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Priya main prjt

  1. 1. CHAPTER 1 INTRODUCTION 1 1.1INTRODUCTION An organization is a social unit which is deliberately constructed and reconstructed to seek specific goals. It is a social group which distributes tasks for a collective goal. It is a social unit of people, systematically structured and managed to meet a need or to pursue collective goals on a continuing basis. All organizations have a management structure that determines relationships between functions and positions, and subdivides and delegates roles, responsibilities, and authority to carry out defined tasks. Organizations are open systems in that they affect and are affected by the environment beyond their boundaries. Organizational studies is "the examination of how individuals construct organizational structures, processes, and practices and how these, in turn, shape social relations and create institutions that ultimately influence people", organizational studies comprise different areas that deal with the different aspects of the organizations, many of the approaches are functionalist but critical research also provide alternative frame for understanding in the field. It is an effort towards understanding the organization, its policies, structure and methodology adopted. It gives us brief description of the overall functioning of the company or organization. It helps a management student to acquire knowledge and skills require making a major contribution to the challenges of industrial and commercial management. The main purpose behind the study is to understand the overall performance of the organization, which includes its function and processes of various departments and their inter-dependence and other organization and understand their basic functions, their purpose, achievements, competitors and the mission and vision of the company and their progress towards that. It helps to develop students with knowledge of business managements who will be able to handle successfully the complexity and uncertainty of the contemporary business environment. •The study encompasses the systematic and careful application of knowledge about how people perform within organizations.
  2. 2. •To understand the working environment of the organization. The study is limited to EICL, TVM. English Indian Clays Ltd, established in 1966, operates China Clay mines in the southern most of India, in lush green Kerala. The company’s clay mining and refining operations center on Trivandrum where the processing plant produces several grades of refined Kaolin (clays) to cater to the paper, paint, rubber, plastic, fiber glass, cement and ultra-marine industries. It concentrates on the functioning of different departments in the organization. The study focuses on the organizational structure of EICL. It is purely based on the information obtained from the departmental heads of the organization. •To understand the structure and functioning of the organization. •To understand the delegation of authority and responsibility. •To understand the various policies and programs of the organization. 2 1.2. INDUSTRY PROFILE The early history of the industry is, as would be expected, very much concerned with the discovery and production of China clays for use in ceramics. The story starts thousands of years ago and thousands miles away. China clay, the pure white porcelain used by the Chinese, was discovered many thousands of years ago and has always been a much prized material. Despite many attempts to find its sources elsewhere, it reminded elusive until a few deposits were found in some parts of Europe and in America early in the eighteenth century. When China clays or kaolin was discovered in England, it was realized that it was of a much finer quality than found elsewhere in Europe. A Quaker apothecary-cum-potter, William Cook worthy made the discovery in Cornwall in 1746. He experimented with various samples and in 1768 he took out a patent to use the material, soon producing items at his Plymouth Porcelain Factory. Until that time, English pottery had consisted of coarse earthenware and stoneware ceramics and had suffered considerable competition from elsewhere. As more potteries made use of porcelain, so the demand grew and by the early nineteenth century, the kaolin industry had become highly successful, with many of the potters owing right
  3. 3. to mine the material for themselves. In addition by the middle of the nineteenth century, China clay was increasingly being used as a raw material by the developing paper industry. Early in the twentieth century, the industry was made up of some seventy or so individual producers, each competing on price with little regard for marketing or standards. There was almost no capital investment or product development and over production was great, wages were low and working conditions were poor. By 1910, paper had completely overtaken ceramics has become the prime user of China clay. Over 75% of output was exported, with North America and Europe being major markets. The China clay industry in Cornwall and Devon held a virtual monopoly on the supply of that mineral to the world market. Just after the First World War, the three leading producers joined forces-forming English China Clays Limited in 1919, placing almost 50% of the industry’s capacity under one banner. 3 1.2.1 FORMATION OF CHINA CLAY China clay or kaolin occurs in the deposits in the form of china clay rock, a mixture of up to 15 percent China clay and up to 10 percent mica and the remainder being quartz. One of the purest of the clays, composed chiefly of the mineral kaolinite, usually formed when granite is changed by hydrothermal metamorphism. Usage of the terms China clay and kaolin is not well defined; sometimes they are used synonymously for a group of similar clays and sometimes kaolin refers to those obtained in the United States and China clay to those that are imported. In some parts of South West, the feldspar in the granite is higher in its soda content than its potash content and these places are these places are where China clay is found. It came into being through a complex sequence of events. While the molten rock was still cooling, it was attacked successively by steam, boron, fluorine and tin vapor, these acting on the alkali content of the feldspar and converting it into China clay. Kaolin’s whiteness, opaqueness, large internal surface area and non-abrasiveness make it an ideal filler material for paper production. As a coating agent in paper, it provides a smooth, opaque surface with good printability and ink retention. Although about 80% of all kaolin production is used production is used in paper, other uses include fillers for rubber, plastic, paint and adhesives as well as in ceramics such as porcelain and refractory products.
  4. 4. 4 Chemical Formula: Al2O3, 2SiO2, 2H2O. 1.2.1.1 Physical Properties Sp. Gravity : 26 Bulk Density : 0.821 Oil Absorption Value : 25-35 PH of 10% Solution : 7-8 Water Soluble Salts : Not more than 2% Moisture and Volatile Matter : Not more than 1% Refractive Index : 1.5 Loss on ignition % : 13-15 1.2.1.2 Chemical Composition Al2O3 : 32.9% SiO2 : 42.3% Fe2O3 : 0.6% MgO : 1.6% Na2O : 0.6% K2O : 3.0% 1.2.2 USES OF CLAY Paper, kaolin performs two quite separate functions in paper making. As a filler or loading, it is incorporated within the body of the paper, both reducing its overall cost and improving its printing properties. It is also a coating pigment, enhancing the surface properties of the paper, such as brightness, smoothness and gloss, thus allowing the accurate reproduction of color printing.
  5. 5. Ceramics, Kaolin was originally used in the manufacture of white ware ceramics. The amount of kaolin used for this purpose is now greatly exceeded by that used in the paper industry. The ceramic and refractory industries remain a major market, accounting for nearly one million tons of kaolin in Western Europe. The major markets for English kaolin in the white ware ceramic industry are tableware, vitreous-China sanitary, wall tiles (in the UK), electrical porcelain and glazes. In addition, kaolin and calcined clay are used for refractory applications. 5 1.2.3APPLICATIONS  Paint applications: Water based decorative paints: gloss; semi-gloss and silk; exterior matt-smooth and textured; interior matt; primers.  Solvent based decorative paints: Gloss; semi-gloss and eggshell; matt; undercoats; primers. Protective and OEM coatings: metal primers; furniture lacquers; domestic appliance finishes; electrophoresis coatings; coil coatings; traffic marking; printing inks.  Rubber applications: Kaolin is incorporated into both natural and synthetic rubber compounds and is the rubber industry’s most widely used non-black filler with reinforcing properties.  Cable insulations: Cable sheath; hose; extrusions; belting; footwear; pharmaceutical; seals; general moldings; plant lining; domestic moldings; latex; tyres/inner tubes.  Plastic applications: Kaolin has many uses as a filler in plastics.  Specialty films: PE master batch; PE cables; PE film; PVC cables; PVC extrusions; PVC plastisols; PP moldings; polyamide moldings; PBT/PET moldings; unsaturated polyester; urea formaldehyde; phenol formaldehyde.  Metakaolin: For the building and construction industry. A high quality pozzolanic material, blended with Portland cement to improve the durability of concrete and mortars.  White cement: In the production of white cement, iron is a deleterious component which can be avoided by using kaolin, an alumino silicate with very low iron content.  Glass fiber: The raw material for introducing alumina to glass compositions for glass fiber manufacture is kaolin.  Agricultural industries: The caking or setting of granular fertilizer prills is a serious problem since the caked mass must be broken down into its individual particles before it
  6. 6. can once again become free-flowing product. Kaolin, some of which is amine-coated, acts a non-stick coating to the fertilizer prill. As color is of no significance, cheaper grades can be used.  Other industries: Pharmaceutical applications; quality leather; textiles; inks, dyes, adhesives, crayons and pencils; toothpastes and cosmetic applications; chemical industry. 6 1.2.3.1 Into the future Some of the uses listed below are already common while others are innovative and in the development stage. 1. Plastic film, Video and audio tapes, where clays are used as anti-blocking agents. 2. Laundry products, Washing powders and detergents. 3. Decorative concrete, Mortars and renders. 4. Mark resistant polypropylene for automotive use Thermoset moldings for baths, shower trays. 5. Light weight concrete Water treatment systems. 6. Biotechnology, Ability of lightweight high strength ceramic materials to support micro-organisms. 1.2.4 MARKET DEMAND Market demand sometimes impacts the kaolin industry adversely. For example, the majority of paper manufacturers use high speed blade coaters. The efficiency and throughput rates of these machines should be improved because manufacturers are constantly seeking to improve operating speeds. This places a demand on the kaolin industry to provide kaolin products with rheological properties compatible with higher machine speeds. Rheology can only be improved by blending ores, which has its economic and inherent limitations. Controlling rheological properties by blending crude ores or finished products is costly because it requires additional systems and labor. In addition, the producer must operate and maintain more than one time.
  7. 7. 7 1.2.4.1 Producer Trends Businesses that sell onto highly competitive markets, where profits are constantly squeezed, do not generally produce technological innovations although still suffering from low margins and thin profits, kaolin producers have been innovative, responding to market demands with high brightness products. They have developed technologies for the production of affordably priced high quality products and are taking long term optimistic view of the market place. The kaolin industry will continue to work in partnership with paper industry in identifying new products needs and developing new products to fill these needs. 1.2.4.2 Kaolin in India In India, the production of kaolin is about 2, 00,000 metric tons. India is a major producer of kaolin in Asia. India is not a good customer of kaolin. The kaolin import to India is less compared to other Asian countries. EICL Limited, a Company incorporated in India, was part of the erstwhile Thapar Group. The Company was incorporated in 1963 in technical & financial collaboration with English China Clays Ltd., U.K, the pioneer and the then world leader in Kaolin processing. This collaboration with ECC ceased in the year 1992. EICL has two key Divisions, viz., Clay & Starch Divisions. The Clay Division, having three manufacturing locations in Kerala, specializes in mining and processing of high end kaolin. Both the divisions of EICLTVM have grown to be market leaders in their respective fields. This growth been chiefly driven by prudent investment in world class R&W facilitates for research in kaolin and starches enabling their businesses to be specialized solution provides for various application spanning diverse industries. Most domestic clay is mined by open pit method using various types of equipment including draglines power shovels, front and loaders, backhoes, scraper loaders and shale planers. In addition, some kaolin is extracted by hydraulic mining and located in Pennsylvania, Ohio and West Virginia, whether the clays are associated with coal deposits. A higher percentage of fire clay is mined clays, because the higher quality fire clay is mined underground than other clays, because the higher quality fire clay deposits are found at depth that make open pit mining less profitable.
  8. 8. The early history of the industry is, as would be expected very much concerned with the discovery and production of China clays for use in deposits in the form of China clay rocks, a mixture of up to 15 percent China clay and up to 10 percentage mica and the remainder being quartz. One of the purest of the clays composed chiefly of the mineral “kaolin” usually formed when granite is changed by hydrothermal metamorphism. Usage of the terms China clay and kaolin is not well defined. The history of China clay industry in 3 heads International scenario, National scenario and State scenario. 8 1.2.5 INTERNATIONAL SCENARIO The early history of the industry is, as would be expected, very much concerned with the discovery and production of China clays for use in ceramics. The story starts thousands of years ago and thousands of miles away. China, the pure white porcelain used by the Chinese, was discovered many thousands of years ago and has always been a much priced material. Despite many attempts to find sources elsewhere, it remind elusive until a few deposits were found in some parts of Europe and America early in the eighteenth century. The search to find deposits in England was increased. When China clay or kaolin was discovered in England, it was realized that it was of much fines quality than found elsewhere in Europe. A Quaker apothecary cum potter William Cook Worthy made the discovery in Cornwall 1746. He experimented with various samples and in 1768 he took out a patent to use the material, soon producing items at his Plymouth porcelain factory. Until that time English pottery has consisted of coarse earthenware and had suffered considerable completion from elsewhere. As more potteries made use of proclaim so the demand grew and by the early nineteenth century the kaolin industry had become highly successful with many of the potters owning rights to mine the material of them. In addition, by the middle of the nineteenth century, China clay was increasingly being used as a raw material by the developing paper industry. Early in the twentieth century the industry was made up of some seventy or so individual procedures, each competing on price with little regard for marketing or standards. There was almost no capital investment or product development and over production was great, wages were low and working conditions were poor.
  9. 9. Deposit this by 1910, production was approaching a million tons a year and paper had completely overtaken ceramics as the prime user of China clay. Over 75 percentage of output was exported, with North America and Europe being major markets. The China clay industry in Cornwall and Devon held a virtual monopoly on the supply of that mineral to the world market. Just after the First World War, the three leading procedures joined forces forming English China Clays Limited in 1919, placing almost 50 percent the industry’s capacity under one banner. 9 1.2.6 NATIONAL SCENARIO The ceramics industry in India came into existence about a century ago and has matured overtime to form an industrial bare from traditional pottery making the industry has evolved to find its place in the market for sophisticated insulators, electronic and electrical items. Over the years, the industry has been modernizing through new innovations in product profile, quality and design to emerge as a modern, world class industry ready to take on global competition. The Indian Ceramic Industry ranks at 8th position in the world and products around 2.5 percent of global output. The industry provides employment to 550,000 people, of whom 50,000 are directly employed. Gujarat accounts for around 70 percent of total ceramic production. The ceramic products 60th in organized as well unorganized sector. The share of organized sector in total production in around 55 percent. The organized sector is characterized by the existence of a few large players. Small and medium enterprises (SMEs) account for more than 50 percent of total market in India, offering a wide range of articles including crockery, art ware, sanitary ware, ceramic tiles and refractory and stone ware pipes among others. Most of the players are grouped together in clusters. Over the last two decades, the technical ceramics segment has recorded an impressive growth propelled by the demand for high alumina ceramics, cutting tools and structural ceramics industry has emerged as a major manufacturer and supplier in the global market. During 2008, India was the 24th largest ceramic trading nation in the world and accounted for a share of around 0.9 percent in total ceramics trade increased from US & 738million at a CAGR of 22.2 percent. The increase in trade was led by rise in imports, which increased, from US & 523.8 million in 2001 to US & 523.8 million in 2008 at a CAGR of 30.9%. India’s ceramics exports on the other hand increased at a CAGR of 12.8% from US & 83.3 million to US &214.5 million.
  10. 10. China was India’s main sources of 008 with imports ceramics imports, during 2008 with imports worth US & 50.7 million and US & 22.5 million respectively. India’s top five import sources together accounted for 82% of India’s total ceramics imports during 2008. China alone accounted for 60.7% of India’s ceramic imports. UAE, Saudi Arabia and Malaysia were the major destination for India’s ceramics export destinations together accounted for 30% of Indian total ceramics exports. 10 1.2.7 STATE SCENARIO The state is plenteous in China clay kaolin which forms an important raw material in the production of porcelain items such as crockery and glazed tiles. It is the finest variety of the kaolin found in the entire country and is fundamental in the high tension insulators and sanitary ware producing units. About million tons of such fine China clay are to be found in the state. Another variety of clay is found in Kerala and is useful albeit of an inferior raw material in the production of tiles and bricks. Graphite, an allotrope of carbon which is used in the manufacture of the lead used in the pencils also occurs freely in the state. The silica and quartz deposits wealth of the state is a composition of 79 tons of lime stone, 11 million tons of bauxite, 35 million tons of illuminate, 3 million tons of retiles, 1 million tons of monazite and 0.7 million tons of borophite. The bounties of the state mineral wealth need to be exploited and put to proper use. The industrial potential of this mineral treasure has not been reined in yet. 1.3 COMPANY PROFILE English Indian Clay Ltd, (EICL)Thiruvananthapuram (TVM) was incorporated on 18th November 1963 and operates in two business divisions namely clay and starch. EICLTVM is an ISO 9001-2000 company supported by a strong research and development setup.EICL was established by Maharaja of Travancore along with Mr. M. N. Ramakrishna Iyer in collaboration with English China Clay (ECC), UK who provided the machinery and expertise. The first plant commissioned was the Rotary drier Plant with a capacity of 15000TPA. The company has a registered office at TC-94/4, Veli, TVM, Pin code -695021. EICL, is engaged in the business of clay mining and refining and manufacturing of starch and allied products. EICL has two key business segments namely Clay business and starch business, with strong R&D setup at all its three manufacturing locations. The collaboration with ECC ceased in
  11. 11. the year 1992. EICL has been actively engaged in manufacturing and processing of China Clay of different grades for use as a coating agent and a filling agent. The company has its clay manufacturing units at Veli, Thonnakal and Kollam located in Kerala. The installed capacity of the plants was 36, 000 MT per annum initially and it has since been increased to 2, 13, 600 MT per annum as of date. The Starch business has two manufacturing divisions at Yamuna Nagar in Haryana and Pondicherry. The starch division at Yamuna Nagar can be trace its origin back to 1937. EICLTVM manufactures and processes China clay of different grades for use as a coating agent and filling agent. The installed capacity of the plants was 360000 MT per annum initially and it has since been increased to 213600 MT per annum of date with approximately70% of domestic market share. The Starch Division has two manufacturing units, one located at Yamuna Nagar, Haryana, manufacturing Starch and its derivatives, and the other located at Shimoga exclusively specializing in the manufacture of value added Modified Starches for various Industrial applications. The divisions have the distinction of being the lonely starch company in India to have acquired ISO-9002 certification and DSIR recognized R&D Centre, which is recognized by the Department of Science and Technology, Govt. of India. EICL has been successful in maintaining strict quality control and consistent conformity to International standards. Current starch producing capacity of the company is 101040 MT per annum. EICLTVM is a market leader in modified textile starch and a significant player in traditional starch with suitable growth rate. The Starch Division was started under the name of Bharat Starch Industries in the year 1937. It was subsequently taken over by EICL Limited in the year 2002. Both the Divisions of EICL have grown to be market leaders in their respective fields. This growth has been chiefly driven by prudent investment in world class R&D facilities for research in Kaolin and Starches, enabling these Businesses to be specialized solution providers for various applications spanning diverse Industries. EICLTVM is promoted by the prestigious BM Thapar group and Mr. Karan Thapar is the chairman of the company. The group is one of the big industrial houses of India having successfully managed large companies in diversified industries. The other companies under the control of Mr. Karan Thapar are Graver Cotton Ltd and Premium Energy and Transmission Ltd. 11
  12. 12. 12 1.3.1 COMPANY HISTORY EICL was established in 1963. The main objective of the company is Mining of China clay and manufacturing of processed China clay paper, textiles, rubber, plastics, ceramics, insecticides etc. In 1970, Thapar group took over the company. The company went in for automation during second half of 1980’s to improve productivity and by the end of 1985, it began to achieve a steady profit. By 1990 a second plant was commissioned in Pondicherry, a spray drier plant with a capacity of about 20000TPA and commenced leasing activities. In 1994, EICL was awarded ISO 9002 certification for quality assurance in production. In 1995, 3rd plant, the calciner plant was commissioned by EICL with a capacity of 20000TPA. It produces calcined clay which is another variety of China clay. In 2003, the company commissioned a 20000TPA calciner plant at Thonnakkal as a part of its continuous expansion. In 1994, shares of EICL were listed on the Bombay Stock Exchange. In 2002, EICL was merged with Bharat Starch Industries Ltd. In 2007, EICL acquires clay reserves and manufacturing assets of clays Pvt. Limited at Kollam. This becomes the third manufacturing location of clay business. In 2008, two MW co-gen plant was commissioned at Yamuna Nagar to reduce the cost of stream and power significantly. 1963 EICL incorporated on 18.11.1963. 1964 Commerical manufacturing started for Hydrous Clay at Veli, Kerala. 1992 Stake of English China Clays Ltd., UK (now merged with IMERYS PTE Ltd- France) in EICL bought by Thapars. 1993 Mr Karan Thapar appointed as Chairman cum Managing Director of the Company (CMD). 1994 Shares of EICL listed on the Bombay Stock Exchange 1994 EICL commissions a Speciality Starch Plant at Puducherry. 2002 Merger of Bharat Starch with EICL. 2003 Capacity expansion in calcined clay at a greenfield location (Thonnakkal, Kerala) by commissioning of a R&D project for the manufacture of 25000 MTA of Calcined clay.
  13. 13. 2005 Capacity expansion in Hydrous Clay at Thonnakkal, Kerala. 2007 EICL acquires clay reserves and manufacturing assets of Wolkem Clays Pvt Limited at Kollam (Kerala). This becomes the third manufacturing location for Clay Business. 2008 2 MW Co-gen plant commissioned at Yamuna Nagar to reduce the cost of steam 13 & power significantly. 2008 De-merger of the Investment Division of EICL to Bharat Starch Products Ltd. 2008 Capacity expansion in Calcined clay at Thonnakkal, Kerala. 1.3.2 VISION OF EICL “To be a leader in processed China market in Asia and to be an employer of choice fostering a culture that values dedication, respect and continuous improvement”. 1.3.3 MISSION OF EICL “To provide consistently high quality products and material to our customers in a sale, timely and efficient manner, at lowest possible cost and to grow with them and ensure the growth and development of employees of the company in order to achieve the objective of the organization and the caver goals of the employees”. 1.3.4 QUALITY POLICY OF EICL EICL. TVM is committed to processing and supply of value added Hydrous and claimed clay, meeting customer requirement of quality, delivery and application support through continual improvement of the effectiveness of its quality management system. 1.3.5 ENVIRONMENTAL POLICY EICLTVM is committed to meet or exceed relevant environment regulations and other environment related requirement through the continual improvement of the environmental management system and the prevention of pollution with systematic review of environment objectives and target.
  14. 14. 14 1.3.6 BUSINESS OBJECTIVES To adhere to, and deliver, the following objectives in the business of A) Mining, Refining & Processing of China Clay. B) Starch, Modified Starch and related products.  Conduct business affairs ethically.  Produce high-quality products at competitive prices for Industrial Application, with adequate care of Environment.  To grow profitably and responsibly and create value for all the Shareholders & Stake holders alike.  Continually improve products & processes through judicious and effective use of R&D. 1.3.7 PHILOSOPHY EICL’s philosophy is to enhance overall long term value of its shareholders, customers, lenders and employees. We strongly believe that our strength lies in managing our business in a professional manner, and in adopting transparency & responsibility in all our operations. We work towards developing a professional, knowledge based, and system driven work culture. 1.3.8 VALUES  To develop a professional, knowledge based, system driven work culture.  Respect for ethical integrity, environmental protection, and safety.  Believe in people and system driven performance.  “Thinking Organization” with pro-active action.  Team performance is more important than individual performance.  Customer satisfaction.  Quality and Cost conscious. 1.3.9 CORPORATE GOVERNANCE The company has compiled with the code on corporate governance as prescribed by the Securities Exchange Board of India and had taken all necessary steps to ensure that the guidelines prescribed by SEBI in this regard are fully compiled with.
  15. 15. 15 1.3.10 SOCIAL RESPONSIBILITY The company continued to pursue its agenda on social responsibility during this year. Water provided round the year to the neighboring villages around the Thonakkal Mines through pipeline and through water tank. A pioneering rain water harvesting scheme spread over 80 acres of land was successfully implemented at Thonakkal Mines and the water stored in the reservoir is stored with the neighboring villages. This is the largest commissioned rain water harvesting scheme in Kerala. 1.3.11CORPORATE PROFILE Chairman : Mr. Karan Thapar Directors : Mr. Praveen Sachdev : Mr. T. Balakrishnan : Mr. D Kohli : Ms. P S Saini : Mr. Rahul Gupta : Mr. S K Toshniwal : Mr. S N Dua : Mr. S Padmakumar : Mr. Vijay Kishore Sharma : Mr. J. K Jain : Mr. Vijay Raj Managing Director : Dr. VenkateshPadmanabhan Vice President : Mr. S.K. Jain Auditors : Mr. Walker Chandiok& Co Bankers : ICICI Bank Ltd : UTI Bank Ltd : Oriented Bank of Commerce : State Bank of India : State Bank of Indore : Indusind Bank
  16. 16. Shares Listing at : Mumbai Stock Exchange Revenue : 79.3977(USD in Millions) Market Capital : 2370.51401295(Rs. in Millions) Corporate Office : Global Business Park, 801-803, Tower-B, 16 8th floor, Mehrauli, Gurgaon (Haryana) Corporate Address : TC 79/4, Veli, : Thiruvananthapuram-695021, Kerala. Head Office : N 75, Connaught Circus, : New Delhi-11. Works : Thiruvananthapuram (Kerala) Financials : Total Income Rs. 4635.678257 Million (year ending March 2014) : Net Profit Rs. 160.991516 Million (Year ending March 2014) Business Operation : Miscellaneous 1.3.12 WORKING PATTERN OF THE COMPANY It is a 24 hour working company. The working time is divided into three shifts. Shifts Timing A 6 am- 2 pm B 2 pm- 10 pm C 10 pm- 6 am Table 1: Working Hours
  17. 17. 17 There are three grades of employees. They are  Workers  Staff  Officers The workers are on a long term settlement of four years with the company. The company and employees come into agreement about salary, welfare activities and incentives for four years. The percentage of change in salary for four years will be mentioned in the agreement. Thus there will be less conflict between the employees and the company. 1.75% of monthly turnover is also distributed to employees as incentives. Bonus is given to employees according to bonus act. It is fixed for four years. General shift is from 9 am to 5 pm. For plant officers and staff, the timing is from 8 am to 5 pm. For office workers in the night, every day a duty officer is appointed. 1.3.13 EMPLOYEE PROFILE EICL has 340 employees working in EICL.There are also casual laborers and contract laborers. Category Number Officers 60 Administrative staff 36 Workers 170 Employees 46 Apprentices and trainees 28 Total 340 Table 2: Employee Profile
  18. 18. TC-79/4, Veli, TVM- 695021, Kerala Phone: 0471 741133, 4095111 18 Address for correspondence English Indian Clays Ltd, Email: psaini@eicl.com Website: www.eicl.in 1.3.14 ORGANIZATIONAL STUCTURE Grouping of activities or departmentalization is an essential step in every organization and it helps to design an organization structure. It makes large and complex organization into small flexible groups which are easier to manage. It shows the horizontal differentiation in an organization. Grouping of activities into departments or divisions can be done by grouping tasks into jobs, combining of groups into identifiable segments, on the basis of functions, products, process, territory etc. Department is a workgroup combined together to perform certain functions of similar nature. Departmentalization is done to “Simplify managerial tasks and to maintain control by grouping employees within well-defined areas”. Detailed and well defined policies and procedures which each department has to follow during the different operations have been laid down by the company. At EICL, the departments are classified according to their functions, which follow the principle of grouping activities in accordance with the functions. The functional area consists of 7 major departments, each headed by Senior Managers or Deputy General Manager. The major functional areas include the departments like Human Resource Management, Commercial, Finance & Accounts, Research & Development, Marketing, Production and Quality Control. 1.3.14.1 EICL ORGANIZATION CHART The organization structure of the company is diagrammatically represented by an organization chart. The chart shows the lines of responsibilities between the various departments of EICL.
  19. 19. Chairman Execut ive Director Vice President Senior Manager Quality Cont rol Senior Manager Finance Senior Manager Finance Chart 1: EICL Organization Chart 19 Senior Manager Operat ions General Manager Sales and Dist ribut ion General Manager Operat ions Deputy General Manager Commercials Commercial Manager Deputy General Manager Market ing Senior Manager HRA Market ing Manager Deputy General Manager Mines Senior Manager R&D Senior Manager Maintena nce Senior Manager Mines
  20. 20. 20 Level 1- Chairman Chairman controls the overall activity of the organization. He is the reporting officer of the level 2 Managers. He is responsible for solving issues at his level in the most of the situations. Level 2- Managing Director Managing Director is responsible for solving issues at this level in most of the situations. The Managing Director is the Chief Executive of the corporation. He is assisted in the registered office by the heads of various divisions. Level 3- Low level Management Every Departmental Manager is Subordinated by one or more middle levels Managers. Each of these manager will have a deep technical knowledge about the functions of the department. 1.4 PRODUCT PROFILE The company has hydrous and calcined clays for application in paper, paint, rubber, fiber glass and other industries. English Indian Clays Ltd. TVM’s products have been in use in above industries in India, Africa and the Far East. Its products include hydrous and calcined clay. 1.4.1 CLAY EICL’s Clay business is the largest integrated clay facility in Asia, mining and refining high end Calcined and Hydrous Clays. EICL operations are multi location with an installed capacity of 240,000 tons per annum. With the commissioning of its new calciner in 2009, EICL has increased the Calcined Clay capacity to 60,000 tons. EICL products touch and enrich everyday life of people through wide range of applications spanning diverse segments including paint, paper, inks, plastics, fiberglass and catalysts, etc. The corner stone of EICL philosophy is to be a solution provider to customers through value enhancing products and services. Application needs of user industries are incorporated at incubation stage itself through extensive interaction with customers and our application specialists work closely with customers at shop floor integrating its use. EICL believes in building partnerships that are long
  21. 21. lasting. EICL’s performance enhancing pigments are classified into No. 1 fine grades and regular grades. The fine grades of Calcined Clays are used as partial substitute for TiO2. The fine Hydrous Clays are used for premium paper coating application, delivering excellent print characteristics and rheology. The regular grades are used as extender pigments and precoats enhancing opacity and whiteness providing the right base to build on. The premium grades are also used by the Cable and Plastic Industries taking care of specific application requirements of volume resistivity and ease of extrusion. 21 1.4.1.1 Application – User industries  Paper & Board  Paint  Printing Inks  Rubber  Cable  Plastic  Glass & Fiber  Printing Inks  Rubber  Cable  Plastic  Glass Fiber  Ultramarine  Concrete  Others 1.4.2 STARCH The Starch business of EICL started out as an agro based Company called “Bharat Starch Industries”. This company was set up in 1937, with production facility located at Yamunanagar (Haryana). It was the first Company in the organized sector to enter into Starch manufacturing. Bharat Starch Industries started initially as a Corn Wet Milling Unit with 80 MT
  22. 22. per day grinding capacity, manufacturing Native and Modified products primarily for Food, Paper and Textile Industries. EICL’s Starch business has now grown into 2 manufacturing locations – one at Yamuna Nagar and the other at Shimoga. These two Units manufacture Starches for different applications, with particular focus on value added Speciality Starches. The business today has capacity of 76500 MT per annum (both Maize and Tapioca products). The business maintains leadership position through product innovation & development, and providing application support to customers. The products manufactured cater to the specific requirements of customers, such as:  Wet-end Additives, Surface Sizing and Coating Binders for Paper Industry.  Adhesives for Paper Sack/ Packaging Industry.  Starches for Pharmaceutical Industry.  Syrups for Confectionery, Food & Beverage Industry.  Yarn Sizing, Printing & Finishing for Textile Industry.  Starches for Oil well Drilling Industry 22 1.4.2.1 Products a) Maize Starch Maize Starch is a white or creamy powder having various direct and indirect applications. Our Native Starch is manufactured from selected good quality corn with high brightness and low ash content, which is very desirable in the Food, Pharmaceuticals and Paper Industries. It finds applications in the Food Industry as a thickener and emulsifier in the manufacture of Sauces, Puddings. It is used by the Textile/ Jute Industries in wrap sizing, finishing, back filling and printing. In the Paper Industry Maize Starch is widely used for sizing and increasing the strength. It finds usage as an adhesive in the manufacture of Corrugation Board and Paper Boxes. It is even used by the Laundry as a stiffener of clothes after washing. Packing: It is available in 50 kgs HDPE bags with moisture proof HMLDPE inner liner. Storage: The product should be stored in ambient conditions, away from damp surfaces.
  23. 23. 23 b) Modified Starches A very wide range of Modified Starches are available for numerous applications such as, i. Adhesives ii. Coating Starches iii. Coating Binder Starches iv. Wet end Starches v. Spray Starches vi. Pharma Starches vii. Food Starches viii. Textile Starches ix. Pregel Starches x. Adhesive Starches xi. Oil Well Drilling Starches They are explained as follows i. Adhesives This product range has applications in Paper Tubes, Core, Cones, Edge Protectors, Corrugation and Pasting Gums segment. All these adhesives provide strong bonding, faster setting time, uniform spread ability, and are ready to use. Marketed under the brand names Addcol, Bondex Y-90, Bondex FD-80 and Bharat Gum. ii. Surface Sizing, Lamination and Coating Starches These Starches have a range of viscosity and fluidity to suit the requirements of paper processing in the application of surface sizing. These contribute to the enhancement of surface properties of finished paper sheet by facilitating smooth application as a surface sizing agent without gel formation. Marketed under the brand names Synthosize-10, Papyrox, Amyloplast-10, Amyloplast SMO and Thitrite-90. iii. Coating Binder Starch This product range finds usage in Coating and Lamination of Paper & Board as well as in the Pharmaceutical and Latex Industries. Marketed under the brand names Amylogum C- 40, Amylogum S-20 and Amylokote.
  24. 24. 24 iv. Wet End Starch These are Cationic and Amphoteric Starches for Wet End Applications in the processing of paper. These products help to improve surface strength properties, fiber & fillers retention, water clarification, reduction in water pollution and rattling/stiffness. They also contribute in the enhancement of smooth running of high speed machines. Marketed under the brand names Fibreloc T-20, Fibreloc T-25, Fibreloc T-45, Fibreloc T-65, Fibreloc T- 85 andAmylofloc. Various grades of Fibreloc, are modified to different levels according to specific customer requirements/ benefits. v. Spray scratch These Starches were developed as an answer to the problems of the Kraft Paper Industries. Marketed under the brand names Amylospray, Super Bond, Super Spray, and Amylosize. vi. Pharma Starch Pharma grade Maize Starch is a premier product used in various applications in Pharmaceutical industries. It is manufactured from carefully selected grains with controlled feeding to the system maintaining hygienic condition throughout the process to control microbiological load. It has very low bacterial count as compared to Native Starch. Marketed as Maize Starch (IP), Maize Starch (25 kgs) and Amyloflow. vii. Food Starch Food Starches are ideal products to meet the exacting requirements of processed foods. High Viscosity Native Starch, in the uncooked form, is used as filler or bulking material in processed foods. When cooked, it acts as a suitable thickener and texturizer for consumer prepared foods. Marketed under the brand names Aquasol and Aquagel. viii. Textile Starches They are used in textile yarn sizing. These products have a proven track record for sizing application and are also used as the major ingredient of the size recipe. These products impart the required mechanical strength properties to the yarns to ensure hassle free weaving process even in
  25. 25. high speed air jet looms. These products have GOTS certification from Control Union Certifications, Netherlands. The trade names are TEXOPLAST, CARBOJET and JETSIZE (different grades are available as per the specific customer requirements and types of yarns i.e fine count, coarse count, dyed, etc.). All major corporate mills in India are our customers. 25 ix. Oil Well Drilling Starch These starches are used as viscosifiers in oil well drilling and are exported 100% to the Middle East. These are also one of the key ingredients of a mud chemical system. DRILLING STARCH (DS) and HIGH THERMAL STABLE DRILLING STARCH (HTDS) are used to provide filtration control and rheology stability in all types of waterbase drilling fluids. HTDS is stable upto 135 °C (275 °F) temperature. CARBOXYMETHYL STARCH (CMS) is a non-ionic material especially suited for fluids containing salts or ion sensitive additives. x. Pregel Starch These products are pre-gelatinized starches with suitable modifications and have wide application in Industries for manufacturing Laundry Starch,Mosquito Coil Starch and Coal Briquetting Starch. These products are cold water swell able in nature and form homogenous paste on stirring. The adhesive and binding properties of these products are excellent. xi. Adhesive starch This product is marketed as Aqua paste CP and is used in corrugation box manufacturing for pasting and corrugation. This is a cold water swell able product and its bonding strength is very good. As a result its usage is very suitable for 3 Ply and 5 Ply boards.
  26. 26. 26 The product range is as given below: Type Grade Industry Very Fine Coating Clays Super coat Paper Fine Coating Clays Hi gloss Paper Normal Coating / Paint Grade Clays BCK Paint/Paper/Printing Ink Coating/Filler Grades KCG Paper/Rubber Fiberglass Grades Fiberlin Fiber glass Very Fine Calcined Clays Himafine Fiber glass/Paper coating/Paint/printer Inks Fine Calcined Clay Himapol Paint/Ready Mix Concrete/PVC Compounding Coarse Calcined Clay Himapol Paint/Ready Mix Concrete/PVC Compounding Cement Grade Calcined Clay Himacem Himablue Ready Mix Concrete Cement/Ultramarine Table 3: Product Grades
  27. 27. Items Sales (%) Paint 35 Paper 30 Rubber 20 Fiber glass 10 Others 5 Table 4: Industry wise market break up 27 1.4.3 EICL EXPORTS Over the last 10 years, EICL products have established themselves in the international market. With hydrous and calcined clay of quality comparable with the best grades available in the world, EICL products offer distinct techno-commercial advantage in Africa, South East Asia and Middle East markets due to its geographical location. 1.4.4 COMPETITORS In Domestic Market  INDAL, Kolkata  Kerala Ceramics Limited, Kundara
  28. 28. 28  Ashsbosa Clay and Minerals  Neeleswaram Clay  Cochin Clay, Madurai In International Market  Engel Hard, U.K  Imercis, USA  Huber, Germany 1.4.5 Market EICL enjoys a market for the product that is manufactures. The other companies, which hold a position in the market other than EICL, are smaller in size and turnover, nor do they have adequate technology to match EICL in terms of quality. It has a market share about 60% in the two lakhs tons market. 1.4.5.1 Customers of EICL  Paper industry ITC Ltd –BudraChalo : Andhra Pradesh Ballarpur Industries Ltd : Ballarpur Paper Straws Products : New Delhi Haryana Coated Paper Ltd : Faridabad Rohit Pulp Paper Mills : Gujarat Sreevidhya Paper Mills Ltd : Nasik  Soap and Detergent Hindustan Lever Ltd : Mumbai Colgate Palmolive : Mumbai Godrej Soaps : Mumbai
  29. 29. 29  Paint Industry Asian Paint India Ltd : Mumbai Jemson A Nicholson India Ltd : Mumbai Berger Paints India Ltd : Kolkata Shalimer Paints : Kolkata Distinct techno-commercial advantage in Africa, South East Asia, Far East and Middle East markets due to its geographical location. EICL exports cover around 12-14 countries with 80% of its exports to UAE. It faces competition from international markets such as USA, Brazil, UK and China. In 2003-2004, export marked a growth of 16.5%. The major parts of Cochin and Tuticorin provide logistic support to all major parts of the world.
  30. 30. CHAPTER 2 RESEARCH METHODOLOGY The organization study was done for a period of month and aimed at an industrial exposure and to understand the functioning of the organization in real life. The main intention was to help students to link the corporate management practices with the theories learnt. 30 2.1 OBJECTIVE OF THE STUDY  Primary objective of the study is to learn in detail about the overall functioning of English Indian Clays Ltd.  The secondary objectives are as follows 1. To understand the organization structure. 2. To know about the policies and procedures of the organization, its Vision and Mission. 3. To understand the various departments, their functions and administration levels. 4. To know the various stages of manufacturing processes. 5. To study about the functions of the organization. 6. To interact with the managers of various levels of the organizational hierarchy as well as the workers at work place. 7. To make a SWOT analysis about the organization. 8. To compare and contrast theoretical knowledge with the actual practice. 9. To analyze the financial performance. 10. To know how the theory learned are practically applied in the organization. 2.2 SCOPE OF THE STUDY The organization study is conducted to have practical knowledge about the various functions and activities of an organization. The study done in English Indian Clays Ltd, in their Trivandrum plant helped to attain the aim of study. English Indian Clays Ltd, a well reputed and experienced company in Kerala was one of the best place of study for an MBA student. The company was running with various departments and has vast hierarchies of administration, which is a best example of study for the well understanding of how a management works practically. It
  31. 31. is easily reach unto the top most as well as the lower most level of the company. So it was found to be truly effective in doing a project work on the organizational study at English Indian Clays Ltd. the study helped to know the activities of various departments in the organization. The importance of each activity in an organization is analyzed. 31 2.3 METHODOLOGY Research is a systematic method of finding a solution to problem. Research methodology refers to the method of gathering data through extensive interviewing and other methods. The data collected were analyzed within the parameter of evolution model to prepare the final report. This report was prepared based on both primary and secondary data collected from the English Indian Clays Limited during the study period. Primary data were collected from direct observation, discussions with the company personnel and by face to face interviews with officials in various departments. Secondary data includes data collected from internet, company annual reports and manuals of various departments.  By collecting information about the company from various instruction manuals and journals provided by the Training Department.  By conducting talks and meetings with various department heads to understand separately the individual functioning of the different departments and their importance.  By visiting the plant as well as other operational areas to observe and experience their activities directly. 2.4 LIMITATIONS OF THE STUDY Since the study is conducted at the Veli center of English Indian Clays Ltd., it contains more information about the office at Veli and lacks detailed information regarding the other centers of the organization. The conclusion and inference are drawn on the basis of data received from personal interviews and it may not be accurate. No set of rules have been followed in collecting the information. More importance is given to understand the organization and not to evaluate it critically. Sampling is not possible in this study. Financial statements are generally based on historical or original cost. The current economic conditions are generally ignored.
  32. 32. CHAPTER 3 DEPARTMENTAL STUDY 32 3.1 FUNCTIONAL DEPARTMENTS Departmentalization is the process of dividing the work of the organization into departments or either manageable units. Departments are classified on the basis of grouping activities. Functional, product, territorial customer, process, time and numbers are the main patterns of grouping activities. The basic purpose of the departmentalization is:  To make the size of each departmental unit manageable.  To secure the advantages of specialization.  To help the organization to expand and grows.  To facilitate management development.  To delegate responsibility.  To facilitate Administrative Control. Detailed and well defined policies and procedures which each department has to follow during its different operations have been laid down by the company. Under ISO, all the procedures are highly standardized and separate manuals are issued to all departments. This is issued and controlled by various HODs. The efficient and effective functioning of all the departments in an organization is important for the progress of the organization. A good organization structure is determined by the type of communication and coordination existing between various departments in an organization. With the various departments responsibility is delegated to various persons, who help in decision making and makes the functioning of the organization simpler. The functional departments include: 1) Marketing Department 2) Commercial Department 3) Production Department
  33. 33. 4) Research And Development Department 5) Finance and Accounts Department 6) Quality Control Department 7) Maintenance Department 8) Project Department 9) Human Resource and Administration Department 33 3.1.1 MARKETING DEPARTMENT Marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational goals. The main function of marketing is managing relationships in an organization, with outside vendors and the customer. Without marketing there is no customer and without the customer there is no use for the product or service the company is producing. At EICLTVM, the marketing acts as a guide and lead the company’s other departments in developing, producing, fulfilling and servicing products and services for their customers. Communication is vital and the marketing department typically has a better understanding of the market and customer needs. The goals and guidelines set by the marketing department are in line with the vision and mission of the company. The upper management is also involved in and endorses cooperation by all departments in following and implementing the plan and integrating a consistent message into all communication channels. At EICL, there is a system of preparing the Material Complaint Report (MCR). MCR is a report prepared by the marketing department which consists of customer complaints about the product. This will be circulated among all the department which consists of customer complaints about the product is. After detecting the mistake, the complaint will be rectified with immediate effect. English Indian Clays Ltd. TVM goes in for industrial marketing, as its product is used as raw material by other industries such as paint, paper, rubber and ceramics. The company also has its own Exports Divisions in the marketing department. Over the last 10 years, English Indian Clays Ltd. TVM products have established themselves in the international
  34. 34. market. It exports products to about 18 countries some of which include UAE, Philippines, Mauritius, Oman, Yemen and South Africa. With hydrous and calcined clays of quality comparable with the grades available in the world, English Indian Clays Ltd. TVM products offer distinct techno-commercial advantage in Africa, South East Asia, Far East markets due to its geographical location. 3.1.1.1 MARKETING DEPARTMENT CHART Chart 2: Marketing Department Chart 34 3.1.1.2 FUNCTIONS The functions of marketing department are:  Identify purposive customers.  Conduct market survey and market research.  Source orders and execute them as per delivery schedules agreed upon  Provide application support to customers in coordination with EICL R&D center and QC department. Marketing Manager Assistant Manager Industrial Relations Executives Assistant Manager Sales Officer Logistics Executives
  35. 35.  Attend customer complaints and take preventive action against recurrence of 35 similar complaints.  Attend and settle customer complaints.  Service the existing customers- servicing involves o Meeting customers schedules on time. o Keeping track of customers stores and purchase department. 3.1.1.3 LOGISTICS SUPPORT The major Indian Arabian Sea port of Cochin is only 220 km our works. Regular connections to all the major ports in the world are available from Cochin. A new port at Tuticorin, managed by Singapore Port Authority has come up in a major way to the East in Bay of Bengal. This port is 200 km from their works and major shipping lines have started calling here. These two ports together ensure minimum lead time for their cargo to be shipped out of India to destinations all over the world. For domestic cargo, EICL offers movement of material by coastal route as well as CONCOR rail in addition to the direct truck option. 3.1.1.4 MARKET RESEARCH Marketing research is the systematic design, collection, analysis and reporting of data and findings relevant to a specific marketing situation facing the company. At EICL, the HOD of the marketing department also maintains a good MIS. It uses internet for collecting information and interacting with customers, etc. The department goes in for product analysis and competition analysis. Product analysis is done to study the recent or proposed production, sales and pricing policies of the companies. 3.1.1.5 AGENTS Agents are appointed by EICL because it is not possible for the company to cater to the needs of all the customers who are situated at various cities of which are far from their branches. After satisfying the conditions, the appointed agent enters into an agreement with the company which is signed both by the agent as well as the Vice President and the marketing manager of the company.
  36. 36. Agents are appointed as per the recommendations made by the branch offices to the management. Criteria for appointment of an agent are the following: a) An agent should have a business in the potential area or in the particular industry. b) The person to be appointed as the agent should be financially strong. c) The agent should have sufficient technical knowledge to deal with the customer 36 problems. d) The agent should have sufficient market as well as office infrastructure like Fax, Telephone, warehouse etc. e) The person appointed as agent should have good contacts in the industry. 3.1.1.6 ELEMENTS OF MARKETING MIX 1) Product Marketing development ensures that the product is of the same grade as specified by the customers and meets the quality standards. Currently 35 grades of clay are available, each with 2 main specification brightness and fitness. The right quality clay should contain 78-88% brightness and fitness content from 60-10%. 2) Price The prices are based on pricing policies taken by the company based on the market conditions. The pricing decisions are taken by the marketing department after studying the market conditions and also comparing the competitor’s price. 3) Promotion It deals with advertising and sales promotion for the product. Since the company goes for Industrial marketing department concentrates on direct marketing as a means of promotion which enjoys the advantage of two way communication. EICL has marketing offices in Mumbai and Delhi and has marketing agents in Mauritius, South Africa, GCC, Sri Lanka, Indonesia, Jordan and New Zealand.
  37. 37. 37 4) Packaging Packaging is done in laminated High Density Poly Ethylene (HPDE) bags. EICL products are generally packed in 50 kg or 1000 kg (Jumbo bags). They are also packed in 25 kg bags as per the requirements of the customers. The 75 kg bags are used to pack the product in the form of lumps. 5) Place In this clay industry the place is not that much important. The production plant is setup in TVM and Thonakkal. 3.1.1.7 INDUSTRIAL MARKETING Over the last 10 years, EICL products have established themselves in the international market. With hydrous and Calcined Clay of quality comparable with the best grades available in the world, EICL products offer distinct techno-commercial advantage in Africa, South East Asia, and Far East and Middle East markets due to its geographical location. The location is selected based on auction freight advantage countries. They will have agents to do the marketing part. These agents will have regular touch with the customers asking them about the quality of the product. The main products in international marketing are Paint, rubber, insulators, ready mix concrete, rubber, etc. 3.1.1.8 LIST OF MAJOR CUSTOMERS Clay being the major raw material for various products EICL has got paper industry, soap and detergent industry, paint industry, ceramic, rubber and fiber industry. The major customers of EICL include  Paper Industry ITC Ltd –BudraChalo : Andhra Pradesh Ballarpur Industries Ltd : Ballarpur Paper Straws Products : New Delhi Haryana Coated Paper Ltd : Faridabad Rohit Pulp Paper Mills : Gujarat Sreevidhya Paper Mills Ltd : Nasik
  38. 38. 38  Soap and Detergent Industry Hindustan Lever Ltd : Mumbai Colgate Palmolive : Mumbai Godrej Soaps : Mumbai  Paint Industry Asian Paint India Ltd : Mumbai Jemson A Nicholson India Ltd : Mumbai Berger Paints India Ltd : Kolkata Shalimer Paints : Kolkata  Ceramics Industry Spartex Ceramics India Ltd : Chennai Naices India Ltd : Pondicherry Surya Pottery Ltd : Himachal Pradesh Eagle Potter Private Ltd : Gaizabad Diamond Pottery Private Ltd : Bahduge  Rubber Industry MRF Ltd : Chennai Paragon Rubber Industries : Kottyam Bata India Ltd : Banglore  Fiber Industry FCB Ltd : Thana UP-TiywaGlan Ltd : New Delhi
  39. 39. 39 3.1.1.9 COMPETITORS EICL, being the largest producer of China Clays in India, has a very few competitors. The monthly production of EICL (about 1200 tons) is higher than the annual production of same of the companies in the same sector. Hence competitors are not a threat to EICL. Some of its competitors are  Kerala Ceramics, Kollam  20 microns  Wolken 3.1.1.10 FUTURE PLANS Marketing department strives to move proactively to anticipate and meet the product and service needs of the market. This includes providing value added products, enhanced capacity of existing range etc. Marketing department of EICL helps to market its products by knowing market changes, meeting the requirements of customers, knowing the competition in the market and taking steps to counter this competition. At EICL, the idea that marketing is a team effort is constantly reinforced among employees. The marketing department in EICL studies the market and the customers, determines the best way to reach those customers, and works with the rest of the company to help determine the new product needs of the market and represent the company in a consistent voice. 3.1.2 COMMERCIAL DEPARTMENT The commercial department in EICL is responsible for the procurement of raw materials, vendor development and procurement of raw materials, chemicals, spares and packing materials, vendor development and procurement of imported materials. The department consists of stores sections. 3.1.2.1 MISSION The mission is to procure material of required quantity at most competitive prices for uninterrupted production and maintenance of the plant with least possible tie-up in inventories and with constant endeavor to make it economical.
  40. 40. 3.1.2.2 COMMERCIAL DEPARTMENT CHART DGM Commercial Chart 3: Commercial Department Chart Senior Manager Commercial is responsible for giving the approval for purchase of materials, assessing, rating and finalization of vendor, setting disputes pertaining to terms of contract and purchase order. Any incidents regarding project are taken care of by the Assistant Manager-Purchases. Vendor development vests with him. Assistant Manager (Stores) controls the functions performed in the stores section. The executive (commercial) is responsible for verification of indents, sending inquiries, obtaining quotations, preparation of comparative statements, renewal of for licenses, clearing materials, preparation of transport documents and follow up with the vendor. The executive (stores) is responsible for receipt of materials, preparation of records for sending out and receipt of outward materials and lay down procedures for calibration of balance used for measurements related to store activities. 40 Senior Manager Commercial Executive Purchase JR executive Supervisior JR Assitant Executive Stores JR Executive Senior Assitant JR Assistant Store Attenders
  41. 41. The supervisor in purchase section is responsible for verification of indents, sending inquiries, obtaining quotations, preparation of comparative statements and obtaining approval of purchase orders. Senior assistant (stores) assists the Executive (stores) in his job and store attenders issue the stored items to the user departments as advised to them. 41 3.1.2.3 ACTIVITIES  Review of stock materials indents.  Selection of materials source, obtaining offers, negotiation, terms of purchase, ordering, follow up, receipt, payment, vendor rating and evaluation, approved suppliers list and new source development.  Market Intelligence: continuous interaction with market and collecting data on costs, demand and product substitution.  Receipt of goods, inspection and their approval.  Proper storage and materials accounting and reconciliation, safety and security, easy accessibility and identification of the location.  Issue of materials to the user department.  Compliance with statutory and audit formalities.  Clearance of incoming materials.  Obtaining and renewal of licenses.  Systematic storage of scrap and periodical disposal.  Physical stock verification and identification of surplus item, its disposal and perpetual inventory system.  Divisions will all departments, effective and timely communication with all concerned.  Transportation of materials- fixing transporters for transportation of all materials, rate contract for bulk materials to the user department. 3.1.2.4 VENDOR DEVELOPMENT AND EVALUATION At English Indian Clays Ltd. TVM there are two vendors for transportation, one contractor for excavation and three vendors for the purchasing raw materials, packing materials, machinery spares, machinery, electrical items and other items. It has two steps:
  42. 42. 42 a) Vendor selection b) Vendor rating Vendor can be selected based on interactions with the user to clearly identify the need. Knowledge of all possible sources, frequent visit of sales representatives and summary of discussions with them facilitates vendor selection. Enquiries are sent to selected vendors to know their past experience, financial status and reputation. Vendor is asked to give samples and specifications. Vendor name is registered on approval by Senior Manager – Commercial. Vendor rating is done on the basis of how many times the vendor is able to deliver the materials as per the delivery schedule. The following factors are taken into consideration.  Quality of material delivered on time.  Response time.  Whether the vendor is able to give any technical support. Packing Materials Kamalavel Corporation, Tuticorin Klean Pack, Banglore Multi Packing , Banglore Chemicals Swastik Corporation, Erode, Gulshan Chemicals, Bombay Travancore Cochin Chemicals, Cochin Surya Corporation, Pondicherry Bhagya stores, Thiruvananthapuram Fuel oil Bharat Petroleum Corporation Ltd Hindustan Petroleum Indian Oil Corporation Table 5: List of Vendors
  43. 43. GM Production Senior Manager Operations Shift In Charge Workers 43 3.1.3PRODUCTION DEPARTMENT The production department is the core of the company which in turn is supported by all the remaining departments. All the departments are interdependent. The Production Department of EICL is mainly concerned with the mining and processing of China clay. EICL produces about 1,50,000 tons of China clay and calcined clay per year which cater to the needs of paper, paint, fiber glass rubber cable, soaps and detergents and plastic industries in the country. The plant capacity is 190,000 metric tons per annum and is the biggest in South East Asia. The mining activity is performed by experts who ensure that the art equipment grinds the ores to the particles, with high-powered machineries ensuring a product that meets highest quality standards conforming to international class. 3.1.3.1 PRODUCTION DEPARTMENT CHART Production Manager Shift In Charge Workers Plant3 Maintenance Manager Mechanical Engineer Mechanical Supervisor Technician Chart 4: Production Department Chart Plant 1 Shift In Charge Workers Plant2 Electrical Engineer Electrical Supervisor Electrician The production department at English Indian Clays Ltd. TVM is headed by the General Manager (operations) and the senior manager (operations) and the managers (production). It is concerned with the planning, organization and controlling the activities relating to the production functions. The activities carried out by the production department ranges from the mining of raw materials to the packaging of the finished products. The
  44. 44. company is engaged producing two types of clays clained clays and hydrous clays from app heat ion in paper paints, rubber, fiberglass and other industries. 44 3.1.3.2 PLANTS The production process takes place in various plants. Plants refer to the buildings used in connections with the manufacturing, processing, packaging, labeling and storage of calcined and hydrous clay. EICL, TVM has 4 plants. First 3 plants are at the Veli unit and the fourth plant is at Thonnakkal. The entire production process takes place in these plants. Plant1 - The product is dried using a rotary drier, which operates at high temperature. Plant 2 - It is a spray drier plant which does direct drying. In plant 2, spray drier called atomizer is used for obtaining products in the granular form. Both the plants are used for producing hydrous clay. Plant 3 - Has been shut down. Plant 4 – At Thonakkal is used for the production of calcined clay. Types of Clay Produced Available Forms Plants Hydrous clay (with water content) Lump, Powder, Spray, Dried 1 and 2 Calcined Clay (without water content) Spray dried, Powder 4 Table 6: Types of clay produced 3.1.3.2.1 Capacity of Plants New calcined clay at Thonakkal has a capacity of 20, 000TPA. Another hydrous clay with a capacity of 3, 00, 000TPA is commissioned in 2004. EICL had completed a spray drier plant at Thonakkal, which has a capacity of 50, 000MT per annum. The total capacity of EICL is 2, 13,600 MT per annum. The company has raised the grinding capacity of Yamuna Nagar plant to 136TPD. It had resulted in increasing the corn wet
  45. 45. capacity by 10%. The company had also installed additional capacity in Pondicherry to the tune of 1500MT per annum for producing Carbojet, a new specialty for the textile industry. 45 3.1.3.3 PROCESSES The various processes involved in the production of hydrous and calcined clay at EICL are as follows: 1) Mining The raw material is extracted from the bottom portion of the earth using excavators and is transported to the plant, where they are graded on color in a yard. 2) Matrix Analysis It mainly deals with analyzing and granting the clay matrix based on color. Generally the matrix is found in 3 colors- white, grey and pink. White clay indicates clay in the pure form. Grey clay indicates the presence of graphite and pink color indicates the presence of iron (ferric) content. This is done with the help of process control lab which decides the blend of grades that go into the production process according to customer requirements. 3) Matrix Blending The different grades of clay matrix in appropriate proportions as per process control lab to obtain raw materials of desired characteristics according to customer requirements. The process control lab is responsible for deciding the quality of the matrix coming from the mines. This is done with the help of quality control department. It decides the blend of grades that go in to the production process according to the requirements of the customers. This is based on the type of product to be produced on the particular day. It also keeps an eye on the quality of the product during various stages of production.
  46. 46. 46 4) Blunger Requirements Here water is added with the raw material (clay matrix) to form the slurry. The clay matrix in bulk form is fed to the machine called Blunger with addition of water to form the required amount of slurry. 5) Classification It is the process of separating the higher grid from the slurry. Through this process 25 to 30% of sand gets removed. 6) Hydro Cyclone Process This is a two stage process. In the first stage the slurry after classification is passed to 14” hydro cyclone where there is a primary vortex formation by which the residue moves downward to the nozzle and the secondary vortex moves the product upwards and in the second stage it is passed to 3” hydro cyclone where the remaining sand gets removed. The first stage removes the heavier sand particles, and the second stage removes the smaller grit particles. After removing the grit particles and other impurities, the refined product in the form of slurry is stored in storage tanks. 7) Bleaching It is the process of separating the impurities like iron particles by subjecting the refined product to chemical separation. Bleaching agent used is Hydro Sulphite bleaching of clay removes iron impurities and allows clay to be bleached to perfect whiteness. Sodium Hydro Sulphite transforms trivalent iron to bivalent which, on subsequent acid treatment (by adding sulphuric acid which reduces the pH value to 2.5), dissolves and removes iron from the clay. To neutralize the acidic content of the slurry and to prevent from revamping, carbonate and soda ash is added to the slurry and the bleached slurry is
  47. 47. then collected in a holding tank. Having refined the clay, it is moved on to the final process i.e. drying. 47 8) Drying Drying refers to converting the liquid clay into a solid material by a process known as filtration. The products of filtration normally have a moisture content of about 25%. Passing the clay through a thermal drier further reduces this moisture content. The driers are fired by natural gas and see a product emerging at around 10% moisture. 9) Screening The bleached slurry(containing 12% salts) is subject to screening through which graphite and other foreign materials are screened off then pumped and passed through a filter cloth. 10) Filter Pressing Here a hydraulic filter press is used to drain off the excess water. On passing through the filter cloth, the slurry gets converted to cake from with 65% salts and 35% water. The cake is collected and it is sliced using a cutter. Here on, the drying process varies depending on the plant in which it is carried out. Plant 1 makes use of indirect drying through a rotary drier and plant 2 makes use of direct drying by means of spray drier. The different operations at plant 1 are mentioned below a) Paddle Mixing Operation The sliced clay are mixed with 12% dry powder in paddle mixer which converts the moisture content to 22% and put in the rotary drier. b) Rotary Drying Operation The drier runs on fuel, hot air is passed through it and to this 12% dry powder is added. It turns to lump from containing around 12% moisture. The lumped product is sent to the lump silo from where it is either sent to packaging section or it is sent to attritor mill where the lumps are milled to powder from with 2% moisture and then send to silos for packaging.
  48. 48. Chart 5: Production Process 48 Mining Transportation Unloading as microheaps as grade Matrix analysis Matrix blending Blunger Operation Classifier Operation 14" Hydrocyclone 3" Hydrocyclone Storage tank Bleaching Operation Bleached Storage Tank Plant1 Plant 2
  49. 49. The different operation at plant2 is mentioned below: 49 a) KneadingOperation At plant2, the sliced clay cakes (containing 65% salts) are mixed with chemicals (dispersal agent) like accumer or calgon to convert it to slurry form. This process is known as kneading. b) Atomization The slurry is then stored in storage viscosity tank. It is then passed to the spray drier called atomizer with the help of a feed pump where hot air is passed through the slurry which kept in a closed chamber. The product obtained in powder form contains only about 2% moisture, which is then send to silos for packing. c) Packaging The product stored in silos is send to either jumbo ( 1 ton bag) bagging or 50 kg bagging machine and dispatched. The different operations at plant 4 are mentioned below  Calcinations At plant 4, which is a calciner plant where the moisture content from is removed by adding chemicals to get calcined clay. The powdered product from the attrition in the first plant or spray dried powder in the second plant is sent to the calciner where the moisture is removed and then sent to silos for packing. The calcite is for high value. 3.1.3.3 TYPES OF LAYOUT A layout essentially refers to the arranging and grouping of machines which are meant to produce goods. The type of layout followed in EICL is process layout. It involves grouping together of like machines in one department. The process arrangement is signified by the grouping together of like machines based upon their operational characteristics. The advantages of process layout are  Reduced investment on machines as they are general purpose machines.  Greater flexibility in production.
  50. 50.  Better utilization of men and material.  Greater scope for expansion as the capacities of different lines can be easily increased. 3.1.3.4 VENDOR SELECTION AND RATING Vendor selection is one of the most important processes. The vendor has to supply the raw materials. The selection is done on the basis of following criteria  Capacity of vendors.  Reasonable price.  Reliable supplier.  Responding time.  Quick delivery.  Meet the customer’s requirements.  Considering the reputation of the supplier. 50 Vendor Rating The vendor rating will be done on how the vendor is able to meet the requirements of the customers. The goodwill of the vendor is very important. If all the criteria of a vendor selection is met then that vendor will be in good list. If the vendor is unable to meet the customer requirements then first warning will be give but after the third warning that vendor will be black listed. 3.1.3.5 LOGISTICS The major Indian Arabian Sea Port of Cochin is only 220 km from our works. Regular connections to all the major ports in the world are available from Cochin. A new Port at Tuticorin, managed by Singapore Port Authority has come up in a major way to the East in Bay of Bengal. This Port is 200 km from their works and major shipping lines have started calling here. These two ports together ensure minimum lead time for their cargo to be shipped out of India to destinations all over the world. For domestic cargo, EICL offers movement of material by coastal route as well as CONCOR rail in addition to the direct truck option.
  51. 51. 3.1.4 RESEARCH AND DEVELOPMENT DEPARTMENT EICLTVM has a well-equipped R&D center that is recognized by the department of Science and Technology. It is started in 1992 with the view to provide technical advice to the customers and to offer technical assistance including testing services to other departments of English Indian Clays Ltd. TVM. Its in-house research and development unit is known for stringent quality control and developing tailor made products for the customer’s requirement. The company has regular samples of various materials taken at various stages of the production process to analyze complete mineralogical and chemical composition by their competent team of Research and Development experts, enabling them to not only recommending right products to the customers but also to develop customized minerals if required. 3.1.4.1 RESEARCH AND DEVELOPMENT DEPARTMENT CHART Senior Manager R&D Assistant Manager Trainees Senior Supervisor Worker Research Chemist Junior Supervisor Chart 6: R&D Department Chart 51 3.1.4.2 FUNCTIONS The department has close relations with the nation draw upon the national laboratories and the research wings of major customers. Hence it is able the expertise of these esteemed
  52. 52. organizations in bringing out innovative products and finding new applications for existing products. The research and development department supports other departments by providing with them steps in cost reduction and for optimum utilization of resources. The following are the functions performed by the Research and Development 52 Department  Develop new products.  Provides support to other departments.  Provide application support to customers.  Internal testing for each industry.  Generate application data.  Process improvements.  Interaction with external industries and research organizations.  Interaction with research departments of major customers to understand their needs and meet quality requirements. 3.1.4.3 DEVELOPMENT OF NEW PRODUCTS The R&D Department has developed varieties of grades of clays of which the important are the following  Hydrous Clay  Surface Treated Clay  Calcined Clay  Speciality Clay Development of new products is one of the major activities of R&D Department. It is carried out by following steps. 1) Feedback from customers by visiting them directly. 2) Translate it into Product Specification. 3) Identifying Resources. 4) Sample preparation as per the specification. 5) Application test.
  53. 53. 6) Pilot plant trail and Plant trail at customer site. 7) Testing and application (sample given to customer’s first small sample and the large 53 sample). 3.1.4.4 APPLICATION SUPPORT EICL has well equipped application laboratory in Thiruvananthapuram. This laboratory is under the control of R&D Department. The different kinds of labs available with R&D department are paper, rubber, cement, paint and ceramic industry specialists, supported by most modern equipment, who constantly thrive for offering proactive solutions to the respective industries. The paint lab carries out manufacturing and testing of paint. Some of the qualities analyzed are opacity, glass, smoothness and viscosity. The chemical lab conducts analysis of clay. There is also an instrumentation room which houses world class equipment for testing, some of which includes serigraph, Brookfield viscometer and X-ray diffractometer. The investment in lab is very high as it is fully equipped with the most modern equipment to carry out all types of analytical tests for its customers. 3.1.4.5 AREAS IN WHICH R&D WAS CARRIED OUT  Provided technical support to improve the quality of Specialty Hydrous clays for the paint industry.  Provided technical assistance for identifying and providing suitable blend of raw matrix.  Introduced a cheaper process chemical to reduce the production cost. 3.1.4.6 FUTURE PLANS OF ACTION  Commercialization of Specialty Clays in new industries.  Development of delaminated clay.  Optimization of super gloss quality to replace imported clay in paper coating.  Develop cheaper and suitable process chemicals for reducing the cost of production.  Collaborative research works with major customers to develop cost effective formulations in all areas of application.  Developing new products.
  54. 54. 3.1.5 FINANCE AND ACCOUNTS DEPARTMENT The Finance and Accounts department is responsible for the financial functions and activities of the company and for the administration of company’s fiscal policy. The main activities include budget preparation, monitoring the income and expenditure. MIS reporting, audits, tax administration, updating the shareholders on the financial health of the company, maintaining accounting records, preparation of financial statements, ledger administration etc.. The finance department is a supporting department. Senior Manager is the head of the department and authorized signatory of the unit. He is responsible for the consolidation functions. Executive (Accounts) and Senior Manager are responsible for balance sheet preparation. The Executive Accounts also participate in audits, prepare statements related to MIS reporting and handle taxation matters and accounting. Senior Supervisor and Junior Supervisor are responsible for accounting and returns preparation. The cashier receives and distributes funds, records monetary transactions, issue receipts, balance records, transfer funds and prepares cash receipts. 3.1.5.1 FINANCE AND ACCOUNTS DEPARTMENT CHART Senior Manager Chart 7: Finance and Accounts Department Chart 54 F&A Executive Accountants Senior Supervisor JR Supervisor Assistant Trainee Accounts Officer Senior Assistant F&A JR assistant F&A
  55. 55. 55 3.1.5.2 OBJECTIVES To collect, record, classify, analyze and evaluate various functional data and make reports to provide information to management, government, shareholders and general public. To assist management by making investment analysis, tax planning and working capital management. 3.1.5.3 FUNCTIONS The main activities of the department includes  Budgeting  Financial Accounting  Cash Accounting/ MIS Preparation  Audit Compliance  Computerized Accounting  Statutory reports and tax reports  Cash flows  Investments  Cost allocation  Internal and External financial reports  Control of expenditure  Administration of taxes  Financial concurrence and advice  General accounting records  Complication of codes, rules and procedures concerning financial transaction and having bearing on their implementation Some of them are explained as follows 1) Budgeting Individual budgets are prepared by the concerned departments and master budget is prepared by the finance department. Budget is normally prepared 3 months in advance and has to be approved by the Chairman.
  56. 56. 56 2) Financial Accounting EICLTVM has in-house accounting software and has standardized on clipper as their development platform. The database used is FoxPro. Financial Department maintains separate ledgers for the 3 plants in EICLTVM namely manufacturing ledger which includes office expenses and normal administration expenses, spray driver ledger and calciner ledger. A separate ledger is maintained for the R&D department. The total control of all these ledgers rests in the general ledger. 3) Cash Accounting/ MIS Preparation EICL TVM has installed MIS for better operation. It is prepared by the Financial Department. It is prepared on the second of every month. This includes various financial statements like profitability ratio for mines, stores trend, drawing power trend, debtor’s age-wise analysis, cash flow and fund flow statements and ratio analysis. MIS Review: in this process, the management reviews the cost. The management also reviews the sales, variable cost, fixed cost, depreciation and net profits. 4) Audit Compliance Both internal audit and statutory audit is conducted. Internal audit is done once in 6 months by Varma&Varma. Statutory audit is done on a quarterly basis by Mr. Walker Chandiok& Co. the other functions include Statutory Compliance and Fund Management. 5) Payroll The payroll is prepared by the HR department and it has to get approval from the finance department. HR executive, AM- P&A and department head of F&A are responsible for inputs of salary details of payroll system. 6) Working Capital Management The finance required for the day to day running of the organization is obtained from the sales collections. Loans are also taken from financial institutions which help to meet the working capital requirements. Inventory is kept a security for loans. Public deposits are also used as short term source of funds.
  57. 57. 57 3.1.5.4 FINANCIAL ANALYSIS Analyzing financial statements, is a process of evaluating relationship between component parts of financial statements to obtain a better understanding of firm’s position and performance. Ratio analysis is one of the most used techniques of financial analysis. Financial ratios help to find out a firm’s performance and financial situation. Most ratios can be calculated from information provided by the financial statements. Financial ratios can be used to analyze trends and to compare the firm’s financials to those other firms. For the financial analysis of EICL, data from financial statements such as Balance Sheet, Profit and Loss Account, and Cash Flow Statement of the company are utilized. Ratio analysis is used as a tool for analyzing and interpreting the financial statement of EICL. Its financial performance is studied through the calculation of different financial ratios such as liquidity, profitability, and solvency ratios. Financial ratios can be classified according to the information they provide. Comparative ratio analysis helps to determine a company’s strength and weakness, evaluate its financial position and understand the risks. The following types of ratios are frequently used  Leverage ratios  Liquidity ratios  Activity ratios  Profitability ratios 1) Leverage ratios Financial leverage ratios are used to understand a company’s ability to meet its long term financial obligations. Unlike liquidity ratios that are concerned with short term assets and liabilities, leverage ratios measure the extent to which the firm is using long term debt. EICL uses leverage ratios such as debt-equity ratio and long term debt-equity ratio.  Debt Equity Ratio and Long term Debt Equity Ratio This ratio is determined to ascertain the soundness of the long term financial policies of the company. The ratio indicates the extent to which the firm depends on the outsiders for its existence. A high ratio means less protection for creditors. A low ratio indicates favorable
  58. 58. situation since the creditors feel the owner’s fund can help absorb possible losses of income and capital. Debt Equity Ratio = Total Debts/ Total Equity Long term Debt Equity Ratio = Long term Debts/ Equity The leverage ratio for EICL is more than 1 it means a company finances its assets with debts and its growth with debt. This can result in volatile earnings as it can result in additional income expenses. 58 2) Liquidity ratios They are used to determine the company’s ability to meet its short term debts and obligations as they fall due. It includes the current ratio and quick ratio. Generally, the higher the value of the ratio, the larger is the margin of safety that the company possess to cover short term debts.  Current ratio It represents the ratio of current assets to current liabilities. Current ratio is an index of the firm’s financial stability since it shows the working capital which is the amount which the current assets exceed the current liabilities. It is expressed as current assets/ current liabilities. A current ratio of 2:1 is the ideal ratio and is expressed as a safe margin solvency.  Quick ratio This ratio, also termed as acid test ratio, is determined by dividing “quick assets” by “current liabilities”. The ratio may be expressed as quick or liquid assets/ current liabilities. The ideal ratio is 1:1 and is also an indicator of short term solvency of the company. In EICL the current ratio is kept below the standard level and it is clear that available funds are utilized efficiently. 3) Activity ratios The activity ratios indicate the efficiency with which capital employed is rotated in the business. Activity ratio or turnover ratio indicates the number of times the capital has been rotated in the process of doing business.  Fixed assets Turnover Ratio This ratio indicates the extent to which the investments in fixed assets contribute towards sales. It is given by sales/ fixed assets.
  59. 59. 59  Working Capital Turnover Ratio This ratio indicates whether or not working capital has been effectively utilized in making sale. Working capital is calculated by deducting current liabilities from current assets. The ratio can be found out by dividing sales by net working capital.  Stock/ Inventory Turnover Ratio It explains whether investment in inventories is within proper limits or not, i.e. it signifies the liquidity of the inventory. The ratio is calculated as (cost of goods)/ (average stock). The average stock or inventory mat be calculated on the basis of the average of inventory at the beginning and at the end of accounting period. A high inventory turnover ratio indicates brisk sales. The ratio is therefore, a measure to discover the possible trouble in the form of overstocking. A low inventory turnover ratio results in blocking of funds in inventory which may ultimately result in heavy losses due to inventory becoming obsolete or deteriorating in quality. 4) Profitability ratios Profitability ratio is an indication of the efficiency with which the operation of the business is carried out. Poor operational performance may indicate poor sales and hence poor profits. A lower profitability may arise due to the lack of control over the expenses. The important profitability ratios are  Gross Profit Ratio (GPR) The ratio expresses relationship between gross profit and sales. It is given by (Gross Profit*100)/(Net Sales). An increase in the gross profit ratio may be due to 1) Increase in the selling price without a corresponding increase in the cost of goods sold. 2) Decrease in the cost of goods sold without a corresponding decrease in the selling price of goods.  Net Profit Ratio(NPR) This ratio establishes the relationship between profit after tax and sales. This ratio I determined by dividing the net income after tax to the net sales for the period. An increase in the ratio over the previous period indicates improvement in the operational efficiency of the business.
  60. 60. 60  Earnings per Share(EPS) It is calculated by dividing the profit available to the equity shareholders by the number of shares issued (Net Profit After Tax)/(No of Equity Shares). The earnings per share help to determine the market price of the equity shares of the company. A comparison of EPS of the company over the years will also help in determining whether the equity share capital is being used effectively or not. It also helps in determining the company’s capacity to pay dividend to its equity shareholders.  Operating Expenses Ratio This ratio is the test of the operational efficiency with which the business is being carried. The operating ratio should be low enough to leave a portion of sales to give a fair return of the investors. A ratio of 85-90% is considered as normal operating ratio in many cases. 3.1.5.5 LIMITATIONS OF FINANCIAL ANALYSIS  A reference point is needed. To be meaningful, most ratios must be compared to historical values of the same firm.  Most ratios by themselves are not highly meaningful. They should be viewed as indicators, with several of them combined to paint a picture of the firm’s situation.  Yearend values may not be representative. Certain amount balances that are used to calculate ratios may increase or decrease at the end of the accounting period because of seasonal factors. Such changes may distort the value of the ratio. Average values should be used when they are available.  Ratios are subject to the limitation of accounting methods. Different accounting choices may result insignificantly different ratio values. 3.1.6 HUMAN RESOURCE AND ADMINISTRATION DEPARTMENT Human Resource and Administration Department act as a link between the employees and the top management. It is involved with the selection and placement of right candidates for right job at all levels in EICL.
  61. 61. 61 3.1.6.1 VISION Human Resource and Administration Departmentis responsible for ensuring the maximum utilization of available human resources and to ensure growth and development of the employees of the company in order to achieve the objectives of the organization and the career goals of the employees. 3.1.6.2 MISSION Human Resource and Administration Department aims at ensuring that all employees in the company are well versed with the job that they are doing with respect of the quality and services and the optimum contribution are made by all employees through rewards for performance by enriching their knowledge and skill and by ensuring proper work environment and welfare amenities. 3.1.6.3 SCOPE Human Resources Development functions include recruitment and selection, placement and induction, performance rating, identification of training needs, training and development programs, welfare measures etc. Administrative functions of P&A department are attendance management, wage and salary administration, PF and ESI scheme administration, security matters and safety management. Personnel department also arrange for promotion, demotion and transfer and job rotation.This department performs both Human Resources Development functions and Administration functions. It works in close contact with all other departments and also coordinates various activities within the organization. It is responsible for ensuring maximum utilization of available human resources and to ensure growth and development of the employees of the company in order to achieve the objectives of the organization and career goals of the employees. The policies and practices of HR department are in line with ISO 9001:2000 and also conform to the provision laid down in various Acts of which include 1. Workmen’s compensation Act 1923 2. Trade unions Act 1926 3. Industrial disputes Act 1946
  62. 62. 4. Factories Act 1948 5. Industrial employment standing orders Act 1947 6. Mines Act 1952 7. Employees State Insurance Act 1948 8. Employees Provident Fund Act 1852 3.1.6.4 HUMAN RESOURCE DEPARTMENT CHART GM HR Manager HR Deputy Manager HR Supervisor Deputy GM P&A Assistant Manager P&A JR Executive HR Management Trainee Supervisor Chart 8: Human Resource & Administration Department Chart 62 3.1.6.5 FUNCTIONS The major functions of Human Resource Department include  Human Resource Development Function  Administrative Function 3.1.6.5.1 Human Resource Development Function The main function of Human Resource Development include  Recruitment, selection and placement of employees  Training of employees  Performance appraisal

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