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IPCL Indian Petrochemical Corporation Limited Background: IPCL, Indian Petrochemicals Corporation Limited is a pioneering petrochemicals company in India, was incorporated on 22 March 1969. It is a leading integrated manufacturer of polymers, synthetic fibers & fiber intermediates & chemical products from hydrocarbon feed stock. They also manufacture catalysts & adsorbents. IPCL was established in March 1969 as a government of India undertaking, with the objective of promoting the development of the petrochemicals industry in India, develop Indian market & distributes its products. The company owns & operates three petrochemical complexes, a naphtha-based complex at Vadodara, & a gas based complex each at Nagothane near Mumbai & Dahej on Narmada estuary in the bay of Khambhat. The construction of IPCLs first petrochemicals complex began at Vadodara in 1970. Commercial production commenced in 1973. IPCLs second petrochemicals complex was commissioned in 1992 at Nagothane & the third complex at Gandhar was commissioned in 1996. In August 1992, the companys shares were listed on all major stock exchanges in India. In June, 2002 Reliance Group acquired 46% equity stake in IPCL, pursuant to the disinvestments of IPCLs equity by the Govt. of India. In the first year under the Reliance, IPCL record 18% growth in output. The companys three production unit, one Naphtha based cracker at Vadodara, & two gas based cracker, one each at Gandhar & Nagothane have recorded 14%, 29%, & 9% growth in production respectively. The company produces over 1.6 million tones of merchant products & generates a turnover close to Rs.100 billion. 2


IPCL is currently the second largest petrochemicals company in India.IPCL was ranked as the 29th largest company in India in terms of sales, with net sale in fiscal 2006 of Rs84690 million. In fiscal 2006, 70% of its net sales were from polymers, 14% from fibers & fiber intermediates, 14% from chemicals & 2% from trading, other activities. IPCL derived 90% of its net sales in fiscal 2006 from the sale of its products in the Indian market. IPCL has also exported their products to the various countries across the globe. Indias petrochemicals industry is relatively young, having started in 1960s. Demand for petrochemical products is related to general economic growth, substitutability of competing materials & the prices of petrochemicals feedstock, end products & competing products. The rapid growth in the demand for petrochemicals in India. The domestic polymer industry has a few manufacturers & many consumers. As of 2001-02, nearly 85% of the polymer capacity in the domestic market was with the top three participants (RIL, IPCL, HPL). Between RIL & IPCL, IPCL accounted for about 67% of domestic polymer capacity. Production capacity of polymer is widely distributed in the international polymer market with the top 10 polyfins producers accounting for less than 50% of the global capacity. In 2002, the global PE capacity was estimated at 67.5 million TPA, of which capacities for HDPE, LDPE, and LLDPE were estimated at around 29.6 million TPA, 19.3 million TPA & 18.5 million TPA respectively. North America was the largest producer of PE while the Middle East & Asia accounted for only 8.6% pf global PE production; its market share is expected to increase on account of significant ongoing capacity additions. The leading PP manufacturers are Atofina, Basell, Boreallis, BP, ExxonMobil, Reliance group & Sabic.

1.3 LOGO

IPCL, as a corporate entity, is and what it shall strive to be. This symbol or logo reflects that IPCL is a single matrix of many diversified activities and products, emerging from one source and branching out in different directions, yet retaining its unity and identity. The lines flow upwards and outwards from a common base into infinity, reaching for unending growth, universal goodwill, general prosperity and excellence in everything. The green color used in the design reinforces the theme aspiration and growth, rooted in the earth and in harmony with the other elements water, light, air and space.

Be a globally preferred business associate with responsible concern for ecology, society and stakeholders value. We shall strive to generate best value for all associates we deal with, by constantly innovating and updating ourselves with best practices from across the world. Think big, Think fast, and Think ahead. Ideas are no ones monopoly.

Continuously innovate to remain partners in human progress by harnessing science and technology in the petrochemicals domain. Continuously Innovative This concept is ingrained in IPCLs culture. The founder chairman of Group Shri Dhirubhai Ambani said, Only when you dream it, you can do it underscores our drive to become better and bigger company. Partners in human progress The products we make, find their way into products that help people with improved lifestyles. All of us at IPCL must understand and take pride in this. We must also use this concept to further connect IPCL with the external markets we serve. When we think in terms of markets we serve, we become more outside in focused and we can better seek growth opportunities.

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

Integrity The relationships that are critical to our success depend entirely on maintaining the highest ethical and moral standards. As a vital measure of integrity, we will ensure the health, safety of our communities, and protect the environment in all we do. Respect for people We believe in the inherent worth of people and will honor our relationships. We, the employees of IPCL, are the engines of value creation. Our imagination, determination, and dedication are essential for growth. We will work to celebrate and reward the unique backgrounds, viewpoints, skills and talents of everyone at IPCL. Respect for people is measured by how we treat each other, by the contributions that flow from our diversity, by the productivity of our relationships, and by a job well done, no matter what the job is. Our customers are our partners in creating value; their loyalty is our greatest reward. Our shareholders are the beneficiaries of our success; their on-going commitment to us is based on returning to them consistent superior returns over time. We will strive to answer peoples most vital needs: for food, water, shelter, transportation, communication, health and medicine. Unity We are one company, one team. We believe that succeeding, as one enterprise is as important as succeeding independently. Balancing empowerment and interdependence makes us strong. We will work together; build relationships to create greater value for the customers.

Outside-in-focus We believe that growth comes from looking at opportunity through the eyes of the customers and all those we serve. Taking an outside-in view ensures that our efforts are always relevant and that our unique talents are applied to real world opportunities. We will see through the eyes of those whose lives we affect, identifying unmet needs and producing innovative and lasting solutions. We will bring to this task all of our experience and knowledge. Agility At IPCL, we believe our future depends on speed and flexibility- mental, emotional and physical. Responding resourcefully to societys fast-changing needs is the only road to success. We will meet the forces of change with power and grace. We will make necessary corrections that demonstrate flexibilities as well as courage, and that highlight our ability to keep ourselves aligned with a world in motion.

Innovative We believe that meaningful productive change; solving problems; only comes by looking at challenges and opportunities from new angles and exercising our curiosity. In the name of innovation, we will make science a way of living. We will not only harness the science of the physical world, but the science of the mind and heart. Our job is to unlock the answers that make a fundamental difference to peoples lives. We will use technology to help lead society forward. We will conceive, design, engineer, and execute solutions that remove barriers to human potential and productivity. These values guide IPCLs vision, mission and all our transactions.


We at IPCL are committed to meet customers requirements through continual improvement of our Quality Management Systems. We shall sustain organizational excellence through visionary leadership and innovative efforts. Continual Improvement This concept finds its roots in our mission and is ingrained in IPCLs culture. Continual improvement will lead to higher reliability in quality of products and services needed by our customers. This will make us outside in focused and provides us with the needed drive and direction in achieving excellence in managing our business. Visionary Leadership This means that we shall collectively work to sustain excellence. Our vision is to develop enabling leaders who will carry our people to sustain excellence, to scale newer and higher benchmarks.


The environment policy declared by IPCL reads as follows: Aims to maintain relevant environment norms as per prevailing statutory standards. Strives to conserve natural resources and to minimize waste generation in petrochemical operations. Contribute to a green economy for continual improvement and sustainable development in minimizing environmental impacts by technological innovation and research. Encourage environmental awareness in employees and society for vigilant hazard management and prevention of pollution.


The safety & health policy declared by IPCL reads as follows: Professionally manage and comply with the statutory provisions by giving high priority to health, safety and environment control programs. Ensure that technology absorbed, assimilated, upgraded and developed by the company lays emphasis on safety in and around the workplace. Ensure continuous improvement in safety and health aspects by carrying out safety audit, risk analysis etc. Constitute safety committees to promote safety awareness and ensure participation of employees in safety and health related functions. Organize structured training programs on continuous basis to educate employees and neighboring society on safety, health and loss prevention and control aspects. Ensure codification of safety standards and extend services to parties associated with the company on safety aspects. Recognize contributions made by an individual employee towards safety and health aspects.


INSTITUTION BUILDING IPCL has helped in establishing several institutions, which in turn help to sustain growth of the petrochemical industry. A pioneering data bank providing information and consultancy services in the area of petrochemicals both in India and abroad. National committee on use of plastics in agriculture (NCPA) was constituted in 1981 and since its inception; IPCL has been actively supporting it with manpower and infrastructure. NCPA has been instrumented in propagating use of plastics in agriculture universities in different states. Petrochemicals Management Development Institute (PMDI) was established in November 1991, to serve overseas training contract and create human resources for outside organization and for IPCL Plastic Processing operator training: A scheme to general trained workforce for plastic processing industry, jointly with ITIs, Ministry of Labor and State Governments.



IPCL has a tradition of supporting activities related to arts, aesthetics and sports. A beautiful piece of contemporary sculpture by Shri Nagji Patel is a landmark in the city of Vadodara. It is also symbolic of IPCLs deep commitment to promote art and culture.

Fig. 1 A huge sports complex matching international standards has been developed at Vadodara. It has held mens and womens world cup cricket matches, international tennis tournaments besides being a venue to various national and state level games. Some of the IPCL players have made their mark at state and national level in various sports.

Fig 2 A giant mural adorns IPCLs open-air theatre at Vadodara. IPCL organizes regular camps for painters, graphic artists and sculptors. A Konkan craft festival was also organized at Nagothane in 1993. IPCL has sponsored a book on the Contemporary Art of Vadodara.


The company, as a matter of policy, continues to meet some of the basic needs of the villages surrounding the complexes and developmental work is prioritized according to the needs of the people in the peripheral villages. The Companys Social Welfare and community Development initiatives focus on the key areas of education, health care and the overall development of the communities in which the company operates. These initiatives are undertaken directly by the company and also through legally constituted trusts and welfare bodies. SVADES (Society for Village Development in Petrochemicals Area), MADER and JADER trusts have been established for up gradation of infrastructure facilities and developing the rural community in the vicinity of IPCL Complexes. The company has been quick to place all its resources at the service of the nation and community in time of crisis and emergency.

Health camps, Family Planning Camps, Dispensary and Mobile Medical Vans are provided to neighboring villages. Nursery and Industrial Training Institutes Cattle Development Center and Vaccination camps. Providing subsidized sanitation facilities to rural families. Providing facilities like school building, books, and furniture for libraries play Scholarships for graduate and post graduate students from Gujarat.

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


Technical assistance to the national institute for the blind. Provision of drinking water at Nagothane villages. Vocational training programs for the youth and women. Tree plantation, diagnostic, eye camps, educational tours, training farmers etc.

IPCL professes the doctrine that any economic activity should not erode the very foundation of such activity. Development should therefore be with due regards to environment protection and not at the cost of it. IPCL has formulated a clear and focused safety, health and environment policy, which reinforces the corporate commitment to these facets of business. IPCL has: Adopted elaborate water treatment and air monitoring at all sites. Developed microorganism for bio-degradation of cyanide water. A multi-purpose hazardous waste incinerator. Developed a 27-acre experimental farm at Vadodara where vegetables are grown A living museum of trees where 70 species proliferate over 40 acres of land. Created an artificial lake from treated wastewater, which attracts over 100 species of

and the use of treated effluents for agricultural produce studied.

birds from all over region.



Strengths Manpower with rich experience in managerial, technical & commercial fields. Plants located on the west coast where the downstream industry is concentrated. Both liquid & Gas fired crackers. Diverse product range. Global sized plants at Baroda, Gandhar & Nagothane complex. Extensive sales network & infrastructure facilities. Noteworthy safety & environment records. Weaknesses Aged & smaller sized plants at Baroda Complex. Feedstocks supply constraints at Gandhar & Nagothane. Dependence on sole suppliers for natural gas & C21C3. Commodity business subject to cyclically. Dependence on external sources for feedstock. Opportunities Huge growth potential in Indian Polymer Market. Excellent Research & Development facilities. Scope for expansion especially at Gandhar Complex.


Revamp of old plants located at Baroda. Proactive enhancement to global standards. Strong outlook for global petrochemical Industry. Changed employees expectations. Proactive Industrial Relation Strategy.

Uncertainties on Natural Gas Pricing. Competition from low cost Middle East producers. High rate of technological obsolescence. Environmental concerns on plastics been incorporated as an appraisal parameter.



Chairman (Mr. Mukesh Ambani) Whole Time Director (Mr. S.K, Anand) Baroda Complex Site President Senior Vice President Vice President General Manager Senior Manager Manager Executive Staff Gandhar Complex Nagothane Complex






Commodity Chemicals: Acetonitrile Benzene Benzene Ethylene Ethyl Acrylate Orthoxylene Ammonium Sulphate Butyl Acrylates Carbon Black Feed Stock Caustic Soda Methyl Acrylate Propylene

Solvents: Cixon Hepton Solvent CIX

Polymers (Commodity Plastic): Indothene Indothene CC Indothene HD Indothene LL Indothene LDPE Indovin Koylene Koylene CP Koylene ADL Koylene ADL-CP Koylene PVC Koylene RCP

Rubber: Cisamer 01 Cisamer 1220 Petrez 18

Fiber & Fiber Intermediates: Acrylonitrile Dimethyl Terpthalate Ethylene Glyco Indacryl Supacryl

Catalysts & absorbants: Catal Catsiv Speciality Catalist

Surfactants: Ethylene Oxide Linear Alkyl Benzene



Products Ethylene Propylene Butadiene Butane-1 Benzene Cixon Carbon black feedstock Acrylonitrile Indothene LD Indothene LL/Indothene HD Indothene HD Koylene Koylene CP Koylene ADL Indovin Cisamer Ethylene Oxide Ethylene Glycol Indacryl Supacryl Acrylates Linear alkyl benzene Caustic soda Chlorine Power (mwh)

Vadodara Complex 1,30,000 1,07,460 37,700 23,600 12,000 17,900 30,000 80,000 30,000 25,000 75,000 55,000 50,000 10,000 7,000 12,000 12,000 10,000 43,500 89

(Capacities in MTA) Nagothana Gandhar Complex Complex 4,00,000 63,000 15,000 2,20,000 60,000 5,000 50,000 87 3,00,000 38,000 160000 1,50,000 10,000 1,00,000 1,30,000 1,15,000 154.5



Solid Products Main uses of polymers: Product LDPE/LLDPE HDPE PP PVC PBR Uses Consumer packaging/film, extrusion wires, cable coatings, heavyduty bags, garbage bags, milk & shopping bags. Fertilizers/household packaging, woven sacks, cartons, crates, luggage, pipes, paints, storage bins etc. Cement packaging, monofilament yarn, and ropes, fishing nets. Water pipes, electrical conduit/wires, cables, sheets, footwear, flexible films Automobile tyres & tubes, conveyor belts, footwear.

Main uses of fiber & fiber intermediates: Products AF/DSF MEG CAN DMT Uses Textiles, knitting yarns, sweeter. Polyesters, Anti freeze. Acrylic fiber, Acrylates, engineering polymers. Polyester staple fibers, polyester filament yarns, polyester.


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

care products. EO/BENEZENE/TOLUENE Phenol, dyestuff, pharmaceuticals, paints, industrial uses, Caustic Soda caprolactum Alumina/paper.




Financial success often depends on marketing ability. Marketing deals with identifying and meeting human and social needs. Finance, operations, accounting and other functions will not really matter, if there is not proper marketing is not done for product. The demand, competition, distribution channel and many other things are very important for the success of any company. The following are some important information of marketing department of IPCL.

List of competitors:
IPCL is a petrochemical company which produces only intermediate products or industrial products. Generally it doesnt face much competition. In spite of this, the following are some of the industries which pose as competitors of IPCL. Haldia petrochemicals GAIL (Gas Authority of India Ltd.) Indian Alkalies Pashupathy Alkalies IOC (Indian Oil Corporation)

Promotional measures:
IPCL being an intermediate industrial products manufacturing company, it does not need more promotional efforts than occasional communication through trade journals, internet, seminars, symposiums, trade exhibitions etc. So there is no need to invest huge amounts as promotional expenses.


Sales Revenue:
The sales revenue for the year 2005-06 is Rs.12362.20 Crores as compared to 9385.55 Crores in last year (2004-05).

Competitive approach:
IPCL manufactures intermediate products which serve as raw materials for industries producing finished products. As a result of this, IPCL enjoys almost a monopolistic status. The company provides highest priority and is committed to meet customers requirements to the maximum extent. The company has a formal mechanism for customer grievance redressel and prompts customer services. Therefore IPCL is being more customers oriented and takes care that all its loyal customers are served satisfactorily. And now, IPCLs main competitive approach is stepping forward from customer satisfaction to customer delight.

Pricing policy
Ex factory as well as ex point selling pricing is inclusive of excise duty For payment of excise duty, freight should not be included Excise duty shall be paid for ex factory sales Quantity discount is applicable will not be deducted Cash discount if applicable is to be allowed Prices of prime goods are higher Prices are inclusive of standard packing charges More the quantity purchased more the discount Cash discount is given in the form of early payment incentives Additional discount is given to exporters Credit policy for customers and dealers Cash sales, interest @ 24 % will be charged for delayed payment.


Marketing operations and Planning (MOP):

MOP group is the backbone of every organization. It is responsible for warehousing and management from different plants to consumers. Mops principle task is logistics management. The logistics movement of solid, liquid, gaseous products is done either by roadways, railways, or even by pipelines. Regional offices collect orders and submit the requirements. The other activities include processing freight bills, coverage of insurance policies, appointment of surveyor, hiring of warehouses, appointment of cost& freight, etc.

Objectives of marketing department:

Strategic market development Formulations of marketing plans/ cash flow plan Competitors strategy updated Expert marketing as a tool of value addition Set up of an effective and efficient system for expenditure Prepare all necessary production and sales reports Floating various tenders and preparation of tender documents Strategic integration of developmental plans




The Company regards its human resource as one of its prime resources. A continuous effort for improving contribution of its human resources towards attainment of organization goals has been the area of focus. Fiscal 2004-05 was a year of stabilization and consolidation in the process of change management, growth and development. The human resource processes and systems are being geared for business focused and competency driven performance. IPCLs employee strength as on 31st March 2006 is 13000 employees as compared to 11,088 strength on 31st March 2005.

Human Resource planning, recruitment and selection:

Human Resource Planning is one of the most primary activities carried out at IPCL. Planning is done by maintaining a Stock of Sanction, Filled and Vacant (SFV) File. This file maintains a track of the requirements of personnels in the organization. It is regularly reviewed by the top management. As and when the need arises, arrangements are made for the recruitment of the personnels. Generally Reliance is doing centralized recruitment at Mumbai. IPCL generally goes to the reputed campuses for recruitment purpose. It does not go for advertisement in the newspapers or media or any such other ways of recruitment. IPCLs one of the foremost criteria for selection of employees is competency. It selects those people who are competent and knowledgeable enough to perform their duties effectively and efficiently.

Performance appraisal system:

IPCL undertakes performance appraisal at regular intervals without fail. Here annual confidential reports are filled wherein the details of the work done by the employees are entered. In this way, a track of the performance of individuals in the organization is maintained. For supervisors, Performance Management System is in practice. In this, the key result areas are listed down and the performance is evaluated and rated keeping in view these core areas. Setting up of development centers for assessment of competencies, identification of gaps and charting out further interventions is in progress. Thus the Performance Appraisal System in IPCL is contributing its full-fledged efforts to improvise the performance of its employees.


Promotion and transfer policy:

The promotion at IPCL is time bound. The vintage period is generally 6 years. For supervisors the vintage period is 4 years. Once an individual is promoted to General Manager post he gets 2 years residence period. If there is no vacancy available the employees are simply upgraded. And if vacancies are available, the employees are promoted as per the requirement of the company policy. The transfers are done as per needs of the company.

Welfare activities:
The welfare activities at IPCL include the following: Medical Benefit- The expenses beared by the employees on medical treatment Accident Insurance Scheme House Building Advance Car Loan at subsidized rate of interest Benevolent Fund Free provision of uniform, apron, towel, jersey, raincoat, gumboot, safety shoes, (including the family members) is reimbursed as per the company policy.

soaps, napkins etc. Apart from its welfare activities towards its employees, IPCL also carries out community welfare activities in the villages surrounding its three complexes at Vadodara, Nagothane and Gandhar through various initiatives in the areas of education, health, agriculture, employment generation and infrastructure development.

Industrial Relation:
IPCL is associated with three unions: AITUC Communist INTUC Congress HMS


IPCLs relations with these unions are quite cordial. Only in 1992 there was a major strike which was resolved soon.

Administrative activities:
The administrative activities such as transport, securities etc. are taken care by the Reliance Group Security Services (RGSS).

Computer applications in HR: (SAP support to HR)

All the HR activities are carried out through the Self Development Module (SDM) in SAP. There is a separate department known as SAP HR. This department does Enterprise Resource Planning. It takes care of Personnel Administration/Organizational Management, Payroll, Time Modules and Employees Self Service (ESS). The implementation of this portal has resulted in efficient data support for decision-making.

Quality assurance:
The business environment in our country today is more competitive than ever before. The globalization of markets places the need to excel day after day. To succeed in this environment, IPCL has embraced a methodology called Six-Sigma to ensure that the business processes that serve the different stakeholders are regularly reviewed with reference to the best achieved or a benchmark of a similar business entity. Six-Sigma is fast becoming a passion at IPCL. It is a systematic methodology which enables the organization to put the challenges in correct perspective and ensure superior overall performance faster with high quality and acceptability.


Six-Sigma Technology used in IPCL:

General introduction of six-sigma
The 18th letter of the Greek alphabet, Sigma is the symbol for standard deviation, A measure of variation .Sigma has a history and is: A Vision A Philosophy A Management System An Aggressive Goal A Benchmark A Disciplined Date Based Methodology for improvement A tool Box A vehicle for Customer Focus

IPCL has also adopted the benefits from the implementation of ISO 9001. ISO 9001 is a series of models for Quality Assurance. It defines the procedures to ensure that the organization meets the requirements of its customers. The following are benefits of ISO 9001-

Within IPCL:
Improves operational efficiency by defining processes for management of activities Reduces confusion and emergencies as activities are documented and updated. Reduces cost and wastage. It improves work culture and makes work a pleasure. like product planning, provision of resources, product realization etc.




Finance is the life blood of any business undertaking. Effective financial management is the outcome of proper management of investment of funds in business. Funds can be invested for permanent or long term purpose such as acquisition of fixed assets, diversification and expansion of business, renovation or modernization of plant and machinery and research and development. Funds are also needed for short term purpose, that is, for current operation of business. For a manufacturing unit one has to manage the procurement of raw material, payments of wages, and salaries to employees and for meeting routine expenses. The various departments under the roof of Finance Department are as under: Corporate Finance Material Finance Marketing Finance Operation Finance Administration Finance Excise & Custom Department Pay-roll Section Public Finance Internal Audit Central Account & Taxation Project Finance Treasury Finance Provident Fund


Organizational Hierarchy of Finance and Operation

Vice President (F&O)

Operational Traveling Finance Dept.

Salary Dept.

Materia l Finance Dept.

Cash and Cheque Treasury Dept.

Administrative Finance Dept. And Medical Dept.

General Manager (Finance)

Senior Manager Finance

Senior Manager Finance

FGS Dept

Import RM Chemical Finance Indigenous Dept. Engineering Dept. Dept. Store Dept. Accounting Packaging Dept. Dept.

Medical Procure. Dept.

Administrative Goods Procure Dept.


Sources and Application of funds: Balance sheet for last two years:

BALANCE SHEET OF LAST TWO YEARS (Rs in crore) (Rs in crore) st As on 31 March, As on 31st 2006 March, 2005 SOURCES OF FUNDS Shareholders' Funds Share Capital Equity Share Suspense (Refer note no. 4(a) (ii) of Schedule 'O') Reserves and Surplus Deferred Tax Liability Loans Funds Secured Loans Unsecured Loans

249.05 39.12 4681.92 4970.09 1100.61

249.05 2672.00 2921.05 1101.16

596.24 650.17 1201.41 459.98 7732.09

659.85 100.40 760.25 493.39 5275.85

Liability for Leased Assets TOTAL APPLICATION OF FUNDS Fixed Assets Gross Block Less : Depreciation Net Block Capital Work in progress Investments 35

11201.77 3577.67 6060.61 42.62 5958.37 179.82

9785.77 3126.17 5783.31 58.80 5063.80 165.33

Current Assets, Loans and Advances Current Assets Inventories Sundry Debtors Cash and Bank Balances Loans and Advances

1226.13 450.48 1079.57 2756.18 1652.55 4408.73

623.12 701.06 664.82 1989.00 456.58 2445.58

Less : Curent Liabilities and Provisions Current Liabilities Provisitons

2384.10 430.73 2814.83 1593.90 7732.09

1999.47 399.39 2398.86 46.72 5275.85

Net Current Assets TOTAL


Profit and Loss Account for last two years:

PROFIT AND LOSS STATEMENTS FOR THE LAST TWO YEARS INCOME Turnover Less : Excise duty Recovered on Sales Net Turnover Other Income Variation in Stock EXPENDITURE Purchase Manufacturing and other Expenses Interest Depreciation Profit Before Tax Provision for Current Taxation Provision for Deferred Tax Provision for Fringe Benefit Tax Profit After Tax Add : Balance brought forward from last year Add : Debenture Redemption Reserve writtern back Add/(Less): Taxation for earlier years Amount Available for Appropriations APPROPRIATIONS General Reserve Transfer to Debenture/Bond Redemption Reserve Proposed Dividend on Equity Shares Interim Dividend on Equity Shares Tax on Interim/Proposed Dividend Balance carried to Balance Sheet Basic & Diluted EPS of Rs. 10 each (in Rs) - Basic Earnings per Share - Diluted Earnings per Share 37 2005-2006 12362.20 1439.80 10922.40 266.93 232.41 11421.74 111.97 9019.30 134.79 561.49 9827.55 1594.19 304.00 121.80 4.64 1163.75 992.65 5.25 (5.96) 2155.69 600.00 24.12 136.52 19.15 1375.90 40.29 40.21 (Rs in crores) 2004-2005 9385.55 1186.43 8199.12 132.17 2.92 8334.21 63.65 6576.91 162.30 505.70 7308.56 1025.65 105.99 133.93 785.73 772.82 57.22 4.41 1620.18 500.00 111.70 15.83 992.65 31.83 31.83

Budgeting is a method of bridging the gap between what you want and what you are likely to get. It is always desirable that production is equal to sales. Budgeting is a process to reach this target. Total consumption is the summation of raw materials, fuels, utilities and other items. The difference between the sales value and the total value of the consumption is the margin. And this margin is, what is stated earlier, what you want. At IPCL two types of budgets are prepared Revised Budget and Budget Estimates. The Revised Budget is prepared for the current year and the Budget Estimate is prepared for next year. These budgets are sent to the finance department, which is in turn sent to the Board of Directors meeting for approval. All the departments including the plants prepare budget for their respective department and sent it to the Corporate Finance group. This department goes through all the budgets through MIS. Then, as per the requirement of the plants and based on the annual report, funds are allotted to the departments.

Accounting: (SAP support to Accounting)

SAP is a compilation of different modules in which almost all the functions of any organization can be done like accounting, HRM, marketing, etc. In the SAP accounting all the accounts are coded. Codes are generally of 7 digits. The starting code numbers of assets is 5, liabilities is 3, expenses 7, income 6. The account in each category is coded accordingly. For example freight is an expense so its code will start with the number 7. All the accounts under a particular category are compiled together under their starting code number. The accounting system at IPCL is SAP oriented. Each and every transaction is done through SAP. The important Accounting Policies are as under: 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. 38

Depreciation on fixed assets is provided on straight line method at the rate prescribed Transactions denominated in foreign currencies are normally recorded at the Long term investments are stated at cost. Items of inventories are measured at lower of cost or net realizable value. Cost of

in the Companies Act, 1956. exchange rate prevailing at the time of the transaction.

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 Companys contribution to provident fund, family pension and gratuity and leave Compensation to employees who have opted for retirement under the voluntary Premium on redemption of bonds / debentures are adjusted against the Securities An asset is treated as impaired when the carrying cost assets exceeds its recoverable period. encashment benefits are charged to Profit and Loss Account. retirement scheme of the company is charged off to Profit and Loss Account. Premium Account. value. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired.





DEFINITION: Logistic means management of the flow of goods or material from point of origin to point of consumption and in some cases even to the point of disposal. The Council of Logistics Management (CLM) defines: Logistics is that part of supply chain process that plans, implements and controls the efficient, effective flow of and storage of goods, services and related information from the point of the point of consumption in order to meet the customers requirement. Distribution Channel:










Fig. 4


Logistics gained recognition since World War 2 when marketing became predominant over manufacturing, requiring concentrated attention to customer wants. Concurrently, logistics is the delicate fulcrum-balancing product with consumption. Hence it plays a very important role in international competition. The word logistic means the movement, storage and supply of troops and equipment. The important point about Logistics is that it is much more than transportation or the mere physical movement of goods. International logistics decision affect the number and location of production and storage facility, production schedule, inventory management and even if firms level of involvement in international competition. In other word we can say that it is closely associated with the Just in Time (JIT) management technique. Basically, logistics is the ability to get the right product at the right place at the right time. Overall it is the planning, organizing, controlling and execution of the flow of goods from purchasing through production and distribution to the final customer in order to satisfy the requirements of the market. It combines production, distribution and transportation on global basis. So, the basic function of Logistics in international competition, is to create Place and Time utility in goods, locating them at the right place, at the right time and also in right quantity to customer demand. IMPORTANCE AND USE OF LOGISTICS The most important point about logistics is that it is much more than transportation or physical movement of goods. Basically, the art of logistics is the ability to get the right product at the right place at the flow of goods from purchasing through production and distribution to the final customer in order to satisfy the requirements of the market. It combines production, warehousing distribution and transportation on global basis.



The key activities of logistics are: 1) Transportation: For most firms, transportation is the most important logistics activity, simply because it absorbs, on the average, approximately two thirds of logistic costs. It is essential because no modern firm can operate without providing for the movement of its raw materials and / or finished products in some way. Transportation refers to the various methods for moving a product. Truck, rail water and air are just a few of the popular choices. Management of the transportation activity usually involves the making of choices regarding the method of shipment, the routings, and the utilization of vehicle capacity. 2) Inventory Maintenance: It is usually not possible or practical to provide instant production or instant delivery to customers. In order to achieve a reasonable degree of product availability, inventories need to be maintained as buffers between supply and demand. The extensive use of inventories results in the fact that, on the average, they account use of approximately on third of logistics costs, making inventory maintenance a key logistics activity. 3) Order Processing: Order processing costs tend to be minor compared to transportation or inventory maintenance costs. Nevertheless, it is a primary logistics activity. Its essential nature comes from the fact that there is a critical time element in getting goods and services to customers. Also it is the primary activity that triggers product movement and service delivery.


Supporting activities of logistics are: Warehousing. Materials Handling. Protective Packaging. Acquisition. Product Scheduling. Information Maintenance.


The four Ps of the marketing mix require that for a firm to be successful any marketing effort must integrate the ideas of having the right product, at the right price, publicized with proper promotion, and available in the right place. Logistics plays a critical role particularly in support of getting the product to the right place. Primary goal of logistics is to provide customer service. Achieving customer satisfaction requires an integrated effort both internally and with suppliers and ultimate customers and these can be achieved with the help or Logistics Management. Following figure summarizes the tradeoffs required between and among the major elements of the marketing mix and logistics.













Fig. 5


Logistics is a very essential function of marketing. It plays a very important role to make customer satisfied with timely delivery at optimum cost. Logistics function includes mainly transportation, warehousing & insurance part of goods to be delivered. Logistic function itself means the right goods at right place at right time. Unless & until we efficiently delivered the goods at the customers destination, our customers are not satisfied & this becomes possible, only through logistic function. Marketing mgmt. includes the management of mktg. Mix i.e. the 4 Ps a) Product, b) Price, c) Place & d) Promotion. Place aspect is taking care of the distribution part of goods to the market & includes the logistic function as well. Nowadays, physical distribution has expanded into the wider concept of Supply Chain Management (SCM). SCM starts before physical distribution. It involves procuring the right inputs, converting efficiently into finished products & dispatching them to the final destinations. Marketing Logistics involve planning the infrastructure to meet demand then implementing & controlling the physical flows of materials & final goods from points of origin to points of use to meet customer requirements at a profit. Mktg. Logistic involves several activities. The first is sales forecasting, on the basis of which the company schedules distribution, production & inventory levels. Finished goods flow off the assembly line & pass through packaging, in-plant warehousing, shipping room processing, outbound transportation, field housing & customer delivery & servicing. Producers of physical goods & services must decide on mkt. logistics- the best way to store & move their goods & services to the market destinations. The logistical task is to coordinate the activities of suppliers, purchasing agents, manufacturers, marketers, channel members & customers. Major gains in logistical efficiency have come from advances in information technology.


Chapter 6

Sub-Cycle 47



Truck parking entry (checking of documents by RGSS) Weighbridge entry by RGSS Truck order linking at ware house Materials pick up note. Placement of material & manual loading by labour Invoice generation Weighbridge bridge exit by RGSS (checking of net weight) Main gate exit

Truck parking entry is done at BC-05 (gate no. 5) where the reporting number is provided. The order number, L.R. number and total quantity to be loaded is entered in the remarks column which helps the storekeeper to find out which grade of material is required in what quantity. At Gate no. 5 the RGSS instructs the truck driver to remove all unwanted items such as stove, rubber tubes, incense sticks (agarbatti), match box, cigarette, bidi, tobacco, pan masala, stephny etc. Then the truck is sent to gate no. 7 from outside (outside IPCL complex). WBN At the gate no. 7, the security checks the truck thoroughly for the spark arrester and shoes for the driver and cleaner. If any unwanted item is there in the truck, it is removed before the truck enters the gate. After entering from gate no. 7 the truck goes to the weighing bridge. Here, the empty truck is weighed and WBN (weight bridge entry) is prepared. Thereafter, the truck is parked in queue for loading. TOL Once the WBN is done the truck driver brings the TPN and requisition slip for TOL. The storekeeper links the truck order and prepares the material pickup note which states how much quantity to pick and from which storage location. The stock supervisor identifies the material and instructs the forklift operator to bring it to the loading point. The supervisor instructs the truck-driver to bring the truck at the loading point. The labourers pick the bags from the palette and place it in the truck. When the truck is filled, the loading supervisor signs the material pick-up note and it is sent to the warehouse office for the preparation of the invoice.


The storekeeper prepares the invoice, the border form in case the material is being sent outside the borders of Gujarat and a quality certificate. The invoice is signed by the warehouse in-charge and handed over to the truck-driver. In case there is a border form, it is signed by the truck-driver and a copy of the same is retained with us. WBX The filled truck goes for weighing again. The WBX gives the gross weight; the net weight is ascertained on the basis of this. If the net weight is falling within the ascertained range i.e. weight of empty truck + weight of quantity loaded+ weight of empty bags 20 kg, then the truck is allowed to exit (Main gate exit). In case the net weight doesnt fall within the limits then the difference is adjusted either by adding or removing the appropriate quantity of material. After that only the truck is allowed to leave the complex. MGX Main gate exit is recorded for monitoring and security reasons. It helps to identify how much time the truck took to leave after WBX is done.




Customer Placing / Receiving the Order


Loading of truck at warehouse



Regional Office Block


MOP Block

Head Office Block



Credit Block

Fig. 6


Customer can book the order from any of the 5 regional offices of the I.P.C.L. customers have to make advance payment through check / D.D. / cash. The major functions of different Regional offices are to receive payment, to make the sales orders and to calculate relevant taxes and discounts and attend to customer complaints. If all conditions are satisfied then Regional officers enters the customer order in SAP system. At the head office the concern Business group receives the customer orders from five Regional offices located all over the India. The major functions of Business group are to decide the prices of different materials, customer wise allocation and region wise allocation of the materials. After checking the availability of materials Business group releases the pending order through SAP system to MOP (Marketing, Operation & Planning) department. The major functions of MOP are to check the availability of material in different warehouses, to make the dispatch plan, to release the dispatch plan to the concern transporters and to see that the respective loading for the day gets over well in advance. The final dispatch plan is prepared and given to the transporters in the previous day evening. MOP also gives some additional dispatch plan throughout the day, which again depends on the order that comes from the head office. Transporters have to place their trucks for the additional plan given throughout the day. The Product Transfer Department (PTD) releases the material to respective transporters and in turn transporters deliver the material to customers.




Transportation function is the part of any logistics management. The marketer is required to take effective decisions. Transportation of the goods will affect product pricing, on-time delivery, performance & the condition of the goods when they arrive, all of which affects customer satisfaction. The transportation of material from Baroda complex to various destinations is outsourced to Reliance Logistics Ltd. Reliance Logistics in turn subcontracts it with various transporters on ARC basis, which can be extended for a period of 3 months on existing terms and conditions. We identify the regions where our customers are located. Then we estimate the amount to be dispatched to these regions directly to our customers and to our warehouses during the year. Tenders are invited and on the basis of the lowest quote the contract is given. We have many transporters as our customers are spread across the nation and no particular transporter can provide services covering the entire nation. The list of IPCL transporters is as follows:

SR NO. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19



The transporter appoints a representative who will be at IPCL Gate No. 5. Our senior executive of the marketing dept. hands over a list to this representative, called babu, every evening. This list contains the number of trucks required for various destinations along with the truck capacity for the following day. The next morning the transporter either sends his trucks or contacts the various transport brokers for availability of trucks. After negotiating over the rates with the brokers the trucks are sent to IPCL. These trucks first report to their respective babu at gate no.5 who completes certain procedures for verification and identification purposes. Thereafter, the truck goes through the activities of TPN to MGX. The truck is sent to the respective warehouse where it is filled and finally goes out of IPCL.



For the transportation of IPCLs products Reliance Logistics Pvt. Ltd awards the Transportation Rate Contract to financially sound & experienced transport companies. The total quantity of solid products from all the three complexes of IPCL is around a million tones p.a. the products are packed in bags. The tender document has two partsnamely, a) Technical bid b) commercial bid. A tender committee evaluates the tender. The committee among other things verifies the fulfillments of the statutory requirements, such as tax clearance certificate, solvency certificate, certificate of incorporation of a company, certificate of registration of partnership, latest balance-sheet &/or statement of account along with IT returns. Attested photocopies of registration in the name of the firm, partners, and proprietor are also to be enclosed with the tender, accompanied by an Earnest Money Deposit of appropriate amount. The tenderers are also required to provide detailed information such as registered name of the firms, composition of the firm, details of general facilities namely the address, year of establishment, contact person, telephone no., fax no., e-mail address.


The tenderer is required to quote competitive & workable rate for operating Successful tenderers are given the work order. They are required to provide a Security

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

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

further period for the same terms & conditions, or terminate at any time without assigning any reason thereof.


Capacity & suitability of trucks: a) The trucks provider should be in roadworthy condition & maintain all features necessary for smooth & safe transportation of products over long distance. The loading capacity of all trucks as governed by RTO registration book. b) c) d) e) The truck should be occupied with all necessary permit & licenses (e.g. inter The trucks should be fit to carry the products over long distances without The interior of truck should be smooth & at the sides as well as at bottom, so The tarpaulin has to be put at the bottom & after loading material it is to be state road permit) transshipment. that the bags should not get damaged during loading transit & unloading. covered properly by another tarpaulin to protect it from rain/Sun. Contract rates: the quoted rates of the tenders are on FOR (Free On Road) destination basis including loading, unloading & stacking of consignment inside the warehouse as per the requirement of the corporation or its dealers/consignment stockiest/ customers as the case may be. Road tax, entry tax, good tax, RTO tax & all other taxes, levies, surcharges except octroi, that are imposed during contract period by any central/ state/ municipal or other bodies shall be payable by the transporters.


Placement of trucks & indent of trucks: a) b) The transport contractor is responsible for providing required no. Of trucks as It will be the contractual responsibility ascertained, such requirement from

per indent for each destination within specified working hours. IPCL daily for the following day. Non-placement penalty: a) If the transporter fails to prevail a certain % of indent for a sector daily, nonplacement penalty can be levied.


b) Truck reporters without licenses & proper documents will not be allowed for loading & will be treated as non-placement. Open mkt. hiring: in case contractor fails to provide required no. Of trucks on dayto-day basis, the corporation has the right to hire trucks at open mkt. rates & deduct the difference of rates from the defaulting contractors. Termination of contract: transporter who fails to place indented trucks as per the terms may be suspended or terminates & the security deposit shall be forfeited. Transshipment &/or part delivery of consignment during transit is strictly prohibited. The contractor shall comply with all the statutory requirements as stipulated in various acts & Laws regarding casual labor deployed by him by various activities connected with the contract. The contractor shall be solely responsible for noncompliance with any such statutory requirements.


Difficulty in getting the desired no. of vehicles from the market due to seasonal Certain drivers are reluctant to carry IPCLs products due to high value associated When seasonal farmed products are available for export from Baroda, the truck The transporters are of the opinion that their freight bill payment cycle is longer. Thus The drivers feel that the strict checking of the documents, license, permits etc. is not Sometime they are not receiving order in advance so they find it difficult to arrange

fluctuations. risks & also considerably longer turnaround time. drivers give preference to such products where the risk is less & the incentive is more. making their working capital position tight. comfortable as in the most documents are not available in original form. for the trucks on the same day.



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

Permissible transit period Vadodara complex 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Destination VADODARA RO VADODARA SURAT VALSAD VAPI/DAMAN/SILVASSA INDORE BHOPAL GWALIOR JABALPUR AHMEDABAD RO AHMEDABAD KALOL RAJLOT Bhavnagar Jaipur Jodhpur Udaipur MUMBAI RO Mumbai Aurangabad Jalgaon Nasik Solapur Nagpur Pune Goa Bangalore Mangalore Hydrabad Nandyal Gantur Vizag CHENNAI 58 Transit days 1 1 1 1 2 2 3 3 1 1 1 1 3 3 1 2 2 2 2 3 3 2 4 4 4 3 3 4 4 5

31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55

MADURAI SALEM PONDICHERY KOCHI COIMBATORE CALICUT KOLKATA RO Kolkata Raipur Patna Ranchi Balasore Cuttack Jamshedpur Guwahati Bhuvaneshwar DELHI RO Delhi Faridabad Kanpur Dehradoon Agra Varansi Gurgaon Ghaziabad Ludhiana Jammu

5 5 5 5 5 5 6 4 6 6 6 6 6 10 5 3 3 5 4 3 5 3 3 4 6



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









Fig. 7 The distribution is basically done through road with the help of trucks. IPCL has made a contract with some transporters for transporting its goods to the different cities in India. IPCL follows 1 level channel for distributing its goods throughout the country. IPCL Sales its goods through distributor warehouses located in different cities of India. It also provides door delivery for its goods to its customers. IPCL follows three types of distribution strategies. 1. Stock Transfer. 2. Direct Sales. 3. Export. There are total 5 regional offices of IPCL they are located in Ahmedabad, Bombay, Chennai, Delhi and Kolkata Major SALES CENTERS:

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


Dispatch Process comprises of the activities undertaken at the warehouse for the delivery of the product. That includes all the activities from TOL to INV. So in a way, dispatch process includes all the activities considered for computing the cycle time. So we can say that the Dispatch Process is the part of Logistics which is very essential in the out bound logistics management. Reducing the time involved in it and increasing the efficiency and productivity will lead to the benefit of fast dispatch. For accurate and quick dispatch the most important factor is the warehouse management. For dispatch of any product the first thing is the availability of that product in sufficient quantity and the last thing is the main gate exit of the truck after making the invoice. There are three types of dispatch taking place from the warehouse: 1. Domestic sales 2. Stock transfer 3. Export




Warehousing is the process of storing goods within a storage facility and to look after stored goods. But Warehouse Management is a wider term, which monitors the progress of products through the warehouse. It involves the physical warehouse infrastructure, tracking systems, and communication between product stations. Warehouse management deals with receipt, storage and movement of goods, normally finished goods, to intermediate storage locations or to final customer. The IPCL warehouses are of finished goods. So here the warehouse management is concerned about sending the goods to the consumers, distributors or to the IPCL warehouses away from manufacturing complexes. Major activities involved in the Warehouse Management are: Receiving of goods Moving of goods to the loading points Loading of goods Maintaining the warehouse

The IPCL employees are doing the entire warehouse management Out of seven warehouses at IPCL Baroda Complex only two warehouses (PP-4, PBR-2) are given to a contractor for warehousing activities. Gradually they are planning to give a contract to a contractor for remaining five warehouses. There are Loading Supervisors, Khalasies, Cleaning Staff, labors, forklifts and forklift operators in the warehouse. The role of IPCL employees in the warehouse is to take care of all the documentation work and to keep a watch on loading activities as well as warehousing activities being carried out by the labour and warehouse employee. The dispatch activities works for 6 days per week, and on an average 350 MT are loaded a day. There are two shifts working, 8:30 am to 5:00 pm and 2:00 pm to 10:00 pm. The scheduled timing for all the labours of contractor is 9:30 am to 10:00 pm. But the forklift operators, storekeeper work in shift (general shift and second shift). For general shift two forklifts and two operators and for evening shift two forklifts and two operators are to be provided. So for the time between 2:00 pm to 5:00 pm there are four forklifts and four operators. 63

Now lets see the every days procedure to manage the warehouse. Receiving of goods Every day in the morning a Receipt for Goods Received is handed over to the loading supervisor by the bagging department. The goods that are packed and put on the pallet are stored in the warehouse by the forklift operator of bagging area and the IPCL employees give him the information regarding the storage location. Now the Loading Supervisor will check the goods kept according to the receipt received which contains the storage location of goods kept. And then the receipt is given to the IPCL employees to enter the information in the SAP system. So the information regarding which grade of goods is kept where that can be known with the help of the SAP system. Moving of goods to the loading points With the reference of the Daily Dispatch Plan the major grades in order for the day is known, and according to that those materials are brought nearer to the loading area for the quick loading. The IPCL employees make when the truck arrives to warehouse after TPN and WBN, the TOL and Material Pick up Note. TOL is not a physical document, so other than that documents are given to the loading supervisors. According to the Material Pick up Note issued, the Loading Supervisor will ask the forklift operators to bring the pallets to the particular loading point. Loading of goods The Loading supervisor will observe the number of pallets kept and loaded, he will also look after the number bags on the pallet and labors. As and when the loading of required material is done the documents are sent back to the warehouse office, where IPCL employees work, and then invoice and quality certificate is made. After that the truck is sent for the WBX. Maintaining the warehouse They have appointed a sweeper for marinating the cleanliness of warehouse. The warehouse in charge has to look for the condition of the pallets, condition of the forklifts, availability of forklifts and his employees. If any error is found in the activities then he is only the responsible person there. 64

There are three types of registers maintained by the corporation: RG 23C register: RG 23C is an excise register maintained at the complex. Excise duty is debited into this register for all capital goods. Normally debit is made once in the every fortnight for all invoices prepared during the fortnight. Credit can be availed from register. RG 23A register: RG 23A is an excise register maintained at complex. Excise duty is debited into this register for all Raw material Normally debit is made once in every fortnight for all invoices prepared during the fortnight. Modvat credit can be availed from the register. BOND register: bond register displays the sequence of transactions availed against that Bond. It can be debit or credit. Each transaction has a sequence no. Entries made in Bond register is in the order of the sequence no. The sequence no. Is different for debit & credit transaction.




Finished products are received from the plant by the PTD (Product Transfer Department) which function is the interface between the Mktg. Dept. & the Production dept. however, in the recent restructuring of the functional activities of IPCL, there is a plan to eliminate PTD. The finished products from the plants are transferred in the silos, from where the produces are coming through the pipeline for the final finishing & bagging purpose. After the quality checked, the dispatch able qty. is shown under unrestricted, qty. in SAP. This is the qty., which is planned for dispatching by MOP. IPCLs products are bagged in LDPE bags. The packaged material used by IPCL is environmental friendly as it can be recycled for further use. One wooden /plastic pallet carries 40 bags of 25kgs. Each i.e. 1Mt weight. The content on the bag carries-- Name of the manufacturer Product & brand name Grade Gross & net weights Batch no. Month & year of manufacturing Instructions Batch no. Will help in the case of any quality complaint from the customer, to trace out the cause of the complaint. Proper care is taken while transporting the material, in order to prevent any damage to the bags or the materials.


The key concern of the chemical industry is to do everything possible to ensure that nothing goes wrong during the transport of its products. International trade, exports & imports demand the chemicals to be moved in & moved out of ports. In fact, road is by far the most important way of moving chemicals. Rail is used less, the major reasons being that the rail network is overloaded with movement of food grains, coal, ore, petroleum products etc.& is relatively smaller than the road network. In addition relatively few factories have direct access to Railway. Pipeline are rarely used to link major centers of chemicals manufacturing it may not be economically feasible, or even socially desirable to cross the country with them. On the road, chemicals are either carried in bulk tenders, mostly in liquid form, or in packages such as drums, cylinders or bottles.

Personal protection equipments: helmet, gloves, mask, safety shoes, face shield, earplugs, and safety belts. Vehicle safety measures: tanker owner should get explosive passing issued by chief controller of explosives. Fire water sprinkler Pressure test certificate



AT the time when the trucks are coming for loading purpose there are certain documents required & which are must, otherwise the corporation has the right to reject the truck for the loading. First of all the driving license of the driver of the truck is checked, the condition of the driver as well as the truck is checked by the security, whether the truck is in the good & roadworthy condition or not, the required no. Of the tarpaulin is available or not, the engine of the truck is in working condition, all these formalities are checked by the security & then the truck is allowed for the entry in the parking plaza. Once the truck is in the parking plaza, the permit is checked. The permit must contain PUC (pollution under control certificate) Certificate of registration (RC book) Insurance policy National permit for the inter state transit

The most important document while any truck comes for the loading purpose. The transporter issues the lorry receipt while his truck is come for the dispatch & receipt of the goods against the order. Lorry receipt shows the brief about the truck, details about consignee as well as consigner, insurance detail, description regarding the material for dispatch etc. Lorry receipt is very important document in case if any abnormal situation arises while transit, if any accident arises with the loaded truck & in case of the insurance claim the lorry receipt is the first requirement. Even at different check posts also the lorry receipt is being checked.


Lorry receipt & other documents are to be furnished as per IPCLs requirements. In case of export consignment such issuance will be governed by the provision of various customs & excise laws.



Selling outside the country is very difficult than to the domestic market. In foreign market we are not in the direct contact with our customers. To export in the foreign market needs competitiveness & quality assurance. IPCL is having good amount of exports in the foreign countries. IPCLs products are well in the demand of the foreign market. Earlier IPCL had its business associates for the foreign trade but after acquired by the RIL it handles all the export directly without any intermediates.

1) Purchase order: the IPCL receives order through sending quotations to the vendor country, which is in the requirements. 2) Acceptance of contract/ order 3) Letter of credit 4) Block order release 5) ARE - application of removal of excise duty.

The documents required for the export are as follows: Certificate of origin: certificate of the origin is required by the importing country to check whether the goods are from their original country & company, to avoid re-export. Packing list: packing list contains the total weight of the goods, their packaging aspect etc. Letter of credit: letter of credit is the sort of the bank guarantee on behalf of the exporter to the importer. Bill of lading: bill of lading is issued by the shipping company which contains the detail regarding the net goods receipt for the loading form the port to the respective destination. Shipping bill: shipping bill is the important document for custom purpose. At the time when goods are about to depart form the port the custom authority must check it. They checks the quality, the quantity, they can even check the sample. After the checking 71

approved by the custom authority the consignment is authorized to export, & the export is known as Let Export. Test certificate: in case of exporting of chemicals the importing country may asks for the test certificate to check the various parameters as per their specification required in the order. Commercial invoices: the most important document in domestic as well as in the export of the goods. There are 3 copies of the invoices of the invoice are required in case of the export. In the invoice all the details regarding the goods, their qty., the rate, the amount, other levies etc. are mentioned. Insurance policy: in case of CIF basis of export the insurance policy is taken by the exporter till the consignment reaches its destination. All the cost of insurance premium is beared by the exporter.

The major foreign markets for IPCL are China, Vietnam and The European Union, which accounted for approximately 51%, 19% and 8%, respectively. LAB, BENZENE, MEG, LDPE, is generally exported from IPCL Vadodara complex.





The major objective of the study is to study the cycle time of the LDPE warehouse and to reduce the cycle time. For this purpose the activities from TOL-INV are considered as the cycle. As per the commitment given to ISO cycle time is 120 minutes on an average. The average cycle time for the month of May 06-07 was 138 minutes. Other objectives To identify the causes for higher cycle time To understand the practical difficulties faced by the people working in the warehouse. And finally find out ways and means to improve the dispatch process.

The motive behind reducing the cycle time is to improve the customer satisfaction and better utilization of the resources. As the famous saying goes time saved is money earned! If the time taken to lift the material from the storage locations and put it in the trucks is reduced, the average inventory carrying costs will come down. Also, the number of trucks filled per day will increase. If the ideal cycle time is achieved it will ensure standardization.

Benefits of achieving desired cycle time

The achievement of the desired cycle time will result in the following benefits: 1. By reducing the cycle time we can reduce the total inventory carrying cost. 2. If the cycle time reduces, each truck can be filled in a lesser time and therefore we can maximize the number of trucks filled per day. 3. We can reduce the number of empty trucks sent back and therefore save the revenue loss. 4. It will improve the productivity of employees. If we are able to meet the ISO requirements it will also result in a psychological advantage - our employees will have a feeling of achievement and therefore will take pride in being a part of IPCL. This sense of belongingness can lead to increase in employee productivity. 5. Security issues related to providing night halt to the truck drivers can be eliminated. This will give them a pleasure to work with IPCL and thus, we will have good rapport with the transporters. 74

6. The transporters will be willing to deal with our company in future and will provide us better services. 7. The material will reach the end customer promptly and therefore customer satisfaction objective will be achieved. 8. ISO requirement of 120 minutes, if it is met it will help in keeping up the public image of our company of being an ISO certified company. Also, our stakeholders (customers, suppliers, employees and shareholders) will have greater faith in us. 9. National gain if the trucks are relieved earlier from IPCL, they can be put to other uses sooner.



Our study is limited to LDPE warehouse only and that too only the cycle time i.e. from TOL to INV. So the findings and suggestions cannot be generalized for all the warehouses of IPCL to a large extent. The time period of the study is just 4 weeks. We have tried our best to make the most of the available time but if more time was available definitely we would have been able to connect to all the linked aspects of the warehouse. Not only this, we got an opportunity to interact with people having rich knowledge in various fields that is Marketing, Warehouse, Civil engineering. Also we had conversations with warehouse Contractor, truck drivers, labourers, and Transporters and RGSS staff. This helped us to develop a practical perspective towards each problem and make pragmatic recommendations. There could be some gaps because of the limited access to information.


The two main approaches used during our study are BPR and Work-study. BPR It basically focuses on what are the goals and ultimate objectives. Thereafter, the existing process, procedures, systems and methods are analyzed to find out where is the liaison. Once it is identified, ways and means are developed to overcome it. The necessary changes in any or all of process, procedures, systems and methods are adopted in order to achieve our set goals. During the period of our assignment, we studied the various aspects of the dispatch process and related activities in LDPE warehouse. In order to understand the procedures in a comprehensive manner, we had interactions with various groups of people related to the dispatch process directly or indirectly. The mission of this project was to bring down the TOL-INV cycle time. We noted the average cycle time and identified the main factors responsible for increasing the cycle time. Thereafter, we had brain storming sessions and discussions with our guide and warehouse staff to find out solutions to eliminate those factors. Major areas where change is required are focused upon keeping in mind there significance and consequences of such changes. Dialogues with the end user and continuous critical evaluation helped us to make our suggestions practical and feasible. Work Study Work Study includes time study and motion study. The process in question requires use of physical labour as well as machines. Therefore, it becomes mandatory to use work-study approach. This included noting the use of machines and there significance in the entire cycle and the method of working of the labourers. The most important and inevitable movements were identified. Also, there was an attempt to find out unnecessary movement of either labour or 77

machines or both. Normal and actual time taken to complete each task was determined. A few suggestions have been made to eliminate the unnecessary activities, to improve or redesign the method of accomplishing a particular task in order to reduce the time taken to complete it.


Data was collected by three means as follows: 1. SAP Daily dispatch reports and cycle time computed through the SAP system used by the company was one major source of information. Since the data was available through SAP, the authenticity and reliability of the data is not questionable at all. 2. Observation All information cannot be available through computerized systems. Sometimes human observation helps much more than any other means of collecting data to know the true picture. Also it is said that seeing is believing! Thus, in certain cases we undertook observation to verify the data collected through other means. This ensures that the data used was not based on biased opinion of any particular group. 3. Questionnaire Questionnaire for IPCL staff was designed in order to collect information that demanded objectivity to a large extent. The purpose of the questionnaire was to get the information from the people who were responsible behind the cycle time. The questionnaire was handed over to the IPCL staff to be filled in by them. But in case of the contractors staff, they were not able to fill in the responses themselves. So, we asked them the questions and filled in responses on our own. In order to eliminate any manipulations, two people approached the respondents; one person asked the question and the other filled in the responses.


4. In-depth interview We needed profound knowledge of the entire system in order to be able to comment on it. For this purpose we conducted depth interview with some people who possessed rich knowledge and experience in their area of work. These included Senior store keeper who had 22 years of experience at IPCL warehouse, Warehouse incharge who had rich experience of working with IPCL Architect of IPCL, Baroda complex, Senior store keeper, LDPE having detailed vision of the problems faced by our transporters and last but not the least our guide Senior Executive, MOP dept. who again has an experience of 20 years of career in the marketing dept. along with rich knowledge of economics, politics, global market, geographical accuracy and human psychology.


The factors responsible for increasing the cycle time are divided into three categories as management related, contractor related and transporter related. This is done in order to find out which factors are under our control so that they can be dealt at the earliest. Management related Contractor related Transporter related

Management related
Lack of checking: since there is only one supervisor (store keeper) looks after the loading activities so he is not able to pay attention when there is a too much load. Which has major impact on the cycle time Arrangement of finished goods: since LDPE warehouse is having a 8 grades of a finished goods(majority of demand is of 3 grades only) the arrangement of those goods should be done properly. The arrangement of a good should be in such a way that highly demanded goods should be placed in the front rows and the goods which are having low demand should be kept at the back Utilization of the BA07 vacant place: The BA07 area where they are suppose to put the finished goods they are putting palette. It would be better that if they place the goods which are at the back rows (BC 105 140) can be put there so that forklift will have to travel less distance and they will be able to complete the loading early Usage of forklift: Some times they are carring more weight on the forklift. The capacity of the forklift is 1.5 ton. But it lifts 2 tons at once. This deteriorates the condition of the forklift and therefore hampers its performance. Lack of proper planning by Supervisor: The Supervisor should place the material to the loading point before truck comes since he has all the order in advance. But they are waiting for the arrival of the truck then they start putting material at the loading point. 80

Warehouse layout The existing layout has certain drawbacks. The layout should be such that the forklift can go inside and put the material into the trucks. For that the dock leveler should be used which will help the fork lift to go inside. And out of 10 loading points only 6 points are covered by the roof rest of the 4 should have a protection from the rain. During rainy season if only 6 loading points are working then we would have too much chaos over there. Attitude of management Lack of co-ordination between MOP staff and PTD staff results into lack of proper management. Here at IPCL BC people are still living in the Government organization era, privatizations effect is very low in work culture Of people having casual approach towards work, they are passing their work to Others not all but few one it increases the processing tine


Contractor related
Labour absenteeism The major problem is posed by high absenteeism of Labour. The total number of labourers per day to be provided at the LDPE warehouse as per the contract is 40. But the supervisor fails to arrange for the required number. On an average the number of labourers present per day is 24. The total number of labourers present on any day is divided into 3 groups, each group at one loading point. Therefore, at any given time there are maximum 3 loading points working simultaneously. Attitude of labour: Most of the labours are coming after 11 oclock (though they have to be there in a campus before 9:30) so they are not willing to start the work at 11 am because they will have lunch break soon. This further delays the loading of trucks. The labourers form three groups everyday. And they are not flexible. In other words, if a person has finished his work, he will not go and help another group to finish the work sooner. Service rate of warehouse labour: Service rate of outbound logistic system at IPCL Baroda Complex is lesser than the arrival rate of the truck. In system there is queue. Because of that truck has to wait idle. Which is the major factor affecting cycle time. Attitude of contractor Since the contract is given on tender basis, the contractor takes us for granted that the company has no other option as his enterprise had quoted the lowest tender. With this attitude he takes liberty and does not fulfill his commitment. Reducing the cycle time or company growth is his last concern.


Transporter related problems

Delay in arrival of trucks The trucks do not arrive on time as per the indentation provided in the contract with the transporter. As a result of this, there are very less trucks to be loaded from 8.30 a.m. to 11.00 a.m. and there is bunching of trucks between 2 p.m. to 5 p.m. Because of this lot of work is pushed towards the end of the day.

concentration of trucks time wise

200 No of trucks 160 120 80 40 0 8:30 11:00 11:00 2:00 2:00 5:00 time slot 5:00 8:00 8:00 10:00 Series1

GRAPH 1 The following Graph gives an account of the cycle time during different periods of the day for the month of may 2007 for LDPE warehouse.
avg cycle time during a day
160 140 120 100 80 60 40 20 0 8:30 11:00 11:00 2:00 2:00 5:00 time slot 5:00 8:00 8:00 10:00

avg cycle time



GRAPH 2 It is evident that the highest cycle time is during 5 pm to 8 pm. Also, it is observed that the lowest cycle time is during the last time slot i.e. 8 pm to 10 pm. The cycle time starts decreasing towards the evening We can see that the maximum number of trucks TOL is done between 12 noon to 3pm and minimum is between 8.30 am to 10 am. The number of trucks reporting decreases after 2 pm. This is majorly because all the trucks find some consignments by then. Only those trucks which are unavailable to find a consignment of their destination or have arrived late in the city report in the afternoon. From the above graphs we can conclude that during the loading hours, the number of trucks arriving during a particular time period does affect the cycle time. But the exception is the last time slot. Though the number of trucks to be filled has not decreased, the cycle time has decreased tremendously. The invisible hand behind this phenomenon is the motivation to complete the work as soon as possible in order to be able to go home early.

Other problems
They gate is closed from 8:15 to 8:45,2 to 2:15 and 5 to 5:15 so during those time if any truck comes during that time it will have to wait outside which will increase the overall cycle time. Technological aspect in packing Cause of less modernization at warehouse for bagging the variation take place at Weigh Bridge. Cause of that weighs bridge official has to take weight of truck more than once and even some times truck is rejected also. In order to correct these situation lots of efforts are to be by unloading the defective Since there is only one weighbridge so there is a lot of time being spent at the weighbridge. There is a long queue of trucks at the weighbridge.


From the above information we conclude that there are multiple factors responsible for increasing the cycle time. Moreover, some of the factors are beyond our control such as those related to transporter or contractor. In order to improve the cycle time we need to first plug out those factors that are under our control. These are the management related factors. Hence, first and foremost we should deal with them and make changes from our end to help minimize the cycle time. This will make our position stronger in order to demand changes from others i.e. transporters and contractor.


11.7 RECOMMENDATIONS Possible without additional resources

Supervisor should be there when truck are getting loaded so that labor works properly and damage of bags and loading time can be reduced. Labor sits idol until all the material is brined at loading point. Supervisor should force them to start loading as soon as first pallet or carrot has been brined at loading point. The entry and exit of liquid truck should be done from the liquid point i.e. Gate No

4. So that there would be less number of trucks to handle at gate 5, which will defiantly going to help in reduction of time. There should be greater emphasis on punctuality and discipline. If all the different groups of workers related to the dispatch process are available on time, work will not suffer. In order to ensure punctuality, electronic punching should be introduced for the contractors and labourers. Penalty should be imposed on all those who fail to perform their duty. The terms of the contract need to be altered so as to stress upon the need for daily availability of the minimum number of labour sometimes, negative reinforcement helps to get the work done. The truck should be parked alternatively if there is not much load. This will reduce the chaos at the loading point since more space will be available for loading and carring the material by the labour. The warehouse in charge should conduct a timely inspection in a day to observe the loading activity and the staff members also; he should not be sitting in his office all the time. The truck should be parked alternatively if there is not much load. This will reduce 86

the chaos at the loading point since more space will be available for loading and carring the material by the labour. The warehouse in charge should conduct a timely inspection in a day to observe the loading activity and the staff members also, he should not be sitting in his office all the time. The total material should not be placed at the loading point together. Instead, after 2 rows pallets are emptied then they should be removed and the next pallets should be placed as close to the loading point as possible. This will reduce the distance to be covered by the labourers to lift the bag and fill the truck. Warehouse people already have their dispatch plan so that they can know about their daily work. The warehouse person should bring material at loading point in the morning before truck came for loading except start bringing material after truck came and wait for material to be brined for lading.


Additional resources required (EXITING LAYOUT)






Forklift maintenance Warehouse In-charges office Store Keepers office Senior Managers office Storage location Khalasis Rest Room

Bagging Office Loading Point Forklift runway Toilet Battery Charge Room Exit Gate

Proposed Warehouse layout


There are some changes required in the warehouse. If we design a warehouse in such a way that a forklift can go inside and put material in to a truck that would really help to improve cycle time. Which will also need less labor. And on an average 16 tone trucks will be filled in a 28 minutes, which currently takes 40 minutes. So 30% saving in time is there. For that some investment is required but this is one time investment and the benefit of it will be available all the time. 1. The transporters contract should lay more emphasis on demand for truck between

8.30 to 10 a.m. so as to minimize idle time at the warehouse during those hours and avoid bunching of trucks towards the second shift. 2. 3. The forklift should be of better condition. We should pay higher in order to Those employees who perform outstandingly in order to reduce the cycle time minimize our revenue loss due to poor condition of the forklifts. should be duly rewarded. Others 4. 5. Also, there should be a rest room for the truck drivers. The captions should be written in Gujarati, the labourers cant read English.



Used vary small sample size i.e. only on month data was used. Time period of study was during general shift hours i.e. between 8a.m. to 5p.m. So could not observe the activities till 10p.m. The project was done only for 4 weeks had there been more time we would have come out with better practical solution. Since the LDPE warehouse is located very far we needed to spend too much time on traveling.


FOR MANAGEMENT Is the number of forklifts provided in each shift sufficient? Yes____ No____

What is the optimum number of labor required to fill one truck of 16 MT? Specify_____ At what time the following groups start working? Loading supervisors ____________ Forklift operators ____________ Labourers ____________ At what time the loading activity starts? __________ What are the peak loading hours and what are the lean loading hours? Peak hours___________ Lean hours__________ What are the timings for Lunch Break and Tea break? For management For labors For forklift operators Morning Tea Break _________ _________ _________ Lunch Break _________ _________ _________ Evening Tea Break _________ _________ _________

What are the responsibilities of Loading Supervisor? Please specify___________________________________________ Which is the weakest link in the entire dispatch cycle? Please specify___________________________________________ Which is the one step to be taken by contractor to improve cycle time? Please specify______________________________________________ 91

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

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

Which are the factors mostly responsible for the higher cycle time? Please specify 1)______________________________________________ 2)______________________________________________ 3)______________________________________________


FOR CONTRACTOR Is the number of forklifts provided in each shift sufficient? Yes____ No____

What is the optimum number of labor required to fill one truck of 16 MT? Specify_____ At what time the following groups start working? Loading supervisors _______________ Forklift operators _______________ Labourers _______________ At what time the loading activity starts? __________ What are the peak loading hours and what are the lean loading hours? Peak hours___________ Lean hours__________ What are the timings for Lunch Break and Tea break? For management For labors For forklift operators Morning Tea Break _________ _________ _________ Lunch Break _________ _________ _________ Evening Tea Break _________ _________ _________

What are the responsibilities of Loading Supervisor? Please specify___________________________________________

What are the problems faced by a Loading Supervisor? Please specify___________________________________________

Which is the weakest link in the entire dispatch cycle? Please specify___________________________________________


Which is the one step to be taken by contractor to improve cycle time? Please specify______________________________________________ Do you think that the reporting of the trucks is in satisfactory proportion? Yes______ No______

On going through the truck movement query report, we find that the cycle time is unusually longer during the noon hours, why? Please specify_______________________________________________ Which are the factors mostly responsible for the higher cycle time? Please specify 1)______________________________________________ 2)______________________________________________ 3)______________________________________________


BG Business Group BPR Business Process Reengineering HDPE High density polyethylene INV Invoice generation IPCL Indian Petrochemicals Corporation Limited LAB Linear alkaline benzene LR Lorry Receipt MGX Main gate exit MOP Marketing Operations and Planning MT Metric tons MTA Metric tons per annum PBR Poly butadiene rubber PE Polyethylene POR Pending order report PVC Poly vinyl chloride LDPE Low density polyethylene PTD Product Transfer Department RGSS Reliance Global Security Services RIL Reliance industries limited ISO International organization for standardization TOL Truck order linking TPN Truck parking entry USA United States of America WBN Weigh bridge entry WBX Weigh bridge exit


Graph 1 Concentration of trucks time wise Graph 2 Distribution of trucks time wise

Fig: 1 Famous sculpture Fig: 2 Sports Complex of IPCL Fig: 3 Product Flow Diagram of IPCL Fig: 4 Supply Chain Fig: 5 Interrelations between Marketing & Logistics Fig: 6 Order Flow Cycle Fig: 7 Distribution Channel Fig: 8 Warehouse Layout


1. Johnson Henry, Penellebry, Wheeler William A., Business Process Reengineering 2. Dewitt William, Mentzer John T. (Editor), Supply Chain Management 3. Donald J Bowersox,David J. Closs, Logistical Management 4. 5.