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1 Organization structure

1.1

Finance and Controlling Organization Entities

1.1.1 General explanations


Planet Retail group comprises of several individual legal entities. IS-Retail project will
address the logistics and financial tracking of the following 3 company codes
1. CMRI
2. Supreme Tradelinks Private Limited
3. Quest Retail Private Limited
Comprehensive financial statements will be drawn for the three company codes. Trial
Balance will also be available at Sites through Profit Center grouping by enabling the New
GL functionality of online split with Zero balancing for scenarios Profit Center and
Segments.
For internal monitoring purposes, individual responsibility centers have been identified
against which operating profitability will be measured together with Accounts Receivable,
Accounts Payable and Stock.

COMPANY CODE
It is the smallest organizational unit for which a complete self-contained set of accounts can be
drawn up for purposes of external reporting. The process of external reporting involves recording all
relevant transactions and generating all items and supporting documents required for legal financial
statements (Balance Sheet and Profit and Loss statement).
Only a legally independent company is normally represented by a Company Code in the SAP
system. In financial accounting, business transactions are always entered on the Company Code level
and processed further. The costs are also managed at the Company Code level. By using internal
organizational structures, it is possible to divide this up even further in Controlling.
Tax and Legal requirements: ability to produce an auditable, fully balanced set of financial records.
In CMRI system, there will be one Company Codes where the Statutory Profit and Loss Statement as
well as Balance Sheet will be generated under Schedule VI to the Companies Act, 1956.
Company Code Description
CMRI

Company Code
1000

In the following documentation, we will refer all scenarios with reference to Company Code CMRI.
All scenarios will work identically for the other 2 company codes also. Wherever differences arise,
we will refer in explicit.

Fiscal Year and Accounting Posting Period


A Fiscal Year is generally a period of 12 months for which the company produces financial
statements and takes inventory. It may or may not correspond to the calendar year.
A Fiscal Year variant specifies the number of periods and special periods in a Fiscal Year and
how the system is to determine the assigned posting periods.
CMRIs Fiscal Year is April to March. The end of a period is the last day of the calendar
month.
PRHPL will use the standard SAP Fiscal Year Variant V3 with 12 normal posting periods.
Posting Period Variant
Once a Fiscal Year is defined, it is possible to specify whether a period is allowed for posting
or not. In order to standardize maintenance of accounting period especially across the group,
SAP system allows the specification of open or close status to be maintained via a posting
period variant.
Separate posting period variants will be created for the 3 company codes. It will add the
flexibility of separately managing period opening and closing for individual company codes.

Posting Period
Variant

Name

Company
code

1000

Planet Retail Holdings

1000

1100

Supreme Tradelinks

1100

2000

Quest Retail

2000

CHART OF ACCOUNTS
The Chart of Accounts is a classification scheme consisting of a group of general ledger (G/L)
accounts. It provides a framework for the recording of values, in order to ensure an orderly rendering
of accounting data. The G/L accounts it contains can be used by one or more Company Codes. Every
Company Code must be assigned a Chart of Accounts.
For each G/L account, the Chart of Accounts contains the account number, the account name and
other technical information. A Chart of Accounts must be assigned to each Company Code and will
be used in both financial accounting and cost accounting.
All 3 company codes will use a common chart of account to manage accounting in consistent
manner.
GL Account Creation Process
Step 1 Create GL account in Chart of Account (GL Code, Description, Balance Sheet account /
P&L account)
Step 2 Extend GL account to individual company codes

Chart
of
Accounts Chart of Accounts
Description
PR Chart of Accounts
1000
Following is the proposed Chart of Account structure for Planet Retail -

Natur
e

Account Group

Liabilit
ies

Shareholders Funds

SHAR

Loan Funds - Secured

LNSE

Loan Funds - Unsecured

LNUN

Current Liabilities

CULI

Provisions

PROV

Fixed Assets

FIXD

Investments

INVS

Inventories

INVE

Debtors

DEBT

Loans & Advances


Cash & Bank

ADVA
BANK

Group
Code

From To
1000 10999
00 9
1100 1199
00
99
1200 1299
00
99
1300 1399
00
99
1400 1499
00
99

Assets
2000
00
2100
00
2200
00
2300
00
2400
00
2500

2099
99
2199
99
2299
99
2399
99
2499
99
2599

Deferred Tax
Misc Expenditures not
Written Of

DTAX

Revenue

REVE

Other Income

OTIN

Cost of Goods Sold

COGS

Employees Cost
Gen & Administrative
Expenses
Selling & Distribution
Expenses

EMPL

Interest & Finance Charges

FINA

Depreciation

DEPR

Provision for Taxation

PTAX

MENW

00
2600
00
2700
00

99
2699
99
2799
99

3000
00
3100
00

3099
99
3199
99

4000
00
4100
00
4200
00
4300
00
4400
00
4500
00
4600
00

4099
99
4199
99
4299
99
4399
99
4499
99
4599
99
4699
99

Incom
e

Expen
ses

ADMN
SELL

CONTROLLING AREA
Controlling area is an Organizational Unit within a company, which is used to represent a system for
management accounting purposes. A controlling area may include single or multiple Company
Codes. These Company Codes must use the same operative Chart of Accounts & the same Fiscal
Year.
All internal allocations refer exclusively to objects in the same Controlling Area. Internal business
transactions are portrayed in the Controlling Area. Primary costs are transferred from external
accounting and classified according to managerial accounting perspectives. All these will help the
company track specific information for cost monitoring, business decisions and sales control.
One controlling area 1000 is recommended for Retail operations to facilitate internal reporting
requirements.
Controlling
Description
PR Controlling Area

Area Controlling Area


PR01

CREDIT CONTROL AREA


A Credit Control Area can establish and monitor credit limits for customers assigned to one or
several Company Codes. A Company Code is assigned to one Credit Control Area, which monitors
its credit limits. More than one company codes can be assigned to a common Credit Control Area to
carry out group-level collective credit management.
One Credit Control Area 1000 will be defined and attached to the 3 company codes.
Credit Control
Description
PR Credit Control Area

Area Credit Control Area


1000

PROFIT CENTER ACCOUNTING


A Profit Center is a management-oriented Organizational Unit used for internal controlling purposes.
Dividing the company up into Profit Centers allow analyzing areas of responsibility. Profit Center
Accounting supports a division of the enterprise into areas of responsibility.
The standard hierarchy of Profit Center is defined as a tree structure for grouping all Profit Centers,
which belong to a Controlling Area. Each Profit Center must be assigned to a group (node) of the
standard hierarchy. In addition to the standard hierarchy, various alternative hierarchies can be
defined for use in the information system and other functions.
The Standard Profit Center Hierarchy for Controlling Area PR01 will be defined considering both
the Geographic dimensions and major merchandise categories (segments). Sites as a common Profit
Center and a combination of sites with major merchandise categories (segments) as operational
Profit Center will be defined as Profit Centers.
By creating Profit Center groups, the aggregated data can be analyzed at higher levels in the
hierarchy. Lowest level in the Profit Center hierarchy is identified as site (stores) and combination of
sites with major merchandise categories (segments), are defined as Profit Centers.

A broad template for profit center hierarchy is as follows -

Plane
t
Retail
PRH
PL
PRHPL Commo
n
Debenha
ms
Debenha
ms Common
Store 1
Store 1
Fashion
Store 1
Health
Store 1
- Home

Store 2
Store 2

Fashion
Store 2
Health
Store 2
- Home

DCDebenhams

Next
Next Common
Store 3
Store 4
DC - Next

STPL
STPL Commo
n
M&S
M&S Common
Store 5
Store 5

Fashion

Store 5
- F&B

Store 6
Store 6

Fashion
Store 6
- F&B

DC-M&S

QRP
L
QRPL Commo
n
TBS
TBS Common
Store 7
Store 8
DC-TBS

Code Structure:Profit Centers would thus be SITES (which will be Stores / DC) + Major Merchandise Category
(segments). SAP provides a 10 digit Profit Center Code to be defined:
XX

XX
______

XXXX

XX
___

COMPANY CODE
CONCEPT
SITE CODE
SEGMENT CODE
Concept codes, Site Codes and Segment Codes are being discussed and once finalized, Profit Center
Codes will be drawn-up. However, the structure will be as explained above.

COST CENTER ACCOUNTING


Cost Center is the lowest Organizational Unit on which Cost can be collected, planned and analyzed.
The Cost Center hierarchy is the repository of all the Cost Centers that are applicable for processing,
monitoring and reporting costs. The Cost Centers are assigned at the lowest node of a tree structure
representing the hierarchy of the cost structure in the company.
The Cost Center Hierarchy will be defined on the same lines as Profit Center Hierarchy. Key
difference is that the individual cost centers can be defined at functional department level also
(admin, selling etc) in addition to the Major Merchandise Category (segment) level.
By creating Cost Center groups the aggregated data can be analyzed at higher levels in the hierarchy.

The Cost Center Hierarchy is structured as follows:

Plan
et
Retai
l
PRH
PL
PRHPL
Comm
on
Debenha
ms
Debenha
ms Common
Store 1
Store 1 Fashion
Store 1 Health
Store 1 Home
Store 1 Common

Store 2
Store 2 Fashion
Store 2 Health
Store 2 Home
Store 2 Common

DCDebenhams

Next

Next Common
Store 3
Store 4
DC - Next

STPL
STPL Comm
on
M&S
M&S Common
Store 5
Store 5 Fashion
Store 5 F&B
Store 5 Common

Store 6
Store 6 Fashion
Store 6 F&B
Store 6 Common

DC-M&S

QRP
L
QRPL Comm
on
TBS
TBS Common
Store 7
Store 8
DC-TBS

Code Structure: Cost Centers would thus be sites (which will be Stores / DC) within which Departments / Offices are
defined. SAP provides a 10 digit Cost Center Code to be defined. Since our definition of Cost Center
is Site and within this a Department, we could restrict the Cost Center Code to a 9 digit code as
defined below:

XX

XX
______

XXXX

XX
___

COMPANY CODE
CONCEPT
SITE CODE
SEGMENT/FUNCTION
CODE
Site Codes are being discussed and once finalized, Cost Center Codes will be drawn-up. However,
the structure will be as explained above.