kalpesh 26

A Project Report on

“VAT CALCULATION & APPLICATION”At

Gujarat Narmada Valley Fertilizer Co. LtdNarmada Nagar, Bharuch

Submitted toThe School of Management, Sumandeep Vidyapeeth

In the partial fulfillment of the award of the MBA Degree

Submitted byKalpesh Prajapati

SM20090026

Under the Guidance of

Faculty Guide Company GuideRahul Sharma Mr. G.B. Patel Lecturer Accounting OfficerSchool of Management GNFC Sumandeep Vidyapeeth BharuchPiparia, Vadodara Gujarat

July, 2010

GUJARAT NARMADA VALLEY FERTILIZERS COMPANY LTD.

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DECLARATION

I, Prajapati Kalpesh Dhirajlal hereby declare that the report on summer internship project

and project work entitled “VAT CALCULETION & APPLICATION” submitted to ”The school

of Management, SVU” is a result of my own work and my indebtedness to other work

publications if any, have been duly acknowledged.

PLACE: Vadodara

DATE: Kalpesh D Prajapati

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PREFACE

The M.B.A program is well structured and integrated course of business studies. The main

objective of project work at M.B.A level is to develop skill in student by supplement to the theoretical

study of business management in general. Project work helps to gain real life knowledge about the

business practices. The MBA programme provides student with a fundamental knowledge of business

and organizational functions and activities, as well as an exposure to strategic thinking of

management.

In every professional course, project work is an important factor. Profession gives me

theoretical knowledge of various subjects in the college but they are practically exposed of such

subjects when they get the project work. It is only the training through which I come to know that

what an industry is and how it works. I can learn about various tools and techniques being performed

in the industry, which would, in return, help me in the future when I will enter the practical field.

Project work is an integral part of MBA and each and every student has to undergo the

summer internship project and then prepare a project report.

In today's globalization world, where cut throat competition is prevailing in the market,

theoretical knowledge is not sufficient. Beside this one need to have practical knowledge, which

would help to individual in his/her carrier activities and it is true that "Experience is best teacher".

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Acknowledgement

‘‘Any systematic and Meaningful project work cannot be carried out without any proper guidance and inspiration. It is nice time for me when I remember the persons behind successful completion of my project work’’

With a deep sense of respect I would like to extend my heartiest thanks to all those who provided me immense help and guidance during my training period.

I express my special thanks to Mr.N K Patadia & Mr D C Jadeja, at GNFC Ltd., Bharuch for giving me valuable opportunity to pursue my project work at GNFC.

I am also thankful to Mr.D B Panchal for providing me with necessary guidelines.

I am extremely grateful to Mr.Girish B Patel, my Project Guide, for providing me excellent support and guidance throughout the learning process. As a project guide she has been very resourceful and supportive. Her ideas and thought have given me inspiration to perform better at each and every moment.

I am also thankful to entire staff of my Department, The Department of Applied Mathematics, for their constant encouragement, suggestions and moral support throughout the duration of the project.

I also consider worth mentioning the co-operation & support extended by my family members & all my cherished friends.

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EXECUTIVE SUMMERY

For the first time when I selected the topic on VAT then after I was tried to know what the VAT & what is the part of the VAT in GNFC.Then after observed that what is the effect of VAT on GNFC than also see the government rules& regulation in the VAT for fertilizer industry Then also made some calculation of VAT in GNFC & observed the input tax credit in VAT & also take some knowledge of central service tax Then maid comparison between VAT & CST also sees all the forms of GST & CST .

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ContentSR. NO

PARTICULAR PG.NO

1 Chapter – 11.1 Why, Whom, Where, When and How. 121.2 Definition and Background OF VAT 131.3 Identifying the variables and parameters for the particular study 24

2 Chapter – 2 (2.1.COMPANY PROFILE) 28a. History 30b. Growth & Development 33c. Benchmark & Milestone 34d. Who’s who 39

2.2 INDUSTRY PROFILE 40a. Competitive Scenario 41b. Market Share 42c. Industry Life Cycle & Growth. 43d. Industry Spectrum. 45e. Government Rules & Regulation. 46

3 Chapter-3 ( OVERVIEW OF FUNCTIONAL AREA) 48a. Finance 49b. Marketing 52c. Human Resource 57d. Operations 61

4 Chapter-4 ( MODEL APPLICATION) 65a. Strategic Advantage Profile. 65b. ETOP (Environmental Threat & Opportunity Profile). 68c. Porter’s Five Forces Model. 70d. BCG (Model). 72

e. Value Chain 745 Chapter-5 ( Research Methodology) 76

5.1 Objectives and purpose of the study 765.2 Scope of the study, Benefits of the study 765.3 Assumptions 775.4 Types of research design 775.5 Methods of data Collection 775.6 Limitations of the study 77

6 Chapter-6 Data Collection & Analysis 78

7 Chapter-7 Finding & Suggestions/recommendations 80

8 Goods & Services Tax 809 Chapter-810 Bibliography 82

LIST OF TABLE8


SR.NO

PARTICULAR PG.NO

1 CASCADING EFFECT 152 FROMS UNDER VAT 173 HIGHLIGHT OF GUJARAT VAT ACT 194 COMPARISON BETWEEN VAT & SALES TAX 215 EFFECT OF VAT ON GNFC 216 MARKET SHARE 407 MATURITY 428 GOVERNMENT RULES & REGULSTION 449 PRODUCT PORTFOLIO 5110 GNFC VAT SUMMERY 7611 CST ADJUSTED AGAINST VAT 77

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LIST OF CHART & GRAPH SR.NO

PARTICULAR PG.NO

1 COMPETITIVE SCENARIO 392 MARKET SHARE 403 PRODUCT LIFE CYCLE 414 PRODUCT PORTFOLIO 515 DISTRIBUTION NETWORK 526 ORGENITION STRUCTURE 567 DEPARTMENTS & FUCTION 578 FUNCTION OF MANAGMENT 609 PROCESS OF MANAGEMENT 6010 ORGENITION & GROUP STRUCTURE 6211 PORTER FIVE FORCES 6812 BCG MATRIX 7013 VALUE CHAIN 7214 VAT SUMMERY 7615 CST ADJUSTED AGAINST VAT 77

Chapter – 110


VALUE ADDED TAX

TOPIC - APPLICATION AND CALCULATION OF VALUE ADDED TAX IN GNFC.

1.1

WHY – GNFC has suggested the topic VAT and I am also having Interest in tax calculation and in past this topic was not selected by any one, as looking the present taxation scenario this topic is very challenging. WHOM- Suggested by company guide.

WHERE – AT GUJARAT NARMADA VALLEY FERTILIZER COMPANY LTD, BHARUCH GUJARAT, INDIA

WHEN – This project made between 1st may 2010 to 30th June 2010

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INTRODUCTION

What is VAT?

VAT is a tax, which is charged on the ‘increase in value’ of goods at each stage of production and further distribution. It is charged by registered VAT businesses/persons/taxpayers. VAT has replaced a number of other taxes and its introduction has not resulted in either increased prices to final consumers or reduced profitability of business. VAT is levied on the difference between the sale price of the goods produced or the services rendered, and the cost thereof that is, the difference between the output and the input.

HISTORICAL BACKGROUND

Ever since 1954, when the tax on value added tax was introduced in France it has spread to a large number of countries. This tax was proposed for the first time by Dr. Wilhelm Von Siemens for Germany in 1919 as an improved turnover tax. In 1921, vat was suggested by Professor Thomas A. Adams for the United States of America who recommended “Sales tax with a credit or refund for taxes paid by the producer or dealer on goods bought for resale or necessary use in the production of goods for sales”. VAT was also recommended by the shout mission for the reconstruction of the Japanese economy in 1949. However, the tax was not introduced by any country till 1953. France led the way in 1954 by adopting a VAT that covered the industrial sector alone and the tax was limited to the whole sale level. The tax limited to the boundaries of France until the fifties. Thereafter from sixties to now VAT is recognized as less distortive and more revenue productive, it has spreading all over the world. As on today about 130 countries have adopted the same.FROM 1986

Excise duty was existed having almost similar calculation in VAT.Known as ‘modified value added tax’ at that time.Now called central value added tax.

GOVERNMENT TAX SCHEDULES

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AT STATE LEVELProposed by Finance minister Dr. Manmohan Singh during the meeting of empowered committee in 1995

On 16th November 1999 all states had permitted value added tax to enter it state level.

On 18th October 2002 Finance minister Mr. Jashwantsinh had clarified his intention of starting VAT at state level form 1st April 2003.

Except the state Haryana no state followed the VAT from 1st April 2003.

After making some adjustments to rules of VAT during the meeting of 18 th June 2004 it was accepted to introduce VAT from 1st April 2005.

In Gujarat VAT applicable from 1st April 2006.

FUNDAMENTALS OF VAT

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Due to introduction of VAT following acts are eliminatedI. Gujarat sales tax 1969II. Bombay motor spirit sales tax act 1958III. Gujarat sugarcane act 1989

Turnover tax additional taxes are also eliminated because of VAT.

Not registered under above mentioned acts and having the turnover less than 5 lakhs are not required to get registration number.

Liable for paying VAT have to collect tax at mention rates under the act on sales.

Tax credit is available to resells as well as manufacturer.

Tax credit is available on purchase of goods by liable to pay VAT.

Tax credit is available only if the goods will be used for followingI. Resale within Gujarat II. Interstate transactionIII. ExportIV. Sale to EOU or SEZV. Interstate branch transfer

In case of branch transfer tax credit is available only after deducting 4% of total amount from tax amount.

For which period tax invoices are having liable with taxpayer, in that period they get tax credit.

At the end of any tax credit is having credit balance will carry forward to next year.

Traders/Manufacturer having less than Rs. 50lace turn over can opt for lump-sum tax payment.

Lump-sum tax payer can’t claim for tax credit for the tax paid on purchase.

If lump-sum tax payer is liable to pay CST act then he has to pay totally.

Lump-sum tax payer has to pay purchase tax if he purchases goods from unregistered traders.

Every registered trader or manufacturer has to pay purchase tax if purchase from any unregistered traders. But he is entitled for tax credit of that amount.

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Tax should be paid as well as return should be filled the within 22days of next month.

Lump-sum tax payer has to pay tax and filled the return quarterly within 22days of next month.

Trader or manufacturer whose turnover is Rs. 1Crore required to filled annual return within 3 months of completion and present P/L account and Balance sheet.

If notice is given to any trader or manufacturer by commissioner then he is liable to file the return.

Audit assessment notice can be given to tax payer if required by self assessment.

If turnover is more than Rs. 1crore then audit of account book is required by CA, Cost Accountant and sales tax practitioner within 6 Months of year completion.

In case if tax transaction both is registered than tax invoice is compulsory.

In case if tax invoice is not required to give then retail invoice is provided by seller if transaction amount is more than Rs. 100

Lump-sum tax payer cannot give tax.

Every liable tax payer is required to give of account for the period of 8 years.

VAT is imposed on goods only and services and it has replaced sales tax. Other indirect taxes such as excise duty, service tax etc…, are not replaced by VAT.

VAT is implemented at the State level by state Governments. Vat is applied on each with a mechanism of credit for the input VAT paid.

THERE ARE FOUR slabs of VAT

0% for essential commodities1% on bullion and precious stones.4% on industrial input and capital goods and items of mass consumption.ALL other items 12.5%Petroleum product, tobacco, Liquor etc… attract higher VAT rates that vary from state to state.

MEANING OF CASCADING EFFECT OF TAX

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In modern production technology, raw material passes through various stages and processes till it reaches the ultimate stage e.g. steel ingots are made in steel mill. These are rolled into plates by a re-rolling unit, while third mfg. makes furniture frim these plates. Thus, output of first manufacturer become input for second manufacturer. If a tax is based on selling price of a product, the tax burden goes on increase as raw material and final product passes from one stage to other.

VAT AVOIDS CASCADING EFFECTSystem of VET works on tax credit method. In tax credit method of VET, the tax is levied on full sale price, but credit is given on tax paid on purchases. Thus, effectively tax is levied on value added; Most of the countries have adopted ‘tax credit’ method for implementation of VATIllustration of tax credit method to avoid cascading effect

Transaction without VAT Transaction with VATDetails A B A BPurchases - 110 - 100Value Added 100 40 100 40Add Tax 10% 10 15 10 14Total 110 165 110 154

‘B’ is purchasing goods from ‘A’. In second case, his purchase price is Rs.100 as he is entitled to VAT credit of Rs.10 i.e. tax paid on purchases. His invoice shows tax paid as Rs.14. however, since he has got credit of Rs.10, effectively is paying Rs.4 which is in proportion to value added by him.

REGISTRSTION UNDER VAT

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Under the VAT act, provision are therefore registration as per the section 21 of the dealer on his becoming liable to pay tax for voluntary registration as per the sec22 of the act the application can be done in the form 101.Under the earlier low apart from getting of registration number, there were provisions for obtaining recognitions certificate, license and permit. But under the VAT act as there are no documents from the turnover of sales like sales against from-19 etc. no such other docs are required nor any provision for such docs. Under this act also the deposit of Rs. 25,000/ is there for voluntary registration.However, there is one glaring difference that under the earlier law such deposit was to be used for adjustments against tax, penalty interest. If any, payable by the dealer according to the returns furnished by him in that year in which the amount is deposited and in the year immediately succeeding, balancing left after adjustments was to be refunded to the dealer after two years.Under the VAT act the dealer can in his return to be furnished adjust the amount so deposited against his liability to pay tax, penalty and interest, under the earlier law if there was any unadjusted balance it was requiring to be refunded after 2 year to the dealer. No such provision in under this VAT act.

FORMS UNDER VAT

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Form no Particular101 Application for VAT registration.101A Addresses of other paces of business, branches, go downs within the states.101B Addresses of other paces of business, branches, go downs outside the state.101C Applicant has to disclose his benefits in other businesses.101D In case of partnership firm every partner’s detail.101E Mention the information like production capacity, machines, manpower etc. at

the time of application for registration as well as at the time of filling returns.102 Registration Certificate.103 Application for the cancellation of registration.104 Notice for cancellation of registration.105 Security under section 28.106 Declaration for the appointment of manager.107 Declaration about the detail of the bank account. 108 Returns for getting the tax credit of the stocks on 31st March, 2006201 Monthly return.201A Details of sales bills in contest of form 201.201B Detail of tax invoices in context of form 201.201C Detail of goods at go downs for which trader make transaction. 202 Quarterly return [lump-sum]202A Details of tax invoices in context of from 202.203 Monthly return for the trader having tax free certification.204 Monthly return for the trader having late tax payment certification.205 Annual self assessment return.206 Application for getting the permission for filing return for different place of

businesses at different places.207 Chillan208 Notice for filing return for non registered traders.209 Application for exemption for filing return {in case of trading only tax free

goods} 210 Application for choosing to pay lump-sum tax.211 Permission for paying lump-sum tax. 301 Notice for provisional assessment.302 Notice for audit assessment.303 Notice for re-assessment.304 Provisional assessment, audit assessment or reassessment order.305 Demand notice.306 Application for provisional refund.307 Refund/interest payment order.308 Refund adjustment order.

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401 Notice for submission of account books, proofs etc.402 Driver has to keep declaration related to goods at the time of transportation.403 Same as above[ but only those goods announced by commissioner] 404 Application for getting transit passes.405 Transit passes.501 Memorandum for 1st and 2nd appeal.502 Application for revision.503 Notice to those individuals who are affected due to appeal & revision.601 Application for adding name in the list of tax practitioner.602 Form of tax practitioner list.603 Authority given to the chartered accountant, coat accountant, sales tax advisor

and legal practitioner.604 Authority given to relatives to remain present at the time of procedures.701 TDS exemption certificate.702 Statement to the contractor to the sub-contractor.703 TDS certificate704 Yearly declaration of contractor.

PAYMENT METHOD OF VAT

Two type payment method1. LUMP-SUM

In case of lump-sum payment of VAT, ITC is not available.Rate of ITC is 2%But GNFC cannot go for this scheme as it only for retailers having turnover of Rs 50 lacks p.m. or lessUnder this scheme, retailer has to file returns every quarter.

2. RUNNING SYSTEMUnder running system of paying VAT, different rates of VAT are applicable and ITC is also not available.GNFC comes under this system of paying VAT as it is a manufacturing company.

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BENEFITS OF VATBusiness friendly system of taxation.Is simple, transparent and progressive tax.Eliminates “tax on tax” of existing system.Places greater emphasis on self assessment by the dealers.Reduces effective tax rate on many goods.Includes input tax credit.Decreases number of forms.There will be growth in export.In case of export refund will be paid within three months.

HIGHLIGHT OF GUJARAT VAT ACTIt is called value added tax act, tax introduce in India 1st April 2003, and implement in

Gujarat from 1st April 2006.APPLICABLE RATES OF VAT

RATES OF TAX ITEMS0% Exempted goods [essential items for

consumption]1% Gold, Silver, Jewelry etc….4% Industrial inputs, raw materials etc….12.5% All other items which are used by consumer.

DIFFERENT STAGES OF VATVAT RATE: RAW MATERIALS-12.5% FINISHED GOODS- 12.5%

FIRST STAGERaw material producer

Inputs Sale price Tax charged Tax already paid Nat VAT payable0 1000 125 0 125

SECOND STAGEManufacturer

Purchase price

Value addition

Sale price Tax charged Tax already paid on inputs

Net VAT payable

1000 1000 2000 250 125 250-125 =125

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THIRD STAGEWholesaler

Purchase price

Value addition


Net VAT payable

2000 100 2100 262.50 250 262.50-250= 12.50

FOURTH STAGERetailer

Purchase price

Value addition


Net VAT payable

2100 420 2520 315 262.50 315-262.5= 52.50

VAT in case of exporterCost Price=10,000Sale Price=12,000Input tax=1250VAT=0So exporter will get refund of Rs.1, 250/-

VAT in case of manufacture of tax-free goodsCost Price=Rs.50, 000Input price=Rs.6, 250Sales Price=Rs.70, 000VAT Payable=0

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COMPARISON BETWEEN VAT AND SALES TAX

SALES TAX VALUE ADDED TAX

Tax levied at the stage of first sale (only for cotton, leather, and natural gas at final stage)

Tax collected at each point of sale.

Successive sales of goods on which tax is already paid do not attract tax.

Tax collection at every point of sale and tax already paid by the dealer at the time of purchase of goods will be deducted from the amount of tax paid at the next sale.

Dealers reselling goods on which tax has already been paid do not collect any tax on resale and file nil return.

Dealers reselling tax paid goods will have to collect VAT and file returns and pay VAT at every stage of sale.

Computerization of tax liability is complex. Transparent and easier.Returns and challan are filed separately and in return dealers have to give numerous details. Security of returns is also difficult.

The return and challan will be filed together in a simple format after self assessment done by the dealers he which will be subject to scrutiny.

Tax only on goods Tax both on goods and services.Panel provisions for defaulters and evaders of tax not very strict.

Penalties will be stricter.

EFFECT OF VAT ON GNFC’S PRODUCTS

AERA POSITIVE EFFECT NEGATIVE EFFECTFERTILIZER Rate of tax will reduced to

4% input tax credit will beavailable raw material,processing material,packaging, packaging goodsAnd capital goods. PurchaseTax u/s 158 on BT is removed.

If fertilizer is exempted from VAT then no input tax credit will be available credit on LSHS, natural gas and naphtha is not available onFertilizer.

INDUSTRIAL PRODUCT

Input tax credit will be available on raw material, processing material, packing material and capital goods purchase tax u/s 15B on purchases used in BT are removed.

Interstate sell will affect as the buyers will purchase from their respective states to get input tax credit.

IT PRODUCTS Input tax credit will be Interstate sell will affect as

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available. the buyers will purchase from their respective states to get input tax credit.

1.3

THEORETICAL FRAMEWORK

Indentifying variables% of Vat Tax. [Vat is the dependent on sales]% of other direct tax.Government.

Parameters for allowing ITC

What are the parameters on the basis of which purchases made by a dealer are evaluated for claiming of ITC? The GVAT, apart from laying down various general conditions, provides for specific conditions as well. Conditions to be complied are with regard to the nature of goods, its utilization etc., GVAT also connects it with the nature of business as well. It should be remembered that it is not that each and every purchases made by the dealer will make him entitle for claiming of ITC. S. 11(3)(a) lays down seven different purposes for which the dealer should have made the purchases.

“…. Tax credit to be claimed under sub-section (1) shall be allowed to a purchasing dealer on his purchases of taxable goods made in the State, which are intended for the purpose of …………………….…”.

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LITERATURE REVIEW

Expert have given Opinion on this topic that study is better for GNFC. Because of all company have pay the tax we all know how to cost cut from the goods & less pay the tax to government. Altimetry all benefit taken by the consumer.

FEATURES OF VAT

1. Tax levied and collected at every point of sale.

2. Tax collected at every point of sale and the tax already paid by the dealer at the time of purchase of goods will be deducted from the amount of tax paid at the next sale.

3. Dealers reselling tax paid goods will have to collect VAT and file returns and pay VAT at every stage of sale (value addition)

4. It is transparent and easier.

5. VAT dispenses with such forms and sets off all tax paid at the time of purchase from the amount of tax payable on sale.

6. The returns and the challan are filed together in a simple format after self assessmentDone by the dealer himself

7. At the most a few forms are required.

8. Tax on goods and services both.

9. Self assessments by dealers.

10. Penalties will be stricter.

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LIMITATIONS

In past research only calculated GNFC vat calculate method not deduction.Not explain consumer benefit. In Past report do not write How to take more credit for tax payment from Government. In past research do not disclosed future planning.Lastly, due to shortage of time it is not possible to cover all the factors and details regarding the subject of study.Do not compeer the past data [how many more tax pay to government].India being a Federal Republic country has state level administration of the local sales tax which is being replaced by VAT and had been the reason for deferment of its implementation time and again.Inherently there are certain limitations of VAT due to which it being opposed by some of the trade associations. Moreover VAT undoubtedly has many advantages but without taking note of the limitation of VAT, one is just looking only at one side of the coin. The limitations of VAT are discussed hereunder.

1. Detailed Records: Like any other system VAT is also not free from all evils. Though on record it is said to be the simplest method, however, it is more complicated than a simple first point tax. Many small dealers maintain only primitive accounts and it is very difficult for them to keep proper and detailed records required for VAT purposes.

2. Cause Inflation: It is also argued that VAT causes inflation. Its impact will depend on various factors such as inventory holding period, demand supply position of that particular product, number of intermediaries etc. Investment in stock is bound to increase as tax will be paid at the time of purchase, hence one will have to carry tax paid stock.

3. Refund of Tax: Credit of tax paid on inputs/capital goods is available to be utilized against tax liability which will be calculated on the sale of final product. VAT credit cannot be availed if no tax is payable on final product being exempt or taxable at lower rate.

4. Functional Problems: The functional problem of VAT is that input tax credit is allowed on the basis of the invoices issued by the dealer. In respect of invoices where tax at the earlier stage is charged and collected, but not remitted to the State by the concerned dealer, the dealer who has paid the tax and who is entitle to take credit for the tax paid should not be made to suffer. Provisions to protect the interest of the dealers who have paid the tax should be made.

5. Increase in Investment: Dealer will be making purchases after paying tax, therefore investment in stock will go up the extent of tax paid. Under old system the dealer was making purchases against statutory forms, hence was not liable to pay tax on it’s purchases.

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6. Not Credit for Tax paid on Interstate Purchases: The biggest problem of introduction of VAT is the non availability of credit for tax paid on interstate purchases in initial years. It will also result in some cascading effect, which goes against the basic spirit of VAT.

7. Audit under VAT: Most of the states introduced VAT on 1.4.2005 and they have incorporated audit provisions in the Legislation itself. Audit under VAT is important for better and effective implementation of the VAT system.

METHODOLOGY USE IN PAST RESEARCH In past research researcher used DESCRIPTIVE METHOD because they made general report on VAT.

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Chapter – 22.1.

COMPANY PROFILE

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GENERAL INFORMATION

Name of company :

GUJARAT NARMADA VALLEY FERTILIZERS COMPANY LTD

Forms of business organisation:

Public secter company

COMPANY AUDITER

M/S R S PATEL & COMPANY

COMPANY SECRETEY

R B PANCHAL

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A) HISTORY OF GNFC The Company was incorporated on 10th May 1976, in Bharuch, Gujarat.

The Company was promoted by Government of Gujarat and Gujarat State Fertilizers Co., Ltd. (GSFC). The Company Manufacture chemical fertilizers, particularly ammonia and urea and petrochemicals.GSFC entered into a supply and engineering contract with Lined Which was subsequently transferred in the name of the Company? Under this Agreement, Lined was to supply all the imported equipments to the Company for its ammonia plant. GNFC started its manufacturing and marketing operations by setting up in 1982, one of the world's largest single-stream ammonia-urea fertilizer complexes. Over the next few years, GNFC successfully commissioned different projects - in fields as diverse as chemicals, fertilizers and electronics.

A letter of intent was received for the establishment of a nitro phosphate plant with a capacity of 1,42,500 tones per annum, a calcium ammonium nitrate plant with a capacity of 1,42,500 tones per annum and a concentrated nitric acid plant with a capacity of 33,000 tons per annum.

- The Company undertook a project to manufacture 30,000 sq. metres. per annum of printed circuit boards. For this purpose, a Memorandum of Understanding was signed with PCK technology division of Kollmorge, U.S.A.

- Forfeiture on 1,825 No. of Equity shares annulled.

1981 - 2,530 shares subscribed for by the signatories to the Memorandum of Association, 2, 31, 41,010 shares allotted to Gujarat Govt. 2,22,50,000 shares allotted to Gujarat State Fertilizers Co. Ltd., 1,50,00,000 shares reserved and allotted to NRIs and NRI investors from Oil Exporting Developing countries with repatriation rights and 50,00,000 shares reserved and allotted to agriculturists, co-operative societies, directors, employees of the Company and business associates.2,36,06,460 shares offered at par to the public in May 1981.

1986

- Agreements were entered into with Toyo Engineering Corporation of Japan, for the acquisition of technical know-how, basic engineering and imported equipments, etc for this expansion.

- A letter of intent was received for the manufacture of 10,000 tons per year of formic acid.

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- An EPABX project with a capacity to manufacture 20,000 lines of digital electronic automatic exchange with C-dot technology was commissioned at Roopnagar, Valia. The Company undertook to produce an enhanced model i.e. V - III system of EPABX.

- The Memorandum of Understanding for the project was signed with Mozak International Inc., and a new Company in the name of `Emirates Narmada Industries p.l.c.' was registered in U.K.

1987

- Agreements were signed between M/s. Lurgi of W. Germany and the joint venture Company U. Emirates Narmada Industries PLC.

1991

- "Narmada Chematur Petrochemicals, Ltd.", was incorporated jointly with Chematur AB and IBI Chematur as equity partners, for the implementation of 10,000 TPA TDI and 20,000 TPA Aniline projects with Du-pont technology provided by Chematur AB.

1993

- `Gujarat Narmada Auto Ltd.' (GNAL) is a wholly owned subsidiary of the Company which is manufacturing two-wheelers three-whalers.

- As at 31st March, all the 51,55,207 No. of equity shares of Rs 10 each were held by the holding company, i.e. Gujarat Narmada Valley Fertilizers Co., Ltd

1997 - The Company undertook to expand the plant's capacity by putting up a new plant of 100 million tons per day capacity with an investment of Rs32cores. - The Company undertook to set up a third gasified train to augment ammonia capacity by addition of 20,000 MTA of additional ammonia at a cost of Rs 50 cores.- The Gujarat Narmada Valley Fertilizers Company (GNFC) is seriously contemplating withdrawal from Videocon Narmada Electronics Limited,GNFC's joint venture with the Videocon group.- The Bharuch-based Rs 1,200 core Gujarat Narmada Valley Fertilizer Co Ltd (GNFC), market leader in acetic acid, methanol and formic acid, is doubling its acetic acid production capacity from 50,000 to one lace tones per annum (TPA) in technical collaboration with B P Chemicals of the UK.

1999 Gujarat Narmada Valley Fertilizers Company (GNFC) is considering a proposal to market products of BP Chemicals, UK through its vast marketing and distribution network.

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2001. - Mr. Sudhir Mankad has been appointed as Director on the board effective from October 24.

- The Company has commissioned its international private leased circuit (IPLC) at its GNFC Info tower in Ahmadabad.

2004

-Delists the equity shares from Ahmadabad & Delhi stock exchanges

-Gujarat Narmada Valley Fertilizers Company Ltd has informed that Dr. Manjula Subramanian has resigned as a director of the Company with effect from August 5, 2004

2008

-Gujarat Narmada Valley Fertilizers Company Ltd (GNFC) has appointed Shri. T Natarajan as Director of the Company w.e.f. August 28, 2008.

2009

- Gujarat Narmada Valley Fertilizers Company Ltd (GNFC) has informed BSE about the change taken place in the Company's Directorate: - Name of Director: Shri. D Rajagopalan, IAS - Date of Appointment or Change: January 21, 2009 - Brief Particulars of change: Ceased to be a Director vide resignation.

Gujarat Narmada Valley Fertilizers Company Ltd (GNFC) has informed BSE about the change taken place in the Company's Directorate as mentioned hereunder :

- Name of Director : Shri. Guruprasad Mohapatra, IAS

-Date of Appointment: July 28, 2009.

- Brief Particulars of Change: The Board has at its meeting held on July 28, 2009 taken note of the nomination of Shri Guruprasad Mohapatra, IAS, Managing Director, Gujarat Alkalies & Chemicals Ltd as Government Director and has appointed him to hold additionalcharge of the post of Managing Director of the Company effective July 01, 2009

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B) GROWTH & DEVELOPMENT There is more to GNFC than what meets the eye. Fertilizers business is only a part of the company's growing sphere of activities. In fact, industrial chemicals have been the dominant driver of growth for the GNFC during the recent times. GNFC has also made a foray into the arena of e-security towards potential future growth in the info tech sector. At GNFC, the quest for the growth is inherent and insatiable. The tradition of high production levels and growth is envisioned clearly.

As a part of an evolved strategic thrust, the focus is on consolidating and driving growth through core competencies., absorbing technologies from the world's leading technology providers and latching on to business areas with high potential. Fresh and dynamic business outlook is in the DNA of GNFC.

GNFC has to its credit a dedicated, committed, creative, innovative and motivated workforce. The management and the employees at all levels and therefore the company have been able to withstand the challenges in its journey of over 30 years.

The company has evolved into multi location, multi plant, multi product, multi service and multi Core Company in the business of manufacturing fertilizers, chemicals, and industrial gases

The company has developed excellent marketing network across India independently for fertilizers and chemicals.

GNFC has in-house research and development capabilities and researchers have developed various market-oriented products such as highly popular water-soluble fertilizers.

Ant hygroscopic Coating Agent for ANP and CAN Fertilizer granules

Purified Calcium Nitrate of Fine Chemical Grade

Urea-Ammonium nitrate liquid fertilizer

New fluorescent material for cyclone Bag testing

32


C) Milestones & Achievement of GNFC in Industrial Chemicals:

First Methanol Plant was set up in 1985, Second Plant in 1990 & Third Plant was commissioned in 2006. Total production capacity is about 180,000 MT/Annum.

Commissioned 5,000 MTPA Formic Acid plant in 1989. Present capacity 10,000 MT/Annum.

Set up of 33,000 MT/Annum Concentrated Nitric Acid plant in 1989. Capacity doubled to 66,000 MT/Annum in 1998.

Commissioned Weak Nitric Acid plant in 1990 with original capacity of 2, 07,900 MT/Annum which has been further increased to 2, 47,500 MT/Annum in 2001.

Commissioned 50,000 MT/Annum Acetic Acid plant in 1995. Capacity doubled to 100,000 MT/Annum in the year 2002.

Started Aniline production in 1995 with the capacity of 20,000 MT/Annum, which has been increased to 35,000 MT/Annum.

Commissioned Toluene Di-Isocyanine plant with installed capacity of 10,000 MT/Annum in 1995. The present capacity of the plant has been revised to 14,000 MT/Annum since 2007.

GNFC is India's largest producer of Formic Acid, Acetic Acid, and Methanol & Aniline. Aniline is the largest single-stream plant in the country; the TDI plant has a singular distinction of being the only one of its kind not only in India but entire South East and West Asia. The company is credited to be India's only manufacturer of Glacial Acetic Acid by the cutting-edge Methanol route. Besides this, co-products, Nitrobenzene, Nitric Acid, Hydrochloric Acid, Meta Toluene Diamine and Ortho Toluene Diamine (OTD) are also well accepted in domestic and international markets.

GNFC has been running all chemical plants at more than 100% capacity utilization to generate best value for money to all stakeholders of the company. The company has contributed in setting up of a large number of small & medium downstream chemical manufacturing units providing employment & income opportunities to a large section of the society in the state. The industrial chemicals manufactured by GNFC are used by a wide range of manufacturers, processors and chemical operators in India and abroad. Production of Industrial Chemicals by GNFC increased from 0.21 Lacks MT during 1986-87 to about 9 Lacks MT during 2008-09 an increase by 43 times in 22 years. Turnover of Industrial Chemicals by GNFC has increased from Rs. 116 Cores in 1991-92 to Rs. 1,066 Cores in 2008-09.

33


AWARDS

National Safety council, USA Good safely Performance

National Productivity Council Best Productivity-First, Second & Third Prizes, Best Productivity for Nitrogenous Fertilizers

Federation of Indian chamber of commerce & industry: Best Environment Preservation & Pollution Control

Indian Chemical Manufacturers Association: Environmental Control & safety

Fertilizer Association of India: For research paper

Best Technical Innovation – pure CO2 enhancement scheme in ammonia plant

Best Technical Innovation implemented in fertilizer industry(twice)

Best overall performance of an operating unit for P205 in complex fertilizers

All India Organization of Employers: Outstanding Contribution in the fiend of Industrial Relations

National Energy Conservation Award, Department. of Energy, Government of India: Energy Conservation Award, Second Prize

Government of India: Award for Energy Conservation Award

National Suggestion Scheme: Two awards for the company, one for the employee

India National Suggestion Scheme: Prizes in different years, Excellence in Suggestion Scheme for The company, second prize to the employee

34


Texaco Development Corporation, USA: Licensee of the year for operating gasifies on more than rated capacity for over a decade

Labor & Employment Department , Government of Gujarat: Shram bhushan Award & Rana Shram Ra Ratna Award to the employees

Indian Institute of Chemical Engineers: ICI Award for Excellence in process/Product Development

Department. Of Scientific & Industrial Research, Ministry of Science & Technology, GOI FICCI: National Award for R&D efforts

World Environment Foundation: Golden Peacock Eco Innovation Award

Fertilizers Association of India: Transfer of Improved Award for the best technology Award at the national level

Computer society of India: CSI-Nihilist e-Governance Award for the best technology implementation for e- Governance projects

The Government of Gujarat Project eProcurement handled by code Solutions-A Division of GNFC Ltd. Has won the CSI-Nihilist e-Government Award 2006-07 in the category of government to Business. Award ceremony held at Bangalore on December 1, 2007 at 42nd computer Society of India.

35


ACHIEVEMENTS SET UP THE WORLD’S LARGEST SINGLE STREAM,FUEL OIL BASED

Ammonia- Urea plant

All fertilizer under the name of Narmada, Along with extensive support activities, have been well accepted by the country’s farmer community.

Indian’s largest producer of Formic Acid, Acetic acid and Methanol.

India’s only manufacture of Glacial Acetic through the cutting-edge methanol route.

Indian’s largest single stream plant of Aniline.

The only manufacturer of toluene Di-isocyanine in south East Asia.

Record capacity utilization in all plants, defying the vintage through ingeniously innovative maintenance measures.

Development of the first indigenous, eco-friendly technology for H2s removal, CATSOL, a much awarded product of the company’s R&D labs.

36


Vision & Mission

Vision To be technology driven, environmentally responsible joint sector company manufacturing fertilizers, commodity and Specialty chemicals maintaining highest standards of operational excellence and innovation for creating sustainable value for all stakeholders

Mission

We shall be the leading provider of chemicals and agricultural inputs through adoption of state of the art technologies and business processes.We shall have a firm commitment to quality, environment, health and safety.We shall Enrich human resources and promote teamwork, innovativeness and integrity.We shall achieve sustainable economic growth based on corporate excellence driven by ethical business practices, professionalism, and dynamism and social responsibility.

Values • Strong Commitment towards clean environment and social services.

• Hard work, Discipline, Integrity, Honesty, Dedication, Mutual respect and Transparency.

• Strong commitment to quality of products and customer services.• Promotion of creativity and professionalism through HRD.

37


D) Who’s who? BOARD OF DIRECTORS

Shri A.K.Joti

Shri M.M. Srivastava

Shri D.J.Pandian

Shri P.N. Roychaudhari

Shri Pankaj Kumar

Dr. TT Ram Mohan

Shri D.C.Anjaria

Dr.Ashok Shah

EXECUTIVE DIRECTORS

Shri J.S.Kochar

Shri K.C. Jatania

Shri A.D. Modashia

38


2.2

INDUSTRY PROFILE

39


A) Competitive scenario

CHAMBALGNFC

IFFCO

KRIBHCO

GSFC

NAGARJUNA

RCF0

1000000

2000000

3000000

4000000

5000000

6000000

Production (MT)

Production (MT)

(1) Modification of technology – In which company take the decision for the taking a new technology & invested their money power in to the modification of the company & there new technology equipment

(2)Expansion of business – For expansion of the business GNFC, expanded their business in to Different area of the business in which included industrial product, Information technology product 7 also in to the fertilizer product.

(3)New Projects – Here GNFC take a decision for taking a new project & always work for the new project new GNFC work as new project of 1200Rs. More in the Dahej . Name if project TDI

(4)Power marketing network- for the competitive scenario GNFC make their good & effective marketing network and they always work for

40


improved their marketing network for their business.(5)Qualitative control & management – for the quality control GNFC

always work to maintain the quality they always check there finish good in there Lab than after they are sold it in to the market.

(6)Effective used of man power- For the use of man power they have a skilled worked and they also have knowledgeable person & they always work with their full efficiency and give maximum work to the company.

B) Market Share

37.8938

4.62157

0.43

13.361

21.013

22.685

Market Share

GNFCGSFCFI&BankFFIS(GOR)NRI&ocbPublic

41

Company name Market Share (%)GNFC 37.8938GSFC 4.62157FI &Bank 0.43FFIS(GOR) 13.361NRI &ocb 21.013Public 22.685


C) Industry Life Cycle & Growth

INTRODUCTION

The fertilizer plant was established in 1906 in Tamil Nadu. (Ranipat in Chennai)

The growth of the fertilizer industry began in 1951 with plant establishment by Fertilizer Corporation of India. The constant demand of fertilizer resulted in Green Revolution and lead to spreading of industry in industry in several parts of India. Today, Tamil Nadu, Uttar Pradesh, Gujarat, Kerala and Punjab produce over half of the total produce of fertilizer required in India. Apart from them, Andhra Pradesh, Rajasthan, Orissa, Bihar, Assam, Maharashtra, Rajasthan, West Bengal, Madhya Pradesh, Delhi, Goa and Karnataka are also important producers of fertilizers. The ease of obtain ability of natural gas resulted in the wide spread of the fertilizer industry. India produces nitrogenous nearly 11 million tones, phosphate 4 million tones and potash fertilizers to 1.7 million tones. The country imports potassium from abroad.

42


Requirement of FertilizerFertilizer sector is a very crucial for Indian economy because it provides a very important input to agriculture.India is the third largest producer and consumer of fertilizers in the World after China and the United States.The government exercised extensive controls on the pricing, distribution and movement of fertilizers.The combined cost of feedstock and fuel accounting for anywhere between 55 and 80per cent of cost of production, depending on the type of fertilizers.

Future Outlook The fertilizer sector in last few months has shown some upward trend on the ground that government may come out with policies favoring the sector which would provide boost to the companies in this sector. We are bullish on the sector with the time horizon of 1-2 years and expect that sector would outperform the broad market in coming years.

GROWTH I ndia fertilizer industry is one industry with immense scopes in the future. India is

primarily agriculture oriented country and its economy is highly dependent on the agrarian produce.

Presently there are 57 large fertilizers plants in the country producing urea, DAP, Complex fertilizer, Ammonium Sulphate (AS) and Calcium Ammonium Nitrate (CAN).

MATURITY YEAR DEAMAND & SUPPLY2002-03 196662003-04 205732004-05 214192005-06 222642006-07 23133

43

Developments pertaining to different industries are being made on a massive scale to change the country's economy from an agrarian one to a industrial one. It is extremely important for the fertilizer industry India to have development in terms of technologically advanced manufacturing process and innovative new-age products. In the present scenario, there are more than 57 large and 64 medium and small fertilizer production units under the India fertilizer industry. The fertilizer industry in India with its rapid growth is all set to make a long lasting global impression.


D) Industry Spectrum (1) Ammonia

445500 MTPA (INSTOLE CAPACITY)Technology- Linele ag, Germany, Texaco, USA, BASE, GERMANY, DenmarkUse- In the manufacture of urea, ammonium, nitro phosphate, weak nitric acid.

(2) UREA 6, 36,000MTPA (INSTOLE CAPACITY) Technology- snamprogetti, Italy Uses – convenient for foliar application on plant can copy equally effective for all kinds of soil and crops.

(3) Acetic acid

Glacial (99.85%)

1, 00,000MTPA the country’s largest capacity

Technology – BP chemicals, UK, the only manufacturer in the country to employ methand route

Uses – in the manufacture of acetic anhydride vinyl / acetate monomer (vam) purified terephthalic acid (pta) monochloro, acetic acid acetates & diselene derivatives etc………..

(4) Methanol (99.85%) 1, 80,600 MTPA the country’s largest capacity Technology – ICI, UK product conforms to highest purity grade of us federal AA Uses – acetic acid, formaldehyde, MTBE, DMT, TAME, pharmaceutical

44


(5) Formic acid (85%) 10000 MTAP the country’s largest capacity Technology – kemira oy, Finland high quality product formic acid though monthly formate route Uses – rubber& rubber chemicals, leather& textile industry, intermediate in the man of bags, durgs & chemicals.

E) Government Rules & Regulation Period Policy Specifics1957Before 1970

Fertilizer Control order Price Control

Distribution Control

Price and Distribution ControlControl of straight nitrogenous fertilizers including urea, ammonium sulfate and CAN (1966), no or irregular price controls of other fertilizers

Gradual decrease of distribution control, no area-wise price and distribution control (ceiling price only) since 1968

Oct. 1970Around 1970

Distribution Control Pool used to account for individual cost structure of plants (different retention prices)

1973 Re-Introduction of Distribution Control

Fertilizer Movement Control Order, Essential Commodity Act (ECA): Percentage fertilizer under ECA varied from time to time

1974 Fertilizer Pool Equalization charge

Additional charge to pool used to subsidize high costs of importedfertilizer following oil price shock

January 1976 High Power fertilizer Prices Committee

Develop suitable price system: Ensuring higher fertilizer use, financial health and growth of the industry

1977 Review of price Control Review of price control for nitrogenous fertilizers based on the recommendations of the committee

1977 Retention Price System Introduction of retention price system for nitrogenous fertilizers

Feb.1979 Price Control Retention price system (RPS)

45


for phosphate fertilizers such as DAP and other complex fertilizers (NP and NPK)

June 1980 Price Decontrol Price Decontrol of low analysis nitrogenous fertilizers (AS, CAN, ACI)

May 1982 Price Control Retention price system for single superphosphate

Sep 1984to1987-88 Free Allocation of specific Quantities of fertilizer for Rabi & Kharif

Free movement of quantities of single super phosphate & complex fertilizer cost involved over & above the normal freight under ECA allocation

April 1988 Revision of price control Reduction of retention prices and subsidies for nitrogenous fertilizer

July 1991 Price Decontrol Price decontrol of low analysis nitrogenous fertilizers

August 1991 Dual Pricing Policy 30% price increases of fertilizer for big farmers, no price increase for small and marginal farmers

August 1992 Partial decontrol Decontrol of prices, distribution and movement of phosphate and potassic fertilizer, decontrol of low analysis nitrogenous fertilizers,10% price reduction for urea fertilizer

1992 untilMarch 1993

Subsidy Subsidies on DAP, NP, NPK fertilizers

September 1992 Import Liberalization Import of raw material for manufacture of DAP & other complex phosphate fertilizer allowed at lower exchange rate with no customs dutty

1993 Subsidy Continuation of subsidies on domestic phosphate fertilizers, introduction of subsidies on SSP

June 1994 Decontrol Price Increase Decontrol of low analysis nitrogenous fertilizers againUrea prices raised by 20%

2003 – Retention price – cum-subsidy dominated fertilizer scene from 1977-78 to July 92 for all fertilizers and up to march 2003 for urea

46


Chapter – 3

3.1OVERVIEW

OF

47


FUNCTIONAL AREA

A.

48


FINANCE DEPARTME

NT

DEFFRENT SECTION IN FINANCE

1) BILL’S PAYMENT SECTION- Raw material payment - Service payment - Work’s payment

49


- Project payment - Foreign payment

2) MARKETING ACCOUNT SECTION3) COST & BUDGET SECTION4) ESTABLISMENT SECTION5) INSURANCE SECTION 6) INDIRECT TAXIES7) CENTREAL ACCOUNT SECTION8) STORES ACCOUNT9) BANK SECTION10) CONCURANT SECTION

Capital StructurePeriod Instrument --- CAPITAL (Rs. cr) --- - P A I D U P -From To Authorized Issued Shares (nos) Face Value Capital2008 2009 Equity Share 214.75 157.51 155418783 10 155.42

2007 2008 Equity Share 214.75 157.51 155418783 10 155.42

2006 2007 Equity Share 214.75 157.51 155418783 10 155.42

2005 2006 Equity Share 214.75 148.57 146476214 10 146.48

50


Financial Ratio

Particular Mar '05 Mar '06 Mar '07 Mar '08 Mar '09Dividend Per Share 3.75 4.25 4.25 4.25 3.25

Return On Capital Employed (%) 23.58 29.13 25.67 26.86 16.68Return On Net Worth (%) 23.49 25.03 20.79 20.20 11.29Return on Assets Excluding Revaluations 9.68 11.81 12.08 13.02 --

Debt Equity Ratio 0.52 0.23 0.22 0.17 0.18Dividend Payout Ratio Net Profit 28.00 24.08 23.67 20.72 25.97

51


B.MARKETIN

GDEPARME

NT

52


PRODUCT PORTFOLIO

AMMONIA UREA METHANOL FORMIC ACID

2009-10 445500 636000 50000 100002008-09 455217 592284 25769 149702007-08 535478 670290 58539 172902006-07 472305 626192 64143 15355

2009-10 2008-09 2007-08 2006-070

100000

200000

300000

400000

500000

600000

700000

445500 455217

535478472305

636000 592284

670290626192

50000

2576958539

64143

10000 1497017290

15355100000133058

152966

132665

AMMONIA UREA METHANOL FORMIC ACID ACETIC ACID

As we can refer from the above diagram that the main core product of the company is urea and the company focuses more on the production of urea. There was a 8% growth in production of urea from year 2006-07 to 2007-08.

In 2008-09 production decries because same technical problem so as camper of 2007-08 and urea production increase may be next year GNFC has men ten profit line.

53


DISTRIDUTION NETWORK

54

PRIVATE CHANNEL

CO-OPERATIVE

GUJARAT COMMERCIAL MARKET SOCIETY

DISTRICT PURCHASE & SALE UNIT

TALUKA PURCHASE &SALE UNIT

CO-OPERATIVE SOCIETY (RETAILER)

FARMER

TALUKA

DISTRICT PERSON

AREA OFFICE

REGIONAL OFFICE

Gujarat Narmada Valley Fertilizers Company Limited

AREA OFFICEAREA OFFICE

DISTRICT PERSON

DISTRICT PERSON


SALES FORCE

Fertilizer is selling according to government quota and directives.

Industrial product – there is a dealer network for selling the I.P as well as chemicals.

PROMOTION STRATEGIES

PRICE- GNFC has desist at flexibly or minimum price for Farmer.

PROMOTION-GNFC production promote to the advertisement & camp.

PRODUCT-NARMDA UREA, NARMADA KEN, NARMADA FORCE

PLACE- Rural Area & Urban Area

CUSTOMER SERVICE

Help line number(customer care) Give content which quantity & quality use in which type of land. In Rural area take camp for give knowledge How to Use product for more

production? Telemedicine E-education Online services.

55

NARMDA KISHAN MANDAL


Market Share

37.8938

4.62157

0.43

13.361

21.013

22.685

Market Share

GNFCGSFCFI&BankFFIS(GOR)NRI&ocbPublic

Competitor

GSFC

KRIBHCO

IFFCO

NFL

56

Company Name Market ShareGNFC 37.8938GSFC 4.62157FI &Bank 0.43FFIS(GOR) 13.361NRI & Cob 21.013Public 22.685


NAGARJUN FERTILIZER COMPANY

C.HUMAN

RESOURCE

57


DEPARTMENT

Organization structure

58

Managing Director

Executive director

General Manager

Addl. General Manager

Chief Manager

Senior Manager

Manager


Senior managementGeneral manager Executive directorSpecial director

Departments and Function

59

MANAGERIAL FUCTION OPERATIVE FUCTION

(1)PLANNING

(2)DIRECTING

(3)CONTROLLING

(1)PROCUREMENT

-Job analysis

-HRP

-Recruitment

-Selection

-Placement

(2)DEVELOPMENT

-Performance appraisal

-Training

-Executive development

-Career

(3)MAINTENANCE

-Health

-Safety

-Social security

-Welfare Scheme

(4)COMPENSATION

-Job evaluation

-Wage & Salary Administration

-Bonus &

(5)INTEGRATION

-Motivation

-Job satisfaction

-Participation of employees


Staff StrengthHR DEPARTMENT

MARKETING DEPARTMENT

FINANCE DEPARTMENT

RecruitmentEmployee exchange News paper advertisementCampus interviewConsulting agenciesInternal source

Training & developmentFor training purpose GNFC has a separate training center and following types of training are given there.

TYPES OF TRAININGTime managementEffective communication

60

(1)PROCUREMENT

-Job analysis

-HRP

-Recruitment

-Selection

-Placement

(2)DEVELOPMENT

-Performance appraisal

-Training

-Executive development

-Career

(3)MAINTENANCE

-Health

-Safety

-Social security

-Welfare Scheme

(4)COMPENSATION

-Job evaluation

-Wage & Salary Administration

-Bonus &


Personality developmentRefresh courseTechnical trainingBehavior traininghealth & safety training

Performance appraisal The forms are filled by the superiorStaff & below staff levelOfficersManagersManages & above

D.61


CORPORATE MANAGMEN

T

Function

62

Finance

Store Administration

Purchase Human resources

Marketing

Dispatch & logistic


Process

FacilitiesComputerIntranetIntercomCentral air coolerPrinter, FaxInternet

63

Implement

P l a n

&

Design

E

V

A

L U A T E

Asses/ reassessment

Continues

Process


ORGANIZATION & Group structure

64

MD

ED O& M

(Mech, elect, R&D, maint

ED

(Proj, lab, R&D, tech, service

ED material mgt, task force,vigilence,trg center

CS & AGM legal & secretarial

ED marketing operation & maintenance of aniline tdi

ED info tower, it & isd

GM CPG & PROJ, GRUPE


Chapter – 4

Strategic Advantage ProfileSTRENGTH

WORLD CLASS PRODUCTION TECHNOLOGY IS AVAILABLE WITH ALMOST ALL fertilizes plants in country which is based on feed stock naphtha, fuel oil, LSHS (low sculpture high stock), natural gas & coal.This latest fertilizer production techno GNFC BHARUCH, Nogy ensures quality in product as well as continuity in production gas based fertilizer units some of them are KRIBHCO, TATA chemical, aditya birla,rcf,etc.naphta based plants aremcfl manglore,mfl manali. Lshs based units are GNFC BHRUCH, NFL NANGAL, NFL PANIPAT, NFL BHATINDA.

65

ED finance,pension.gratuity

GM Elect Insurance maintance

GM D&C

GM operation(wnacan-I/II ANP fa/aa

GM operation camm, meth-I/IIsggu

GM mech. maint

GM MATERAL MGT, STORE

GM MEDICAL CENTER & SERVICE

GM HR,TRG,SEQURITY

GM IT & ISD GM OPRETION MENTENCE OF ANLINE TDI

GM FINANCE

GM FINANCE

GM ADMINISTETIVE


INDIA is world’s 3rd largest consumer of fertilizer so there are bright chances of expansion of fertilizer units and better application of fertilizer policy.There are ample opportunities for growth in fertilizer consumption rate as population of India increases every year and there by demand for food grains also increases.Fertilizer market is wide for application of various types of fertilizer on variety of crops like vegetables, fruits, cereals and food grains etc.Fertilizer industry is backbone of agriculture sector as agriculture forms the 20% portion of Indian economy GDP so fertilizer policy and its application on fertilizer units plays agrater role in national progress prosperity and economical growth in long run.Agriculture sector provides employment to 65% of work force and earns 16% of India’s foreign exchange as per the record of planning commission. Looking to this fertilizer production and its consumption in agriculture sector has great importance.Fertilizer policy has direct impact on fertilizer industries growth and employment in industrial sector.There is vast distribution net work of fertilizer distribution well spread throughout the country. States like, BIHAR, M.P, RAJSTHAN need further intensification of distribution.A new policy for encouraging production and availability of fortified and coated fertilizers in the country was approved by CCEA on 1st May 2008. The manufactures are now allowed to charge additionally up to 5 % of maximum retail price of subsidized fertilizers to recover the cost of fortification of fertilizers with secondary and micro nutrients. For zincates urea and boronated SSP the ceiling has been kept at 10%.

WEAKNESS

The future and growth of fertilizer indirectly is totally dependent on imported raw material like rock phosphate. various catalyst used in production of ammonia gas which is raw Material for urea, CAN and ANP fertilizer fluctuation in any of this imported raw material in international market leads to higher production cost and negative impact on fertilizer subsidy. The fertilizer manufacturing units many times are dependent on vendors for critical requirement of various equipments and machines.

66


Fertilizer production cost is totally dependent on various fuels like, coal, naphtha, LSHS and cost of which increasing day by day. This higher fluctuation in the pricing of fuels has direct impact on fertilizer production cost.

Indian fertilizer industry as well as agriculture sector has a poor record of research and development work. Due to n this agriculture sector is hardly in a position to reduce the fertilizer.

Most fertilizer plants are located on the coastal areas and the prosperous agriculture areas are off from the coastal areas. This leads to higher transportation cost and delay in delivery of fertilizer product at required location. Transportation cost is part of subsidy in fertilizer policy which gives extra financial burden to Gov. of India. Any fluctuation in railway freight leads to higher production cost of fertilizer.

Since fertilizer is a essential commodity as per essential commodity act-1955 there are various controls by gov. of India on its pricing, production, distribution and sales allocation area.

The consumption of fertilizer is totally dependent on pattern of monsoon and many a times there are serve fluctuation in its pattern which leads to erratic of fertilizer in various parts of country.

Survival and profitability of fertilizer industry is totally dependent on gov. fertilizer policy.

There is no expansion of fertilizer industry since 1999 as there are as many controls and restrictions on fertilizers product due to gov. fertilizer policy , in addition to this the new fertilizer plant investment due to requirement of larger infrastructure like, rail, road, electricity , water as well as larger area for constructing the plant fertilizer storage and transportation facility.The present policy environment is not investment friendly and viability of several existing units will also be adversely affected. A switch over in feedstock from naphtha to LNG for urea is contemplated. High energy cost do not permit further expansions in urea capacity within the country , joint venture abroad are likely to be developed.

67


Environmental threat & opportunity ProfileOPPORTUNITIES

Tax deduction & more subsidies from the government for nearby 0% pollution in economy.

68


As a fertilizer policy Gov. of India should introduce the policy that the specific fertilizer should be used for specific crop only.GNFC used more technology for the production of Urea in market share high value.

There is an ample scope to manufacture fertilizer for specific crop application through research and development efforts.

Agriculture ministry at state level must emphasize the use of bare minimum fertilizer in area where consumption is as good as nil. Since effort in this direction should improve yield of crop even from the land which is having least fertilizer.Ministry of fertilizer and chemicals should think of installing gas based fertilizer plant near Krishna Godavari basin as lot of natural gas has been struck from this are installation of fertilizer plant in this area will have minimum gas transportation charge and ultimate production cost of fertilizer will be very much competitive compared to others plants.

THREATS

Main threat in consumption of fertilizer sector is from nature, environment, global warming erratic monsoon etc.

69


Any adverse change in the Gov. Policy on fertilizer will affect the profitability of existing fertilizer units adversely and may force the closure of few units.About 8 old plants of fertilizer corporation of India and Hindustan fertilizer corporation are closed sindri, durghapur, gorkhapur,etc. all this plants are naphtha based and could not survive due to higher production cost as plant life were almost over and because of higher raw material cost.

Development of alternative source of nutrient like bio fertilizer will reduce the consumption of fertilizer.

Non availability of feed stock natural gas or naphtha may hamper the production of fertilizer such situation may arise due to limited supply of natural gas as wellas rising price of raw material like coal, rock phosphate, FO/LSHS.

Sudden fall in crop of food grains due ti the erratic monsoon, flood situation or large scale import of fertilizer may affect the consumption of indigenous fertilizer.

Long term draught condition affects the consumption of fertilizer adversely. This is regular phenomena in kutch district and parts of saurashtra as well as parts of rajasthan.

Porter’s Five ForcesModel of Competition

70

Threat of

Substitutes


Threat of competitor In GNFC have a list of competitor but they not any type of threat because of Government is handling all activity like sales, price, distribution….etc.

Here only one threat of competitor in GNFC is supply and time delivery of fertilizer product.

Threat of New entrants

If any Fertilizer company entrants but no effaced to GNFC Because of in Fertilizer industry no competitor in India in fertilizer industry

Threat of substitute Today in fertilizer product no one substitute product available.

The bargaining power of suppliers In GNFC only one threat because of company has produce fertilizer on OIL and his competitor use the GAS. So in which no threat but his margin of profit less camper to his competitor

71


Bargaining Power of Buyer

In fertilizer unit no bargaining power of buyer because of product price deseeded by the government so it fixed no bargaining power.

BCG (MODEL)

72


Question Marks

Product development and strategy

For the new product development first GNFC must check the position of current product (old) in the market and then take the review of implementation of new product in market. Now GNFC introduces the product in the market.

Ex = now a days the current production of urea is 6, 36,000 MT & now GNFC wants to introduce CAN in to the market with more efficiency and more effectiveness.

A question mark is ammonia that grows rapidly and as a result consume large amounts cash, but ammonia have low market share so ammonia does not create much profit. The result is large net cash consumption. A question mark has the potential to gain market share and become a star, and eventually a cash cow when the market growth slows. Ammonia it doesn’t become a market leader it will become a do when market growth declines. Question marks need to be analyzed carefully to determine if they are worth the investment required to grow market share.

Stars

73


Market penetration strategy

New product New market in the question marks.

In the GNFC used partitions in market for development of product. First GNFC select the target population after they will introduce the product. GNFC for introduction a product they use advertise in public place, farmer meeting, paint farmers trolley, demonstration, dealer’s development program and slide show, Narmada Kishan Parivar etc.

Also GNFC give same discount and gift to the farmer.

New ammonia becomes a Star. Ammonia generates large sums of cash because of their strong relative market share, but also consumes large amounts of cash because of their high growth rate. So the cash being spent and brought in approximately nets out. If a star can maintain its large market share it will become a cash cow when the market growth rate declines.

Cash Cow Market development strategy

Cash cow position the product of is there maturity level so the products don’t have any time additional expanses or addition investment so from this point company take retune profit.

Urea is give to company maximum profit because of urea stage of High sales. (Cash cow). Urea leaders in a market, cash cues exhibit a return on assets that is greater than the market growth rate – so they generate more cash than they consume. These units should be ‘milked’ extracting the profits and investing as little as possible. They provide the required to turn question marks into market leaders.

DogsDiversification stag in which company divert the production in to the different industry any they wone to divers their business.

In this stage market price less & market growth less. In Dogs Company star a new thinking he diversified or change a market or product because of this product old, damage, traditional, subsidiary product.

GNFC has produce a fertilizer product they divers business In industrial product.

74


VALUE CHAIN

.The value chain identifies nine strategically relevant activities. In which five primary and four support activities- that create value and cost in a specific business

Primary activities are inbound logistics or bringing materials into the business operations or converting them into final products.

Support activities – procurement, technology development, human resource management, and firm infrastructure are handled in specialized department.

The firm’s infrastructure covers the costs of general management, planning, finance, and accounting, legal, and government affairs.

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Inbound logistic

GNFC make order for raw material on Annual basis contract. The contract is for price money which will be same for that time period but they will order the material when there will be need of it. GNFC maid contract with the supplier must be deliver the goods on time.

Operations

GNFC has its own imported Boilers & reactors to mix the raw material and process them for converting them in finish good. With the help of boiler & reactor GNFC produce fertilizer as well as industrial product like acetic acid, nitric acid etc.

Outbound logistics

After converting the raw material into final good we send goods for packing and in packing we take bags with hard polyether. GNFC sold all finish goods to the limited dealers.

From the dealers it sends with proper channel to the consumer.

Marketing and Sales

GNFC had done pre market survey. In view of the international quality our company has become regular suppliers for high profile customers and enjoying the privilege of having a niche market with industry benchmarks. GNFC also take prevention about market situation and market scenario.

Service

As per the product there is nothing to do service in it but we give on time delivery and credit facility to our distributors.

Know how for useFarmer meetingDemonstrationCredit to dealer

76


Chapter – 5RESEARCH METHODOLOGY

5.1 Objectives and purpose of the study

OBJECTIVE

To understand the Gujarat value added tax.To study the actual working and calculation of tax as per vat.To learn about the benefit of vat to the government as well as to the manufacture.Effect of vat in GNFC in Gujarat state.After the research GNFC know how to get more credit from government and how to get more profit in government price policy. .

5.2 Scope of the study, Benefits of the study

SCOPE OF STUDY

If the researchers get all the knowledge about VAT then they can know very well that how can get deduction for all GNFC products from the tax.

BENEFITS OF STUDY

To the GNFC

Reduction in Cost of production.More profitability.Identifying problems in calculation of VAT. More confidence in Stake holders of GNFC.

To the Researcher

Learn the VATWhich place Vat applying and who to calculated VAT.Know about at requirement of government document & who get credit.

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5.3 ASSUMTION

In the research all factor will be same.All Data collect by me is correct.Government may not change police for VAT.

5.4 TYPES OF RESEARCH DESIGN

This research is DESCRIPTIVE research study because this research is totally depending on observation, and examination of records.

(Descriptive research, also known as statistical research, describes data and characteristics about the population or phenomenon being studied. Descriptive research answers the questions who, what, where, when and how...

Although the data description is factual, accurate and systematic, the research cannot describe what caused a situation. Thus, Descriptive research cannot be used to create a causal relationship, where one variable affects another. In other words, descriptive research can be said to have a low requirement for internal validity.)

5.5 METHODS OF DATA COLLECTION

SECONDARY data collection method because all information collected from GNFC, different books, internet, past report etc……

5.6 LIMITATION OF THE STUDY

The research is feasible applied to fertilizer industry of a giant size only.The research studies only one variable of tax i.e. VAT so it cannot cover other parameters like direct taxes which affect the cost of production.

78

http://en.wikipedia.org/wiki/Internal_validity

http://en.wikipedia.org/wiki/Causality

http://en.wikipedia.org/wiki/Causality

http://en.wikipedia.org/wiki/Statistical_population

http://en.wikipedia.org/wiki/Statistics


Chapter – 6

79

NET TAX (PAYABLE/RECEIVABLE) CALCULATION MONTH: MAY 2010NO VAT

ADD VAT CST TOTAL

A TOTAL TAX COLLECTED ON SALES 2560328.65 636655.99 936193.59 4133178.23B LESS TAX CREDIT FOR CLOSING STOCK 0 0

TAX CREDIT 10107877.54 0TAX CREDIT FOR RM & PM (Aniline - TDI Unit) 813792.54 203448.15TAX CREDIT FOR CONSUMABLES & SPARES 450809.65 106955.09TAX CREDIT FOR (LSHS Duty Paid For IP Product) 3874528.88 645754.81TAX CREDIT FOR N. GAS 929132.77 187381.83

TAX CREDIT OF CAPITAL GOODS 525374.58 125955.07

TAX CREDIT ON LSHS USED AS RM FOR NON FERTILIZER PRODUCT 0 0

TAX CREDIT ON LSHS USED AS FUEL FOR NON FERTILIZER PRODUCT 0 0

TAX CREDIT ON NAPTHA USED AS RM FOR NON FERTILIZER PRODUCT 0 0

B TOTAL TAX CREDIT 16701515.96 1269494.95 0 17971010.91

C LESS TAX CREDIT DEDUCTED FOR BRANCH TRANSFER 13914.62 0 0 13914.62

D NET TAX CREDIT (B - c) 16687601.34 1269494.95 0 17957096.29

E NET TAX PAYAMLE (A - D)-

14127272.69 -632838.96 936193.59-

13823918.06

FORM 201( See rule 18 and sub-rule (2) of rule 19)

MONTHLY RETURN UNDER THE GUJARAT VALUE ADDED TAX ACT, 2003Registratio NO 24210100259 date 01-07-2002 Original/RevisedTax Period : from 01-05-2010 to 31-05-2010 If revisedName 0f the Registered dealer : Date of original return :

GUJARAT NARMADA VALLEY FERTILIZER COMPANY LIMITED AcknowledgementAddress: P.O. NARMADANAGER No.

Dist : bharuch – 392015Attach a note explaining the revision

PART ITurnover of Sales and PurchasesDescription Sales (Rs) Purchase(Rs)

1 Total Turnover 116090425.5 255469458.12 Deduct: 0 0

2.1 Exempted from tax under section 5(1) 0 02.2 Exempted from tax under section 5(2) 0 02.3 Branch transfer or consignment to and from outside the State(a) of the goods manufactured 2603760 0(b) other than (a) above 0 02.4 Purchases not qualifying for tax credit as per

0 631984.92section 11 (8) read with section 11 (5)2.5 Reducation as per item 37 of Annexeure III 47446832.95 169589178.72.6 Changes towards labour, services and other charger referred to

0 0


in sub-clause {C} of clause (30) of section 2TOTAL OF (2.1) TO (2.6) 50050592.95 170221163.6

3 Net taxable Turnover (1+2) 66039832.55 85248294.51

PART IIOUTPUT TAX

Rate of tax Commodity HSN Code Turnover Tax Additional

Total Turnover

excluding tax tax Including tax1%4% 62294439.24 2491777.57 622945.77 65409162.584% 0 0 0 0

12.50% 548408.66 68551.08 13710.22 630669.96otherTotal 62842847.9 2560328.65 636655.99 66039832.544.1 Total tax

Tax payable on the purchase of taxable goods under section 9Rate of tax Commodity HSN Code Turnover Tax Additional

Total Turnover

excluding tax tax Including tax1%4%

12.50%Total 0 0 04.2 Total tax

82


PART IIINPUT TAX

5 purchase of capital goods from registered deales 06 purchases of taxable goods other than capital goods from reg. dealers 85248294.517 purchases of taxable goods from a person other than reg. dealers 0

Total 85248294.51Calculation of input tax

Rate of tax Commodity HSN Code Turnover Tax Additional

Total Turnover

excluding tax tax Including tax1% AS PER ANNEXURE-1 0 0 04% AS PER ANNEXURE-1 42556617.26 1621212.81 405084.09

12.50% AS PER ANNEXURE-1 1402982.52 152709.35 28598.4415% AS PER ANNEXURE-1 30476237.39 3890583.5 648430.58

12.50% NATURAL & ASS. GAS 10812457.35 1175367.1 235053.4215% LSHS(FS) 0 0 016% NAPHTHA 0 0 0

OtherTotal 85248294.52 6839872.76 1317166.53

TOTAL(E64 + F64) 8157039.29

Tax payable on the purchases of taxable goods under section 0Tax paid under the Gujarat Tax on Entry of Specified Goods 0

into Local Area Act,2001 (Guj.22 of 2001)8 Total 8157039.29

PART IVTAX CREDITDescription Admissible tax credit (RS)

83


9 Tax credit brought forward from previous period 10107877.5410 Tax credit as per 8 8156939.3Total (9+10) 18264816.84Adjustment of tax on purchases as per Annexure II (+ or -) 011 Gross Tax Credit 18264816.8412 Reduction in Tax Credit:12.1 Under section 11(3)b(i) (other than 12.2 below) 012.2 Under section 11(3)b(ii) (of the goods manufactured) 13914.6212.3 Under section 11(3)b(iii) (of fule used for mfg. of . Goods) 7779.1512.4 Under section 11(5) (foe used in mfg. of goods 0

exempted form tax under section 5(1) and 5(2)12.5 other reasons( Gvg notification for fertilizer) 286026.77

Total (12.1+12.2+12.3+12.4+12.5) 307720.5413 Net Tax credit admissible (11-12) 17957096.3

PART VNet Tax PayableDescription RS14 The amount of Tax payable as per 4.1 3196984.6415 Tax payble on the purchases of taxable goods under sec.9 as per 4.2 016 Total 3196984.6417 LESS 17.1 Adjustment of Tax on sales as per Annexure I (+ or -) 0 17.2 Remission under section 41 0 17.3 Credit u/s 59B(9) of the amount of tax deducted at source (enclose from- 703) 0 17.4 Adjustment of the amount deposited under section 22 0 17.5 Net tax credit as per 13 17957096.3 Total 17957096.3

84


18 Net tax payble (16-17) 019 Excess amount of tax credit (17-16) 14760111.6620 Excess amount of tax credit adjusted against CST 936193.621 Excess amount of tax credit claimed as refund 022 Amount of tax credit forward to the next tax period [19-(20+21)] 13823918.06

PART VIPAYMENT OF TAX RS

23 Amount payble 0 23.1 amount of tax payble as per 18 0 23.2 amount of interest 0 23.3 amount of penalty 024 Amount paid 025 Amount outstanding 026 Amount paid in excess 0

ANNEXURE I (IN RUPEES)Adjustment in sales as per Increase Decrease27 Sub- Section (1) of section 8 0 0 27 Sub-Clause (a) (sale cancelled of sale) 0 0 27 Sub-Clause (b) (alteration in consideration of sale) 0 0 27 sub-Clause [C] (Goods return) 0 028 sub-rule (7) of rule 17 (pertains to transactions throuth commission agent) 0 0 TOTAL 0 029 Net of Sale 0 0 Adjustment in tax on Sale 0 0

85


ANNEXURE II (IN RUPEES)Adjustment in Purchase Increase Decrease30 On account of credit note/debit note 0 031 on account of goods on which right to use such goods is transferred as defined under section (d) of clause (23) of section 2. 0 0TOTAL 0 032 Net of Purchase 0 0 Adj. in tax on purchase

ANNEXURE II (IN RUPEES)Reducation Sales Purchase33 Sales/purchase as specified in sub-section (2) of section 5 of the Central Act. 0 034 In the course of export / inport out of country 0 90861675.5635 sales/purchase as specified in sub-section (3) of section 5 of the Centrel Act 0 036 in the course of interstate trade and commerce other than 47446832.95 78727503.11 branch transfer or consignment

TOTAL 47446832.95169589178.

7

FORM 201 A(List of sale)

86


(See sub-rule (2) of rule 19)List of sales of goods against tax invoice in the stateRegistration Certificate No. 24210100259 Date 01-07-2002Name and Style of Business : M/S. Gujarat Narmada Valley Fertilizer Company Limited (Mfg. of Fertilizer,Chemical & IT productsTax period From 01-05-2010 to 31-05-2010A. List showing sale of goods to registered dealersSr no Tax Invoice No

Date

Name with RC noA Goods Value of goods Tax Add Tax TotalName RC. No

with HSN

1 As per Attached SALES REGISTER 66039797.25 2560328.65636655.9

9 69236781.89234

TOTAL 66039797.25 2560328.65636655.9

9 69236781.89

87


FORM 201 B(List of purchases)

(See sub-rule (2) of rule 19)List of purchases of goods against tax invoice in the stateRegistration Certificate No. 24210100259 Date 01-07-2002Name and Style of Business : M/S. Gujarat Narmada Valley Fertilizer Company Limited (Mfg. of Fertilizer,Chemical & IT productsTax period From 01-05-2010 to 31-05-2010A. List showing sale of goods to registered dealersSr no Tax Invoice No

Date

Name with RC no Turnover of purchases of taxable goodsA bName RC. No Goods Value of goods Tax Add Tax Total

with HSN1 As per Attached SALES REGISTER 85248294.51 6839772.76 1317166.54 93405233.81234

TOTAL 85248294.51 6839772.76 1317166.54 93405233.81

88


CST (Central sales Tax)

FORM_III(B)(See rule 5)

Form of Return under the Central Sales Tax (Gujarat) Rules, 1970MONTHLY RETURN ANNUAL RETURNName : GUJARAT NARMADA VALLEY FERTILIZER COMPANY LIMITEDG.V.A.T. NO C.S.T.R.C.NO Period From Period To24210100259 24710100259 01-05-2010 31-05-2010

Rupees1. Gross Turnover of Sales 116090426Deduct: (A) Turnover of sales within the stste 66039832.55 (B) Turnover of Sales of Goods outside the State 2603760 {C) Sales of Goods in the course of export out of or import into India 0 (D) Turnover of Intre-State sales of goods covered by schedule-I or fully tax exempted u/s 5(2) of the Gujarat Value Added tax, 2003 0 (E) Turnover of Inter-state on which tax is not Leviable under section 9(1) 0 (F) Sales to special Economic Zone under section 8(6) 02. Balance: Intre-State on which tax is leviable in Gujarat Satet 47446832.95Deduct: (A) Cost of freight. Delivery or installation, If seperately changed 0 (B) Value of goods returned within six months under section 8A(1) (b) 0 (C} Tuenover of Inter-State on which no tax is payble 0 (D) Tuenover of Inter-State sales u/s 6(2) 0 (E) Tuenover of sales made u/s 6(3) 0 (F) Sales to special Economic Zone under section 8(6) 03. Total Taxable Inter-State Sales 47446832.95

89


Deduct: Deduction u/s 8A (1) (a) 936193.594. Net taxable Inter-State Sales 46510639.36

Calculation of Central Sales TaxA.Sales Taxable A.Sales Taxable

Under Section 8(1) Under Section 8(2)/8(2)ASr No Tax Rate % Sales Turnover Tax

Sr No

Tax Rate Sales Turnover Tax

1 4% 0 02 1% 0 03 2% 46311279.26 926225.58524 5% 199360.1 9968.005

Total 46510639.36 936193.5902 Total 0 0

5. Value of Goods transferred u/s 6A (1) 6. Amount of Forms for the periodForm type Total Forms used Value of GoodsCEIEIIFHI

7. Total amount payble as Rupees (i) C.S.T 936193.59

90


(ii) Intrest 0 (iii) Penalty 0less : Amount of Tax credit adjusted against local purchases 936193.598. total Amount payble 09. Net Tax payble10. Net Tax Paid11. Net Outstanding - Demand / Refund (Adjustment for excess pmt of VAT)12. Challan No: Form IV (B) (in words ) Rs.13. Calculation of deferment benefits (To be filled in by a dealer to whom deferments benefits have been granted.) (i) Eligibility Certificate No. and date of issue (ii) Exemption Certificate No. and date of issue (iii) Period of validity of the Certificate From To (iv) Total celling, if any, subject to which tax benefits are granted14. Status of deferment (a) Opening balance of celling at the beginning of the period for which the return is filed. (b) less: Total tax deferred for the period covered by this return (c} Closing balance of ceilling at end of the period for which return filed.

The statement contained in this return is true to the best of my knowledge and beliefPlace : Bharuch Full SignatureDate : 22-06-2010 Name: Status:

VAT & CST PAYMENT SUMMERY

91


Before implementation of VAT in GNFC they do not get any type of credit from the Government But after implementation GNFC can get that credit & also get deduction for the Tax payment. Because of GNFC production cost is decreased & from this Tax get credit it a GNFC profit.

In about table some time GNFC make payment on VAT or same time GNFC get credit from Government.

If GNFC can get credit from Government at that time GNFC have same resign just like Shout down, machinery purchase Or repairing and most important is that production is higher purchase for all this resign GNFC get Tax retune(credit) from Government which is over profit.

92

SR.NO

MONTH VAT ADD VAT CREDIT TAKEN

PAYMENT OF VAT

CST TOTAL TAXPAYMENT

1 AUG09 689737.95 310636.97 0 1000374.92 21581967.41 22582342.332 OCT09 79982.53 191495.17 0 271477.7 1104576.51 1376054.213 NOV09 -10442.34 188120.11 10442.34 177677.77 1303856.1 1481533.874 DEC09 -329357.35 108968.25 220389.10 0 1169352.58 948963.485 JAN 10 -8990.57 159651.74 8990.57 150661.16 1154076.83 13047386 MAY10 -14127272.7 -632838.96 14760111.66 0 936193.59 0TOTAL -13706342.48 326033.28 15141604.26 1600191.55 27250023.0

227693625.89


CST ADJUSTED AGAINST VAT

MONTH VAT CSTAUG.09 1000374.92 21581967OCT.09 271477.7 1104576.5NOV.09 177677.77 1303856.1DEC.09 -220389.1 1169352.6JAN.10 150661.17 1154076.8MAY.10 -14760111.66 936193.59

AUG.09 OCT.09 NOV.09 DEC.09 JAN.10 MAY.10

-20000000

-15000000

-10000000

-5000000

0

5000000

10000000

15000000

20000000

25000000

1000374.92 271477.7 177677.77-220389.1

150661.17

-14760111.66

21581967.41

1104576.51 1303856.11169352.58

1154076.83936193.59

VAT CST

93


This competition for the Adjustment of credit of VAT against CST

Here we make a adjustment of the excess credit which we can get from the Government is adjusted against CST & if after the adjustment some excess credit is remaining than if it is shortage of credit than we must be paid that amount to government

In above table we are making payment of VAT for the month of August & also adjusted the credit of VAT against CST in the month of December.

In the month of May we get credit of VAT & Which is adjusted by us against the CST than after it is excess so it will be carried forward to next month.

For December we can get credit because in this month the use of LSHS is very much & it is used in non fertilizer product so we can totally credit from government. So here are must be paid CST Rs.948963.48 actuality CST payment 1169352.58 Rs GNFC take credit 220389.1 Rs (it’s a profit).

94


GOOD & SERVICE TAX

Introduction

The replacement of the state sales taxes by the Value Added Tax in 2005 marked a significant step forward in the reform of domestic trade taxes

in India Implemented Under the leadership of Dr. Asim Dasgupta, Chairman, Empowered Committee of State Finance Ministers, it addressed the

95


distortions and complexities associated with the levy Of tax at the first point of sale under the erstwhile system and resulted in a major

Simplification of the rate structure and broadening of the tax base The state VAT design Is based largely on the blueprint recommended in a 1994 report of

the National Institute Of Public Finance and Policy, prepared by a team led by late Dr. Amaresh Bagchi (Hereinafter, the “Bagchi Report”).1In

recommending a state VAT, the Bagchi Report Clearly recognized that it would not be the perfect or first best solution to the problems of The

domestic trade tax regime in a multi-government framework. However, the team felt that this was the only feasible option within the

existing framework of the Constitution and would lay the foundation for an even more rational regime in the future Buoyed by the success of the

State VAT, the Centre and the States are now embarked on The design and implementation of the perfect solution alluded to in the Bagchi

Report. As Announced by the Empowered Committee of State Finance Ministers in November 2007, the solution is to take the form of a ‘Dual’

Goods and Services Tax (GST), to be levied concurrently by both levels of government The essential details of the dual GST are still not known.

Will it necessitate a change in the constitutional division of taxation powers between the Centre and the States? Will the Taxes imposed by the

Centre and the States be harmonized, and, if so, how? What will be Treatment of food, housing, and inter-state services such as transportation

and Telecommunication? Which of the existing Centre and State taxes would be subsumed? Into the new tax what will be the administrative

infrastructure for the collection and enforcement of the tax? These are issues which ultimately define the political, social, and Economic

character of the tax and its impact on different sectors of the economy, and Households in different social and economic strata

The Current Taxes and Their Shortcomingsthe replacement of the single-point state sales taxes by the VAT in all of the

States and union territories,reduction in the Central Sales Tax rate to 2%, from 4%, as part of a complete

Phase out of the tax,the introduction of the Service Tax by the Centre, and a substantial expansion

Of its base over the years, andrationalization of the CENVAT rates by reducing their multiplicity and

Replacing many of the specific rates by ad valorem rates based on the maximum retail price (MRP) of the products

96


Chapter – 7FINDINGSTHROUGH OUT THIS REPORT WE COME TO KNOW THAT

Ultimately it is beneficial to all that is state government, end user and manufacturer

low cost of production

Government decide the price for fertilizer product

Central govt. had already committed to state govts. To pay the whole amt. of loss which accurse from VAT.

If we think from the view point of manufacturing side in which because of low cost of production they can capture a good market share.

CONCLUSIONSO I HERE BY CONLUDED THAT

The state government interfères a lot in the proces of the taxation.

VAT is good for end user.

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Chapter – 8BIBLIOGRAPHY

GNFC LIBRARYVAT BOOK 2009 MR. J K AGERWALGOVERNMENT LITERATURECOMPANY ANNUAL REPORTGOOGLE SEARCH

WWW.GNFC.IN THE GUJARAT VAT MANUAL 2008 MR.AKHHIT P VAYAS

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http://WWW.GNFC.IN/

kalpesh 26

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