college pawar

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A

PROJECT REPORT

ON

Cash Collection Management

A detailed study done in

Reliance Energy

Submitted in partial fulfillment of the requirement for the award of PostGraduate Diploma in Business Management under Bharati Vidyapeeths

Institute of Management Studies & Research

Submitted by

SWAPNIL SURESH PAWARROLL NO: 46

BATCH: 2008-2010

Under the guidance of

Miss. SUVARNA KULKARNI

Bharati Vidyapeeths Institute of Management Studies & ResearchSector 8, CBD-Belapur, Navi Mumbai 400614


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ABSTRACT

In a business anything done financially affects cash eventually. Cash is to a

business what blood is to a living body. A business cannot operate without its life-blood

cash, and without cash management, there may remain no cash to operate. Cash

movement in a business is two-way traffic. It keeps on moving in and out of business.

The inflow and outflow of cash never coincides. Important aspect which is unique to cash

management is time dimension associated with the movement of cash. Due to non-

synchronicity of cash inflow and outflow, the inflow may be more than the outflow or the

outflow may be more than the inflow at a particular point of time. This needs regulation.

Left to itself cash flow is apt to follow monsoonic pattern, and showers of cash may be

heavy, scanty or just normal. Hence there is a dire need to control its movement through

skillful cash management. The primary aim of cash management is to ensure that there

should be enough cash availability when the need arises, not too much, but never too

little.

(i)


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ACKNOWLEDGEMENT

I express my profound sense of gratitude and sincere thanks to my institute Bharati

Vidyapeeths Institute of Management and Information Technology, Navi Mumbai and

my mentor Prof. Suvarna Kulkarni for enabling us to undertake such an exceptional

project, which made me to acquire good knowledge.

I take the opportunity to thank my project guide Mr. Rajendra Rane, Sr. Manager of A&F

at Reliance Energy for giving me this project topic and incessantly guiding and

supporting me all the way through.

I also want to thank the entire team at Reliance Energy for their assistance and Mr. Jigar

Doshi for his constant support and help.

Signature of the student

(SWAPNIL SURESH PAWAR)(ii)


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EXECUTIVE SUMMARY

Reliance Energy is into a business of generation, transmission, distribution and trading of

power. It distributes over 5,000 MW of power-the largest in the country.

The Report majorly focuses on the study of the Cash collection management of a

Reliance Energy. Reliance Energy has its operation in Mumbai from Bandra

Bhayandar, Kurla - Vikhroli and Kurla Mankhurd and it has given plenty of options to

its consumer to pay their Energy Bills.

The Fund is collected form modes like VDS(Voluntary Deposit Scheme), Internet (debit,credit & ITZ cash card), Pay using Reliance mobile (ITZ cash), ECS(Electronic Clearing

Service), Mail (post), Collection Center, Collecting Banks, Drop Boxes, Easy Bill outlet,

consumer can use any mode as per their convenience. Reliance Energy is also focused on

making its consumer earn while they pay their Energy bills through VDS (Voluntary

Deposit Scheme).

(iii)
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PLEASE PASTE HERE THE CERTIFICATE FROM THE COMPANY

(iv)


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CERTIFICATE

This is to certify that the Project titled CASH MANAGEMENT submitted by

Mr. SWAPNIL PAWARin partial fulfillment of the Post Graduation Diploma in

Business Management for the academic year 2008-2010 from Bharati

Vidyapeeths Institute of Management and Information Technology. Navi

Mumbai.

Signature Signature

Suvarna Kulkarni. Dr. D.Y Patil

Project guide Director

(v)


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TABLE OF CONTENTS

PARTICULARS PAGE NO:Acknowledgem

ent (i)Executive summary (ii)Certificates (iii)

Chapter 1: Introduction of the Project

1.1: Concept & Significance of the Study 11.2: Scope 51.3: Objective of the Study 51.4: Literature Review 5

Chapter-2 Introduction to the Industry

2.1 Introduction to Electricity industry in India 6

2.2 Types of Power 7

2.3 Objectives & Strategies 9


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2.4 Subsidies 10

Chapter-3 Introduction to the Company/Organization

3.1 Overview & Profile 113.2 Vision & Mission 153.3 Zones in Mumbai 163.4 Quality Policy & Quality Objectives 173.5 Awards & Recognitions 18

Chapter 4: Introduction to the Topic

4.1: Research Methodology 204.2: Data Collection Techniques and Tools 204.3 Cash Collection Management 21

4.3.1 Reliance Energys own Collection Centre 244.3.2 Collecting Banks4.3.3 ECS (Electronic Clearing Service)


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4.3.4 Pay Bill On-Line4.3.5 Voluntary Deposit Scheme4.3.6 REL Bill Pay using Reliance Mobile4.3.7 Pay by Mail

Chapter 5: Data Analysis and Interpretation

Chapter 6: Conclusions, Limitations and Suggestions6.1 Conclusions6.2 Limitations6.3 Suggestions

Bibliography


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Chapter 1:

Introduction of the Project

1.1: Concept & Significance of the Study

Cash management is a marketing term for certain services offered primarily to largerbusiness customers. It may be used to describe all bank accounts (such as checkingaccounts) provided to businesses of a certain size, but it is more often used to describespecific services such as cash concentration, zero balance accounting, and automatedclearing house facilities. Sometimes, private bank customers are given cash managementservices.

Cash Management Services generally offered

The following is a list of services generally offered by banks and utilised by largerbusinesses and corporations:

Account Reconcilement Services: Balancing a checkbook can be a difficultprocess for a very large business, since it issues so many checks it can take a lotof human monitoring to understand which checks have not cleared and thereforewhat the company's true balance is. To address this, banks have developed asystem which allows companies to upload a list of all the checks that they issueon a daily basis, so that at the end of the month the bank statement will show notonly which checks have cleared, but also which have not. More recently, banks

have used this system to prevent checks from being fraudulently cashed if theyare not on the list, a process known aspositive pay.

Advanced Web Services: Most banks have an Internet-based system which ismore advanced than the one available to consumers. This enables managers tocreate and authorize special internal logon credentials, allowing employees tosend wires and access other cash management features normally not found on theconsumer web site.

Armored Car Services: Large retailers who collect a great deal of cash may havethe bank pick this cash up via an armored car company, instead of asking its

employees to deposit the cash.

Automated Clearing House: services are usually offered by the cashmanagement division of a bank. The Automated Clearing House is an electronicsystem used to transfer funds between banks. Companies use this to pay others,especially employees (this is how direct deposit works). Certain companies alsouse it to collect funds from customers (this is generally how automatic payment plans work). This system is criticized by some consumer advocacy groups,

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because under this system banks assume that the company initiating the debit iscorrect until proven otherwise.

Balance Reporting Services: Corporate clients who actively manage their cashbalances usually subscribe to secure web-based reporting of their account and

transaction information at their lead bank. These sophisticated compilations ofbanking activity may include balances in foreign currencies, as well as those atother banks. They include information on cash positions as well as 'float' (e.g.,checks in the process of collection). Finally, they offer transaction-specific detailson all forms of payment activity, including deposits, checks, wire transfers in andout, ACH (automated clearinghouse debits and credits), investments, etc.

Cash Concentration Services: Large or national chain retailers often are in areaswhere their primary bank does not have branches. Therefore, they open bankaccounts at various local banks in the area. To prevent funds in these accountsfrom being idle and not earning sufficient interest, many of these companies have

an agreement set with their primary bank, whereby their primary bank uses theAutomated Clearing House to electronically "pull" the money from these banksinto a single interest-bearing bank account.

Lockbox services: Often companies (such as utilities) which receive a largenumber of payments via checks in the mail have the bank set up a post office boxfor them, open their mail, and deposit any checks found. This is referred to as a"lockbox" service.

Positive Pay: Positive pay is a service whereby the company electronically sharesits check register of all written checks with the bank. The bank therefore will only

pay checks listed in that register, with exactly the same specifications as listed inthe register (amount, payee, serial number, etc.). This system dramatically reducescheck fraud.

Sweep Accounts: are typically offered by the cash management division of a bank. Under this system, excess funds from a company's bank accounts areautomatically moved into a money market mutual fund overnight, and then movedback the next morning. This allows them to earn interest overnight. This is theprimary use of money market mutual funds.

Zero Balance Accounting: can be thought of as somewhat of a hack. Companies

with large numbers of stores or locations can very often be confused if all thosestores are depositing into a single bank account. Traditionally, it would beimpossible to know which deposits were from which stores without seeking toview images of those deposits. To help correct this problem, banks developed asystem where each store is given their own bank account, but all the moneydeposited into the individual store accounts are automatically moved or swept intothe company's main bank account. This allows the company to look at individualstatements for each store. U.S. banks are almost all converting their systems so

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that companies can tell which store made a particular deposit, even if thesedeposits are all deposited into a single account. Therefore, zero balanceaccounting is being used less frequently.

Wire Transfer: A wire transfer is an electronic transfer of funds. Wire transfers

can be done by a simple bank account transfer, or by a transfer of cash at a cashoffice. Bank wire transfers are often the most expedient method for transferringfunds between bank accounts. A bank wire transfer is a message to the receivingbank requesting them to effect payment in accordance with the instructions given.The message also includes settlement instructions. The actual wire transfer itselfis virtually instantaneous, requiring no longer for transmission than a telephonecall.

Controlled Disbursement: This is another product offered by banks under CashManagement Services. The bank provides a daily report, typically early in theday, that provides the amount of disbursements that will be charged to the

customer's account. This early knowledge of daily funds requirement allows thecustomer to invest any surplus in intraday investment opportunities, typicallymoney market investments. This is different from delayed disbursements, wherepayments are issued through a remote branch of a bank and customer is able todelay the payment due to increased float time.

In the past, other services have been offered the usefulness of which has diminished withthe rise of the Internet. For example, companies could have daily faxes of their mostrecent transactions or be sent CD-ROMs of images of their cashed checks.

Cash management aims at evolving strategies for dealing with various facets of cash

management. These facets includes the following: Optimum Utilisation of Operating Cash

Implementation of a sound cash management programme is based on rapid generation,efficient utilisation and effective conversation of its cash resources. Cash flow is a circle.The quantum and speed of the flow can be regulated through prudent financial planningfacilitating the running of business with the minimum cash balance. This can be achievedby making a proper analysis of operative cash flow cycle alongwith efficient managementof working capital.

Cash Forecasting

Cash forecasting is backbone of cash planning. It forewarns a business regarding

expected cash problems, which it may encounter, thus assisting it to regulate further cashflow movements. Lack of cash planning results in spasmodic cash flows.

Cash Management Techniques:

Every business is interested in accelerating its cash collections and decelerating cashpayments so as to exploit its scarce cash resources to the maximum. There are techniquesin the cash management which a business to achieve this objective.

Liquidity Analysis:

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The importance of liquidity in a business cannot be over emphasized. If one does theautopsies of the businesses that failed, he would find that the major reason for the failurewas their unability to remain liquid. Liquidity has an intimate relationship with efficientutilisation of cash. It helps in the attainment of optimum level of liquidity.

Profitable Deployment of Surplus Funds

Due to non-synchronization of ash inflows and cash outflows the surplus cash may ariseat certain points of time. If this cash surplus is deployed judiciously cash managementwill itself become a profit centre. However, much depends on the quantum of cashsurplus and acceptability of market for its short-term investments.

Economical Borrowings

Another product of non-synchronisation of cash inflows and cash outflows is emergenceof deficits at various points of time. A business has to raise funds to the extent and for theperiod of deficits. Raising of funds at minimum cost is one of the important facets of cashmanagement.

Purpose of Cash Management

Cash management is the stewardship or proper use of an entitys cash resources. It servesas the means to keep an organization functioning by making the best use of cash or liquidresources of the organization.

The function of cash management at the U.S. Treasury is threefold:

1. To eliminate idle cash balances. Every dollar held as cash rather than used to augmentrevenues or decrease expenditures represents a lost opportunity. Funds that are notneeded to cover expected transactions can be used to buy back outstanding debt (andcease a flow of funds out of the Treasury for interest payments) or can be invested togenerate a flow of funds into the Treasurys account. Minimizing idle cash balancesrequires accurate information about expected receipts and likely disbursements.

2. To deposit collections timely. Having funds in-hand is better than having accountsreceivable. The cash is easier to convert immediately into value or goods. A receivable,an item to be converted in the future, often is subject to a transaction delay or adepreciation of value. Once funds are due to the Government, they should be converted tocash-in-hand immediately and deposited in the Treasury's account as soon as possible.

3. To properly time disbursements. Some payments must be made on a specified or legaldate, such as Social Security payments. For such payments, there is no cash managementdecision. For other payments, such as vendor payments, discretion in timing is possible.Government vendors face the same cash management needs as the Government. Theywant to accelerate collections. One way vendors can do this is to offer discount terms fortimely payment for goods sold.

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1.2: Scope

This project report would help any researcher who wants to acquaint himself with

the cash management in India with respect to Reliance Infrastructure.

1.3: Objective of the Study

Objectives of a project tell us why project has been taken under study. It helps us to knowmore about the topic that is being undertaken and helps us to explore future prospects ofthat organisation. Basically it tells what all have been studied while making the project.

To learn about various aspects of Reliance Energy cash management.

To analyze the history of Reliance Energy.

To gain insights about functioning of Reliance Energy cash management.

To explore the future prospects of Reliance Energy cash management.

1.4: Literature Review

Web-based Cash Management

Web-based cash management solution enables banks to offer comprehensive cashmanagement services to businesses, ranging from small enterprises to large corporatehouses.

Built on new-generation industry standard technologies J2EE and .NET, the modular

solution provides corporate customers anytime, anywhere access to real-timeconsolidated information. It manages cash positions and electronically sends and receivesfunds in a secure manner, within and across borders.

The solution is multi-currency enabled and offers multilingual support. It is also designedto support multiple channels including the Internet and mobile, and can be interfaced withdisparate host systems and third-party applications.

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Chapter-2

Introduction to the Industry

2.1 Introduction to Electricity industry in India

The Electricity sector in India is predominantly controlled by Government of India'spublic sector undertakings (PSUs). Major PSUs involved in the generation of electricityinclude National Thermal Power Corporation (NTPC), National Hydroelectric Power

Corporation (NHPC) and Nuclear Power Corporation of India (NPCI). Besides PSUs,several state-level corporations, such as Maharashtra State Electricity Board (MSEB), arealso involved in the generation of electricity. The intra state distribution is managed bythe State Electricity Boards (SEBs) and private companies. Power grid Corporation ofIndia is responsible for the interstate transmission of electricity and the development ofnational grid.

India is world's 6th largest energy consumer, accounting for 3.4% of global energyconsumption. Due to India's economic rise, the demand for energy has grown at anaverage of 3.6% per annum over the past 30 years. More than 50% of India's commercialenergy demand is met through the country's vast coal reserves. About 76% of theelectricity consumed in India is generated by thermal power plants, 21% by hydroelectric

power plants and 4% by nuclear power plants. The country has also invested heavily inrecent years on renewable sources of energy such as wind energy.

In March 2009, the installed power generation capacity of India stood at 147,000 MWwhile the per capita power consumption stood at 612 kWh. The country's annual powerproduction increased from about 190 billion kWh in 1986 to more than 680 billion kWhin 2006. The Indian government has set an ambitious target to add approximately 78,000MW of installed generation capacity by 2012. The total demand for electricity in India isexpected to cross 950,000 MW by 2030.

Electricity losses in India during transmission and distribution are extremely high andvary between 30 to 45%. In 2004-05, electricity demand outstripped supply by 7-11%.Due to shortage of electricity, power cuts are common throughout India and this has

adversely effected the country's economic growth. Theft of electricity, common in mostparts of urban India, amounts to 1.5% of India's GDP.

Despite an ambitious rural electrification program, some 400 million Indians still have noaccess to electricity. While 80 percent of Indian villages have at least an electricity line,just 44 percent of rural households have access to electricity. According to a sample of97,882 households in 2002, electricity was the main source of lighting for 53% of rural

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households compared to 36% in 1993. Multi Commodity Exchange has soughtpermission to offer electricity future markets.

2.2 Types of Power

GenerationGrand Total Installed Capacity is 1,47,402.81 MW.

Thermal Power

Current installed capacity of Thermal Power(as of 12/2008) is 93,392.64 MW which is63.3% of total installed capacity.

Current installed base ofCoal Based Thermal Poweris 77,458.88 MW which

comes to 53.3% of total installed base. Current installed base of Gas Based Thermal Power is 14,734.01 MW which is

10.5% of total installed base. Current installed base of Oil Based Thermal Power is 1,199.75 MW which is

0.9% of total installed base.

The state of Maharashtra is the largest producer of thermal power in the country

Hydro Power

India was one of the pioneering states in establishing hydro-electric powerplants, The

power plant at Darjeeling and Shimsa (Shivanasamudra) was established in 1898 and1902 respectively and is one of the first in Asia. The installed capacity as of 2008 wasapproximately 36647.76. The public sector has a predominant share of 97% in this sector.

Nuclear Power

Currently, seventeen nuclear power reactors produce 4,120.00 MW (2.9% of totalinstalled base).

Main article:Nuclear power in India

Renewable PowerCurrent installed base of Renewable energy is 13,242.41 MW which is 7.7% of totalinstalled base with the southern state of Tamil Nadu contributing nearly a third ofit(4379.64 MW) largely through wind power.

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Transmission

Transmission of electricity is defined as bulk transfer of power over a long distance athigh voltage, generally of 132kV and above. In India bulk transmission has increasedfrom 3,708ckm in 1950 to more than 265,000ckm today. The entire country has been

divided into five regions for transmission systems, namely, Northern Region, NorthEastern Region, Eastern Region, Southern Region and Western Region. TheInterconnected transmission system within each region is also called the regional grid.

The transmission system planning in the country, in the past, had traditionally beenlinked to generation projects as part of the evacuation system. Ability of the powersystem to safely withstand a contingency without generation rescheduling or load-shedding was the main criteria for planning the transmission system. However, due tovarious reasons such as spatial development of load in the network, non-commissioningof load centre generating units originally planned and deficit in reactive compensation,certain pockets in the power system could not safely operate even under normalconditions. This had necessitated backing down of generation and operating at a lowerload generation balance in the past. Transmission planning has therefore moved awayfrom the earlier generation evacuation system planning to integrate system planning.

While the predominant technology for electricity transmission and distribution has beenAlternating Current (AC) technology, High Voltage Direct Current (HVDC) technologyhas also been used for interconnection of all regional grids across the country and forbulk transmission of power over long distances.

Certain provisions in the Electricity Act 2003 such as open access to the transmission anddistribution network, recognition of power trading as a distinct activity, the liberaldefinition of a captive generating plant and provision for supply in rural areas areexpected to introduce and encourage competition in the electricity sector. It is expected

that all the above measures on the generation, transmission and distribution front wouldresult in formation of a robust electricity grid in the country.

Distribution

The total installed generating capacity in the country is over 135,000MW and the totalnumber of consumers is over 144 million. Apart from an extensive transmission systemnetwork at 500kV HVDC, 400kV, 220kV, 132kV and 66kV which has developed totransmit the power from generating station to the grid substations, a vast network of subtransmission in distribution system has also come up for utilization of the power by theultimate consumers.

However, due to lack of adequate investment on T&D works, the T&D losses have beenconsistently on higher side, and reached to the level of 32.86% in the year 2000-01.Thereduction of these losses was essential to bring economic viability to the State Utilities.

As the T&D loss was not able to capture all the losses in the net work, concept ofAggregate Technical and Commercial (AT&C) loss was introduced. AT&C loss capturestechnical as well as commercial losses in the network and is a true indicator of totallosses in the system.

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High technical losses in the system are primarily due to inadequate investments over theyears for system improvement works, which has resulted in unplanned extensions of thedistribution lines, overloading of the system elements like transformers and conductors,and lack of adequate reactive power support.

The commercial losses are mainly due to low metering efficiency, theft & pilferages.

This may be eliminated by improving metering efficiency, proper energy accounting &auditing and improved billing & collection efficiency. Fixing of accountability of thepersonnel/feeder managers may help considerably in reduction of AT&C loss.

With the initiative of the Government of India and of the States, the Accelerated PowerDevelopment & Reform Programme (APDRP) was launched in 2001, for thestrengthening of Sub Transmission and Distribution network and reduction in AT&Closses.

The main objective of the programme was to bring Aggregate Technical & Commercial(AT&C) losses below 15% in five years in urban and in high-density areas. Theprogramme, along with other initiatives of the Government of India and of the States, hasled to reduction in the overall AT&C loss from 38.86% in 2001-02 to 34.54% in 2005-06.The commercial loss of the State Power Utilities reduced significantly during this periodfrom Rs. 29331 Crore to Rs. 19546 Crore. The loss as percentage of turnover wasreduced from 33% in 2000-01 to 16.60% in 2005-06.

The APDRP programme is being restructured by the Government of India, so that thedesired level of 15% AT&C loss could be achieved by the end of 11th plan.

Power for ALL by 2012

The Government of India has an ambitious mission of POWER FOR ALL BY 2012. This

mission would require that our installed generation capacity should be at least 200,000MW by 2012 from the present level of 144,564.97 MW. Power requirement will doubleby 2020 to 400,000MW.

2.3 Objectives

Sufficient power to achieve GDP growth rate of 8% Reliable power Quality power Optimum power cost Commercial viability of power industry Power for all

2.3 Strategies

Power Generation Strategy with focus on low cost generation, optimization ofcapacity utilization, controlling the input cost, optimization of fuel mix,Technology up gradation and utilization of Non Conventional energy sources

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Transmission Strategy with focus on development of National Grid includingInterstate connections, Technology up gradation & optimization oftransmission cost.

Distribution strategy to achieve Distribution Reforms with focus on System upgradation, loss reduction, theft control, consumer service orientation, quality

power supply commercialization, Decentralized distributed generation andsupply for rural areas.

Regulation Strategy aimed at protecting Consumer interests and making thesector commercially viable.

Financing Strategy to generate resources for required growth of the powersector.

Conservation Strategy to optimize the utilization of electricity with focus onDemand Side management, Load management and Technology up gradationto provide energy efficient equipment / gadgets.

Communication Strategy for political consensus with media support toenhance the genera; public awareness.

Rural electrificationJharkhand, Bihar, Uttar Pradesh, Orissa, Uttaranchal, West Bengal etc are some of thestates where significant number (more than 10%) of villages are yet to be electrified.

Number of Villages (1991 Census) - 593,732 Villages Electrified (30 May 2006) - 488,173 Village level Electrification % - 82.2%

2.4 Subsidies

Several state governments in India provide electricity at subsidized rates or even free tosome sections. This includes for use in agriculture and for consumption by backwardclasses. The subsidies are mainly as cross-subsidization, with the other users such asindustries and private consumers paying the deficit caused by the subsidized chargescollected. Such measures have resulted in many of the state electricity boards becomingfinancially weak.

At present (2009), the price per unit of electricity in India is about Rs. 4 (8 US cents) fordomestic consumers, and Rs. 9 for the commercial supply.

Energy Portal

Energy policy of India Solar power in India Wind power in India

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Chapter 3

Introduction to the Company

Reliance Energy is Indias largest integrated private sector power utility company. Thecompany is into generation, transmission, distribution and trading of power. It distributesover 5,000 MW of power-the largest in the country.Reliance Energy and its affiliate companies power 2 out of 3 homes in Mumbai and 1 outof 2 in Delhi and has a consumer base of 5 million catering to an estimated population of25 million in Mumbai, Delhi and Orissa. It is poised to become a nationwide powercompany, providing world class quality, reliable and competitively priced power tomillions of customers.

3.1 Profile

Reliance Energy Ltd.-Energizing the Power Sector.Reliance Infrastructure Limited is a part of the Reliance Anil Dhirubhai Ambani Group,Indias second largest business house.

Incorporated in 1929, Reliance Infrastructure is one of Indias fastest growing companiesin the infrastructure sector. It ranks among Indias top listed private companies on allmajor financial parameters, including assets, sales, profits and market capitalization.

Reliance Infrastructure companies distribute more than 36 billion units of electricity toover 30 million consumers across an area that spans over 1,24,300 sq kms and includesIndias two premier cities, Mumbai and Delhi. The group generates over 940 MW ofelectricity through its power stations located in Maharashtra, Andhra Pradesh, Kerala,Karnataka and Goa.

Reliance Infrastructure has emerged as the leading player in India in the Engineering,

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Procurement and Construction (EPC) segment of the power sector.

In the last few years, Reliance Infrastructure has expanded its foot-print much beyond thePower sector. Currently, Reliance Infrastructure group is engaged in the implementationof projects not only in the field of generation, transmission, distribution and trading of

power but also in other key infrastructural areas such as highways, roads, bridges, metrorail and other mass rapid transit systems, special economic zones, real estate, etc.

Powering Progress, Energizing the Economy:

Reliance Energy engaged in the generation, transmission and distribution of electricity.

A key constituent of the Reliance - Anil Dhirubhai Ambani Group, India's third largestbusiness house, Reliance Energy is India's foremost private sector utility with aggregategroup revenues of Rs. 13,017 crore (US$ 3 billion) and total assets of Rs. 12,166 crore(US$ 2.80 billion).

Reliance Energy companies distribute more than 28 billion units of electricity to cover 25million consumers across different parts of the country including Mumbai and Delhi in anarea that spans over 1,24,300 sq. kms. It generates 941 MW of electricity, through itspower stations located in Maharashtra, Andhra Pradesh, Kerala, Karnataka and Goa.

Reliance Energy has emerged as one of the leading players in India in the Engineering,Procurement and Construction (EPC) segment of the power sector.

Reliance Energy companies currently pursue several gas, coal, wind and hydro-based power generation projects in Maharashtra, Uttar Pradesh, Arunachal Pradesh and

Uttaranchal with aggregate capacity of over 13,510 MW. These projects are at variousstages of development.

Reliance Energy is also active in the trading and transmission of power, making it a fullyintegrated player in the power sector.

Reliance Energy has also forayed as an equity investor in to the infrastructure business,including in the prestigious Mumbai metro rail project and various road projects of theNational highways authority of India.

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REL is committed to creating superior value for all its stakeholders and be amongst themost admired and trusted utility companies in the world by setting new benchmarks instandards of corporate governance, operational and financial excellence, responsiblecorporate citizenship and profitable growth.

Chairman's Profile

Shri Anil D. Ambani Chairman

Shri.Satish Seth Vice Chairman

Shri S.C.Gupta Director (Operations)

Shri Lalit Jalan Whole-time Director

Directors

Gen.V.P.Malik P.V.S.M,A.V.S.M

Shri S.L.Rao

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Dr.Leena Shrivastava

Shri V.R.Galkar Representative of LIC

Boards Sub-committee

Audit Committee

Shri V.R.Galkar

Gen. V.P.Malik P.V.S.M.,A.V.S.M.

Shri S.L.Rao

Dr. Leena Srivastava

Shareholder's/Investor's Grievances Committee

Shri V.R.Galkar Chairman

Shri S C Gupta

Dr.Leena Srivastava

Nomination/Remuneration Committee


Shri S L Rao

Dr.Leena Srivastava

Environment,Health and Safety Committee

Dr.Leena Srivastava Chairperson

Shri S.L.Rao

Shri S.C.Gupta


Committee of Directors (Allotment)

Shri S.C.Gupta

Shri Lalit Jalan

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3.2Vision & Mision

Our Vision

To be amongst the most admired and most trusted integrated utility companies in theworld, delivering reliable and quality products and services to all customers atcompetitive costs, with international standards of customer care -thereby creatingsuperior value for all stakeholders.

To set new benchmarks in standards of corporate performance and governance throughthe pursuit of operational and financial excellence, responsible citizenship and profitablegrowth.

Mission: Excellence in Infrastructure

To attain global best practices and become a world-class utility. To create world-class assets and infrastructure to provide the platform for faster,

consistent growth for India to become a major world economic power.

To achieve excellence in service, quality, reliability, safety and customer care.

To earn the trust and confidence of all customers and stakeholders and byexceeding their expectations, make the company a respected household name.

To work with vigour, dedication and innovation, with total customer satisfactionas the ultimate goal.

To consistently achieve high growth with the highest levels of productivity.

To be a technology driven, efficient and financially sound organization.

To be a responsible corporate citizen, nurturing human values and concern forsociety, the environment and above all, people.

To contribute towards community development and nation building.

To promote a work culture that fosters individual growth, team spirit andcreativity to overcome challenges and attain goals.

To encourage ideas, talent and value systems.

To uphold the guiding principles of trust, integrity and transparency in all aspects ofinteractions and dealings.

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3.3 Divisions in Mumbai

1. South Zone - Bandra2. South Central Zone MIDC - Andheri

3. Central Zone - Dindoshi4. North - Kandivli5. East - Tilak Nagar

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3.4 Quality Policy

1. REL is committed to be amongst the most admired & trusted integrated ElectricSupply Utility Companies in the world.

2.REL shall deliver reliable and quality products and services to all customers atcompetitive costs, with international standards of customer care - thereby creatingsuperior value for all stakeholders.

3. REL is committed to comply with requirements and continually improve theeffectiveness of the Quality Management System as per ISO 9001:2000.

4. REL shall set new benchmarks in standards of corporate performance andgovernance through the pursuit of operational / environmental and financialexcellence, responsible citizenship, and profitable growth.

Quality Objectives

The quality objectives of REL are to:

5. To attain global best practices and become a world-class utility.

6. To provide uninterrupted, affordable, quality, reliable and clean power, tomillions of customers.

7. To achieve excellence in service, quality, reliability, safety and customer care.

8. To earn the trust and confidence of all customers and stakeholders, exceedingtheir expectations, and make the company a respected household name.

9. To work with vigor, dedication and innovation, with total customer satisfaction asthe ultimate goal.

10. To consistently achieve high growth with the highest levels of productivity.

11. To be a technology driven, efficient and financially sound organization.

12. To be a responsible corporate citizen nurturing human values and concern forsociety, the environment and nation building.

13. To promote a work culture that fosters individual growth, team spirit andcreativity to overcome challenges and attain goals.

14. To encourage ideas, talent and value systems.15. To uphold the guiding principles of trust, integrity and transparency in all aspects

of interactions and dealings.

(Anil.D.Ambani)

Chairman&Managing.DirectorReliance Energy Limited

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3.5 Awards & Recognitions

Reliance Energy Ltd. contributions in the areas of enriching the ecology and initiatives inCorporate Governance have received wide acclaim. Reliance Energy Ltd. in the recentyears has received the following Awards

The Indo-German Annual EnvironmentExcellence Award - 2000 by GreentechFoundation.

FICCI Award 1999-2000 for outstandingachievement in Environment Conservation andPollution Control by the Federation of Indian

Chambers of Commerce & Industry.

The first Millennium Business Award instituted by International Chamber of Commerce (ICC)and United Nations Environment Programme(UNEP) for its outstanding contribution toenvironmental management. Reliance Energy Ltd.is the only company from India and only one outof two power utilities in the world (the other beingTokyo Power Company of Japan) to have beenhonored with this Award.

Best Environmental and EcologicalImplementation Gold Award conferred byInternational Greenland Society.

Other awards :

Top of India's Most Valuable Companies - at the 23rd rank based on the averagemarket capitalization during 2000-01

Rajiv Gandhi National Quality Award 2001 for providing quality and excellence

in every aspect of its functioning,

The Golden Peacock Award from the Institute of Directors for excellence inCorporate Governance.

Dahanu Power Station was adjudged as the Best Power Station of the country inthe 700 MW and below range and was conferred the Environmental Award on theoccasion of Thermal Centenary Celebrations 1999.

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Rotary Vocational Award for Excellence in Corporate Governance.

The G-51 Millennium Award in the field of Mother Earth Protection conferred bythe Indian Institute of Ecology and Environment on the occasion of the WorldEnvironmental Congress.

MCCI Dr R J Rathi Award 1998 to Reliance Energy Ltd. for pollution control inthe category of Non-Chemical Industries by the Mahratta Chamber ofCommerce & Industries (MCCI).

The Rotary International of Gujarat, Madhya Pradesh and Rajasthan conferred the"Excellence in Corporate Governance Award" on Reliance Energy Ltd.

ICSI Award for pursuit of Good Governance Practices in the year 2001.

These awards and recognitions greatly motivate and encourage the Reliance Energy Ltd.team to set fresh benchmarks in corporate governance, particularly in the Indian Powersector.

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Chapter 4

Introduction to the Topic

4.1Research Methodology

Research is a process through which we attempt to achieve systematically and with thesupport of data the answer to a question, the resolution of a problem, or a greaterunderstanding of a phenomenon. This process, which is frequently called researchmethodology, has eight distinct characteristics:

Research originates with a question or problem. Research requires a clear articulation of a goal. Research follows a specific plan of procedure. Research usually divides the principal problem into more manageable

subproblems.

Research is guided by the specific research problem, question, or hypothesis. Research accepts certain critical assumptions. Research requires the collection and interpretation of data in attempting to resolve

the problem that initiated the research.

Research is, by its nature, cyclical; or more exactly, helical.Descriptive research is used in this project report in order to know about cashmanagement services to clients and determining their level of satisfaction. This is themost popular type of research technique, generally used in survey research design andmost useful in describing the characteristics of consumer behavior. The method usedwere following:

Questionnaire method

Direct Interaction with the staff members.

4.2: Data Collection Techniques and Tools

MODE OF DATA COLLECTION

Primary Data: - The sources of Primary data were questionnaires and personalinterviews.

Secondary data: - the sources of secondary data were internet, books andnewspaper articles.

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4.3 Cash Collection Management

Payment Collection Option

1. Collection Center

2. Collecting Banks

3. Drop Boxes

4. Easy Bill outlet

5. ECS (Electronic Clearing Service)

6. Internet (debit, credit & Itz cash card)

7. Pay using Reliance mobile (itz cash)

8. VDS (Voluntary Deposit Scheme)

9. Mail (post)

4.3.1 Reliance Energys own Collection Centre:-

There are around 56 Locations under Reliance Energy from

Bandra Bhayandar

Kurla - Vikhroli

Kurla - Mankhurd

There are 111 Energy Collection Centres (Security) and 8 Non-energy collection centre(SAP)Energy Collection is of Daily Usage Electricity made by the Users

Non Energy Collection is of Electricity used by Users for Temporary purpose.E.g.:- Ganesh Festival, Job fair etc.

There are 121 Collection Counters all over Mumbai. Supply area includes Permanent &Temporary (occasional) connections.

1) One single counter is open for 20 days in a monthTimings: - 8am-3.30pm and there are 9 Single counters out of 111.

2) An Occasional counters are open 2 days in a month on 6th and 10th.3) SAP (Non-Energy) counters are opened from 10am-5pm.

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Cash flow from Collection Counters

OH + SD OH + SD

Dishonored chequePicked by Bank Picked up by Bank

22

CollectionCounters

Day 0

CashDay 1

ChequeDay1

RespectiveZonal office

Central

office

CustomerBill

payment

ICICIBank

Day 2 A/CCredit


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PROCESS BY WHICH CONSUMER GETS CREDIT

Cash and Cheque cycle (collection counters) Cheque cycle

Day0 Day0

Day1 Day0

Day1 Day0

Day1Day1

Day1

4.3.2 Collecting Banks.

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Bill payment byconsumers by cashand cheque oncollection counters

Cheques -Dropboxes (Railways,Housing societies,

P file and S file sentto Financedepartment by

Collected byAgencies

Files checked anduploaded on system

P file and S file sentby agencies tofinance department

At night the EDPdepartment runs theprogram and creditis given to

consumers energy

Finance departmentchecks and uploadit in system

At night the EDPdepartment runs theprogram and credit isgiven to consumersenergy account


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Cash collection from Collecting Banks:- Co-operative Banks

Nationalized Banks

Private Banks/ Scheduled Banks

Accept Payments in all Three forms Cash

Cheque

Transfer

But the amount is transfer to companies ICICI bank account twice in a week onMonday and Thursday or Tuesday and Friday.

There are some other Banks like

Private Banks

Schedule Banks

Non-Cooperative BanksThe Banks Transfer the fund from its account to Reliance Energy A/C in ICICI bankonce in a week.

Cash Collection from Collecting Banks.

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OH+SD OH+SD OH+SD

Credited same day Credited same day Credited after 2 daysDishonored Cheque

RTGS, NEFT or PAY ORDER

25

CustomerBill

payment

CollectingBanks

Cash Transfer Cheque

RespectiveZonal office

Centraloffice

RespectiveBanks

ICICIBankA/C


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PROCESS BY WHICH CONSUMER GETS CREDIT

26

Bill payment

by consumer

CollectingBanks

Sends consumersdetail manuallythrough Post

Sends consumersdata through

E-mail

Files uploadedinto SAP

At night the EDPdepartment runs theprogram and credit isgiven to consumersenergy account


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Cash Flow from Respective Banks to ICICI Bank

Companys A/C

Now- a- days Banks are using RTGS & NEFT function for transfer of fund to ICICI bankCompanys account.

RTGS: - Real Time Gross Settlement.Banks uses this RTGS function when they want to transfer Rs One lakh or more.

NEFT: - National Electronic Fund Transfer.Bank uses this NEFT function when they want to transfer amount less than Rs One lakh.

Pay Order: -The Noncore Banks which do not use the functions like RTGS or NEFT transfer theircash by issuing Instrument i.e. is Pay order.E.g. Jaoli Bank, Excellent Bank etc.

Automation of countersThe banks collections centers are equipped with bar-code scanners and the collection

data is sent to zonal office through E-mail. The collection is credited to customer byuploading the soft file in SAP.

27

CollectingBanks

RTGS NEFTPAY

ORDER

ICICIBankA/C


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Commission payment: Banks are paid commission at the rate of Rs 3/- per receipt. A bill for the same is sent to the zonal office on a monthly basis for payment ofcommission.

4.3.3 ECS (Electronic Clearing Service):-

ECS is a system introduced by Reserve Bank of India, which provides consumer anoption to pay their electricity bill directly through their Bank account.

No worries about missing a payment date

Hassle-free procedures

Flexibility of fixing an upper limit

No need for a separate bank account

Discount of 0.5% or Rs. 250 on bill amount, whichever is lower

ECS is cheapest form of Avenue which collects Cash from the consumer.

The Payment is transferred from Respective Bank to ICICI Bank Companys A/C twodays in a week.

1. Tuesday2. Friday.

If ECS is going to run on Tuesday then the file is send to ICICI Bank on previousFriday, so that within 3 days if any changes has to made can be done easily andinformation is passed onto RBI regading ECS . The ICICI Bank account is credited on

same day when the system runs i.e. on Tuesday & Friday.

9 Reasons for Dishonor:-1. Account closed / transferred.2. No such account3. Insufficient Balance4. Account description does not tally5. Not arranged for / Exceeds arrangement6. Payment stopped by Drawer7. Payment stopped under court order8. ECS Mandate not received

9. Miscellaneous

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Cash Flow From ECS (Electronic Clearing Service)

File send to ICICI Bank by Central Office

No

Yes

Same day Bill amt is Credited

OH+SD

RTGS or NEFT or PAY ORDER

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CentralOffice

RespectiveBanks

CollectionCounters

ICICIBankA/C


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4.3.4 Pay Bill On-Line:-

Pay through Credit Card or Online banking account

Pay your Reliance Energy bill instantly.

Use any valid Visa, MasterCard / American Express or Diners Credit Card, or paythrough your Net Banking account with Citibank, IDBI Bank, HDFC Bank, State Bank ofIndia or Punjab National Bank, ABN AMRO, Bank of India, Indusind Bank, Union Bankof India and AXIS Bank. More banks will be added shortly. You can also pay your billthrough ITZ Cash card.

Receive online confirmation and a Transaction Reference Number

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Cash Flow From Online Payment

Credited after 2 or 3 days

Credited Next Day Credited Same Day

Credited on next day

RTGS or NEFT or PAY ORDER

4.3.5 Voluntary Deposit Scheme:-

Earn Interest While You Pay Your Electricity Bills

Now, you have an option to pay a deposit in advance and your future electricity bills willbe adjusted against the same.

31

CustomerBill

payment

Credit Card NetBanking

ITZ CashCard

Bill Desk

ICICIBankA/C

RespectiveBanks

ICICITech

Process


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You can choose to deposit any amount. However, the minimum amount to earn interestunder the scheme will be Rs. 3,000/- or in multiples of Rs. 500/- thereafter.

Qualifying deposits will carry interest from the date of deposit on the diminishingBalance @ 7% p.a. after adjusting the monthly bill on the due date.

Payments can be made in Cash or through Crossed Cheque / Demand Draft at thecollection centre in the respective Divisional office.

4.3.6 REL Bill Pay using Reliance Mobile:-

REL Bill Pay is a new bill payment facility to add further convenience to our valuedcustomers. Now you can pay your bill from just anywhere and anytime through yourReliance India Mobile (RIM) phone using ITZ Cash Card.

Following are the advantages for opting for REL Bill Pay.

By registering for this service, you will be able to view and pay your bills overyour RIM phone using ITZ Cash Cards.

You can avail the service by a simple Registration procedure on R-World. If you are an ITZ Cash Card holder, you need not access the internet to make your

bill Payment, you can pay by "Bas button dabao" using your RIM phone.

4.3.7 Pay by Mail

1. Draw your cheque in favour of Reliance Infrastructure Limited A/c no. xxxxxxxxx.Please ensure that the cheque is account payee and is not post-dated.

2. Attach your bill payment slip to your energy payment cheque.

3. Mail the cheque by post or courier to the following address:

Bill paymentReliance Infrastructure LimitedReliance Energy CentreSanta Cruz-East,Mumbai-55

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Chapter 5

Data Analysis and Interpretation

Modes of collection:

The Various Modes through which revenue is collected from consumer, this table willhelp us to elaborate that how many consumers are using which avenue to make their billpayments.

Further data gives the information of last 5 years as follows:-

Source:- Reliance Energy MIS A&F Department (Bandra-Rna Corporate park)

Modes of Collection % ofTotal Receipts

31/3/05

31/3/06

31/3/07

31/3/08

31/3/09

Drop Boxes 2.31 4.5 5.3 5.2 5.2

REO Cash 52.8 50.1 46.4 44.3 46

REO Cheques 20.2 20.1 19.9 19.6 20.1Bank Branches 21.8 21.1 17.1 15.3 14.5

ECS 1.32 1.5 1.6 1.5 1.5

Internet 1.5 2.6 8.9 13.2 12

Mobile Vans 0.04

Cheques by Mail 0.01

Easy Bill Outlets 0.1 0.8 0.9 0.7

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Total % 99.98 100 100 100 100Source:- Reliance Energy MIS A&F Department (Bandra-Rna Corporate park)

Modes of Collection % of Total Collection

Below Pie chart gives us the complete information that which is the form of collectionmethod which collected how much fund for an organisation.

In the below pie chart it can be clearly observed that collection through Chequesdominate the market at around 58.73% in 31/3/2008 which increased to 60.76% in31/3/2009.The second highest mode of collection is through cash collection counters where cash is

collected at 17.19% in 31/3/2009.

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Source:- Reliance Energy MIS A&F Department (Bandra-Rna Corporate park)

Modes of Collection % of TotalCollection

31/3/08

31/3/09

Drop Boxes % 5.3 4.96

REO Cash % 17.82 17.19

REO Cheques % 58.73 60.76

Bank Branches % 9.63 8.58

ECS % 1.8 1.83

Internet % 6.29 6.33

Mobile Vans %

Cheques by Mail %

Easy Bill Outlets % 0.4 0.32VDS % 0.03 0.03

Total % % 100 100Source:- Reliance Energy MIS A&F Department (Bandra-Rna Corporate park)

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Chapter 6

6.1 Conclusion

The key findings and analysis of the survey showed the following:-

REL emphasized more on providing better services to its customers as comparedto other service provider.

REL focuses more on customers satisfaction by providing them better servicesand a plenty mode of collection options.

Any type of customer has the flexibility to pay their Energy bills as per theirconvenience through any mode.

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The Banks has co-operated with REL to collect their Energy Bills and provideconvenience to customers.

REL has tie up with many private agencies that help them to collect their Energybills.

The Cash Collection modes are so smooth that all the fund collected is transferredto company A/C in ICICI bank, and at the end of the day balance is transferred tohead office.

6.2 Limitations

Following are the limitations faced by me during this project:

1. The allotted time period of 6 weeks for the study was relatively insufficient,

keeping in mind the long duration it can take at times.

2. A few of the managers refrained from giving the required information as heconsidered me to be from their confidential domains.

6.3 Suggestions

Customers should be encouraged to make their payments through ECS (Electronicclearing service) method because it is the cheapest form of collection method ascompared to other modes of payment.

REL Bill could be paid using Reliance Mobile (Prepaid Card) instead of using

ITZ cash card. Reliance Communications can come up with its own prepaid cardfor payment of Energy Bills as both the organizations are part of the ADAG.

Customers should be encouraged usually to make their payments throughReliance Energy collection centres. Because it is one of the payment method inwhich fund is transferred to companys ICICI Bank A/C in short span of time, ascompared to Internet, collecting Banks, Drop boxes, Easy bill outlets which takearound more than 3 days for funds to get transfered.

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Annexure

BIBLIOGRAPHY

Books:

1. Me Cabe and Smith; Unit Operation in Chemical Engineering; 4th Edition, pp-812-814.

Journals:

1. Ariponnammal,S and Natarajan,S. (1994) Transport Phenomena of SM SEL-XPramana-Journal of Physics, Vol.42, No.1, pp 421-425.

2. Barnard,R.W. and Kellogg,C. (1980) Application of Convolution Operators,Michigan Mach-Vol.27,pp 81-82

Websites:

http://www.rinfra.com/Rel/Paymentoptions/paymentoptions.jsphttp://www.rinfra.comhttp://en.wikipedia.org/wiki/Electricity_sector_in_Indiahttp://www.rinfra.com/Rel/aboutus/Achievements.jsphttp://en.wikipedia.org/wiki/Cash_management
http://www.rinfra.com/Rel/Paymentoptions/paymentoptions.jsphttp://www.rinfra.com/http://en.wikipedia.org/wiki/Electricity_sector_in_Indiahttp://www.rinfra.com/Rel/aboutus/Achievements.jsphttp://en.wikipedia.org/wiki/Cash_managementhttp://www.rinfra.com/Rel/Paymentoptions/paymentoptions.jsphttp://www.rinfra.com/http://en.wikipedia.org/wiki/Electricity_sector_in_Indiahttp://www.rinfra.com/Rel/aboutus/Achievements.jsphttp://en.wikipedia.org/wiki/Cash_management

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