ABC Textile India Ltd

ABC Textiles India Ltd.

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ABC Textiles India Ltd.1. Introduction 2. Company 3. Company codes 4. Plants 5. Business Areas 6. Basic settings of Accounting 6.1 Financial year 6.2 Posting period variant 6.3 Open posting periods 6.4 Field status variant 6.5 Tolerance groups 7. Postings 7.1 Document types 7.2 Document number range interval 8. General Ledger Accounting 8.1 Chart of Accounts 8.2 Account groups 8.3 Retained earnings Account 8.4 G/L Master records 9. Bank Accounting 10. Cash Journal 11. Terms of Payments 12. Interest settings 13. Dunning procedure 14. Down Payments Made/Received 15. Withholding Tax 16.Tax on Sales and Purchases

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ABC Textiles India Ltd.17. Accounts Receivable 17.1 Credit control area 17.2 Sales Areas 17.3 Customer Account Groups 17.4 Customer Master records 17.5 Customer Billing 17.6 Customer payments 17.6 Special G/L transactions 18. Accounts Payable 18.1 Purchase Organizations 18.2 Vendor Account groups 18.3 Vendor Master records 18.4 Invoicing 18.5 Invoice Clearing 18.6 Special G/L transactions 18.7 Automatic Payment Program 19. Asset Accounting 19.1 Asset classes 19.2 Acquisition of Assets with/without vendor and retirement of Assets 19.3 Depreciation Keys 20. Information System 20.1 External Reports 20.2 Internal Reports 21. Controlling 21.1 Cost Element Accounting 21.2 Cost Center Accounting 21.3 Product Cost Controlling 22. Information System

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ABC Textiles India Ltd.AS-IS 1. Organizational Structure Group Company ABC TEXTILES(India) Limited is a Group of Companies having two companies. Companies ABC TEXTILES(India) Limited consists of two Companies. 1. AP Cotton Limited, Hyderabad. 2. AP Mlange Limited, Hyderabad. Manufacturing Units AP Cotton Limited, consists of two manufacturing units 1. 100% Cotton Group 2. 100% Polyester Group A.P. Mlange Limited Consists of one manufacturing unit. 3. 100% Cotton & Viscose Blends 100% Polyester Blends 2. Books of Accounts 2.1 Books of Accounts are maintained by ATIL with Financial year April to March in Indian Rupees. TO-BE

In SAP Company can be created with a six-character code. Transaction Code: OX15. In SAP a four character Company Code can be created for each Company. Transaction Code: OX02. Company Codes are assigned to Company. T.C.:OX16 In SAP Plants can be created with a four character code. T.Code:OX10 Plants are assigned to their respective Company Codes T.Code:OX18

Fiscal Year variant can be maintained for the Financial Year and assigned to Company Codes. Fiscal Year Variant consists 12 periods starting from April to March. 4 special periods can be maintained for closing purpose. T.Code: OB29, OB37. Currency codes can be maintained in T.Code:OY03

2.2Currencies Currencies with which ATIL is dealing with Indian Rupees, USD

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ABC Textiles India Ltd.Opening and closing of Books In every financial year books are opened on 1st of April and closed on 31st March Books are closed in every month and balances are carried forward to next month 2.4Journal Day to day transaction is recorded in journals. Separate journals are maintained for cash, sales day book, sales returns purchase day book, purchase returns 2.5General Ledgers General ledger accounts are maintained under various heads like Capital, liabilities, assets, income expenditure, creditors and debtors ledger In SAP periods can be opened and closed by using posting period variant and assigned to Company Codes. T.Code:OBBO, OB52, OBBP

In SAP document types classify transactions. A Document number identifies each journal entry. Document number intervals are assigned to Number range of document types in company code OBA7, FBN1 In SAP a Chart of Accounts can be created which contains list of G/L Accounts. Under the Chart of Accounts, G/L accounts are classified under Account groups. T.Code OBD4 Share Capital Reserves & Surplus Secured Loans & Unsecured Loans Current Liabilities & Provisions Fixed Assets Investments Current Assets Loans & Advances Incomes Expenses GL Master Records G/L Master record is maintained for each General Ledger account. Each G/L master is recognized by a number. T.Codes: FS00

3.Bank Accounting Bankers: ATIL is banking with SBI, AB and ICICI.

In SAP, a House bank can be maintained

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ABC Textiles India Ltd.3.1 ABC TEXTILES(India) Limited is having two accounts 1. SBI, Dilsuknagar (Open Cash Credit Account) 2. Current accounts with AB AP Melange Limited has one Current account with ICICI Bank. All receipts and payments from foreign trade are accounted with ICICI Bank. Bank reconciliation is done manually at the end of every month. 3.2 Cash books Cash books are maintained to record the cash receipts and Payments. for each bank account. T. Code FI12,FF68

In SAP Cash Journals can be maintained for cashbooks. T.Code:

4. Terms of Payment 30 days Credit facility is In SAP Terms of Payment are maintained provided to customers. Discount in T.Code:OBB8 2 % is allowed to customers for payments realized within 10 days and 3 % is allowed to customers for payments realized within 20 days. For some customers, installment facility is given. Materials are procured from vendors on 30 days credit 5. Reminder Notices Weekly reminders are sent to In SAP, Dunning procedure can be created customers with regard to for sending reminder notices. overdue more than Rs.50000/T.Code: FBMP Fortnightly reminders are sent to customers with regard to overdue less than Rs.50000/Yearly once Balance confirmation statement is sent to vendors.

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ABC Textiles India Ltd.Remainder Notice charges will be charged. Interest notice send to the customers on overdue. 6. Interest Calculation As per the Company Policy, interest is calculated @ 24% pa on the balance overdue. 7. Withholding Tax As per the Income Tax Act 1961, TDS is deducted on service related payments under the following categories. Salaries Dividends Interest payments Contract payments Rent Professional & Technical fees Quarterly Returns are submitted to the Tax Department In SAP, Interest Indicators can be created for each type of Interest. T.Code:OB46 In SAP, Withholding Tax types and Withholding Tax codes can be maintained for each category of Withholding Tax.

In SAP, Remittance challans can be created in T.Code: J1INCHLN

At the Year End, TDS certificates In SAP. Withholding Tax certificate can be are issued to the concerned parties created in T.Code: J1INCERT from whom the TDS is made. When customer makes TDS, it is not accounted until receipt of certificate. Up to that time it is shown as outstanding against certificate. In the year-end TDS certificates are obtained from the customers.

8.Tax on Sales & Purchases: Excise Duty Payable / Paid Customs Duty Payable / Paid CESS Payable VAT Payable / Paid CST Payable

In SAP, Account key is created for each Tax. Tax procedure is created and assigned to country India. Tax codes are created with the percentage of Taxes. T.Code: OBCN, OBYZ, OBQ3, OBBG, FTXP

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9.Accounts Payable Account Payable General Ledger accounts is maintained for each Vendor as a sub ledger accounts. Materials are procured from domestic vendors as well as imports.

In SAP, an account group can be created for regular vendors and one time vendors. A vendor master record is maintained for each vendor. Vendor master record is recognized by a number from the number range interval and assigned to account group.

Advances are paid to vendors for In SAP, advance to parties are done goods delivered. through special GL transactions Invoices are received after delivery of goods. Invoices are settled as per the Invoices can be created in T.Code: MIRO terms and conditions. Payments are made through Cheques, Bills Payable, Cash 10. Accounts Receivable Account Receivable General Ledger account is maintained for each Customer as a sub ledger accounts Types of customers Domestic and Exports Creating invoices to customers House banks are maintained for each Bank and cheque lots can be maintained for outgoing cheques. In SAP, an account group can be created for regular customers and one time customers. A customer master record is maintained for each vendor Customer master record is recognized by a number from the number range interval and assigned to account group. In SAP invoices can be created in T.Code: VF01 In SAP a House bank is maintained for each Bank account for receivable purpose and

Payment methods accepted By the ATIL from customers: Cheques, Bills Receivable cash

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In SAP an asset class can be created for each head. Asset class consists of Assets are grouped under the account determination, number range and following heads screen layout. Land and buildings G/L master record is created for each Plant and machinery asset class. EDP equipment Vehicles Furniture and fixtures An asset master is created for each asset. Depreciation method Each asset master is recognized by a Assets consist of useful life. During number. the life some wear and tear will occur, so we calculate depreciation IN SAP chart of depreciation can be for each fixed assets To calculate created and assign to company code the depreciation we follow Written down value method. Method of depreciation and Rates of depreciation is provided in depreciation keys T.codes: EC08, OADB, OAOA, AO90, AFAMA, AO21, ASO1, F-90.

11.ASSET MANAGEMENT

12. Reports External reports 1. Profit and loss account for year 2. Profit and loss account half yearly or quarterly 3. Balance sheet actual / actual year 4. Cash flow statement In SAP these are standard reports available

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1. Introduction ABC TEXTILESINDIA LIMITED (ATIL) is established in the year 1995, it is a Yarn Manufacturing Facility with different kind of End Products, like 100% Cotton, 100% Polyester and Mlange yarn to cover the market demand of different areas and needs. Our enterprise is present globally by exporting our products to many countries also have a healthy share in Domestic Market. We have a very strong Quality and Environment policies, we posses the ISO9002: 2000 and ISO-14001 certifications. Our enterprise is the only one of its kind with winner of Best exporter of the year award continuously for past Six (6) years, and Installed spindle capacity of over 70,000, And 14.6 million kgs of output per annum with over Rs. 1.76 billions turn over per annum. Company has 150 crores equity share capital divided into 15 crores equity shares. 2. Company ABC TEXTILES(India) Limited is a Group of Companies having two company codes. A Company is created with a six-digit character code with the information of address, language, currency and country. The Company is used for the consolidation of financial results of the companies within the group. Company ATIL Transaction Code: OX15. 3. Company Codes A four character Company Code is created for each Company. AP Spinner (India) Limited consists of two Company Codes 3. AP Cotton Limied at Hyderabad Company Code APCL 4. AP Melange Limited at Hyderabad Company Code APML Transaction Code: OX02. Company Codes are assigned to Company. Transaction Code: OX16.

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4. Plants AP Cotton Limited consists of two manufacturing units. Plants are created with a four-character code. 1. 100% Cotton Mills 2. 100% Polyester Mills Code APCM Code APPM

AP Melange Limited consists of one manufacturing unit 1. 100% Cotton & Viscose Blends Mills 100% Polyester Cotton Blends Mills Code APMM Transaction Code: OX10. Plants are assigned to their respective Company Codes Transaction Code: OX18. 5. Business Areas ABC TEXTILES(India) Limited is into 3 market segments. Cotton Yarn, Polyester Yarn and Cotton, Viscose, Polyester Blends. Three Business areas are created for internal reporting purpose Business Areas APC APP APM 100% Cotton Yarn 100% Polyester Yarn 100% Cotton, Viscose and Polyester Blends Transaction Code: OX03

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ABC Textiles India Ltd.6. Basic Settings of Accounting Books of Accounts are maintained by the Company with Financial year April to March. 6.1 Fiscal Year variant is maintained for the Financial Year. Fiscal Year Variant consists 12 periods starting from April to March. 4 special periods can be maintained for closing purpose. Fiscal year variant AP is used Transaction Code: OB29 Fiscal Year variant AP is assigned to both the Company Codes Transaction Code: OB37 6.2 Posting period variant In every financial year books are opened on 1st April and closed on 31st March. Books are closed in every month and balances are carried forward to next month. So, Posting period variant is created. Posting Period VariantATIL is used Transaction Code: OBBO Posting period variant is assigned to Company Codes. Transaction Code: OBBP 6.3 Open posting periods Periods are opened for the fiscal year through the posting period variant Transaction Code: OB52

6.4 Field Status Variant Field Status Variant is copies from standard SAP with 47 field status groups. Field Status group defines the status of the fields while making posting to the GL accounts.

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ABC Textiles India Ltd.Field status variant APSL Transaction Code: OBC4

Field Status variant is assigned to Company Codes. Transaction Code: OBC5 6.5 Tolerance Groups Tolerance group for GL Account is created in each Company Code. In Tolerance groups the permissible amounts for accounts and for line items are specified Transaction Code: OBA0 Tolerance group for employees is created in each Company Code. This group defines different amount limits for your employees. It determines: The maximum amount for which an employee is permitted to post a document. The maximum line item amount an employee is permitted to enter in a customer, vendor or general ledger account. The percentage amount related to cash discount. The maximum permitted payment differences. Transaction Code: OBA4 Tolerance group for (vendor / customer) is created for each company code. In the tolerance group limits for vendor / customer payment differences are defined. The tolerance group determines: Limits to which differences in payments are posted automatically to expense or revenue accounts when clearing open items Terms of payments are used for settle the invoices. Transaction Code: OBA3 7. Postings Every transaction is recorded in Journal at the first and separate journals are maintained for cash, sales day book, sales returns, purchase day book, purchase returns. Standard SAP Document Types are used to classify the transactions.

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ABC Textiles India Ltd.Document number intervals are maintained for each document type. From this number interval, system picks and assigns a number to each transaction in SA.

Doc.type SA AA AB DR KR DZ KZ DG DA KG KA AF

No. Range GL account document 01 Asset accounting 01 document Reversed clearing 01 document Customer invoice 18 Vendor invoice 19 Incoming payment 14 Outgoing payment 15 Customer memos 16 Reversal/Clearing Doc. 16 of customers Vendor memo 17 Reversal/Clearing Doc. 17 of vendor Depreciation posting 04 Description

No. Intervals From To 100000 200000 300000 400000 500000 600000 700000 800000 199999 299999 399999 499999 599999 699999 799999 899999

Document type Number intervals

Transaction Code:OBA7 Transaction Code: FBN1

Posting Keys Standard posting keys defined in SAP are used 8. General Ledger Accounting General ledger accounts are maintained under various heads like Capital, Liabilities, Assets, Income, Expenditure, Creditors and Debtors ledger Preparations

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ABC Textiles India Ltd.8.1 Chart of Account consists list of GL accounts and two company codes will be maintained with seperate Chart of Accounts. Chart of accounts defines the language, length of GL accounts and its helps to integration with Controlling. Chart of Account: APCL & APML Chart of accounts is assigned to Company Codes. Transaction Code:OB62 8.2 Account groups The following account groups are created for the Chart of Accounts APCL Acc. Group SC10 RS11 SU12 CL15 FA20 IN21 CA22 LA26 IC30 EX40 From Account 100000 110000 120000 150000 200000 210000 220000 260000 300000 400000 To Account 109999 119999 149999 199999 209999 219999 259999 299999 399999 499999 Transaction Code:OB13

COA APCL APCL APCL APCL APCL APCL APCL APCL APCL APCL

Description Share Capital Reserves & Surplus Secured and Unsecured Loans Current Liabilities & Provisions Fixed Assets Investments Current Assets Loans & Advances Incomes Expenses

The following account groups are created for the Chart of Accounts APML Acc. Group SC10 RS11 SU12 CL15 FA20 IN21 CA22 From Account 100000 110000 120000 150000 200000 210000 220000 To Account 109999 119999 149999 199999 209999 219999 259999

COA APML APML APML APML APML APML APML

Description Share Capital Reserves & Surplus Secured and Unsecured Loans Current Liabilities & Provisions Fixed Assets Investments Current Assets

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ABC Textiles India Ltd.APML APML APML LA26 IC30 EX40 Loans & Advances Incomes Expenses 260000 300000 400000 299999 399999 499999

Transaction Code:OBD4 8.3 Retained earnings One retained earnings account is created with GL account 110000 and P&L statement account type X. Transaction Code:OB53 8.4 GL Master Records G/L Master record is maintained for each General Ledger account. Each G/L master record is recognized by a number and text. GL master record consists of two segments chart of account segment and company code segment. Transaction Code: FS00, OBY7, OBY2

9. Bank Accounting House bank of a company code is denoted as a bank ID every account specfies by an account ID in the SAP system. In the SAP system, use the bank ID and the account ID to specify bank details. These specifications are used to determine the bank details for payment. Bankers: ATIL dealing with SBI, AB and ICICI. AP Cotton Limited is maintaining two accounts SBI, Dilsuknagar (Open Cash Credit Account) Current accounts with AB,Somajiguda AP Melange Limited has one Current account with ICICI Bank

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One House bank is created for each bank account. Co. code House bank APCL APCL APCL APCL APML APML Bank Key SBIAPCL ABAPCL ICAPML Description SBI Bank AB Bank ICICI Bank Bank acc.no SBI001 AB001 ICICIML GL account 121000 222000 223000

Transaction Code: FI12 10. Cash Journal: The cash journal a sub ledger of Bank Accounting. It is used to manage record the cash receipts and payments. The Company would be maintaining two Cash Books, One is for the Main Cash and other is for Petty Cash Book. By setting the cash balance at the beginning of the day, the cash journal shows the cash balance at any time by adding the cash receipts and deducting the cash payments. The cash journal also serves as a basis for entries in the general ledger and thereby represents the "Cash" G/L account.

Settings for Cash journal 1. GL account for Cash journal 220500 2. Document type for Cash journal SA (General Accounting Document) 3. Number Range Intervals-01: 1 - 999999 Transaction Code: FBCJC1 4. Set up Cash Journal 5. Create Bank transactions 6. Set up print parameters 7. Postings to cash journal is made through 11. Terms of Payment Transaction Code: FBCJC0 Transaction Code: FBCJC2 Transaction Code: FBCJC3 Transaction Code: FBCJ

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ABC Textiles India Ltd.Terms of Payments contains conditions framed between the business partners to settle the invoices and it specifies about the due date of amount payable. Based on time cash discount can be availed. It defines cash discount rate for an individual payment with a maximum of 3 payment terms i.e. first cash discount period, second cash discount period and due date for net payment. Terms of Payment are attached to vendor/Customer master records or document postings, system automatically calculates the cash discount while posting the document. In SAP Terms of payments are attached to customer or vendor. 30 days Credit facility is provided to customers. Discount 2 % is allowed to customers for payments realized within 10 days and 3 % is allowed to customers for payments realized within 20 days. For some customers, installment facility is given. Terms of payment 0001 Payable Immediately APSL 30 Days credit Transaction Code: OBB8

Payment Terms for installments APSI Installment Payments Transaction Code:OBB9 12. Interest Settings Interest Calculation: As per the Company Policy, interest is calculated @ 8% p.a. on the balance overdue. Company has taken working capital loans from their bankers for which they are paying interest @ 9% p.a Account balance interest or Interest on arrears can be calculated on customer as well as vendor accounts Balance interest calculates interest on balance amounts periodically where as Item interest calculates interest for the overdue or delayed days of payments

Standard Interest Calculation Types available P: Item Interest S: Balance Interest

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ABC Textiles India Ltd.Z: Penal Interest Interest Indicators CI: Balance Interest Indicator MI: Item Interest Indicator Transaction Code: OB46 Reference Interest rates APS1: Reference Interest @ 8% APS2: Reference Interest @ 9% Transaction Code: OBAC Time based terms CI: Term Debit Interest: Balance Interest calculation CI: Term Credit Interest: Balance Interest calculation MI: Term Debit Interest: Arrears Interest calculation MI: Term Credit Interest: Arrears Interest calculation Transaction Code: OB81 13. Dunning Procedure The dunning procedure determines how business partners can be dunned. It contains the number of dunning levels, dunning frequency, minimum amounts and dunning activities. Dunning Level indicates how often an item or an account has been dunned and describes the steps to be maintained for a dunning procedure. Dunning levels control the dunning process. Dunning Area is an organizational unit within a company code from which dunning is conducted. The dunning procedure is controlled and the dunning notices are sent separately per dunning area. A dunning area can represent the following:

Business Area Sales Organization Distributon Channele Division Dunning Notices

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ABC Textiles India Ltd.Weekly reminders are sent to customers with regard to overdue more than Rs.50000/Fortnightly reminders are sent to customers with regard to overdue less than Rs.50000/Yearly once Balance confirmation statement is sent to vendors. Dunning charges will be charged. Interest notice send to the customers on overdue Dunning procedure:ATIL Dunning Interval in days: 7 Dunning levels: 4 Minimum amount for dunning: INR 50000 Dunning charges: INR 100 to 500 Transaction Code: FBMP

14. Down Payment made/received Down payments are used for short or medium financing. Generally the vendor or manufacturer does not have to pay interest on down payments. Down payments are generally made before production begins or after partial completion. Down Payments must be displayed separately in the Balance Sheet. On the balance sheet, down payments made are displayed on the assets side and down payments received on the liabilities side. Down Payments made are futher divided, depending on whether they are a. Down Payments on Tangible Fixed Assets b. Down Payments on Intangible Fixed Assets c. Down Payments on Inventory stocks d. General Down Payments.

15. Withholding Tax As per the Income Tax Act 1961, TDS is deducted on service related payments under the following categories. Salaries, Dividends, Interest payments, Contract payments, Rent, Professional & Technical fees Quarterly Returns are submitted to the Tax Department

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ABC Textiles India Ltd.At the Year End, TDS certificates are issued to the concerned parties from whom the TDS is made. When customer makes TDS, it is not accounted until receipt of certificate. Up to that time it is shown as outstanding against certificate. In the year-end TDS certificates are obtained from the customers. Withholding Tax types and Withholding Tax codes are maintained for each category of Withholding Tax.

Withholding tax types 01: TDS on Payment posting 02: Surcharge on TDS 03: Cess on TDS 04: Higher Education Cess 05: Cess on Surcharge 06: TDS on Invoice posting Withholding tax codes W.Tax W.Tax Type Code 01 01 02 03 04 05 06 01 02 01 01 01 01 01 Description (TDS on) Salaries Contract payments Surcharge on TDS Cess on TDS Higher E.Cess Cess on Surcharge TDS on Invoice posting Off W.Tax Key 192 194C % Posting Subject Indicator to tax (Std) 100 1 100 3 2 2 2 100 1 1 1 1 1 1 W.Tax rate Income Type

2% 10 % 3% 1% 3% 2%

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ABC Textiles India Ltd.Remittance challans are created in Withholding Tax certificates are created in 16. Taxes on Sales & Purchases The following are the Taxes, which the company is paying on Sales and Purchases Sales Output Tax: Excise duty payable, Customs Duty, CESS payable, VAT payable, CST payable Purchases Input Tax: Excise duty paid, Customs Duty Paid, CESS paid, VAT paid, CST paid. Transaction Code: J1INCHLN Transaction Code: J1INCERT

Tax on sales and purchases are procedure-based taxation in FI component. Condition Types: Condition Types APS5 APS6 APS7 APS8 APS9 APS0 APS1 APS2 APS3 APS4 Description Excise Duty Paid Cess Paid VAT Paid CST Paid Customs Duty Paid Customs Duty Payable Excise Duty Payable Cess Payable VAT Payable CST Payable Transaction Code: OBQ1 Account Keys A/c Key SL5 SL6 SL7 SL8 SL9 SL0 Description Excise Duty Paid Cess Paid VAT Paid CST Paid Customs Duty Paid Excise Duty Payable Type Input Tax Input Tax Input Tax Input Tax Output Tax Output Tax Not Deductible X 2 2 3 2 3 2 Posting Indicator

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ABC Textiles India Ltd.SL1 SL2 SL3 SL4 Cess Duty Payable VAT Payable CST Payable Customs duty Payable Output Tax Output Tax Output Tax Output Tax X 2 2 2 2

NOTE: 2 Separate Line Items 3 Distributed to relevant expenses / revenue items Transaction Code: OBCN

Tax Procedure A calculation procedure is defined for each country INDIA, containing the specifications required to calculate and post tax on sales/purchases. Calculation procedure contains tax types, which are called condition types in the procedure. The system defaults condition types when you define a tax code. The condition type (such as input or output tax) specifies the base amount on which the tax is calculated and the account key that is used to post the tax. The specifications necessary for calculating and posting tax have been defined for the condition type and account key. Tax Procedure ATIL Step 10 100 110 120 130 140 200 210 220 230 240 Condition Type BASB APS5 APS6 APS7 APS8 APS9 APS0 APS1 APS2 APS3 APS4 Description Excise Duty Paid Input Tax Cess Paid- Input Tax VAT paid-Input Tax CST Paid Input Tax Customs Duty Paid- Input Tax Excise Duty Payable-Output Cess Payable-Output Tax VAT Payable-Output Tax CST Payable Output Tax Customs Duty Payable Output Tax From 10 100 10 10 10 10 200 10 10 10 To Account Key SL5 SL6 SL7 SL8 SL9 SL0 SL1 SL2 SL3 SL4

100 110 110

200 210 210

Transaction Code: OBQ3

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ABC Textiles India Ltd.Tax procedureATIL is assigned to country India. Transaction Code: OBBG Tax Codes The tax code represents a tax category, which must be taken into consideration when making a tax return to the tax authorities. Tax codes are unique per country. The tax rate calculation rules and further features are stored in a table for each tax code.

Tax Code I0 I1 I2 I3 O0 O1 O2 O3

Description Input Tax Exempted Customs Duty Excise + Cess + VAT Excise + Cess + CST Output Tax Exempted Customs Duty Excise + Cess + VAT Excise + Cess + CST

Tax Type V V V V A A A A Transaction Code: FTXP

Rates of Tax Tax Customs Duty Excise Duty Cess VAT CST Rate of Tax (Percentage) 8 16.5 2 12.5 3

17.Accounts Receivable The Accounts Receivable application component records and manages accounting data of all customers. It is also an integral part of sales management. All postings in Accounts Receivable are also recorded directly in the General Ledger. Credit Control Area: Central Credit Control Area is responsible for granting and monitoring credit to the customers.

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ABC Textiles India Ltd.Credit Control Area Code ATIL Transaction Code: OB45

Company Codes APCL and APML are assigned to credit control areaATIL. Transaction Code: OB38 Sales Areas Customer Account Groups Account Group SLDC SLFC SLOT Description Domestic Customers Foreign Customers One time Customers Transaction Code: OBD2 Number range for customer account groups Account group SLDC SLFC SLOT Number range SD SF SO From 10000 20000 30000 Number interval To 19999 29999 39999 Transaction Code: XDN1 Number ranges are assigned to customer account groups. Transaction Code: OBAR Customer Master Record Customer master record is maintained for each customer. Each customer master record is recognized by number. Customer Masters: Customer Master record consists of three segments, general data, company code data and sales area data. Transaction Code: FD01, XD01 Customer Billing Customer billing is done through the following steps:

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ABC Textiles India Ltd.Sales order T. Code: VA01 Outbound Delivery T.Code: VL01N Billing a Document T.Code: VF01

Integration with SD GL accounts are assigned to condition types in transaction code VKOA Customer Payments Payments are accepted from customers through Cheque, Bills Receivable and Cash. Document type DZ is used to make payments. Incoming payments are made through T.Code: F-28 Special GL Transactions Advances from customers are treated as Special GL transactions Special GL indicators A Down payments F Down payment request Transaction Code: OBXR 18. Accounts Payable The Accounts Payable application component records and manages accounting data for all vendors. It is also an integral part of the purchasing system: Deliveries and invoices are managed according to vendors. Purchase organization Vendor Account Groups Account Group VIND Description Domestic Vendors

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ABC Textiles India Ltd.VIMP VEMP VOTV VSTAT Foreign Vendors Employees One time Vendors Statutory Vendors Transaction Code:OBD3 Number range for vendor account groups Account group VIND VIMP VEMP VOTV VSTAT Number range V1 V2 V3 V4 V5 From 50000 60000 70000 80000 90000 Number interval To 59999 69999 79999 89999 99999 Transaction Code: XKN1 Number ranges are assigned to vendor account groups. Transaction Code: OBAS Vendor Master Records A Vendor master record is maintained for each Vendor. Each Vendor master record is recognized by number. Vendor Masters: Vendor Master record consists of three segments, general data, company code data and purchasing data. Transaction Code: FK01, XK01 Invoicing Invoicing is done through the following steps: Purchase order T.Code: ME21N Goods receipt - T.Code: MIGO Invoice verification T.Code: MIRO Invoice clearing

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ABC Textiles India Ltd.Invoices are cleared through cheques, Bills Payable and Cash. Payment method C (Cheque payment) Document type KZ Transaction Code: F-53 Special GL Transactions Advances made to vendors are treated as Special GL transactions Special GL indicators A Down payments F Down payment request G Bank guarantees Automatic Payment Program Steps involved in APP: 1. All Company Codes for payment transactions 2. Paying Company Codes 3. Payment methods in Country 4. Payment methods in Company Code 5. Bank Determination 6. House Banks Transaction Code: FBZP 19.ASSET ACCOUNTING Asset Accounting is utilized for managing companies fixed assets, we can categorize assets and to the said values for depreciation for each fixed asset. Fixed Asset having a useful life and are utilized for business process. In the course of process some wear & tear will occur, for that reason we calculate depreciation. An Asset Management Team is sitting in every Manufacturing Unit and at the Corporate Office, which is responsible for Asset Account Maintenance and Disclosure in the Financial Statements as per Accounting Standard 10 of ICAI Acquisition of assets Retirement of assets Calculation of Depreciation on assets

Transaction Code: OBYR

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Charts of depreciation A chart of depreciation is used in order to manage various legal requirements for the depreciation and valuation of assets. Chart of Depreciation code:ATIL Transaction Code: EC08 Depreciation areas: Book depreciation

CHART OF DEPRECIATION

COMPANY CODE APCL

COMPANY CODE APML

Chart of depreciationATIL is used for two company codes APCL and APML to country India Transaction Code: OAOB Tax codes to assigned to non-taxable transactions Input Tax: I0 - exempted Output Tax: O0 exempted Assets are grouped under the following heads Plant & Machinery, Buildings, Asset under construction Furniture and fixtures and Vehicles.

Asset Class

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ABC Textiles India Ltd.Asset classes are used to structure fixed assets. Asset classes are applied to all Company Codes. Asset classes provide default values for all asset master records. Asset classes consists of account determination, screen layouts and number ranges. Account Determination GL accounts for acquisition, retirement, profit or loss on sale of assets, accumulated depreciation, depreciation and special reserve are specified in account determination. Account Determination number 200000 201000 202000 203000 204000 Description Plant & Machinery Buildngs Asset Under Construction (P & M) Furniture & Fixtures Vehicles

Number interval for asset numbers in asset class. Number range 01 02 03 04 05 Asset class Asset Class 20000 0 20100 0 20200 0 20300 0 20400 0 Description Plant & Machinery Buildings Account Determination 200000 201000 Screen layout 1000 2000 2000 3100 3000 Number range 01 02 03 04 05 From 10000 20000 30000 40000 50000 To 19999 29999 39999 49999 59999 Transaction Code: AS08

Asset Under Construction 202000 (P & M) Furniture & Fixtures 203000 Vehicles 204000

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Depreciation Keys Depreciation method The Company follows Written down value method for depreciation Rates of depreciation Company is following the Depreciation rates prescribed by Schedule 14 of the Companies Act 1956. For each rate of depreciation, a Depreciation Key is maintained. Transaction Code: AFAMA 20. Standard Reports External Reports

Report Profit and loss account for year Profit and loss account half yearly or quarterly Balance sheet actual / actual year Cash flow statement

Standard Report S_ALR_87012284 S_ALR_87012271

Internal Reports Report Standard Report

Weekly, fortnight, monthly, quarter- year, half- S_ALR_87012186 yearly, yearly Sales reports Over due items from customers statement S_ALR_87012168 Outstanding payments to accounts payable S_ALR_87012084 statements Ageing analysis report S_ALR_87012078

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Gaps to be addressed 1. 2. 3. 4. In Asset Accounting Reporting for Month wise Depreciation. Smart Form of Debit Note and Credit Note Statement of Account for Customers / Vendors with opening balance. In Vendor Master Transaction Code XK01, a user exit is required for the field SCAC 5. Trial Balance 6. In F110 Cheque Printing

\

21. CONTROLLING

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ABC Textiles India Ltd.Controlling (CO) module is one of the integral components of standard SAP R/3 system. Controlling module provides information to the organization in decision-making. It facilitates coordination, monitoring and optimization of all processes in an organization ATIL is maintaining cost accounts for the purpose of controlling costs in manufacturing units Controlling Area represents a closed system used for cost accounting purposes. Transaction Code: OKKP

Controlling Area

Controlling Area APCLAPCL is assigned to Controlling Area APCL APML is assigned to Controlling Area APML Components are activated in the Controlling Areas

Controlling Area APML

Number intervals for controlling areas are maintained at transaction code KANK. Versions Version 0 (Plan / Actual Version) is maintained for controlling areas.

21.1 Cost Element Accounting This process takes care of integrating FI GL accounts with CO. Through cost element accounting, an enterprise can get complete information on what costs are incurred within

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ABC Textiles India Ltd.the enterprise. Maintenance of Cost Element accounting of the enterprise for preparation of information relevant to internal reporting. As a manufacturing organization ATIL is concerned with the conversion of raw materials into finished products with the help of labour and other services. In order to compute cost of manufacturing a product is sub divided into cost elements They are maintaining costs records in the form cost elements Cost elements are classified into: direct material, direct labour, direct expenses and overheads. Cost Element Accounting is the part of accounting where you enter and organize costs incurred during a settlement period. It is not an accounting system. It is a detailed recording of data that forms the basis for cost accounting. Cost elements Cost elements are created in two ways Manual -T.CODE: KA01 Automatic T.CODE:OKB2 Primary Cost Elements A cost element is created for each GL account under the revenue account group (IC30) ranging from 300000 to 399999 A cost element is created for each GL account under the expenses account group (EX40) ranging from 400000 to 499999 Secondary Cost elements are created at T.CODE: KA06 Cost Element Group A Cost Element Group is created to classify the Cost Elements. Cost Element Group SLCEGROUP

Under this group cost elements are broadly classified into two heads Primary cost elements Secondary cost elements

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ABC Textiles India Ltd.500000 501000 502000 503000 504000 505000 Machine Overheads Labour Overheads Set Up Costs Repairing Costs Testing Costs Tear Down Costs

21.2 Cost Center Accounting This functionality enables an enterprise to get information on where costs are incurred. It provides supporting data for management decision making to check/control the costs of individual functional areas (cost centers). This requires that all costs be assigned according to their source. However, source-related assignment is especially difficult for overhead costs. Cost Center Accounting lets you analyze the overhead costs according to where they were incurred within the organization. Cost accounting department of the ATIL is Maintaining Cost centers for collection and distribution of costs. Cost centers are classified into Production Cost Centers & Services Cost Centers. Cost Center Accounting enables an enterprise to get information on where costs are incurred. It provides supporting data for management decision making to check/control the costs of individual functional areas (cost centers). This requires that all costs be assigned according to their source. However, source-related assignment is especially difficult for overhead costs. Cost Center Accounting lets you analyze the overhead costs according to where they were incurred within the organization.

Cost center categories Standard Cost Center Categories are used E: Development F: Production

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ABC Textiles India Ltd.G: Logistics H: Service Cost Center L: Management M: Material S: Human resource V: Sales W: Administration Cost Center Groups Cost Center Groups are created to classify the Cost Centers Cost Center Structure SLCC Groups Under this group, Cost Centers are grouped into the following heads 0000 1000 2000 3000 4000 5000 Management Production Administration Materials Management Sales & Distribution Service & Utility Transaction Code:KSH1

Cost Centers : APCL Cost Center COTTONMNGT COTTONPROD COTTONPMXG COTTONPBRM Description Management Production Mixing Blow Room CC Category L F F F Hierarchy 0000 1000 1000 1000

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ABC Textiles India Ltd.COTTONPCDG COTTONPDWG COTTONPHLP COTTONPCBR COTTONPRFM COTTONPACR COTTONPTFO COTTONPCDG COTTONPPKG COTTONPCCR COTTONDADM COTTONDPUR COTTONDMSC COTTONDS&D COTTONDPER COTTONDPWR COTTONDRNT COTTONDR&M Carding Drawing Hi-Lap Combers Ring frame Autoconer TFO Conditioning Packing Product C.C. Administration Purchasing Material Scrapping Sales & Distribution Personnel Power Rent Repairs & Maintenance F F F F F F F F F F W M M V H H H H 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 2000 3000 3000 4000 5000 5000 5000 5000

Transaction Code : KS01

Cost Centers : APML Cost Center MELANGMNGT MELANGPROD MELANGPMXG MELANGPBRM MELANGPCDG Description Management Production Mixing Blow Room Carding CC Category L F F F F Hierarchy 0000 1000 1000 1000 1000

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ABC Textiles India Ltd.MELANGPDWG MELANGPHLP MELANGPCBR MELANGPRFM MELANGPACR MELANGPTFO MELANGPCDG MELANGPPKG MELANGPCCR MELANGDADM MELANGDPUR MELANGDMSC MELANGDS&D MELANGDPER MELANGDPWR MELANGDRNT MELANGDR&M Drawing Hi-Lap Combers Ring frame Autoconer TFO Conditioning Packing Product C.C. Administration Purchasing Material Scrapping Sales & Distribution Personnel Power Rent Repairs & Maintenance F F F F F F F F F W M M V H H H H 1000 1000 1000 1000 1000 1000 1000 1000 1000 2000 3000 3000 4000 5000 5000 5000 5000

Statistical Key Figures Statistical Key Figures used as tracing factors for distribution or assessment can be collected in groups. Statistical Key Figures Statistical Key Figure 1000 2000 3000 4000 5000 Description No. Of Employees Power Area occupied Repairing hours Testing items Unit of Measurement EA (Each) KWH (Kilowatt hours) FT2 (square foot) HR EA Category Fixed Total Fixed Total Total

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ABC Textiles India Ltd.Transaction Code: KK01 Activity Types A unit in a controlling area that classifies the activities performed in a cost center Activity Type Id SLMHHR SLLBHR SLSPHR SLRPHR SLTSHR SLTDHR Description Machine Hours Labour Hours Set Up Hours Repairing Hours Testing Hours Tear Down Hours Activity Unit H H H H H H Cost Center Category * * * * * * Activity Category 1 1 1 3 3 3 Allocation Cost Element 500000 501000 502000 503000 504000 505000

*All cost center categories Activity Category 1 Manual Entry, Manual allocation Activity Category 3 Manual Entry, Indirect allocation Transaction Code : KL01

Planning The following steps do Cost Center Planning Version 0 Plan / Actual Planning Profile Set Planning Profile in T.Code: KP04 Planning Layout Layout is designed in T.Code: KP26

Revaluation of Planning

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ABC Textiles India Ltd.Overhead Structure Overhead Structure defines the rules for the calculation of the values to be posted. An overhead structure consists of the following rows:

Base row - Contains the amount used as a basis for the overhead application Calculation row - Contains the overhead percentage rate to be applied to the base row Totals row - Contains the sum of the base and overhead amounts

Overhead structures are used to calculate accrual costs.

Distribution of overheads It involves three stages Collection and classification of overheads Departmentalization of overheads: allocation / apportionment of overheads Absorption of overheads Overheads can be distributed/apportioned or absorbed by using assessment cycles Transaction Code: KSU1 21.3 Product Cost Controlling Product Cost Controlling is used to estimate the Standard Cost per Unit of a product and also determine the cost of goods manufactured or cost of goods sold. This will help To fix the pricing floors To optimize the cost of goods manufactured and cost of goods sold

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ABC Textiles India Ltd.To valuate inventories and work in process & production variances and scrapping costs

Cost of a Product constitutes Raw Material Cost Process/Conversion costs Overheads This tool contains the following application components 1.Product Cost Planning 2.Cost Object controlling

Product Cost Planning The following settings are made for the Product Cost Planning. 1. Calculation bases are defined 2. Overhead rates are defined 3. Overhead Cost Elements are maintained for Material overheads, Personnel overheads and Manufacturing overheads 4. Credits are defined 5. Costing sheets Costing Sheet defines how values are posted in the SAP system A costing sheet consists of the following lines: Base lines These contain the amount or quantity on which the overhead is calculated. Calculation lines These contain the percentage rate to be applied to one or more base lines. Totals lines These contain the sum of the base amount and calculated amounts. 6. Cost Component Structure 7. Cost Estimation with Quantity Structure

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ABC Textiles India Ltd.Cost Object Controlling The following steps are involved in Cost Object Controlling 1. Order Type Standard Order Type PP01 is used. T.Code: OPJH 2. Order Type dependent parameters are defined. Plant is specified in this step. T.Code: OPL8 3. Scheduling parameters for Production orders are defined. T.code: OPU3 4. Confirmation of parameters. T.code: OPK4 5. Costing Variants PPP1 - Production Order: Planned PPP2 - Production Order: Actual are used T.code: OPL1

Work in Process (WIP) The following steps are involved for calculating Work in Process 1. 2. 3. 4. 5. 6. 7. 8. Result Analysis Keys. Define Cost Element for WIP Calculation. Define Result Analysis Versions Define Valuation Methods. Define Line Ids Define Assignments Define Posting Rules for settling WIP Calculation of WIP T.Code: OKG1 T.Code: KA02 T.Code: OKG9 T.Code: OKGC T.Code: OKGB T.Code: OKG8 T.Code: KKAX

Information System Costing Reports Reconciliation statement of financial accounting with cost accounting Production statement (periodic) Cost element allocation to cost centers report Cost center plan/ actual comparison, Cost center actual/actual Production Variance Analysis Report Standard SAP Reports available S_ALR_87013603 S_ALR_87013158 S_ALR_87013601 S_ALR_87013611 S_ALR_87013623, S_ALR_87013624 S_ALR_87013143

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Business BlueprintIndex Page 1. Organization Structurei) ii) iii) iv) v) i) ii) iii) iv) v) vi) vii) viii) ix) x) i) ii) iii) iv) v) vi) vii) viii) ix) x) xi) xii) x) Company Code Plant Storage Location Purchase Organization Purchasing Group Material Master Material type Material group Valuation class Batch determination Vendor Master Info Record Master Source List Master Quota arrangement Service Master Purchase Requisition Release procedure RFQ & Quotation Purchase Order Outline Agreement Contract Scheduling Agreement Pricing Procedure Special Procurement Process Subcontracting Consignment Stock Transfer Account Determination 03 03 03 04 05 05 06 06 07 08 09 10 11 13 14 14 15 16 17 18 21 22 23 23 24 24 27 27 27 27 31

2. Master Data

3. Procurement Process

4. Inventory Management

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ABC Textiles India Ltd. i) ii) iii) iv) Goods Receipt Goods Issue Stock transfer Transfer Posting 31 31 31 31 35 35 35 37 37

5. Physical Inventory 6. Invoice Verificationi) Logistics Invoice Verification

7. Report 8. Gap Analysis

Organization structure:

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AP SPINNERS INDIA LIMITED

AP COTTON LIMITED

CENTRAL PURCHASE DEPARTMENT

AP MELANGE LIMITED

PLANT-I (COTTON) STORES DEPTT.RAW MATERIALS SPARES BY PRODUCTS FINISHED PRODUCTS PACKING MATERIALS SCRAP

PLANT-II (POLYESTER)STORES DEPTT PURCHASE DEPTT

PLANT-III (MELANGE)PURCHASE DEPTT STORES DEPTT

PURCHASE DEPTT

.RAW MATERIAL SPARES BY PRODUCTS FINISHED PRODUCTS PACKING MATERIALS SCRAP RAW MATERIAL SPARES BY PRODUCTS FINISHED PRODUCTS PACKING MATERIALS SCRAP

1 ORGANISATIONAL STRUCTURECompany Code AS IS

TO BE

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ABC Textiles India Ltd.Company Code AP Cotton AP Cotton Ltd Ltd AP AP Mlange Ltd Mlange Ltd Plant A plant is a place where either material is produced or goods Plant Deshmukh Deshmukh Bhongir AS IS Cotton Mill Polyester Mill Mlange Mill TO BE Code APCM APPM APMM Description Cotton Plant Polyester Plant Mlange Plant Code APCL APML Description AP Cotton Limited AP Mlange Limited

Storage Location Storage Location is an organizational unit, which differentiates between the various stocks of material within a plant and can have physical / logical existence. The storage location has the following attributes: 1. There can be one or more storage locations within a plant 2. A storage location will have an address. 3. Stocks are managed only on a quantity basis and not on a value basis at storage location level. 4. Physical inventories are carried out at storage location level.

Storage Location

Cotton Plant RMCO

Polyester Plant RMPO

Mlange Plant RMME

Raw Materials

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ABC Textiles India Ltd.Packing Materials By Products Finished goods Spares Scrap PMCO BPCO FGCO SPCO SCCO PMPO BPPO FGPO SPPO SCPO PMME BPME FGME SPME SCME

Purchase Organization In SAP solution, there will be a purchase organization having four digit alphanumeric code and will be responsible for all purchasing activities of the company codes APCL & APML..

Purchase Organizatio n Cotton Plant Polyester Plant Mlange plant Central Purchase Organizatio n

TO BE AS IS Cotton Purchase Polyester Purchase Code CPPO PPPO Description Cotton purchase organization Polyester purchase organization Mlange purchase organization ATIL Central purchase organization.

Mlange Purchase MPPO Corporate Purchase Organization

REPO

Purchasing Groups The purchasing group is a key for a buyer or a group of buyers, who is / are responsible for certain purchasing activities. Internally, the purchasing group is responsible for the procurement of material or class of materials. Externally, it is the principle channel for an

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ABC Textiles India Ltd.enterprises dealings with its vendor. Purchasing group defined APCL & APML are as follows: Purchase Group Raw Material Others Cotton Plant CPR CPO Polyester Plant PPR PPO Mlange Plant MPR MPO for Company codes

Central Purchase Organization RPR RPO

2 MASTER DATA

Material masterMaterial master contains information of all the materials that a company produces and procures, stores and sells. It is the companys central source for retrieving material specific data Benefit Analysis: The integration of all material in a single database object eliminates the problem of data redundancy. All areas, such as purchasing, inventory management, material planning, and invoice verification for posting invoice, in Sales and Distribution for sales order processing, in Production Planning and Control for material requirement planning, scheduling and work scheduling in Quality Management and Warehouse Management can jointly use the data stored. Material number is a number uniquely identifying a material master record, and thus a material. User can have Internally (system) generated material number or can have his own externally entered number. User will be identifying material with maximum 18 digit alphanumeric code having description of 40 characteristics. User can have Inventory material for Value and Quantity, OR Quantity only.

Material master will have the following important fields, Material number Material description Material type Material Group Stock-keeping unit Purchasing group & ordering unit of measure

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ABC Textiles India Ltd. Batch management Plant / storage data MRP parameters Price indicator& price Valuation class for G/L account determination Sales organization, distribution channels and other sales parameter Industry sector (T-Textiles)

VIEWS AND SCREEN SEQUENCE: Material Type RAWM PACK SPAR PNTS FINS CONS PIPE Basic Data

Purchasing Data

Plant Storage Data

Accounting Data

MRP Data

Sales Data X

X

X

X X X X

X

X

X

MATERIAL TYPE Grouping of materials with the same attributes of characteristics. AS IS MATERIAL TYPE MATERIAL DESCRITION TYPE RAW MATERIALS RAWM TO BE NUMBER RANGE RM0001 RM9999 DESCRIPTION

TO RAW MATERIALS

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ABC Textiles India Ltd.PACKING MATERIALS SPARES PAINTS FINISHED GOODS CONSUMABLES PACK SPAR PNTS FINS CONS PM0001 PM9999 SP0001 SP9999 PA0001 PA9999 FG0001 FG9999 CO0001 CO9999 PI0001 PI9999 SF0001 SF9999 TO PACKING MATERIALS TO SPARES TO PAINTS

TO FINISHED GOODS TO CONSUMABLES TO PIPE LINE MATERIALS TO SEMI FINISHED GOODS

PIPE LINE PIPE MATERIALS SEMI FINISHED SEMI GOODS Material Group

Grouping of material with same attributes, which can be used to restrict the scope of analysis. The following material groups are identified: Material type Raw material Raw material Raw material Raw material Packing material Packing material Packing material Paints Equipments Equipments Consumables Finished Finished Finished Finished Finished VALUATION CLASS: Valuation Class is used to determine which stock account is to be updated during the goods movement of the material. Valuation class is used to combine materials for Code RAWM RAWM RAWM RAWM PACK PACK PACK PNTS EQUP EQUP CONS FINS FINS FINS FINS FINS Material group COTTON POLYESTER VISCOSE DYCOTTON CONES CARTONS PALLETS PAINTS EQUIPMENTS PRTs CONSUMABLES COTTON Description Cotton Group Polyester Group Viscose Group Dye cotton Group Cones Group Cartons Group Pallets Group Paints Group Equipments Group PRTs Group Consumables Group Cotton Group Polyester Group Mlange Group Byproducts Group Scrap Group

POLYESTERMELANGE BY PRODUCTS SCRAP

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ABC Textiles India Ltd.assigning G/L accounts so that you do not have to manage a separate stock account for each material. A set of Valuation class will be attached to each material type, which will determine the stock account where the accounting entry will happen. The list is as given below: Material Type RAWM RAWM RAWM PACK PACK PACK EQUP EQUP PNTS CONS FINS FINS FINS FINS FINS Material Valuation Material Valuation is determination of value of a stock of material. It includes: Valuation price Assignment to a valuation class Selection of valuation method using the price control indicators S-standard V-Moving average price All the material will be valuated as per the valuation price control. Period end has to be carried out in materials management at the end of each period to allow goods movement in the next period. This is required since the price, stock value and quantity are managed period wise in the system. Before creating any material, user needs to verify if it has already been created with another number or not. The system does no allow the creation of a material with same number twice, but cannot control creation under different number. Valuation Class 3000 3001 3002 3050 3051 3051 3040 3041 3060 3061 7920 7921 7922 7923 7924 Valuation class description Raw Materials Cotton Raw Materials Polyester Raw Materials Viscose Packing Materials Cones Packing Materials Cartons Packing Materials Pallets Equipments PRTs Paints Consumables Cotton Polyester Mlange Byproducts Scrap

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ABC Textiles India Ltd.User needs to enter the description of the material logically. It is important since the system does not have functionally on duplicate check. The user also needs to clearly identify Material Types, Unit of Measurement, as these are important parameters of any material. Changes in these are very difficult. It is advisable to record all the inputs first and then create the same in the system. Benefits: Correctness in maintaining Material code, Description, Material Type, Valuation class and units of Measurement Completeness as well as correctness of the data from various especially MRP, Sales and Accounting/Cost Views Maintenance of Correct Excise data to take care of all Legal requirements.

BATCH DETERMINATIONA batch is a quantity of a material produced during a given production run. A Batch represents a homogeneous unit with unique specifications. A batch is a subset of total quantity of material held in stock. This subset is managed separately from other subsets of the same materials BENEFITS: Batch master record can be created manually or posting a goods movement automatically. The cotton/polyester/viscous are procured and batch number is assigned to it externally. For the yarn produced the batch number is to be generated internally, which should contain the batch number of cotton/polyester/viscous used to produce it. For e.g. If the batch number of cotton is COVNDATE, the yarn must contain the batch number COVNDATE LOTDATE Batch can have any alphanumeric number. This number can be assigned either externally or internally. The quality checks become easier with the batch management process. COMPANYS REQUIREMENTS ARE TO Select the most appropriate batch to meet customer needs. Select the most appropriate component batch to make a quality product. Issue stock based on (FIFO).

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ABC Textiles India Ltd.INCOTERMS Sl. No. 1 2 3 4 5 6 INCO TERMS FOB C&F FOR ONS CIF EDS DESCRIPTION Free on board-Export Cost and freight-Import Freight on road-Domestic On site Cost insurance freight Ex-destination station

VENDOR MASTER The Vendor master record contains information on enterprise vendors. This information is stored in individual vendor master records. In addition to the vendors name and address, a vendor master record contains data such as the following: The currency used for transactions with the vendor Terms of payment Names of important contacts (e.g. sales persons) Pricing schema for vendor Reconciliation account Vendor account group Customer code for vendor if vendor is also a customer

Since, for accounting purposes, the vendor is also a creditor of the enterprise, the vendor master record also contains accounting data such as the reconciliation account from the general ledger. Both purchasing and accounting therefore maintain the vendor master record. This is also the reason for the subdivision of the data in the vendor master record into different categories. The data in the vendor master record is subdivided into the following categories: General data : This data is valid for the whole client. It includes the vendors address and bank details, for example. Accounting data: This is maintained at Company code level comprises data such as the reconciliation account and the payment methods for automatic payment transactions. Purchasing data:

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ABC Textiles India Ltd.This data is maintained for each purchase organization comprises the purchase order currency, Inco terms, and various control data pertaining to the vendor. VENDOR ACCOUNT GROUPS The Account Group has control function, when we maintain the vendor master record only the screens and fields data needed for the relevant role of our business partner appear and are ready to accept user input. This is controlled by account group. The account group determines: The type of number assignments (internal or external) The field selection which fields are ready for user input and which fields must be maintained and which are hidden. Which partner schema are valid The status whether the vendor is one time vendor Vendor sub range and plant specific data

Vendor Vendor Type Description Account Group Codes VIND VENDOR INDEGENOUS VIMP VENDOR IMPORT VEMP EMPLOYEES VOTV VENDOR-ONE-TIME VSTAT STATUTORY VENDOR

Number Range V1 (50000 - 59999) V2 (60000 - 69999) V3 (70000 - 79999) V4 (80000 - 89999) V5 (90000 - 99999)

Benefits: Correctness in maintaining Vendor Code, Name and Address, Vendor Account Group, Reconciliation Account Completeness as well as correctness of the data from various views especially Logistics (purchase Org data) and company code data Maintenance of correct Excise data to take care of all Legal requirements. Effective grouping of vendors Effective monitoring and MIS

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ABC Textiles India Ltd. Effective control on vendor creation. Instead of separate master for each agency (like purchasing, sales and accounts), system will provide centralized data for master data. It is required to identify person who will trigger creation of vendor master and follow-up action by different agencies in logistic system.

INFO RECORD MASTERThe Purchasing Info record master helps to define vendor specific information for a material. The purchasing Info record provides the option of storing information about a vendor and a material as master data at purchase organization and plant level. You can define the following information in info records: Current and future prices and conditions (for example, freights and discounts) Delivery data (for example, planned delivery time and over delivery and under delivery tolerance) Vendor data (for example, contact person) and vendor specific data about the material (such as the vendor sub range to which the material belongs, description of material at vendor) Number of last purchase order Text Internal info memo record: This is an internal comment that is copied to the purchase order item. This text is not printed. PO text in the purchasing info record: This is used to describe the PO item. It is copied to the purchase order item and printed.

Benefits: When creating the purchasing documents, the data from the info record is copied into the documents as a default value. You can also use the list displays for the info records to determine which vendors offer a particular material or which materials can be procured from a particular vendor

SOURCE LIST

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ABC Textiles India Ltd.The source list contains the allowed, preferred and / or blocked sources of supply for a material in a Plant that are valid within a certain period. Each source is defined in the source list by a source list Record. Source list contains information: Source list records enable you to determine and check sources. Fixed sources are always preferred over other sources in the relevant validity period. Only one fixed Source may exist for a material within a certain validity period. Buyers are not allowed to procure from blocked sources. Blocked sources are not taken into account in source determination. The MRP indicator in the source list stipulates how the source defined in a source list record is taken into account in materials planning. If a source list requirement exists, a material may not be procured from sources other than those Included in the source list. A source list requirement can be specified either for an individual material (in the material master), or for all the materials of a plant (using a Customizing parameter). Source list analysis enables you to list the materials of a plant for which no source list records exist during a certain period. This function is useful in the case of a source list requirement (use of source List mandatory). Process decided:IN ABC TEXTILES India Limited, we must maintain the source list for each material for a particular plant

QUOTA ARRANGEMENT The quotas indicate the percentages of a total requirement that are to be procured from each of the various sources over a period. A quota arrangement is set up for a specific timeframe. A quota arrangement item is created for each source of supply within the period. Only consecutive validity periods can be specified for a material. A quota arrangement can provide for external procurement or internal (in-house) production, as well as various special procurement types. For a quota arrangement to be applied to a material, the quota arrangement usage indicator must be set in the material master record. By setting the quota arrangement usage indicator in the material master record, you specify that: A quota arrangement can be applied to a material. The business application areas in which the quota arrangement is used, and the quota-allocated quantity, is updated progressively. Quota arrangement usage indicators are defined in Customizing.

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ABC Textiles India Ltd.SERVICE MASTER RECORD The Service Master Record belongs to master data services as a source of data that can be used when you create service specifications. A service master record contains the following principal information for the unique description of an external service Service number Service category Description texts (short and long text) Base unit of measure Material Group Valuation class

Benefits: Service master records can be used by different applications. Like MM-Purchasing, Plant maintenance (PM) By using service master record we can reduce the amount of time needed for this activity, as well as the occurrence of error. This is because we need to enter the services specifications completely once only in the service master records. The service master record transaction is single-screen transaction that you can use to create, change and display services. Price for external services that are valid over a longer period can be recorded in the system in the form of service conditions.

3 PROCUREMENT PROCESSProcurement Cycle

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Determination of requirements Source Determination Vendor Selection P O Processing P O Monitoring Goods Receipts Invoice Verification Payment Processing

PURCHASE REQUISITION Purchase Requisition represents the requirement of non-production material or services, which can be procured so that these are available at the particular point of time for usage. In ABC TEXTILESIndia Limited, PR will be generated by any of the users (depts.)

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ABC Textiles India Ltd.In, ABC TEXTILESIndia Limited a material master for the stock material should exist in the system, as no stock can be maintained without a material master. In the material master minimum stock levels can be maintained. To comply with the business requirement, MRP profiles will be created using Auto Reorder point planning with or without regular interval planning. If there is preferred vendor for the requirement created, MRP will create a PR (approved requisition) with vendor assigned for indirect non-ROL items. A Purchasing Requisition can create requirements for the stock materials online. PR will have following key data: PR number Material code Material description-which will be either copied from material master in case of material master available or this will be entered by users in case of master is not available Quantity required Delivery date Storage location and plant where the material is required Requisitioner Account assignment (e.g. cost center) Item category (i.e. standard service, subcontracting, stock transfer) Rate per unit if material master with accounting view is available, else user need to enter the Rate per unit. This is very important field as value based release strategy depends on this field. Services and service specification of service requisition. A PR can be created directly or indirectly in the SAP R/3 system: Direct means that the purchase requisition is created manually in the Department that made the request. Indirect means that the purchase requisition is created automatically, like MRP.

Number Range: In ABC TEXTILESIndia Limited internal number range will be used for PR. This will be identified based on document type of PR. These are as follows: Document type NB Description Standard Number range Internal range

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ABC Textiles India Ltd.FO Frame-work Internal range

Tracking is also possible based on material group, requisitioner, account assignment, item category, material and buyer. For MRP run requisition generation user has to maintain MRP type and other planning requirements like Reorder level, safety stock, lot size etc. Precautions: Correctness is to be maintained for MRP parameters like reorder level, safety stock etc. Correctness in choosing document types Correctness in account assignment and item category Correctness in choosing material code, delivery date and quantity Benefits: Reduction in manual efforts required to monitor the stock for requirement planning Effective monitoring of PR, this will enable the requisitioner to do the follow-up

RELEASE PROCEDUREIt refers to the approval of purchasing documents. Two different procedures are available for requisitions: With classification With this procedure, requisitions can be released both at item level (i.e. item-byitem) and in total. The latter approach is also termed "overall release". Without classification With this procedure, requisitions can only be released at item level.

CHARACTERISTICThe communication structure CEBAN (for requisition) and CEKKO (ext purchase doc) contain all fields that can be defined as release characteristic.

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ABC Textiles India Ltd.Characteristic to be taken: I) Value II) Plant CLASS: - All characteristics that are to be used in release strategies for requisition or external purchase document must be collected together in classes. The classes must be assigned to class type 032 RELEASE CONDITION: - Release condition determines the release strategy. RELEASE GROUPS: -Grouping of different users or authorities for the purpose of approving documents. In a release group there can be any number of release codes. Release Group: 2 groups [c1 & c2] RELEASE CODE:-It is a 2 char ID defined for each individual user or authority for approving the documents.

P1 P2 P3 P4 P5 P6 P7 P8 P9 P10 P11 P12

Requisitioner (production) Requisitioner (Maintenance) Requisitioner (Miscellaneous) Purchase Officer Purchase officer-central Assistant manager-purchase Purchase manager Production manager Plant manager Assistant general manager General manager Vice-president

RELEASE STRATEGY The release strategy defines the approval process for purchase requisitions or external purchasing documents. Strategy 1 -S1 up to 1, 00,000 INR

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ABC Textiles India Ltd.Release code: P1-Requisitoner (production) P4-Purchase officer P7-Purchase manager P8-Production manager Strategy2S2 1, 00,001 to 5, 00,000 INR

Release code:P4-Purchase officer P7-Purchase manager P8-Production manager P9-Plant manager P11-General manager P12-Vice president Strategy 3- S3 for central purchase organization P5-Purchase officer P6-Assistant purchase manager P10-Deputy general manager P12-Vice president RELEASE INDICATOR It is a single char ID to represent a status of document when release authority releases the document with release code. either of the two can release

Release Indicator: U-Under processA- Approved.

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ABC Textiles India Ltd.RELEASE PRE-REQUISITE:-It defines the sequence of approval.

REQUEST FOR QUOTATIONA Request for Quotation (RFQ) is an invitation extended to vendor by a purchasing organization to submit a quotation (bid) for supply of material or performance of services. This process will be used to raise the requirement of estimation to vendor for supply of particular material or service. Prices and conditions quoted by vendors are entered in original RFQ. A user can have the system to determine the most favorable quotations submitted. User can also store the price and terms of delivery from certain quotations in an info record for future accessing. Number Range A number will identify each RFQ. In case RFQs are to be posted to multiple vendors, user can track the quotation via Collective RFQ No, which is a tracking number manually entered in the system. There will not be any release strategy applicable for RFQ. In SAP the quotation no. is generated internally for each vendor. All these quotations can be linked through collective number. In SAP both the RFQ and vendors response to the quotation document will be handled through the RFQ function. Price Comparison The decision to select or reject a vendor can be based on the price comparison list generated by the system and by checking the vendors technical competency (specifications, delivery items), which will be done outside the system. Once the vendor is selected the price can be updated in the info record from the price comparison list by selecting the info record indicator. RFQ will have following data RFQ Number Vendor Code Material code Description either copied from material master if it is available or this will be entered by user in case when master data is not available Services and service specification of service requisition Quantity required Delivery date Storage location and plant where the material is required Quotation deadline date User can not enter account assignment in RFQ

Process decided

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ABC Textiles India Ltd.In ABC TEXTILESIndia Limited there will be one type of RFQ, which will be used for all type of materials and services Document type AN Description Request for Quotation Number range Internal number range

PURCHASE ORDERThe selected vendor is offered with the purchase order quoting the prices and terms and conditions with delivery time and required quantity. Authorization in terms of total value of goods in purchase order is Up to 50000 INR Purchase Officer is authorized to release. 50000 - 100000 INR, authorized officials are Purchase officer followed by Purchase Manager.

If reference is made to a purchase requisition, an RFQ or a contract, item data and any existing header data is copied from the proceeding document to the purchase order. This reduces the entry effort required and therefore reduces possible entry errors. You can change most of the copied data in the purchase order. To create a purchase order with reference to another document, you can also enter the number of the document and the number of the item directly in the item overview in the corresponding field of the purchase order. The purchase order can be generated manually without reference to PR or with reference to PR, contract, Info record, Quotation, last Purchase order number etc. Purchase can be generated with or without reference to material master. Release procedure will be defined based on As-Is conditions. The purchase document can be printed in standard SAP form or purchase order samples given by the client after necessary enhancement.

DOCUMENT TYPES AND NUMBER RANGEDocument type NB FO UB Description Standard Purchase Order Frame-work Order Stock-Transport Order Number range Internal Range(45 series) Internal Range(46 series) Internal Range(47 series)

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OUTLINE AGREEMENTSAn outline agreement is a longer-term arrangement with a vendor for the supply of material or provision of services based on predefined terms and conditions. This arrangement is valid for certain period and for a predetermined total purchase quantity or value. There are two types of outline agreements. CONTRACT SCHEDULING AGREEMENT CONTRACTS Contract is an external purchasing document created by purchase dept. with or without reference to other document for long term supply of material or service with respect to quantity or value. Contract is not a final document for supply of material.

There are two types of contract used by ABC TEXTILESIndia Limited.Quantity contract The total quantity to be ordered over the duration of the agreement has already been agreed. The Contract counts as fulfilled once an agreed quantity has been reached through the issue of contract release orders. In quantity contract, you define, among other things, the target quantity and conditions of ordering for each item. Value contract The total value of all contract release orders is not to exceed a certain amount. The contract counts as fulfilled once an agreed value has been reached through the issue of contract release orders.

Document type MK

Description Quantity Contract

Number Range Internal Range

WK

Internal Range Value Contract

SCHEDULING AGREEMENTS It is an external purchasing document created while purchasing with or without referring to other documents for long-term supply of materials.

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ABC Textiles India Ltd.Scheduling Agreements have the legal validity, unlike contract there is no separate release order required, but a delivery schedule will be issued for supply of material. Document type for Scheduling Agreement: Document type LP LU PRICING PROCEEDURE Pricing procedure deals with access sequence and condition types in purchasing conditions and assigns these condition types in the pricing procedure. Following pricing Procedure is suggested for ABC TEXTILESIndia Limited as per application. Define Price Determination Process: The following steps describe how the price determination process is controlled. Before you set up the price determination facility in the SAP system. Check the dependencies under which prices, discounts, and surcharges are arrived at. For example, determine whether conditions apply to individual material groups and the basis on which surcharges and discounts are calculated. Then bring your pricing dependencies into line with the criteria for price determination in the sap system. Define Calculation Schema: In the Calculation Schema (pricing procedure), you specify which condition types are to be taken into account in which sequence. In the price (or cost) determination process, the sap system automatically determines which calculation schema is valid for a business transaction and takes into account, one after another, the condition types it contains. Schema Group These allow you to group together certain purchasing organizations that use the same calculation schema. NOTE: (calculation schemas may also be referred to as pricing procedures and schema groups therefore as procedure groups.) Schema Determination Assigning purchasing transactions and processes to a calculation schema Description Number Range Scheduling Agreement Internal Range without releasing document Stock transport Internal Range scheduling agreement

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Sch. Gp. P.Org APS1 APS2

Sch.Gp.Vend APV1 APV2

Procedure AP0000 AP0002

Description Pricing Procedure for ABC TEXTILESDomestic Pricing Procedure for ABC TEXTILESImport

Pricing conditions used in imports pricing procedure Gross price (Automatic) Gross price (Manual) Discount % on Gross Freight % Freight (Value) Freight (Quantity) Insurance (Value) Customs % Customs (Value) Customs (Quantity) Edu. CESS % Customs Edu. CESS % Additional Excise Duty % Pricing condition used in Indigenous pricing procedure Gross price (Automatic) Gross price (Manual) Discount on Gross % Discount /Quantity Discount lump sum Basic Excise Duty % Basic Excise Duty value Educational CESS % Service Tax Surcharge Insurance% Insurance value Freight% Freight Quantity Freight Value Discount on Final price % Cash discount

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ABC Textiles India Ltd.BENEFITS: The system generates the price automatically with the implementation of pricing procedure. Correctness in maintenance of condition types and access sequence Correctness in entering pricing conditions, vendor assignment to pricing conditions and tax code Correctness in choosing account assignment and item category.

SPECIAL PROCUREMENT PROCESSSUB CONTRACTING Sub contracting is an external purchasing process of finished product with a sub contract order that also contains entries about the components to be provided for the subcontractor. In inventory management the components are posted/provided in the stock of material provided to the vendor. The sub contractor supplies his services and delivers the manufactured or processed material. The goods receipt for the finished product is entered in the inventory management. The consumed components are therefore cleared from the stock of material provided to the vendor. If the subcontractor reports an excess consumption or under consumption of components after the goods receipt posting, these can be corrected with subsequent adjustment. The sub contractor shows the service actually planned in the invoice. The invoice is entered in the Logistic Invoice verification.

VENDOR CONSIGNMENT Vendor Consignment material is a stock of material owned by vendor but the stock is stored at companys premises. The liability will come to the vendor only when company takes ownership of the material or when you issue to cost center. The settlement of consignment liability with the vendor is done on periodic basis. The consignment goods are settled without invoice receipt, as the vendor cannot trace the goods withdrawal directly. The vendor can only manage the consignment stock with his deliveries and on the payment made by company.

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STOCK TRANSFER A stock transfer is the removal of material from one storage location and its transfer to another storage location. Stock transfer can occur either within the same plant or between two plants. In ABC TEXTILESIndia Limited the process of stock transfer between plants is by using two-step procedure because the plants are located in different places. If we use the twostep procedure, you can monitor stocks while they are in transit. Once you have posted the goods issue from the issuing point, the stock is located in stock transfer at the receiving point, and is managed as such in the system. Stock transfer can be carried out in two levels: Stock Transfer from one company code to another Stock Transfer from one plant to another

ACCOUNT DETERMINATION Automatic Account Determination Process Valuation Area Plant Material Business Transaction - Movement type

Valuation Area

Material

Movement Type

Movement Indicator Consumption posting Value String Counter Transaction/ Event Key

Company Code Chart of Accounts Valuation Grouping Code

Valuation Class Material Type Account Category Reference

Special Stock Ind Value Updating Quantity Updating

Account Modifier Check

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Account Category Reference Account Category Reference is grouping of valuation classes used by the system to check whether the valuation class entered is allowed when we maintain the accounting data in the material master record. This account category reference can be assigned to a material type. Account Category Reference A001 A002 A003 A004 A005 A006 Descriptions Reference for RAW MATERIALS Reference for SPARE PARTS Reference for PACKING MATERIAL Reference for SERVICES Reference for PAINTS Reference for FINISHED

Valuation Class Valuation class is grouping of material with same accounting requirement for the purpose of automatic account determination. Valuation Grouping Code The Valuation Grouping Code facilitates differentiation by valuation areas during the process of automatic account determination. It allows the grouping and consolidation of valuation areas for the determination of the GL account for each business process. Valuation Grouping Code: 0001 Transaction/Event Keys It is an internal processing key facilitating automatic account determination for the various materials and invoice posting. The system uses the Transaction/Event key to determine the account in which posting line is generated. At least two Transaction/Event keys are involved in each posting.

Transaction/Event KeyBSX

DescriptionInventory Posting

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ABC Textiles India Ltd.WRX GBB BSV KON PRD UPF DIF GR/IR clearing account Off-setting entry/Inventory posting Stock Change account Consignment liabilities Price Difference account Unplanned delivery cost / freight Materials management small price diff a/c

Account ModifierAccount Modifier is a key used to determine finer accounts of a transaction/event key. In finer account we further distinguish the account. For example account modifier for GBB is Account Modifier AUF BSA INV VAX VAY VBO VBR VNG ZOB ZOF Value String Value string is a group of possible transaction or event keys that can be triggered due to a movement type. For e.g. WE01 for goods receipt Description Goods Receipt for Orders with a/c assignment Initial entry of stock balances Expense/Revenue for inventory Diff. Goods Issue for sales order without a/c assignment Goods Issued for sales order with a/c assignment object Consumption from stock of material provided to vendor (subcontracting) Internal goods issues for cost center For scrapping/destruction Goods receipt without purchase order Goods receipt without production order

INVENTORY MANAGEMENTThe second step for external procurement process is the goods receipt. When goods are delivered against a purchase order, it is important for all departments concerned that you enter this goods receipt with reference to the PO. When you record the receipt of goods,

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ABC Textiles India Ltd.the system suggests all open items from the purchase order. This facilitates both the entry and checking of incoming goods. The right material has been delivered The right quantity has been delivered, or whether there has been over- or under delivery

Process DecidedThe following Goods Movements will be performed in ABC TEXTILESIndia LIMITED: Goods Receipt - A goods receipt (GR) is a goods movement with which the receipt of goods from a vendor or from production is posted. A goods receipt leads to an increase in storage location stock. Goods Issue A goods issue (GI) is a goods movement with which a material withdrawal or material issue, a material consumption, or a shipment of goods to a customer is posted. A goods issue leads, to a reduction in warehouse stock. Stock Transfer - A stock transfer is the removal of material from one storage location and its transfer to another storage location. Stock transfer can occur either within the same plant or between two plants. Transfer Posting A transfer posting is a general term for stock transfer and changes in stock type category of a material. It is irrelevant whether the posting occurs in conjunction with a physical movement or not. Physical Inventory posting - After user decides to carryout physical count, user will have to create Physical Inventory document, enter the count and post the difference (Excess/Shortage). At the time of posting the difference, system will generate the material document. For valuated stocks, Accounting document will also be generated. Description MATERIAL DOCUMENT CONTROLLING DOCUENT ACCOUNTING DOCUMENT Number Range Internal range Internal range Internal range

Results of Goods Movements in the System: Material document is generated, which is used as proof of the movement and as a source of information for any other applications involved. If the movement is relevant for Financial Accounting, one or more accounting documents are generated. The stock quantities of the material are updated.

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ABC Textiles India Ltd. The stock values in the material master record are updated, as are the stock and consumption accounts. Movement Type: The Movement Type is a three-character key used to differentiate between goods movements. Examples of such goods movements are goods receipt, goods issues or transfer postings. Benefits: It plays a central role in automatic account determination in SAP R/3 The movement type determines which stock or consumption account are updated in financial accounting The movement also determines the layout of the screen for document entry or updating of the quantity fields Movement Types used in ABC TEXTILESIndia Limited: Movemen t Type 101 102 103 105 122 201 261 309 311 Description GR for Purchase Order into unrestricted use stock Reversal/cancellation of GR into unrestricted for purchase order Goods Receipt for purchase order into GR blocked stock Release GR blocked stock to Purchase order receipt Return delivery to the supplier or to production Remarks For this a purchase order reference is required and will be used for gate entry for self certified materials Can be used for cancellation for get entry or reverse short receipt material during GR This is first step of two step process This is step two of the above mentioned process This movement type is used to differentiate between cancellation and return

Goods Issue for Cost This movement type is used to issue the stock center material against cost center Goods issue to an order This refers to issue to all orders like, maint, and production order. Transfer posting from This movemen

Documents

ABC Textile India Ltd