SUMMER TRAINING REPORT ON

Cash Management System

Undertaken at

DABUR INDIA LTD.

BACHELOR OF COMMERCE (Hons.)

BY ABHISHEK S. IYER
07017788813

Vivekananda School of Business Studies

To Whom It May Concern

I A B H I S H E K S . I Y E R Enrolment No. 07017788813 from BCOM 5TH SEM of the

Vivekananda Institute of Professional S t u d i e s , Delhi hereby declare

that

the

Summer Training Report (BCOM 309) entitled CASH MANAGEMENT SYSTEM at

DABUR INDIA LTD. is an original work and the same has not been submitted to any other
Institute for the award of any other degree.

Date: Signature of the Student

Certified that the Summer Training Report submitted in partial fulfillment of Bachelor of
Commerce (Hons) [BCOM (Hons.)] to be awarded by G.G.S.I.P.University, Delhi 2013-16,
and Enrolment No. 07017788813 has completed under my guidance and is satisfactory.
Date:

Signature of the Guide

Name of the Guide:

Designation:

PROJECT INDEX
TOPIC

PAGE NO

Certificate

03

Summer Training Appraisal

04

Acknowledgement

05

Chapter I:Introduction

06

Chapter II: Cash Management System at Dabur India Ltd

20

Chapter III: Payment System in Dabur India Limited

22

Chapter IV: Application of SAP in Cash Management System

35

Chapter V: Dabur India Ltd. Agreed Terms and Conditions with Bank

49

Chapter VI: Summary & Conclusion

53

List of Tables

56

References/Bibliography

57

ON COMPANYS LETTER HEAD

CERTIFICATE

This is to certify that Abhishek S. Iyer, a student of Bachelor of Commerce (Hons.) (B.com (h), a
class of 2013,Vivekananda Institute of Professional Studies, Affiliated to GGSIP University bearing
Enrolment

No.

07017788813,

has

undertaken

the

Summer

Internship

Training

at

DABUR INDIA LIMITED during 1st June 2015 to 31st July under my supervision & guidance. He has
conducted a study & completed the Project on Cash Management System (CMS).

Seal of Organization

Signature of the Guide

Date:

Name of the Guide:

Mr. Rakesh Arora
Designation: Zonal Financial
Manager (ZFM)
Address:

ACKNOWLEDGEMENT

I would like to take this opportunity to thank and extend my sincere gratitude towards
Mr.

Rakesh

Arora,

Dabur

India

Ltd.

&

Mr.

Randhir

Singh

Azad,

School of Business Studies (SBS),VIPS, G.G.S.I.P University whose valuable guidance and
knowledge helped me to work on this project. This project could not have been completed so
successfully without their valuable guidance and support.

Abhishek S. Iyer
(07017788813)
B.com (Hons.)

Chapter-I: Introduction

1.1
Introduction:
(a) Cash Management comprises of a series of activities aimed at efficiently handling the inflow
and outflow of cash. This mainly involves diverting cash from where it is to where it is needed. In
other words, cash management is the optimization of cash flows, balances and investments.
Cash in this context, may refer either to cash in the form of currency, or to other equivalents such
as cheques, drafts, deposits, among others. While organizations may hold other assets which can
potentially be converted to cash, cash management essentially deals with the management of liquid
cash and near-cash assets such as marketable securities and time deposits, which can be readily
converted to cash.
It is crucial to organizations for three main reasons:
a. Transaction: Ready cash balances are vital for routine transactions including
purchases, operating expenses, wages, and other payments such as dividends, taxes
and so on.
b. Precaution: There may be unanticipated cash requirements as a result of sudden
increase in inventory costs, delay in collection of receivables, among others. And
maintaining ready cash balances is essential to deal with such unforeseen expenses.
c. Speculation: Reserving cash balances is also crucial when firms anticipate decline in
prices of raw materials, reduction in interest rates for buying securities, availing
early payment discounts, among others.

Components of Cash Management

1.1.1. Account Reconciliation: Managing cheques, monitoring their clearance, and

keeping track of the true cash balance can be an overwhelming task for businesses
because of the huge number of cheques that are processed on a daily basis. Hence
banks offer account reconcilement services wherein corporate customers can upload
details about the cheques issued on a daily basis. And at the end of the month, the bank
statement shows information on cheques which have been cleared and those which
have not. This system is also helpful in the process known as positive pay, used by
banks to prevent cheques from being fraudulently cashed if they are not on the list.

1.1.2. Cash Concentration: This is a quick and cost-effective method of moving funds
from different accounts spread across the country to a single monitored and managed
account. This allows businesses to maximize the use of available cash, and to optimize
returns on consolidated balances.

1.1.3. Financial Risk Management: Risk management is the process of measuring risk,
and developing and implementing strategies to manage and mitigate risk. Financial
risk management plays an important role in cash management, because it focuses on
managing risks in relation to changes in interest rates, commodity prices, stock prices,
exchange rates, among others.

1.1.4. Liquidity

Management:

Forecasting the cash needs of a

business

is

essential

for

managing cash flows, short-term

borrowings, among others in an
efficient manner, in order to
ensure that such cash needs can
be met if and when they arise.
This requirement is addressed
through liquidity management services offered by banks. Liquidity management
7

comprises of activities that release the investments locked in working capital, enabling
it to contribute to higher profits. It also refers to the specific services provided by
banks to enable their customers optimize their interest revenues and reduce interest
costs.
(b) Why Cash Management?
1. Complete Visibility: Corporate customers increasingly expect superior cash
forecasting ability, for which they need complete enterprise level visibility into cash
balances and movement of cash. This is provided by banks in the form of status
reports, direct enquiry, and through consolidated view of accounts held with
branches/banks across the globe.

2. Rich Reporting Modules: In order to make corporate customers understand the

need to adopt cash management services, banks are showing cost-benefit analysis
reports, and demonstrating the benefits offered by cash management using graphs
and illustrations.

3. Integrated Services: Corporate customers prefer a single platform for all their
financial needs in place of disparate systems. Hence the focus is on integrating cash
management systems with other activities involving the bank. For example, linking
of ERP solutions with banking systems facilitates cash management by enabling
effective trade finance process and investment management, among others.

4. Remote Deposit Capture and Straight- Through Processing - (STP): In order to

accelerate transactions businesses are looking for solutions that offer straight
through processing capability. For example, corporate customers are trying to
streamline their transactions and reduce downtime, for which banks offer STP
services which enable businesses to conduct entire trade processes and payments
electronically. And to better serve the needs of corporate customers, banks look to
technology vendors who offer optimal solutions that can enable more efficient cash
management.
8

(c) The Role of Technology in Optimizing Cash Management: (Implementation strategy of

concept in your present study)
Cash management solutions are not new. The market is mature and many banks offer efficient cash
management solutions. But market forces, economic conditions, and changing corporate trends
have generated opportunities for further innovations in this space.
Although traditionally a large number of these solutions have been windows-based, with many
corporate customers embracing internet banking, several banks are now migrating to browser based
solutions. Technology has been the driving force in optimizing cash management solutions for
corporate customers:

Browser-based solutions facilitate centralization of cash management thereby

enabling better accessibility by users across the organization thereby having a better
control of cash flows.

Online banking and STP (Straight- Through Processing) help quicken payments,
thereby accelerating business and streamlining processes by eliminating redundant
manual processes.

360 degree view of accounts offers greater visibility on cash position thereby
improving the forecasting ability.

1.2 Objectives of Project:

(a) To study the Cash Management System of Dabur India Ltd.
(b) To study different aspects of Cash Management System
(c) To understand different Payment modes; Speed clearing and
(d) To study Central Banking Solutions - Cheque Truncation System (CTS),
Magnetic Ink Character Reader (MICR)
(e) The advantages in increasing the efficiency of the company
(f) To understand the Application of SAP in Cash Management System
(g) To understand Sales Order Management in SAP

1.3 Scope of Project:

Cash management solutions are now widely being adopted, and hence there is likely to be an
increase in the number of vendors offering these solutions. Correspondingly, corporate customers
are also likely to become more demanding, thereby promoting more intense competition amongst
vendors. Here are some areas with scope for improvement which vendors can focus on, to provide
better services than their competitors:

Eliminating Disparate Systems: Different cash management solutions are being offered for
diverse segments. And as businesses grow, managing these disparate systems is increasingly
becoming a challenge. Hence vendors should come up with a single platform which can
support various cash management products and services as the business grows.

Customizable Solutions: Banks today offer similar solutions to all corporate customers
irrespective of their size and business. Hence vendors should try to come up with a
customizable platform which can cater to the specific needs of different businesses.

Unified System: Integration of corporate customer systems with banking systems can be very
helpful in reconciliation of internal systems with banking systems, and can support account
management between the bank and customer. And this offers great scope for vendors.
Today, banks are leveraging cash management systems as a tool to build long-term trust with
corporate customers, because these systems will empower banks customers to be empowered
and manage their liquidity position at any given time, thus building a trust and strengthening
the relationship that goes beyond transaction banking

10

1.4 Company Profile

1.4.1 Name of the firm/company:Dabur India Limited
Corporate Office:
Kaushambi
Ghaziabad - 201010
Uttar Pradesh, India
Tel: +91 (0120) 3982000 (30 Lines); +91 (0120) 3962100, 39412525, 4182100
Registered Office:
8/3, Asaf Ali Road,
New Delhi 110 002
Tel: +91 (011) 23253488

1.4.2 Dabur India Ltd. - Corporate Profile

Dabur India Ltd is one of Indias leading FMCG Companies with Revenues of over
` 7,806.4 Crore & Market Capitalization of US $5 Billion. Building on a legacy of quality and
experience of over 131 years, Dabur is today Indias most trusted name and the worlds
largest Ayurvedic and Natural Health Care Company.

Dabur India is also a world leader in Ayurveda with a portfolio of over 250 Herbal/Ayurvedic
products. Dabur's FMCG portfolio today includes five flagship brands with distinct brand
identities --Dabur as the master brand for natural healthcare products, Vatika for premium
personal care, Hajmola for digestives, Ral for fruit juices and beverages and Fem for fairness
bleaches and skin care products.

Dabur today operates in key consumer products categories like Hair Care, Oral Care, Health
Care, Skin Care, Home Care and Foods. The company has a wide distribution network,
covering over 5.8 million retail outlets with a high penetration in both urban and rural markets.

11

Dabur's products also have a huge presence in the overseas markets and are today available in
over 60 countries across the globe. Its brands are highly popular in the Middle East, SAARC
countries, Africa, US, Europe and Russia. Dabur's overseas revenue today accounts for over
30% of the total turnover.

The 130-year-old company, promoted by the Burman family, had started operations in 1884 as
an Ayurvedic medicines company. From its humble beginnings in the bylanes of Calcutta,
Dabur India Ltd has come a long way today to become one of the biggest Indian-owned
consumer goods companies with the largest herbal and natural product portfolio in the world.
Overall, Dabur has successfully transformed itself from being a family-run business to
become a professionally managed enterprise. What sets Dabur apart from the crowd is its
ability to change ahead of others and to always set new standards in corporate governance &
innovation.

Figure 1 Manufacturing Facility in India

12

1.4.3 Companys vision & mission:

VISION
"Dedicated to the health and wellbeing of every household"

PRINCIPLES
OWNERSHIP
This is our company. We accept personal responsibility, and accountability to meet business needs.

PASSION FOR WINNING

We all are leaders in our area of responsibility, with a deep commitment to deliver results. We are
determined to be the best at doing what matters most.

PEOPLE DEVELOPMENT
People are our most important asset. We add value through result driven training, and we encourage
& reward excellence.

CONSUMER FOCUS
We have superior understanding of consumer needs and develop products to fulfill them better.

TEAM WORK
We work together on the principle of mutual trust & transparency in a boundary-less organization.
We are intellectually honest in advocating proposals, including recognizing risks.

INNOVATION
Continuous innovation in products & processes is the basis of our success.

INTEGRITY
We are committed to the achievement of business success with integrity. We are honest with
consumers, with business partners and with each other.

13

MISSION
To maximize shareholders value, by offering superior quality nature based products, that
contributes in improving consumers life in personal care, health care and foods.
1.4.4 Product range of the company:

DABUR INDIA LTD. (PRODUCT LINE CATEGORY)

HEALTH CARE

SUPPLEMENTS

DIGESTIVES

OTC- HEALTH CARE

PERSONAL CARE

FOOD PRODUCTS

HOME CARE

HAIR CARE

REAL

ODOPIC

ORAL CARE

ACTIV

ODOMOS

SKIN CARE

BURSST

ODOMOS NATURALS

HOMMADE

ODONIL NATURE
SPRAY

LEMONEEZ

SANI FRESH (SHINE)

CAPSICO

14

1) Health Care

Supplements, Digestives, OTC- Health Care

2) Personal Care

3) Food Products

15

4) Home Care

5) Ethical

6) Professional Range Fem

16

1.4.5 Organization structure of the company:

1.4.6 Market share & position of the company in the industry:

COMPANY NAME

LAST PRICE

52 WK

52 WK

CHANGE

HIGH

LOW

MARKET CAP

HUL

896.20

-1.18

979.00

665.00

193,920.88

Dabur India

297.15

0.19

304.00

200.45

52,203.91

Godrej Consumer

1230.00

0.33

1261.85

872.65

41,885.55

Marico

435.25

0.18

466.30

243.40

28,077.34

Colgate

2046.00

-0.59

2198.50

1465.00

27,824.13

Table 1: Market share & position of the company in the industry

17

Dabur India Ltd. (DABUR) - Net Sales

COMPANY

LATEST(Rs)

CHG

CHG (%)

Net Sales (Rs crore)

ITC

311.70

-2.60

-0.83

36507.40

Hind. Unilever

901.60

-5.30

-0.58

30805.62

Rajesh Exports

541.60

12.55

2.37

23537.49

Videocon Inds.

154.10

-2.30

-1.47

18967.60

Asian Paints

856.60

9.35

1.10

12263.77

Redington India

107.00

-1.55

-1.43

12021.38

Titan Company

331.65

-7.70

-2.27

11903.21

Shree Gan.Jew.

13.22

0.12

0.92

9830.88

3706.00

-82.15

-2.17

8516.59

Gitanjali Gems

41.40

-1.35

-3.16

7343.03

HCL Info systems

41.00

-1.40

-3.30

5725.41

Dabur India

298.85

2.25

0.76

5431.28

PC Jewelers

437.00

-4.85

-1.10

5324.83

Marico

431.50

-2.95

-0.68

4681.20

1252.00

26.00

2.12

4429.80

276.65

0.05

0.02

4258.11

United Breweries

1028.00

17.70

1.75

4235.50

Colgate-Palm.

2058.70

0.55

0.03

3981.94

Whirlpool India

717.00

-13.45

-1.84

3887.25

Berger Paints

211.00

-5.65

-2.61

3806.51

United Spirits

Godrej Consumer
Bajaj Electrical

Table 2: Dabur India Ltd. (DABUR) - Net Sales

18

1.5 Industry Profile:

A. Established in 1884 - more than 125 Years of Trust & Excellence

B. Among top 4 FMCG companies in India

C. Worlds largest in Ayurveda and natural healthcare
D. Revenue of ` 41.1 billion and profits of ` 5.7 billion in FY2010-11

E. Strong brand equity

o Dabur is a household brand
o Vatika and Real are Superbrands

Hajmola , Real & Dabur ranked among Indias Most Admired Brands

F. 11 Brands with sales of over ` 1 billion each

G. Wide distribution network covering 2.8 million retailers across the country
17 world class manufacturing plants catering to needs of diverse markets

H. Strong overseas presence with c. 30% contribution to consolidated sales

19

Chapter 2:
Cash Management System at Dabur India Ltd

The company maintains bank accounts in all towns through Dabur owned Depots.
(Cheques/ drafts received from customers (now here customers are referred to as stockiest) in
nearby places are sent for local clearing to initially collect funds in these bank accounts.
This has reduced the average collection period (as compared to the time it would take if customer
cheques were first received at head office and then sent for out-station clearing) thereby increasing
the velocity of cash inflows. Funds thus collected at the depot towns are each day transferred to the
companys head office or corporate bank accounts.
The company has a sweeping arrangement with the bank at head-office by which any of the funds
transferred from the depot towns are automatically applied towards settling the companys cash
credit loan from the bank and reducing its debit balance. These steps have resulted in reducing and
controlling the cost of interest to the company. When the company has surplus funds, the company
invests the same in short- term investments or instruments like Mutual funds and Govt. securities.
2.1

Process

of

Cash

Management

through

Banking

Stockiest

Filling

Posting

PSBC

Sorting

Cheque
Deposit in
Bank

Invoice
Generates

Parking

Acknowledgment

20

Department

Company

has

Pre-Signed

Blank

Cheques

(PSBC)

from

all

the

stockiest.

The company receives at least 3 cheques from them. (Security Feature)

2.2 Banks and Zones
Dabur has 4 banks in each of the 4 zones-

North zone
East zone

HDFC Bank
Delhi
Bank of America
Kolkata

West zone

RBS
Mumbai

South zone

Kotak Mahindra Bank

Hyderabad

The company has different terms and conditions with every bank according to CMS terms
negotiated by various banks. Headquarters Dabur Tower, Kaushambi, Sahibabad, Ghaziabad 201010 (UP), India
2.3 Terms and conditions set by Company
a. For speed clearing (local, outside)- no charges
b. For non- speed clearing (local, outside) - costlier, bank covers its expense in physically
collecting cheques and compensation costs.

21

Chapter 3: Payment System in Dabur India Limited

These are the main 3 modes of Payment followed in DIL:
3.1 Cheque
3.2 RTGS
3.3 DD
3.1 Cheque- If there is bouncing of Cheque, and then stockiest would have to pay 3 times the
original amount to the company (Cheque bouncing amount). If the cheque is bounced more
than 3 times the company would block that account.

Cheque Banked

Clearing next day

Bouncing Report
Reverse Document
Number
Update Bouncing File

Two Types of bouncing

Technical Bouncing

This means error through duplication, wrong

amount, missing Date or the Stockiest signature
etc.
Non-Technical Bouncing
means signature mismatch, insufficient funds etc
22

Processing of Cheque in Dabur India

Cheque
comes in
Cheque
Inventory
Invoice Generation
PIS (Pay in Slip)
System allocates cheque against
invoice
On due date, Credit expiry report is
generated
Cheque is placed according to PIS
Next Day Posting is done
Then sent to bank

New format of cheque system followed at Dabur India Limited:

3.1.1 Cheque Truncation System (CTS)
Truncation is the process of stopping the flow of physical cheque issued by a drawer at some point
with the presenting bank en-route to the drawee bank branch. In its place an e-image of the cheque
is transmitted to the drawee branch by the clearing house along with the relevant info like data on
MICR band, date of presentation, presenting bank.

23

This effectively eliminates a. the associated cost of movement of the physical cheques,
b. reduces the time required for the collection and brings elegance to the entire activity of
cheque processing
Non CTS cheques were later on was not entertained in DIL and letter was issued regarding
clearing the Non CTS cheques on regular basis (every week).

Cheque Truncation in India

It speeds up the process of collection of cheques resulting in reduction of scope of clearingrelated frauds or loss of instruments in transit, removes the reconciliation- related and
logistics- related problem. Accordingly, RBI focus on improving the efficiency of cheque
clearing cycle as CTS is considered to be a more secure system vis--vis the exchange of
physical instrument.
CTS offer benefits like Business Process Re- engineering and HR rationalization.
RBI has implemented CTS in NCR and Chennai with effect from Feb1, 2008
and Sep24, 2011 and Grid based CTS was started in Chennai including few banks from
Coimbatore and Bangalore with effect from Mar, 2012.

Process Flow in CTS

a. In CTS, the presenting bank captures the data (on MICR band) and the images of
cheque using their Capture system and has to meet the specifications and standards
prescribed for data and images.
b. To ensure security, safety and non-repudiation of data/ images, end-to-end Public key
Infrastructure (PKI) has been implemented in CTS.
c. The collecting bank sends the data and captured images duly signed and encrypted to
clearing house for onward transmission to paying bank
d. For this purpose, presenting and drawing banks are provided with an interface/
gateway called Clearing House Interface (CHI)
e. The clearing house processes the data, arrives at the settlement figure and routes the
images and requisite data to the drawee bank, this is termed as Presentation Clearing
f. The drawee CHIs generate the return file for unpaid instruments
24

g. The return file /data sent by the drawee banks are processed by Clearing house in the
return clearing session in the same as presentation clearing
h. The clearing cycle is treated as complete once both the above sessions are
successfully processed.

CTS 2010 Standard

Standardization of cheque forms(leaves) in terms of size, MICR band, quality of paper,

pattern, design of cheque, watermark, banks logo in invisible ink, VOID photograph
and standardization of field placements on cheques are key factors that enables the secure
mechanism of cheque processing. This all reduces the incidence of cheque misuse,
tampering and alterations.
Growing use of multicity and payable-at-par cheques, CTS introduction and Speed
clearing uniformly led across the banking industry.
The set of minimum security features would not only ensure uniformity across all cheque
forms issued by banks in the country but also help presenting banks while scrutinizing/
recognizing cheques of drawee banks in an image- based processing scenario. Indian
Bank Association (IBA) and National Payment Corporation of India (NPCI) are
coordinating with the banks on implementation of the new standard.

25

Picture 3.1: Depicting the new CTS cheques which are under the process.

26

3.1.2 Magnetic Ink Character Recognition (MICR)

MICR encoding or say MICR line is at the bottom of the cheque and other vouchers and typically
include the document type indicator, bank code, bank account number, cheque number, cheque
amount and a control indicator. The technology allows MICR readers to scan and read the info
directly into a data- collection device.
The MICR E-13B font has been adopted as the international standard in ISO 1004:1995, but the
CMC-7 font is widely used in Europe.

A) MICR code line structure:

1. Cheque serial number of 6 numeric digits preceded and followed by a delimiter. The
alpha-numeric prefix to the serial number should be printed outside the code line in close
proximity, just above the read-band in normal ink.
2. Sort field or the city/ bank/ branch code number consisting of 9digits followed by a
delimiter. The first 3digits (numeric) represents city, the next 3digits (abbreviation-alpha
code) indicate the bank and last 3 indicates the unique branch code. It is unique.
Allotment of branch codes is by the President of the Clearing house of which the bank is a
member
3. Account number field, consisting of 6 digits followed by a delimiter, is an optional field.
In case of Govt. Cheques issued by RBI alone, the account number is of 7digits. The Govt.
account number is of 10digits i.e. 7digits occurring in Account number field and 3 in
transaction code field.
4. Transaction code field comprises of 2 digits in all instruments except Govt. cheques drawn
on RBI which have 3digits. Control documents, batch and block tickets have 3digit
representation in the transaction code field.
5. Amount field, it is the last field and consists of 13 digits bounded on both sides by a
delimiter. The amount is encoded in paisa without the decimal point.

27

3.1.3 Endorsement of cheques

Special crossing stamp

All cheques received for collection over the banks counters are required to be
banded with the banks special crossing stamp.

Dimension of special crossing stamp

Two parallel lines of length up to 2 inches at a distance of inch in between them.
The name of the bank and branch to be incorporated in the enclosed space.

Position of Special crossing stamp- Preferably at the top left corner with a slanting
of 60 degrees to the base

Suggested specimen-

Additional Safeguard- The crossing stamp should be affixed in such a manner that
to the extent possible it does not deface A/C Payee crossing made by the
customer.

Clearing Stamp
The clearing stamp indicates particulars regarding the name of the presenting bank/
branch (alpha codes), date of presentation and type of clearing. Encoding machines
28

are programmed to affix the clearing stamp on the reverse of the cheque
simultaneously while encoding the amount.

Format of Local Clearing Stamp

3.1.4 Speed Clearing

1. What is Speed Clearing?

Speed clearing refers to collection of outstation cheques (a cheque drawn on non-local bank
branch) through the local clearing. It facilitates collection of cheques drawn on outstation corebanking-enabled branches of banks, if they have a net-worked branch locally.

2. Why Speed Clearing?

The collection of outstation cheques, earlier required movement of cheques from the
Presentation center (city where the cheque is presented) to Drawee center (city where the
cheque is payable) which increases the realization time for cheques. Speed Clearing aims to
reduce the time taken for realization of outstation cheques.
Even though Speed clearing hastens the process of cheque collection as compared to outstation
cheque collection, it pre-supposes the presence of the drawee bank branch in the clearing house
location

29

3. What was the process followed by banks for collection of outstation cheques before the
introduction of Speed Clearing?
A person who had an outstation cheque with him/her use to deposit it with his/her bank branch.
This bank branch is called the Presenting branch. The cheque, was sent for collection to the city
where it was payable / drawn called Destination center or Drawee center. The branch providing
the collection service is called the Collecting branch. On receipt of the cheque, the Collecting
branch use to present the physical instrument in local clearing at the drawee bank branch
location through its branch at the drawee bank branch location. Once the cheque was paid, the
Collecting branch use to remit the proceeds to the Presenting branch. On receipt of realization
advice of the cheque from the Collecting branch, the customers account was credited. This, in
short, is the process of Collection before the introduction of Speed Clearing.
When a cheque was accepted on a collection basis by a bank, the customers account was
credited only after realization of proceeds. In the absence of a clearing arrangement at the
Destination center, the Presenting branch was sending the cheque directly to the Destination
branch for payment. On receiving the proceeds from Destination branch, Presenting branch
follow the practice of crediting the customers account.

4. How long does it take for getting credit of an outstation cheque sent on Collection basis?
Generally, it takes around a week to three weeks time depending on the drawee center and
collection arrangements to get outstation cheques realized on a Collection basis.

5. How does the Local Cheque Clearing work?

In Local Cheque Clearing in major centers, cheques are processed by using Cheque Truncation
Systems (CTS) through movement of images. Grid based CTS are in place in New Delhi,
Chennai and Mumbai. In addition, Express Cheque Clearing Systems (ECCS) application
package is used in small clearing houses.
Local Clearing handles only those cheques that are drawn on branches within the jurisdiction of
the local Clearing House. Generally, the jurisdiction is determined taking into account the
logistics available to physically move to and from the Clearing House.

30

6. How does the Speed Clearing work?

Banks have networked their branches by implementing Core Banking Solutions (CBS). In CBS
environment, cheques can be paid at any location obviating the need for their physical
movement to the Drawee branch. Cheques drawn on outstation CBS branches of a Drawee bank
can be processed in the Local Clearing under the Speed Clearing arrangement if the Drawee
bank has a branch presence at the local center.

7. When will the beneficiary get funds under Speed Clearing?

As on date, the local cheques are processed on T+1 working day basis and customers get the
benefit of withdrawal of funds on a T+1 or 2 basis. 'T' denotes transaction day viz. date of
presentation of cheque at the Clearing House. So, the outstation cheques under Speed Clearing
will also be paid on T+1 or 2 basis like any other local cheque.

8. What are the charges for cheques cleared through Speed Clearing?
With effect from April 1, 2011, no charges will be payable for cheques of value up to and
including Rs.1 lakh by Savings a/c customers. Banks would be free to fix charges for collection
of other types of accounts for all values and also from Savings a/c customers for cheque of
value above Rs.1 lakh. Charges fixed should be reasonable, computed on a cost-plus-basis and
not as an arbitrary percentage of the value of the instrument and to be levied in an upfront
manner with due dissemination to the customers of such charges.

9. How is Speed Clearing an improvement over collection basis?

Outstation cheque collection through collection basis takes around one to three weeks time
depending on the drawee center. Under Speed Clearing, it would be realized on T+1 or 2 basis,
say, within 48 hours. Further Savings Bank customers need not incur any service charge for
collection of outstation cheques (value up to Rs.1 lakh) in Speed Clearing which they may have
to incur if such cheque is collected under collection basis.

31

3.1.5 Transaction Codes List

32

3.2 RTGSIt stands for Real Time Gross Settlement which can be defined as the continuous settlement
of

funds

transfer

individually

on

an

order

by

order

basis

(without netting).
RTGS system is meant for large valued transactions. The min. amount to be remitted is
` 2 lac and there is no upper ceiling for RTGS transaction
(I)

Processing of RTGS

a. Email comes from Bank 4 times in a day 2:00,4:00,6:00,8:30PM

b. Then YVIRTUAL t-code is used for Posting of RTGS
c. After posting in SAP, one of the following message is shown
- 31 Bytes means Successful
- 61 Bytes means One or more errors in file
- 30 Bytes means Whole file error
d. Then mail is send to related or associated team with attached file of RTGS received in
mail.
(II)

Service charges for RTGS transaction

b. Inward transaction- Free, no charge to be levied.
c. Outward transaction-` 2 lac - ` 5 lac, ` 30.00 per transaction.
Above ` 5 lac `55.00/ transaction

(III)

Information- remitting customers have to furnish for the remittance:

a. Amount to be remitted
b. Remitting customers account number which is to be debited
c. Name of the beneficiary bank and branch
d. IFSC code of the receiving branch

e. Name of the beneficiary customer

f. Account number of the beneficiary customer

33

3.3 Demand Draft:

A method used by individuals to make transfer payments from one bank account to another.
Demand drafts are marketed as a relatively secure method for cashing checks. The major
difference between demand drafts and normal checks is that demand drafts do not require a
signature in order to be cashed.
The company does not have a standard credit policy that could be applied to all customers.
Instead, distinct credit terms are offered to each group depending upon various factors such
as the product, place, price, demand and competition.
(A)Stockiest in Depots Town: 70% of the Companys stockiest are located in or
around the depot towns. At these places, the company uses the cash management
system(CMS) offered by banks, stockiest cheques are collected till the end of a day are
deposited the next morning into the companys local bank account from where the funds are
transferred to the corporate bank account.
Earlier these stockiest used to enjoy 5 days of credit period but now the company has
decreased the time frame to one day. For new stockiest, sales are normally made on
demand draft basis. If a Stockists cheque bounces, then the party has to make payment
only by demand-draft. If a party defaults on payment (or a partys cheques bounce) more
than once, then for all its transactions with Dabur India in the coming year the party would
be required to make payments only by demand draft.
(B)Stockiest in Remote Areas: The remaining 30% of the turnover with stockiest take
place at remote places away from the depot towns with no easy access to banks so that the
anywhere cheque system is logically not possible. Such stockiest may be allowed a credit
period of up to 10 days. On an average, the money is credited in companys bank account in
3-7 days.

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Chapter 4: Application of SAP in Cash Management System

stands for System, Applications and Products. In Dabur India Ltd, SAP is used to

SAP

manage Cash inflow and outflow in an efficient and effective way.

SAP Cash Management is used to monitor cash flows and to ensure that you have sufficient
liquidity to cover your payment obligations.

4.1 Integration
SAP Cash Management is a subcomponent of SAP Financial Supply Chain Management.
SAP Cash Management is integrated with a range of other SAP components. For example, the
liquidity forecast - in a medium to long term liquidity trend - integrates expected incoming and
outgoing payments in financial accounting, purchase and sales.

4.2 Features
The Incomings area covers the following topics:

Electronic and manual bank statements

Payments

Lockbox

Polling

Electronic and manual check deposits

Bill of exchange presentation

Memo record

Compare payment advices, Interest calculation and Returned vendor checks are dealt with the
Checks topic.
Cash concentration can be found in the Planning topic. Planning also deals with the payment
program, payment requests, bill of exchange presentation, memo record and telephone list.
The Tools topic covers the distribution to cash management systems.
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The Information System topic deals among other things with the Liquidity forecast. You can use
this to obtain relevant information in connection with customer and vendor cash flows. The
structure of the cash position and business transactions that affect the cash position are also
described here. SAP Cash Management uses the cash position to reflect movements in bank
accounts, while movements in the sub ledger accounts are represented using the liquidity forecast.
Further topics include: Payment advice journal (entered and changed planned items),
Compare and check and Reconciliation with cash management.
In the Environment area you will find functions for transferring market data to the SAP System.
Market data can be transferred using the file interface, real-time data feed or via the spreadsheet.
The areas Worklist and Change master record are also described here.
Prerequisites
In Data Setup you can find out what needs to be done before you can go live with SAP Cash and
Liquidity Management.
There are various types of SAP modules but it is according to use of different- different
departments like:

SAP-FI
Finance

SAP- SD
Sales

SAP- MM
Marketing

And many more

So Sap- FI is used for CMS in Dabur India Ltd. To have a control over its efficiency and
effectivity, certain SAP t-codes (transaction codes) are to be remembered such as
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T- CODES
DETAILS
FBL5N
Customer Line Item
FBL3N
GL Line
ZCHEQINV
Cheque Entry, Deletion and
Replacement
F-02
SAP Posting
F-29
SAP Posting for Overdue
YVIRTUAL
RTGS Posting
ZFI_F29
Channel Finance Posting
F-32
Clearing
ZFB03
Voucher Printing
ZFBL3N
Report generation after posting of
cheques
YCHLEAF
Check availability of Cheques
YCBR
After Parking check details of cheques
ZCCHQ
Bank Details
YCUSTDET
Customer Details
ZAPIS_NEW
Printing of Overdue Vouchers
YPIS_NEW
Parking
Table 3: Transaction Codes Used in SAP

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4.3 Displaying Cash Management & Forecast, Cash Management Position

Use
As already mentioned in the previous process on Cash Management, Cash Management &
Forecast/Cash Management Position are updated during the whole SD procedure - starting with the
order, then billing document, followed by cash receipt. The following sub-process will now present
the cash receipt in Cash Management Position and those changes in the planning totals connected to
the cash receipt, which are formed through open billings.

Procedure

Call up the transaction as follows:

Menu Path

Accounting
Treasury Cash Management Information System Reports on Cash
Management Liquidity Analyses Liquidity Forecast

Transaction

FF7B

Code

Enter the following data:

Field

Europe

North America

Company code

1000

3000

Cash management

Select

Select

Liquidity forecast

Select

Select

Grouping

Total (all types of receipts/expenditures Total (all types of receipts/expenditures

position

and bank data)

and bank data)

Display as of

Date of incoming payment

Date of incoming payment

Display in

EUR

USD
38

Choose .

Enter the following data:

Field

Europe

North America

Delta display

Select (display changes per value date

Select (display changes per value date

with balances

as opposed to cumulative display)

as opposed to cumulative display)

Choose .

If the date you entered as the planning date falls on a public holiday, the incoming payment is
reproduced on the next working day dependent on the value date.

Double-click on Banks.

Double-click on B9 (Cash rec).

The system displays the bank accounts on which the cash receipts are recorded.
The cash receipt you posted has flowed into the value date dependent balance of the DBGEING
(Europe)/CBGEING (North America) group on the planning date you entered.

In DBGEING (for Europe) or CBGEING (for North America), select the amount in the column for the
planning date you entered and choose

Display list.

You should be able to find the incoming payment you posted in the list of displayed documents on
the Line Items (Module Pool)
Screen.

Choose

3 times.

Finally, you still need to check whether the amount in short-term cash management (=presentation
of the expected cash receipt from the billing) has been reduced as a result of the incoming payment.

Choose New display.

In the dialog box, enter the following data:

Field

Europe

North America

Display as of Noted planning date from FI document

Choose

Continue.
39

Noted planning date from FI document

If the date you entered as the planning date falls on a Saturday or Sunday, the expected
incoming payment is reproduced on the next working day dependent on the value date. For
overview reasons select NEW ENTRY in this case and enter the previous working date as
value date (i.e. minus 1 or 2 days)!

Double click on Persons.

Double-click on the F1 (FI customers/vendors) level to display the group of customers

(already posted and thus billed values).

The sum displayed has once again been reduced exactly by your billing amount as this is henceforth
already displayed as an incoming payment on the bank account.

Choose

until the overview tree appears.

Application of SAP with Screenshots:

(I) SAP T CODE: ZCHEQINV

*These SAP Screenshots were taken on Testing Servers of DIL

40

2)

3)

41

4)

(II) T Code YPIS_new - Parking and Posting (CHEQUE PARKING AND POSTING
ACCORDING TO THE CREDIT EXPIRY)

42

43

(III)T- Code FB50 - Virtual A/C Entry (Clear the GL)

(IV) T Code YVIRTUAL RTGS Posting

44

(V) T Code ZFI_F29 - Channel Finance Posting

(VI) T Code YCHLEAF Cheques Availability

45

(VII) T Code ZCHEQINV Cheques Enter, Deletion and Replacement

46

4.4 Sales Order Management in SAP R/3

SAP R/3 (the "R" was for "Real-time data processing" and "3" was for "3-tier":
1) database, 2) application server, and 3) client (SAPgui)). This new architecture
is compatible with multiple platforms and operating systems, such as Microsoft
Windows or UNIX. This opened up SAP to a whole new customer base.
The order to cash process

SD: Sales and Distribution

Integrated with:
Materials Management (MM)
Production Planning and Execution (PP)
Financial Accounting (FI)
Configurable structures within the software that represent the legal and/or
organizational views of an enterprise
47

 Organizational elements form a framework supporting all business activities in

the manner desired and selected for a given instance of the software

4.4.1 Organizational Elements

Client
Company Code
Sales Organization
Distribution Channel
Sales Division
Sales Area
Plant
Storage Location
Shipping Point

48

Chapter 5: Dabur India Ltd. Agreed Terms and Conditions with Bank
These terms and conditions including terms under respective services section govern the CMS and
by signing the CMS designation form and / or by accepting the service proposal and/ or by using
the Banks CMS, one agree to be bound by these T&Cs at all times.
5.1

Transfers Limited to Available Funds- The bank is under no obligation to comply with

any payment instruction or to make any fund transfer that would exceed the available funds in
available limit on the Customer accounts designated for such payment instruction.
5.2

Confidentiality- The sharing, storage or transmission about Customer / his account details

within HSBC group or with any agent should be on confidential basis.

5.3

Indemnity- As long as bank is in good faith, the Customer shall indemnify the bank and

hold the bank harmless from time to time from any or all claims brought or incurred by bank.
5.4

Force Majeure- The bank will not be responsible for non-performance or delay in the

performance of one or more services caused by circumstances beyond its control such as fire,
communication/ system failure etc.
5.5

Change of Terms- The bank may modify, terminate and suspend the services including the

present T&Cs to the customer anytime with or without notice, due to change in rules, regulations
and laws set by tax authorities or Bank policies.
5.6

General Undertaking from Customer- He agrees and confirms thata. Fully understands and is satisfied with all features of services offered
b. He is solely responsible for the accuracy, completeness and timeliness of instructions
in line with that specified by the bank from time to time.
c. He authorizes the bank to debit his account and/ or exercise right of setoff for any
liability incurred by the bank for and due to the execution of payment instruction
issued by customer to bank.
d. The customer will ensure the security procedure established by the bank for the
purpose of verifying that the payment order or communication is that of the customer

49

or for detecting error in the transmission of the content of the funds transfer request or
communication is adhered.
e. Customer hereby represents and warrants that these T&Cs have been duly executed
and delivered by duly authorized representative and constitutes a legal, valid and
binding obligation of the customer and shall be enforceable against customer.
f. The Non- Residential External (NRE) customer shall ensure that bank would mention
word SOF NRE in the Tag70 or Second Party Reference field as appropriate
while initiating any RTGS, NEFT, IAT payments.
g. Also customer agrees to provide the Priority Payments File not later than the agreed
cut-off date and time, which is subject to change from time to time.
5.7

MIS/ Reports- Bank at its sole discretion provide info including data, instruments and

reports to Customer related to any concerned banking activity.

5.8

Waiver- If bank fails to exercise any right or privilege conferred in T&Cs shall not affect

the specified services and remain in full force.

Example of North Zone Bank Associated with Dabur India Limited:

50

What are the features and benefits of our Collection services?

With HDFC Bank's Collection Services, our aim is to make your banking more efficient,
manageable and speedy. Here are some of the major features and benefits of our Collection
Services:
Features

You can manage your funds' flow position most effectively from a central location.

Avail of a range of products under our collection services to make your cheque realization and
banking more efficient.
Benefits

Quick realization of your local and outstation cheques.

Avail this service with or without having a Current Account with HDFC Bank.

What are the products offered under Collection Services that you can use?
You can take advantage of the products we offer under Collection services:

Local Cheque Collections With this product, your local cheques deposited at the same location
will be realized quickly. You can make use of this product at all locations of HDFC Bank
("SPEED") and over 18 locations of our correspondent Bank ("RAPID")

Outstation Cheque Collections You can deposit outstation cheques drawn on any HDFC Bank
location at any HDFC Bank location ("SPRINT"). Also, cheques drawn on over 300 locations of
our correspondent banks ("EXPRESS") can be deposited at any HDFC Bank locations.

Transfer Cheque Collections Your local/outstation cheques drawn on any branch of HDFC Bank
Ltd. will be realized quickly though this product available at all HDFC Bank ("HBTRF") locations.

Clean Collections If your cheques are drawn on locations not covered by us or our correspondent
banks, they will be collected at any of our locations and the proceeds will be credited to your
account as soon as credit is received by HDFC Bank.

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Comprehensive MIS You will receive a detailed MIS that includes the following:

Daily report of deposits made at various locations

Location-wise report

Credit Forecast report

Monthly cumulative report - date wise / location wise

Monthly charging statement

Monthly cheque return statement

Customized reports as per mutual agreement

Some Important Terminologies

1.2. Virtual Account- It is a non- transactional sub- account created under the Customer
Account at the request of the customer, as submitted to the bank from time to time, to
capture reference of payments made by the Payers for the purpose of preparing MIS/
Statements for the customer.
1.3. Master Account- It is any Customer Account with the bank into which payments by Payer
using a distinct Virtual Account number is to be credited.
1.4. Inward Payment Services (Channel Financing)- The service under which the bank
would provide info on the payments received and outstanding for the Customer based on
the info received from the customer and the actual payments received in its account.
1.5. P2E Migration Program- This service assists Corporate in shifting their payments and
receivables from paper mode to electronic mode thereby offering the process and cost
efficiency benefits.
1.6. P2A- Person to Account service is used for fund transfer by individual to a corporate
customer using Payee IFSC and Payee Account number and shall form part of the Service
as defined under T&Cs.
1.7. PSBC- Pre-signed Blank Cheques issued in favor of Company and submitted to bank as
per applicable terms on which amount payable and Cheque date is left blank.
1.8. PDC- Post Dated Cheque issued in favor of Company with future date and submitted to the
bank for collection as per applicable terms.

52

Chapter 6: Summary & Conclusion

6.1 Interpretation and Conclusion (SWOT Analysis):
The company maintains bank account at all depot towns. Cheques/drafts received from customers
in nearby places are sent for local clearing to initially collect funds in these bank accounts. This
has reduced the average collection period (as compared to the time it would take if customer
cheques were first received at head office and then sent for outstation clearing) thereby increasing
the velocity of cash inflows. Funds thus collected at the depot towns each day transferred to the
companys head office (or corporate) bank account. The company has a sweeping arrangement
with the bank at the head office by which any funds transferred from the depot towns are
automatically applied towards setting the companys cash credit loan from the bank and reducing
its debit balance. These steps have resulted in reducing the cost of interest to the company.
When the company has surplus funds, it invests the same in short-term investments or instruments
like mutual funds and government securities.
With advent of CBS and CTS, Dabur has increased its operational efficiency and decreased its
overheads and costs. Here computer software such as SAP is used to perform core operations
of banking like
a. Recording transactions
b. Interest calculations
c. Customer Records
d. Balance of payments
e. Details of Withdrawal
The new platform has changed the way bank system in Dabur India Ltd. Works. All the
services in the Cash Management System have benefitted the corporate office and banking
facilities bya. Shorter Clearing cycle
b. Superior verification and reconciliation process
c. No geographical restrictions and customers alike
d. Reduction in operational risk and risks associated with paper clearing
53

Moreover, a Companys Cash Position is said to be a better indicator of the health of its
business, rather than its profit and loss statement. Hence knowing the cash position is crucial
for every business to:
a. forecast when, how, and where cash needs may arise
b. determine which would be the best source for additional cash needs, and
c. be prepared to meet cash needs when they arise
And for better visibility into the cash position across banks, across borders, cash managements
crucial. It empowers businesses with the ability to forecast cash flows, plan future business
strategies, and manage cash accordingly.
6.2

6.3

Limitations:

No authorization to use some T-codes which were restricted to Managerial Level.

Data access wasnt provided as the information was highly confidential.

Suggestions, Scope for further Study & Conclusion:

Lack of control over cash flows and inefficient cash management can be very harmful to
business. More often than not, it is the improper management of cash that has caused businesses
to fail. Effective cash management is therefore a necessity for businesses. Companies heavily
rely on knowing their cash position to manage working capital requirements such as ordering
inventory, raw material, or
Acquisitions/expansion program, for which they need a clear idea of how much cash is
required, and when. This is enabled by Efficient Cash Management System.

Here are some areas with scope for improvement:

a. Eliminating Disparate Systems: Different cash management solutions are being offered for
diverse segments. And as businesses grow, managing these disparate systems is increasingly
becoming a challenge. Hence company should come up with a single platform which can
support various cash management products and services as the business grows.

54

b. Customizable Solutions: Company should try to come up with a customizable platform which
can cater to the specific needs of different businesses.
c. Unified System: Integration of corporate customer systems with banking systems can be very
helpful in reconciliation of internal systems with banking systems, and can support account
management between the bank and customer. And this offers great scope for vendors.

Today, company is leveraging Cash Management System as a tool to build long-term trust with
their customers, because these systems will empower them and manage companies and their
position at any given time, thus building a trust and strengthening the relationship that goes
beyond transaction banking.

Summary
With growing recognition of the need to adopt Cash Management Strategies, company is
achieving and moreover expecting more efficiency and effective solutions around b. standardization,
c. reconciliation,
d. integrated banking systems with corporate systems, and
e. Real-time reporting for overall view of the existing cash position.
Role of the Finance Department:
The finance department is involved in all aspects of financial planning and control. It maintains
a quarterly score card, which helps the company evaluate the performance of employees in
terms of Cost to Company (CTC). Managerial remuneration consists of a fixed salary plus
bonuses based on performance on a variety of parameters, including maintenance of inventory
levels and other working capital items within agreed limits. The department also prepares MIS
and communicates the same to all the concerned departments. It also continuously monitors the
management of inventory, debtors and creditors to ensure that the net working capital remains
within the budgeted levels. If, for example, the investment in inventory exceeds the planned
limits due to some unavoidable circumstances, it must be offset by either an increase in
creditors or a reduction in debtors.

55

List of Tables
Table 1
Market share & position of the company in the industry
Table 2
Dabur India Ltd. (DABUR) - Net Sales
Table 3
Transaction Codes Used in SAP

56

References/ Bibliography

BOOKS
1. B. Bhattacharyya, Theory and Practice of Case Method of Instruction,
ARTICLES
1. Aashish Goyal, Cash management at bank of India
2. Dabur Annual Report 2014-15, Dabur India Ltd.

WEBSITES
1. www.dabur.com
2. www.daburinternational.com
3. www.wikipedia.com
4. www.googlescholars.co.in
5. www.moneycontrol.com
6. www.rbi.org.in
7. www.sap.com
8. www.go.sap.com
9. http://www.dabur.com/Investors%20Relation-Reports
10. http://www.sap.com/bin/sapcom/en_us/downloadasset.2013-10-oct-01-18.daburcreating-efficient-cost-saving-shared-services-with-sap-document-access-by-opentextpdf.html

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