FICO Real Time Project

D1007AIP 24/06/2000
/FICO
Financial Accounting & Controlling

AS IS document for
KBL e-MAD
L&T Information Technology Limited
1.0
PH021T/1.0/15.09.99
DOCUMENT RECORD LIST
Ver/Rel. Release Mod.By Rev. By Auth By Remarks

No Date Mod. Dt Rev. Dt. Auth Dt.
1.0 24/06/2000 VRK, MRR, MGL, RSG MMN
RRK,SSK 23/06/2000 24/06/2000
22/06/2000
D1007AIP/FICO /1.0/24/06/2000 Financial Accounting & Controlling AS IS D1007 KBL e-MAD
Table of Contents
INTRODUCTION ......................................................................................................................................... 4
ORGANIZATION STRUCTURE................................................................................................................ 5
ORGANIZATION STRUCTURE OF KIRLOSKAR BROTHERS LIMITED (KBL) ................................................. 5
ORGANIZATION STRUCTURE OF ACCOUNTS DEPARTMENT ...................................................................... 5
MASTER DATA ........................................................................................................................................... 6
GENERAL LEDGER MASTER ....................................................................................................................... 6
CUSTOMER MASTER .................................................................................................................................. 6
VENDOR MASTER ....................................................................................................................................... 7
DEPOTS LEDGER MASTER ......................................................................................................................... 8
ADVANCES (EMPLOYEE) MASTER.............................................................................................................. 8
BANK MASTER ............................................................................................................................................ 9
COST CENTERS MASTER ........................................................................................................................... 9
GENERAL LEDGER ..................................................................................................................................10
CONSOLIDATION PROCESS .......................................................................................................................10
CASH AND BANK ACCOUNTING .................................................................................................................11
PAYROLL ACCOUNTING .............................................................................................................................13
ASSET ACCOUNTING .................................................................................................................................15
BUDGETING ...............................................................................................................................................17
YEAR-END / PERIOD END CLOSING OPERATIONS. ...................................................................................18
ACCOUNTS RECEIVABLE ......................................................................................................................23
DOMESTIC SALES ......................................................................................................................................23
Kirloskarvadi ........................................................................................................................... 23
Dewas..................................................................................................................................... 31
Shirwal .................................................................................................................................... 35
Area Offices ............................................................................................................................ 38
PROJECT SALES .......................................................................................................................................42
EXPORTS ...................................................................................................................................................48
AFTER SALES SERVICE .............................................................................................................................53
Kirloskarvadi ........................................................................................................................... 53
Dewas..................................................................................................................................... 56
Shirval..................................................................................................................................... 58
STOCK TRANSFER CORRECTIONS ............................................................................................................60
RECEIVABLE MANAGEMENT (COLLECTIONS)............................................................................................62
Kirloskarvadi – Domestic & Export and Dewas Export ........................................................ 62
Dewas , Shirwal and Area Offices - Domestic ....................................................................... 68
Projects................................................................................................................................... 71
SALES RETURN / CREDIT NOTES .............................................................................................................74
Kirloskarvadi ........................................................................................................................... 74
Dewas & Area Offices ............................................................................................................ 77
Shirval..................................................................................................................................... 79
Projects................................................................................................................................... 81
BUSINESS DEPOSITS , ADVANCES FROM CUSTOMERS ............................................................................83
Kirloskarvadi ........................................................................................................................... 83
Dewas / Shirval / Area Offices................................................................................................ 86
Projects................................................................................................................................... 88
L&T Information Technology Limited 2 of 105

ACCOUNTS PAYABLE ............................................................................................................................90

PURCHASE ACCOUNTING ..........................................................................................................................90
Kirloskarvadi ........................................................................................................................... 90
Dewas / Shirval / Area Offices................................................................................................ 94
Projects................................................................................................................................... 96
COST CENTER ACCOUNTING ............................................................................................................100
INTERNAL ORDER ACCOUNTING .....................................................................................................102
INFORMATION SYSTEM .......................................................................................................................104

Introduction
Kirloskar Group is one of the India’s Premier and more than a Century
old engineering group. The group turnover is around Rs. 20 Billion. The
group is known for largest distribution network and excellence in
manufacturing. The group consists of 20 companies including joint
ventures.
Kirloskar Brothers Limited (KBL) is flagship company of the group having

turnover of around Rs. 3.7 Billion for the financial year 1999-2000. The Company
was incorporated in the year 1920. At present Company is having manufacturing
facilities at Kirloskarvadi, Shirwal and Dewas. The company’s operations are
divided into seven SBUs. The Company’s distribution network comprises of 16
regional offices in India and 8 overseas offices. Product range includes industrial
and agricultural pumps, hydro-turbines, valves, machine tools, industrial coatings
etc.. The Company also executes turnkey projects mainly in the areas of water
supply for irrigation scheme, municipalities and power stations.
Mission Statement
"Seek continuously, appropriate technology and systems to enhance stakeholder

value through increased customer focus leveraging on engineering skills and
recognized Brand Image."
Future Direction
To become a focussed player in engineering products, shift focus from top line to
bottom line and aggressive cost cutting & increasing productivity of capital and
human resources.
Project e-MAD
This project is a SAP R/3 implementation project. The scope of the project covers
the business processes related to Marketing And Distribution (MAD) Division of
KBL, which is providing services to all SBUs for their Domestic & International
Market. The entire factory operations are out of the scope of the project.
Manufacturing set up and external vendors are the sources of Products to
Marketing Division. The modules covered in this project are:
1. Sales & Distribution (SD)

2. Service Management (SM)
3. Materials Management (MM)
4. Financial Accounting (FI)
5. Controlling (CO)

Organization Structure
Organization Structure of Kirloskar Brothers Limited (KBL)
KBL is divided into seven strategic business units (SBU) on the basis of product
groups for the purpose of proper control and accountability. These cover both
manufacturing and marketing activities of particular product. These are supported
by Central Corporate Function at Pune for common services such as
international marketing, taxation, accounts, finance, internal audit, information
technology, public relations etc.
Organization Structure of Accounts Department

Finance and Accounts Department as part of corporate function, renders
services to all SBUs. Accounts Departments are situated at Factories viz.
Kirloskarvadi, Dewas, Shirwal and Pune (Press), at Projects Division, Pune and
at all Area Offices.
Manpower strength of Accounts Department is about 130, as detailed herein

below.
Corporate 13
Kirloskarvadi 51
Projects 8
Shirwal 1
Press 1
Dewas 23
Area Offices 33
Present organization structure of the Company and accounts department in

particular is depicted in FC-OrgStructure.xls file in different sheets as stated against
each chart.
 KBL Organization Chart SBU structure and corporate functions (CH0)
 KBL Corporate Organization Chart for Accounts and finance department
(CH1)
 Corporate Organization Chart for Accounts and finance department at
Pune (CH2)
 Organization Chart for Accounts Department at Kirloskarvadi (SBU 1,3,4
and 7) (CH3)
 Organization Chart for Accounts Department at Dewas and Shirwal
(SBU5) (CH4)
 Organization Chart for Accounts department at Pune (SBU2 – Project and
Engg Pumps) (CH5)
Note: Organization Chart for SBU 6 (Press) is not provided as activity of this
SBU is not material with respect to company’s overall activity and not within
the scope of the project.

Master Data
General Ledger Master
The General Ledger Master records are maintained in in-house developed

Financial Accounting Software of KBL in Foxpro language. G/L account numbers
are stored as 6 digit numeric field with grouping of numbers as stated below.
Nature of From To
Accounts
Liabilities 100000 199999
Assets 200000 299999
Income 300000 399999
Expenses. 400000 499999
Coding Structure: 1st digit indicates the nature of account as tabulated above. In
case G/L master ends with 00, this account balance is depicted in financial
statements.
Opening of new account in General Ledger is controlled centrally by Corporate

Finance and Accounts Department, Pune.
Description of Account is the only information stored in Master Data record.
The details of all the G/L master records are stated in Data-GL.xls.
Customer Master
The Customer Master records are maintained in in-house developed Financial

Accounting Software of KBL in Foxpro language. Customer account numbers
are stored as 5 digit numeric field with grouping of numbers as stated below.
Customer Accounts From To

Normal transactions 10001 19999
Security (business) 20001 29999
deposit
Advances 50001 59999
The customer number starts from 10001 to 19999. There are no further sub-
groupings of customer master records based on certain criteria such as
associate concerns, export customers etc. All the customers created between
aforesaid range are automatically (built in Accounting Package and not in
customer master) assigned to control account 240100 in General Ledger. In case
of customers at Kirloskarvadi, if transactions are in the nature of sale on

acceptance basis and the dealer does not sell it within 180 days, the same is
returned to Kirloskarvadi. Such transactions are posted to control account
240150 in General Ledger.
In case of security (business) deposit taken from the dealer it is accounted in

customer master record ranging from 20001 to 29999. The last four digits of
customer master and customer master for security deposit will always be same
for easy retrieval of summed information. To illustrate if a customer master
record number is 11126, its security deposit account will be 21126. This linkage
is followed only at Kirloskarvadi. All the customers (security deposit) created
between aforesaid range are automatically (built in Accounting Package and not
in customer master) assigned to control account 240200 in General Ledger.
In case of advances received from the dealer it is accounted in customer master

record ranging from 50001 to 59999. This series is available only for
Kirloskarvadi operations. The last four digits of customer master and customer
master for advances received will always be same for easy retrieval of summed
information. To illustrate if a customer master record number is 11126, its
security deposit account will be 51126. All the customers (advances) created
in customer master) assigned to control account 234310 in General Ledger. This
range is operated only at Kirloskarvadi.
Coding Structure: Accounts in these ledgers are prefixed with a code in 4 digit.
First two digits indicate Region to which the customer belongs and the last two
digits indicate class of buyer i.e. dealer, stray customer, OEM etc. To illustrate,
customers master number 0901010011, means Pune Region (09), Dealer (01),
Ramchangra & Company (10011).
Authority of opening of new customer is vested with respective accounts

department. This results into different account number for the same customer at
different locations.
The name and complete postal address of the customer is stored in master
record. The master data does not contain information of Sales Tax Registration
Numbers, Excise Control Code, Permanent Account Number etc. of customer.
The details of customers at Pune Area Office are stated in Data-Cust.xls.
Vendor Master
The Vendor Master records are maintained in in-house developed Financial

Accounting Software of KBL in Foxpro language. Vendor account numbers are
stored as 5 digit numeric field with grouping of numbers as stated below.

Vendor Accounts From To

Normal transactions 70001 89999
There are no further sub-groupings of Vendor master records based on certain

criteria such as associate concerns, foreign Vendors etc. All the Vendors created
in Vendor master) assigned to control account 240500 in General Ledger.
Authority of opening of new Vendor is vested with respective accounts

department. This results into different account number for the same Vendor at
different locations.
The name and complete postal address of the Vendor is stored in master record.
The master data does not contain information of Sales Tax Registration
Numbers, Excise Control Code, Permanent Account Number etc. of Vendor.
Class of vendor i.e. manufacturer, trader, SSI etc. cannot be ascertained from
the present system.
Depots Ledger Master
The Depots Ledger ( area office / branch / regional office / factory ) Master
records are maintained in in-house developed Financial Accounting Software of
KBL in Foxpro language. Depots Ledger account numbers are stored as 5 digit
numeric field with grouping of numbers as stated below.
Particulars From To
Depots Ledger 30001 39999
All the Depots Ledger Masters created between aforesaid range are
automatically (built in Accounting Package) assigned to control account 240300
in General Ledger.
The details of Depots Ledger are stated in Data-Depot.xls.
Advances (Employee) Master
The Advances (Employees) Master records are maintained in in-house

developed Financial Accounting Software of KBL in Foxpro language. Advances
(Employees) Master numbers are stored as 5 digit numeric field with grouping of
numbers as stated below.
Particulars From To

Advances to Employees 40001 49999
All the Advances (Employees) Master created between aforesaid range are
automatically (built in Accounting Package) assigned to control account 240400
in General Ledger.
Coding Structure: Last four digits are ticket number (Personnel number) of the
employee. This logic is not strictly followed.
The detail of Advances (Employees) Master at HO is stated in Data-Empl.xls.
Bank Master
Separate bank master is not maintained in the existing system. Account

numbers in General Ledger are allotted to banks depending upon the nature of
account such as current account or cash credit account. Account numbers are
allotted on the basis of Name of the Bank and not on the basis of address of the
branch.
Address of the bank / branch of the bank does not appear on the master.
Similarly, borrowing limit, rate of interest, nature of security / hypothecation,
names of authorized signatories etc. does not form a part of the master.
The details of Bank Master is stated in Data-Bank.xls.
Cost Centers Master
Separate master of cost centers is not maintained in the existing system. Each
cost center is given a department number in 3 digits and entries in books of
accounts are passed with reference to Department Number, wherever possible
but it is not mandatory.
The details of Cost Centers are stated in Data-Cctr.xls.

General Ledger
Consolidation Process
AS-IS Document
For KBL e-MAD Project
Date : June 24, 2000
Business Unit : Kirloskar Brothers Limited
Module : Finance and Controlling Chapter: FI-GL
Name of Business Process : Consolidation Process
Flow Chart of Business Process : attached
Details of Business Process: Area Offices raise advice on concerned SBUs

and head office for transfer of income / expenditure relating to them together with
associated balance sheet accounts. Accounts of Dewas factory include
consolidation of Dewas, Shirwal and Area Office accounts. Accounts of
Kirloskarvadi include consolidation of Kirloskrvadi and Projects Division
Accounts. Accounts of Corporate Office include consolidation of Head Office
Accounts, Dewas, Kirloskarvadi and Printing Division accounts.
Concern Areas, if any :
Whether modification of current business process required? (If yes, give

details) :
Any reports related to current business process: Trial balance of Corporate

Accounts showing consolidation of Kirloskarvadi, Dewas, Printing Division is
enclosed.
Whether copy of such report is attached : Yes
Purpose of the report :
Any document/output is printed for this business process: Yes
If yes. Document/output is attached: KBL Balance sheet and Profit and Loss
account.
The data/records of current business process is stored in: Present financial
accounting software in Foxpro language.
Output from this business process sent to other functions :

Sign-off (Approval) for this document :
Name of Team member Organization/Bus. Unit Signature
M M Naik KBL - Kirloskarvadi
S Shreekrishnan KBL - Dewas
V R Kulkarni KBL - Pune Head Office
M R Rajwade KBL - Pune Projects
R R Kittur KBL - Pune Area Office

Cash and Bank Accounting
AS-IS Document
Name of Business Process : Cash and Bank Accounting
Flow Chart of Business Process : FC-Cash Bank.Doc
Details of Business Process:
Basis of Payment
We prepare vouchers for receipt and payment of cash and bank for payment to
and from vendors, employees, area offices, customers, factories, Corporate
Office etc. depending upon the nature of transaction.
Generation of Vouchers / Cheques

These vouchers are prepared by Accounts Department manually on the basis of
instructions, memos, bills, agreements, expenses sheets etc. All the vouchers
are signed by authorized signatory and then sent to cashier for receiving /
disbursing cash and issuing / depositing cheques. Cheques are prepared
manually and signed by Authorized Signatories.
Accounting
After making / receiving the payment, the cashier defaces the vouchers by
putting rubber stamp. The cashier maintains a cash scroll and accounts for the
vouchers through Cash / bankbook. He takes out daily print out of the cashbook
and tallies the cash on hand.
At the end of the month all the cash / bank cash vouchers are incorporated in
Finance System and ledgers are processed.
Expenses of C.I.D.
Routine administration expenses of C.I.D. (i.e. Salaries, Travelling, Conveyances
etc) are accounted in the books of Corporate Finance and Accounts Department,
Pune. Similarly, expenses of overseas offices also are accounted in the books of
Corporate Finance and Accounts Department, Pune. Product specific expenses
(such as advertisement, exhibition, sales promotion, remuneration,
reimbursement of trucking expenses, bank guarantee expenses, inspection
charges etc) incurred by C.I.D. are accounted in the books of Kirloskarvadi /
Dewas factories as the case may be. Sometimes, the expenses are paid through
EEFC Account also. Expenses of this / similar kind not paid as on the date of
Balance Sheet are provided for in the books of accounts. All these expenses are
shown under Expenditure in Foreign Currencies in the Notes to Final Accounts.

Expenses incurred on advertisement / exhibition etc. must be ascertained

separately so as to include those in Tax Audit Report. Similarly, we need all
expenses incurred on Exports Activity for their inclusion in Tax Audit Report.
Concern Areas, if any : Present system does not facilitate automatic processing
of vouchers, remittance letters & cheques.
Whether modification of current business process required? (If yes, give

details). Yes
Any reports related to current business process :

a) Daily and monthly cash / bankbook.
b) Bank code-wise listing.
Whether copy of such report is attached : yes
Purpose of the report : Statutory / Audit / Information
Any document/output is printed for this business process: Cash Flow ,

Books of Accounts
If yes. Document/output is attached : No
The data/records of current business process is stored in : Present

Financial Accounting System in FOXPRO Language
Output from this business process sent to other functions : Internal users.


Payroll Accounting
AS-IS Document
Name of Business Process: Payroll Accounting
Flow Chart of Business Process :
Except for Pune, Nagpur and Mumbai area offices and Projects Division,
processing of pay takes place at respective locations. Pay roll is processed
through our present Pay Processing System in Foxpro language.
Following accounting entries are passed in books of accounts :
Wherever the payments are made by way of cheque, the entry is passed for net
amount.
For difference between gross amount and amount paid through bank, the entry is
passed with cash code.
Debit : Wages and Salaries,

Debit : Production Bonus,
Debit : Leave Travel Assistance,
Debit : Provision for Annual Bonus,
Debit : Company’s contribution to Provident Fund,
Debit : Company’s contribution to E S I,
Debit :Company’s contribution to Employees Deposit Linked Insurance
Scheme
Credit : Cash Account
Credit : Bank Account
Credit: Accounts for respective deductions like own contribution to provident
fund, Life Insurance Premium etc.
Concern Areas, if any: Since this activity is not under SAP, comments are not
offered.
Whether modification of current business process required? (if yes, give

details). Not Applicable.
Any reports related to current business process : NA
Whether copy of such report is attached : No

Any document/output is printed for this business process: Books of

Accounts , Pay Slips, Pay Master, Form no 16 & 24

Output from this business process sent to other functions: Internal users.


Asset Accounting
AS-IS Document
Name of Business Process: Assets Accounting
Purchase Order
Purchase Orders are placed after getting Board Approval.
Receipt of assets
Store Memo is issued for receipt of asset.
Invoice Verification and Accounting

After connecting freight, octroi, installation charges etc., the purchase bill is
passed through Journal by debiting the asset account and crediting vendor
account.
Entry is made in the Register for Fixed Assets.
Sale / Disposal of assets

Assets are disposed off after getting Board approval.
Cash Memo / Invoice is prepared in case of sale of asset and in case of
scrapping of asset, entry is passed through Journal.
Transfer of assets
In case there are transfers of asset from one place to another, debit / credit
advice are raised on receiving office for transfer of cost and accumulated
depreciation.
Closing operations
Physical inventory of assets is taken on periodic intervals.
Depreciation is charged in books of accounts at the year-end as per rates
applicable to each class of asset on Straight Line Method.
Other Information
We have following accounts for asset accounting :
Opening Block for various assets,
Additions A/c for various assets,
Deductions A./c for various assets,
Opening Depreciation for various assets,

Depreciation for the year for various assets,

Recouped on deductions A/c for various assets.
Machinery Pending Installation
Capital Work in Progress
Depreciation for the year,
Loss on sale / scrapping of fixed assets,
Profit on Sale of Fixed Assets,
Sale of Fixed Assets (Group A/c) which is nullified at the year-end.
Concern Areas, if any: Since this activity is not under SAP, comments are not
offered.


Accounts , Machine/Depreciation Master.



Budgeting
AS-IS Document
Name of Business Process : Budgeting
Details of Business Process: At present this activity is carried out at factory
level.
Concern Areas, if any : Since this activity is not under SAP, comments are not
offered.

Purpose of the report : Information
Any document/output is printed for this business process: Annual Operating

/ Long Range Plan
The data/records of current business process is stored in :


Year-end / Period end Closing Operations.
AS-IS Document
Name of Business Process: Year-end / Period-end Closing Operations
General Processing of ledgers in parts at the end of each quarter and three parts
at the time of year-end.
Preparation of inventory sheets.
Valuation of inventory.
Provisions for income / expenses

Quantitative Information.
Calculation of depreciation.
Merging of subsidiary ledgers.
Preparation of statements required for final accounts.
Export / Import Transactions

At the end of each quarter, we scrutinize Account No. 19999 and transfer the
amount of difference in exchange accounted (either short or excess) to
respective income accounts. This is done with reference to product code, by
preparing a dummy invoice in 02 series, numbering from 10001 onwards (if
excess amount is received) and by issuing a credit note in 06 series, numbering
from 01 onwards (if short amount is received).
At the year-end, outstanding export debtors are updated with exchange rate
prevailing on the date of Balance Sheet by preparing a journal voucher.
Similarly, credit balance to overseas supplier’s account is updated with exchange
rate prevailing on the date of Balance Sheet by preparing a Journal Voucher.
Sundry Debtors Group account Dr/ Cr.
Purchase Account Dr / Cr
Sales account Dr/ Cr.
Creditors on Purchases Account Dr / Cr
This aforesaid journal voucher is reversed in next financial year. The entry
passed is :
Sundry Debtors Group A/c Dr / Cr
Difference in Exchange Account Dr / Cr
Similarly, advances received from customers pending adjustments are also

updated at the end of the year at exchange rate prevailing on the date of Balance
Sheet by preparing a journal voucher.
Advance against Order (Customer) account Dr./Cr.

Exchange Difference accounts Dr./Cr.
At year-end, we prepare a statement to arrive at the difference in exchange

included in the income / expenses accounts on account of transactions of sale.
This is arrived at as under:
a) Difference between invoice amount realized / outstanding and amount as per

rate prevailing on date of bill of lading.
b) Difference between invoice amount outstanding and amount as per rate
prevailing on date of balance sheet.
c) Difference between amount of advances adjusted and amount at which the
advance is accounted in books of account.
d) Difference between amount of advance accounted in books of account and
amount as per rate prevailing on date of balance sheet.
In case of transaction for import, the same is arrived at as under :

a) Difference between invoice amount paid / outstanding and amount as per rate
prevailing on date of bill of lading and
b) Difference between invoice amount outstanding and amount as per rate
prevailing on the date of Balance Sheet.
At the time of year-end, we also prepare a statement showing CIF value of

imports of Raw Materials. In case the imported material is lying in custom
warehouse on the date of Balance Sheet, we account for the purchases at the
exchange rate prevailing on the date of Balance Sheet by debiting respective
purchases account and crediting provision account. We also include the said
material in Closing Stocks at the value at which the purchases are booked for but
without demurrage. The entry for provision made for such purchases are
reversed in next financial year. In case the imported material has not reached
India on the date of Balance Sheet, we do not provide for the liability. Customs
duty payable on material lying in Custom warehouse is calculated and shown
under Contingent Liabilities in the Notes to Final Account. This practice will now
change in view of guidelines issued by the Institute.
Compilation of FOB Value of Exports: We compile this information out of the

system at present. F O B Value of exports is arrived at as under, for export of
products as well as services:
Amount of invoice actually realized less actual freight charges and insurance
charges and Amount of outstanding invoice updated as per rate prevailing on
date of Balance Sheet less actual freight charges and insurance charges.

For the purpose of published accounts, Exports to Bhutan and Nepal etc. in
Indian currencies are considered. However, for the purpose of Tax Audit, those
ignored.
Quantity Statement: C.I.D. requires a statement showing product-wise quantities

and FOB values of goods exported, country-wise and product-wise quantities
and FOB values of goods exported and any other similar statement as per
requirements of time. These statements are prepared manually as at present.
Similarly, at the end of each quarter, C.I.D. requires a statement showing FOB
value of realized exports. This statement also is prepared manually as of now.
In case of export of compressors, we do not claim any export benefit. The same
are claimed by the supplier viz. Kirloskar Copeland Ltd. In order to enable them
to claim the benefits, we give a disclaimer certificate to them every year.
We pass entries in respect of short payment received from customers,

deductions made by customers towards liquidated damages for late supplies
etc., after getting written approval from CID.
We prepare a list of doubtful debtors at the time of year-end after discussions

with CID and statutory Auditors.
We also pass entries for write off of debtors where we have received approval
from Reserve Bank of India.
We require a statement showing aging of export debtors specifically old more

than 180 days for attaching to Tax Audit Report.
We process TDS Certificates once in a quarter for taxes deducted at source.
We process form No. 26 C once in a year, preferably in every May.
Stocks with clearing house agent / for exhibition purpose

In case of stocks lying with clearing house agent as well as at the place of
exhibition, we request C.I.D. to get a certificate from respective authorities and
send to concerned factories for the purpose of valuation.
We have maintained a register at Bills Section, Kirloskarvadi to record following:
Delivery note number and date for dispatch of material for export,
Destination of dispatch,
Commercial Invoice Number and date,
Purpose (i.e. whether exhibition)

Reference of having received the material back at Kirloskarvadi.
This acts as internal check on the certificate given by Clearing House Agent.
Domestic Sales
Send letters to all the customers for confirmation of balance.
Calculation of interest on business deposit.
Processing of credit advices
Accounting of credit advices
Calculation of interest on advances received from customers
Deduction of Income Tax at source
Processing of TDS Certificate
Return in prescribed format
We pass entries in respect of short payments received from customers,

deductions made by customers towards liquidated damages for late supplies
etc. after getting written approvals from the Marketing Department.
We prepare a list of doubtful debtors at the time of year-end after discussions

with Marketing Department and statutory auditors.
We also pass entries for write off of debtors where we have received approval
from Vice President.
Project
At year-end, the Area Offices transfer the Sales, Purchases, Debtors, Creditors,
Advances received from customers, and Advances given to suppliers and stock
received account to Project Pune. These accounts are transferred by drawing
necessary debit or credit advice. Project Pune records these advices by crediting
the particular product sale and purchases account, debiting sundry debtors
account for debtors, crediting creditors on purchases account for creditors,
advances received from customers for advances from customers and Advances
account for advances given to suppliers. The individual debtors or creditors
accounts are not transferred by the Area Officer but only controlling accounts are
given effects. These debtors, creditors and advances account are reversed to the
concerned area offices in next year.
Project accounts merges these entries in its Trial Balance. Transfers expenses
pertaining to other SBUs to respective SBU accounting departments. Completes
its year ending activities and sends the Trial Balance to Kirloskarvadi accounts
department for merging purpose.
Concern Areas, if any: This activity is highly manual.

details). Yes
Any document/output is printed for this business process: Reports as per

requirements of management.


Accounts Receivable
Domestic Sales
Kirloskarvadi
AS-IS Document
Module : Finance and Controlling Chapter: FI-AR
Name of Business Process : Domestic Sales (kirloskarvadi)
Flow Chart of Business Process : FC-Sales-KOV.Doc
Pre-sales activity and Acceptance of Order

The Order Acceptances ( O.As. ) are issued by Marketing Departments of SBU
1, 2, 3, 4 and 7 after completion of all the pre-sales activities.
Procurement / Production / Packing / Delivery

Wherever possible, the O.A. is converted into Bill of Material through present
MRP system.
Based on the output of MRP system and non-MRP requisitions, required raw
materials are procured.
Ordered products are manufactured and handed over to Composite Section.
Composite Section prepares packing list, packs the products and hand over the
consignment to Dispatch Section by preparing a Consignment Note.
Dispatch Section arranges for the dispatch by completing Excise formalities.
Dispatch Section prepares delivery note (consignment note) and forwards to Bills
Section for raising invoice.
Invoicing
Bills Section starts the billing activity on receipt of delivery note (Consignment
Note) from Dispatch Section.
Kirloskarvadi Accounts Department raises bills for domestic sales of SBU 1, 2, 3,
4 and 7.
Following series are allotted for raising invoices :
SBU1 SBU2 SBU 3 SBU 4 SBU 7
Inland sale of
Complete
Articles & Set 01 21 41 61 81
Exports 02 22 42 62 82
Spare Parts 03 23 43 63 83
Service Charges 04 24 44 64 84

Sale in Transit 05 25 45 65 85
180 days credit 06 26 46 66 86
Additional
Invoice 07 27 47 67 87
Free Supply 08 28 48 68 88
Job Work 09 29 49 69 89
Stock Trans-
Fer to Aos 10 30 50 70 90
GSD * 11 31 51 71 91
Tool Room
(Captive Use) 12 32 52 72
PSC for Reje-
Cted Casting 13 33 53 73
Leasing 14 34 54 74 94
Sale of Asset 15 35 55 75 95
Spares – Manual
(Cr note reversal)16 36 56 76 96
Rectification
Voucher Inland
DR 17 37 57 77 92
CR 18 38 58 78 93
GSD from
Prod. Divn. 19
Rectification
Voucher Export
DR 98
CR 99
* ( Serial Numbers in this series are : 00001 to 01000 General Stores, 01001 to
02000 Cast Iron Foundry, 02001 to 03000 Heavy Foundry and 03001 to 04000
Non Ferrous Foundry ).
Invoices are raised in accordance with Order Acceptances received from

above SBUs as well as on the basis of Purchase Orders from clients and
memos received from various departments.
In case of SBU 1, the Order Acceptance is created through KBL’s OA package

(KOASP or web-based).
In case of SBU 2, Order Acceptances for spare parts are through KBL’s OA
package as well as manual and those for supply of complete product, erection
and commissioning activity, civil activity etc. are only manual.
In case of SBU 3, 4 and 7, the Order Acceptances are manual only.
Bills Section at Accounts Department, Kirloskarvadi has access to above

documents.

The activity of raising of invoice is as under :
Dispatch Section, after receipt of material from Composite Section, prepares a

Delivery Note and sends to Bills Section. Bills Section relates this Delivery
Note to Order Acceptance and prepares invoice. Bills Section puts Sales Tax
Codes, Codes for terms of payment and amount of deduction of advance.
After taking out print-out of these invoices, those are sent to Dispatch Section
for mentioning dispatch particulars. After putting in dispatch particulars, the
invoices are received at Bills Section.
While raising invoice on the customer, we show deduction of advance received

in the invoice itself. The advance is deducted as per the terms mentioned in
the Order Acceptance. At the time of accounting the invoice, entry is passed
in books of account for adjustment of advance by debiting the account of the
customer in Advance Received Against Order Ledger and crediting his current
account in Debtors Ledger. This happens automatically through the present
system.
We raise following types of invoices :
a) Commercial invoices for domestic sale of products and services. These are
accounted for in books of accounts. These invoices are raised in the series
as mentioned above depending upon the product and the selling SBU. The
invoices are raised through computerized system as well as manually. The
invoices which are raised through computerized system, get automatically
incorporated into Finance Data at the time of processing books of account.
The invoices raised manually require to be fed into the computer in the
Financial Accounting System for the purpose of recording into books of
accounts.
In case of manually raised invoice, at the first instance, the invoice is

prepared by hand ( this is called as valuation ). Then it is got typed,
checked, signed and circulated.
Entry to Debtors Ledger Account appears with reference to Invoice Series,

Invoice Serial Number, Date of Invoice, Gross Amount of invoice,
Reference of Order Acceptance, Credit period allowed and due date of
payment.
There is no written down policy for offering terms of payment. The terms of
payment differ from client to client and case to case. We put terms of
payment on invoices, which are mentioned in the Order Acceptance.
Entry to General Ledger Account appears as summary entry of the invoice

series.

Dr. Customer account / Area Office Account ( in case of stock transfer )

Cr. Various Income / Expense Accounts / Stock Transfer Account ( in case
of stock transfer )
In case of computerized Order Acceptance, the amendment memo is

keyed in the system only. In case of manual Order Acceptance, the
amendment memo also is issued by hand. It is pasted to the original Order
Acceptance after its receipt at Bills Section. All the amendment memos are
referred to while raising invoices manually. In case of computerized Order
Acceptance, rarely the amendment memo is issued manually.
b) Submission invoices for collecting payment. These are not accounted for in
books of accounts. Many times, the terms of payment committed to the
customer are of deferred nature i.e. 90 % payment against proof of
dispatch and balance 5 % after receipt of material at site and balance 5 %
after erection / commissioning / alignment. In our present system, we
cannot raise more than one invoice for one supply / consignment note.
Therefore, such invoices are required to be raised. These invoices are
raised through a separate computer package after raising of commercial
bill for the supply. Therefore, the activity of raising this invoice gets
secondary priority and there is delay in raising the invoice and sending it to
area office, which ultimately results in late realization of sale proceeds.
There is a problem from Sales Tax angle too. The customer gives Sales
Tax declaration with reference to the submission invoices as those are
accounted for in his books of accounts, whereas we show our commercial
invoice to the assessing authority. In the event that when there are two
financial years involved in these transactions, it becomes difficult to satisfy
the assessing authorities.
c) Direct Sales Bills ( for trading material directly delivered by the vendor to
customer’s place ). These are accounted for in books of accounts as
mentioned at item No. (a) above. These are raised for sale in course of
transit. We receive lorry way bill and other documents from the vendor and
on the basis thereof, raise Sale Invoice on the customer which is called as
Direct Sale Bill. We cannot process such bills from our present finance
system. However, we have developed a tailor made package for this
activity.
d) Stock Transfer bills ( for movement of material from factory to area offices /
Dewas). These are accounted for in books of accounts as mentioned at
Item No. (a) above.
e) Pro-forma bills ( before supply of material but as per customer’s

requirement ). These are not accounted for in books of accounts. These

are raised manually as there is no provision in the present system to raise

those automatically.
Disposal of invoices
Bills Section disposes off the invoices in accordance with terms of Order
Acceptances along with required documentation.
Exclusions
Invoices raised in SBU 2 series i.e. 21 to 40, are not accounted in the books
of accounts of Kirloskarvadi but are sent for accounting to Projects Division,
Pune. For the purpose of Sales Tax compliance, we raise a debit advice for
stock transfer on Projects Division for supplies covered under such invoices
on month to month basis. The stock transfer invoice is raised at 92.5 % of the
product value.
Updating customer master

In case of new customer, the Sales Ledger Master is created by Customer
Support Cell at Kirloskarvadi and Sales Ledger Section.
The logic applied while giving account numbers is as under :
10001 – account of XYZ in Debtors Ledger,

20001 – account of XYZ in Business Deposit Ledger and
50001 – account of XYZ in Advance Received Against Order Ledger.
Sales from Area Offices

In case of Kirloskarvadi ( i.e. SBU 1, 3, 4 and 7 ), sale takes place from Area
Offices in respect of SBU 3 and 7. However, the volume of sale as well as
number of sale invoices is not significant. Normally, sale invoices from area
offices are required to be raised in order to comply with requirements of Works
Contract Tax Act. The activity is as under :
a) Transfer of stock from Kirloskarvadi to area offices – Such transfer is

made by raising an invoice in stock transfer series. Entry passed at
Kirloskarvadi : Debit : the account of respective area office in Depot
Ledger and Credit : Stock sent to that area office account in General
Ledger, through Sales Journal.
b) On receipt of material at area office, a store memo is taken out, entry of
material received is recorded in Stock Ledger and Kirloskarvadi’s stock
transfer bill is accounted for by debiting Stock Received from Kirloskarvadi
Account in General Ledger and Crediting Kirloskarvadi Account in Depot
Ledger.
c) After sale of the material, area office raises sale invoice on the customer
and accounts for in their books of account through Sales Journal by

debiting customer’s account in Sales Ledger and crediting respective

income / expenses accounts.
d) At the time of year end, balance appearing to Stock Received from
Kirloskarvadi Account, balance appearing to the sale account of that
product, debit / credit balance appearing to the account of respective
customer are transferred by the area office to Kirloskarvadi through
journal.
e) Corresponding entries are passed at Kirloskarvadi to nullify Stock Sent to

area office account and account for the sale, debtors and creditors in the
books through Journal.
f) In case there are discrepancies in stock transfer transaction i.e. non /
short receipt of material at area office, rectification to stock transfer invoice
is done at Kirloskarvadi either by issuing a credit note or by journal
voucher.
At the time of year end, Area Office prepares a physical inventory statement of
products of Kirloskarvadi lying in stock at their end and sends it to Kirloskarvadi
for the purpose of valuation and incorporation in books of accounts.
Exclusions
The activity of raising invoices for sale of scrap, stores material, capital goods,
goods for captive consumption, cash sales etc. is excluded as the said sale does
not form a part of Marketing and Distribution Activity.
Concern Areas, if any: Serial numbers of the products do not appear on the
invoice. Documentation required along with invoicing does not come as OAMISI.
Performa invoice and submission invoice can not be generated from the system.
Verification of purchase with sales and vice versa is not possible.

details). Yes

After putting in all the above data into the present finance system, we process
the ledgers on month to month basis. We get following print-outs for above
activities :
Invoice,
Check runs for verifying the accuracy of the data keyed in. In case errors are
found, necessary corrections are made, control totals are tallied,
Mis-match report ( unadjusted credit against debit or vice versa ),
Sales Journal,
Credit Notes Journal,
Debtors Ledger ( Outstanding ) ( account serial number wise, region wise ),
Dues / overdues statement,

Business Deposit Ledger,

Advance Received Against Order Ledger,
Advance Received Against Order Ledger Outstanding,
Trial balances for all the above ledgers consolidate for Kirloskarvadi and
SBUwise,
Discounted Draft Register,
Productwise listing of quantities and values for domestic invoices, export
invoices, credit notes and total on monthly as well as cumulative basis,
Schedule code wise Sales Tax List and
Schedule code wise Sales Tax Register
A copy of the ledger extract is sent to concerned customer on month to month

basis.
In case need be, the accounts are reconciled.
Set of Books of Accounts in Operation

Sales Invoices,
Credit Notes,
Voucher for rectification of errors in invoices and credit notes ( These are
accounted like invoice and credit note ),
Journal Voucher ( Debit Advice ) in J 4 series for debit to customer’s account (
e. g. rectification of wrong credit, debiting bank charges, cost of sales literature
sold etc. ) and
Journal Voucher ( Credit Advice ) in J 5 series for credit to customer’s account
( e.g. rectification of wrong debit, crediting cash discount, advertisement
expenses, sales promotion expenses etc. )
Whether copy of such report is attached: (Refer attachments to Dewas).
Any document/output is printed for this business process:

Books of Accounts
Invoice file for accounting to SBU 2 at Pune.
Daily SBUwise Invoicing information
Monthly regionwise , SBUwise invoicing information,
Reasonwise credit notes issued,

Financial Accounting System in FOXPRO Language.
Output from this business process sent to other functions : Customers and

Internal users.


Dewas
AS-IS Document
Name of Business Process : Domestic Sales (Dewas)
Flow Chart of Business Process : FC-Sales-Dewas.Doc
Pre-sales activity and Order Acceptance

At present, there are 14 area offices having there own godowns and also operate
through C&F agents.
In case of make to stock products, Area Offices issue stock indents to factory on
fortnightly basis. Here the products are dispatched by Stock and Dispatch
Department to stocking points (AO godowns /C&F).
In case of make to order products, orders are directly placed by the dealers on
factory and the product is dispatched directly to the destination of the dealer/
customer.
Production Planning
In case of make to stock products, at factory level the production plan is taken on
forecasting basis as well as on the basis of indents received from Area Offices.
In case of made to order products the production is made on the basis of orders
placed directly and the dispatches are made according to the terms of contract.
Invoicing
In case of make to stock products, factory raises stock transfer invoices under 54
series for dispatches to Area Offices /C & F agents. Stock transfers are effected
at dealer price (i.e list price less standard discount). In case of material directly
dispatched to dealer excise / commercial invoice is raised on the basis of
delivery challan issued by Stock & Dispatch Department. Pricing of invoices are
done on the basis of commercial policy. As regards sales tax the same is
charged as per prevailing tax rules/act. Specific codification for tax rate is given
in the invoice.
In case of Works Contract Order, the products are supplied from Dewas to
customer’s location directly or through Area Office and the sale invoice is raised
from the delivering point (Dewas/Area Office). The incidental activities like
installation, erection etc. are carried out by way of subcontracting. Sub
Contractors’ invoices are accounted at Dewas on the basis of order placed on
subcontractor and is co-related with invoice raised on tendering authority.
Following types of invoices are raised from Dewas

1) Commercial Invoice

2) Traders Invoice under excise rules
Regular transaction for sale of scrap to outsiders is routed through same invoice
series. Amount of such sale is credited to Misc. Stores Sales.
Accounting Entries
a) Stock Transfer / Sale Invoice
1) Stock Transfer – Dr. Current account of AO (Depot Ledger)

Cr. Stock Sent to AO A/C (General Ledger)
2) Sale Invoice - Dr. Dealer / Customer A/C (Debtors Ledger)

Cr. Sale of Respective Product (General Ledger)
Cr Taxes / Duties Recovered (General Ledger)
Cr Cash Discount (General Ledger)
b) Short /Excess/Wrong Dispatch
In case of excess / short / wrong dispatch of products to area office / C&F agent,
accounting entry for the same is passed in factory books on the basis of credit or
debit advises received from area office.
1) For short qty. Dr . Stock sent to AO (General Ledger)

Cr . Current Account of AO (Depot Ledger)
2) For Excess qty. Dr Current Account of AO (Depot Ledger)

Cr Stock Sent to AO A/C (General Ledger)
3) In case of dealer / customer - Short /excess/wrong supply is accounted for by

issuing credit note or by raising invoice as the case may be.
Discounts
Cash discount is parted through sales invoice considering payment will be
realized within 4 banking days from date of invoice by way of local cheque or by
D/D in case of outstation dealer. Cash Discount is reverted if the payment is not
received as per above terms by raising debit advice on the dealer and is
accounted through journal. Cash Discount is allowed @3% on product value (list
price less std. Discount)
In addition to cash discount additional discount of 1% is allowed on product value
in the invoice itself if value of single invoice is as under.
Value of single invoice = Previous year’s off-take x Rate of growth /30 or
Rs.25000/- (for new dealer) whichever is higher. The growth rate is fixed on the

basis of off-take during last year. This differs from dealer to dealer.
At every month end, data of sales invoice is transferred to accounts dept from
the invoice package and monthly trial balance is processed.
Incentive
In order to encourage the dealers, growth incentive is introduced this year. The
calculation of incentive is based on last years off-take and rate of growth given in
the commercial policy. The incentive @3% on net product value (list price less
standard discount less stock discount) is to be allowed by way of credit note at
the year end. The amount of incentive should be debited to Sales Promotional
Expenses.
The data/records of current business process is stored in invoice package

developed in FOXPRO and are operated by store keeper/marketing personnel,
for billing purpose.

details).

a) Debtors Ledger Trial Balance
b) Sales Journal
c) Credit Note Journal
d) Schedule code wise Sales Tax Register
e) Set-off Register
f) Product Code Listing (Monthly & Cumulative)
g) Dealer Code-wise Listing
h) Product-wise stock Summary Report (for own products excluding spares)
i) Report on CST Transactions

Accounts

Financial System in FOXPRO Language

Output from this business process sent to other functions : Customer and
other Internal users


Shirwal
AS-IS Document
Name of Business Process : Domestic Sales (Shirwal)
Flow Chart of Business Process : FC-Sales-Shirval.Doc
Pre-sales Activity
Indents for stock to sale material is placed on fortnightly basis by area offices
except area offices located in Maharashtra. As of today 14 area offices have
their godowns and they are also operating through C&F agents. In case of
indents placed by area offices the material is dispatched by stock and dispatch
dept to stocking point (AO godowns /C&F). In case of order placed by dealer on
factory the material is dispatched directly to the destination of the dealer/
customer.
Production Planning
At the factory level the production plan is taken on forecasting basis as also on
the basis of indents received from various area offices.
Invoicing Activity
Factory raises stock transfer invoice under 54 series for dispatches to area
offices and in case of material directly dispatched to dealer excise / commercial
invoice is raised. Stock transfer are effected at pre determined standard price.
Accounting entries for these transactions are passed as under.
1) Stock Transfer – Dr . Current account of AO (Depot Ledger)

Cr. Stock Send to AO A/C (General Ledger)
2) Sale Invoice - Dr. Dealer / Customer A/C (Debtors Ledger)

Cr. Taxes / Duties Recovered (General Ledger)
Cr. Cash Discount (General Ledger)
Short /Excess/Wrong Dispatch

1) For short qty. Dr. Stock sent to AO (General Ledger)
Cr. Current Account of AO (Depot Ledger)
2) For excess qty. Dr. Current Account of AO (Depot Ledger)

Cr. Stock Sent to AO A/C (General Ledger)
3) In case of dealer / customer - Short /excess/wrong supply is accounted for by

issuing credit note or by raising invoice as the case may be.
Regular transaction for sale of scrap to outsiders is routed through same invoice
series. Amount of such sale is credited to Misc. Stores Sales
Discount Structure
Standard Discount varies from area office to area office for stock transfer.

received as per above terms by raising debit advice on the dealer / customer
which is accounted through journal. Cash Discount is allowed @3% on product
value (list price less std. Discount).
We have separate invoice package built in FOXPRO , and the same is operated
by store keeper/marketting personnel/Accountant.
At every month end data of sales invoice is transferred to accounts dept from the
invoice package and monthly trial balance is processed.
Sales Tax
Shirwal Unit has been granted exemption certificate by Sales Tax authorities,
and has been given eligibility certificate by SICOM in 1999. The limit of
exemption is 1.34 crores. This certificate is valid up to Jan 2005 or utilizing limit
of 1.34 crore whichever is earlier.

details).

b) Sales Journal
e) Set-off Register


Whether copy of such report is attached : Refer attachments - Dewas.

Accounts
The data/records of current business process is stored in: Present Financial

Accounting System in FOXPRO Language.
Output from this business process sent to other functions: Customers and
Internal users.


Area Offices
AS-IS Document
Name of Business Process : Domestic Sales – Area Offices (Dewas & Shirwal
Products)
Flow Chart of Business Process : FC-Sales-Area Offices.Doc
Pre-sales Activity
Orders are placed by dealers on area offices / factories. As of today 14 area
offices have their godowns and they are also operating through C&F agents. In
case of orders placed on area offices the material is dispatched from the stocking
point (godowns /C&F). In case of order placed on factory the material is
dispatched directly to the destination of the dealer. Area offices place indents on
factory for the requirement of material based on the best judgement of marketing
personnel.
Production Planning
At the factory level the production plan is taken on forecasting basis as also on
the basis of indents received from various area offices. In case of made to order
products the production is made on the basis of orders placed directly and the
dispatches are made according to the requirements.
Invoicing
Factory raises stock transfer invoice under 54 series for dispatches to area
offices.
On receipt of material at area office godowns the store- keeper takes out store
memo on the basis of physical receipt of material. Deviation in receipt of material
in relation of stock transfer invoice is informed to accounts dept. Accountant on
the basis of store memo and stock transfer invoice pass following entries.
1) Stock Recd – Dr . Stock Received from Factory (General Ledger)
Cr. Current Account of Factory (Depot Ledger)
In case of excess / short / wrong receipt of material, the same is informed to

factory and simultaneously accounting entry for the same is passed in AO books.
Credit or debit advices are send to factory.
1) For short qty. Dr Current Account of Factory (Depot Ledger)

Cr. Stock Recd from Factory (General Ledger)

2) For excess qty. Dr Stock Recd from Factory (General Ledger)

Cr. Current account of Factory (Depot Ledger)
Sales Invoices from Area Office:

In case of dealer/customer the material is delivered to transporter / individual
customer against delivery note / sale invoice. Wherever the sale invoice is raised
on a latter date the same is prepared on the basis of dispatch document such as
LWB, delivery note. While preparing the invoice pricing is done on the basis of
commercial policy. As regards sales tax the same is charged as per prevailing
tax rules/act. Specific codification for tax rate is given in the invoice.
The following entry is passed

Sale Invoice - Dr. Dealer / Customer A/C (Debtors Ledger)
Cr. Taxes / Duties Recovered (General Ledger)
Cr. Cash Discount (General Ledger)
In case of short /excess/wrong supply to dealer / customer the same is

accounted for by issuing credit note or by raising invoice as the case may be.
In few area offices the handling charges are recovered at @1% of product value
in the invoice itself elsewhere the amount of transportation is recovered in the
invoice at actual.
C&F activity
Stocks are maintained at the godowns of C&F locations. C&F agent caters
dealers in his area as per the instructions from area office. The requirement of
material for stocking purpose is informed to area office by C&F agent. Stock
transfer invoice is raised from area office on C&F for such transfer of material.
Receipt of material - accounting is same as per the practices of area office and in
case of sales also the practices of area offices is followed. Accounts books of
C&F locations are maintained at respective area office to which C&F agent is
attached
Following types of invoices are raised by Area Offices.
1. Commercial Invoice for Dewas & Shirwal Products.

2. Traders Invoice under excise rules
Stock transfer of material also takes place between area offices located at
various locations. The accounting treatment is same as explained above. This is
restricted to own manufactured products only.
In addition to regular stock transfer / sale activity we also undertake Works

Contract Order through area offices/ Dewas factory. Supply of material for such
orders is from area office / Dewas directly to customer’s location and the sale
invoice is raised from the delivering point. In case of activities like installations,
the same is carried out by subcontracting the job. Sub Contractor’s invoice is
passed at respective area office / Dewas on the basis of order placed on him and
is co-related with AO/Dewas invoice raised on tendering authority. The
accounting entry is as under.
Dr. Customer A/C (Debtors Ledger)
Cr. Sale of Own Product A/C (General Ledger)
Cr. Sale of Trading Articles (Bought-out Items) (General Ledger)
Cr. Services Rendered A/C (Installation Charges) (General Ledger)
Cr. Works Cont. Tax A/C(General Ledger)
In this case composite tax is calculated
Discount Structure
received as per above terms by raising debit advice on the dealer and is
accounted through journal. Cash Discount is allowed @3% on product value (list
price less std. Discount)
In addition to cash discount we allow additional discount of 1% on product value

in the invoice itself if value of single invoice is as under.
Value of single invoice = Previous year’s off-take x Rate of growth /30 or
Rs.25000/- (for New Dealer) whichever is higher. The growth rate is fixed on the
basis of off-take during last year. This differs from dealer to dealer.
We have separate invoice package built in FOXPRO is operated by store

keeper/marketing personnel/Accountant at various locations.
At every month end, data of sales invoice is transferred to accounts dept from
the invoice package and monthly trial balance is processed.
Growth Incentive : In order to encourage the dealers growth incentive is

introduced this year. The calculation of incentive is based on last years off-take
and rate of growth given in the commercial policy. The incentive @3% on net
product value (list price less standard discount less stock discount) is to be
allowed by way of credit note at the year end. The amount of incentive should be
debited to Sales Promotional Expenses.
Concern Areas, if any : Credit limits of dealers and balance available is not
readily available (on line). Calculation of overdue interest, reversal of cash

discount, growth incentive is required to be done manually in the present system.

Availability of stocks at various locations is not known to billing clerk. Product-
wise summary report of sales is not available in case of trading products, spares.
Details of pending concession forms (sales tax) are not available.

details).
The above information should be made available.

b) Sales Journal
e) Set-off Register
Whether copy of such report is attached : Please Refer attachments - Dewas

accounts

Output from this business process sent to other functions: Customers and
other internal users.


Project Sales
AS-IS Document
Name of Business Process : Project Sales
Flow Chart of Business Process : FC-Sales-Projects.Doc
Preparation of Order Acceptance

On the basis of tendering activity done by the Marketing department, the Letter of
Indent or Purchase order is received from the customer. On the basis of this, the
execution department prepares Order Acceptance. The tendering activity or the
preparation of Order Acceptance Activity is taken place at Pune or at Area
offices. The Order acceptance is bifurcated in to
1. Manufacturing Portion called as KOV (Kirloskarvadi) Portion and

2. Trading Portion (Outside Vendor procurement) portion
In the manufacturing portion, further bifurcation is done as to product value,

excise duty, sales tax, transportation, insurance, erection and commissioning.
The Order Acceptance contains the delivery schedule based on the requirements
of the particular project.
Manufacturing and Despatch from Kirloskarvadi

On the basis of KOV portion the present MRP system generates the raw material
procurement requirements. On this basis the raw material is procured. After the
production is completed, the material is handed over to the composite section at
kirloskarvadi. The composite section prepares a packing list, completes the
packing and sends the material to the despatch department along with the
consignment note. On the basis of this consignment note, the billing section at
Kirloskarvadi prepares Excise get pass cum invoice. Excise duty is paid at
kirloskarvadi, the despatch department arranges for the lorries for despatch of
the material and despatches the material as per the schedule contained in the
Order Acceptance.
Invoicing at Kirloskarvadi
The invoice prepared at Kirloskarvadi contains the Name and address of the

customer (If Project is to be billed from the Area Office then Name of the Area
Office), the name and address of the consignee, the order acceptance number,
the customer purchase order number, LR number, the product value of main as
well as spares, the Excise classification number, the amount of Excise Duty paid,
Freight, Insurance charges and applicable Sales Tax etc. All this information is
based on the billing break up given in the Order Acceptance. The invoice
received from Kirloskarvadi is not accounted in project if terms of payment are
different. Kirloskarvadi raises a debit advice of stock transfer price, which is
recorded as debit to stock received from Kirloskarvadi, crediting to Kirloskarvadi.
The Invoice raised by Kirloskarvadi is not accounted by Kirloskarvadi.
The copy of the invoice prepared along with the lorry waybill and other necessary
documents such as instruction manuals are given to Pune CCR (Credit Control
and Recovery Department.)
Submission (Commercial) Invoice at Project / Area Office

On the basis of this invoice the accounts department at Pune prepares
submission invoice on the basis of Purchase Order break up approved by the
customer. The invoice received from Kirloskarvadi in this sense is a delivery
challan for project. This invoice is prepared for the total price given for the
product in the purchase order. This invoice bears the same number as given by
Kirloskarvadi. This invoice contains the name and address of the customer, LR
number, OA number, PO number (All same as given in the invoice received from
KOV). This invoice in addition to the invoice received from KOV, contains the
reference of terms of payment. The total price is then bifurcated as per the
payment terms. This shows the amounts due after completion of each activity.
The advance is adjusted in this invoice. The advance is adjusted as per the
terms of Purchase Order. The authorized signatory in accounts department
authorizes this invoice and hands it over to the CCR department. Accounts
Department accounts this invoice at its hundred percent value by debiting the
customer account in Sales Ledger and crediting the product sales account,
Excise duty recovered account and particular sales tax account. The credit
balance in excise duty recovered account is transferred to Kirloskarvadi on
monthly basis. Pune accounts person maintains the customer master. The CCR
department then accumulates all the necessary documents and sends this to
customer for payment process. In case of hundred percent payment terms
invoices, submission invoice is not prepared and KOV invoice received from KOV
is sent to the customer for payment process.
If the sale is to be recorded at Area Office, then Pune accounts department

receives an invoice from KOV in the name of the concerned Area Office name as
Indentor. In project department, the projects falling under works contract act are
billed from the Area Offices. After receipt of an invoice in the name of the area
office, the Project Pune, records this invoice debiting the concerned area office
and crediting the stock sent to concerned area office account. The area office

receives a copy of invoice from kirloskarvadi directly. The area office credits
Projects Pune and debit the stock received from project account. On the basis of
this invoice and other documents received from Kirloskarvadi, the area office
prepares the submission invoice and records in its books. The area office
accountant maintains the customer master at concerned area office. The
customer account is debited, crediting the product sale account, sales tax and
other charges account like transportation account. The sale recorded is
transferred to project Pune on yearly basis. Excise duty recovered is transferred
by project Pune to kirloskarvadi. The sales tax account is debited on payment.
Invoicing for Outside Procured Material (Trading)

For sale of outside procured materials, the execution department, Pune gives a
note in prescribed format to accounts department, Pune for raising the invoice.
The format contains the project name, OA number, PO number, the sale value,
LR number. Accounts department along with the original LR and original
Purchase Invoice receives the format. After checking the format with the
Purchase Order terms, the accounts department raises the invoice. The Invoice
series for raising such trading invoices is different from those for KOV articles
and differs from area office to area office. This invoice is also raised for hundred
percent values and contains the similar details as invoices for manufactured
products. Authorized person in accounts department authorizes this invoice. The
submission invoices for trading as well as for manufactured products is raised in
nine copies. The second copy is remained with the accounts department. All
other copies are handed over to the CCR department. For outside procured
materials, Area offices follow the similar procedure.
Sale Reversal on Erection Account

If the purchase order of the customer does not contain separate item for erection
and commissioning, a percentage of product sales (ideally the percentage
envisaged by marketing department at the time of tendering) is reversed, debiting
to product sale and crediting to sundry debtors account separately taken in
general ledger for merging purpose. All the expenses incurred for erection and
commissioning are also accumulated in a separate account opened for each
project in advance ledger account. After the completion of the entire project, the
accumulated sales and expenses are recognized as revenue and expenses.
If the purchase order of the customer contains a separate item for erection and
commissioning, the invoice for such erection and commissioning is prepared on
the basis of protocol signed by the site engineer and approved by the customer.
If the Purchase Order contains single item for erection and commissioning, the
bill is raised for the entire value after completion of the entire erection and
commissioning. The expenses are accumulated in the similar fashion. If the
purchase order contains erection and commissioning item for each of the supply
item, the invoice is prepared on the basis of protocol referred above. If expenses
against such sale could not be directly related, then such sale and expenses for

the project are accumulated as referred above and recognized as revenue items
only after the entire erection and commissioning activity is completed.
Preparation of Site Draft

If invoice is to be sent through bank of collection, a site draft is prepared along
with the invoice. The site draft is prepared in pre-designed format. This site draft
contains the name of the customer, name of the customers banker on whom the
draft is drawn, the amount to be collected additionally in case the prescribed
sales tax declaration form is not submitted by customer while retiring the
documents from the bank. The site draft is prepared by accounts department in
nine copies. Second copy is kept by accounts department. An authorised person
in accounts department signs this site draft as well. This site draft is kept by
accounts department only for record purpose.
Invoicing for Freight/Erection etc.

The freight is charged to the customer either at predetermined price or on actual
basis. The freight is charged to the customer either along with the supply
invoices or a separate invoice is prepared based on the material supplied. This is
as per the invoices required by the customer.
The submission invoices are prepared as required by the customer. The

customer in its purchase order mentions the requisitions about the same. Certain
customers require some codes or signs on the invoice itself to match the same
with the predetermined tag numbers assigned to the materials by the customer.
Some customers require separate invoices for Due against despatch amount,
Due against receipt of material amount, Freight amount, Sales Tax amount,
Excise Duty amount, erection amount etc. Due against despatch invoice contains
all the information. This invoice is assigned the main invoice number. This
invoice is recorded at hundred percent values and kept as main invoice. All
subsequent invoices are given main invoice number with A,B,C etc attached to
the invoice number. These invoices are not accounted but kept only for record
purpose.
Invoicing for Deemed Export

Invoices for projects under deemed export are prepared in different currencies.
Deemed export projects are projects, defined by in EXIM policy such as projects
financed by World Bank. The purchase orders for such project are in different
currencies. The Excise Duty on manufactured products is not paid by the
customers. Such excise duty is not invoiced to the customer but while recording
the invoice is debited to Claims receivable account. The sales tax on such Excise
Duty is not paid by the customer and has to be borne by the company and hence
debited to sales tax paid account. If negotiated with the customer however,
certain customers agree to pay the sales tax on excise duty also. The excise duty
is reimbursed by Director General of Foreign Trade. The invoices in foreign
currencies are recorded at rates prevailing on the date of the invoice.

Service Contract Invoicing

In case of supply contracts, a separate contract is entered for supervision of
erection and commissioning. The rate is normally fixed on the basis of days
required to complete the activity and the days requiring the presence of the site
engineer. On completion of the site engineer’s job, he submits a log sheet on the
basis of which the service charges invoice is prepared. This invoice is prepared
in trading activity invoice series. This is normally a hundred percent invoice and
does not contain terms of payment. Since this is a separate contract, sales tax is
not applicable.
Price Variation Invoicing

The contract with the customer sometimes contains a price variation clause. After
completion of the supply, this invoice is raised either from KOV, project or from
Area Office based on the material against which such invoice is required. If PVC
Invoice is prepared for supply of trading material, it is prepared from Pune or
from Area Office where the original supply invoice is recorded. If this is prepared
for manufactured product, it is prepared from KOV. The formula for preparing
such invoice is given as annexure to the Purchase order of the customer. The
indices required for calculating the price variation are made available by the
Indian Pump Manufacturing Association. This invoice is prepared after supply of
the material on availability of the indices. Applicable excise duty and sales is
charged in the invoice. These invoices are subjected to different types of terms of
payment from original terms of payment.
Civil Activity
Project along with supply and erection and commissioning, also undertakes civil
construction activity. Civil activity is covered by the accounting standard 7 issued
by The Institute of Chartered Accountants of India. The method of accounting
followed by project is percentage completion method. All income relating to work
completed is accounted on the basis of running bill prepared on the basis of work
recorded in measurement book. For any additional work done at site, not
included in the customer’s order, though billed on the customer, is not accounted.
The expenses incurred for such activity is however accounted. This is followed
as per the conservative method of accounting. If on a comparison of entire
contract price and our estimated cost, we anticipate that we would incur a loss, a
provision for such apparent loss will be made in the respective year itself. A sale
and purchase connection report is prepared. On this basis a provision for
purchase or closing stock (WIP) is calculated.
Pending Order Data

Order Acceptance, when sent to Kirloskarvadi, it is manually punched in the
computer. After the sale is taken place, whether manufactured or trading, it is

manually deleted from the order data to generate the pending orders status.
Import Licence Sale Invoicing

If export department in Pune wants to sell the import license to the customer,
then such request is received by project department. On the basis of price
offered by the customer, such invoice is prepared and accounted. The sales tax
recovered from such invoice is credited to sales tax account and paid by project
department. The sale and customer’s account is transferred to Kirloskarvadi.
Concern Areas, if any : Serial numbers of the products do not appear on the
invoice. Documentation required along with invoicing does not come as OAMISI.
Proforma invoice and submission invoice can not be generated from the system.
Verification of purchase with sales and vice versa is not possible.

details). Yes
Whether copy of such report is attached: Refer attachments Dewas

Accounts

Internal users.


Exports
AS-IS Document
Name of Business Process : Export Invoicing (kirloskarvadi and Dewas)
Flow Chart of Business Process : FC-Exports.Doc
Pre-sales activity and Acceptance of Order

The Acceptance of Order (A/O) is issued by Corporate International Division
(C.I.D.), Pune after completion of all the pre-sales activities.
Packing Credit Utilization

We utilize packing credit facility for execution of majority of export orders.
Corporate Finance and Accounts Department at Pune performs the activity of
availing of packing credit after obtaining necessary information / documents
(A/O) from C.I.D., directly. The bank sanctions the packing credit and disburses
the amount by debiting the Packing Credit Account and the same is accounted in
Head Office accordingly.
Dr. Bank (Cash Credit) accounts.

Cr. Kirloskarvadi accounts.
At the same time Head Offices issues a credit advice to facilitate the accounting
at Kirloskarvadi.
On the basis of aforesaid credit advice, Kirloskarvadi Accounts Department

accounts the same as under.
Dr. Head Office accounts.

Cr. Packing Credit (Bank) accounts.
This credit advice is accounted through bankbook.
Interest on packing credit is fully accounted at Kirloskarvadi.

Procurement /Production/ Packing / Delivery
The A/O is converted into Bill of Material through present MRP system.
Based on the output of MRP System, required raw materials are procured.
Ordered products are manufactured and handed over to Composite Section.
Composite Section prepares packing list, shipping invoice, Consignment Note,
delivery note and packs the products. (Dewas does not prepare shipping
invoice.)

Composite Section informs C.I.D. about the dispatch.

C.I.D. arranges for a container and the material is loaded into the truck in
presence of the Excise Inspector, for full container load consignment. For part
container load consignment, presence of Excise Inspector is not required.
The dispatches are made either through Bond or paying Excise Duty. Excise
Cell at Kirloskarvadi / Dewas looks after refund of duty paid on exports.
Composite Section hands over delivery note and Shipping Invoice to Dispatch
Section for AR 4 formalities.
A copy of the Shipping Invoice goes along with the transporter and one copy to
C.I.D.
Invoicing
After getting Shipping Documents from the Customs House Agent, C.I.D. raises
commercial invoice on the customer in 02 series, for Kirloskarvadi products and
in “D” series for Dewas products. . We have allotted the invoice series SBUwise
also e.g. 02 for SBU 1, 22 for SBU 2, 42 for SBU 3, 62 for SBU 4, 82 for SBU
7and ‘D’ for SBU 5. However, as of today, the export invoices are raised in 02
and D series only for Kirloskarwadi and Dewas respectively.
The invoices are raised in various currencies. However, one invoice is never
raised in multi currencies.
C.I.D. sends accounting copy of export invoice to respective Accounts
Departments for accounting.
The product codes are mentioned in the invoice in 7 digits, customer’s account
number in Debtors Ledger is put in, sales tax code is put in and General Ledger
Account numbers for crediting income are put.
The invoice is punched in the present Financial Accounting System for the
purpose of recording into books of accounts.
Entry to Debtors Ledger Account appears with reference to Invoice Series,
Invoice Serial Number, Date of Invoice, Gross Amount of the invoice, Reference
of Acceptance of Order, Credit Period allowed and due date of payment.
Entry to General Ledger Account appears as summary entry of the invoice
series.
The invoice is accounted in books of account at the exchange rate informed by
C.I.D.
C.I.D. obtains this rate from the bank prevailing on the date of submission of
document to the bank for the purpose of discounting / collection/ purchase etc.
Accounting system does not record foreign currency information. Following
accounting entry is passed.
Dr. Customer account

Cr. Sales
Any rectification in invoice is corrected by way of creating a dummy invoice in 98

series and dummy credit note in 99 series. At Dewas this activity takes place
through journal voucher.

Export Incentives
C.I.D. applies for all sorts of export entitlements i.e. duty drawback, DEPB,
Advance / Special Import License. On receipt of cheques towards settlement of
the claims, we account for entries in books of accounts by debiting the bank
account and crediting Duty Draw Back Received Account or Duty Draw Back
Receivable Account as the case may be, through journal or Bank Cash Book.
We have accounts with Bank of India, Ballard Estate Branch, State Bank of India,
Fort, State Bank of India, Andheri and State Bank of India, Sahar for direct credit
of duty drawback and DEPB claims by respective Government Departments. At
the time of year-end, we get a statement from C.I.D. giving list of unsettled
claims. On this basis we pass entries in books of accounts by debiting Duty
Draw Back Receivable Account and crediting Duty Draw Back Received Account
through journal. Excise Cell at Kirloskarvadi / Dewas looks after lodging of
claims arising out of AR 4 and settlement thereof.
In case of Advance / Special Import License, we do not pass any entry in books
of accounts.
Sale of Import Licenses

C.I.D. informs details of sale of import license to Projects Division, Pune for
raising invoice on concerned customer (for the purpose of complying with the
provisions of Sales Tax Act ). Project Division, Pune raises sales invoice on the
customer and transfers debtors as well as sale to Kirloskarvadi for the purpose of
accounting. Projects Division, Pune transfers to Accounts Department,
Kirloskarvadi collections towards such invoices for the purpose of accounting.
These transactions are routed through Journal and bankbook as the case may
be.
Updating of Sales Ledger Master :

In case of new customer, Accounts Department, Kirloskarvadi / Dewas updates
the Sales Ledger Master.
Concern Areas, if any : Serial nos of the products do not appear on the
invoice. Accounting in multiple currencies is not possible. System does not
generate 1) Statement of FOB value, 2) Impact of difference in exchange and 3)
quantity statement in various formats.

details). Yes

After putting in all the above data into the present finance system, we process

the ledgers on month to month basis. We get following print-outs for above
activities :
Check runs for verifying the accuracy of the data keyed in. In case errors are
found, necessary corrections are made, control totals are tallied,
Mis-match report ( unadjusted credit against debit or vice versa ),
Sales Journal,
Credit Notes Journal,
Debtors Ledger ( Outstanding ) ( account serial number wise, region wise ),
Dues / overdues statement,
Business Deposit Ledger,
Advance Received Against Order Ledger,
Advance Received Against Order Ledger Outstanding,
Trial balances for all the above ledgers consolidate for Kirloskarvadi / Dewas
and SBUwise,
Discounted Draft Register,
Productwise listing of quantities and values for domestic invoices, export
invoices, credit notes and total on monthly as well as cumulative basis,
Schedule code wise Sales Tax List and
Schedule code wise Sales Tax Register
A copy of the ledger extract is sent to concerned customer on month to month

basis.
In case need be, the accounts are reconciled.
Sets of Books of Accounts in Operation

Sales Invoices,
Credit Notes,
Voucher for rectification of errors in invoices and credit notes ( These are
accounted like invoice and credit note ),
Journal Voucher ( Debit Advice ) in J 4 series for debit to customer’s account (
e. g. rectification of wrong credit, debiting bank charges, cost of sales literature
sold etc. ) and
Journal Voucher ( Credit Advice ) in J 5 series for credit to customer’s account
( e.g. rectification of wrong debit, crediting cash discount, advertisement
expenses, sales promotion expenses etc. )
Whether copy of such report is attached: Refer attachments to Dewas.

Accounts


Internal users.


After Sales Service

Kirloskarvadi
AS-IS Document
Name of Business Process : After Sales Service (Kirloskarvadi – Domestic
& Exports)
Flow Chart of Business Process : FC-After Sales Service-KOV.Doc
(a) Exports
Rejections / Rectification
In case there are rejections / rectification in / to the goods supplied to overseas
customers, C.I.D. requests the overseas office / distributor / agent to get those
repaired locally and send their claim for reimbursement to us. On receipt of the
claim at their end, C.I.D. prepares a letter in favor of Bank to remit the amount to
the client. A copy of this letter is endorsed to Accounts Department,
Kirloskarvadi. After receipt of bank advice for effecting the payment, we pass
entry to appropriate account. In case the amount is not remitted till the date of
Balance Sheet, we make a provision therefor. Sometimes, these payments are
effected through EEFC Account only. In such cases, we receive a debit advice
from Corporate Finance Department along with required details. On the basis of
this debit advice, entries are passed in books of accounts. These payments are
shown in Expenditure in Foreign Currencies in the notes to Final Accounts.
Sometimes, the payment is adjusted against remuneration payable to the
distributor / dues from him. In case the defect cannot be repaired locally, CID
decides in consultation with the factory for free replacement.
(b) Domestic
The customer lodges his complaint with factory or area office. The complaint is
resolved in following ways :
Representative from Area Office visits the customer and inspects the product. If
required, representatives from factory ( Quality Control, Product Engineering,
Service Cell etc ) visit the customer and inspect the product. Such visits are on
chargeable basis as well as non chargeable basis. If on chargeable basis, we
raise a debit advice on the customer as per recommendation from Marketing
Department. This debit advice is accounted for through Journal by debiting the
customer’s account in Debtors Ledger and crediting Services Rendered Account.
If possible, they purchase required material locally and repair the product. In

such case, the area office pays to the supplier or to the representative for making
cash purchase and raises a debit advice on Kirloskarvadi. This debit advice is
accounted through Bank Cash Book. Corresponding entry for this debit advice is
passed at Kirloskarvadi through Journal by debiting respective expenses account
and crediting the area office account in Depot Ledger. Almost in all cases, the
cost of such purchases is borne by Kirloskar Brothers Limited only.
In case it is not possible to purchase the material locally and it needs to be
dispatched from Kirloskarvadi, Marketing Department issues Order Acceptance
and directs the factory to supply required material to the customer either free of
cost or on chargeable basis. Supply of material free of cost is done in two ways :
(I) Dispatch the material under a delivery note in FREE Series. No accounting
entry is passed for such dispatches and cost of the product dispatched free gets
loaded to Material Consumption because the figure of consumption is arrived at
by classical method i.e. Opening Stock + Purchases – Closing Stocks. (ii) The
material is dispatched on 180 days’ credit. In such case the material is
dispatched under a delivery note in regular series and invoice is raised on the
customer. This invoice is accounted in books of accounts through Sales Journal.
The only difference is : the customer’s account is linked to controlling account
No. 240100 in General Ledger. A pre-condition of transaction under this method
is that the customer has to return the originally supplied part, which is in defective
condition, to the factory. On receipt of the defective part at Kirloskarvadi and on
getting a Returned Goods Memo from Dispatch Section, Accounts Department
issues credit note in favor of the customer for nullifying the bill raised on 180
days’ credit.
In case it is impossible to repair the product, the customer is advised to return the
product to Kirloskarvadi. On receipt of the defective product at Kirloskarvadi and
on getting a Returned Goods Memo from Dispatch Section, Accounts
Department issues credit note in favor of the customer for nullifying the bill
raised.
Concern Areas, if any : We do not know whether the expenditure is to be borne

by KBL or the client.

details).
Any reports related to current business process : No
Any document/output is printed for this business process:




Dewas
AS-IS Document
Name of Business Process : After Sales Service (Dewas)
Flow Chart of Business Process : FC-After Sales Service-Dewas.Doc
Receipt and Verification

In case of material received from dealer /customer directly at Dewas plant,
verification of such defective material is done by servicing dept. If defective
pumps are repairable then repaired activities are carried out and such repaired
pumps are send back to dealer/customer.
Warranty Status
Considering the status of such defective material i.e. whether in warranty or out
of warranty action for raising invoice for material consumed / services given is
decided. The warranty period as per commercial policy is 18months from date of
dealer/sub-dealer invoice. In few cases the defective material against sales made
from area offices / C&F locations are also received at Dewas for repairs. In case
the pumps are in warranty period, spares consumed /services charged are born
by the Company.
Accounting Entries
For receipt of material from dealer / customer no accounting entry is passed, only
store memo is generated and the material is delivered to servicing dept. under
credit slip.
After the confirmation from servicing dept. about repaired activity, invoice is
raised for spares consumed. Dispatched qty is nullified with store memo qty by
passing accounting entry.
In case of serviced pumps not in warranty period
A) For spares consumed:

Dr. Dealer/Customer Account (Debtors Ledger)
Cr. Sales of Spares (General Ledger)
B) For service Charges Recovered
Dr. Dealer/Customer A/C (Debtors Ledger)
Cr. Services Rendered A/C (General Ledger)
In case of serviced pumps are in warranty period
A) For spares consumed at factory: (Indirectly following entry is passed as at

present company does not have consumption accounting and only purchase
accounting)
Dr. Spares Consumed (General Ledger)
Cr. Spares Inventory (General Ledger)
B) For spares provided by the dealer
Dr. after Sale Services (General Ledger)
Cr. Dealers (Customer Ledger)
C) For service Charges
No accounting document is generated.
For material received from area office:

Wherever the pumps are repaired, the same are send to area office under non-
billable challan. In case the pump is not repairable value of pump is credited to
dealer’s account
Concern Areas, if any : The current system is not suiting the requirements of
activity.

details). Yes
Any document/output is printed for this business process: Field Complaints

Report
If yes. Document/output is attached : Yes



Shirval
AS-IS Document
Name of Business Process : After Sales Service (Shirwal)
Flow Chart of Business Process : FC-After Sales Service-Shirval.Doc

In case of Shirwal products defective pumps are received at area office locations
from dealer /customer. Verification of such defective material is done by service
center. If defective pumps are repairable then repaired activities are carried out
and such repaired pumps are send back to dealer/customer.
Warranty Status
Considering the status of such defective material i.e. whether in warranty or out
of warranty action for raising invoice for material consumed / services given is
decided. The warranty period as per commercial policy is 12 months from date of
dealer / sub dealer invoice. In case the defective pumps are not repairable at
service center those are send back to Shirwal.
Accounting Entries
store memo is generated and the material is delivered to service center. After the
confirmation from servicing dept. about repaired activity, invoice is raised for
spares consumed. Dispatched qty is nullified with store memo qty by passing
accounting entry. In case pumps are within warranty period no accounting
document are generated.
In case of serviced pumps not within warranty period:

A) For spares consumed :
Dr. Dealer/Customer Account (Debtors Ledger)
Cr. Sales of Spares (General Ledger)
B) For service Charges Recovered

Dr. Dealer/Customer A/C (Debtors Ledger)
Cr. Services Rendered A/C (General Ledger)
For pumps send to Shirwal:

In AO Books
Dr. Current A/C of Shirwal (Depot Ledger)
Cr. Stock Recd from Shirwal (General Ledger)

In Shirwal Books
Dr. Stock sent to Area Office (General Ledger)
Cr. Current A/C of AO (Depot Ledger)
Finally area office issues credit note to dealer or free replacement is given from
AO stock. The qty is nullified by accounting store memo and free replacement
invoice / credit note.
Concern Areas, if any : The current system is not suiting the requirements of
activity.

details). Yes
Any document/output is printed for this business process: Field Complaints

Reports.



Stock Transfer Corrections
AS-IS Document
Name of Business Process : Stock Transfer Corrections
Flow Chart of Business Process : FC-Stock Transfer Correction.Doc
In case of excess / short / wrong receipt of material, the same is informed to

factory and simultaneously accounting entry for the same is passed in AO books.
Credit or debit advices are send to factory.
1) For short qty. Dr Current Account of Factory (Depot Ledger)

Cr. Stock Recd from Factory (General Ledger)
2) For Excess qty. Dr Stock Recd from Factory (General Ledger)

Cr. Current account of Factory (Depot Ledger)
In case of wrong dispatches product-wise / quantity-wise corrections are routed

through account number 19999.
e.g. in the stock transfer invoice product X is mentioned, and the physical receipt
is of product Y, then following entry is passed.
Dr. A/C No 19999 (Debtors Ledger)

Cr. Stock Recd /Product Code of Y
Dr. Stock Recd A/C /Product Code of X

Cr. A/C No 19999 (Debtors Ledger)

details).
Whether copy of such report is attached :No
Purpose of the report :No

Any document/output is printed for this business process: No
The data/records of current business process is stored in : No


Receivable Management (Collections)

Kirloskarvadi – Domestic & Export and Dewas Export
AS-IS Document
Name of Business Process : Receivable Management (Kirloskarvadi –
Domestic & Export ) and Dewas Export
Flow Chart of Business Process : FC-Collections-KOV.Doc
A) Exports – KOV & Dewas
Purchase / Discounting / Collection of Export Invoices

The commercial invoice is submitted to bank for purchase / discounting /
negotiation / collection as per the terms of the A/O.
After submission of the invoice to the bank, bank issues a credit advice. The
credit advice shows the amount, the exchange rate at which the invoice is
negotiated / purchased / discounted, amount of packing credit recovered,
recovery of service charges of the bank, courier charges etc. and the amount
credited to our Cash Credit Account.
Our bank duty courier at Pune collects such advices on daily basis together with
supporting given by the bank and sends the same to Accounts Department at
Kirloskarvadi on weekly basis for accounting.
On receipt of the advices at Kirloskarvadi, we check the adequacy of supporting

documents and pass entries in books of accounts for creating liability for Foreign
Bills Discounting Account and debiting respective revenue expenses accounts
and Packing Credit Account. Exchange rates as applied by the bank are
considered for accounting.
Cash Credit account Dr. (balancing amount)

Bank charges Dr.
Packing Credit Dr. (optional)
Foreign Bill Discounting account Cr. (in case of discounting)
This credit advice is accounted through bankbook.
Interest on Foreign Bills discounting account is booked at Kirloskarvadi.
Realization of discounted / purchased / collected bills by bank

On realization of negotiated / purchased/ on collection / discounted bill, bank

issues a credit advice in our favour indicating foreign currency realized, rate
applied for conversion, amount in Indian Rupees, the deductions made by the
customer / negotiating bank etc. Similarly on realization of bills sent for collection,
the bank issues credit advice in our favor indicating above details. Many times
the amount is credited to our EEFC Account with the bank as per instructions
from Corporate Finance Dept.
Our bank duty courier at Pune collects such advices on daily basis together with
Kirloskarvadi on weekly basis for accounting. In case of amounts credited to
EEFC Account, Corporate Finance Department issues credit advice in favor of
Kirloskarvadi and the realization is accounted for on this basis through journal.
Accounting at Corporate Finance Department, Pune
Bank Account (EEFC) Dr.

Kirloskarvadi account Cr.
Accounting at Kirloskarvadi
Head Office Dr.

Customer account Cr.

documents and pass entries in books of accounts for reducing liability for Foreign
Bills Discounting Account, Realization of Debtors and debiting respective
revenue expenses accounts through Bank Cash Book.
Cash Credit Dr.

Expenses Dr.
Exchange difference Dr/Cr.
Bill Discounting (Bank) Dr.
Sometimes, the invoices negotiated / discounted / purchased with the bank are
delinked if the payment is not realizing within 180 days. At that time the Bank
reverses the entry for purchase / discounting / negotiation in their books and
informs us by way of an advice. We pass corresponding entries in our books of
accounts.
Transfer from / to Dewas

Kirloskarvadi Accounts Department raises / issues advices in favor of Dewas
factory for realization of export bills of their products as the packing credit, foreign
bills discounting facilities are in the books of accounts of Kirloskarvadi factory.
These advices are accounted through bankbook. Similar advices are raised for

transfer of Sale of Dewas products which is included in 02 series invoice,

realization of claims for duty drawback pertaining to their invoices, bank charges,
interest on foreign bills discounting. Corresponding entries are passed in Dewas
books.
B) Domestic Sales
Realization of sale proceeds

In case the documents are to be routed through Bank (for collection as well as
under Letter of Credit), bills section prepares Bill of Exchange and covering letter
to the bank.
In case the invoice is to be discounted, Bill Section prepares Bill of Exchange

and obtains acceptance from the customer. This Bill of Exchange is forwarded to
the bank along with a covering letter requesting for discounting. On discounting,
bank issues a credit advice in our favor, indicating the amount at which the
invoice is discounted, recovery of service charges of the bank etc. and the
amount credited to our Cash Credit Account.
Our bank duty courier collects such advices on daily basis together with
Kirloskarvadi on daily / weekly basis for accounting.

documents and pass entries in books of accounts for creating liability for Inland
Bills Discounting Account and debiting respective revenue expenses accounts
and Cash Credit Account. These entries are passed through Bank CashBook.
On realization of discounted bill, bank issues a credit advice in our favor

indicating the amount realized, the deductions made by the customer /
negotiating bank etc. Similarly on realization of bills sent for collection and under
Letter of Credit, the bank issues credit advice in our favor indicating above
details.
Our bank duty courier collects such advices on daily basis together with
Kirloskarvadi on daily / weekly basis for accounting.

documents and pass entries in books of accounts for reducing liability for Inland
Bills Discounting Account, Realization of Debtors and debiting respective
revenue expenses accounts and bank Cash Credit Account.
These advices are accounted through Bank Cash Book

Many times, the bills are sent to Area Offices for collection along with consignee
copy of Lorry Way Bill. Area offices collect the payment from customers or some
times the bills are directly sent to customers and payment is received from them
directly at Kirloskarvadi / Area Office / Head Office etc. We have following
methods of depositing the realizations:
Hand over the negotiable instrument to HDFC if it is raised on specified locations,

Deposit the same into bank account of the area office.
Send the cheques to Kirloskarvadi
In case the instrument is handed over to HDFC, no entry is passed in books of

accounts of receiving office. They get an acknowledgement from HDFC and
forward the same to Kirloskarvadi Accounts Department along with details such
as name of the customer, his account number in Debtors Ledger, Invoice
Number against which the payment is realized, amount realized, deductions
made by the customer etc. HDFC draws a cheque in favor of Kirloskar Brothers
Limited payable at Pune and deposits the same into our bank account at Pune.
HDFC hands over the counter foil of pay in slip for depositing the amount into our
bank account to Corporate Finance Department, Pune along with copies of
acknowledgements given by them to various area offices. Corporate Finance
Department sends these documents to Kirloskarvadi and we pass entries for
realizations in our books of accounts through Bills Receivable, by debiting the
account of the bank at Pune and crediting the customer’s current account /
advance account / business deposit account, as the case may be. At every
month end, entries are passed for acknowledgements given by HDFC upto last
day of the month but not deposited into our bank account at Pune, by debiting
Remittance in Transit account and crediting the customer’s current account /
advance account / business deposit account, as the case may be.
In case the instrument received at area office cannot be handed over to HDFC,
the concerned area office deposits the same into their local bank account and
issues a credit advice in favor of Kirloskarvadi giving details of realizations. This
credit advice is accounted at Kirloskarvadi through journal by debiting the
account of concerned area office in Depot Ledger and crediting the customer’s
current / business deposit / advance account, as the case may be. After credit of
the cheque by the local bank to the account of area office, Area Office procures a
demand draft in favor of Kirloskarvadi payable at Pune / Sangli / Kirloskarvadi
and sends the said demand draft together with a debit advice to Kirloskarvadi for
accounting. This debit advice is accounted at Kirloskarvadi through Bills
Receivable by debiting the account of the bank wherein the instrument is
deposited and crediting the account of respective area office.
In case the instrument is directly received at Kirloskarvadi, we deposit the same

into our bank account and account for the realization through Bills Receivable by
debiting the account of the bank wherein the instrument is deposited and

crediting the customer’s current account / business deposit / advance account as

the case may be.
When accounting is done through Bills Receivable, the system automatically

generates pay in slip and daily SBUwise cash in flow report.
Advances received from domestic customers against the orders placed by them
on us are accounted for to the concerned customer’s account in Advance
Received Against Order ledger. Similarly, business deposits received from
customers are accounted for to the concerned customer’s account in Business
Deposit Ledger.
We issue money receipt to the customers only when it is specifically demanded

by him.
Dishonor of Cheque
Whenever any negotiable instrument received from the customer is dishonored
by the bank, we receive the original instrument together with bank’s note
explaining the reason of dishonor. In case the bank has requested to present it
again, we do not reverse the original entry passed, redeposit the cheque, do not
pass any entry and wait for clearance. In case the matter is to be referred to the
customer, we reverse the entry in following way:
Debit A/c No. 19999 in Debtors ledger and credit respective bank account,
through Bank Cash Book and
Raise a debit advice on the customer and send the original to him along with
Xerox of cheque and bank’s intimation. This debit advice is accounted through
journal ( J 4 ) by debiting the customer’s account in Sales Ledger and crediting
A/c no. 19999.
Concern Areas, if any : Follow up by way of reminders for recovery of over-

dues is not provided through system.

details). Yes
Existing system gives following reports.
a) Debtors Ledger Trial Balance,

b) Age-wise Outstanding Report and
c) Due Overdue Report

Purpose of the report :Statutory / Audit / Information

Accounts

Internal users.


Dewas , Shirwal and Area Offices - Domestic
AS-IS Document
Name of Business Process : Receivable Management (Dewas, Shirwal &
Area Offices)
Flow Chart of Business Process : FC-Collections-Dewas.Doc
Commercial Policy
The receivables management for Dewas and Shirval Products is governed by a
common Commercial Policy for dealers all over India.
The dealers working for more than one year are given credit limits based on the
performance of previous year. The credit period extended to old dealers is 45
days from the date of invoice. The collections are by way of adequate security or
by demand drafts to be received at area office location on or before 45th day
from the date of invoice.
In case of New Dealers no such credit facility is extended at least up to
completion of first year operations. New dealers are subject to operate on cash
and carry basis. The collections are by way of local cheques / demand drafts
realizable within 4 banking days from the date of invoice.
Accounting Procedure
Transfer of balances of customers: - In case of direct billing from Dewas / Shirval
on area office dealers / end-customers, the out-standings are transferred to
concerned area office in the subsequent month of invoicing. The balance is
transferred by way of debit/Credit advices. Dewas Books carry only export,
associate concern debtors & Shirval Books does not carry any debtors.
Collections: - Cheques / Demand Drafts received (as per commercial policy) at

area offices are deposited in local ICICI/HDFC/collection bank account by
respective account dept. Money receipts are issued on basis of pay-in-slips. In
case of C&F agents the pay-in-slips are forwarded to respective area office for
issuance of Money Receipts.
The Money receipts are accounted as under through cash and bankbook
a) For deposits in ICICI Bank

Dr. Dewas Current A/C (Depot Ledger)
Cr. Dealer/ Customer A/C (Debtors Ledger)
The funds are transferred directly to Dewas bank a/c by ICICI.

b) In case of deposits in HDFC bank

Dr. H O Current A/C (Depot Ledger)
The funds are transferred directly to BOI/HDFC a/c of HO..
c) In case of deposits in Collection account

Dr. Bank A/C (General Ledger)
The funds are transferred directly to KBL Dewas Bank a/c as per standing
instructions by way of T.T.
While keying in data in cash and bankbook amount of Cheque / DD is adjusted

against specific invoice through system, unadjusted amount are shown as open
debit /credit in outstanding report and the same are adjusted manually.
Dishonored (Returned) Cheques: - On receipt of intimation regarding bouncing of

cheque, debit advice is raised on dealer for the amount of cheque together with
bank charges, overdue interest. The following entry is passed.
Dr. Dealer / Customer Account (Debtors Ledger)
Cr. Bank A/C (General Ledger)
Cr. Interest Received A/C (General ledger)
Doubtful Debtors & Bad debts written off :
Provision for doubtful debts is made on the basis of discussion with marketing
dept. & Debtors are written off as per instructions from SBU Head. & following
entry is passed
For provision
Dr. Provision for doubtful debtors( General Ledger)

Cr. Provision for doubtful debtors( General Ledger)I
For Bad debts written off
Dr. Bad debts written off (General Ledger)

Cr. Customer A/c (Debtors Ledger)


details). Yes



b) Age-wise Outstanding Report

Accounts

Internal users.


Projects
AS-IS Document
Module : Finance And Controlling Chapter: FI-AR
Name of Business Process : Receivable Management (Project)
Flow Chart of Business Process : FC-Collections-Projects.Doc
Realisation
For recovery of the dues against the invoices raised, Project has a separate CCR
department. This department looks after the collection of payments from the
customers. The collection of payments contains collection of payments as per
terms of payment accepted by the customer in his purchase order.
Realised advance is credited to a separate account in sales ledger. Such

advance is adjusted in the invoices as per the terms of purchase order. These
may be hundred percent in first invoice or on pro rata basis. Accounts
department for adjusting advance in customer’s account prepares an advance
adjustment entry. The advance account is opened in 10000 series. There is no
separate series of accounts for taking advance account in project.
On collection of other payments, the CCR department forwards the collection

instrument such as cheque or demand draft, along with a memo specifying the
details of payments. The details contain the Customer name, OA number, the bill
number and deductions if any. The accounts department makes an entry to
record this collection debiting the bank account and crediting the customer’s
account is sales ledger. The deductions, if considered by CCR department as
recoverable subsequently, not credited to the customer. While recording the
payment, the present finance system asks for the bill number and date. On
punching the bill number and date, the present finance system connects the
payment to the bill number. In the outstanding report for the current month, this
connected payment shows a specific number. Outstanding reports for next month
onwards does not show the bill as well as the payment connected. This way the
outstanding statement is a remaining bill balance statement. This does not show
all the bills and all the credits. In case the CCR department does not indicate the
required details, the payment credited to the customer is shown as unadjusted
credit. On getting the details subsequently the connectors can be generated
manually. In case, the payment is collected by Area Office, it is transferred to
Pune by credit advice and vice versa

Excise Duty Drawbacks

The excise duty charged by the supplier for deemed export project is reimbursed
by the Director General of Foreign Trade as an export incentive. While passing
the invoices of suppliers for deemed export project, the excise duty is debited to
claims receivable account instead of purchase account. The CCR department
lodges the claims with the DGFT. DGFT requires certain documents to be
submitted to him for processing the claims. On completion of these formalities,
the DGFT remits these reimbursements subject to availability of funds. Besides
reimbursement of excise duty paid (whether to government on manufactured
products or to supplier for outside procurements), project is entitled for export
and custom duty draw back. This is in addition to reimbursement of excise duty.
The Custom Act provides for the rate at which such draw back is calculated and
lodged to the DGFT. Credit of this draw back is taken to income account.
The above said benefits differ from project to project based on the category of
deemed export. If a power project is funded by United Nations or by World Bank,
the Excise Duty is exempted on application to Ministry of Commerce on the basis
of certificate issued by the project authority.
Recovery Of Written Off Balances

If after writing off of any deduction made by the customer, any amount is
recovered, it is credited to Miscellaneous receipt account. If the amount is written
off as bad, then such subsequent recovery is credited to bad debts recovery
account.


details). Yes

b) Age-wise Outstanding Report

Accounts

Internal users.


Sales Return / Credit Notes

Kirloskarvadi
AS-IS Document
Name of Business Process Sales Returns / Credit Notes (Kirloskarvadi)
Flow Chart of Business Process : FC-Sales Returns-KOV.Doc

Situations warranting issuance of credit notes

Credit Notes are issued for :
Rectification of error in invoicing : When Bill Section notices any error in invoice
raised ( on self verification as well as on the basis of complaint from customer /
area office ), credit note is issued for rectification. This may be to the extent of
error or for cancellation of invoice in toto. In such case fresh invoice is raised on
the customer. Reference of credit note issued is mentioned in the invoice to
which it pertains. The reference contains Serial Number of Credit Note, Date,
Amount and reason. In case fresh invoice is raised, it contains reference of
original invoice number, date, credit note number and date. Simultaneously the
credit note contains reference of fresh invoice number and date.
Adherence to terms as per O. A. : If the O.A. stipulates terms for issuing credit
notes such as Remuneration for pre-sale canvassing, Remuneration for follow up
and collection of payment, Liquidated Damages etc., Bill Section issues the credit
notes. Reference of such credit note is mentioned on the respective invoice.
Instructions from Marketing Department : These are for Difference in price,

Cancellation of invoice against Returned Goods, Liquidated Damages,
Remuneration, Re-invoicing, Other Charges, Refund of Excise Duty and Sales
Tax and so on.
In such cases, Marketing Department prepares a Credit Note Memo. This memo
contains the history warranting issuance of credit note and is signed by the
Regional Sales Manager. It is, then, sent for approval of Zonal Manager and
Vice President.
On receipt of the approved memo at Bills Section together with complete

documentation, Bill Section issues the credit note. Reference of credit note
issued is mentioned on the respective invoices.

Series of Credit Note

The credit notes are issued in following series :
SBU 1 SBU 2 SBU 3 SBU 4 SBU 7
Cancellation
Of Invoice 01 21 41 61 81
Difference in 02 22 42 62 82
Price/Discount
Remuneration 03 23 43 63 83
Liquidated 04 24 44 64 84
Damage
Refund of 05 25 45 65 85
Other Charges
Export difference06 26 46 66 86
In realization
Foundry
Supplies 07 27 47 67 87
Re-invoicing 08 28 48 68 88
The credit notes are accounted through Credit Note Journal.
The entire activity of issuing credit notes is manual. At the first instance, the
credit note is prepared by hand ( this is called as valuation ). Then it is got
typed, checked, signed and circulated. The credit notes issued are keyed in at
the month end and accounted for by debiting respective income / expense /
provision account and crediting the account of the customer in debtors ledger.
Records
Bills Section maintains two registers with them as under :
Delivery Note Register : to record invoice number against each delivery note
so as to ensure that sale invoice is raised against each delivery note.
Credit Note Register : to record each credit note so as to ensure that all the
credit notes are accounted for.
Concern Areas, if any : The activity is not mechanised.

details). Yes

a) Credit Notes,
b) Credit Notes Journal,
c) Product-wise / party-wise quantity statement and
d) Schedule code-wise sales tax register

Accounts

Internal users.


Dewas & Area Offices
AS-IS Document
Name of Business Process : Sales Returns / Credit Notes (Dewas)
Flow Chart of Business Process: FC-Sales Returns-Dewas.Doc
Organizational Structure
We have 14 area offices located all over India. Very few of those are having our
own service stations, else where we have authorized service centers.

In case of material received from dealer / customer directly at Area office,
verification of such returned material, testing is done at service station.
Whenever it is confirmed that returned pumps are not repairable marketing dept.
takes the decision about free replacement / credit note and informs accounts
dept accordingly.
On receipt of credit memo, credit note is issued by account dept and is
authorized by Regional Sales Manager of the concerned area office.
store memo is generated and the material is delivered to service center. After
instruction from marketing dept credit note is issued and following entries are
passed.
Dr. Sale of Product (General Ledger)
Dr. Sales Tax A/c (General Ledger)
Cr. Dealer/Customer (Debtors Ledger)
Sales tax is parted only if the pumps are returned within six months from the date
of invoice.
In case of free replacement given to dealer from area office stock, the store
memo and free replacement invoice (zero value) are accounted at the same time
for qty effect.
For material send to Dewas from Area Offices

Store memo of returned pump is booked for quantitative records, qty of store
memo is nullified with the credit note issued to dealer / customer. Stock transfer
invoice is raised on Dewas and accounting entry is passed accordingly.
In case of direct dispatches from Dewas the pumps are send by dealer /
customer without involving area offices, Dewas deals with customer / dealer

directly for replacement and in case of credit note, the credit balance is
transferred to respective area office.

details). Yes
a) Credit Notes
b) Credit Notes Journal
c) Product-wise / party-wise quantity statement

Accounts

Internal users.


Shirval
AS-IS Document
Name of Business Process: Sales Returns / Credit Notes (Shirval)
Flow Chart of Business Process: FC-Sales Returns-Shirval.Doc
Organizational Structure
We have 14 area offices located all over India. Very few of those are having our
own service stations, else where we have authorized service centers.

In case of material received from dealer /customer directly at Area office,
verification of such returned material, testing is done at service station.
Whenever it is confirmed that returned pumps are not repairable marketing dept.
takes the decision about free replacement / credit note and informs accounts
dept accordingly.
On receipt of credit memo, credit note is issued by account dept and is
authorized by Regional Sales Manager of the concerned area office.
The accounting entries for this activity are as under.
store memo is generated and the material is delivered to service center. After
instruction from marketing dept credit note is issued and following entries are
passed.
Dr. Sale of Product (General Ledger)
Dr. Sales Tax A/c (General Ledger)
Cr. Dealer/Customer (Debtors Ledger)
Sales tax is parted only if the pumps are returned within six months from the date
of invoice.
In case of free replacement given to dealer from area office stock, the store
memo and free replacement invoice (zero value) are accounted at the same time
for qty effect.
For material send to Shirval from area offices:

Store memo of returned pump is booked for quantitative records, qty of store
memo is nullified with the credit note issued to dealer / customer. Stock transfer
invoice is raised on Shirval and accounting entry is passed accordingly.


details). Yes
a) Credit Notes

Accounts

Internal users.


Projects
AS-IS Document
Name of Business Process: Sales Returns / Credit Notes (Projects)
Flow Chart of Business Process: FC-Sales Returns-Projects.Doc
Credit Notes
At end of the quarter or year, if the deductions made by the customers are
considered doubtful of recovery, a provision is made for such deductions. This
provision is made by debiting the deductions account (If exists in General Ledger
such as Liquidated damages for late supplies) and credit to sundry debtors
account. When the deductions made by customer or deductions so provided are
considered not recoverable, these are written off by raising credit note on the
customer. The credit note is initiated by the CCR department on approval from
Vice President (Marketing). The credit note is raised by accounts department.
Credit Note is raised in three copies. First copy is for customer, Second for CCR
Department and third for accounts department. The current finance system
generates monthly credit note register. Sometimes the balance to the customer’s
account is considered as non-recoverable by the CCR department. On approval
from the SBU Head, these balances are written off as bad on the basis of credit
memo initiated by the CCR department. The SBU Head approves this credit
memo. On the basis of this credit memo, the accounts department draws a credit
note, crediting the customer and debiting the bad debts account. This credit note
is also drawn in triplicate.
On realisation of foreign currency for invoices in foreign currency, the bank

provides a credit advice for receipt. The CCR department gives the similar details
for receipts of such currency. The receipt is accounted by accounts department
at rate prevailing on the date of receipt. If the receipt is against the invoice of
current year, the difference in rate is accounted to product sales and if pertaining
to invoices of earlier years, accounted to difference in exchange rate account.
The balance in sales ledger, both in customers and advances account are
revalued on the basis of rates prevailing on 31st March. The difference arising out
of such valuation is accounted to difference in exchange rate account. The
present finance system does not allow accounting in multiple currencies.
Returned Goods Accounting

In case of goods returned, the Kirloskarvadi despatch department receives the
goods. The despatch department prepares a ‘Returned Goods Memo’.
Kirloskarvadi sends one copy of this memo to project Pune. On the basis of this

memo, if CCR department at Pune consider this material is not returnable, draws
a credit note memo and forwards it to the accounts department. Accounts
department on the basis of this credit memo draws a credit note debiting to sales
and crediting the customers account in sales ledger.

details). Yes
a) Credit Notes

Accounts

Internal users.


Business Deposits , Advances from Customers

Kirloskarvadi
AS-IS Document
Name of Business Process : Business Deposits , Advances from
Customers (Kirloskarvadi)
Flow Chart of Business Process : FC-Deposits,Advances-KOV.Doc
a) Exports
Advances from Customers

Sometimes, we receive advances from overseas customers against the orders
placed by them on us. C.I.D. deposits the said cheques in our bank account at
Pune under a covering letter and sends a copy of the covering letter to us by
putting name of the customer and reference of Acceptance of Order. On
realization of the said amount into our bank account, we account for the advance
to the concerned customer’s account in Advance Received Against Order ledger,
at the rate charged by the bank on the date of credit, through bankbook.
Bank account Dr.

Advance Ledger (Customer) accounts Cr.
In case the cheque is deposited but not credited by bank upto 31 st March, we
account for the advance by passing above entry at exchange rate prevailing on
the date of Balance Sheet.
Adjustment of Advances
We pass transfer entries from Advance Received against Order Account to
customer’s account in Sales Ledger on the basis of adjustments shown by C.I.D.
in the invoice and / or as per the recommendation of C.I.D., through Journal. This
does not happen automatically through the system.
Advance Ledger (Customer) accounts Dr.

Difference in Exchange Account Dr / Cr
The exchange difference (i.e. difference between accounting value of the invoice
and realized value and difference between adjustment of advance at invoice rate
and realized value) is accounted to Account No. 19999 in Sales Ledger if the
invoice pertains to current year. If the invoices are pertaining to previous financial

years, exchange difference is accounted to Difference in Exchange Account

through Bankbook or Journal as the case may be.
b) Domestic
We Collect business deposits from dealers as per prevailing commercial policy /

decisions of SBU heads. The amount is credited to the customers account in
business deposits ledger. Similarly we collect advances from customers. These
are accounted to the customer’s account in advance received against order
ledger. The advance gets adjusted at the time of raising the bill automatically
through present financial accounting system and entry is passed debiting
advance account and crediting customers account in debtors ledger.
On the termination of dealership agreement the business deposit is either

adjusted in current account (in case of Outstanding) or repaid by cheque or
demand draft.
A) In case of refund:
Dr. Dealer A/C in (Business Deposit Sub Ledger)
B) In case adjustment to Current a/c :

Cr. Dealer A/C in (Sales Ledger)
We issue credit advises to the customer for interest on business deposit /

advances at the time of year end. We deduct income tax at source, issue TDS
certificate, deposit the tax and file form no 26 C.
Concern Areas, if any : The activity is partially mechanised.

details). Yes
a) Business Deposits Ledger,

b) Business Deposits Trial Balance,
c) Advance against Order Ledger,
d) Advance against Order Ledger Trial Balance,
e) Outstanding register of Advances,
f) Credit advice for interest on BD / Advance,
g) TDS Certificate and
h) Form no 26 C


Accounts

Internal users.


Dewas / Shirval / Area Offices
AS-IS Document
Customers (Dewas / Shirval)
Flow Chart of Business Process : FC-Deposits,Advances-Dewas.Doc
Terms and Conditions

As per the terms and conditions of Commercial Policy interest free business
deposit of Rs.10, 000/- is accepted at the time of appointment of New Dealer and
in case of old dealers the same clause is applicable.
Accounting Entries
For acceptance of BD
Dr Bank A/C (General Ledger)
Cr. Dealer A/C in (Business Deposit Sub Ledger)
For refund of BD
On the termination of dealership agreement the business deposit is either
adjusted in current account (in case of Outstanding) or repaid by cheque or
demand draft.
A) In case of refund:
B) In case adjustment to Current a/c :
Cr. Dealer A/C in (Sales Ledger)
Advance from Customers

As per the commercial policy dealer lifts the material either on cash and carry
basis or on credit basis. Hence possibility of any advance is remote. There are
cases of dealer sending advance along with the order placed to area office, in
such cases the amount is credited to current account of the dealer and is
adjusted against billing.

details). Yes

a) Business Deposits Ledger

b) Business Deposits Trial Balance

Accounts

Internal users.


Projects
AS-IS Document
Customers (Projects)
Flow Chart of Business Process: FC-Deposits,Advances-Projects.Doc
Dealer’s Deposit
The commercial policy of SBU 2 specifies collection of dealership deposit
minimum of Rs. Three Lakhs. Though the acceptance of such deposit is
discretionary to the Regional Sales Manager subject to approval of the SBU
Head. In some cases the deposit may be below the minimum prescribed by the
policy. At the time of year-end, interest at the rate prescribed by the commercial
policy is calculated and credited to the dealers account in sales ledger. Presently
the rate of interest is 10% per year. In case there is no outstanding on the
dealer’s account, the interest is paid to the dealer. The TDS deducted from the
interest is transferred to the Head Office. Head Office issues the TDS
Certificates.
Concern Areas, if any : The activity is partially mechanised.

details). Yes, to overcome above problems.
a) Business Deposits Ledger

b) Business Deposits Trial Balance
c) Outstanding register of Advances

Accounts


Internal users.


ACCOUNTS PAYABLE
Purchase Accounting
Kirloskarvadi
AS-IS Document
Module : Finance and Controlling Chapter: FI-AP
Name of Business Process : Purchase Accounting (Kirloskarwadi –
Domestic and Exports)
Flow Chart of Business Process : FC-Purchases-KOV.Doc

a) Exports
Customs House Agent (CHA) Invoice

The CHA raises his bill for services rendered in connection with export of goods
on C.I.D. The bill is verified with the Agreement and sent for accounting to
Kirloskarvadi by C.I.D. We account for the same by debiting respective expense
accounts and crediting the CHA account in Creditors Ledger. This accounting is
done through journal. We deduct income tax at source while passing the bill or
at the time of payment, whichever occurs earlier. We raise debit advice on the
CHA for deductions mentioned by C.I.D. on his bill. Accounting of this debit
advice is done through Journal. The accounting entry for TDS deducted is
passed as:
Clearing House Agent’s account in Creditors Ledger – Dr.

Income Tax Deducted at source account in Advance Ledger – Cr.
As per availability of funds or as per instructions from C.I.D. or at the request of

Clearing House Agent, we pay his dues by preparing a Remittance Letter
manually. The Remittance Letter is prepared by Purchase Ledger Section and
sent to cashier for issuing the cheque. This payment is accounted through
bankbook.
Sometimes, the material is dispatched from Kirloskarvadi to dock or by customer

to dock by his own transport arrangement. In such case we pass the
transporter’s bill through Purchase Journal by debiting Outwards Transportation
Account and crediting his account in Supplier Ledger. The procedure of passing
the bill is as explained above.

The transporter, in consultation with CID, undertakes the performance of

activities relating to Octroi exemption such as payment of Security Deposit,
submission of exemption form etc. In case, sometimes, the octroi is required to
be paid, he pays the same and claims reimbursement through his bills. The
clearing agent lodges the claim for refund of octroi duty paid and on settlement of
the claim, sends the cheque to CID, who, in turn, sends the same to us for
accounting. However, in the present system, there are no controls / internal
checks on such transactions.
Purchasing of bought out items (Trading goods)

Many times, C.I.D. procures trading items directly (within India as well as outside
India) i.e. without involving factories (e.g. Compressors, Engines and Motors,
Castings etc.). In such cases, the Purchase Order is placed by C.I.D. directly on
the supplier with instructions to supply the material to factory / docks / customer.
A copy of the Purchase Order is sent to Accounts Department at Factory. The
bill received from supplier is also sent to factory for accounting. In case the
material is received at factory, we get a store memo for the same. In case the
same is directly sent to dock / customer, we seek commercial invoice number
from C.I.D. vide which the customer has been billed for. After getting the details
we pass the bill of supplier through Purchase Journal, by debiting respective
Purchase Account and crediting supplier account in Creditors Ledger. In case of
import, the supplier’s bill is passed along with bill of Customs House Agent. In
case the payment is made to overseas supplier against demand L. C., the bill is
accounted for at the amount actually paid to him. In case the payment is made
to overseas supplier against D.P.L. C., the bill is accounted for at the rate of
exchange prevailing on the date of obtaining Delivery Order. Payment is made to
domestic supplier as per availability of funds. In case we avail cash discount from
the supplier for effecting the payment before due date, the same is accounted to
Cash Discount Received Account (Other Income Group). This accounting is
done through bankbook. The rate of cash discount is case specific.
Payment to suppliers is effected either by Corporate Finance Department or by

Kirloskarvadi Accounts Department, either in advance or after receipt of bill and
material.
Sales Tax Section at Kirloskarvadi issues necessary Sales Tax Declarations to

vendors, in case the purchases are made within India.
c) Domestic
Very rarely, Marketing Department makes purchases of trading articles such as

Pumps, Valves, Engines, Motors etc. In such case the Purchase Order is
released by the Marketing Department requesting the vendor to dispatch the
material either to Kirloskarvadi or directly to the customer.

In case the material is to be dispatched to Kirloskarvadi, they send a copy of the

purchase order to Accounts Department, Kirloskarvadi. The supplier dispatches
the material to Kirloskarvadi and sends his bill to Accounts Department,
Kirloskarvadi. At Kirloskarvadi, we obtain a store memo for receipt of the
material and pass the bill of the supplier through Purchase Journal. Payment of
this bill is effected by Kirloskarvadi and accounted through Bank Cash Book.
In case the material is dispatched directly to the customer, the supplier raises his
bill on the Area Office. On the basis of dispatch documents handed over by the
supplier to Area Office, the Area Office raises sale invoice on the customer and
accounts for the bill of the vendor and effects payment to the vendor. In such
cases, at the year end, the balances appearing to the Purchases and Sales
accounts in the books of area offices are transferred by the Area Office to
Kirloskarvadi by way of debit and credit advices, which are accounted through
Journal.
Concern Areas, if any : Age-wise classification , dues / overdues classification

of vendors is not available through present system.

details). Yes
a) Creditors Ledger Trial Balance,

b) Purchase Journal,
c) Debit Note Journal,
d) Schedule code wise Purchase Tax Register,
e) Set-off Register and
f) Creditors Ledger

Accounts

Output from this business process sent to other functions : Vendors and
Internal users.



Dewas / Shirval / Area Offices
AS-IS Document
Name of Business Process : Purchase Accounting (Dewas & Shirval)
Flow Chart of Business Process : FC-Purchases-Dewas.Doc
Bought Out Finished Goods:
Purchase Order
At Dewas purchase order is raised by ancillary dept. on the ancillary units /
vendors for supply of finished products. (As of today we are purchasing End
Suction, Mini pumps and valves from vendors). At area offices, marketing
department place purchase orders directly on vendors for their requirements but
at the agreed terms of Dewas with vendor such as price, delivery period, terms of
payment etc. Copy of purchase order is given to accounts department.
Material Receipt and Invoice Verification

On receipt of material at Dewas / area office store memo is taken out by store
person and copy of the same with vendor’s invoice is forwarded to accounts
dept. After verification of bill with purchase order and store memo, the amount of
bill is credited to vendors’ account in purchase ledger by debiting to purchases
account. After passing invoice area office transfers the credit balance to Dewas
on month to month basis.
In case of transportation charges incurred, bills are passed by Dewas and area
offices on the basis of rate contracts and payments are made after deducting
TDS wherever applicable (presently @2.2%). All area office except
Secunderabad, Chennai, and Banglore transfer TDS to Head Office Pune by way
of credit advice on month to month basis before 5th of subsequent month. In
case of Secunderabad, Chennai, and Banglore TDS is deposited with Local
Govt. Authorities before 7th of subsequent month. Yearly return of TDS under
form 26C is filed with Govt. authorities.
In case of sub contractors for works contract order at Pune AO TDS deducted is
transferred to Projects division by way of Credit Advice.
Payments to Vendors:
We have a system of centralized payment from Dewas for vendors of finished
products. Payments are made as per availability of funds. In case of transporter’s
also the payments are made from Dewas except for local transportation at area
offices.



details). Yes

a) Creditors Ledger Trial Balance
b) Purchase Journal
c) Debit Note Journal
d) Schedule code wise Purchase Tax Register
e) Set-off Register
f) Creditors Ledger

Accounts

Internal users.


Projects
AS-IS Document
Name of Business Process : Purchase Accounting (Project)
Flow Chart of Business Process : FC-Purchases-Projects.Doc
Issue of Purchase Orders

On the basis of trading portion in Order Acceptance, Project Pune or Area Office
issues purchase orders on suppliers. Purchase orders are issued based on the
quotations received from suppliers. The purchase order issued contains Name
and address of the supplier, description of the products, quantity, rate, amount
and other clauses like delivery schedule, L D clause, taxes and duties clause etc.
Supplier’s Bill Passing

Adhering to the delivery schedule, the supplier despatches the material to the
destination asked for in the purchase order. He sends his invoice raised on
Kirloskar Brothers Ltd addressed as per requirement. Along with the invoice he
submits the necessary documents like Lorry waybill, Delivery challan etc. He
submits these documents to the execution department. The project coordinator
verifies the supplier’s invoice and other documents, fills the predesigned format
of submitting the documents to accounts department and sends these
documents to accounts.
Accounts department rechecks these documents with purchase order copy and
passes this invoice. Accounting entry made is debiting the product purchases
account, crediting the suppliers account in purchase ledger. Accounts
department maintains the purchase ledger master. The master contains
information of Account Number of the supplier (decided by the person keeping
the purchase ledger master), name and address of the supplier.
Debit Advices
While passing the supplier’s invoice, if some mistakes found by the accounts
department, necessary deductions are made. The mistakes normally are amount
excess claimed by the supplier, taxes, freight or insurance wrongly charged,
description of the product differs from the purchase order etc. If some amount
has to be debited to the supplier on account of these mistakes or if the delivery is
delayed beyond the delivery schedule mentioned in the purchase order, such
debit is charged to the suppliers account on the basis of debit advice raised. The
accounts department in duplicate raises this debit advice. Original copy is meant
for the supplier and accounts department keeps second copy. Debit except on

account of L D, is debited to the suppliers account and credited to product

purchases account. If debit is on account of late delivery, the suppliers account is
debited however the credit is given to ‘Product L D account’ opened in purchase
ledger separately. This account is opened for each of the trading product. This
credit is not taken to the product purchase account. The reason behind this is the
L D on account of late delivery, if considered as reasonable by the execution
department, is waived latter on. If L D is waived, a credit advice is raised on the
supplier, crediting his account and debiting this ‘Product L D account’. At the time
of year ending, the accounts department in consultation with the execution
department reviews the balance to this ‘Product L D account’. The Liquidated
damages, considered as non-payable, are debited to ‘ Product L D account and
credit is given to the product purchase account. The balance L D is kept in the
same account till the decision of paying back or writing off is not taken.
Payment to Suppliers
The suppliers invoices are paid by the accounts department on the basis of due
dates quoted in the purchase order subject to the availability of required funds. If
some cases if required funds are available with the accounts department and
supplier agrees for a cash discount, his invoices are paid before due date. The
rate of cash discount is based upon the applicable situations. Considering to pay
the supplier, accounts department prepares a remittance letter in duplicate and
cashier on the basis of this remittance letter draws a cheque in favour of supplier
and cheque is given to the supplier. Cashier takes acknowledgement of the
supplier on duplicate copy of the remittance letter while forwarding the cheque.
Original copy of the remittance is given to the supplier along with the cheque.
The work of drawing remittance letter and cheque is manual in the present
system. The TDS and ESI applicable to the class of the supplier are deducted
while passing the bill or while payment to the supplier. The TDS is credited to
‘Tax Deducted at Source’ account in General Ledger and the ESI deducted is
credited to ESI account opened in Advance Ledger. The balance to these
accounts is transferred to the Head Office on monthly basis. Head Office issues
TDS certificates on yearly basis. Head Office deposits ESI.
Imports
The contract for imports are normally for technical know how, import of parts of
pump, submission of manuals and for supervision of construction of the pump.
The terms of payment differ depending upon the nature of import. The terms of
payment for supply are normally back-to-back. The currency in which the
payments are to be made to the foreign suppliers are kept in EEFC account. In
case the currency received is short of the amount of payment, the payment is
made in Indian rupees to the bank. These payments are normally made through
Letter of Credit.
On receipt of the documents from the foreign bank, the Indian bank submits the
documents along with the necessary advices to execution department in Project.

Execution department verifies the invoice with the purchase order placed on the
foreign supplier. The execution department forwards this invoice along with the
bill of entry and other necessary documents to the accounts department.
Accounts department rechecks these documents with the Purchase Order and
passes the suppliers invoice. The invoice is recorded at rate prevailing on the
date of passing the invoice. The payment of out EEFC account is recorded
normally at rate prevailing on the payment date. The difference is accounted to
the product purchase account. The execution department receives the clearing
agent’s invoices directly, verifies and submits to the accounts department for
payment. Accounts department on receipt of these invoices, rechecks the
charges charged by the clearing agent and pays for the same as normal payment
procedures. These charges are debited to respective purchases account. At the
time of year-end, if any balance is there on foreign supplier’s account, it is
revalued at the rates prevailing on 31st March. The difference is accounted to
difference in exchange account. Similarly, the balance in EEFC account is
revalued based on the rates as on 31st March and the difference is taken to
difference in exchange account.
EEFC Account Operations

In some cases of realisation in foreign currency, the proceeds are credited to
EEFC account maintained with the bank. The EEFC account is maintained for
making payment for the imports. For contracts involving the construction of the
concrete volute pump, the parts of such pumps are imported from Italy. The
terms of payment for imports are normally back-to-back. When amount is
received from the customer in ITL, kept in EEFC account and payment is made
to the foreign supplier out of this account. The accounting entry for receipt of
foreign currency is made at rate prevailing on the date of receipt and the entry for
payment out of EEFC account is made at the same rate at which the entry for
receipt is made. At the time of year ending, the balance in EEFC account is
valued at rate as on 31st March. The difference is accounted to Difference in
exchange account.
Purchase Ledger Scrutiny

The present system does not facilitate automatic purchase ledger scrutiny. The
ledger, the present system allows, is not similar to the sales ledger. The
purchase ledger gives the opening balance of the month and transactions of the
total month. The items comprised in the balance to the account have to be listed
out manually. The balance confirmation letters also have to be printed manually.


details). Yes


a) Creditors Ledger Trial Balance
b) Purchase Journal
c) Debit Note Journal
d) Schedule code wise Purchase Tax Register
e) Set-off Register
f) Creditors Ledger

Accounts

Internal users.


COST CENTER ACCOUNTING
AS-IS Document
Date : June 24,2000
Module : Finance and Controlling Chapter: CO-CCA
Name of Business Process : Cost Centre Accounting
Collecting of cost / revenue for cost centres

At present, while entering accounting document, system asks for the department
number. But this is not strictly followed which leads to non-availability of
department wise cost incurred under different account heads.
Whenever management requires any information for particular department, the

same is prepared by analyzing the ledger accounts of particular G/L account. If
required account vouchers are also analyzed to prepare the report. But this
information is not available and not updated on regular basis.
Concern Areas, if any : Online information is not available and its time
consuming job to prepare such reports. Budget data for each department can not
be stored and not available for monitoring. Formal system of allocation and
appropriation is not in operation to provide meaningful information

details). Yes
Any reports related to current business process : Need based reports are
generated.
Any document/output is printed for this business process: Department/ SBU

wise profit and loss account (As and when required)
The data/records of current business process is stored in : Present Financial




INTERNAL ORDER ACCOUNTING

AS-IS Document
Date : June 24,2000
Module : Finance and Controlling Chapter: CO-OPA
Name of Business Process : Order Accounting
Collecting of cost / revenue for Orders

At present, while entering accounting document, system asks for the order
number. But this is not strictly followed which leads to non-availability of order
wise cost incurred under different account heads.
Whenever management requires any information for particular order, the same is
prepared by analyzing the ledger accounts of particular G/L account. If required
account vouchers are also analyzed to prepare the report. But this information is
not available and not updated on regular basis.
Concern Areas, if any : Online information is not available and its time
consuming job to prepare such reports. Budget data for each order can not be
stored and not available for monitoring. Formal system of allocation and
appropriation is not in operation to provide meaningful information

details). Yes
Any reports related to current business process : Need based reports are
generated.
Any document/output is printed for this business process: Order wise

profitability (As and when required)
The data/records of current business process is stored in : Present Financial




INFORMATION SYSTEM
AS-IS Document
Module : Finance and Controlling Chapter: IS
Name of Business Process : Reporting

Area Offices
Sales, stock and recovery figures are reported by Marketing Staff to Head,
National Sales, Dewas on daily basis.
Accounts Department at Area Office reports to Head Office monthly information
regarding
Sales, Recovery, Employee Related Expenses, Other Expenses, Stocks,
Debtors, Aging of Debtors and Stocks, details of statutory payments such as
income tax, provident fund, E S I, Sales Tax etc., I
Information of customers due outstanding for period of more than 6 months is
reported through Head, National Sales along with the comments from Marketing
Personnel at Area Office about recovery plan of the sale, details of Government
debtors between 180 to 270 days. .
Projects Division
Monthly Profit and Loss Account and Balance Sheet
Daily recovery and trading sale figures.
Aging of debtors’ details of Government debtors between 180 to 270 days.
Details of monthly civil contract activity report, billing to top ten customers on
month to month basis and cumulative up to each quarter.
Monthly cash flow,
Report on product-wise material cost of trading articles on quarterly basis.
Dewas / Shirval factory

Monthly Profit and Loss Account and Balance Sheet.
Daily production, sales, recovery figures.
Aging of debtors’ details of Government debtors between 180 to 270 days.
Monthly cash flow, monthly stock statement.
Kirloskarvadi factory
Daily production and despatch report.
Daily SBU-wise Invoicing report.
Daily SBUwise inflow.
Monthly Profit and Loss Account and Balance Sheet.

Details of Government debtors between 180 to 270 days.

Aging of domestic and export debtors.
Monthly Cash Flow.
Monthly Stock Statement.
Any other report as per requirements of the Management from time to time.
Concern Areas, if any: Required data is not available readily at all locations,
hence the activity becomes time consuming, resulting in to rework, duplications,
digging out data etc.

details). Yes
Any document/output is printed for this business process: Reports as per

requirements of management.
If yes. Document/output is attached :


FICO Real Time Project

Hochgeladen von

Dokumentinformationen

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

FICO Real Time Project

Hochgeladen von

Copyright:

Verfügbare Formate

D1007AIP 24/06/2000

Financial Accounting & Controlling

L&T Information Technology Limited

DOCUMENT RECORD LIST

Ver/Rel. Release Mod.By Rev. By Auth By Remarks

L&T Information Technology Limited 2 of 105

ACCOUNTS PAYABLE ............................................................................................................................90

INTERNAL ORDER ACCOUNTING .....................................................................................................102

INFORMATION SYSTEM .......................................................................................................................104

L&T Information Technology Limited 3 of 105

Kirloskar Brothers Limited (KBL) is flagship company of the group having

"Seek continuously, appropriate technology and systems to enhance stakeholder

1. Sales & Distribution (SD)

L&T Information Technology Limited 4 of 105

Organization Structure of Accounts Department

Manpower strength of Accounts Department is about 130, as detailed herein

Present organization structure of the Company and accounts department in

L&T Information Technology Limited 5 of 105

The General Ledger Master records are maintained in in-house developed

Opening of new account in General Ledger is controlled centrally by Corporate

Description of Account is the only information stored in Master Data record.

The Customer Master records are maintained in in-house developed Financial

Customer Accounts From To

L&T Information Technology Limited 6 of 105

In case of security (business) deposit taken from the dealer it is accounted in

In case of advances received from the dealer it is accounted in customer master

Authority of opening of new customer is vested with respective accounts

The details of customers at Pune Area Office are stated in Data-Cust.xls.

The Vendor Master records are maintained in in-house developed Financial

L&T Information Technology Limited 7 of 105

Vendor Accounts From To

There are no further sub-groupings of Vendor master records based on certain

Authority of opening of new Vendor is vested with respective accounts

Depots Ledger Master

The details of Depots Ledger are stated in Data-Depot.xls.

Advances (Employee) Master

The Advances (Employees) Master records are maintained in in-house

L&T Information Technology Limited 8 of 105

Advances to Employees 40001 49999

The detail of Advances (Employees) Master at HO is stated in Data-Empl.xls.

Separate bank master is not maintained in the existing system. Account

The details of Bank Master is stated in Data-Bank.xls.

Cost Centers Master

The details of Cost Centers are stated in Data-Cctr.xls.

L&T Information Technology Limited 9 of 105

Flow Chart of Business Process : attached

Details of Business Process: Area Offices raise advice on concerned SBUs

Concern Areas, if any :

Whether modification of current business process required? (If yes, give

Any reports related to current business process: Trial balance of Corporate

Output from this business process sent to other functions :

L&T Information Technology Limited 10 of 105

Cash and Bank Accounting

Generation of Vouchers / Cheques

L&T Information Technology Limited 11 of 105

Expenses incurred on advertisement / exhibition etc. must be ascertained

Whether modification of current business process required? (If yes, give

Any reports related to current business process :

Whether copy of such report is attached : yes

Purpose of the report : Statutory / Audit / Information

Any document/output is printed for this business process: Cash Flow ,

If yes. Document/output is attached : No

The data/records of current business process is stored in : Present

Sign-off (Approval) for this document :