1ORGANIZATIONAL STUDY REPORTatKERALA SOLVENT EXTRACTION,IrinjalakudaSubmitted bySRUTHY RK(Reg No. 1137)In partial fulfilment of requirement for the award ofPOST GRADUATE DIPLOMA IN MANAGEMENTtoBHAVAN’S ROYAL INSTITUTE OF MANAGEMENT(Approved by All India Council for Technical Education, New Delhi)THIRUVANKULAMKOCHI- 6823052011-2013
2DECLARATIONI, SRUTHY RK, hereby declare that this organizational study report at Kerala SolventExtraction Ltd has been prepared by me under the guidance of Mr. Girish S Pathy; Asst.ProfessorBhavan’s Royal Institute of Management, Cochin. I also declare that this training report ismy original work and that it has not previously formed the basis for award of any degree or diploma.Date: 16/7/2012 SRUTHY RKPlace: Cochin
3CERTIFICATEI do hereby certify that organizational study report prepared under my guidance and submitted toBhavan’s Royal Institute of Management is a bonafide record of organizational report done by Ms.SRUTHY RK at Kerala Solvent Extraction Limited Irinjalakudathe study was done in partialfulfilment of the requirement of the award of Post Graduate Diploma in Management. It is alsocertified that this report has not been previously formed the basis for the award of any degree, diplomaor any other similar titles.Date: 16/7/2012 Mr. Girish S PathyPlace: Cochin Assistant Professor
4ACKNOWLEDGEMENTI thank the Almighty for instilling in me the strength and power required to fulfil the workextended to me.I would like to express my sincere thanks and heartfelt to Mr.M.C. PAULChairman &Managing Director and my organization guide Mr. M.D.JOHNY Chief Personnel Manager forhaving given me the opportunity to complete my organizational study in their esteemed organization.With immense pleasure I express my heartfelt gratitude to the Management and Staffs of variousDepartments of Kerala Solvent Extraction Limited Irinjalakudafor their valuable guidanceextended to me for the successful accomplishment of this organizational study.I articulate the feeling of obligation for the splendid support extended by Mr. Girish S Pathy;Asst. Professor, my academic guide without whose meticulous and industrial guidance, this studywould have not served its very purpose.I owe my sincere thanks to Prof.(Dr) B. Hareendran, Dean, Bhavan’s Royal Institute ofManagement for permitting me to do my organizational study in Kerala Solvent Extraction LimitedIrinjalakuda. I also extend my sincere gratitude to all the other faculty members and non teachingfaculty for all their support in the completion of this study. Finally, I thank my family members andfriends for their support and encouragement throughout the study.SRUTHY.RK
5TABLE OF CONTENTSSl. No Chapter Title Page No1 INTRODUCTION1 1.1 Introduction 12 1.2 Need and Significance of the Study 13 1.3 Objectives of the Study 14 1.4 Scope of the Study 25 1.5 Methodology of the Study 26 1.6 Scheme of Reporting 37 2 INDUSTRY PROFILE8 2.1 Introduction to the Cattle Feed Industry 49 2.2 World Scenario 410 2.3 Indian Scenario 711 2.4 Kerala Scenario 1412 2.5 Porter’s Five Forces Analysis 1613 3 COMPANY PROFILE14 3.1 Introduction 1915 3.2 Vision 2016 3.3 Mission 2017 3.4 Corporate Objectives of the Company 2118 3.5 Growth Chronicle of KSE Ltd 2119 3.6 Product Profile 2320 3.7 Future Scope of the Industry 2321 3.8 Future Scope of the Company 2423 3.9 Company’s Philosophy on CorporateGovernance2424 3.10 Organizational Structure 25
625 4 DETAILED STUDY OF DEPARTMENTS26 4.1 Finance Department 2628 4.2 Marketing Department 3429 4.3 Human Resource Department 4630 4.4 Production Department 5231 4.5 Purchase Department 5732 4.6 Store Department 6133 4.7 Quality Control Department 6434 4.8 SWOT Analysis of KSE Limited 6735 5 SUGGESTIONS and CONCLUSION36 5.1 Observation 7237 5.2 Suggestion 7338 5.3 Conclusion 7339 5.4 Bibliography 75
7LIST OF FIGURESSl. No Figure No TITLE Page No.1 2.1 Porter’s Five Force Model for Industry Analysis 172 3.1 Structure of the organization 253 4.1 Structure of the Finance Department 264 4.2 Structure of the Marketing Department 345 4.3 Structure of the Human Resource Department 466 4.4 Production Department 527 4.5 Purchase Department 568 4.6 Store Department 619 4.7 Quality Control Department 64
8LIST OF TABLESSl. No Table No. Title Page No.1 4.1 Financial Highlights 312 4.2 Sales Comparison of Last Six Years 313 4.3 Market Price Data 324 4.4 Sales of the Company in the Last Five Years 375 4.5 Showing the Details Regarding the ProductsProduced by the Company416 4.6 Details Procedure of Purchase in Solvent Plant 607 4.7 SWOT Analysis of KSE Ltd 69
91.1IntroductionThe Indian cattle feed industry is about 35 years old. It is mainly restricted to dairy andpoultry feed manufacturing. Feed manufacturing on a commercial and scientific basis startedaround 1965 with the setting up of medium-sized feed plants in northern and western India. Feedwas produced mainly to cater to the needs of dairy cattle. The poultry sector was not developedat that time and was restricted to backyard production. The poultry industry is now growing inimportance. The cattle feed industry is been utilizing the indigenous raw material i.e.; coconutcake, which is the residue after the extraction of oil from copra which is mainly used as a cattlefeed. Coconut cake contains 4-5% oil generally used for industrial purpose and de-oiled is usedto make mixed cattle feed.The trainee did her internship training in KSE as it is one of thefamous cattle feed manufacturing firms in Kerala. Internship training for two weeks is an integralpart of the PGDM curriculum of Bhavan’s Royal Institute of Management during the first year ofstudy.1.2Need and Significance of the Study1 To familiarize with the functions of the business organisation.2 To study the work culture of the executives and the workers.3 To familiarize with the different departments in the organisation, the structure and theirfunctioning.4 To understand how key business processes are carried out in organisations.5 To understand how the theoretical knowledge and practical knowledge go together in orderto achieve organizational goal.1.3Objectives of the StudyThe main objective of the study is to get knowledge about the organization and theactivities of various departments. The purpose is to acquaint the trainee with a large company’sorganizational climate.
101. To get the knowledge about the organizational functions and strategies followed bydifferent departments to fulfill organizational goals.2. To study how the management tries to control and co-ordinate various departments toachieve organizational goal.3. To do SWOT analysis of the firm.4. To get an insight about the cattle feed industry1.4 Scope of the StudyBy doing this organization study one can understand about all the activities of theorganization .similarly this study help anyone to know about the manufacturing process ofconcern and also understand the practical side of the theories, that taught in the class. This studyalso given a clear picture of the Kerala Solvent Extraction Ltd, IrinjalakudaThe scope of the study is to understand the interrelation between various departments likePurchase, Marketing, Finance, Human resource, Quality assurance etc. The study helped me todevelop an understanding about the structure and dynamics of a business firm. Due to timeconstraint it was not possible to study the functions and operation of the entire organization.Hence the scope of this report is constraint to 8 departments.1.5Methodology of the StudyThe study conducted was a descriptive study sought to collect information about an organizationin its actual working environment. For this purpose the data was collected with the help ofprimary data and secondary data.The researcher used observation method and interview techniques to collect the required primarydata1) Observation methodThe observation method is the most commonly used methods. Theinformation obtained in this method relates what is currently happening. It is not complicated byeither the past method behavior and future intention or attitude. This method is particularlysuitable in studies which deal with reason on the other.
112) Interview methodThis method require a person generally in face to face contact known asthe interviews asking questions generally in direct face to face contact to the forms of directpersonal investigation and it may be indirect personal investigation. In this case of directpersonal investigation the interviews than to collect the information personally from the sourcesconcerned. But in certain cases it may not be possible to contact directly with a person whobelongs to the firm.Sources of Secondary DataSecondary data means the data which is already available that is, theyrefer to the data which may either be published data. Usually published data are available ina) Various publications of central, state government. b) Technical and trade journal c) Books,magazines and news papers d) reports and publications connected with business and industry etcand reports prepared by research scholars, universities, economists etc. e) company websites .The sources of unpublished data are many they may be found in diaries, letters, unpublishedbiographies and auto biography etc.1.6Scheme of ReportingThe first chapter deals with introduction, need of significance, objective behind conducting thestudy, methodology used to collect data for the study, scope of the study, limitations of the study,and the scheme of reporting.Second chapter deals with the industry profile in global, national and state aspects and alsogiving a small picture about the future of the respective industry.Third chapter gives an idea about the company profile which includes history of the company,mission and vision of the company, product profile etc.Fourth chapter deals with the information gathered from company about the working, activities,procedures etc.Fifth chapter deals with the findings and recommendation and conclusion.
122.1Cattle Feed IndustryIn the past, the cattle population was in proportion to the amount of resource availableto feed them. But today things have changed and the natural feed available for the cattle hasalso come down drastically. In addition to this the demand for the milk and milk product havealso been increasing ,thus making it absolutely necessary for rearing cattle which produce highyield. From this arose the concept of producing cattle feed wherein there is no compromiseover the nutritional composition.The productivity of the cattle is limited of their genetic make-up, so high qualitycompound feed (industry feed) may not necessarily generate a significant improvement inproductivity and this has hampered growth of the cattle feed industry because most farmersreluctant to use compound fully. They compromise by using such field in proportions of 5to 6%,making up the balance with their formulation.According to “Extract From Animal Feeding Safely”, report of an FAQ expertconsultation present condition of cattle feed is “worldwide, tonnage of feed exceeds 4 billiontonnes per annum of which some 550 million tonnes are milled feeds. The largest portion of thebillion tonnes of feed involves subsistence farming on the Indian subcontinent and Asia”India is currently self sufficientlive stockfeeds and does not depend on imports. Instead,the country exports large quantities of solvent extracted meals which are a major source offoreign exchange earnings.2.2 World ScenarioThe global animal feed market is growing at a steady pace and has a promising futurebecause of the globally increasing demand for meat and meat products. Feed additives arebecoming an important part of feed for animal growth and nutrition. Recently, disease outbreakssuch as avian flu and foot-and-mouth diseases have also increased concern over animal healthacross the world. Environmental concerns, such as reduction of phosphorous content in manureare promoting feed additives consumption for animals.The Europe and the U.S. are the largest markets for animal feed additives and Asia isemerging as a high growth market.
13Live stock production is growing rapidly as a result of the increasing demand for animalproducts. A joint IFPRI /FAO/ILRI study :Live stock to 2020.the next food revolution (Delgado1999),suggest that global meat production and consumption will rise from 233 million tons(2000) to 300 million tons(2020),and milk from 568 to 700 million tons over the same period .Over the few decades, the increasing demand has been largely met by the worldwide growth inintensive livestock production, particularly poultry. This is expected to continue as real incomegrows in the emerging economies.Intensive livestock production is very efficient in using feed conversion rates of 1.8-1.9are possible .feed conversion for layers is now below 1.65kg/dozen eggs. But production reliesheavily on grain, soya, fishmeal and other feed which frequently need to be imported intodeveloping countries. Feed grains are thought to compete directly, or in the use of land, withgrains for human consumption and livestock are often blamed for inefficient use of feed andenergy. Indeed, in some systems, e.g. beef feedlots, energy and nitrogen conversion is poor.However, if efficiency is seen over the entire production chain, and expressed as input of ediblehuman food/output in human edible food, the view of animal production is more positive. If it isassumed that all 1000 million tonnes of cereals, roots and tubers used for livestock are edible forhumans (in practice, they are not) then livestock use 80-100 million tonnes edible protein. On thepositive side, the 233 million tonnes meat, 568 million tonnes milk and 55 million tonnes eggsproduced globally contain 65 million tonnes of protein. So while input is higher than output, ifimproved protein quality on the output side is considered, a reasonable balance emerges.Industrial livestock production depends on external inputs. Technology, capital andinfrastructure requirements are based on large economies of scale and labour efficiency, whichmay or may not be seen as positive in developing countries. One person can operate a unit of 10-12,000 laying hens and 35-40,000 broilers, 6.5 times per year. Hence industrialisation requiresless labour than traditional systems. However, given the rapid increase in demand, there isadditional employment above the current level and further jobs are created in the supply andprocessing industries. And as a way of providing eggs, poultry meat and pork at competitiveprices, it has been successful in meeting the escalating demands for low cost animal products inrapidly growing urban centres of the developing world.The industrial system is also associated with environmental problems. Industrialisationimplies large numbers, large volumes of wastes, animal and human health risks, and poor animal
14welfare. Waste products are often dumped without accounting for the environmental costs.Manure storage and disposal is one of the main problems of large industrial operations. Pigs andpoultry excrete some 65 and 70 percent, respectively, of their nitrogen and phosphate intake.Nitrogen, under aerobic conditions, can evaporate in the form of ammonia with toxic, eutrophicand acidifying effects on ecosystems. Nitrous oxide, a greenhouse gas, is formed as part of thedenitrification process with particularly harmful effects on the environment. Nitrates are leachedinto groundwater posing human health hazards, and run-off and leaching of nitrogen directly leadto eutrophication and bio-diversity loss of surface waters and connected ecosystems. Phosphorus,on the other hand, is rather stable in the soil, but, when P saturation is reached after long termhigh level application of manure, leaching occurs and this also causes eutrophication or riversand lakes.To control the undesirable effects of industrial livestock production, The Livestock andEnvironment authors proposed:1. to establish zoning for industrial production systems;2. to bring animal densities in line with the absorptive capacity of land and water, throughquota systems, as already imposed in many parts of the world; and3. to prescribe regulations for waste control from processing and industrial production units,and use of noxious substances, management practices, and labelling.They also point out that there may be environmental benefits of industrial productionsystems.Firstly, the rapid development of pig and poultry systems helps to reduce total feedrequirements of the global livestock sector to meet a given demand. The shift from red to whitemeat (i.e., ruminants to monogastrics) implies a great improvement in feed conversionefficiency. It may therefore alleviate pressures for deforestation and degradation of rangelands,such as is happening in parts of Latin America and Asia, thus saving land and preservingbiodiversity. Secondly, the feed-saving technologies developed for this system can be effective atany scale and therefore can be successfully transferred to smaller farming systems. Thirdly,waste management and treatment technologies have been developed which may convert it intovaluable organic fertilizer and energy in the form of biogas or electricity.More benign development of pig and poultry production systems requires attention to nationaland local government policy to promote and encourage effective solutions.
152.3 Indian ScenarioThe Indian feed industry is about 35 years old. It is mainly restricted to dairy and poultryfeed manufacturing; the beef and pork industry is almost non-existent. The quality standards ofIndian feeds are high and up to international levels. Raw materials for feed are adequatelyavailable in India (there is the advantage of a successful soyabean industry with some 5.7 millionhectares in production). The industrys production is about 3.0 million tonnes, which representsonly 5 percent of the total potential, and feed exports are not very high. The feed industry hasmodern computerized plants and the latest equipment for analytical procedures and least-costration formulation, and it employs the latest manufacturing technology. In India, most researchwork on animal feeds is practical and focuses on the use of by-products, the upgrading ofingredients and the enhancing of productivity. The projected increase in the demand for livestockproducts has important implications for the livestock feed industry, and the demand for energyand protein raw materials. At present rates of growth, it is projected that production will havereached 5 million tonnes by 2020.Sustainable agriculture, integrated systems and organic farming methods have beenpromoted by development agencies for many years, and yet their real impact is very small. Overthe last 30 years, FAO has worked in the field to develop technologies for integrated farmingsystems appropriate to small producers, particularly in the tropics. For ruminant livestock, ureatreatment of straw and the use of multi-nutrient blocks have been shown to greatly improvenutrition of animals fed on low quality roughage diets. The use of sugarcane and its by-productshas been demonstrated in many countries, including the feeding of pigs on sugarcane juice andmolasses while ruminants consume the pressed cane stalk or bagasse. Legumes and tree forageshave also provided needed protein inputs into cattle, sheep and goat production systems, whilebenefiting the environment through nitrogen fixation and organic matter. Attention has been paidrecently to the use of mulberry, Morusalba, as a high quality forage for cattle. Finally, the use ofwater plants (Azolla, Lemna, etc.) has been shown to provide good DM production and animalperformance in studies in Latin America and Asia.These technologies have been combined into integrated farming systems for the smallproducer that are biologically sustainable and achieve high levels of production, with minimalenvironmental problems as the manure is recycled or used for biogas production.Much of this
16work is described in publications by T.R. Preston, of which one is cited here.Undoubtedly, thetechnologies have contributed to the improvement of income and lifestyle of small farmers andrepresent an effective approach to sustainable development and poverty alleviation. But theapproach has been divorced from the parallel growth of intensive systems and industriallivestock throughout the world, which can be seen as providing the bulk of supply to meet thedemand.The challenge is to enable small producers (who are usually the ones applying the moresustainable technologies and integration of farming activities) to have access to a wider market -termed Ruralizing the Livestock Revolution. There is also a need and demand for low cost andsimple technologies for livestock and product processing. All too often, the middle-men ortraders take the greatest share of the profit because they have the means, the knowledge and theaccess to the consumer market. Emphasis needs to be given to the development of small-scaleand village-level processing, including equipment, training, distribution and marketing. Indiaalready has an advantage in this area.Medium sized and small cooperative livestock systemsIndias very positive experience with the NDDB and milk production could haveimportant lessons for the development of other parts of the livestock sector. If the cooperativesystem and organized marketing is applied more to the poultry sector, there is enormouspotential for expanded production in rural areas, supplying the cities. The authors of the FAOreport suggest that backyard production could be coordinated through local units, given that thescavenging hen produces the cheapest eggs. But this may not be the most effective method toadvance production and supplies to meet the demand. It may be better to develop medium sizedcooperative commercial units which are more susceptible to technological improvement andsustained supply. Such systems would not be the very small, backyard operations but mediumsized village cooperatives of say 10000 to 50000 birds. The advantages of such developmentwould include:1. Ownership remains with village people2. Enterprise is larger and enjoys some economy of scale3. Some of the technical advantages of industrial systems compared to backyard farming4. A small but viable feed mill can be operated5. Management is more efficient: breeding, feeding, veterinary treatment, etc.
176. Extension work is facilitated7. Can still be less capital intensive than industrial units8. Labour is reduced and allows for secondary employment/income9. Marketing is more efficient: regular supply, increased scale, improved standards possible...10. More people participate and benefit from the market11. Easier to apply Good Agricultural Practices than either industrial or backyard farming12. Environmental and ethical advantage over industrial units could be exploited for added valueGiven the potential market for an additional million tonnes each of eggs and poultrymeat, the is considerable opportunity for participation in this expanding sector. It also impliesmore than 2-3 times the required capacity for poultry feed production, preferably in smallintegrated units.The implications for local feed production are that these small units (10,000layers/35,000 broilers) would need 1-2 tonnes per day of poultry feed. This might be furtherintegrated, particularly in the states of Karnataka, Kerala, Andra Pradesh, Tamil Nadu andMaharashtra, with soya bean production and small-scale processing.Such vertical integration, albeit on a relatively small scale, is desirable and appearsfeasible with these numbers. Cooperative marketing is required to ensure the scale needed tosupply the cities.Unfortunately, experience in the Indian poultry industry has been mixed withwide shifts in prices and failures of companies as a result.There is suspicion of the present integrators and a need for a more organized andsustainable system to develop the sector effectivelyThe above analysis highlights the potentialfor livestock production globally and in India particularly. However, there are serious concernsabout food safety and the environment associated with the growth of intensive, commerciallivestock which need to be addressed if the livestock sector is to develop in a sustainable way,satisfying the more exacting demands of the consumer and world markets.In recent years and inmany countries, public concern about the safety of foods of animal origin has heightened due toproblems that have arisen with bovine spongiform encephalopathy (BSE), dioxin contamination,outbreaks of foodborne bacterial infections, as well as growing concern about veterinary drug
18residues and microbial resistance to antibiotics. These problems have drawn attention to feedingpractices within the livestock industry and have prompted health professionals and the feedindustry to closely scrutinise food quality and safety problems that can arise in foods of animalorigin as a result of animal feeding systems.Some foodborne diseases have recently become more common. For example, outbeaks ofsalmonellosis have been reported for decades, but within the past 20 years the disease hasincreased in incidence on many continents. In the Western hemisphere and in Europe,Salmonella enteritidis (SE) has become the predominant strain. Investigations of SE outbreaksindicate that its emergence is largely related to consumption of poultry or eggs. In 1994, therewas a nationwide outbreak of salmonellosis in the United States as a result of contamination ofpasteurized ice cream during transport in lorries that had previously carried nonpasteurized liquideggs containing Salmonella enteritidis. It is estimated that 224,000 persons were affected by theoutbreak.Other foodborne pathogens are increasing in prevalence because they are newmicroorganisms or because the role of food in their transmission has been recognized onlyrecently. Infection with Escherichia coli serotype O157:H7 (E. coli) was first described in 1982.Subsequently, it has emerged rapidly as a major cause of bloody diarrhoea and acute renalfailure. The infection is sometimes fatal, particularly in children. Outbreaks of infection,generally associated with beef, have been reported in Australia, Canada, Japan, United States, invarious European countries, and in southern Africa. In 1996, an outbreak of Escherichia coliO157:H7 in Japan affected over 6,300 school children and resulted in 2 deaths. This is the largestoutbreak ever recorded for this pathogen.Listeria monocytogenes (Lm) is considered emerging because the role of food in itstransmission has only recently been recognized. In pregnant women, infections with Lm cancause abortion and stillbirth, and in infants and persons with a weakened immune system it maylead to septicemia (blood poisoning) and meningitis. The disease is most often associated withconsumption of foods such as soft cheese and processed meat products that are kept refrigeratedfor a long time because Lm can grow at low temperatures. Outbreaks of listeriosis have beenreported from many countries, including Australia, Switzerland and the United States. Twoconsecutive outbreaks of Listeria monocytogenes in France in 1992 and 1993 were caused by
19contaminated pork.tongue and potted porkFAO data show that livestock production, anddemand for animal products, will grow rapidly in the next 20 years. These predictions show amassive increase in animal protein demand, needed to satisfy the growth in the humanpopulation. Consumption of livestock products, with the associated demand for feed grains andthe environmental effects of this pressure, will grow even faster in some countries. It is predictedthat there will also be a greater concentration and associated problems of livestock in the citiesand peri-urban areas. These problems will include environmental pollution and, not least, theincreasing risks of zoonotic diseases affecting humans.The big increase in animal protein demand over the last few decades has been largely metby the world wide growth in intensive livestock production, particularly poultry. This is expectedto continue as real income grows in the emerging economies. Industrial production relies heavilyon grain, soya and fishmeal, and has a high cost in terms of fossil fuel consumption. Theconcentration of animals, disassociated from land and crops, presents alarming problems ofwaste disposal. Technologies are needed to make use of the waste as fertilizer and fuel.Sustainable agriculture, integrated systems and organic farming methods have beenpromoted by development agencies for many years, and yet their real impact is very small. Thechallenge is to enable small producers to have access to a wider market. There is also a need anddemand for low cost and simple technologies for livestock and product processing. Emphasisneeds to be given to the development of small-scale and village-level processing, includingequipment, training, distribution and marketing.It may be better to develop medium sized cooperative commercial units which are moresusceptible to technological improvement and sustained supply. If the cooperative system andorganized marketing is applied to the poultry sector, there is enormous potential for expandedproduction in rural areas, supplying the cities. The advantages of such development are:ownership remains with village people; enterprise is larger and enjoys some economy of scale;some of the technical advantages of industrial systems compared to backyard farming; a smallbut viable feed mill can be operated; regular supply, increased scale, improved standardspossible; more people participate and benefit from the market; its is easier to apply goodagricultural practices than either industrial or backyard farming; and there are environmental andethical advantage over industrial units that could be exploited for added value.
20Fulfilment of consumer demand is not only quantitative but also qualitative. Livestockproducts must be produced from disease-free animals and under hygienic conditions. We mustalso question the use of additives that improve production but are unacceptable to the consumer.At the policy, producer and processor level, the provision of safe and wholesome food must berecognised as the cornerstone to sustainable livestock and product development.FAO is engaged in developing Codes of Good Agricultural Practices (both in the feedindustry and from farm to fork) which will support Quality Assurance schemes that addressissues of human health, animal health and the environmentIndias animal wealth is quite large in terms of its populations of cattle, poultry, sheep andgoats, camels, horses and pets Recently, aquaculture has also been growing in importance inIndia.Feed manufacturing on a commercial and scientific basis started around 1965 with thesetting up of medium-sized feed plants in northern and western India. Feed was produced mainlyto cater to the needs of dairy cattle.CLFMAwas formed in June 1967 as an association of feed manufacturers and associatedindustries such as ingredient suppliers, importers, feed additive manufacturers, consultants,hatcheries and milk cooperatives and feed machinery manufacturers.The objectives of CLFMA are to promote the concept of nutritionally balancedcompound feed; to promote, assist, organize and coordinate scientific research in the field ofanimal nutrition; to conduct, assign, sponsor or co-sponsor surveys and studies; to collect,classify and circulate information related to animal feed to its members and government; to offersuggestions to government in formulating policies; and to impart training to livestock farmers,feed mill personnel, veterinarians, students and others. The office-bearers of CLFMA are electedand operate for a maximum of two years at one level.Over the years, CLFMA has been able to solve many problems of the industry, but manyothers still remain unsolved. CLFMA is gradually becoming a representative of the entirelivestock industry.
21Formed in June 1967 as The Compound Feed Manufacturers Association, CLFMA nowhas around 200 members, including all sectors of the livestock industry. CLFMA OF INDIA isrecognized not only by livestock farmers, Central and State Governments, GovernmentDepartments, Agricultural Universities, Veterinary Colleges and National Research Institutes inthe country, but also by related sectors outside the country.CLFMAs views are solicited and reckoned with by our Central and State Governmentswhile formulating policies governing not only animal feed industry but also the entire gamut ofanimal production.CLFMA, the sole, All-India representative of manufacturers of nutritionally balanced andscientifically compounded feed for cattle, poultry, fish, prawns etc., manufacturers and suppliersof feed supplements & raw materials, feed plants & machinery and other service providersbusiness associated with livestock industry. Today CLFMA has around 200 members includingall sectors of the industry.Few animal feed manufacturers’ way back in 1964 initiated the dialogue to giveorganizational bent to this industry. As a result, CLFMA was formed and registered on 8th June1967, which in 1969 was registered as a charitable public trust. The prime objective of CLFMAis helping the promotion of overall animal husbandry, by promoting the concept of balancedfeeding of animals in accordance with their nutritional requirements for deriving the maximumoutput from them through productivity improvement.CLFMA is fully committed to manufacturing and supplying high quality; safe andconversion-efficient animal feeds to livestock farmers at prices affordable to them.During 2001,at the AGM held at Goa, the resolution was passed to form a Sub-Committee to broad-baseCLFMA.It was agreed by the members present that all sectors of livestock industry should cometogether for the progress of the industry.The share of compound cattle feed manufactured by the industry, in relation to the overallpotential, is low for the following reasons:
221. The cattle population is fragmented and spread over large parts of the country. Farmerslow level of education and strong traditional beliefs mean that there is generally littleawareness of compound cattle feed.2. More than 50 percent of the countrys total milk production comes from a very largenumber of low-yielding cows and buffaloes. A further 25 percent of milk productioncomes from buffaloes and only the remaining 25 percent of the total is produced bycross-bred and improved cows.3. Industrially manufactured compound cattle feed has proved its value for cross-bred cowsand buffaloes but not for low-yielding cattle because of their genetic limitations. Home-mixed feed is very frequently used for buffaloes and low-yielding cattle.2.4 Kerala ScenarioCattle feed industry is growing in Kerala. There are many cattle farmers as well aslaboratories, so cattle feeds industry is growing. The major players n Kerala are KeralafeedsGodrej FeedsLtd,Milmafeeds,SunandhiniFeed , Prima Feed.a) Kerala FeedsKerala Feeds Ltd is a public sector stock feed manufacturing Unit under the Governmentof Kerala which was set up in 1995 with a total project cost of approximately Rs.35 Crore. Theplant is located in Panjapally (Now Feed Nagar) in Kalletumkara Village of Thrissur District, 2.5kms away from the Irinjalakuda Railway station. The commercial production was started in1999. Within a short period of 4 years the company has increased its total production from3793.49 MT in 1998-1999 to 125567 MT in 2004-2005. The technology used for manufacturingis MMCP (Milling, Mixing, Cooking & palletizing). The machinery is imported fromNetherlandsb) MilmaThe name MILMA has been derived from the cumbersome predecessor, Kerala LivestockDevelopment Board and Milk Marketing Board (KLD&MMB). KLD&MMB existed from 1976to 1981. The name MILMA was coined at the official level by Mr. S. Nagarajan IAS. A 1961batch Indian Administrative Service (IAS) officer, he took over KLD&MMB as its firstchairman.
23Milk distribution in Kerala was available at only a few locations in Kerala. Thedistribution and sale was handled by the employees of the Board. The consumers had to purchasecoupon booklets in advance and exchange the coupons in exchange for milk. No mechanismexisted to tally the sale of milk and the coupons received. Mr. Nagarajan bought about a changein this system by making the consumer pay for milk at the time of purchase instead of the couponbooklet system. Moreover at that time milk was being sold in bottles and for the first time inIndia he introduced milk in ½ liter sachets. He had a prototype machine for packaging milk insachets installed in Thiruvananthapuram. From the public sector he moved the sale of milk to theprivate sector. Milk booths permits were issued to private entities for the sale of milk fromMILMA. From 1981 onwards under the advice of Dr. V. Kurien, by forming cooperativesocieties PrayarGopalakrishnan and others were able to introduce MILMA to the whole ofKeralaThe KeralaCo-operative Milk Marketing Federation (KCMMF) or Milma started itsoperation in 1980 with its head office at Thiruvananthapuram. It was started under the Indo-Swiss project The project was launched in 1963 on the basis of a bilateral agreement executedbetween the Swiss Confederation and the Government of India. The project has made greatstrides in the improvement of livestock farming in the state. One of them is the development ofSwiss Brown, a cross breed suited for the states conditions. The project is now managed by theKerala Livestock Development and Milk Marketing Board. It main motive was to implement theOperation Flood programme started by the National Dairy Development Board (NDDB) inKerala.The project impact was so widespread that close to about 83 % of the adult cattle of thestate got converted to the new breed – Sunandini-, the milk production increased by over tentimes and the per capita availability of milk increased by over 7 times with over a millionfamilies dependent on milk production. The project has succeeded in integrating bettertechnology and management to the traditional small holder production system. It alsodemonstrated how the high productive, semi stall fed cows led to a spontaneous decline in thetotal bovine population of the state from 34.6 lakh in 1977 to 21.86 lakh in 2003 when the totalbovine population of India went through an upsurge. This contributed immensely toenvironmental sustainability. By demonstrating a growth model for productivity enhancement,
24the project not only impacted the million small livestock holders in Kerala, but also millionsoutside the stateThe project demonstrated revolutionary institutional changes beginning with the IndoSwiss project of Kerala, an autonomous institution under the govt. of Kerala to the LivestockDevelopment and Milk Marketing Board and then to the present autonomous company - theKerala Livestock Development Board, with the formidable dairy cooperative system under theKerala Cooperative Milk Marketing Federation (MILMA), under the able guidance of its firstmanaging director S. Nagarajan IAS, spun off as successful an independent entity.Keralas milk demand / consumption per day is 10.90 Lakhs liters, whereas totalproduction in Kerala amounts to 7.80 Lakhs liters per day. Thus, Kerala imports round about 3Lakhs liters per day of milk from Karnataka, Tamil Nadu and Maharashtra.c) Prima FeedsPrima Agro Products Ltd is a Cochin based company. The Company is a Prima GroupCompany. The company has identified Ms Jung Won Corporation, Seoul, South Korea as acollaborator for the expansion project. The company has launched in the Kerala market itsRich Foods brand of food products. It has entered the capital market in August 1993 with apublic issue of Rs 360 lakhs. It has already launched cattle feed products in different varietiesunder the brand name Prima Feed
252.5 Porter’s Five Forces AnalysisThe Porter’s five forces model is an analysis of the structure of the industry should beundertaken in order to find effective sources of competitive advantage. Therefore, inordertoanalyze the competitive environment of KSE, Porter’s five forces analysis has been usFig No.2.1 Porter Five Force Model for Industry Analysis1. Threat of new entrantsThe threat of new entrants is moderate mainly because of the1. It would be very difficult for a new company to enter this industry becausethey would not be able to compete with the established brand names,distribution channels, and high capital investment.2. Need of high end and sophisticated technology requirements is pausing theentry of new players.3. The new companies who are entering are Active Kerala feeds, Milmaetc2. Bargaining power of buyersRivalryAmongCompeting Firms inIndustryThreat ofNewEntrantsBargainingPower ofBuyersThreat ofSubstituteProductsBargainingPower ofSuppliers
26The buyers in India have variety of choice. There are more than 6 cattle feedproducing companies in India. So, the bargaining power of buyers is more because theyhave lot many choices available to purchase cattle feed.1. They can switch from one company to other since the switching cost is verylow because the cost of cattle feed is almost same in every company.2. Since the buyers of cattle feed purchase in bulk quantities the buyers has thepower to bargain over the price of cattle feed.3. Bargaining power ofsuppliersThe supplier population in this industry has low to moderate bargaining power due to thefollowing matters:1. Bargaining power of supplier depends on famers availability.When thedemand for farmers is more suppliers will drive the bargaining power.2. The switching cost is also very low. It’s not going to cost much for the industry toshift from one supplier to another and this is one big threat for the supplier andother reason is there is lots of supplier.4. Threat of substitute ProductsThere is not much substitute in this case. Customers view the substitute based on thecattle feed industry as extremely satisfactory in terms of quality, comfort andconvenience5. Rivalry Among Existing CompetitorsCompanies are able to maintain a competitive advantage with innovation due to the largeamount of technology that goes into the products and services. Obtaining that competitiveadvantage is a key factor. Economies of scale can play a huge role in success as well asthe market can also be price sensitive. Due to the fact that the cost of raw materials cansometimes be volatile, the company must plan ahead in order to remain efficient as extraexpenses can only be made up by passing the burden to their customer.Major cattle feed industries are Milma, kerala feeds, etc.
273.1 IntroductionIt was in 1963 that Kerala Solvent Extraction Limited now known as KSE Limitedentered the solvent extraction industry, setting up the very first solvent extraction plant in Kerala.Although Kerala produces 80% of total copra produced in the country, large part of it wassold to other states as copra itself and they were earning good profit when mills in Kerala wasn’table to get enough copra for their daily needs. When oil industry in other parts of the countrywas thriving, in Kerala it was struggling. So they understood the need for modernization of theirmills. At that time Dr.P.S.Loknathan committee setup to study the feasibility of starting newindustries in Kerala, recommended the establishment of three solvent extraction plants. And oneof them was in Thrissur district. The oil mill owners in and around Irinjalakuda, who wherethinking in similar lines saw the opportunity and took the initiative to establish a solventextraction unit. Thus KSE was established.Thus in 1976 KSE LTD entered the cattle feed industry, setting up new plantmanufacturing ready mixed cattle feed. The last 3 decades have been KSE LTD emerging as theleader in ready mixed cattle feed in the country. Today KSE LTD commands the resources,expertise and infrastructure of manufacture arrange of livestock feed in high volumes, driven bya commitment to high qualityOn the road to success, there were many hurdles. Initially, the mobilization of capitalposed the greatest challenge. The future looked grim. But determination and optimism paid off.Thus on 25 September 1963 the Kerala Solvent Extraction Limited was registered as a publiclimited company. The solvent extraction plant went on stream in 1972 and in 1976 a new plantwas set up to manufacture ready mixed cattle feed, which was pioneering step. Since then therewas no looking back.The last three decades have seen KSE emerging as the leader in solvent extraction andready mixed cattle feed in the country. And through these years of consolidation anddiversification, KSE has created a niche for itself.Today KSE commands the resources, expertiseand infrastructure to manufacture a range of live stock feed, in high volumes, coconut oil fromcoconut oil cake, and refined edible oil.
28KSE had computerized its operations way back. In the year 1999, KSE went on toupgrade its EDP setup further. A custom made ERP software was developed for its units andhead office through M/s.R.R Software Private Ltd, Cochin and online computerization was fullyimplemented at all its plants. Being custom made for KSE this ERP software, with SQLRDBMS, front end on Visual Basic and Windows NT OS, seamlessly had integrated allfunctions of the organization such as FA, Inventory, Billing, Payroll, PPC, MIS, ShareAccounting etc.The Head office at Irinjalakuda has 2 servers and 40 nodes running the application. Otherunits, in all, have about 8 severs and about 50 nodes. Their latest plant at Vedagiri, Kottayam hasa computerized control room for monitoring, homogenization, size reduction, batching, andpellet cooling and aspiring systems.From a single unit, solvent extraction plant, KSE has grown in to a multi-unit, multi-product organization. Infrastructure for growth has always been viewed as a priority at KSE.With modern manufacturing facilities spread over three states, KSE caters to a vast beltstretching across south India.With a strong commitment to customers and product quality and being cost competitiveKSE, stands poised to meet new challenges.3.2VisionThe company shall Endeavour to maintain leadership through quality products explorenew avenues in product development and marketing create stronger bond between themanagement ,workforce, dealers and customers ,contribute to social development and rural upliftman and constantly strive for excellence in all shapes of our objective.3.3Mission1. To maintain the market leadership.2. To minimize the cost incurring in production process.3. To maintain the product quality.4. To be competitive at all markets.5. To be compliment to all global quality standards.
296. To maintain top position in the industry.7. To utilize the new technological changes for the benefits of the company.3.4Corporate Objectives of the CompanyThe memorandum of association of the company lists out 38 broad objective for which thecompany is registered .Out of these the most important objectives are:1. To produce, manufacture, extract purchase, refine prepare import, export, sell and generallyto deal in oil bearing materials to carry on business of the refining the hydrogenation of oiland manufacturing of by products there from and of trades connected there with.2. To acquire erect construct establish .operate and maintain oil mills, extraction plants, gheeplants and workshop.3.5Growth Chronicle of KSE Ltd.1972 Solvent plant commences operation.1976 Mixed cattle feed production beginnings.1987 Cattle feed production reaches 180 tones and introduction of computers in the factory.1988 New mixed cattle feed plant starts operation at Swaminathapuram, in Tamil Nadu with adaily production capacity of 180 tones.1989 A solvent unit with a capacity of 120 tons per day commences operation atTamilNaduplant.1990 Introduction of KS Supreme pellets, a by –pass protein Cattle feed in the market.1991 Open Palakkad branch.1992 Cattle feed manufacturing beginning in 3rdparty unit.1993 Enters the export market.1994 Introduction of feed supplement KS FORTE, public issue and listing of shares.
301995 Vegetable oil refining plant commissioned, KS Supreme-sunflower oil launched, andOpen Calicut branch.1996 240 TDP cattle feed commences at Vedagiri.1997 Company renamed as KSE LTD1998 4thProduction unit at Palakkad. Launches dairy product1999 A modern children park and information centrehave been completed atIrinjalakuda for the benefits of the public.Company introduces new product KS deluxe plus the new pellet feed in HDPE bags of Keralamarket2000 Company starts production and distribution of milk and milk products from Konikaradairyunits.2001 Company started production and marketing of poultry feed at Palakkad.2002 Company started production of ice cream and marketed under the brand name of Vesta.2004 ISO 9001:2000 accreditation for Irinjalakuda plant.Company commissioned 200 TDP solvent extraction plant at KINFRA industrial park,with Koratty with a production capacity of 100tonnes solvent extraction2005 Cattle feed production capacity at Irinjalakuda unit increased to 210 MITperday.Company acquired at Mysore.2007 Company started production at Edayar Erode at lease2008 Ice cream production Commissioned at Thalyathu2009 Cattle feed production at Swaminathapuram increased to 200 MTs per dayCommenced 500 TDP fully state-of the art Germen technology animal fed plant atIrinjalakuda
312010 Ice-cream production unit at Vedagiri commission3.6Product Profile1. K.S Cattle feedThere are 6 type of cattle feed. There are,i. K.S-Mashii. K.S Supperiii. K.S Ordinaryiv. K.S Delux pelletv. K.S Delux and pelletvi. K.S Premium pellet2. K.S Supreme(Refined Sunflower Oil)3. Jersey copra4. K.S Forte (Feed Supplement-Tonic )5. K.S Mineral mixture6. Milk Productsi. K.S Milkii. K.S Gheeiii. K.S Curdiv. K.S Butter Milkv. Vesta ice cream3.7 Future Scope of the IndustryIndia’s animal wealth is very large in term of its population of cattle, poultry, sheep, goat,camel, horses and pets. This India’s lives stock industry will be facing with a lot of challenges inthe coming decades. The per capital consumption of milk, meat and eggs expected to doubly by2020.Globally the demanded for the food of animal origin will increase. These will be shift oflive stock production from temperate and dry areas warm and humid areas. Hence there istremendous opportunity for India’s to be a leading exposure. INDIA would need to become verycompetitive in a world of globalize.
323.8 Future Scope of the Company1. After three decades of credible growth and achievements, KSE is looking forward .Plansare already a foot to strength its operation in the edible oil business. Dairy business andreinforce its core capabilities and continue the process of forward integration.2. Company has acquire a land property in mysore.Company is in the process of planning inrespect of the project that property3. Company has endeavored for a Karnataka market survey.4. Company is planning to dispose of its solvent extraction plant at Irinjalakuda unit whichhas been worn out completely and install a cattle feed plant. This project of 2000 coreRupees.5. The company has plan to strengthen its dairy business by increasing production andadding more items to that product line6. Plan to pelletize at Palakkad unit3.9Company’s Philosophy on Corporate GovernanceIn KSE Limited, they believe that good governance is a systematic process which enablesthe company to operate in a manner that meets with the ethical, legal and business expectationsand at the same time fulfils its social responsibilities. The company believe in good CorporateGovernance, with utmost transparency in its operations achieved by proper disclosures in itsAnnual report, Quarterly Result, Public Announcements, Press releases and all othercommunications to shareholders, so as to provide shareholders and all other concerned withinformation about their company’s working, its strength weakness, opportunities and threats andthereby enabling them to develop a proper and balanced perspective on the working of theirCompany .
333.10Organizational StructureFig: No: 3.1 Showing the Organizational ChartBoard of DirectorsWho Time DirectorExecutive DirectorProgramManagerQualityManagerMarketingManagerHRManagerPurchaseManagerFinanceManagerGeneral ManagerManaging DirectorExecutiveOfficerSecurityOfficerCustomerServiceChiefNutritionistAssistant SalesMangerEngineerExecutiveOfficerShareDepartmentAssistantFinanceManagerAssistant A/cManagerClerk ClerkSalesRepresentativesLabAttainderClerkWorkerSecurityGuard Executives
34Department DetailsIn KSE the work activities that are similar and logically connected are grouped toform departments. At present there are seven departments in the organization. They are asfollows.1) Finance Department2) Marketing Department3) Human Resource Department4) Production Department5) Purchase Department6) Store Department7) Quality DepartmentThe study was confined only to four departments of the firm due to lack of time. Thedepartment scovered under the study were marketing, finance, quality control.4.1Finance DepartmentFig: No: 4.1 Showing the Structure of Finance DepartmentFinance ManagerDeputy Account Deputy FinanceManagerDeputy ShareManagerExecutive OfficerClerkExecutive Officer Executive OfficerClerk Clerk
35Learning Objective:To study the;a) Department structureb) Accounting Policiesc) Marketing Price Datad) BSE Sensexe) Summarized Balance sheet for the last five yearsf) Summarized profit and loss account for the last five yearsFinance is regarded as the life blood of the business .In modern money orientedcompany; Finance is one of the basis foundations of all kinds of economic activities. It is themaster key, which provides access to the entire source for being employed in manufacturing andmerchandising activities.Finance plays a key role in all the activities of business. It may be defined as the serviceof money. It deals with the principles and of administrating it by those who control it. Thesuccess of finance function depends on how finance function depends on how finance is plannedat the various levels of administration under the management.The share holders Equity (Net worth) is 3335.34 during the year 2010-2011.Its shares arelisted in Stock exchange of Mumbai,Chennai,Cochin.the Total turnover during the year grew by22% compared to the previous years. But unfortunately the profit was declined inconsistentlycompared to previous years. The total sales of the company was increased from 37227.87 to45368.03(in lakhs).The Company is focusing on cost competitiveness and also is in search ofnew product lines to further improve its overall performance. Financial data, which are notaudited, published by the company in quarterly. The company accepts fixed deposits from thepublic at the rate of 15%per annum.The company keeps book such as purchase daybook, salesday book, and cashbook and bank book
364.1.1Capital StructureThe share capital of the company comes to 320 lakhs from around 6500 shareholders. Itsshares are listed in stock exchange of Mumbai, Chennai, Cochin. This 320 lakhs where dividedas 32 lakhs share of Rs/-10 each4.1.2BankerCompany’s banker is ICICI bank limited which allows a cash credit subject to amaximum limit of Rs cores.4.1.3Source of FinanceThe company makes use of two types of source to finance its activities, they are1. Share holders fund2. Share capital3. Reserves And Surplus4. Loan Funds4.1.4Functions of Financial Department1. Maintain a good financial structure2. Identify the future financial requirement3. Dividend payment4. Salary payment5. Collection of cheque6. Receipt7. General payment8. Payment of raw materials4.1.5Maintenance of Cost RecordAs far as KSE limited is concern maintainer of cost records is not mandatory as none of itsproducts fall with in that category. Even though not mandatory, Company maintains necessarycost records to meet its own requirements.
374.1.6Internal ControlThe system of internal controls may define as the organizational plan and all the methodsand procedure adopted by the management of the entity to assist in achieving.1. Timely preparation of reliable financial information2. Accuracy and completeness of accounting records3. Prevention and completeness of accounting records4. Safeguarding asset5. Adherence to management policies6. Orderly and efficient conduct of its business4.1.7AuditingThe company has constituted on adult company, three independent non-executive directorsassists members. The main auditors of the company are Varna and Varnaa) Internal AuditIt is independent appraisal function within an organization, for the review of activities asa service to all levels of management. Its objective is to measure, evaluate, and report upon theeffectiveness of internal controls, financial and others as a contribution to the efficient use ofresource with an organization. The KSE Limited’s internal audit is taken care of by assistantmanager, some of the units are audited by himself and the rest, mainly situated in other districtsand states are performed by independent chartered accountant firms.b) Internal CheckThe company has devised internal check measures. Internal check refers to a system ofbook keeping and arrangement of staff duties in the organization in such a manner that no oneperson can completely carry through a transaction and record every aspect there
384.1.8BudgetingBudget is prepared by each year .The budget is prepared in the month of February. Profitand loss account is prepared monthly by finance department .Two committee meeting areconducted by the management.4.1.9DividendConsidering the profits for the current year, your Directors recommend a dividend of100% ( Rs.10 per share of Rs each) for the year ended 31stmarch 2011 which, if approved at theensuring Annual General Meeting, will be paid to those members whose names appear in theRegister of members of the company as on 28.07.2011.In respect of share held indematerialized form, the dividend will be paid on the basis of beneficial ownership as per thedetails furnished by the Depositories for this purpose at the end of business hours as on18.07.20114.1.10Capital ExpenditureThe ice-cream manufacturing unit adjacent to our existing cattle feed plant at Vedagiri hasbeen commissioned on 28.03.2011.The capital outlay of the new ice-cream unit is Rs 127 lakhsas on 31.03.2011 excluding the value of land already owned by the company.
394.1.11Financial HighlightsTable 4.1 Showing the Financial Highlights for the Period of 2009-20112009-2010 2010-2011Sales and other income 37227.89 45436.07Gross profit (Profit before depreciationand interest)1917.38 1359.80Profit before tax 1266.14 667.31Net Profit after tax 827.27 449.81Share holder’s equity (Net worth) 3257.45 3335.34Capital employed 6456.64 6065.52Gross fixed asset 6956.64 7220.58Rs RsShare holder’s equity per share 104.23 101.81Earnings per share of Rs.10 each 14.06 25.85Dividend rate 1.00 1.00Source: Company RecordsTable 4.2 Showing the Sales Comparison of Last Six YearsYears Net Profit (In Lakhs) Sales(In Lakhs)2004-2005 675.58 21309.852005-2006 591.23 24060.442006-2007 101.09 27503.592007-2008 258.38 28947.52008-2009 320.54 35007.872009-2010 827.27 37094.192010-2011 449.81 45368.03Source: Company Record
40Table 4.3 Showing the Market Price Data(During the financial year 2010-2011 Based on BSE Data)Month High(Rs) Low(Rs)April 293.50 190.00May 239.80 195.20June 234.45 211.00July 287.95 205.00August 233.40 192.50September 230.00 190.25October 230.00 162.00November 238.00 171.00December 218.95 170.00January 202.00 173.00February 195.00 156.00March 181.00 159.00Source: Company Records4.1.12 Accounting Policies:Accounts in KSE Limited are prepared under historical cost convention on accrual basisunless otherwise specifically stated in the notes to accountFixed asset1. Asset put to use have been stated at less depreciation.2. Asset not put to use have been stated at cost.Depreciation1. Depreciation on fixed asset has been provided on written down value method at the rateprescribed in the company act1956.Investment1.Long term investments are stated at a cost less provision, if any for permanentelimination in the value of such on investment.Inventories
411. Inventories as at the close of the year are valued at lower of cost or net realizable value.Retirement benefits1.Contribution to provident fund and employee welfare fund is charged to profit and lossaccount.2.The accruing liability towards gratuity of employees is covered by the group gratuityassurance scheme of life insurance Corporation of India.4.1.13Financial Procedure1) Payment of Raw MaterialsPurchase department purchase raw materials according to purchase order .90% ofpayment of raw material are made on delivering time. Balance payment will paid after checkingthe quality of raw material, this need material received report, order, and bill of lad report .Itincludes item, weight gross quality, net quantity, net quantity, etc.This report will be signed byhead of purchase department. If the quality is not satisfactory, rebate will be charged.2) General PaymentThis includes electricity charges, stationary items, telephone charges, salary, ESI, PF,housing loan, state tax income tax, etc.3) ReceiptsThis mainly includes sales receipt. The company accepts sales receipt in the form of cash,DD, Cheque: the company will not accept credit sale.4) Cheque Collection5) The company has account in 12 banks. Bank of Baroda keeps large amount of deposit ofcompany. These banks also provide loan facilities to the company maximum limit is up to andcores.6) Salary Payment
42Plant workers will get salary on 6th day of month. Office staff will get salary on 31 st ofthe month .If an employee needs salary as advance; he can take 50% of salary. Another functionof finance department is to collect or transfer surplus fund from other unit to centre unit.7) Other PaymentsShare holder will get dividend. This will be paid on interim dividend and final dividendand now the value of the share is Rs55. Another function of finance department is to providefestival gift in the form of cash, bonus payment of upto20% of salary. Profit and loss accountwill be prepared monthly. It is published quarterly in the news paper. The company also haspublic deposit amounts to 6 cores.4.2Marketing DepartmentFig: No: 4.2 Showing the Structure of Marketing DepartmentMARKETING MANAGERSales ManagerClerkSales ExecutiveSenior AssistantOffice AssistantCustomer ServiceManagerSales ExecutiveSenior AssistantOffice AssistantClerk
43Learning Objectives:-1. To know the idea about product mix of KSE Ltd.2. To study the pricing mix of KSE Ltd.3. To know the organization structure of marketing department.4. To familiarize the distribution system of KSE Ltd.5. To get the idea about the promotional activities of KSE Ltd“Marketing is the process of planning and executing the consumption, pricing,promotion and distribution of ideas, and services to create exchange that satisfy individual andorganizational structure”.The story of success of KSE Limited would reveal the excellence of the marketingbrains of the company .During 1976, When KS cattle feed launched in Kerala market, themarket was in the hands of Godrej and Tata the big boys. The transformation from that level tothe market leader of the south and to the second largest seller of the cattle feed in the industrytell the entry story. The fact that KSE limited could export cattle feed adds another feather to itscap.The company must design a marketing organization that can carry out marketingstrategies and plants. If the company is very small, one person might do all of the research,selling, advertising, customer service and other marketing activities. As the company expands amarketing department emerges to plan and carry out marketing activities. The most commonform of marketing organization in which a functional specialist heads different marketingactivities are headed by a functional specialist ,a sales manager ,advertising manager, Marketingresearch manager, and Customer service managerThe marketing department is headed by a marketing manager .the company has a largenetwork which is directly under the control of the marketing department .All planning andstrategy formation regarding the marketing activities of the company are devised ,Implementedand monitored by this department.The department is divided in to two:a) Sales division.b) Complaints and customer care division.
444.2.1 Sales DivisionThis is headed by an assistant manager .As mentioned earlier all the dealers arecontrolled by the company directly .all orders from the dealers all over the state are receivedby him. In consultation with the production managers of the various plants. He makes theallotment. The allotment is made from the various plants he makes the allotment .the allotmentis making from the various plants depending upon the availability and proximity to the dealer.The manager at the sales division informs the production manager about the demand for thevarious products so as to plan production accordingly.4.2.2 Complaints and Customer ServiceThis division is headed by an assistant manager .Since KSE Limited has network ofdealers directly under their control, maintenance of this net work is very difficult .The dealerarea is very small and closely situated. Overlapping of agencies is a problem .complaintsregarding agencies will reach this department. The complaints are studied and necessary actionsare taken. Similarly, companies regarding the product are also taken care here. As and when acomplaint is received, inspection team is sent to the specified area and details are collected andnecessary actions will be taken immediately.4.2.3 Marketing in Modern WorldIn the olden days, marketing has identified as physical movement of goods fromproducer to consumer. But modern concept of marketing aims at satisfying the needs and wantsof consumers with a reasonable amount of profit alone.According to modern concept, profit, profit can be earned only through customersatisfaction. To satisfy a customer his needs are to be known. This is possible only wheninformation is collected from the customers. Marketing research starts at this stage .Throughmarketing research information is flowing back to customers from producers. Thus modernmarketing starts with customers and ends with customers.
45Table No: 4.4 Showing the Sales of the Company in the Last Five YearsYears Sales( In Lakhs)2006-2007 45436.072007-2008 37094.192008-2009 35007.872009-2010 28947.502010-2011 27503.59Source: Company Records4.2.4 Marketing Strategy of KSE Limited1) Necessary publicity will be provided for assistance. The company reduced itsadvertising expenditure and concentrates more on radio, wall paintings and hoardings.2) Seminar will be conducted on relevant topics.3) Cost of operation kept to be minimum.4) Sales representatives will be providing for assistance.5) Supply quality products at reasonable prices using advanced production technique.6) Other marketing strategies.4.2.5Channel of Distribution1. Manufactures2. Dealers3. Retailers4. Customersa) Selection of DealerThe field staff under assistant customer service and complaint manager will evaluate thedealer on the basis of certain things those are..1. Financial position of the dealer2. Good and spacious go down.3. Marketing potentiality4. Dealers credit worthiness5. One dealer within an area of 5 KM
46a. If the dealer doesn’t buy at last one load of cattle feed in row of 3 month,automatically the company will terminate his dealership.b) Dealer Commission1. For KS cattle feed 10%2. For de oiled coconut cake (jersey)5.5%c) Market SegmentationIt is the process of spiting customers in to different group or segment, with in whichcustomers with similar characteristics have similar needs. By this each one can be targeted andreached with a distinct marketing mix. Being the company’s main emphasis on animal fedproducts company has adopted following steps to segment the market. Company first decidedon the animal-cow and buffalo after choosing target industry(cow and buffalo) it segment on thebasis of geographical area it plants to focus on Kerala, Tamil Nadu,Karnataka.furthersegmentation was on the basis of the size of the company/farmer-medium and large scale.Finally on the basis of purchasing criteria, customers seeking good service and quality.4.2.6Marketing Information SystemThese are collected from:1. Daily call reports by sales representatives2. Field force like sales representatives.3. Competitors telephoning4. Customer telephoning5. Report from sub dealers6. Directly from dealersa) Marketing Research1. It is done by company’s sales force by2. Redressal of customers complaints3. Seeing the competitors activity4. Checking whether the channel in the distribution system is weak or not.
474.2.7 Sales Promotions Activities1) Farmers meet and dealers meetThese are conducted by the company once in every two years at different headquarts.(TVM, ERM, TCR ,Calicut)these meet are conducted in five star hotels. It is a one dayprogramme with two sessions. In that dealers can express their problem current market for theproduct, farmer’s attitude towards the product etc.2) Giving incentivesDealer’s promotion KSE give a target to dealers. If any dealer achieves that target KSEgives incentives.3) CouponsCoupons are put inside the package; these offers are made in onam season. Coupons arecertificates offering a started amount of reduction in the purchase of specific product. Thismethod includes customers to buy a particular brand.4) SeminarsSeminars will be conducted for farmers about cattle feed. In this seminar, an award isgiven for the best farmer this award is in the form of cattle feed.4.2.8 Sales ProcedureOrder is received through phone or in person. Name and expected date of delivery ofgoods will be entered in a computer system. The advance payment is received in the form ofcash (up to Rs 200000), DD, or premium cheque along with the indent form in which theproduct needed quantity required, expected date of delivery along with some remark arespecified, sale department issues delivery order to the go down people .There will be threecopies of delivery order, one kept for data storage in computer, the other two with go downpeople out of which one is sent back to sales department for the preparation of invoice. Onecopy is kept in files and other two copies are sending to the dealer from which the carrierreturns one copy.
48a) Location of Sales Offices1. Vedagiri near kottayam2. Irinjalakuda3. Palakkad4. Edayar near cochinb) Marketing Mix of KSE LimitedMarketing mix is the combination of elements that are used by the marketer to bridgethe gap between the company and the market. In short, Marketing mix is a combination ofelements like product, place, price promotion ,etc in the right proportion to provide maximumsatisfaction to consumers and maximum profit to the company.4.2.9 Product Line of KSE LimitedKSE Limited produce various kind of cattle feed products which helps the customers toselect their product according to necessity .Different flavors packaging price differentiationcontents variation etc,are maintained by the company in its product line .It will help to attractmore customers to buy the product.
49Table No: 4.5 Showing the Details Regarding the Products Produced by the Co:LINE 1 LINE 2 LINE 3 LINE 4 LINE 5 LINE 6 LINE 7KS CattlefeedKSSupremecoconut oilKeyesforteKS pall KSGheeKS IcecreamKS ButtermilkKS Mash KSSolventExtractionOilKSforteKS Milk KSGhee500 mlMango bar KS ButterMilk 200MlKSSpecialMashKS RefinedoilKSHomogenizeKSGhee200mlBudkaKulfiKSSupperMashKSGheeVestaSundae100 mlKSDeluxePelletsKS VestaContopGhee 50mlKSDeluxeplusKS Choco barGhee5Ltr tinKSSupremePelletsVestaFlavoursSource: Company Records4.2.10 Brand LoyaltyIt is strong attachment of buyers towards a particular product of KSE Limited such asKS cattle feeds, KS Pal and Vesta Ice-cream. Brand loyalty offers a numbers of advantage tothe KSE Limited Brand loyalty are the repeat purchase made by the customers out ofcommitment to the brand. Brand loyalty customers start building a relationship with brand.They may become advocate of the brand by their positive word of mouth. The brand loyal
50customer may become passionate about the brand and from the clubs which results in furtherstrengthening of the brandReasons for Brand Loyalty for KSE Limited1. Different product line2. Better customer relationship3. Promotion and advertising4. Affordable price5. Better than competitor6. High quality of product7. Uninterrupted distributionAdvantages of Brand Loyalty for KSE Limited1. Reduce the competition2. Repeated purchase3. Reduction in promotional activities.4. Keeping the product quality5. Increased profit earning ability of the company6. All around development of the firm7. Introduction of new product as per the customer specification.8. Good relationship with the company by customer4.2.11 Price MixPrice is the amount paid by a buyer to seller for a product .It is the exchange value of aproduct in the term of money .Price means nothing to customers and something else to theseller. To the seller, price is a source is revenue. To the buyer, it is the cost of something.Price Mix in KSE LimitedObjective of pricing1. To maximize the profit2. To maintain the market share
513. To achieve a desired rate of return on investment4. To meet the competition5. To stabilize the product price6. To build the image and enhance the good will.7. Ensure the coverage of all cost.Pricing Method of KSE Limited1) Cost Based Pricing PolicyThe policy of selling price essentially on the basis of total cost per unit.KSE is supermanufacture in the field of cattle feed, so they can fix cost based pricing policy irrespective ofthe competitors. It is influencing their competitors pricing policy such as Godrej, Kerala feeds2) Competitors Based Pricing PolicyAll products are not equal strength of the company .Such product are more strengthenthan competitors such as milk product like Vesta ice cream KS ghee. KS Butter Milk, KS paal,In such case company cannot fix price its own style so they follow competition based pricingpolicy especially milk products such as KS pal, The share of milk is controlled by Milma so themilk price purely depends upon the Milma milk price.In short this policy of the price mainly on the basis of price fixed by the competitors.This policy does not necessarily means settings of price save.4.2.12 Place Mix“Distribution is the operation which creates time, place and form utility through themovement of goods and persons from one place to another”There are two type of distribution1) Ex factoryrate: Company need not bear the transportation and insurance cost.2) Rate at destination: Company need to bear the transportation and insurance cost.4.2.13 Promotion Mix
52“Promotion consists of those activities that are designed to bring a company’s goods andservice to the favorable attention of customers”Objectives of promotion mix1. To create awareness of the product.2. To retain loyal customers3. To become market leader4. To popularize brand name5. To help distributors or agent6. To stimulate the demand4.2.14 Promotion Mix in KSE LimitedPromotion mix is the combination of components or elements of promotion.Each promotional tools are different from the product .KSE Limitedused various promotional tools to their products according to the product characteristics, suchpromotional tools are follows:1) AdvertisingKSE Ltd used advertising to its products for promoting sales.Avertisement are gives thecompany according to the product nature. In cattle feed product, they are using radioadvertisement. They do not wish to advertisement T.V because it doesn’t cover target groupsuch as farmers in rural areas.Following are other type of advertising media used by the firm1. Magazines2. Newspapers3. Yearly calendar4. Cloth Banners5. Cinema slides6. Notices7. Product pamphlet
538. Wall painting2) Public RelationKSE Ltd trying to maintain the good public relation to general public relation. It is enhancing tobuild their brand image and brand loyalty.3) Sales PromotionKSE provided various sales promotion schemes to its dealer and customers forincreasing sales. Such activities like seminar, conference of farmers, Classes conductingCompany’s chief nutrition. He can solve various doubts of farmers in the field of cow farming.And also provide advertisement materials like advertisement to dealers ,Money refund offer,free trails,demonstrations,premium offers, dealers contests.4).Personal SellingSometime KSE executives approached to the customers to face to communication andpresentation for the purpose of making sales and clarifying their doubts.4.2.15 Sales of KSE LimitedKSE Limited is the number one cattle feed industry in south India.The cattle feed ismainly two types, mash and pellet. They are in bags of 50kg, 75kg, 57kg, and 40kg.KSE limitedseller the product through its dealers. The daily sales of the concerned come to about 100 tones.The total turnover during the year grew by14% compared to the previous year,the profit also improved considerably compared to previous year. The advertisements place agreat role in improving the performance of the company
544.3 Human Resource DepartmentFig: No: 4.3 Showing the Structure of Human Resource DepartmentHR department is the main and the most important of a manufacturing concern.KSELimited is proud of its well co-ordinate labour force. The HR department was seen as a placewhere the lesser productive employees could be placed with minimal damage to the organizationHuman resource management is concerned with all aspects of managing the humanresource of an organization. More specifically, human resource management involve determiningan organization need of human resource, recruiting and selecting the best available employeesdeveloping counseling and rewarding employees, acting as a liaison with unions and governmentorganization and handling other matters related to the wellbeing of employees.Each of the functions is necessary to some degree irrespective of nature and size of theorganization that is why in most of the organization a separate department is known as personnelHR MANAGERExecutive Officer Security OfficerSeniorSecurityOfficerOfficerJunior OfficerSecurity GuardSenior AssistantWatch ManOfficer AssistantClerk
55department or Human resource department is created for effective performance of thesefunctions. In KSE limited personnel department deals with following objective.1. Employees selection procedure2. Remuneration of workers3. Allowance of employees4. Statutory liabilities5. Trade union6. Workers welfare activities7. Workers safety measures8. Leaves and retirements9. Other functions4.3.1 Functions of Human Resource Department1. Recruitment2. Man power planning3. Welfare function4. Grievance handling5. Discipline6. Industrial relations7. Public relations8. Job decription9. Job specification10. Training11. Performance appraisal4.3.2Employee Selection ProcedureEmployees are selected strictly based on their educational qualification. Work experiencetechnical knowhow and age .company will do the recruitment by giving ads in news papers,through employee exchange. And also promoting its own employees based on their performance.
56RemunerationThere are three types of wage earners:-a) Unskilled but permanent workers-gets daily wagesb) Badali workers-wages on weekly basisc) Office staff-salary on the last working day of every monthSalary Consist of:-1) Basic pay2) Fixed dearness allowance3) Variable dearness allowanceAllowances1) Dearness allowanceThis is given to permanent employees.D.A is divided into two classes:-Fixed asset DA: Calculated at the rate of 15% of the basic salaryVariable DA: Based on cost of living index published by Govt.of Kerala2) Conveyance allowance3) Washing allowance4) Canteen subsidy5) Leave and travel allowance6) Housing subsidy7) Shift allowance8) Overtime allowance9) Scholarship for employee’s children
5710) Employees welfare fundStatutory LiabilitiesProvident fund: From the basic salary the company and the employees channelized 12%into the provident fund account equally. Out of the12% contributed to P.F fund 8.33% aretransferred to the pension account.a) Employee’s State Insurance: The Company pays about 4.75% of total salary ofemployees to ESI. The employees pays a contribution of 1.75% of total salaryb) Gratuity: An employee needs minimum 5 years of service to avail this fund.c) Bonus: It varies according to their grades4.3.3 Trade UnionIn this company there are four recognized trade unions like CITU, INTUC, and BMSCITU-Confederation of Indian Trade UnionINTUC-Indian National Trade Union CongressBMS-Bharat MazdoorSanghA committee consisting of Chairman, Managing Director, Whole time ExecutiveDirector, General Manager Works Manager and Personnel Manger approve the demands ofworkers.Works Welfare ActivitiesThe company established a trust know as employee’s welfare trust in which ensuring soundworking condition.a) Ensuring fair wage system.b) Protecting the right of workers.c) A committee consisting of Chairman, Managing Director, Whole time ExecutiveDirector, General Manager Works Manager and Personnel Manger approve the demandsof workers.
58d) Rs.20 is paid both by the employees and the company every month. Additional funds areprovided to employee during the death of employee or in case of employee’s sibling’smarriage.4.3.4 Safety MeasuresFor safety of workers at plant, they are provided with mask, first aid facility, dustextraction system in plant, which help to suck the dust arising at the time of production.1.Leavea) Casual leave: 9 days for workers and 11 days fir staffb) Privilege leave: For workers 1 day for 15 days worked, for staff its 30 daysc) Sick leave:7 days2. RetirementRetirement age of employees is 58 years.4.3.5 Qualification Required for Different Jobsa) Unskilled Workers: He should be group 25-30 years, should not have studied more than8 th standard and should be residing within a radius of 5 KMs of KSE limited.b) Office Staff: He should be a graduate.c) Shift Engineer: He should be a diploma holder from ITI.d) Security Man: He should be an ex-service man in age group of 35-40 years.22.214.171.124 TrainingKSE LIMITED gives the jobs training to the employees. They are kept in probation for 6months. If company found it unsatisfactory, then probation period may be extended. Introductiontraining is given at this period.Workers are selected as a substitute worker. If a substitute worker works for a period fora minimum of 240 days within a year they would be made a permanent worker.
59Fresh blood would be preferred for lower divisionalworks.Based on this policy companypromotion for a senior post is made. After probation period the manager under whom theemployee is working gives an appraisal report to the personnel manager. Confirmation of job isgiven after that.126.96.36.199Classification of Employee/ WorkmenPermanent employee is one who has been engaged on a permanent basis by a writtenorder to that effect and include any person who has satisfactorily completed a probationaryperiod of 6 months, including period of service in any other post to which he may be transferred,breaks due to sickness, accident, leave, lock out, inventory closure of the establishment and whohas been confirmed in writing as permanent.a) Probationer: is one who is provisionally employed to fill permanent vacancy in apermanent post.b) Substitute is one who is appointed in the post of permanent workmen or probationer whois temporarily absent. If a substitute worker for a minimum of 240 days within 12months, he will be made permanent.c) Temporary Employee: is one who is employed for work which is of an essentiallytemporary nature likely to be finished within a limited period.Casual employee is one whose employment is of casual nature and who is not entitled to claimfor future and continuous employment.Each of the five categories of employee shall be grouped as follows. Monthly rate semployee/workmen whose salaries or wages are calculated at a monthly time. Daily ratedemployee/workmen whose salaries or wages are calculated at a daily rate.4.3.6 Manpower planningKSE Limited proud of its well-coordinated labor force .The personnel departmentwas seen as a place where the lesser productive employees could be placed with minimal damageto the organization ongoing operation.
60Employees are selected based on their educational qualification, work experience,technical knowhow and age. Company ads on news papers through employment exchange andby promoting its own employees based on performance. In KSE Limited, Total numbers ofemployees are more than 900 including the employee in its 4 units. In this 500 employeesattached to Irinjalakuda Unit.4.3.7 Industrial RelationThe company has 926 employees in its rolls as on 31.03.2011.The company is exceptionto the adverse labour conditions existing in Kerala. During its working of 39 years the companyhad lost only few man days by labour unrest .During the lockout period’s management had madealternative arrangements to ensure regular supply to the dealers and the performance of thecompany. There were no labour issues of a serious nature in any units of the company.4.4 Production DepartmentFig: No: 4.4 Showing the Structure of Production DepartmentStoreOfficerPRODUCTION MANAGERElectForemanGodownExecutiveStoreSupervisorMaintenceOfficerShiftEngineerBoilingOperatorElectricalSupervisorOfficerPlantEngineerEngineerMainForeman
61Learning Objective:To study the:1. Department structure.2. Function of the production Department.3. Function of the solvent plant.4. Function of the cattle feed plant.5. MCCP Technology.6. Refining plant.7. Quality parameters.8. Quality control in solvent and cattle feed plant.9. Product specification and ISO certification.The core of a production system is its conversion sub system, where in workers materialsand machines are used to convert inputs into product and service. This process of conversion isat the heart of production function and is present in some form in all organization. It may bestated that every organization irrespective of its purpose, has a production function wheredepartments and personnel play a central role in achieving the objective of the organization.Functions1. Production process2. Employee supervision3. Maintenance of machines4. Quality assurance5. Production plan6. Production control7. Maintaining a hygiene work place8. Management of different shift of employee9. Maximizing the production with minimum resources
624.4.1 KSE-Production UnitsKerala1) KSE Limited, Irinjalakuda Unit2) KSE Limited, Vedagiri unit Kottayam3) KSE Limited, Palakkad Unit4) KSE Limited, Edayar Unit, Cochin5) KSE Limited, Konikara Unit (Dairy)6) KSE Limited, KorattyTamil Nadu1) KSELimitedSwaminathapuram unit2) KSE Limited,Thalyathu(dairy)3) KSE Limited, ErodeKarnataka1) KSE Limited, Mysore unit4.4.2 K.S.E & Its ProductsK.S Cattle FeedThere are 6 type of cattle feed. There are,a) K.S-Mashb) K.S Supperc) K.S Ordinaryd) K.S Delux pellete) K.S Delux and pelletf) K.S Premium pellet7. K.S Superme (Refined sunflower oil)8. Jersey copra9. K.S Forte (feed supplement-tonic)
6310. K.S Mineral mixture11. Milk productsa) K.S Milkb) K.S Gheec) K.S Curdd) K.S Butter Milke) Vesta Ice CreamIn KSE, Production takes place in 3 plants1) Solvent extraction Plant2) Cattle feed plant3) Refining plantSolvent plantThe raw material used the company in this plant is recoiled coconut cake having about 8 %of oil content. The coconut cake is being put into a slow moving conveyor or belt. The nextprocess is heating up of the cake and after that hexane a product of petroleum would be spreadinto the cake. The mixture of oil and hexane is known as miscella.the next step is to separate thesolvent form the cake and is stride fir use. For one tonnes of coconut cake the usage of hexane is9.19 kg, Here 24 hr production takes place and it produces 200 tonnes per day.There are 3 shifts8. A.M -4 P.M4. P.M-12.A.M12. A.M-8.A.MCattle feed plantIn this plant the company uses different types of cakes. According to their availabilityapart from other material the company uses coconut cake, sun flower cake, mustard cake, soyabeen, wheat, calcium, vitamins, cottonseed, phosphate, tapioca, maize jowar and other vitamins.Except from the coconut cake all other material are purchase from other state. Here 24 hrproduction takes place and it produces 650 tones per day.
644.4.3 MMCP Technologya) MillingThis is being used for ensuring that all the granules are grinded, screened 3 mm sieve.The materials feed into grinder are powered and it passes through the screen provided at thebottom side of the grinding chamber. The hammer mills at 30 tonnes per hour together are used.b) MixingThe raw material will be mixed thoroughly by using horizontal mixer. Capacity of thismixer is 6 m.c) CookingThe steam for cooking is produced using 3 million tonnes boiler. The mixer orhomogeniser carry out a strong mixing while the mash is moved forward and added with drysaturated steam. The cooking is carried out at a temperature of 80 degree Celsius using a highpressure dry saturated steam.d) PelletingThe pellet mill dye by rotating drags the mixture of mash and steam towards the roller.Which press it and consequently compel i to pass through the hole of the dye. It increases thedensity of the mixture, which together with heat generated by the saturated steam facilitates theextraction of the pellet. Two pellet machines are there with 15 million tonnes per hour capacityeach.Refining PlantIn this plant oil is refined according to the seasonal demand .Here two types oil arerefined1. Solvent Extraction Oil2. Sunflower OilHere 20 tons per day is produced .The oil so produced will be colourless and dourless soit is not used for household consumption. The main users of this oil are oil millers, industrieswho use this as an ingredient for its product.
654.5 Purchase DepartmentFig: No: 4.5 Showing the Structure of Purchase DepartmentPurchase department in KSE Limited mainly concentrate on the purchase of rawmaterials for cattle feed. They purchase stock normally for the 20 days .They take stock reportdaily and they purchase on the basis of shortage of materials required in production.The nutritionist prepares the formula for production and requirement of raw materialdepend on it. He will prepare the formula by considering the quality ability of raw materialetc.They place order on the basis of fund, go down capacity, availability of labor, space allottedto each materials and equipment, etc.....PURCHASE MANAGEREXECUTIVE OFFICERJUNIOR OFFICERSENIORASSISTANTOFFICEROFFICE ASSISTANTCLERK
664.5.1 Functions of Purchase Department1) To keep a regular check with contracting brokers all over India and thus know themarket price.2) Check whether the weight of goods in correct or not.3) Storing the goods in appropriate places for easy retrieval and use.4) Forwarding payment of foreign charges.5) To give order to buy the goods.6) To keep a feasible market to purchase.4.5.2 Purchase ContractIt is a contract prepare for the purchase of materials. It is signed by two signatories thatis, the purchase manager and the other is GM or FM .It include the following details1) What material they are going to purchase2) What quality they are going to purchase3) At what rate they are going to purchase4) Whether there is tax included or not5) Time of purchase6) The type of packaging7) Mode of paymentPurchase contract is printed in six copies, 2 copies send to the parties.1 copy returnedwith their signature as a token by conformation.1copy for account department .1copy forgodown.1 copy for purchase department.1 copy used as running life. This is the usual systemfollowed in purchase department.4.5.3 Purchase Procedure1) Purchase RequisitionIt is a document through which the user department requests the purchase manager tomake arrangement for purchasing the material required. Each departmental head prepares thepurchase requisition report and send it to the purchase manager. On receipt of purchase
67requisition report the purchase manager will make necessary steps for purchasing materialthat has been mentioned in the purchase requisition report.2) Plans are made by the purchase department about what to purchase, how to purchase. Whento purchase and so on.3) Materials are purchased through brokers. They are not charging any brokerage. They willsend the rate of the materials from different suppliers according to the specification.4) A meeting of purchase committee held after receiving the quotation. The committee includesgeneral manager, finance manager and marketing manager.5) The purchase committee selects the supplier after proper evaluation.6) The purchase manager then discusses with the suppliers about rate, quality requirements,quantity, delivery time and packing.7) If both parties agree they will enter in to purchase contract according to supply and payment.There will be 6copies of the contract.2 copies to supplier.1 copy to accountsdepartment.1copy to godown, 1 copy running file in dispatch session, 1copy as a token of confirmationshould send it back by supplier.8) Purchase orderAfter selecting the supplier purchase order is send to the supplier .it includes the date oforder, description of the material to be supplied and mode of supply.9) Receiving and inspection of materialWhen the material is arrived in to the company, they can enter into the material to checkany compliant in vision and select sample randomly and keep it in 3 packets. Then materialreceived report will be prepared in factory after getting permission from purchase department.Company will check whether the bill is as per the contract and enter the order number and givepermission to lorry people. At the time of unloading ,take the sample of from three packets 1sample to lab, 1 to nutritionist and 1 sample keep it as check sample in go down.Generally 90% of the payments are made in advance, when the company receives thespecified material and bill passed on to the stores department. The purchase department will paythe remaining 10% only after the approval from the laboratory the department. The departmentwill make cuttings according to the lab reports.
68The following table explains the procedure of purchase in solvent plant:Table No: 4.6 Showing the Details Procedure of Purchase in Solvent PlantPurchase Requisition for MaterialsSelection of SuppliersPlacing the Purchase OrderFollow up the OrderReceiving and Inspecting MaterialsChecking and Passing of Bill of PaymentSource: Company RecordsGodowns1) Storing of goods.2) Sending material received report to purchase department.3) Checking goods on arrival.4) Unloading and preparation of daily stock summery report.
694.6Store DepartmentFig: No: 4.6 Showing the Structure of Store DepartmentStore is a place where all the materials required for the production except raw materials isordered, received stored and issued. The store all the mechanical spare parts, company broachers,hand gloves, safety goggles etc....the materials are issued from the store to various departmentson the receipts of requisition form duly signed by the authority.If the stock of material is less than the minimum required quantity, the store clerk givespurchase requisition to the store through works manager. On the receipt of the material he entersit in the system.He also updates on the issues of the materials. So the system quantity and thephysical quantity will be the sameThe officer in charge of the general store is store keeper .The store keeper is responsiblefor identifying the materials that has reached the order level and is responsible for its storing .themain item purchased and stored here are spare part of machinery ,packing material, belt chain,STORE DEPARTMENTSTOREOFFICERGO DOWNEXECUTIVEGODOWNSUPERVISORGODOWNASSISTANTWORKERWORKERSTORE CLERKSTORESUPERVISOR