The Aditya Birla Group is an Indian multinational conglomerate named after Aditya Vikram

Birla, headquartered in the Aditya Birla Centre in Worli, Mumbai, India. It operates in 40
countries with more than 120,000 employees worldwide. The group was founded by Seth Shiv
Narayan Birla in 1857. The group interests in sectors such as viscose staple fibre, metals, cement
(largest in India), viscose filament yarn, branded apparel, carbon black, chemicals, fertilisers,
insulators, financial services, telecom (third largest in India), BPO and IT services.
The Aditya Birla group is a diversified conglomerate with total revenue of approximately US$45
billion in year 2014. With gross revenue of USD 45 Billion (in 2014) it is the third largest Indian
private sector conglomerate behind Tata Group with revenue of just over USD 100 Billion
and RIL with revenue of USD 74 Billion.

OVERVIEW:
A US $40 billion corporation, the Aditya Birla Group is in the League of Fortune 500. It is
anchored by an extraordinary force of over 120,000 employees belonging to 42 nationalities. The
Group has been ranked Number 4 in the global 'Top Companies for Leaders' survey and ranked
Number 1 in Asia Pacific for 2011. 'Top Companies for Leaders' is the most comprehensive
study of organisational leadership in the world conducted by Aon Hewitt, Fortune Magazine, and
RBL (a strategic HR and Leadership Advisory firm). The Group has topped the Nielsen's
Corporate Image Monitor 2013-14 and emerged as the Number 1 corporate, the 'Best in Class',
for the second consecutive year.
Over 50 per cent of the Aditya Birla Group's revenues flow from its overseas operations. The
Group operates in 36 countries Australia, Austria, Bangladesh, Brazil, Canada, China, Egypt,
France, Germany, Hungary, India, Indonesia, Italy, Ivory Coast, Japan, Korea, Laos,
Luxembourg, Malaysia, Myanmar, Philippines, Poland, Russia, Singapore, South Africa, Spain,
Sri Lanka, Sweden, Switzerland, Tanzania, Thailand, Turkey, UAE, UK, USA, and Vietnam.

Aditya Birla Group The Global Scenario

Around the world, theyre known for:

A metals powerhouse, among the world's most cost-efficient aluminium and copper
producers. Hindalco-Novelis is the largest aluminium rolling company. It is one of the three
biggest producers of primary aluminium in Asia with the largest single location copper smelter
No.1 in viscose staple fibre
No.1 in carbon black
The fourth-largest producer of insulators
The fourth-largest producer of acrylic fibre
Among the top 10 cement producers
Among the best energy-efficient fertiliser plants
The largest Indian MNC with manufacturing operations in the USA
Aditya Birla Group The Indian Scenario
In India, here's what we have accomplished:

The largest fashion (premium branded apparel) and lifestyle player

The second-largest manufacturer and largest exporter of viscose filament yarn
The largest producer in the chlor-alkali sector
Among the top three mobile telephony companies
A leading player in life insurance and asset management
Among the top two supermarket chains in the retail business
Rock solid in fundamentals, the Aditya Birla Group nurtures a culture where success does not
come in the way of the need to keep learning afresh, to keep experimenting.

Aditya Birla Group Beyond Business

Works in 3,000 villages

Reaches out to seven million people, annually, through the Aditya Birla Centre for Community
Initiatives and Rural Development spearheaded by Mrs. Rajashree Birla
Focuses on healthcare, education, sustainable livelihood, infrastructure and espousing social
reform in India, Brazil and Egypt, as well as Philippines, Thailand, Laos, Indonesia, Korea and
other Asian countries
In India:

The Aditya Birla Group runs 42 schools, which provide quality education to 45,000 children. Of
these 18,000 students belong to the underprivileged segment. Merit scholarships are given to an
additional 12,000 children from the interiors.
The 18 hospitals run by the Aditya Birla Group tend to more than a million villagers.

In line with its commitment to sustainable development, the Aditya Birla Group has partnered
with Columbia University in establishing the Columbia Global Centre's Earth Institute in
Mumbai.
The idea of embedding CSR as a way of life in organisations has led to the setting up of the
FICCI Aditya Birla CSR Centre for Excellence, in Delhi.
The Aditya Birla Group transcends the conventional barriers of business because we believe it is
our duty to facilitate inclusive growth.

PARTA SYSTEM OF COST MANAGEMENT

Kumar Mangalam Birla works "normal Bombay hours", except that he is also in office on
Saturdays and half of Sundays. "My work-life balance is completely messed up," he says.
On each of those days, he would like to know how much cash came into his group and how
much went out. Not turnover, not profit. Cash.
Of course, it will be a bit of a stretch for the chairman of a $35 billion group to actually count the
cash, but that is the broad philosophy of the Parta system. A financial performance monitoring
mechanism, it has been refined over generations of Marwari businessmen. Among the Birlas,
Ghanashyam Das Birla embraced it wholeheartedly. And his great grandson Kumar Mangalam
swears by it. "It is a timeless concept and can be applied even 20 years from now," says Birla.
Many variations of Parta have evolved over the centuries. But, at the heart of all the different
variations, the underlying principle remains the same: at the end of the day, there should be a net
inflow of cash into the system. If there isn't, something somewhere needs fixing.
The late Mr. Ghanashyam Das Birla, the grandfather of the late Mr. Aditya Birla developed the
system.
Parta means what will be the return to pocket in net. Parta is a system of establishing return on
Investment based on Cost Management.
Since the Group had diversified in different businesses based on availability of license,
technology & resources for raw material they needed a system to monitor profits consistently. It
is a system of accountability based on which each company in the group had to draw a series of
estimates for any new investment: how much it should cost to manufacture a particular volume
of product, sell it & make a profit. The Project department will give the cost of capital for
different capacity levels or different processes or different raw materials. These are the tools to
analyse new businesses, viability of new & old business. This will also give factual information
for investment to Stake Holders including Bankers and helps later on for review and monitoring
based on norms and commitment given while taking sanction of Capital purchase.

The group maintained very good control on preoperative costs to keep a healthy cash flow. There
have been hardly any cases of overrun I have seen during my tenure of over 25 Years with
Aditya Birla Group.
Parta could be of different types:
1. Production based: Capacity of each equipment based on guarantee of production given by the
manufacturer of machinery. There are cases where the Birla companies exceeded the rated
manufacture. Manufacturers came and studied the factors that enabled overshooting of rated
production. Estimate of investment will give the capacity of project. (Where supply is short of
demand). Like - Birla super.
2. Market based: With increase in capacity in items where demand was lesser than supply, it
was based on market research & projected estimates. Dynamics of changes in policy may give
further moderation like Birla White.
Parta is normally made at the start of Project / New Plant / New Machinery / New Product
Manufacturing.
All information were validated by discussion & questioning with related persons Finally the
member of the Birla family approves Parta for each unit. Sanction for capital expenditure is
given only after the Parta is approved. Working of Parta to get details of
(1) INPUT Raw Material (a) Mix (Quantity), (b) Source, (c) Quality
(2) Production Cost, (a) Capacity Utilization, (b) plant no of days running in year
(3) Selling & Administrative Cost per Unit of Product, 1) Fixed 2) variable
(4) Marketing & Advertising costs: one-time and Regular.
There is a meeting of different units manufacturing the same product (like cement business parta)
at a common place which generates healthy competition and sharing of knowledge as well as
concerns. Parta system keeps a close watch on efficiency.
Parta: Executive summary

It is MIS tool developed by Birlas, commonly accepted by all -Challenge and Controls
generates competition to perform better than the best. -Parta is a control device in micro
terms for time (Daily Parta), product mix, consumption, logistics, sales volumes, and
profits and losses.
Corrective actions are taken in time - A Stitch In Time Saves Nine. -Each and every
rupee spent either towards capital expenditure or revenue expenditure must earn in a pre
decided time Parta is to see that the object is met.

Not only Production or Sales are monitored through parta but almost all aspects of cost
and revenue.
Out Put - Selling Price, Return- Discount I Brokerage I Commission, Freight, Tax.
Market Mix Product Mix Finance Cost- (a) Interest (b) Borrowing Mix (c) Cost of public
issue Parta = Selling Cost -(Manufacturing Cost + Administrative Cost include finance
cost) = Net Profit
Once master parta is made then the monthly Target is made based on environment of
marketing & Plant Machinery running (after shut down required for maintenance) Time.
Parta v/s Target explained by CEO I COO to the member of Birla Group who is in charge
of the particular unit.
Target v/s Daily Working is explained by Head of function, marketing I Com/Production,
to CEO. For exceptions & action corrective actions are taken in time - Parta v/s Target (Monthly Profitability Statement) exceptions. Monthly Progress Report. Target v/s Daily
- Daily Report of Profit (loss) & specific Break down etc
Daily report is for Daily Parta of Gain (Loss) Statement i.e. only minus figures are
reported & update is for the month. It is the control device in Micro terms for time,
product mix, consumption & yield of raw material, logistics, sales volume & profit / loss.

Cumulative Average = Cumulative Profitability/Working days

By 20th of the month you must be near the target; if not, a serious review is done between Mr.
Birla and the CEO and the Head of Function.
Change in Parta takes place if there is Marketing Change / Plant Capacity Change I Raw
Material factor Change / Product factor Change

Excellence & Constraints in System

Having worked in different groups I find the system is ideal in principle for a multi unit group. It
is a convenient and efficient mechanism for control and monitoring. The changes are less and
proper Home Work is done. But it could not be owned by young Managers due to Secrecy &
rigidity of Top man in fixing norms and intolerable attitude of the top person for facts. Also
mostly it was a production oriented system i.e. the underlying assumptions of "whatever is
produced will be sold".
In making parta one may challenge norms & its controls generate competition to perform better
than the previous best. Parta monitors all aspects of business not only sales or production. It is a
dynamic concept, which changes with any major change.
Main parta has full details of working running into more than 100 pages while daily review is on
one sheet and the monthly review goes up to 10 sheets.
Parta is a dynamic concept and not only is an academic one, and this proved during the last 100
years of Birla record of growth.
The CEO gives his explanation for the exceptional items to Mr. Birla.
The group organizes Parta conferences at different places, and different unit teams deliberate
almost all the aspects so as to determine targets for expenses and savings.
Parta conference generates a healthy competition amongst the units and ultimately the Bottomlines are improved for all the organizations. Parta is thus a powerful tool for ensuring the
continued viability of the unit.

PERFORMANCE MANAGEMENT
CIA 1:
COSTING PRACTICES OF A COMPANY
PARTA SYSTEM OF COST MANGEMENT
BYADITYA BIRLA GROUP

SUBMITTED BY:
SAMIEL TRIPATHI
ROLL NO. 1311856
BBA F&A