PROCEEDINGS OF THE SEMINAR ON ‘FINANCE MANAGEMENT TODAY’

CONDUCTED BY SECR AT BILASPUR

ON 22.07.2004 & 23.07.2004.

List of Presentations/Talks

(i) BPO & BPR. by Prof. N. Ravi Chandran., IIM, Ahemadabad.

(ii) Recent Developments in Finance Management by Prof. A.Pandey. IIM, Ahemadabad

(iii) E-Commerce in Railways.

(iv) I T & Cyber laws. by Sri R.C.Sethi , FA&CAO/SECR

(v) Financial Advice in Railways by Sri Atul Mohan. FA&CAO(WST)/SECR.

(vi) Role of T.C. members by Sri H.P. Nayak, Dy.FA&CAO(G)/SECR.

Deliberations & conclusions of the seminar

i) Business Process Outsourcing & Business Process Reengineering by Prof. Ravi Chandran, IIM/Ahemadabad.

(i) Concept of BPO & BPR

(ii) Preparation by organizations

(iii) Enablers

–Information Technology

–Team Work

–Top Management Involvement

(iv) BPO -What it means to Railways ?

The outcomes of the deliberation are as follows:-

(i) Reduction in non-value added activities & focus on value-added activities.

(ii) IT plays an important role in the organizational system. Shared database, networking & decision support system will ensure decision making at all the levels faster.

(iii) BPR will lead to a paradigm shift in the present system. BPR will emphasize on multidimensional work that will reorganize the functional dept. as per process terms. People’s role will change from controlled to be empowered. Job preparation will change from training to education. Focus will be on result-oriented performance.

(iv) By implementing BPO in Indian railways, there will be need-based unbundling of the processes. It will ensure professional orientation in Railways. Approach will shift from cost center approach to profit center approach. It will lead to management by objective. For implementing BPO the core sector should be strengthened & the non-core sector i.e. welfare, real estate, health care etc. should be outsourced.

The theme & substance of the lecture was how to change Railways from a service organization to service plus revenue generating organization by implementing BPO.

ii) Recent Developments in Finance Management by Prof. A.Pandey, IIM/Ahemadabad.

a. Finance Management – Concepts

b. Capital Budget & Leasing.

c. Project Finance & Project Restructuring.

d. Derivatives & Risk Management.

e. Shareholders Value Management viz. EVA, CVA, SVA, MVA etc.

The outcomes of the deliberation are as follows:

(i) Financial Management is essential to account for resources (controller functions) and to plan for and evaluate optimal deployment and raising of resources (Treasury functions). Management of both these functions is the index of financial health of the organization.

(ii) Leasing should be resorted if (a) the Tax rate of lessor is higher, (b) early depreciation is allowed, (c) there is time value of money.

(iii) Leasing is an option for Railways. Leasing can soften the budget constraint for Railways.

(v) For a taxable corporate entity, debt or loans save taxes. Project finance is aggressive use of non-recourse debt to be serviced by the cash-flows from the project itself. The risks involved in a project should be identified, mitigated and allocated appropriately through project structuring. A robust project structure relies on self- enforcing contracts as much as possible. Incentive compatibility of contracts and the project structure is the key behind successful project structuring.

(vi) Currency swap should be resorted to in case of projects involving foreign exchange. For raising of funds from market, interest rate swapping may be followed. However, use of such derivatives for risk management of projects should be resorted to only when internal control system is strong.

iii) E-Commerce in Railways by Sri R.C.Sethi, FA&CAO

(i) Concept of – Commerce and Internet ?

(ii) What is e-Commerce? The benefits of e-commerce & customer-oriented e-commerce.

(iii) Threats on Internet & e-Commerce.

(iv) Railways business on Internet viz. e-Ticketing, e-Payments etc.

The following points were discussed:

(a) The concept of commerce & its relevance in the present day due to changes in the customer higher buying power and information revolution.

(b) The role of Internet & how it works for e-Marketing.

(c) The concept of e-commerce & how it is different from traditional business model was discussed.

(d) Benefits of e-commerce and customer orientation of e-commerce.

(e) Threats on Internet viz. interceptors, false customers, false websites, perpetrators, virus etc. were deliberated.

(f) Role of IT in the success of existing Passenger Reservation system of Rlys & Rly. ticket booking on internet, recent development in e-ticketing were discussed.

(iv) Information Technology & Law by Sri R.C.Sethi, FA&CAO.

a. What is IT?

b. The Management Information System in an organization and the requirement of information as a managerial tool.

c. RDBMS & its relevance in the present organizational system.

d. IT in Railways and future MIS applications.

e. IT Act 2000: Objective and salient features.

f. E-Governance, E-Policing, Digital Signature etc.

The following points were discussed:

(i) Difference between data & information & how the information system helps in decision making.

(ii) Information system in an organization at the different managerial level & the type of information required for decision-making.

(iii) The concept of RDBMS, benefits of RDBMS application with reference to PRIME & AFRES.

(iv) IT as convergence of computation, processing and communication technology.

(v) IT in Railways – OIS/TPS/Payroll, BIO Data, FMIS, e-mail, PRS/PNR/Train information status through internet, IVRS, Touch Screen, multimedia, computerized control charting, various MIS of Rlys. Viz. PRIME, AFRES, FOIS, PAS, FAS, OSS, MMIS etc. future perspective of IT in railways were also discussed.

(vi) The IT Act-2000 its objective, salient features were discussed,

(vii) The concepts of e-governance, e-policing, digital signature, digital certificate, e-damage were discussed with examples.

(viii) Various sections IT Act pertaining to e-crime and the punishments were discussed.

(x) Deficiencies in IT Act-2000.

v) Financial Advice in Railways by Sri Atul Mohan, FA&CAO(WST)

i) Financial advice on contractual matters & some case studies.

ii) The main purpose of tendering system is to achieve the best value for public money.

iii) Public advertisement should be in the most public manner.

iv) Amount of work on single tender to be restricted to restoration work like accidents, breaches and other emergencies and works of specialized nature.

v) Tender notice should be published at least one month in advance.

vi) Precautions prior to invitation of tender viz. approved drawing, soil, survey, and site availability were discussed.

vii) Since the practice of tender schedule vetting is stopped, it has to be ensured that the work is within the scope of sanctioned detailed estimate.

viii) No condition with financial implication should be incorporated in any tender document without finance concurrence.

ix) Tender opening should inter-alias reflect

(a) Serial No. (b) Date & time of opening (c) Name of the work (d) Tender Notice no. & date (d) Name of tenderer (f) Rate quoted (g) Spl. Conditions, if any (h) dated signature by tenderer opening official and witness.

x) The role of all TC members were discussed along with various case studies in greater detail.

vi) Role of TC members by Sri H.P. Nayak Dy.FA&CAO(G)

(i) The role of the Convener of TC

(ii) The role of Finance member

(iii) The role of Third Member of TC

(iv) The role of TC accepting authority

(v) Factors affecting reasonableness of the rate

(vi) How to ascertain reasonableness of the rate.

(vii) Equal responsibility by each member of T.C.

The following points were discussed:

a) An agreement, which is enforceable by law, is a contract.

b) Various stages involved in execution of any work/project and the role of members of TC while finalizing the TC recommendations.

c) Precautions to be taken while opening of the tender was deliberated in greater detail. The roles of TC members are to ensure that all these precautions are taken at the time of opening of the tender.

d) The salient features which should be part of the comparative statement and Briefing Note were discussed. It was emphasized that last accepted rates should be exhaustive and any special conditions mentioned by any tenders should be incorporated in the comparative statement.

e) The various factors that is to be considered by TC are sanctioned estimate, procedure of tender invitation and opening adequacy and correctness of tender documents, comparative statement & Briefing Note, validity of offer, Technical & financial credential, Spl. Conditions, rate analysis etc.

f) Finance member is the friend-philosopher –guide of the TC. The role of all the members and the accepting authority were discussed in detail.

g) Lastly, reasonableness of the rate, how it should be ascertained were discussed in detail.

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