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Sabarinath M
Mumbai, Dec 7: OP Lohia-controlled Indo Rama Synthetics, the second-largest private sector petrochemicals company, has roped in consultancy giant KPMG Peat Marwick to implement new and improved accounting practices.
KPMG has been assigned with the task of recommending changes in systems which will form the background for a long-term accounting policy. Fresh accounting guidelines presage a major enterprise resource planning (ERP) programme which the company is planning to implement in January 1999. The move comes after another Big Five consultancy agency, Andersen Consulting, had, through an extensive business process re-engineering programme, reorganised the departmental responsibilities of the company.
"Better accounting practices are vital for long-term growth. Taking this fact into account, KPMG has been asked to suggest changes in the accounting practices," said a top Indo Rama official.
The new accounting guidelines will be ready by end-1998, just before an ERP programme is set in motion.
Hit bya crumbling market and consequent erosion in profits, Indo Rama has for the last six months been engaged in the procees of putting together a comprehensive restructuring programme that would bolster its long-term bottomline.
"The polyester market is drifting away from expectations for the last one year. The unpredictable behaviour of the market coupled with labour problems at the Nagpur unit have caused the company's bottomline bust," said sources close to the company. The company has reported a whopping loss of Rs 85 crore for the first six months ended September 30, 1998. Losses for fiscal 1997-98 stood at Rs 87 crore.
The expansion-cum-diversification plans of the company have been put on hold and it is pulling out all stops to mop up funds so that some of them can take off, said sources.
The projects include a purified terepthalic acid project in Andhra Pradesh and an integrated cotton textile project in Chennai for which all the strategic alliances have been finalised.
"Falling raw materialprices together with bouyant PSF market will turn the tide in favour of the company this year. Also, labour problems have subsided," Indo Rama sources said.
Recently, through a business process re-engineering programme, the management redefined responsibility distribution within the company, identifying separate profit centres and chains of command. An important new department created was that of information and communication, through which better information flow was sought to be created through the organisation.
Reliance Industries, the largest private sector petrochemicals company, had also gone in for substantial modernisation of its registration and transfer process using another Big Five consultancy organisation, Price Waterhouse.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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