in
technology and others.
Impact on profitability
Inventory turnover can be used as the tools for controlling the inventory
Calculation by increasing turnover
Particulars Case-1 Case-2 Case-3
Sales 1 crore 1 crore 1 crore
Profit 20 lakh 20 lakh 20 lakh
Inventory cost 55 lakh 55 lakh 55 lakh
Inventory turnover 12 6 1
Inventory carrying cost @ 20% 91,700 1,83,000 11,00,000
Net profit 19,08,300 18,17000 9,00,000

Inventory management is required at four stages
1. Production
For production raw material is required which will treat as inventory
management.
2. MRO
As the machinery required spares and consumables when ever required.
3. Work in progress
At this stage when product travel one machinery to another machinery.
4. Finished goods
Packaging material is need for finished goods and finished goods itself.
Inventory management can be achieved by implementing
 Maximum stock level

 Minimum stock level
 Reorder level
 Danger level
 Safety stock
Maximum level
Safety stock
Minimum level
Reorder level
Lead-time

Minimum level
This means minimum level stock, which any company has to maintain to avoid the
stock out position. The minimum level is determined by the consumption of the
inventory and lead-time.
Maximum level
Maximum level is the level from where the maximum stock must be there at every
time when the order received.
Reorder level
This is the point where the order has to place again for the inventory.
Lead-time
This is the time taken from placing an order to receiving the inventory, so calculation
of the lead-time makes large importance for the availability of the inventory.
Safety stock
This is the point of safety where a firm must get the placed order; it has to be added
because the lead-time may variety as per the condition.
Economic order quantity
Economic order quantity (EOQ) is the quantity of the single order it can be calculated
as per the formula
EOQ= √2AO
C
Where A = annual consumption
O = cost per purchase order
C = carrying cost

RIL has concentrated on only one factor; reorder level. They are having their
inventory control and management through reorder level. After all the forecasting are
done and with the help of past experience they plan the all levels. They try to
maintain one month stock, and the reorder level used to be for 4 months and the
maximum stock is for the 12 months
THE INVENTORY STRUCTURE

29,000.00 Finished Goods / Traded
Goods
Amount in Cr.
24,000.00
Stock-in-Process
19,000.00
Raw Materials
14,000.00
Stores,Chemicals&Packa
9,000.00 ging Materials
4,000.00
-1,000.00
2010 2009 2008 2007 2006
Year
This figure shows the proportion of each type of inventory in the total inventory. This
shows that major part of inventory is in the form of “Raw material”. Except it the
inventory is not access, this show that company try to maintain minimum inventory
so that the amount not blocked in the inventory. Further the total inventory reduces
over a period of time. This is due to efficient management of RIL.
Total Inventory as on 31.03.2010

(as per valuation class)
Packing material Elec. Items

Others & Consumes. 0.85% 3.90%
Cat-Chem.
13.72%
10.05%
Inst. Items
11.14%
Lubes. & Greases

0.50%
Prepared By: - Chirag Mech.
Chauhan
Items 75
59.84%
Techniques of inventory management
1. ABC analysis
2. VED analysis
3. FSN analysis
4. JIT
5. MRP
6. MRP – I
1. ABC analysis
ABC in ABC analysis stands for Always Better Control that is the control should
be there on the more costly items to less costly items.
The inventory whose cost is round about 70% of the total cost of inventory are
regarded as type A, while inventory with 20% to 25% of total cost are known as
type B and 5% to 10% cost is of type C. imported items and costly items are
included in A type. For RIL they are doing the ABC analysis every six months and
get the information.
2. VED analysis
VED means Vital Essential Desirable, by it name only it tell how it manages the
inventory. The items that is vital for the production process without which the
whole plant can be shutdown. So these types of items are known as Vital, they
can be chemicals, catalysts and spares equipments. While the essential types of
item are those, which are needed for, the production process but they will not
create the shutdown of the plant. And Desirable items are those which is also
required but that can be stocked or can be purchased whenever required.
3. FSN analysis

FSN stands for Fast moving, Slow moving, Non-moving inventory, it states the
movement of the inventory, if any inventory is been not used for more than 5
years then it is included in non – moving inventory, the inventory which are been
used within the year are known as fast moving inventory, and the inventory which
is not used for 0 – 4 years are included as slow moving inventory.
4. Just In Time
Just in time is also known as JIT, this type of purchasing will avoid the
overstocking. In JIT the inventory is purchased only when it is required, this type
of inventory management is used for only those inventories, which are easily and
at a time available. So that the shutdown may not arise due to its shortage. In RIL
only seals are purchased under the JIT, and all other inventory are been stocked.
5. MRP
MRP stands for Materials Requirement Planning; this is time-phased priority
planning system. This is the tool that helps the management to forecast the
proper amount of production and on that basis purchase planning of inventory is
made. It takes into account the valid master production planning Materials
required for the production process accurate and timely inventory status.
 It also comprises of following steps

1. Gross requirement of inventory.
2. On hand inventory.
3. Residual open orders.
4. Plan new orders.
Benefits of MRP
 Reduction inventory
 Quick response in demand and supply
 RIL does not follow the MRP technique

6. MRP – II
MRP – II stands for Manufacturing Resources Planning, it provides the necessary
tools for effective planning controlling and managing the resources of
manufacturing organization.
It helps in various stages like resources, planning, business plan, and production
plan. It also helps in providing information to plan priorities and respond the
production changes, meet delivery schedule and material costs under control.
Benefits of MRP – II
 Optimizes the inventory investment

 Improves productivity
 Improves product quality
 Reduce purchase cost
 Reduce obsolescence
MRP run at RIL
The purpose of MRP is to ensure the right material arrives at the right place at the
right time. The MRP run is used to automatically generate planned orders or
purchase requisition enabling the replenishment of materials depleted by
consumption and planning of known requirements. The system tries to achieve a
balance between optimizing needed materials and minimizing cost by keeping
inventory levels at a minimum and having no stock outages.
During the MRP run, the system compares the current inventory level against the
optimized reorder point uploaded in SAP. If an item is a stock item and the current
inventory is below the reorder point, an automatic PR is raised for the difference
between order up to level and the current inventory.

The MRP run takes reorder points, order up to levels and reorder quantities from the
levels set by the various models and uses it in the MRP run. The intervals between
MRP runs for different sites and materials might be different according to site specific
or item specific conditions. Immediately after each MRP run, the system will
automatically raise a PR for those items which have been approved for auto – PR
release. For other items needing ordering, the inventory controller will be intimated
about the same for action to taken on his/her side.
Inventory categorization
Velocity is the primary basis of categorization. Velocity is number of issues in a

period of time. Items are first segregated into fast moving, rarely moving and non
moving items based on monthly aggregated consumption. Fast moving items are
always consider stock items, while further categorization is done for rarely moving
and non moving items before the stock/non stock decision is made.
After the velocity categorization a value based categorization is done. To optimized

engineer effort, the high value items are subject to further analysis and validation
and the lower value items are considered as stock items.
Finally, for high value items, a stock/non-stock decision is taken based on the
critically, predictability of demand and the probability of demand of the item. This
may be done by answering a detailed questionnaire or having a quick look,
depending on the nature of the item.

Data Analysis & Interpretation
Total inventory distribution during May,09
(Rs. in Crore)
Inventory Items Total inventory Import Local
Catalyst &
18.71 14.46 4.2
chemical
Electrical 13.06 3.36 9.71
Instrument 27.62 10.58 17.04
Mechanical 134.65 34.18 100.47
Packing 0.98 0 0.98
Others 33.69 8.24 25.45
Total 228.71 70.82 157.89
( source: company report ) Chart 3
I n v e n t o r y d i st r i b u t i o n
Chart
Cat &
18. 71 chem indicates
33. 69 elect
13. 06 distributio
0. 98 Inst rum en
t n of total
27. 62 m ech
inventory
pack ing
Ot hers
into
different
categories
134. 65
. It shows

that mechanical items major part in total inventory. Electricals and instruments
contain medium part in total inventory. Electricals are 5.71% and instruments are
12% of total inventories.
Tot a l I n ve n t ory D ist ribu t ion
160
140
120
100
Va lue
Local
80
I m port
60
40
20
0
g
s
t
h
em
en
ec
in
er
ec
ck
th
el
ch
O
ru
pa
&
st
at
In
C
I nve nt or y ca t e gor y
Graph 1
The above graph indicates local and imported inventories of RIL. Electicals and
instrument items usually purchase from local area. Out of total electrical items of Rs.
13.06 crore, 74% are purchased locally and 26% are imported. In case of instuments
out of total Rs. 27.62 crore, 62% are purchased locally and 38% of total value of
materials are imported.
Import is highest in case of chemical and catalyst and lowest in case of packing
materials.

Maintenance Repair Operation ( MRO ) Discipline wise MRO inventory
( Rs. In crores )
Discipline inventory[a] surplus[b] Obsolete[c] Net= [a-[b+c]]
Mech 134.65 16.21 24.61 93.83
Instrument 27.62 3.22 6.47 17.93
Elect 13.06 3 0.9 9.16
Others 33.07 8.28 5.52 19.27
Total 208.41 40.71 37.5 140.2
( source : company report )
M RO i n v e n t o r y st a t u s
30
25
24.61
Value in Rs (cr)
20
16.21
surpl us[ b]
15
Obsol et e[ c]
10 8.28
6.47
5.52
5
3.22 3
0.9
0
Mec h I nst rument Elec t Ot hers
I nvent ory cat egory
Above graph shows the surplus, obsolete and net value of MRO inventory in each
category.
Surplus = stock – maximum quantity

If new technology arrived old will be replaced, it is known as obsolete. In Reliance
they have given flag to each discipline. It is like plant specific material status given to
it. For surplus they have given flag 05 and for obsolete flag 06.
From the above graph, we can see that in case of instruments obsolete materials are
more than the surplus. So in case of instruments the materials are replaced
continuously. In case of electricals obsolete are less than surplus.
Insurance spares
Available in
Category Not available Issue value Stock value
stock
Mech 348 102 0.02 18.96
Elect 1 0 0 0.11
(source: company report )
The above table indicates total insurance spares available. Insurance spares means
that a material which is not available in the market, higher in value and lead time is
also high.
FMS analysis ( Rs. In crore )
Moderate Moving Slow Moving (

Inventory Items Fast Moving
( Flag 08) Flag 03 )
Cat & chem. 16.44 0.41 0.69
Elect 2.59 2.52 2.95
Instrument 5.31 3.29 7.36
Mech 19.02 16.37 29.09
Total 43.36 22.59 40.09

( Source : company report )
FM S a n a l y si s
35
30
25
Value in Rs (cr)
20 Fa s t Mo v
Mo d e ra t e Mo v
15 Sl o w Mo v
10
0
Ca t & c hem e le c t I n st ru me n t me c h
i n v e n t o ry ca t e g o ry
The above graph indicates value of fast moving, moderate moving and slow moving
inventories. In case of electricals slow moving materials are higher than fast moving
and moderate moving. In case of instruments also slow moving materials are high
and then fast moving.
STATUS OF SURPLUS AND OBSOLETE STOCK
(Rs. Crore)
Inventory Items Surplus Flag 05 Obsolete Flag 06
chem & Cat 0.18 0.99
Elect 4.1 0.9
Instrument 5.19 6.47
Mech 40.03 30.14
( source : company report )

Surplus ( Flag 05)
0.18 4.1
5.19
chem & Cat

Elect
Instrument
Mech
40.03
O b so l e t e ( Fl a g 0 6 )
0 .9 9
0 .9
6 .4 7
ch e m & Ca t
El e ct
I n s t ru m e n t
Me ch
3 0 .1 4

ABC ANALYSIS
PARTICULARS AMT (IN CRORE)
ITEM A 133.07
ITEM B 38.02
ITEM C 19.01
TOAL 190.10

ITEM A ITEM B ITEM C
Mechanical Catalyst
106.95 20.37 Electrical 10.76
Items Chemicals
Lubes and
Inst. Items 22.03 0.76
Grease
Other and Packing

27.61 1.60
Consumer Material
ABC in ABC analysis stands for Always Better Control that is the control should
be there on the more costly items to less costly items.
The inventory whose cost is round about 70% of the total cost of inventory are
regarded as type A, while inventory with 20% to 25% of total cost are known as
type B and 5% to 10% cost is of type C. imported items and costly items are
included in A type. For RIL they are doing the ABC analysis every six months and
get the information. The above chart shows the value & category of item
according to their classification.

INTRODUCTION
Introduction to Study:
Polybutadiene is a term used to denote homopolymer of butadiene C4H6.

Polybutadiene rubber (PBR) is used in various applications – tyre and non-tyre
sectors. Polybutadiene latex is used in latex form in the production of ABS resins.
Since polybutadiene latex is always produced for captive consumption by ABS resin
units, the study therefore focuses only on PBR. Reliance Industries Limited VMD
after taking IPCL into its family has become the only major producer of PBR in
INDIA.
Scope of Study:-
Study involves only Baroda RIL VMD Complex. And it involves only PBR which is 1
of the product produced at RIL VMD plant Vadodara.
Objective of Study:-
 To understand materials management on the part of procurement and

inventory management.
 To know overall working and management on procurement part. And how
crucial role does procurement plays in deciding the core competencies of firm.
To Understand the Procurement Process we have to follow basic procurement steps

of
1. Sales forecasting
2. Production Planning
3. Material Scheduling

4. Vendor selection
5. P.R.O. Release.
Introduction to Basics of PBR:-
Rubbers:
Rubbers can be classified into two broad groups - natural and synthetic. In the total
global rubber consumption, natural rubber (NR) consumption is approximately 36%.
Among the various synthetic rubbers (SR), PBR is the second most important
synthetic rubber, next only to styrene butadiene rubber (SBR).
Rubber Applications
Traditionally, the tyre application has been the major end-use for rubber: both natural
and synthetic. Tyre applications account for 57% of total synthetic rubber
consumption. Technical rubber goods for automotive industry rank second. Rubber
toughening or rubber modification of thermoplastic and thermoset materials is the
third-largest area of applications.
Polybutadiene Rubber
Polybutadiene, for the first time was prepared by Lebdev, a Russian in 1910 by using
alkali metals as the initiator in diene polymerizations. His work eventually led to the
first industrial production facility. During the 1920's and 30's emulsion polymerization
process was developed for styrene -butadiene rubber (SBR). Despite the ardous
efforts, emulsion polymerized polybutadiene rubber was not accepted as a large
scale commercial prospect in 1940's. Development of stereo- specific catalyst
systems in mid 1950s marked a significant development in PBR manufacturing.
PBR Properties
Depending upon the disposition of the double bonds present in the polymer chain,
PBR can be classified into five configuration cis- 1,4; trans-1,4; vinyl-l,2-isotactic;
vinyl-l,2-syndiotactic ; and vinyl-1,2 atactic. Depending on the choice of catalyst

system, PBR can be prepared ranging from almost 100% cis to 100 % trans or 100%
vinyl. Out of these configurations, medium and high cis varieties are of commercial.
PBR Manufacturing
Polybutadiene rubber is prepared by either emulsion or solution polymerisation. In
general these processes are based on organo-lithium compounds or co-ordination
catalysts. Polymerization is carried out using pure dry butadiene and a solvent.
When the desired conversion is achieved, the catalyst is deactivated and
polybutadiene is recovered from
the unreacted butadiene and solvent, washed to remove the catalyst residue, and
dried.
Hydroxyterminated polybutadienes are valuable intermediates (apart from their

potential in block copolymer systems) as they can be used with a wide range of
curing, cross-linking and chain extending agents. They are also used as binders for
rocket propellants and in mastics and adhesives applications. HTPB is being
manufactured by IPCL and Vikram Sarabhai Space Centre has been using it since
mid eighties.
PBR Processing
PBR undergoes mastication, mixing, moulding and curing. It is normally cured with
sulphur or peroxide systems after blending with some other elastomers. PBR is
normally blended with other elastomers to enhance processability.
PBR Applications
PBR finds its major outlet in the tyre sector. It is also used in acrylonitrile-butadiene-
styrene resins (ABS Resins) and in high-impact polystyrene (HIPS). Various other
applications are belts, hoses and footwear. In tyre application, apart from enhanced
tread groove cracking resistance, PBR imparts improved tread-wear resistance and
low temperature flexibility. This results in low heat built-up and this property
increases tyre life by keeping it cooler. Due to properties like low gel content, low

temperature flexibility, narrow molecular weight distribution, better resilience, low
water absorption & greater stability, PBR is favoured for the above mentioned non-
tyre uses.
Polybutadiene in ABS Resins

Polybutadiene latex is used in the production of ABS resins, where polybutadiene is
grafted with styrene and acrylonitrile and is dispersed in a rigid styrene acrylonitrile
(SAN) matrix. ABS is manufactured by emulsion polymerization, mass (bulk)
polymerization or combined processes. Although historically emulsion process has
dominated, recently mass process has achieved commercial importance.
INDIAN INDUSTRY STRUCTURE AND STATUS
Indian Rubber Goods Industry

The origin of the Indian rubber goods industry dates back to the year 1921, when the
first rubber goods manufacturing unit was established in West Bengal. Today the
rubber goods industry in India consists of 27 automotive tyre manufacturing units,
around 170 medium scale units, around 5000 units in small scale sector and
numerous tiny ones for misc. rubber products.
PBR industry in India

In early 1970s, IPCL set up PBR manufacturing facilities with the know-how from
Polymer Corporation of Canada. The commercial production in this plant with the
installed capacity of 20,000 TPA started in 1978. PBR's consumption has
substantially increased from around 100 tons in 1973-74 to over 30,000 tons today.
In addition two more plants started in 1979 and 1996 and total production is 72000
tons per annum.

PBR Manufacturing Technology
PBR-I is first unit in India which produced PBR. This plant has adopted a technology
to produce high cis-PBR, which involves solution polymerization using stereo-
specific Ziegler-Natta type catalyst system, based on cobalt. The process uses
benzene as a solvent. The project cost at the time of project implementation was
approximately Rs. 30 crores.
PBR – III has been licensed by Japan Synthetic Rubber Co. Ltd. (JSR). The cost of
the 30,000 TPA PBR project is approximately Rs. 150 crores. This project also is
based on solution polymerization, but will use nickel based catalyst system.
PBR Production and Consumption

With the current production levels of 72000 TPA, IPCL's PBR plant capacity
utilization is 100%. At present RIL produces only three grades of PBR- CISAMER
1220 and CISAMER G.P and one more. The former which accounts for 60-70% of
total production, is used by the tyre sector while the later is being consumed for non-
tyre applications. The overall consumption of PBR by Indian rubber industry today is
over 144340 TPA (2008-09), amounting to a compounded average growth rate of
8% per year in last decade. Automotive tyres sector is the largest consumer of PBR
rubber. Today it accounts for about 70% share, followed by tread rubber- 17%, cycle
tyre 6%, and HIPS 3%.
Polybutadiene in ABS Resins : Indian Industry Status

The credit for developing the basic indigenous ABS process goes largely to Shriram
Institute for Industrial Research (SRIIR) and National Research Development
Corporation (NRDC). License for ABS know-how was obtained by Polychem, ABS
Plastics and Synthetics and Chemicals in mid seventies. Besides them two more
companies viz., Bhansali Engineering Polymers Ltd., and Gujarat Binil Chemicals
Ltd., have established facilities for production of ABS.

Major Producers of PBR
The major producers of PBR today include - American Synthetic, Asahi Chemical,
Australian Synthetic, Bayer, Bridgestone, Coperbo, Enichem, Firestone, Goodyear,
Huls, Japan Elastomer, Japan Synthetic, Karbochem, Korea Kumho, Michclin,
Ncgromcx, Nippon Zeon, Petkim Turkey, Pctrochim, Rcpson Ouimica, Taiwan
Synthetic, Ube and Romania and CIS. The new plants of PBR under construction
are of Goodyear Tyre and Rubber Co. in USA, Autoden in France, Enichem in Italy,
Hyundai in Korea, Net Petrochem in Iran and Companhia Pertnan Bucanadc
Borracha in Brazil.
1. SALES FORCASTING:-
As PBR is material which does not have a direct use hence we have to find
out an indirect demand and as we know tyre industry is a major consumer of
the PBR we will find it demand of Tyre and based on it PBR demand
forcasting.
Expected Future Trends in Tyre Retreading in India
Tyre retreading in the commercial vehicle segment is poised for growth in the future.
This growth will be aided by the following favorable factors and major developments
taking place:
 Increased level of Radialization in the commercial vehicle segment (due to

reduced incidence of overloading of commercial vehicles);
 Growth in and increased share of multi-axle trucks (with the catching up of the
concept of 'hub & spoke' transportation, long distance movement of road
freight will be by multi-axle trucks whereas distances within and around the
cities will be catered by smaller commercial vehicles);

National Highway Projects, especially Golden Quadrilateral Project and Highways
connecting North-South and East -West corridors (coupled with reduction in
overloading and improved condition of road network, higher level retreading will offer
added financial benefits).
TOTAL TYRE PRODUCTION IN INDIA
F.Y. 1995-96 TO 2008-09 (In 000

Nos.)
1995 - 1996 - 1997 - 1998 – 1999 - 2000 - 2001 -

CATEGORY 96 97 98 99 2000 01 02
Truck & Bus 7696 8095 8095 7913 8969 8612 8474
Passenger Car 3324 3888 4263 4571 6054 6813 7481
Jeep 881 1098 1342 1247 1283 1155 1247
Light Comml.
Veh. (L.C.V.) 1177 1833 1903 1917 1980 2108 2352
Tractor Front 976 1040 1075 1085 1203 1186 1150
Tractor Rear 663 683 785 839 903 852 785
Tractor Trailer 686 360 214 223 295 277 320
A.D.V. 673 581 528 593 589 511 488
Scooter 9853 9545 9577 10975 10140 9385 8547
Motor Cycle 3788 4457 5582 7277 9275 11196 12275
Moped 833 795 400 234 516 119 135
Industrial 95 66 143 137 172 219 214
O.T.R. 36 30 37 37 36 38 46
Aero 7 0 0 0 0 0 0
TOTAL 30688 32471 33907 37048 41415 42471 43514

2002 - 2003 - 2004 - 2005 2006 - 2007 - 2008 -
CATEGORY 03 04 05 – 06 07 08 09
Truck & Bus 9863 10821 11092 11941 12367 13137 12839
Passenger
Car 8544 9959 11862 13605 14264 16437 16571
Jeep 1384 1440 1462 1272 1368 1467 1469
Light Comml.
Veh. (L.C.V.) 2844 3271 3945 4529 4820 5320 5298
Tractor Front 1125 1148 1311 1383 1754 1814 1842
Tractor Rear 825 842 1096 1134 1296 1234 1315
Tractor Trailer 470 415 408 596 823 886 758
A.D.V. 456 295 197 325 381 409 281
Scooter 9875 9274 9992 9519 9643 11604 10882
Motor Cycle 15654 16688 18127 21053 26079 27921 30148
Moped 185 168 124 55 0* 0* 0
Industrial 309 295 377 514 635 733 568
O.T.R. 51 74 89 106 115 141 136
Aero 0 0 0 0 0 0 0
TOTAL 515585 54690 60082 66032 73545 81103 82107
*wef April 2006 Moped tyre production included in Scooter Category.

TOTAL TUBE PRODUCTION IN INDIA
F.Y. 1995-96 TO 2008-09 (In 000

Nos.)
1995 - 1996 - 1997 - 1998 – 1999 - 2000 - 2001 -

CATEGORY 96 97 98 99 2000 01 02
Truck & Bus 4923 5961 6053 6781 7382 7465 7291
Passenger Car 2604 3061 3518 3563 3949 4322 4277
Jeep 653 811 1153 1133 1046 939 972
Light Comm.
Veh. (L.C.V.) 969 1323 1422 1416 1614 1758 1853
Tractor 995 953 1088 1221 1259 1108 925
A.D.V. 259 250 234 295 268 259 216
Scooter 4375 4526 5369 6903 5753 5531 5122
Motor Cycle 2574 3290 5272 6507 7771 9772 11372
Moped 561 630 204 224 564 223 151
Industrial 30 24 42 29 33 48 61
O.T.R. 16 4 8 9 12 9 13
Aero 1 0 0 0 0 0 0
TOTAL 17960 20833 24817 28081 29651 31434 32235
2002 - 2003 - 2004 - 2005 – 2006 - 2007 - 2008 -

CATEGORY 03 04 05 06 07 08 09
Truck & Bus 7982 8851 9439 10522 11257 12016 11911
Passenger Car 4762 5331 5947 6990 8509 11490 10773
Jeep 1038 1056 1040 1066 1132 1416 1411
Light Comm.
Veh. (L.C.V.) 2147 2633 3100 3775 4156 4147 4213
Tractor 835 907 1053 1232 1425 1443 1334
A.D.V. 231 187 140 165 213 181 184
Scooter 5750 5624 6439 7044 7461 9128 8242
Motor Cycle 13978 15415 18671 22263 28067 30817 31526
Moped 176 270 347 227 0* 0* 0
Industrial 65 50 71 99 108 112 79
O.T.R. 15 19 26 38 48 60 60
Aero 0 0 0 0 0 0 0
TOTAL 36979 40342 46273 53421 62376 70810 69733
*wef April 2006 Moped tube production included in Scooter Category.

Categorywise Tyre Production in India
Financial Year 2008-09 to 2009-2010 (In Lakh Nos.)
Tyres for: 2008- 2009- %

09 10 Change
Truck & Bus 128.39 148.11 15
Passenger 165.7 200.47 21
Car
Jeep 14.69 14.02 (-)5
Light 52.98 57.39 8
Commercial
Vehicle
Tractor Front 18.42 23.86 30
Tractor Rear 13.15 16.34 24
Tractor Trailer 7.58 9.03 19
Animal Drawn 2.81 2.94 5
Vehicle
Scooter / 108.83 135.57 25
Moped
Motor Cycle 301.48 356.64 18
Industrial 5.68 5.38 (-)5
Off the Road 1.36 1.61 18
(OTR)
Total 821.07 971.36 18
Category wise Export of Tyres
Financial Year 2008-09 – 2009-10 (in Numbers)
Category 2008-09 2009-10

%
Change
Truck & 1933959 2052946 6
Bus
Passenger 991558 845688 (-)15
Car
Jeep 10263 6946 (-)32
Light 1630483 1465991 (-)10
Commercial
Vehicle
Tractor 13051 12052 (-)8
Front
Tractor 46347 46206 (-)0.3
Rear

Tractor 20067 4692 (-)77
Trailer
Motor Cycle 453226 362784 (-)20
Scooter(2/3 435778 441965 1
wheeler)
Implements 9962 15693 58
Industrial 7605 8002 5
OTR 36744 35515 (-)3
Total 5589043 5298480 (-)5
Categorywise Tyre Exports -2000-01 to 2008-09 [ Nos.]
2001 - 2002 - 2003 - 2004 – 2005 - 2006 - 2007 - 2008 -

CATEGORY 02 03 04 05 06 07 08 09
Truck & Bus 1805203 2141438 223155 2503956 2408759 2276049 2431545 1933959
Passenger
Car 287547 364514 591494 1024561 1052874 966046 1091715 991558
Jeep 40 20 220 391 885 1420 7461 10263
Light
Commercial
Vehicle 610692 700868 962972 1130908 1390814 1599230 1621880 1630483
Tractor
Front 23431 20698 18990 18202 13408 11078 17072 13051
Tractor Rear 51218 72263 89758 84684 98807 56186 66644 46347
Tractor
Trailer 444 852 1448 3686 3833 8665 17468 20067
Motor Cycle 33019 34088 47333 62710 84908 151677 322630 453226
ADV 170 20 0 0 0 0 30 0
Scooter 43391 49966 120725 202656 289984 320536 45338 435778
Implements 15758 9143 6558 2096 2447 4045 5637 9962
Industrial 15570 20716 10702 9885 7303 11543 12777 7605
OTR 21468 29079 21168 23375 33480 43085 45919 36774
Antique 2894 0 0 0 0 0 0 0
TOTAL 2910845 3443665 4102923 5067038 5387502 5449560 6094116 5589043
Raw Materials of Tyre Industry Overview (FY 2009-10)
Tyre Industry is highly raw-material intensive. Raw materials cost accounts for
approx 63% of tyre industry turnover and production cost.

Given below is the consumption of raw-materials as a percentage (%) of Total Raw-
material Cost.
Natural Rubber 43%

Nylon Tyre Cord Fabric 18%
Carbon Black 11%
Rubber Chemicals 5%
Butyl Rubber 4%
PBR 5%
SBR 5%
Others 9%
62 % of total Natural Rubber62% of total Natural Rubber consumption is by the Tyre

Sector, balance by rubber based non-tyre industries.
Total weight of raw-materials consumed by tyre industry – 15.50 Lakh M.T.
Total Cost of Raw Materials consumed by tyre industry – Rs.16,000 Crores
Raw Material Availability
 No domestic Production of Butyl Rubber and Styrene Butadiene Rubber of tyre

grades, i.e., 1502 and 1712. Production of Nylon Tyre Cord Fabric,
Polybutadiene Rubber, Rubber Chemicals, Steal Tyre Cord, Polyester Tyre
Cord insufficient to meet domestic demand.
 Tyre industry imports raw materials on account of the following factors:
a. duty-free imports permitted against export of tyres;domestic demand not

sufficient to meet complete requirement;technical and commercial
considerations;
b. business strategy to have multiple sources of supply.

Consumption pattern of Major Raw Materials (2009-10) (Est.)
(in Tonnes)
Raw Total Tyre Non Total Tyre Non Tyre

Materials Cons. Sector Tyre Import Sector Sector
Cons. Sector Imports* Imports
Cons.
Natural 930565 62% 38% 170679 86% 14%
Rubber
SBR 138660 73% 27% 125510 83% 17%
PBR 105060 86% 14% 39280 86% 14%
Carbon Black 317000* - - 36500* - -
Nylon Tyre 115000* - - 48000* - -
Cord
Rubber 25000* - - 4000* - -
Chemicals
Steel Tyre 25000* - - 15000* - -
Cord
Butyl Rubber 36000* - - 36000* - -
*Tyre Sector Consumption / Import
 Total Requirement of PBR is:-
o 105060 +39280 = 144340
o Capacity of RIL VMD division = 72,000
Constant Annual Growth Rate assumed is 9% and hence demand for next 5 years can
be forecasted as follows.
Sr. No. Year Forecasted Demand

( in Tones)
1 2009-10 157330.60
2 2010-11 171490.35
3 2011-12 186924.49
4 2012-13 203747.69
5 2013-2014 222084.98

Hence we are having a capacity which is very lesser than our current as well as
future market demand.
2. Production scheduling:-
Plant is to be used to its maximum capacity i.e. 72000 TPA. Hence we need
to procure material for 72000 TPA.
For Each tone PBR production raw material ingredient are as follows:-
(Most are standard and there also exists some assumptions)
Sr. Ingredient Quantity Demand for 2009-2010

No.
(in % per (MT For Quantity of 72,000 MT)
MT)
Yearly Monthly
1 Butadiene 102 73440 6120
2 BRF 0.90 648 54
3 NIC 0.45 324 27
4 TAL 0.28 201.6 16.8
5 N-HEPTANS 10.50 7560 630
6 TOLUNE 15.00 10800 900
7 DBPE 3.00 2160 180
8 POLYGARD 4.5 3240 270
9 PPA 1.00 720 60
10 N-OIL 2.20 1584 132
11 TBC 0.12 86.4 7
12 CAUSTIC 0.35 252

100% 21

13 SODIUM 0.24 172.8
NITRIL 14
14 AMMONIA 0.20 144 12
PACKAGING:
Sr. Ingredient Quantity Demand for 2009-2010

No. per MT
Yearly Monthly
1 Packaging 2 KG 1,44,000
Material 12000
2 Bags 30 Bags 2160000 180000
FINDINGS:-
1. Over all procurement is managed very well and no major plant

stoppage noticed due to unavailability of any materials.
2. During studying the procurement scheduling it has been found out that
the materials are requested to be delivered on different dates and is
available at different date. This is 1 of the problem in maintaining less
inventory level of less than 15days i.e. 5 days for packaging materials.
This is due to reliance Policy of price change every 1 st and 15th of
month as per price change of polymer.
But it is not a problem as here supplier takes material from RIL only
and he makes price changes as RIL does. Price changes are not a
major effect as it gives advantage of shifting in total amount to be paid
on daily basis and material is always made available by supplier for

production. Till today no plant has been closed due to unavailability of
packaging material.
3. In case of raw material major part is produced in VMD and remaining is

taken from Dahej site by Material Transfer Order (MTO).
4. Rest raw material is very small part and cost calculations shows they
are to be purchased on yearly basis.
5. It has been found that plant is working at its fullest capacity and many
innovations and methods have been implemented to increase total
production of PBR plant.
6. As Reliance is currently having monopoly kind of condition has

currently edge over competitors (which are mainly importers).But its
condition is continuously declining as market requirement is increasing
approx. with a CAGR of 9% and RIL is with still same production level
from 1996.
Recommendations:
 PBR
(i) Since no technology source (for catalyst systems other than cobalt) is
available domestically, import of technology for the new plants appears
inevitable.
(ii) In view of the necessity of additional plants and the likely spin off
benefits like the possibility of export of technology, efforts in technology
development (for catalyst systems based on nickel and neodymium)
appear worthwhile.
(iii) RIL is currently in a unique position to undertake this activity since it is
the only manufacturer with a strong infrastructure in research and
development. For development of superior catalyst systems, RIL may
like to collaborate with a laboratory like National Laboratories.

 Procurement
1. To solve effects of price change we can make an agreement with our supplier
about what ever price changes we would pay price as per our scheduled date
price. But this may affect supplier relationship so care has to be taken.
2. To sustain market position we should go for a new PBR plant with a capacity
of approximately 1, 50,000 TPA as plant erecting takes at least 3 years.
 Calculation to support the recommendation.
Constant Annual Growth Rate assumed is 9% and hence demand for next 5 years
can be forecasted as follows.
Sr. No. Year Forecasted Demand

( in Tones)
1 2009-10 157330.60
2 2010-11 171490.35
3 2011-12 186924.49
4 2012-13 203747.69
5 2013-2014 222084.98
Availability of Raw material Butadyne for current consumption of 72000 TPA is
14,000 – Local (VMD)60,000 – PTO (Hazira)
And at Hazira there is additional capacity of approximately 30,000 which is sold from
there in market. Hence looking to existing set up We can think of addition of another
40,000 TPA plant.
Plant cost is assumed to be 180 crore for 40,000 TPA plant (data taken from existing
project of 1996 for 30,000 150 crore)
Sales Price is approximately 1, 00,000 Rupees per Tonns.

 So assuming profit to be 20 %.
Profit per annum for additional 30 TPA PBR will be 60 Crore and hence
it will take time of approximately 3 years to reach break-even point.
 Assuming profit to be 30 %.
Profit per annum for additional 30 TPA PBR will be 90 Crore and hence
it will take time of approximately 2 years to reach break-even point.
 Assuming profit to be 50 %.
Profit per annum for additional 30 TPA PBR will be 150 Crore and
hence it will take time of approximately1 year and 3 months to reach
break-even point.
Year Profit
20% 30% 50% Cost of Project
1 6 9 15 18
2 12 18 30 18
3 18 27 45 18
4 24 36 60 18

RESEARCH METHODOLOGY
interviewing persons and from documents and knows basic things relating to topic by
observing the work.
PRIMARY DATA
orized persons. Especially

regarding the purchase procedure, sales procedure, about the debtors credit policy
and import and export procedure etc this method is helpful for getting practical
information regarding decision making where only figures are not sufficient. Also
important when only observations do not clear the ideas about topic.
ON SITE OBSERVSTION
which we cannot understand by reading or listening. This method is very essential

especially to see actual working of manufacturing in plant. Observation is also
important to know purchasing process, stores process for inventory management,
sales etc. With the help of this method we know the cash management, monthly
closing of accounts, verification of stocks etc. In this way the overall functioning of
the organization and its culture can be better understood by actually observing the
things.
LIMITATIONS:-
No data primary or secondary data were given by firm and hence most data are
taken from net and rest as advised my internal and external guides.

CONCLUSION
Finally we like to conclude that. Through its uniqueness and providing that
quality products, RIL has made its name felt. It is a company which has succeeded
due to the hard work and sincerity of its employees. So it is truly the employees
company. Its success also lies in the co-ordination of its different department. Here
the relationship between them and it existed without any discord.
Our summer training at RIL was a matchless and a one of a kind experience.
This was the first time in our lives that we had a real and practical exposure to the
vast corporate world, which we are soon going to be part of.
In short span, we got to learn a lot. We now have a better understanding of

how exactly the corporate culture works and how the organization culture should be
defined.
The training was an enlightening experience to understand, observe,

associate and finally establish a link between the theoretical and practical concepts
in management.

BIBLIOGRAPHY
 www.ipcl.co.in
 www.ril.com
 ANNUAL REPORT OF RIL
 Learning centre material
 Previous reports
 Financial Management by Prasanna Chandra
 Financial Management by I. M. Pandey

Inventory Management at RIL

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2010

An overview of the general operation system at

“Procurement and inventory Management

Prakash patel A.K. RASTOGI

C.K.Shah VIjapurwala Institute of Management

Approved by AICTE & Affiliated to GTU

R.V.Desai Road, Pratap Nagar,

Vadodara -390 004.

Date: 17/7/2010 Chauhan Chirag

Prepared By: - Chirag Chauhan 2

It is almost a ritual to begin the project report with an

Many have contributed to the successful preparation of this report. We would

I would like to express my humble thanks to Mr. SAWANT (Training Officer)

Prepared By: - Chirag Chauhan 3

The C.K.Shah Institute of Management, Vadodara gives the students an

Prepared By: - Chirag Chauhan 4

I, Chirag Chauhan student of C.K.Shah Institute of Management, Vadodara, have

I have completed my training at material (finance) department. My area of work was

Prepared By: - Chirag Chauhan 5

Sr. No. Subject Page

1 Financial Department Hierarchy 36

Prepared By: - Chirag Chauhan 6

C PROJECT ON MATERIALS MANAGEMENT

Prepared By: - Chirag Chauhan 7

The Indian petrochemical industry is a highly concentrated one and is oligopolistic in

The Characteristics of Indian Petrochemical Industry

Prepared By: - Chirag Chauhan 8

Prepared By: - Chirag Chauhan 9

 Aromatics (Paraxylene): The demand for Paraxylene (PX) saw a growth

Top Petrochemical Companies in India

 Reliance Industries Ltd.( Indian Oil Corporation)

 Haldia Petrochemicals Ltd.

 Gas Authority of India Limited

 National Organic Chemical Industry Ltd.

 Bongaigaon Refinery and Petrochemicals Ltd.

 Manali Petrochemical Limited

 The Andhra Petrochemicals Limited

 Tamilnadu Petro products Limited

Prepared By: - Chirag Chauhan 10

 Name of the Company:- Reliance industries limited

Prepared By: - Chirag Chauhan 12

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

"Growth has no limit at Reliance. I keep revising my

Prepared By: - Chirag Chauhan 13

The Reliance Group is a living testimony to his indomitable will, single-minded

Reliance Industries Limited operates world-class manufacturing facilities across the

Allahabad Manufacturing Division is located in Allahabad, Uttar Pradesh. It is

Barabanki Manufacturing Division is located near Lucknow, Uttar Pradesh. It

Dahej Manufacturing Division is located near Bharuch, Gujarat. It comprises of an

Prepared By: - Chirag Chauhan 14

Hazira Manufacturing Division is located near Surat, Gujarat. It comprises of a

Jamnagar Manufacturing Division is located near Jamnagar. It comprises of a

Nagothane Manufacturing Division is located in Raigad, Maharashtra. It comprises of

Nagpur Manufacturing Division is located in Nagpur, Maharashtra. It manufactures

Naroda Manufacturing Division is located near Ahmedabad, Gujarat, is RIL‟s first

Patalganga Manufacturing Division is located near Mumbai, Maharashtra. It

Prepared By: - Chirag Chauhan 15

Vadodara Manufacturing Division is located in Vadodara, Gujarat. It comprises of a

Each of these complexes has world class manufacturing facilities

Prepared By: - Chirag Chauhan 16

Prepared By: - Chirag Chauhan 17

Founcer chairman Reliance group