2010

Summer Internship Program

financial management and

reporting system of rites ltd.

Company guide:
Mr. anil ghai
(agm -- f&a, rites ltd )

Submitted to:
Submitted By:
Ms. Sangeeta wats
pandey

Neha

Asia
pacific institute
of
management (New Delhi)

ACKNOWLEDGEMENT
The project, as it stands today is the sincere contributions of spirited individuals. I take
this opportunity to express my sincere gratitude to respected Mr. Anil Ghai, AGM
(Finance& Accounts Department) RITES Ltd. who agreed to be my mentor.
I am sincerely indebted to him, for his outstanding and undeniable considerations. It
was because of him only that I have learnt so much from the company in such a short
duration. I would also like to utilize the space for thanking all the employees in
Finance Division of RITES Ltd. who helped me to understand the working of the
department as well as whole organization.
I express my gratitude to AIM (New Delhi) and my mentor Ms. Sangeeta Wats
for providing me an opportunity to work on this Project as a part of the
curriculum and guiding me in every step.
I express my feeling towards My Dear Parents, who have continuously encouraged &
motivated me during Summer Training & preparation of project. I also express my
sincere gratitude towards my uncle Mr. Vinod Kumar Ojha for encouragement and
cooperation.

NEHA PANDEY

PGDM (General)
AIM, NEW DELHI

PREFACE
While working in RITES limited, I got the opportunity to understand the nuances of a
PSU consultancy firm. The multi-disciplinary areas of operations in the company has
given me an opportunity to know in detail the various types of project entered into by
the company process of making project estimates for planning & procedure of
finance & account

So I have learned in the project that how to change a system. It is change batch system
to online system. I am learning that what roll play by finance department in system. It
is using all procedures of finances in computer. Therefore, it works very fast.
Computer work very fast comparison human. The report is help to other organization
to change system

TABLE OF CONTENTS

INTRODUCTION
The main things, which I have tried to cover in my report in order to gain the whole
sum knowledge of the financial management of the company, are as follows:
1) FMIS i.e. Financial management information system of the company it is being
covered by me because it the source of data collection and management of the
company. Record of all day-to-day transactions is being kept in it so it plays a very
vital role in the F&A division of the company, under that I have covered:

Accounting and financial management of the company: I have tried to gain

the knowledge of the whole process of accounting of the company with it. The
accounting process of the company covers the consolidation of accounts, so the
compilation and consolidation process is also being covered under it.

Project costing and estimation: This helps in allocation of companys fund

efficiently. I have tried to analyze various aspects where cost will be incurred
keeping in view the profit margin.

Deposit works: As they are very important from point of contract management.
I have tried to analyze the costing of deposit works and various expenses
involved in the deposit works contract.
Taxation: I cover it because it affects the profit of the company. The actual
profit and revenue of the company are calculated only after deducting the
taxable income of the company.
2) ERP i.e. Enterprise Resource Planning, which is going to be implemented in RITES
Ltd.
In this way covering all the above-mentioned topics I have tried to understand
the overall structure of the F&A division of the company.

OBJECTIVE
1. To understand the financial management system of rites ltd.
2. To be familiar with the parties involved and guidelines for different types of
projects undertaken by the company and the implementation of information system
in financial management of the company.
3. To be aware of various aspect of financial management including contract
management, accounting procedures, consolidation of accounts & construction
management in context of rites ltd.
4. Need of project estimates and the basis of allocating the costs and overheads to
different heads.
5. Understanding how costing methods vary with the type of business segments (like
Consultancy, Export, Lease etc.) and other costing concepts being used in RITES.
6. To understand why ERP is implementing in Rites Ltd.

METHODOLOGY

1.

Understanding the nature of consultancy industry and the business of the

company, the working of the company by going through the company journals,
annual reports, official circulars, contract documents, tenders and other
documents

2.

Discussions with the company mentor and other key persons concerned

3.

Attending the discussions involved if feasible

4.

Analysis of secondary data of projects from the companys Financial Management

Information System (FMIS) generated reports and statements.

5.

Gone through

BRIEF APPROACH FOR STUDY

COMPANY OVERVIEW

RITES is a PSU, which is an arm of the Indian railways. It was incorporated in 1974,
as a private limited company with the name Rail India Technical and Economic
Service Private Limited was converted into a public limited company on February 5,
2008.
The company has been accorded the Mini Ratna Grade- I status by the Govt. of India
by virtue of operational efficiency and financial status.
RITES Ltd. is an ISO 9001:2000 certified International multi-disciplinary Consultancy
organization rendering comprehensive professional services in various sectors
including Highways, Railways. Bridges, urban development, airports, inland
waterways and ports sector.
RITES have had operational experience in over 55 countries across Africa, Southeast
Asia, Middle East and Latin America. Most of Rites foreign assignments have been
for governments and other apex organizations.

Consulting

1974
onwards

Operations/ value added services/

equity participation

1984
onwards

1989
onwards

1994
onwards

1999
onwards

Fig. Snapshot of evolution of RITES

Infrastructure is the key to a nations social and economic development. It includes

everything from buildings to bridges, roads to railways and irrigation to
telecommunications. Infrastructure inadequacies in rural and urban India are a real

threat to continued growth. Until now, lack of political will, constrained financial
resources and years of underinvestment have been the biggest impediments for
infrastructure development.

More recently, the government has recognized that physical capacity must be created
to ensure 9% GDP growth as envisaged in the XIth Plan period. Some key measures
initiated by the government include, greater and focused expenditure on infrastructure
and setting up of nodal agencies such as the National Highways Authority of India
(NHAI), to provide a regulatory framework and to ensure efficient and timely
implementation of projects. The Planning Commission suggests, Investments will
need to increase from 4.6% of GDP to between 7% and 8% in the XIth Plan period.
This would entail an outlay of USD 500bn across the XIth Plan period (2007-2012), of
which about 30% is expected to be in transportation, including both roads and
railways.
Rites strength lies with total infrastructure solution capabilities and experienced team
of professionals & technical experts for providing multi disciplinary services from
concept to commissioning. The company deploys state-of-art technology and has
sound financial health. Company has an extensive international experience in
developing countries particularly in Africa, Asia, Middle East & Latin America.
Backed by expertise in diverse sectors of transport infrastructure in India and abroad,
RITES is capable of taking new challenges in all facets of transportations viz.railways,
highways, inland waterways, airports, urban transport etc. but company has limited
experience in managing mega projects for rendering of consultancy in overseas and
has remained restricted in railways and highways sectors only.

Investment in the government of India in transport infrastructure covering highways,

rural roads, rail, ports, harbour, inland waterways sectors continue to grow in spite of
global meltdown. Private sectors participation through PPP is being actively
encouraged to achieve greater efficiencies in development, operation and maintenance
of roads, airports and other transport infrastructure projects.

Opportunities are available in near future on modernization of railways workshop on

turnkey basis and company has already embarked upon on such projects through RCF
Kapurthala. Growth in existing business in rail infra, Urban Infra, and QA divisions
continue to secure prestigious projects despite though competition.

BUSINESS PROFILE
Sector

Railway

Bridges ,
tunnel

Highway & IT & Finance

ports

Urban
technology

Business
segment

Consultancy

Export

Lease

Inspection

O&M

Owner

Govt.

Central psu/
State psu

Private

Foreign

Subsidiary/Forei
gn branch

Services

PMC

Design Civil

Design
DPR
Mechanical

MultiDisciplinary

Electrification S&T

Material
Financial &
Procurement technical

Economic
Evaluation

Quality
Assurance
Geo.Tech

Due
Diligence

Project
Advisory

It is believed that RITES Ltd. enjoys a unique position of being the only company in
India to offer such a diverse and wide portfolio of services in the transport
infrastructure sector. It is the first Indian company to operate railway systems abroad
on concession basis. The company is also considering entering into BOT and BOOT
projects in the future.

CONSULTING PROJECTS:
Presently, the company has over 600 ongoing projects in India, besides over 30
ongoing projects overseas. RITES Ltd. has undertaken projects in over 50 countries,
primarily in Africa, Latin America, the Middle East and Asia. Its domestic as well as
overseas clients are typically national governments and public sector enterprises. In
India, its clients include various Central and State government ministries, other
government bodies, public sector undertakings including IRCON, Konkan Railway
Corporation Limited, DMRC, IOCL, NTPC Limited, NALCO, SAIL and NHAI as
well as various private companies including Jindal Steel Limited.

NON-CONSULTING BUSINESS:
Besides consulting, the company is engaged in export of locomotives, coaches, DMUs
and other rolling stock as well as their spare parts to various countries and provides
maintenance support for these assets to its clients abroad. RITES Ltd. is a nominated
agency to export rolling stock and components manufactured by the Indian Railways,
excepting exports to Malaysia, Indonesia and Thailand.
RITES Ltd. operates railway systems abroad on concession basis through joint
ventures or subsidiaries. Since October 1, 2007, its subsidiary TRL is managing the
railway network previously being operated by the erstwhile Tanzania Railway
Corporation in Tanzania, Africa. A joint venture of RITES Ltd. named CCFB is
operating the Beira Rail Corridor in Mozambique since December 10, 2004. From
Fiscal 2000 to Fiscal 2006, RITES Ltd. was a partner in the concession project of the
Atlantic Railway Line in Colombia, South America, although RITES Ltd. has
subsequently divested from this project.

RITES MISSION STATEMENT

To be one of the most admired companies, in India and Abroad, rendering state-ofthe art consultancy, engineering and project management services, in the field of
transportation, infrastructure and related technologies.

The company would aim at leadership in every business by synergizing value,

integrity, and drive for technology and innovative spirits, ensuring value for money to
its clients and benefits to society at large.

Major revenue generation areas for the company are:

AWARDS AND CERTIFICATIONS

1. As a public sector undertaking, RITES Ltd. has been accorded Mini Ratna
Grade-I status by the GoI by virtue of its operational efficiency and financial
strength, which affords greater operational freedom and autonomy in decisionmaking and inter alia, permits the Board to:
Establish joint ventures and subsidiaries in India with equity investment
limited to Rs. 500 crore in one project subject to maximum of 15% of net
worth or 30% of net worth in all joint ventures and subsidiaries; and
Undertake works of capital nature not exceeding Rs. 500 crore or equal to
the net worth of the Company, whichever is less.
2. On July 11, 2007, the Company was upgraded from a Schedule B to Schedule
A company.
3. SCOPE Award for Excellence by Honble Prime Minister of India, 4th
September 2004 and 8th March 2007.
4. CDC National Award for Excellence by H. E. the President of India,12th
October 2004.
5. RITES Ltd. has also received MoU Awards from the Ministry of Heavy
Industries and Public Enterprises for Fiscals 2002, 2003 and 2004.
6. ISO

CERTIFICATION:

The

Companys

multi

disciplinary

services in consultancy, project management, design and

engineering, procurement, quality assurance, export, planning
and development activities in the fields of transportation,
infrastructure and related technologies have been certified as
ISO

9000:2001 compliant by KEMA Quality B.V.

Netherlands since June 2002.

of the

SUBSIDIARIES AND JOINT VENTURES

1) M/s RITES (AFRIKA) (Pty) Ltd., Established
SUBSIDIARY
COMPANIES

in Botswana
2) M/s Tanzania Railway Limited, Established
in Tanzania.
1. M/s RICON - Established in India
2. M/s

Ganga

Expressway

Consultants

Private Limited (GECPL), Established in

JOINT VENTURES

India
3. M/s Companhia Dos Caminhos De Ferro De
Beira, SARL, Beria (CCFB) - Established in
Mozambique

ORGANIZATION STRUCTURE

RITES Ltd. is a wholly owned government organization with the President of India as
its 100% shareholder. The company is organized under a number of divisions, each of
which caters to one or more sectors. The key business divisions are classified under
Director (Technical), Director (Projects) and Director (Finance), while the others fall
directly under the Managing Director.

RITES OFFICE
REGISTERED OFFICE:
Delhi110092

SCOPE Minar, Core I, 12th Floor, Laxmi Nagar,

CORPORATE OFFICE:
122001

RITES Bhavan, No.1, Sector-29, Gurgaon, Haryana-

(RITES BHAWAN, GURGAON)

THE RITES BUSINESS

RITES Limited provides a broad range of services which include:
Consultancy Services for:
o Railways
o Urban Transport
o Highways
o Ports and Waterways
o Airports
o Power
Building, Construction and Architecture for:
o Ropeways
Other Sectors
o Transport Planning
o Quality Assurance
o Training
o Material Systems Management
o Geo technology
o Information Technology
o Environmental Engineering
Export Business

 Concession Business

1) CONSULTANCY BUSINESS
The Companys consultancy services include pre-project activities, design engineering
studies, procurement assistance consultancy, PMC including independent consultancy
services, inspection, quality assurance services, construction supervision and
commissioning support.
a. Pre-project activities: The main activities include:
i. Feasibility Study
ii. Detailed Project Report
b. Design engineering activities: The main activities undertaken include:
i. Design of equipment or structures
ii. Architecture and Environment planning
c. Procurement Assistance: The main activities undertaken include helping
the client to prepare specifications of materials to be purchased,
assistance in tendering for the item, evaluating tenders and verifying
payments to the supplier.
d. Project management activities: The main activities undertaken include:
i. Project Management Consultancy
ii. Independent consultant services
e. Quality Assurance services: The main activities undertaken involve:
i. Third party inspection.
ii. Vendor assessment.
iii. Consultancy to obtain quality certifications such as International
Standards Organization (ISO) ISO 9001, ISO 1401, Operational
Health and Safety (OHSAS) 18001, ISO 22000 and IEC 17025
f. Construction supervision: The main activities undertaken involve actual
construction monitoring and ensuring that the procedures and

specifications in the contract are being strictly followed by the contractor

during the construction process.
g. Commissioning support: The main activities undertaken involve
assisting the client in:
i. Installing
ii. Commissioning
iii. Proof testing the equipment procured.

BUSINESS OPERATIONS IN
CONSULTANCY

RAILWAYS:
Railways can be said as the core competency of RITES Ltd. as the company started as
a consultancy company in the field of railway infrastructure development, providing
services to the Indian Railways and to railway systems abroad.
Over the years, RITES Ltd. has expanded its business in India to clients other than
Indian Railways, such as NTPC, SAIL, NALCO, IOCL, other thermal power stations
and private sector companies. RITES Ltd. has developed expertise in undertaking
techno-economic studies, design of wagons, railway alignments, bridges, tunneling
and geotechnical engineering. The company runs internal railway networks in many
organizations all around the country.

Indian Railways: Shatabdi Express

The major services in this segment are:

 Preparation of pre-feasibility and techno-economic feasibility reports, DPRs,

traffic analysis and forecasting studies.
Engineering surveys to optimize route alignment for new railway lines
Geotechnical investigations including geological and geotechnical studies, PMC
and construction supervision for railway lines and related infrastructure
Restructuring, operations improvement and upgrading of rail systems
Modernization and upgrading of workshops and rolling stock maintenance
facilities
Industrial engineering including work studies and incentive schemes for railway
workshops
Design of bridges, tunnels, wagons, merry-go-round (MGR) systems
Management of entire railway systems inclusive of the operation and
maintenance of rolling stock, workshops, depots and ancillary facilities

PAST PROJECTS (RAILWAYS):

Some of the important consultancy projects are:

 Consultancy for reactivation of Nigeria Railway Corporation

Contract for operation and management of Baghdad-Akashat railway line in
Iraq
Technical assistance to Aqaba Railway Corporation, Jordan, to improve
operation and maintenance of the railway
Feasibility cum cost studies for 550 KM new railway lines, in Syria
MGR railway project studies for NTPC in Singrauli, Farakka, Korba,
Ramagundam
Study to increase line capacity of Zahedan-Mirjaveh railway line in Iran
Detailed engineering study of El-Khroub-Boughegouf 150 KM railway line in
Algeria
Maintenance and operation contract for supervisory and technical support
services to Zimbabwe railways;
United Nations Development Programme assignment for repair and
maintenance practices of diesel locomotives in Vietnam
High speed design upgrade of electrification network in London Glasgow
railway line.

URBAN TRANSPORT:
RITES Ltd. provides consultancy services in various aspects of urban transport
planning, design, management and operation for road as well as rail based systems like
high capacity bus system, metro railway systems, monorail based urban transport

system and other types of light rail transit systems including integration of multimodal transportation for a city.

DELHI METRO RAIL

BUS RAPID TRANSIT SYSTEM

Delhi Metro Rail

The company has done projects at national and international level of working in the
fields of traffic engineering and management, transport demand modelling,
preparation of traffic transportation plans, planning and design of rail based mass rapid
transit system, financing schemes for these capital intensive transportation projects,
optimization, design of public transport system and environmental impact studies.

PAST PROJECTS:
Some of the projects successfully executed in the past are

 Consultancy for World Bank funded assignment for improvement of urban

traffic in Kampala, Uganda
Feasibility studies for extension of metro from Tollygunge to Garia, Kolkata;
Mono rail project feasibility studies in New Delhi
Comprehensive traffic and transportation plans for Bangalore, Dehradun,
Greater Noida

HIGHWAYS:
RITES Ltd. provides consultancy services, covering various aspects of conceptual and
detailed design and construction supervision, for expressways, highways, feeder/ rural

roads, bridges, viaducts and tunnels. In addition, the company also undertakes
maintenance planning work, management of road networks including intelligent
transportation system, and strategic planning for improvement and upgrading of road
systems.

Bird Eye View of Delhi Gurgaon Expressway

RANGE OF SERVICES

Advisory/technical assistance services

Pre-feasibility, strategic option studies and techno-economic feasibility services
Network improvement services
Proof checking and review of design and tender documentation
Procurement of works, pre-qualification and selection of contractors
Construction supervision/project management
Maintenance planning and management

 Quality assurance
Expressway studies
Tunneling projects

PAST PROJECTS
Some of the important highway projects carried out in the past are:
Construction supervision for World Bank funded project for rehabilitation of
road between Serenje and Mpika in Zambia
Services of experts for construction supervision of Kampala City Road, Uganda
World Bank funded Strategic Options Study for roads in Rajasthan, Kerala,
Andhra Pradesh and West Bengal
DPR for Myanmar Highway along river Kaladan in Myanmar
Technical assistance services for development, maintenance and corridor
management for various corridors of the Golden Quadrilateral project of NHAI.

AIRPORTS:
RITES Ltd. offers specialised consultancy services in the planning, design and
construction management of airport projects, including the following:

 Techno-economic project feasibility study including, site selection, analysis of

obstacle limiting surfaces and environmental impact assessment studies
Master planning including demand assessment and forecasting and demand
capacity analysis
Pre and post construction pavement evaluation using non-destructive equipment
Detailed

design,

bid

process

management

and

construction/contract

management of:
o Airfield pavements, associated safety strips and airfield drainage
o Airport access systems, internal roads and car park
o Airfield lighting system
o Terminal buildings (passenger and cargo), workshop buildings; air traffic
control towers;

ONGOING PROJECTS:

The newly made Hyderabad International Airport

PAST PROJECTS
Some airport consultancy projects carried out in the past are:
DPR for airports in Botswana, Republic of Vanuatu, Republic of Djibouti,
Angola, Yemen and Bhutan

 Consultancy for long-term leasing of four metro airports as part of a consortium

and technical due-diligence for Delhi, Mumbai, Chennai and Kolkata airports

PORTS AND INLAND WATERWAYS

RITES Ltd. provides consultancy for ports, water resources and inland waterway
terminals, including their planning, design and logistics, surveys, field investigations,
project reports, detailed engineering and project management.

The services include reservoir sedimentation studies and capacity surveys, planning
and design of water resources projects related to irrigation, such as command area
development, network planning and design of cross drainage structures, planning of
harbour breakwaters, berthing structures, material handling systems, dredging and
reclamation, navigational systems, telecommunication systems, cargo storage systems
and utilities.

Planning studies include conceptual studies, techno economic reports, master plan,
land use plan, financial analysis and terminal layouts for liquid, dry bulk, container
and general cargo. Logistics studies include studies for origin to destination movement
of cargo and inter-modal transport studies. Detailed engineering include harbour
engineering, breakwaters, berthing structures, dredging and cargo/material handling
systems.

PAST PROJECTS
Some of the projects carried out in the past are:
Hydrographic surveys and sedimentation studies in four major reservoirs in
Mauritius
Techno-economic feasibility study for development of internal water transport
systems on seven major water ways in Karnataka
Feasibility study for development of western dock and deep sea trawler berths
to handle iron ore and coke from Paradip port
Project management for multi-level freight container station at Navi Mumbai
Coal transportation study from North-East coal fields to Bongaigaon power
plant in Assam for NTPC

POWER:
The company provides consultancy and project management services in different
types of electrical engineering and power distribution fields such as railway
electrification,

rural

electrification,

building

construction,

transmission

and

distribution, control and automation systems, Supervisory Control and Data

Acquisition systems (SCADA), high tension and low tension sub-stations, diesel
generating power stations, illumination systems, energy conservation studies, power
infrastructure development for townships and use of non-conventional energy sources.
The services include survey, engineering-cum-feasibility reports, DPR preparation,
and detailed designs.

ONGOING PROJECTS
Some of the ongoing projects are:
Third party project inspection for rural electrification works in Uttar Pradesh
Monitoring and supervision of rural electrification works including feeders and
village electrification system under Feeder Renovation Programme/ Rajeev
Gandhi Grameen Vidyutikaran Yojana schemes in Jaipur, Rajasthan

 Consultancy for underground cable based power distribution system at Bilaspur,

Raipur and Durg/ Bhilai in Chhattisgarh
System upgradation under APDRP for 33/11 KV distribution systems at
Jamshedpur and Dhanbad in Jharkhand

2) BUILDING, CONSTRUCTION AND

ARCHITECTURE
RITES Ltd. undertakes design consultancy (architectural and allied engineering
services) and PMC from concept to commissioning for building projects including
group housing, institutional buildings for specialized activities such as airports,
hospitals, workshops and industrial buildings, recreation centers and sports centers.
The services provided include overall planning of facilities, land usage, estimations,
bid processing, planning and scheduling contract services, site supervision and
contract management.

PAST PROJECTS
Some of the projects carried out in the past are:
Construction management of C-DOT complex for Videsh Sanchar Nigam
Limited at Chhatarpur, New Delhi

 Design and PMC for World Bank Aided projects for setting up campuses for
Technical Education Institutes at 66 locations in Uttar

Pradesh and Dr.

Ambedkar Technical Institute for Physically Handicapped at Kanpur, UP

Consultancy and detailed drawing preparation for 200-bedded hospitals at
Noida and Pitampura for the government of NCT
Consultancy for World Bank funded project of upgradation of polytechnics in
Uttar Pradesh.

ROPEWAYS:
RITES Ltd. is one of the few organisations in India having technical competence and
experience to undertake ropeway projects. Its range of consultancy covers preparation
of feasibility reports, DPRs, tendering services, finalization of vendors/ contractors,
project planning and supervision of project execution, and project management of
ropeways and funiculars.

PAST PROJECTS
Some of the ropeways projects carried out in the past are:
Preparation of DPR and project management for bi-cable jigback ropeway at
Gangtok; project management of aerial gondola ropeway in Jammu &Kashmir

3) EXPORT BUSINESS
RITES Ltd. exports locomotives and other rolling stock, as well as their spare
parts. The export services consist of integrated project export packages for rolling
stock and technical support for operation and maintenance of a wide variety of
rolling stock of different track gauges for various railway systems in Asia and
Africa. RITES Ltd. also actively sponsored research and development activities,
which address the requirement of developing new range of products to meet
foreign railway requirements, and help establish a market for cost effective export
of rolling stock manufactured in Indian Railway units and maintained overseas by
the Company.
PAST PROJECTS
Some of the projects undertaken by RITES Ltd. in the past include:
1) Export packages for locomotives, rolling stock and equipment including:
a) Diesel locomotives, passenger coaches and signaling equipment to Myanmar
b) Diesel locomotives and passenger coaches to Senegal, Nepal and Vietnam
c) Diesel locomotives to Sudan, Bangladesh and Sri Lanka

d) Diesel locomotives, passenger coaches, gang cars, inspection cars to Angola

2) Technical Assistance and Rehabilitation projects including:
a) Assessment study and technical assistance for rehabilitation of railways in
b)
c)
d)
e)
f)
g)

Angola
Workshop modernization and equipment supply for railways in Angola
Upgrading the rolling stock maintenance facilities in Sri Lanka
Asset review studies in Zambia, Kenya and Tanzania
Rehabilitation of wagons in Tanzania
Rehabilitation of three railway bridges in Sri Lanka
Rehabilitation of Hitachi locomotives and traction equipment for Sudan

4) CONCESSION BUSINESS
The concessions business was started in Fiscal 2000, to capture the emerging business
related to transport infrastructure privatization, and currently is in four distinct areas,
namely:
Providing full in-house advisory support (including technical and financial due
diligence) to the company management while participating as equity partner or
consortium or joint venture member to secure infrastructure projects being
offered in PPP format.
Carrying out works or services contracts including technical assistance,
reconstruction or rehabilitation of infrastructure and leasing of rolling stock
secured from concession companies where RITES Ltd. has taken equity either
directly or through its subsidiaries or joint ventures.
Providing support to its concession companies in completing pre-takeover
activities including arranging of finance, other technical and management
support during operation or rehabilitation stage and monitoring performance of
concession companies to initiate corrective actions, if required.
Providing advisory services for arranging PPP in infrastructure projects
including bid process management, project structuring studies for PPP, services
of independent engineer.

SECURED PROJECTS
RITES Ltd. has secured the following three railway concession projects until date:
(i)
(ii)
(iii)

Colombia Railway Concession Project, Columbia

Beira Rail Corridor Concession, Mozambique
Tanzania Concession, under its subsidiary TRL, Tanzania

SECTORS OF OPERATION
SECTORS OF OPERATION

RAILWAYS
HIGHWAYS
BRIDGES & TUNNELS
GEOTECHNOLOGY
AIRPORTS
BUILDINGS

URBAN TRANSPORT
URBAN DEVELOPMENT
PORTS & WATER RESOURCES
ROPEWAYS
INFORMATION

TECHNOLOGY
FINANCIAL SERVICES

RITES SERVICE SPECTRUM

Airport Engineering
Architecture & Design
Bridge & Tunnel Engineering
Design Mechanical, Civil,

Electrical
Electrical Engineering
Engineering Survey
Environmental Engineering
Export and Leasing
Financial Management
Geo-technology
Highway Engineering
Human Resources Development

Information Technology
Material System Management
Operation & Maintenance
Ports & Harbours
Privatization & Concessions
Quality Assurance
Ropeways
Signaling & Telecom
Traffic Logistics & Economics
Training
Urban Development & Transport
Water Resources & Waterways

II - ERA:

Second phase in RITES is composed of computerized accounting system which

includes:
FMIS- Financial Management System (FMIS) is totally online-accounting system
which is currently operated by the RITES.

FMIS IN RITES

THE STRUCTURE

ACCOUNTINGSTATEMENT

DIRECTORY
MAINTAINANCE

VOUCHER
MAINTAINENCE
(DOCUMENT)

VOUCHER
MAINTAINENCE
(OTHER SYSTEM)

ONLINE
FINANACIAL
ACCOUNTIN
G SYSTEM

VOUCHER
MAINTAINANCE
(OTHER UNITS)

SUBSIDIARY
LEDGER
GENERAL LEDGER
TRIAL BALANCE
PROFIT & LOSS
BALANCE SHEET

LEDGER INFORMATION

CONSULTANCY FEE
TOUR ADVANCES
LTC ADVANCES O/S
TDS
CONSULTANT
PAYMENT

ASSET REGISTER

AN OVERVIEW

The Corporate Office of RITES being the head office controls all the divisions and site
offices in different regions. For accounting purpose each division or a site office is
assigned a two digit numeric code, which is called as accounting unit. All these
accounting unit keep record of their account transactions of a month and send it to
Corporate Office, Computer Cell (through floppy / voucher document) for processing
and printing of account books. The Account Section collects the A/c ledgers from
Computer Cell and sends to respective units. Any error in the account book is
compensated by writing an adjustment voucher, which gets reflected in the A/c
statement after a month.

This system of financial accounting is in use for the last two decades and is the main
source of information for financial management and reporting system. Due to growth
in business and delay in processing of information, it is felt by the management to get
developed an integrated accounting and financial management system, and implement
it on a company-wide computerised intra-net, with a view to get quick and latest
information on financial data and reduce the redundancy of work.

In consequence to achieve the above objective an On-Line Financial Management

Information System (FMIS) is designed and develop to provide a comprehensive
computerised integrated accounting system with the many features.

ABOUT FMIS

Financial management system (FMIS) itself is a concept .Financial management

system (FMIS) require enlargement of entirely new FMIS and Accounting system so
that work is in tandem .The two require to be undertaken together and not independent
of each other. FMIS require meticulous reassess of system in accounts department.

Attempting to develop FMIS without change in accounting would have amounted to a

purely academic exercise. Before endeavoring the system a certain base should be
created.

THE FEATURES OF FMIS

1) On line, multi-user, menu driven and user-friendly
2) On line Validation and controls on various fields such as A/c code, Project Code,
etc. and checking bank balance in case of payments vouchers
3) On line updating of subsidiary ledgers
4) Integrated to other systems e.g. Budget, Salary, Rent etc
5) Integrated to other unit financial data to generate a consolidated account statement
6) Centralized database
7) Online viewing / printing of accounts statements such as fund position, general
ledgers, trial balance etc
8) In-built security features to restrict access to selected users
The system is developed using front-end Visual Basic (6.0) and Oracle 8i
(RDBMS) on the back-end under Windows NT environment.

REASONS FOR INTRODUCING FMIS

Various needs were not fulfilled by the current system just because it does not
meet todays requirement
For diversification and proliferation of consultancy and project management
To create competitive edge
The reports and statements can be easily seen in computer rather than providing
in hardcopy

OBJECTIVE
Development of integrated accounting and financial
management system
To have more flexibility in both macro level and micro level
fiscal discipline
To meet all national and international accounting standards s
far as possible
To have more transparency in accounting system
Maximum user access to financial data

Complete elimination of manual preparation of vouchers,

books of accounts, and MIS reports

Providing online information of to the management related to

projects, project cost, income, expenditure, budget etc
Standardization of procedures and formats throughout RITES

USAGE
The FMIS consist four main applications:

FMIS

FINANCIAL
ACCOUNTINS
SYSTEM
(FAS)

PROJECT
ACCOUNTING
SYSTEM

BUDGET

MIS

FINANCIAL ACCOUNTING SYSTEM (FAS)

Preparation of Books of Accounts & Financial Statements: It is an
integrated accounting system which covers the entire gamut of accounting system
right from the preparation of vouchers (for client billing, payments, receipts) and
books of accounts to final accounting statements, all through user friendly program

modules called activity modules. The system eliminates the need of remembering
accounts codes, since these are stored in the system directories. Whenever these codes
are required for entry in the field boxes of any activity module, they can be displayed
and selected from drop down lists by clicking the drop down arrow of the field box.
The requirement of inputting data in the activity modules is minimum since the
programs contain all the standard formulae and data for processing and generating
required outputs. The financial data from the modules is stored in a common
centralized database which acts as the source for generating the desired financial,
costing and MIS reports. The FAS system also allows integration with other systems
such as payroll.

PROJECT ACCOUNTING SYSTEM (PAS)

Preparation of project summary of income & expenditure: FMIS
contains modules for generating data on project estimates, coding and detail of income
and expenditure of various project and sub project. The project codes, sector codes,
client codes and other details related to the projects are stored in the project Master
directory and used for generation of MIS reports.

BUDGET
Preparation of income and expenditure budget: Lastly the system provide
most important tool for management system i.e. budget. It contains various projects
program for essential managerial activities and compilation of companys budget for
income, expenditure and capital asset.

SYSTEM DEVELOPMENT
System development question was also considered by RITES that system should
developed in-house or by engaging by software agency or by purchasing ready
made from outside. Lastly, they decided that system should develop in-house because
of following reason:
Ready made packages can not meet total requirement
No system is permanent and static i.e. changes have to made
RITES itself is in business of developing accounting system and computerized
FMIS for their clients.
Work-in-house should give valuable experience.

ESSENTIAL FEATURES
Primary focus to get quick, accurate, and latest information of financial data
eliminating errors and delays
On line, multi-user, menu driven and user-friendly
On line viewing/printing of accounts statements such as general ledgers, trial
balance, subsidiary ledger, staff advances position, etc
Online updation of subsidiary ledgers
Centralization data base
Inbuilt security features to restrict access only to selected users

BENEFITS
Manual preparation of vouchers has been eliminated
Writing of cheques has been computerized eliminating errors
and omissions arising from manual preparation of cheques
Elimination of delay in printing of financial books of account
The staff advances position has up to date enabling quick
settlement of accounts
Raising of invoices has been computerized

 Management information details are available on-line

The staff has been spared of tedious and nerve sapping

manual calculation and written off

It increases efficiency and productivity of the company

The skills of staff have been upgraded making each of them IT
proficient and their efficiency has been increased substantially
It enables quick management decision

MODULES
1. Financial Accounting comprising: Financial accounting transactions recording, processing and accounting
reports

Receivable accounting
Account payable accounting
Treasury and cash accounting
2. Budgeting
3. Fixed Assets Accounting
4. Inventory Management:
It maintain the appropriate level of inventory, here managers are involved in two
major types of decision:
1. Volume decision: How much to order?
2. Timing decisions: When to order?
It determines procurement of inventory is as per Annual budget for each unit.
Actual procurement is on quarterly basis based on budget.

5. Project Accounting
6. Payroll Accounting:
This module deals with information regarding recruitment, appointment, transfer &
posting $ salary etc. of employees.

7. Personnel Management
8. Management Information System and Performance Monitoring
9. Statistical Reports for Economic, Finance and Operation Department

SYSTEM REQUIREMENT
Overall system requirement common to all modules would be All system modules must be available in Russian versions
System administration/manager would be at multiple levels
Financial data would support multiple currencies including their conversion
Calculate gain and loss on currency translation and raise the relevant posting
entries

 Segregation of transactions for processing and reporting, for external and

internal within the UTY group
Authorization for accesses, not only for each of the function but also for each
of the task within the function such as Run, Delete or Update
Capable of interfacing with spreadsheets Excel, Super Calculation and
databases Fox pro and Access & Text data from mainframe

Fully computerized menu driven, user-friendly system

Data driller technology

ACCOUNTING AND FINANCIAL

MANAGEMENT

Accounting and financial management of any organization depends on the

organization structure, the type of work they are dealing in and on the accounting unit.

The good accounting system requires good analysis of the financial working and the
statements of the organization. As it is the cash rich company so the management of
fund is a very significant activity in it which is done following the very systematic
process of accounting in the company. The features of the division are as follows:
Consultancy: As it is the consultancy firms, so the projects taken up by
the company are of that nature and hence the working on it is done in that
manner.
System: There is a particular system in form of FMIS of the company
and the day-to-day transactions of the company are carried on using that
system.
Projects: Company takes up the number of projects, which are the part of
various SBUs of the company. Accounting of each project is done
individually in the SBUs.

Computer: It forms the significant part of the company specially the

accounts division as the whole FMIS is operated with the help of the
computers.

Networking: The Company has its intranet and whole data of the
division is circulated with help of the good network. Data from other
offices is also transferred with the network. Reporting is done using the
intranet of the company.

 Control: Controlling process of the division is very active. Daily

working is checked regularly and control measures are adopted to control
the expenses of the company. The project estimates also apply the control
measures in them regularly.

CONSOLIDATION OF ACCOUNTS IN
RITES LTD.

It is ensured that accounts are complete and all the relevant accounting standards,
principle, accounting policies of the company and generally accepted accounting
practices are compiled with to avoid any flaw and miss-statement in the certified
accounts of all the regions at the corporate office level. While facilitating the process
of consolidation at the corporate level it is ensured that:
I.

Balance sheet, profit & loss account and all the annexure forming part of the
accounts are sent to corporate office as per the format of printed accounts of
the company.

II.

Information as regards notes to the accounts is also in the same sequence as

per the printed accounts of the previous year.

III.

Provision for gratuity, leave salary, doubtful debts are checked and carried
out at unit level.

IV.

Provision for performance incentive is made at corporate office.

V.

For consistency and correctness of accounts, it is ensured that merging and

grouping of accounts is carried out uniformly by all the regions keeping in
view the principal accounting policies of the company.

VI.

The Consolidation process of the company is part of the accounting process

which is very essential part of the company.

CONSOLIDATION AND COMPILATION OF

ACCOUNTS

Accounting
Unit
Vouch
er
Acc.
books
Acc.
ledger
Trial
balance
Combined
T.B
Clubbing
Balance
sheet
MIS
Costing
Project

The first step in consolidation is the maintenance of vouchers using the FMIS system
of the company in the form of various software modules developed by the company.

VOUCHER

The two main forms of vouchers used by the company are:

A. Payment vouchers
B. Journal vouchers

ACCT.BOOKS

After preparation of vouchers ten ledger books are made out

of those vouchers example:
A. Bank day book from payment voucher.
B. Journal day book from journal voucher.

ACC. LEDGER

After that those ten day books are combined and journal
ledger is made out of those books.

TRIAL BAL.

From the information by analysis of journal ledger combined

trial balance is made in corporate office of company it
comprise of all the data from various offices of the company.

COMBINED T.S

It is prepared combining all units. It includes foreign units if

any converted into rupee terms. This serves the basis of

making final accounts. Schedules of balance sheet are

prepared with its help.

CLUBBING

After that clubbing of trail balance is done in the form of

schedules. All similar accounts of one category will club
together and be shown under one major head under P&L or
B/S. However few clubbed accounts are first transferred to
schedules , and the total of particular schedule is transferred
to P&L or B/S as case may be.

BALANCE SHEET

Using schedules final balance sheet is made in corporate

office of the company.

MIS

It is a presentation of balance sheet of the company segment

wise of corporate level it also shows the result of the
company. It also serves as the accountability centre because
it depicts the position of the company SBU wise. It also
reports the divisional performance of the company.

COSTING

It is done according to SBU of the company. All the cost

involved in each projects of the SBU is done in the costing.
It includes the break up all the overheads of each SBUs.

PROJECTS

It includes the cost of various projects of every SBU it takes

into consideration various overheads involved in each
project by that it depicts the cost of projects of SBUs
individually.
NOTE:
The final product after going through the consolidation and compilation process of
accounts is the balance sheet of the company which comprise of the following heads:
Directors report.
Report on corporate governance.
Management discussions and analysis
Auditors report
Financial statements.
Consolidated financial statements.
Financial statements of subsidiary company.

FLOW CHART OF ACCOUNTING SYSTEM

IN RITES
Voucher

Payment
voucher

Revenue
voucher

Bank daybook

Journal
voucher

Journal
daybook

General ledger

Trial
balance

Combined trial
balance
Balance sheet

MIS

Clubbing in
the form of
schedules

PROJECT ESTIMATION AND COSTING

Project Estimates and Costing is an extremely crucial activity in an organization,
especially in RITES Ltd. which is mainly into Consultancy and Project Management
services. This activity helps the organization in estimating what the Company should
quote for a project so as to receive the contract for that project. It includes allocation
of Companys funds efficiently to various factors that would comprise the overall cost
of the project. In short, it tells the Company how and how much to quote for a given
project.
The importance of Project Estimates and Costing lies in the fact that a company can
lose or win a project based on the competitiveness and justifiability of a quote. When
we first try to evaluate different aspects where cost will be incurred and the amounts
of it, we get a fair idea what should be the quote for a project so as to get the contract.
Another important fact that adds to the importance of Project Estimates and Costing is
that it proves extremely helpful in controlling the cost incurred on a project from time
to time. The company prepares an estimate of all the probable costs that may be
incurred on a given project. After the company gets the project, when these costs are
actually incurred, we compare the actual costs with the estimated costs so as to see if
there is any variance. If the variance is negative, it shows that the cost incurred is less
than the cost estimated for that activity or item; if the variance is coming out to be
positive, it represents that more has been spent on that particular activity or item as
compared to the estimation. When the variance is found to be positive, cost control
measures are taken so as to keep the cost of the project within the allocated budget.
Hence, with the help of Project Estimates and Costing, we can see when and where we

are going above the limits. The company is able to identify any deviation caused at the
earliest, and can control it at that time only so as to prevent any damages caused later.
It also saves the company from losing the project due to over-bidding and from losses
due to under-bidding. Even if some incorrigible mistake has happened, we learn how
we should proceed in future so that we do not repeat the same mistake in the next
project.

PROJECT ESTIMATES
Project Estimates includes estimating how much it would cost to the company, in total,
to do a particular project. An institution which has to get a project done through others,
asks the organizations operating in the related field for bids. For example, say, Indian
Railways has a Consultancy project for Track and Survey and it wants to get it done
through some organization providing Consultancy services. Now, such organizations
who wish to take up the project will bid a quote each for that project. These quotes
will be examined by the concerned Railway department and one of the bidding
organizations whose quote would be found the most suitable and justified will be
allotted the project.

So, the quote plays the most important role in getting a project for a company. Project
Estimates is the key tool for preparing such bids. Through project estimates, the
company which is bidding quantifies the expenditures expected to be made for the
project and prepares a rough estimate of how much would be spent on various factors
for that particular project, also keeping in mind the relevant taxes that the Company
would have to pay and some margin for the profit as well. A provision for risk
perception is also added wherever necessary.

Hence, this is a very crucial activity for such organizations. Bidding involves a lot of
factors to be taken care of. It generally depends on factors like expertise, market
conditions, number of competitors, etc. For example, if the project in question is in a
field of business which is new to the company, it may bid for at par for such a project
i.e. it may reduce the profit margin considerably while preparing the quote or keep no
margin at all depending upon its strategy, so as to get hold of the business and capture
the market in which it is entering. The company may also have to bear losses at times
in such cases, as they are new in that field and hence inexperienced. But once the
company proves itself in that field, they can quote with their required profit margins in
future projects.

Similarly, if the Company has expertise in a particular field or market condition is

monopolistic, the firm may keep higher profit margins and quote competitively to get
huge profits as they are experienced in that business. For instance, RITES LTD.
specializes in MGR (Merry Go Round) for powerhouses. It refers to the movement of
coal to powerhouses in the most efficient manner.

Project estimates are prepared for two purposes:

To estimate the approximate expenditure for submission of bids
To use it for subsequent monitoring purposes

After the company gets the project, they can monitor if the costs being incurred are in
line with the estimated ones or not and take necessary actions as required.

PROJECT COSTING
Each project has an income. Cost of its execution is expected to remain within this
income. In order to achieve this, estimates of expected income and expenditure are
prepared and the actual income and expenditure are monitored during the progress of
the project.

Project costing is important for the following reasons:

Compare the actual project costs with the estimated cost as worked out in the
input estimate
Control of project costs
Development of data bank for use in framing estimates and offers subsequently
Evaluation of profitability of the project
Provide the required FMIS reports

The following items form part of the project costing:

1. Direct cost

Manpower

Other Direct cost

2. Indirect cost

SBU overhead

Divisional overhead

Corporate overheads

1. DIRECT COSTS
Direct costs are such costs which are fully related to the project in question and not to
be shared with any other project., which is directly identified with a project e.g. cost of
manpower and stores directly associated with the project. Direct expenditure shall be
collected under the concerned project code as being done in the existing system.
Direct costs include costs like staff costs, traveling expenses, outsourcing costs, cost of
investigations, tendering, communications etc.
Direct staff cost is the cost of staff posted at site or deputed to site for a particular
project for a period of time. It is not necessary for the staff to be working on the
project for a full month etc to be categorized as direct staff cost. Even if the office staff
has worked on the project for a couple of hours, that part of the cost will be classified
as direct cost if the time worked on the project can be identified.

Manpower cost
One of the major items of direct expenditure is the manpower cost.
Presently each SBU prepares a manpower deployment statement showing the number
of days spent on each project by various categories of staff. The manpower cost is then
booked to the project based on predetermined man month rates. Since the expenditure

actually incurred on salaries etc for the project does not match with the predetermined
rates it leads to excess / less man month costs being booked to the projects.
It is recommended that the actual monthly expenditure incurred on manpower duly
adjusted (for leave encashment, gratuity, etc.) may be booked to the projects based on
the manpower deployment statement.

For this the manpower deployed on each project needs to be linked to the
computerised payroll accounting system.

Other direct costs

Presently other direct costs are also booked to the concerned project based on actual
expenditure incurred. However certain items given below need to be examined:
o As per RITES policy reimbursable expenses form a part of income and
expenditure. The expenditure needs to be adjusted for apportionment of
overheads.
o Income from turnkey projects if taken as a whole will also need to be adjusted
for apportionment of overheads.

The quantum of above adjustments needs to be decided.

2. INDIRECT COSTS

Indirect costs generally consist of overhead expenditures.

An overhead cost is one that is essential in some way to a companys operations,
but which cannot be related in a direct way to units of output. For example, a sales
representatives salary is indirect with regard to the various products that he sells,
but it is a direct cost if one is in the total cost of his sales territory. In the same way,
the cost of distributing various products to wholesalers may be indirect with regard
to the goods themselves, but direct when one is concerned with costing the channel
of distribution of which the wholesalers are part.
Cost incurred by the SBU which is common for all the projects of the SBU eg.
office rent & maintenance, indirect manpower , asset utilisation costs, interest on
capital etc. These are collected under project code/codes allotted for SBU
overheads and subsequently distributed to the concerned projects in proportion to
their direct costs.
Classification of expenses like telephone charges, stationary, computer expenses ,
supporting staff etc. as direct or indirect expenditure should follow the same
principle for all projects .

Overheads
In addition to the above direct and indirect expenditure of the SBU the following
expenditure also need to be added to the project costs as overheads:
o Divisional overheads representing expenditure of an intermediate administrative
unit controlling more than one SBUs e.g. Project Office Nehru Place.

o Corporate overheads representing expenditure of the corporate office of the

company.

The methodology of and apportionment of divisional and corporate overheads to

various SBUs is explained in detail in the chapter on Overheads. The total of
divisional and corporate overhead charged to an SBU is then distributed amongst
the various projects in proportion to their direct expenditure .

Income
As mentioned above the income related to the project will be booked to the income
account code with the concerned project code as the as the sub code.
The following items need to be including in the total income of the project:
Income from sale of tender documents
Income internally transferred to the SBU from other SBUs.
Service tax should not be included in income nor in expenditure since it is a
recovery to be passed on
In case of turnkey projects the amount to be shown as income of RITES shall be
as laid down in the project agreement with the client and the partners of RITES.

PROJECT ESTIMATION AND COSTING IN

RITES
RITES LTD. provides a wide range of services like consultancy, engineering and
project management in various sectors of operation like Railways, Highways, Airports,
Ports, Ropeways, Export, etc.
In RITES LTD. each department is considered as a separate SBU, which are taken to
be the smallest profit centre. Each SBU undertakes various projects in the related field.
These projects have incomes and expenditures related to it. The extra income over
expenditures for every project in a particular SBU comprises the profit earned by that
particular SBU. Ultimately, the resultant of all the earnings taken from all the SBUs
indicates the financial status of the organization. Hence, a project is taken as the
smallest basic unit for costing purposes in RITES.
Each SBU is responsible itself for the preparation of Project Estimates and Costing for
the projects it deals with.

In order to identify a project, RITES follows a Coding scheme. Each project executed
by a profit centre is identified by a unique code called Project Code. It is used for
accountability of income and expenditure pertaining to the project. This is then further
used for prepare project costing statements and other reports. The project code is
allotted by F & A Department on receipt of the project data sheet in a particular
format. A project data sheet consists of data of nature of the project, clients details,
etc.

CODING STRUCTURE
Project code has two parts:
Part 1:- which consists of information of master nature. It is required to be given
only once when the project code is being allotted and stored in the project master file
on the computer for preparation of various managerial reports. It is not to be quoted on
any income or expenditure voucher.
XX
Sector code

XX

project type code

XXX
client code

In addition to the above, the Master Data will also contain the source of funding for
the project. For example, World Bank, Itech, ADB etc.

Part 2:- which is required to be quoted on all income and expenditure vouchers.

XX
SBU Code

XXXX
Project Code

Sector code: shall represent the sector to which the project pertains. For
example, say for Railway sector its 01, for highways its 02 etc.
Project type code: like consultancy India 10, consultancy abroad 11, project
management India 20, project management abroad 21 etc.
Client code: It is a number given to important clients in order to enable access
of all data pertaining to a given client of RITES. For example, Indian Railways,
NTPC, APSEB etc.
SBU code: is the code of the SBU executing the project.
Project code: is a consecutive serial number allotted to the project.

COMPONENTS OF PROJECT ESTIMATES AND

COSTING
RITES LTD. executes various kinds of projects, as diverse as consultancy, project
management, inspection, trading etc. Even in case of the same kind of project the
scope of work may be widely divergent. For example, only sale of locomotives, sale of
locomotives along with maintenance, leasing of locomotives, project management
with or without architectural services etc.

It, therefore, depends upon the nature and scope of project and the estimates may
differ for different SBUs depending upon the requirements of the project keeping in
view the terms and conditions to offer. However, a generalized format and the
principles to be followed have been laid down by the company which can be tailored
to the needs of the project.

In RITES LTD. there is a Project Estimate Form which contains Project Estimate
Summary. For Project Estimation purposes, the format of the summary form is used.
The format of the form is discussed in detail on the next page and a copy of the form is
attached as annexure no.___ at the end of the report for reference.

PROJECT ESTIMATE SUMMARY

On the top of the form, SBU Code and Project Code need to be mentioned to identify
the department with which the project is related.

The form contains nine (9) main heads called A, B, C, D, E, F, G, H and

I:
[

1. In the first head A, the income that the project will make has to be mentioned
2. In the second head B, all the direct expenditures that will be incurred for the
execution of the project need to be jotted down. This head includes six subheads called:
Staff cost: it is the cost of staff posted at site or deputed to site for a
particular project or office staff working on a project for a period of time
etc.

 Travel expenses: it refers to the all the travelling expenses that would
be incurred for that particular project. For example, say, it is an
international Consultancy project and requires technicians to travel to that
country.
External procurements: this refers to the expenses that are expected
to be incurred due to outsourcing activity required for that project. For
example, sub-contracting, sub-consultancy etc.

Office rent
Miscellaneous expenses
Abnormal expenses
The miscellaneous and abnormal expenses cover any extra cost that might be caused
during the execution of the project. This is done so as to keep a margin for any extra
expenditure which might be incurred in that project. The total of these six heads is
calculated and is taken as the direct expenditure B.

3. The third head C is for all the indirect expenditures. It is further divided into four
sub-heads called:
1. Depreciation and Asset Utilization:

2. SBU Overheads

3. Divisional overheads

4. Corporate overheads

OVERHEADS are such items of expenditure which, in a multi-product environment,

cannot be allocated in full and in a direct manner to the units being costed. Overheads
cannot be segregated as per project. For example, expenditure on supervisory staff,
secretarial or support staff, training of manpower, etc. Such items of expenditure have
therefore, to be apportioned amongst the cost units in an indirect manner, usually,
according to some predetermined formulae.
In RITES LTD. total overheads for a project are estimated on the basis of the total
expenditure on a project. Previously, it was calculated on manpower cost as manpower
was considered to be the major resource, but now it is calculated on the total
expenditure.
In RITES LTD., a project is the cost unit to which all costs are to be directly or
indirectly allocated. In this context, overheads can be said to arise at the following
levels:1. SBU level
2. Divisional level
3. Corporate level

SBU OVERHEADS:
SBU overheads comprise of:

 Expenditure of the SBU which cannot be directly allocated to any particular

project of that SBU. For example, cost of staff not directly booked to
projects, rent, electricity, business development etc.
Depreciation
Charge for use of capital assets

DIVISIONAL OVERHEADS:
First of all it is necessary to understand how the company defines a division as.
The company defines a division as an office controlling more than one SBU and
falling at an intermediate level between the corporate office and SBU.
Thus project office Nehru place is a division whose SBUs are located both at Delhi as
well as outside. Other examples of division are the infrastructure division, Expotech
and the QA division.
The overheads that cannot be allocated to a particular SBU but can be identified for a
specific division can be categorized as divisional overheads. For example, an EMD
(Executive Managing Director) looks after many divisions. So the expenditure of his
driver or any other staff solely for his maintenance etc. would come under divisional
overheads.
Usually, the company estimates divisional overheads to be around 1-3% of the cost
that is calculated before adding divisional overheads.

CORPORATE OVERHEADS:

Corporate overheads are expenditure on functions executed on behalf of all the units
of the company. Therefore, all the profit centres of the company should share such
expenditure.
Corporate overheads are divided into various projects in the ratio of the cost which has
been incurred on such projects.
The company estimates corporate overheads to be approximately 10% of the cost that
is calculated before adding the corporate overheads.
The total of the above four heads viz. depreciation and asset utilization, SBU,
divisional and corporate overheads constitutes C.

4. The fourth head D is the total expenditure which is calculated by adding B and
C.
5. The fifth head E deals with provision for profit and taxes. While estimating how
much the company should quote for the project, it should keep some margin for profit
and the taxes expected to be paid in relation to that project. A provision for risk
perception is also added wherever necessary.
6. The sixth head F is Grand total which is the sum of D and E. This grand total
gives the Estimated Cost of the project which should be quoted for the project.

7. Then G, H and I deal with operating ratio (D/A), total contribution (A-D) and
productivity (A/F).

This is how project estimates are prepared for any project in the
company.

COMPARISON WITH INPUT ESTIMATE

The expenditure actually incurred on the project is compared with the input estimate at
various stages of execution.
The income and expenditure worked out in the input statement is summarized under
broad heads. The project costing report is also generated under the same broad heads.
Once the project comes under execution stage, the costs being incurred are prepared
and noted down for the necessary comparison with the input estimate and see for the
variations, if any. If the variance is negative, it shows that the cost incurred is less than
the cost estimated for that activity or item; if the variance is coming out to be positive,
it represents that more has been spent on that particular activity or item as compared to
the estimation. When the variance is found to be positive, cost control measures are
taken so as to keep the cost of the project within the allocated budget. A copy of

project cost statement of track and survey SBU up to March 2007 has been attached in
annexure no. ____to demonstrate the comparison of estimated and actual costs.

In this way, the company keeps a check on its expenditures on various

projects.

INPUT
ESTIMAT
ES

A)INCOME
B)DIRECT
EXPENDITURE
STAFF COST
TRAVEL
EXTERNAL

UPT
O
LAS
T
YEA
R

FOR
THE
MONT
H

CUMULATIV
E FOR THE
YEAR

CUMULATIV
E TILL DATE

VARIAN
CE

SERV/PRO
OTHERS
EXTRA
ORDINARY EXP
TOTAL
C)INDIRECT
EXPENDITURE
DEPRICIATION
SBU OH
DIVISIONAL OH
CORPORATE OH
TOTAL
D)TOTAL
EXPENDITURE
E)INTEREST
F)TOTAL
EXPENDITURE
G)OPERATING
RATIO
H)CONTRIBUTION

UNDERSTANDING NATURE OF
EXPENSES IN RITES

In RITES LTD., each department is considered as a separate Strategic Business

Unit(SBU), which are taken to be the smallest profit centre. Each SBU undertakes
various projects in the related field. These projects have incomes and expenditures
related to it. The extra income over expenditures for every project in a particular SBU
comprises the profit earned by that particular SBU. Ultimately, the resultant of all the
earnings taken from all the SBUs indicates the financial status of the organization.
Hence, a project is taken as the smallest basic unit for costing purposes in RITES.
In RITES LTD., a project is the cost unit to which all costs are to be directly or
indirectly allocated.

Following is the format of the Input Estimate for the company:

Direct Expenses
1. Manpower-RITES Ltd being a consultancy firm, the major costs related to
any project can be attributed to the services rendered by consultants in the form
of their expert advises.
Direct staff cost will include the cost of staff to be posted at site or deputed to
site for a particular project, or office staff working on a project at site or
headquarters for a period of time. This will be calculated based on the
predetermined man- month rates and the proportionate man-months to be spent
on the project. It is not necessary for the staff to be working on the project for a
full month to be categorized as direct staff. Even if the time spent on a project is
only a few hours ,this time will be classified as direct cost.

Calculation of Manmonth rate is done in the following way:

Grade(Basic Salary per month+

Designation

Allowances)

GGM

Rs. A

GM

Rs. B

AGM

Rs. C

DGM

Rs. D

Example of Calculation of Manmonth Cost

Seri Experti No. of No Total

al

se

No.

Mand Total Amount(Rs.)

Expert .

manda ay

of

ys

rate *

requir

day

ed

ED

40 40

5000

200000

GM

40 40

4000

160000

AGM

60 180

2500

450000

GT

30 60

3500

210000

3
4

expert
Tota

1020000

* Manmonth rate are used as a sample hence only used for the purpose
of understanding the subject month
2. Material/services-Materials will be mainly in the case of EXPOTECH SBU
wherein exports of locomotives, rolling stock mainly takes place.
3. Travel-It includes all the travel expenditure borne by the company for any
travel undertaken by the employees for the performance of the contract and also
for acquiring the contracts in newer areas of businesses.
4. Other direct costs include all other costs related to that project e.g, stationery,
cost of investigations, tendering, communications etc.

Indirect Expenses
Indirect expenses are those which cannot be especially allocated and identified for a
particular project. So these can be subdivided into manpower and others categories.
Overheads can be said to arise at the following levels:1) SBU level
2) Divisional level

3) Corporate level
Note: SBU overheads are charged to all the projects of the SBU by using the following
Formulae: Total Direct expenditure of the project/Total Cost of the Project * 100

DEPOSIT WORKS CONTRACTS

Deposit Works Contracts are the very important types of the contracts dealt in RITES
as they alone account to as high as around 35% of all types of contracts. They are very
important from the point of contract management because it involves back to back
relation of RITES with client at the same time of managing the contractors work. So,
our next area of focus will be Deposit Works Contracts.

WHAT ARE DEPOSIT WORKS CONTRACT?

Deposit Works refer to the Works that are executed by RITES with Works Contracts
signed by RITES for and on behalf of the client where the client makes available the
funds to meet the Works Contract Value, RITES fees and other related expenses
come. Before taking up any Deposit Work, an agreement has to be executed between
RITES and the client indicating clearly the Scope of Work, the financial arrangements
envisaged by the client for smooth progress of works and the items on which RITES
should take prior approval of the client.

Fig: Relationship between Employer (client),Rites and

Contractor

CONDITION FOR DEPOSIT WORK CONTRACT

1. Eligibility and pre-qualification
2. Earnest Money
3. Security Deposit
4. Variations, Extra/substituted items
5. Payment of running bills
6. Payment of final bills
7. Advance payment
8. Liquidated damages
9. Escalation
10.Disputed items and arbitration
11.Owners risk and compensation Events

STEPS IN MAKING THE OFFER

1. Request for Proposal (RFP) document contains information about the project,
bidding process, proposal submission, qualification and Technical &
Financial proposal requirements.

2. Interested parties who feel that they fulfill the eligibility criteria specified in the
RFP, have to pay a sum called the earnest money deposit, along with
submitting the Bid document.
3. After the bids are received, all the bids are compared to see which bidder fulfils
the following qualification requirements in addition to the other qualification
requirements given in RFP document. Then the most suitable bidder gets
award for work.
4. A Pre bid meeting shall be held in the office of RITES Ltd for clarification of
any doubt on any condition of RFP document.

PROCUREMENT PROCESS
PLAN: TECHNICAL & FINANCIAL
INTEND FROM MINISTRY
BIDDING PROCESS
BIDDING EVALUATION SHEET

COSTING OF DEPOSIT WORK CONTRACT

For the entire scope of services to be performed by project manager, Client shall pay
on the basis of direct cost, incurred by the project manager for and on behalf of
Client which shall include the following:
a) Cost of all materials procured for incorporating in works including:
transportation, loading, insurance, uploading, taxes and duties and charges for
inspection, if any, performed by an agency other than project manager.
However, the approval of client shall be sought in the event of appointment of

any other inspection agency. Cost of inspection by appointment of any other

inspection agency. Cost of inspection by project manager is not to be included
in direct cost.
b) Cost of all office buildings, storage sheds as approved and mutually agreed by
client.
c) Earnest money deposit forfeiture, interest earned on short term deposits if any
and miscellaneous revenue receipts shall be credited to client.

d) In addition to the direct costs, project manager shall be paid a lump sum fee on
firm price basis towards construction management by project manager which
shall include all taxes (including service tax, professional tax, etc. as
applicable),duties, levies, insurance charges ,license fees, project managers site
expenses, overheads and profits ,all related travel expenses, administrative
charges and other incidental expenses which are not separately payable. The
percentage of direct cost shall be :
Rs.calculated @ % of direct cost of
Rs

e) The above lump sum fee shall remain valid for +/- 10 % variation of the
estimated cost. In case the variation is more than +/- 10% of the estimated cost
on account of increase/decrease in quantities required during execution or
increase/decrease in the scope of work, the above lump sum fees will be
increased or decreased proportionately.

SPECIFIC EXCLUSION FROM DIRECT COST

a)

All expenses incurred by project manager for their head office, site office and
those in relation to technical co-ordination

b)

Salaries /wages, P.F/pensions and other perquisites paid to staff and labour
directly employed by the project manager for follow up, receipt, safe custody of
material and execution of work at site.

c)

Cost of direct field supervision at site.

d)

All expenses related to official and residential accommodation acquired by the

project a manger and their maintenance at places other than the project site.

e)

Establishment charges including essential expenses related to accommodation,

furnishing and maintenance of office & stores at site.

f)

All expenses including salaries, allowances, travel expenses for personnel

identified as related to inspection activities.

g)

Cost of all necessary insurance for plants and equipments as well as personnel
provided by project manager, if any.

h)

All capital cost for procurement of tools, plants and equipments incurred by
project manager and their contractors.

ISSUES TO BE TAKEN CARE OF

1. Work should not be awarded to the contractor until all the required construction
drawings are available.
2. Contract should not be awarded to the contractor until the site is available and
ready for construction with clear title deed and free from encroachments,
encumbrance etc.
3. Work should not be awarded until sufficient funds are deposited by the client. In
case the client desires to make available funds in installments, it should be
brought to clients notice that he will be liable for the claims for the contractor
and the Works Contract will have to be terminated.

TERMS OF THE CONTRACT

1. Responsibility of the contractor:
a) The contractor shall arrange for his own men, material, equipments, tools,
labor and material etc. RITES shall not be responsible for any loss or
damage to the same.

b) The contractor shall adopt all the precautionary measures to safeguard

life, property, structure, environment etc. and the rates shall include cost
of such measures.
c) Contractor shall comply with the Industrial Laws, Factories Act, Contract
Labor Act, minimum wages act, payment of bonus act, payment of
gratuity act, provident fund act, workmen compensation act and such
other laws which are applicable from time to time.
d) Contractor shall be responsible for the various levies of State/Central
Governments and / or any Statutory Body, Contractor shall, at his/their
expense, comply with all labor laws and keep RITES indemnified in their
respect.
2. It should be ensured that rates of Extra/Substituted items as well as rates for the
quantities beyond deviation limits of BOQ items are duly accepted by the
Contractor.
3. Whenever there is any likelihood of increase in the cost of work beyond the
clients expenditure sanction figure, revised estimate should be prepared well in
advance and submitted to the client for revised administrative approval and
expenditure sanction.
4. The contractor shall have no claim for compensation in case of delay/disruption
in works due to obstruction in work by local people /villagers/local authorities.
5. RITES shall deduct income tax on the fee as per statutory provisions and
applicable rates.
6. RITES shall have the right to reject any person/equipment of contractor, found
unsuitable for the project and the contractor shall replace them immediately
without any extra cost to RITES. Decision of RITES will be final and binding
upon the contractor.
7.

Financial issues.

Client shall pay on the basis of direct cost.

In addition to the direct costs, project manager shall be paid a lump sum fee on firm
price basis towards construction management by project manager which shall include
all taxes The percentage of direct cost shall be:
Rs.calculated

of

direct

cost

of

Rs.

CORPORATE & OTHER TAXES

The corporate tax of the company includes income tax, dividend tax &wealth tax of
the company under income tax act.
The company has also to pay fringe benefits tax (FBT) in regard to the perquisite
allowed or deemed as an employer. Further it is statutory to deal obligation for the
company to deal with the requirement for the payment of service tax as per law.

PAYMENT OF ESTIMATED TAX

The income of the company is estimated every year well in advance on best estimated
basis. As per the income tax Act 1961 advance tax against the profit estimated has to
be calculated and paid every quarter, as under:
On or before :15 June - not less than 15%of such adv. Tax
On or before: 15 September -not less than 45% as reduced by the amount, if
any, paid earlier.
On or before :15 December -not less than 75% as reduced by any amount paid ,
if any, paid in earlier installment.
On or before: 15 march 100%.

ESTIMATION TO BE MADE ON SHORTFALL ON

ESTIMATION OF TAX
The law requires that companies need to calculate and pay the advance tax on
estimated basis within the date stipulated. Short payment of tax and any delayed
payment thereof shall attract penal interest under section 234B and 234Cof the
income tax act .It is therefore essential that proper planning would need to be made
for estimation of tax to be paid by the Act. However, due care should be taken to
avoid over estimation. If any tax remains unpaid after deducting the advance tax, the
balance need to be paid at the filing of returns by self assessment tax it will attract
penalty @12% p.a. as per income tax act 1961.

TAX AUDIT AND INCOME TAX RETURN

The income tax return is submitted within the stipulated time by the company.
According to section 44B of income tax audit is made by an auditor appointed for the

purpose before submission of the IT return .The company has the provision of a
revised return within one year from the relevant assessment year as per Section 142 of
the IT Act.

TDS CERTIFICATE / WITHHOLDING TAX/OF TDS

BY RITES
The TDS certificates and withholding tax certificates are collected from various
clients and benefit of the same is taken on the total income tax payable by the
company. Further the said certificates are produced as evidence at the time of
assessment U/s 143(1) of income tax act.

Rites are deducting TDS under section 194-C, 194-J, and 195 in addition to
TDS U/S 192 of the income Tax Act 1961.

The TDS certificates are also treated as cash receipts. Timely submission of the
TDS certificate would help getting due credits during the income tax assessment
of RITES. As a part of procedure, the respective DFO are required to reconcile
the TDS account periodically to avoid any loss on this account.

Quarterly statements of TDS are filed electronically with the taxation

department on or before the dues dates as under:
o April June
: On or before 15th July
o July - September : On or before 15th Oct

o Oct December
o Jan March

: On or before 15th Jan

: On or before 15th June

Further it is also necessary to submit the quarterly return in the prescribed forms
as per prescribed time limit.

o For deduction U/s 194-C, 194-J, and 194-I the return in the
prescribed forms as per prescribed time limit.
o For deduction U/s 192 in the prescribed form no 24Q
o For deduction U/s 195 in the prescribed form no 27Q

III- ERA

FIRST ERA:

SECOND
ERA:

BATCH
PROCESSIN

FMIS

GG
THIRD ERA:
IMPLEMENTATIO
N
OF ERP
(Enterprise
resource
planning)

ERP IMPLEMENTATION BACKGROUND

Global
competiti
on

Talent
shortage
s

In todays
business,
companies
must
address:

Expectati
ons
from
customer
s

Increase
d
regulator
y
demand

Demand
for
increase
d
profitabil
ity

So as to assemble above Challenges Company must quickly renovate the

business with minimum cost.
For renovation it needs such a IT tool which is quote flexible, robust and secure.
One of such IT tool is ERP (Enterprise Resource planning).

NOTE: As per MOU between RITES & Ministry of Railways for the year 20082009 an A Report of introduction of ERP Scheme in RITES was submitted by
the end December 2008

 Businesses have a wide scope of applications and processes throughout their

functional units; producing ERP software systems that are typically complex
and usually impose significant changes on staff work practices.

Implementing ERP software is typically too complex for "in-house" skill, so it

is desirable and highly advised to hire outside consultants who are
professionally trained to implement these systems.

This is typically the most cost effective way. There are three types of services
that may be employed for :
Consulting
Customization
Support
The length of time to implement an ERP system depends on the:
Size of the business
The number of modules
The extent of customization
The scope of the change
The willingness of the customer to take ownership for the project
Data migration is one of the most important activities in determining the success
of an ERP implementation. The following are steps of a data migration strategy
that can help with the success of an ERP implementation:
1.

Identifying the data to be migrated

2.

Determining the timing of data migration

3.

Generating the data templates

4.

Freezing the tools for data migration

5.

Deciding on migration related setups

6.

Deciding on data archiving

HISTORY OF ERP VENDORS

SAP purchased Factory Logic.
Oracle purchased JD Edward, People Soft and Siebel system.
Infor purchased extensty,GEAC,Infenium,Lilly Software, Mapics, Marcam,
had purchased Baan, Epiphany, Max International and Provia Software.
Microsoft purchased Axapta, Great Plains Software, Navision, and
Solomon.
Lawson purchased Intentia.
QAD purchased Precision Software.
Intuitive Manufacturing system purchased Relevant Business System and
Supply Works.

M/S SAP INDIA

In India
there is 4
major ERP
vendors in
operation

ORACLE
FINANCIALS
MS DYNAMICS
NAV

RAMCOS

As per survey published by PCQuest (Sep 2008) SAP &

ORACLE are the most future ready brands.

SAP BACGROUND
SUMMARY OF SAP TODAY

SAP AG in 2008 revenues: Rs 7500 crores approx

Around 8200 companies run SAP software
Providing more than 25 industry solutions
51536 SAP employees till dec 2008

12 million users in 120+ countries team are there to:

Integrate their business process
Extend their competitive capabilities
Get a better return on investment at a lower total cost of ownership

Unique partner ecosystem

More than 1.5 million community members (SDN & BPX)
15 industry value networks

SAP INDIA: KEY CUSTOMERS

Top 8 out of 10 PSUs in

India run on SAP

Top 61 out of 100 in Indian

companies in India run on

 Indian oil

Reliance Industries

Bharat petroleum

Tata Group

BHEL

Aditya Birla Group

GAIL

M&M

NTPC

Larsen & Turbo

SAIL

HCC

ONGC

Reliance ADAG

BSNL

Wipro

State Bank Of India

Jindal

BEML

Bajaj Auto

AN INTRODUCTION TO ERP

What is ERP: ERP (Enterprise resource planning) is an integrated computerbased system used to manage internal and external resources including tangible assets,
financial resources, materials, and human resources. It is a software architecture
whose purpose is to facilitate the flow of information between all business functions
inside the boundaries of the organization and manage the connections to outside.

An ERP system can either reside on a centralized server or be distributed across

modular hardware and software units that provide "services" and communicate on a
local area network. The distributed design allows a business to assemble modules from
different vendors without the need for the placement of multiple copies of complex,
expensive computer systems in areas which will not use their full capacity.

To be considered an ERP system, a software package should have the following traits:
It should be integrated and operate in real-time with no periodic batch updates. All
applications should access one database to prevent redundant data and multiple data
definitions. All modules should have the same look and feel. Users should be able to
access any information in the system without needed integration work on the part of
the IS department. An ERP system combines all functional.

MODULES

It supports range of business process such as:

FINANCIAL MANAGEMENT
HUMAN RESOURCE
MANAGEMENT
PROJECTS
SALES AND SERVICE
PROCUREMENT
CORPERATE SERVICE

1. FINANCIAL MANAGEMENT
Comprenhensive financial and managerial accounting and
reporting system:
This module can increase the productivity of the finance department and
value of the business.

Credit management:
It will minimize the risk of extending the credit to the buyers and also
minimize the problems of late payments, bad debts etc.

 Electronic bill payment:

This module increases the accuracy level of billing, also reduces the time
consuming period with maintaining the proper database.

Collection management:
Dispute management:
Treasury management:
Cash and liquidity management:
Financial management:
General ledger:
Accounts receivable:
Accounts payable:
Contract accounting:
Fixed asset accounting:
Bank accounting:
Tax accounting:
Accrual accounting:
Profit centre accounting:
Cost centre and internal order accounting:
Project accounting:
Investment management:
Profitability accounting:

 Transfer pricing:

2. HUMAN RESOURCE MANAGEMENT

Talent management
Recruiting
Succession management
Enterprise learning
Employee performance management
Compensation management
Employee administration
Organizational management
Global employment
Benefit management
Time and attendance
Payroll and legal reporting
Work force deployment etc

3. PROJECT MANAGEMENT
Project planning
Project costing

 Project resource planning

4. CUSTOMER SATISFACTION
Sales order management
Contract processing
Inquiry and quotation processing
Trading contract management
Billing
Incentive and commission management
Customer service and contract
5. CORPORATE SERVICE
Real estate management
Portfolio management
Facilities management
Investment and planning
Maintenance and operation etc

ADVANTAGES OF IMPLEMENTING ERP

Tightly links business operation and improve visibility.
It enhances financial management and reporting.
Effectively manage workforce.
Less manpower utilized.
Address new business requirement.
Provides easier access to enterprise information and reports.
Lower the cost of operation.
Less processing time.
Increased productivity.
Increased organizational efficiency.
Increased accuracy level
Increased ability for confident decision making
Provide competitive edge.
Improved sales: As ERP solution is single point to all information related
to customers order, starting from logging to delivery, makes tracking

process easier and improves coordination amongst the production, inventory

and shipment.
Improved inventory management:
Efficient accounting system:

ERP Systems centralize the data in one place, benefits of this include:

Eliminates the problem of synchronizing changes between multiple systems consolidation of finance, marketing and sales, human resource, and
manufacturing application.
Permits control of business processes that cross functional boundaries.
Provides top-down view of the enterprise, real time information is available to
management anywhere, anytime to make proper decisions.
Reduces the risk of loss of sensitive data by consolidating multiple permissions
and security models into a single structure.
Shorten production leadtime and delivery time.
Facilitating business learning, empowering, and building common visions.

FACTORS OF IMPLEMENTING ERP

FACTORS

LEVELS OF
EXISTING
COMPUTERIZAT
ION

BUDGET

AVAILABILITY
OF SUPPORT

LEVELS OF EXISTING COMPUTERIZATION

Any organization that is going to implement ERP their existing IT infrastructure
should support ERP implementation and also should bridge gap of existing system.

BUDGET
Company should be financially strong to implement ERP i.e. acquiring hardware,
software, networking, training etc.

AVAILABILITY OF SUPPORT
Their should be full support of product for effective and efficient work environment.

GAP AND NEED ANALYSIS

GAP ANALYSIS
After implementing ERP it will help to bridge the entire gap with the help of their
modules and integrated database which cannot be fulfilled even after providing full
effort on non ERP system i.e. existing system of RITES. The module available in ERP
system covers almost all data and each and every minute details successful and
efficient working of any company.
As ERP system endeavors to integrate all the departments and function across the
company onto a single database, where compare with RITES application software
system, it develops each application for every department each application has its own
database which work from different computer system.

The issues arise from the existing system which is in contrast with the ERP
environment is as follows:
Its difficult to get real picture and over-all performance of the business.
As here finance may have their own set of revenue figures while sales and other
business have other versions of how they are contributed to the revenue.

Where ERP has one version of the business performance.

Problem arises due to human error, duplication of information, unavailability of

accurate and timely data.
ERP environment provide accurate information, real time and facilitate better
decision making.

Report generation process can be time consuming.

Inventory cost is quit high.
ERP provides the visibility of order fulfillment process which lead the reduction
of inventory of raw material used and also reduces the inventory of finished
good at the warehouse and shipping docks.

Cost of operation is too high and process is less transparent.

ERP leads to cost saving, higher productivity, it regularly monitor the supply
chain, fund flow statement, work in progress and other business process.

Lack of security and antivirus features in non ERP system may lead to choking
of LAN and reduction in efficiency.

NEED ANALYSIS

In order to bridge the gap as mentioned above just because of non availability of ERP
system there is a need of implementing ERP system, so as to have full advantage of IT
advancement as it is proved that ERP environment enables us with so many
advantages.
So in order to reduce the gap ERP should be implemented in RITES by adopting the
full range of modules as discussed previously.

Why RITES need to move

towards a consolidated ERP
application?
RITES focus on business area such as leasing and EPC project, continous
improvement in operation makes it critical that the organization move to an
integrated ERP business system.

RITES,s impending IPO to finance growth and expansion in new areas of

business will require the support of a robust IT platform that can enable its
business process.

Peer analysis and interviews with RITESs key business executives

corroborated improvement opportunities across many functional areas within
RITES.

KEY BUSINESS AND IT IMPERATIVES

Key business imperative IT

EXPAND PORTFOLLIO OF OFFERING
Imperative
Leverage rich experience
in lesing, maintenance and
rehabilitation of railway
equipment system.

Improve
visibility
and
analysis

Develop
experience
in
managing mega projects
and EPC contracts.

Creative
value for
sharehol
der

Forge business partnership

to strengthen capabilities
in
BOT
projects
and
financing
(IDFC,
ICIC
Ventures etc).

Support
emerging
business
need with
a robust
and
integrated
platform

STRENGTHEN HUMAN
RESOURCES

Ensure optimum utilization

of available resources.
Staff ongoing and new
projects with experienced

Drive
business
and IT
collaborati
on

What are the benefits of the

proposed ERP in the company?
A single integrated IT platform delivers complete transparency and provides
employee with actionable insights on real-time business.

An integrated ERP business platform provides quantifiable business benefits

while eliminating legacy application development, maintenance and integration
costs.
Empirical evidence shows that ERP driven process improvement projects could
lead to higher market valuation of the company due to better transparency,
regulatory, compliance and cost management.
The value of your IT investment in an enterprise wide integrated system can be
viewed in a few simple ways:

Cost to own
Business value

Strategic value

COST TO OWN
Run the business at lower cost: lower cost to maintain, develop and enhance
IT solutions i.e.
Cost of creating, monitoring and supporting interfaces
Cost of

developing new capabilities to support the business evolving

requirements (leasing, managing EPC contract, concession business)

BUSINESS VALUE
Enable the business to work in more effective, efficient, responsive and
competitive manner by:
Assisting in process and people improvement leading to cost reduction
Improving real-time visibility and accuracy of data to enable faster decision
making

Business enablement driven by ERP

AREA

KEY BENEFITS

Improvement in receivable outstanding and collection

process
Track & monitor accounts receivable on a real time basis
using numerous standard reports for all authorized
personnel with various alert capabilities.

Integrate accounts receivable with credit, collection and

dispute management to provide control and analysis and
help optimize accounts receivable functions.

Productivity improvement in finance function

Enable budgeting, rolling forecast and collaborative
planning entirely through the system.
Establishes a single data source for both accounts payable
and purchasing, eliminating data re-entry, provides all
authorized user necessary access for data processing and

Finance &
compliance

inquiry.

Audit trail up the original transaction and supporting

document for all transactions.

Reduce annual and quarterly book closing time

Accelerates closing process through process automation,

workflow and collaboration.

Enables

easier

consolidation

across

different

divisions/SBUs leading to shortened closure.

Governance, risk and organization wide compliance

Compliance

to

trade

regulation

across

various

geographies.
Identify and track the risk associated with key business
opportunities, initiatives, projects, and processes.

Allocate and continuously monitor user authorizations.

System-driven identity management

Improved resource utilization

Closer collaboration with shared project resource terms
leading to easy visibility into utilization of frequently
shared resources in departments like electrical, signaling,
goe-tech etc.
Track resources available along their skill sets, experience,
cost, location, commitment schedule and other data
important in determining their suitability for specific
engagements.

 Provide a fully integrated talent management suite to obtain

Project

visibility to individual data including skills, competency,

education and work experience.

Planning
&
Execution
Reduce project management cost
Project document can be stored in structured fashion with
authorization to selected project resources or stakeholders.
Unifies project management, time tracking, financial data,
and employee skills information in a portfolio management
tool.

Improve bid and proposal costing efficiency

A single source with information around past projects,
resources attached and learning will add to insight for
bidding, planning and execution of current projects.
Enable indepth analysis for cost calculation based on
previous project cost and other data.
Provide consistent central storage of all relevant data
during the entire collaboration process and a secure
integration of external partner and supplier for bid
preparation, design and engineering.

STRAREGIC VALUE
Support you strategically, ability to manage risk & compliance, support new
business
Adopt international accounting system such as IFRS
Ensure the right financial/sock markets valuation of RITES
Combine RITEs consultancy & internal implementation experience to address
to rapidly growing ERP market in India & Abroad

Strategic benefits from ERP

1. Meet the emerging business needs of RITES today

SAP covers IFRS accounting standards

Compliance

which is beneficial because International

with New

financial reporting is not static.

regulation

SAP ERP meets all Indian requirements

& taxes laws

Emerging
and growing
business

Help in leasing and maintenance

As business grows, complexity around asset
management, maintenance & inventory
management will increase.
EPC/BOT contract
Leverage technology to strengthen relationship with designers, subcontractor & supplier.

2. Leverage ERP prior to IPO streamlines operations

Markets and analyst respond positively to ERP project announcement because it
provide better transparency, regulatory compliance & internal control, cost
management and Strong, scalable platform that can support its growth.

The financial markets put higher value on firms with more installed computer
capital.
Empirical evidence points to direct correlation between ERP driven process
improvement projects leading to higher market valuation of the company.

3. Leverage the ERP implementation experience to build an ERP consulting

Practice within RITES

What are the critical success

factors

for

the

successful

implementation of ERP at RITES?

Senor management to monitor project progress and drive execution discipline
Rigorous change management and user training conducted to ensure system
adoption.
Regular project reviews and audit done necessary corrective measure adopted.
Generate positive momentum through constant communication from project
sponsor and champions.

TOP ISSUES ORGANIZATION FACE

DURING ERP

Organizational change

Program management

Internal staff adequacy

Process reengineering

Project team

Stage/transition

Training

Prioritization/resource
allocation

Benefit realization

Software functionality

[[[

Top management
support

Application portfolio
mgmt

Consultants

Enhancement/upgrades

Ownership (of benefits

to other)
Discipline

Data
Reporting

CRITICAL SUCCESS FACTORS FOR

SUCCESSFUL ERP IMPLEMENTATION
1. Strong leadership alignment and support
Establish strong and involved executive sponsorship at HQ and local
level.
Appropriately prioritize project ERP against other initiatives.

2. Focus on achieving the benefits

Clearly identify opportunities for delivering benefits and relentlessly
measure improvements on the periodic basis.
Leverage culture towards active management based on metric
performance.

3. Strong program and change management

Leverage the ERP providers methodology, change management
framework and assets to accelerate design, development and rollout.
Set and manage end user expectations through effective and frequent
communications.

4. Appropriate staffing level of the project

Ensure adequate representation from business areas and capitalize on
internal competencies.

 Ensure coverage of critical skill areas such as change management,

program management & technical architecture.
5. Limit level of customization
Maximize usage of SAPs standard functionality.
Minimize customization through a cost/benefit analysis.

BUSINESS NEED AND SOLUTION

ENABLERS
FINANCIAL & MANAGEMENT ACCOUNTING/
ANALYTICS Business need and solution enablers

BUSINESS NEED

SOLUTION ENABLERS

Budgeting & availability control

Budgeting & availability control

Budget/plan preparation and

Budget/plan preparation and

consolidation across the

consolidation can be handled

organization is a manual

completely in the system with

exercise & the finalized data is

the help of various tools.

store in spread sheet.

Budget availability control
check is manual in many

Budget control is automatic

with online control.

operating areas.

Budget/plan versus actual

Flexible Budget/plan versus

variance is available through

actual variance report can be

MIS reports which need to be

taken from the system any time.

flexible.

Project costing

Project costing

Detailed cost analysis for each

Detailed cost analysis for each

project at various physical

project at various physical

stages & is not available.

stages & is available.

Re-allocation of cost variance

Re-allocation of cost variance

between various divisions,

between various divisions,

projects handled partly through

projects can do based on

the system.

flexible rules & flexible

statistical key figures.

Financial Accounting: Treasury

Financial Accounting: Treasury

INVENTORY AND ASSET MANAGEMENT Business

need and solution enablers
BUSINESS NEED
Inventory management
Inventory records are not
maintained in the system.

SOLUTION ENABLERS
Inventory management
Inventory records are
completely maintained in the
system.

Inability to optimally manage

Integration with supply chain

inventory resulting in

management system, providing

unsynchronized design and

visibility into on hand

sourcing cycles.

inventory when making

purchasing decisions.

Manual receiving and service

entry processes that are
susceptible to errors and lead
to incorrect inventory levels.

Lack of integration of quality

management system with
procurement processes.

Integrated quality management

system for procurement.

Asset management
Difficulty balancing operation

Asset management
Improved coordination of

and maintenance activities in

maintenance, and supply chain

cost effective manner.

activities to directly impact

ROA.

Measuring and analysis

performance of equipments in
manual process.

Performance measurement and

analysis of equipments is
possible through system.