Mr. Subhash Mehta PRODUCER COMPANY (PC) Outline Job description: CEO The CEO is responsible to the Board: 1. Ensuring that the PC achieves the required asset growth and return on total assets as detailed in the agreed and published annual micro budget; 2. Which in turn is based upon the targets outlined in the agreed and published Company macro five year plan; 3. To that end, he should give all necessary support to the Company managers, whose prime responsibility is the same as (1) and (2) above for their area of responsibility; 4. Ensure that adequate working capital is made available to the managers for the efficient running of their divisions to budget or better; 5. Ensure that any surplus cash arising is effectively re-invested in the Company (as budget) or deposited; 6. Formally meet the managers, once a week, at fixed time to go through the weekly accounts with them and to visit their area of operations/factory and more often if necessary; 7. Give due consideration to issues and problems raised by the managers, insisting on a written cost / benefit analysis where appropriate, and always first asking for their recommendations/proposal, then making decisions swiftly, or giving reasons for delay; 8. Give a formal performance appraisal to the mangers six monthly/annually, preferable before the bonus and or salary review, based largely but not wholly on his achievement against budget; 9. Receive a formal performance appraisal quarterly from the managers on their key employees; 10.Visit customers regularly (not just when problems arise), together with the managers/sales manager when possible; 11.Protect the company from undue interference or disruption by govt/orgs personnel, insisting that all non-system communication should be routed only through him; 12.Ensure quarterly meetings of the Board and the Annual General Meeting.

Definitions, Notes and observations relating to the CEO’s Job description – Pages 1 & 2: Para 1: “Asset Growth” – The assets referred to here are primarily fixed assets and secondarily raw material stocks and work in process but NOT debtors and finished goods, which should be kept to a minimum. It is a way of saying that the real value of

the Shareholder’s of course be subject to the peculiarities of Indian law (e.g. how can we stay in the small – scale sector, is it worth the cost involved), but in general the considerations will be: 1. What is the rate of inflation? In order for the Shareholder’s funds to remain static in real terms, growth must equal the rate of inflation. 2. So there is some purpose in staying in business only if the growth rate is faster than inflation. 3. The rate at which growth may exceed inflation will be affected by: a. Market conditions: e.g. market growth, pressure from competitors, how easy or difficult it is for competitors to enter the market – a function of current prices etc. b. Management expertise and control. c. Determination, expertise and leadership of the CEO. d. Profitability, that is, return on total assets employed, which is a function of (b) and (c) manipulating and responding to (a). 4. Are the management information and control systems adequate, and are responsibilities, clearly and completely defined, to enable management to fulfill their objectives and plans, within budgeted targets. Para 1: “Return on total assets” Total assets are defined as: Fixed assets + stocks (raw materials + finished goods + work in progress + stores and spare parts + scrap) + debtors. The sums of money described under these headings represent the total sum made available by the shareholders to the Managers to run the business, upon which the budgeted profit must be made. ‘Creditors’ may be deducted from this sum, but only if by force of circumstance or management decision the amount involved has a noticeable effect on cash flow. “Return” is the amount of profit before tax and interest, expressed as a percentage of total assets. Management is required to produce this budgeted amount. The amount budgeted will depend upon the structure of the Company’s balance sheet, changes in technology, etc. It must always be higher than interest paid on loans. ‘The Company should plan to achieve a minimum 25% return on assets’. Para 1: “Annual Budget”: The annual budget for the coming year should be completed and published two months before the end of the current year. 2

The usual sequence for the production of the budget is as follows:1. The CEO will publish to the Managers the percentage asset growth and return on assets (total) to be used in framing the budget. He will have discussed and agreed these targets at a prior Board meeting. The second target is the more important, because it ensures the first. 2. The Accounts Manager collects all available information on likely cost rises in the coming year (e.g. raw materials, labour, salaries, power, fuel, for writing each departmental budget. 3. The Sales Manager, taking these cost rises into account, produces the order budget, dispatch budget, and collection budget, by month, coverring produce/product types, quantities and value in rupees. 4. These budgets are returned to the CEO for initial approval, and passed on to the Accounts Manager who derives from them the weekly income available to production. He issues this information to the Production Manager, together with the initial sales budgets. Buying (purchasing) budgets will also be based on these budgets, all giving details of their total asset budgets as well as expenses, and profit/loss. 5. CEO, managers’ and central budgets are produced. 6. All are returned to the Accounts Manager for checking and finallisation. 7. CEO’s approval is given, or withheld. 8. If approval is withheld, budgets are discussed with and returned to relevant Managers for amendment. 9. If approval is given, approval or otherwise will be sought from the Board who may also return for amendment. 10.Sequence 7-9 may be repeated as often as necessary to obtain the Board’s approval, called for the purpose.

The Start of the budgeting sequences must be set so that it is completed at the end of the ninth month of the Company’s financial year. Start and finish dates should be published in the Company calendar (see page ) annually. Para 2: “Company five year plan” 1. The five year plan is the basic document for planning the Company’s growth and profitability. 2. It is updated and issued annually for five years ahead. Thus each plan revises and updates two years of the existing plan and adds a further year. 3

3. It is completed by the time the annual budgeting starts, so that the figures used in its first year are available (but changes if later circumstances or considerations make that necessary) as the basics of the budget. 4. It will be based upon asset growth and return on total assets percentages published by the CEO. The first year at least will be the same as for the budget. 5. It is less detailed than the budget in its financial calculations, but contains in addition at least the following information for the previous years: a. Turnover by customer / by type of product Quantity by customer / by type of product Profit by customer / by type of product b. New marketing opportunities by customer / type of produce. c. Significant activity by competitors. d. Capital investment. New technology? Note: All proposed capital expenditure should be detailed by item particularly: product development, machines, plant, building extension, packaging, logistics, etc. Unspecific lump sums are NOT acceptable. e. Personnel: More Managers / Supervisors required to meet the planned expansion? If so how many, for precisely what functions? More/less labour required? How many? 6. The same sequence as for the annual budget (pages is followed). 7. The five year plan should be as realistic as possible, and detailed as necessary, particularly for any expansion required. It should NOT be just a vague hopeful ‘we’ll go on growing’ fairy story. Adverse market conditions should be faced if they are likely and conservative plans laid accordingly. 8. The first and second years of the plan should be broken down by week (2nd year could be month), as for the budget, the third, fourth and fifth year may be left as an annual figures, or broken down my month if that seems necessary. 9. In looking at the first draft of the plan, the CEO should ask himself ‘do I really believe this?’ If he has any reason to feel that it is too optimistic or pesimistic, he should exercise his right to reduce or increase the planned growth, and have the plan re-written. 10.The plan is issued after the CEO’s / Board approval has been given, and used as the base for budgeting. Para 4: “Adequate working capital”: In the job descriptions for the CEO and Managers, managing the provision and / or short-term deposit of funds is the one activity which is the sole prerogative of the CEO. All other management activities are carried out by some-one else on his behalf. Of course the ‘spirit’ of the company will be largely of the CEO’s own making, through the standards he sets and his own style of leadership, 4

inspiration and support, and that is vital. He will also be thinking further ahead than his managers, seeking opportunities, ‘charting the course’. But the cash raising / Cash management job is the one clearly defined activity which he should do himself. He may ask advice from the Board or Accounting Manager, but should undertake the actual negotiation himself as far as possible. If he has to ask someone else to do it, then he should give clear and precise written instructions and it should be a rare event. Only in that way will it be clear that an Accounting Manager need not imagine that he has become a Finance Director, before such a position is necessary. Further reflections on fund management. With the installations of budgetary control in the Company, Managers will become much more acutely aware of the use of assets, and the effect of interest payments on profits. They will feel that they are the prime cash generators, and that is good. They will therefore take more interest in what is done with that cash. Therefore the CEO will have to think more seriously than in the past about how he dispose the cash. Investment in outside business which do not pay a dividend affect the company’s cash position. The CEO will have to decide in the light of all this whether, future profits (after proper tax planning, of course) will be re-invested in the Company only, or elsewhere, whether they should not be invested only in such a way that dividends accrue to the company at once. Para 5: No comment. Para 6: “Fixed Dates”: It is very important, if the budgetary control system is to work effectively, that the routine enquiry and reporting sessions are held regularly and on fixed time and dates. It is essential that the CEO should set a good example. It is necessary to the proper functioning of the system in all its aspects that a Company Calendar is issued by the Accounting Manager annually. This will include at least: i.The end date of each accounting month, which will always be a Wednesday closest to the calendar month’s end, because the factory works from Thursday to Wednesday. ii.Start and completion dates for the five year plan. iii.Start and completion dates for the annual budget. iv. The weeks of the year numbered in sequence. v. Quarterly Board Meeting dates. The weekly meeting between the CEO and the managers to go over the previous week’s report, should therefore be fixed for the afternoon of the Wednesday. On the morning of Wednesdays the managers should have a similar meeting with their staff 5

responsible to them so that they are fully informed in readiness for speaking to the CEO. The Managers should hold meetings with those responsible to them, as is appropriate to monitor and control their plans and budgets. “Visit the areas of activities”: It is of course very important that all employees see and feel the presence of the Boss regularly. The saying in England is “there-is no manure as-good as the farmer’s boot”. That is, direct contact with the Boss, answering his questions, receiving his criticism or praise, is far more effective in keeping a Company on its toes than any amount of suggestions or orders from a distance. Such visits also ensure that the Boss is better informed than he will be if he speaks only to his Managers, whose natural tendency will be to over-emphasize successes and play down shortcomings. For an army to be effective, the Commander must have some direct contact with his troops, and they with him. It is a good thing, when budgetary control is working, to check the systems occasionally. Is the work ticket system being used properly? Can you show me where the work relating to this ticket is? Where is this scrappage recorded? and so on similarly, when problems are raised, if they can be referred back to the control documents, understanding will increase. For example, “Why was this shortage of material not brought to light earlier in the weekly plan?” “Why was this late delivery not noticed days ago when the ticket should have been returned to the office?” and so on. Para 7: “Issues and problems raised by the CEO”: Setting down a method coverring ALL cases, difficult, but generally speaking: 1. Listen carefully, without interruption. 2. Then ask questions, to clarify. 3. Then ask for his proposed solutions. 4. Then give your considered response. The sequence may be repeated! Sometimes, if the problem is difficult and important, it is a good idea to ask for a written description of the issues involved and written suggested solutions given. “Making decisions swiftly”: Of course not all decisions can be made swiftly, but most should be. If the matter requiring a decision is real and not fanciful, then failure to make a decision will hold up some process in the Company, and that may cost money. Moreover, many subordinate Managers will assess a boss, rightly, not only on the wisdom of his decisions but how fast he makes them. Nothing is more dispiriting than waiting around for an answer.

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Para 8: “Formal performance appraisal” practice is an excellent one. It gives the CEO an opportunity to speak to those directly responsible to him in a calm and objective manner, outside the pressure and hassle of day-to-day business. It will be mainly concerned with how the managers are performing against plan and budget, but should also include observations on: 1. 2. 3. 4. 5. 6.

How does he treat his subordinates? How well does he encourage self-confidence and growth in his subordinates? Does he provide them with useful training opportunities? Does his approach to customers inspire confidence or mistrust? Is he precise in his reporting, or does he talk too vaguely and too much? Is he too cheeky, or too servile?

Any observable shortcoming should be described, if possible, and advice given on how to improve. Sometimes it may help to arrange for him to attend a relevant training course, to strengthen a particular weakness. In any case, the discussion should be as unhurried, calm and frank as possible, and helpful rather than squashing. Para 9: “Protect the Company from undue interference”: This is an annoying but most of all in family companies, everywhere. But if the CEO is reasonably successful in achieving it, then he has a right to ask for a corresponding loyalty from his subordinates. They should be told of the damage that thoughtless gossip, story-telling or unnecessary talk with Board members can do to the Company and therefore to their own future prospects. Any clear evidence that such things are happening should be used to stamp hard on the villain doing them. Further thoughts on budgetary control: 1. Budgetary control will only work well if the laid down procedures are strictly followed. It requires unwavering discipline from everyone managing the Company, and from everyone implementing and recording the systems and costs. Usually, the establishment of this discipline takes only a few weeks, because most people see the value of clear and regular financial information, and because it makes managing the company easier. Only inefficient people do not like it. It is therefore, necessary to be very firm with anyone who is seen to be trying to buck the system, or to introduce hobbies or expenditure which have not been budgeted. 7

The CEO himself should set a good example. He should therefore have an adequate contingency fund budgeted in his own account to cope with unexpected costs (there will always be some) or to take advantage of chance opportunities. But his first reaction to any request from subordinates to spend money on anything whatever should be “is it budgeted?” Even if it is budgeted, that does not give an automatic blank cheque. First of all, is the company achieving budgeted profit? If not, budgeted expenditure should be blocked. Secondly, circumstances may have changed since the budget was written; is the expenditure justified in the light of current conditions? In such circumstances, or if the expenditure is not budgeted, then a written cost/benefit analysis should always be produced by the requestor before authority to go ahead is given or refused. 2. If it becomes evident that the year’s budgeted sales are not going to be achieved, then two questions must be asked: (a) Can we sell more if we reduce prices? If the answer to that is yes, then a calculation must be made to assess by how much the company assets and expenses must be reduced in order to maintain the budgeted return on total assets (which for the PC should always be a minimum of 25%) THIS IS THE KEY FIGURE WHICH MUST ALWAYS TAKE PRECEDENCE OVER ANY OTHER RATIO. Very often it is more profitable NOT to reduce prices, not only in the short term, but long term also because customers should not be led to think that reduced prices are going to stay. So the second question is: (b) Can we maintain in our budgeted return on total assets even with a lower turnover? Again a calculation must be made to assess by how much both assets and expenses must be reduced. Then an assessment must be made to judge what is possible in practice, and an action plan issued. Here is a brief check list: 2.1

1. 2. 3. 4. 5. 6.

Reduce raw material stocks and work in progress. Reduce finished goods stocks. Reduce fixed assets (can any be sold, that is) Reduce debtors? Increase creditors? Reduce all expenses, everywhere (e.g. no overtime, or reduce numbers employed; less travel etc.) 8

7. Reduce scrappage. 8. Work two shifts instead of three? All the evidence is that those Companies which have a good budgetary control system react much more effectively and swiftly to adverse market conditions than those companies which do not have one. This is because both their information and their control is better, and because they see clearly that effective cost reduction means reducing total assets as well as expenses: the return on total assets is the all-important factor. 3. The basic reason for making a company as efficient as possible is that it will stay in business longer and more profitably; it will get through bad times with less damage than inefficient competitors. Taking a longer term view, the CEO should ask the question: Are prices in my industry generally too high at present? The way to judge whether prices are too high is to ask the further question: Is it fairly easy for new companies to startup and make profits in this industry? If the answer to that question is yes, then he should initiate a long term strategy, through the five-year plan, to reduce costs and prices, to make competition tougher, and thus to make new entrants into the industry fewer. It follows from this of course that if new technology offers real cost reduction, he should plan to install it as soon as possible. Notes on diversification and new ventures: 1. Before any new venture or diversification is finally decided upon, a five year forecast/plan should be drawn up, along the lines of the Company five-year plan. Basically, the only reason for undertaking a new venture is to make increased profit on an enlarged asset base – which may of course include reducing tax liabilities in an existing company. 2. So the questions are: How much cash will it cost, in what period? What total assets will be required to run the business? What are the order taking, delivering and collection budgets/forecasts?

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How many Workers, Engineers, Supervisors, Mangers will be required? at what cost? Are there any special difficulties concerning recruitment, transport, location, which will involve unusual costs? How much working capital will be needed, how will it be provided, at what price? 3. All these (and no doubt other) questions should be asked and answered realistically. The five year forecast will then show the likely return on total assets: the forecast cash flow analysis will show net profitability and likely cash demands. 4. If the questions have been answered as realistically as possible, the forecast

should answer the final question: is it likely to be worth the effort? 5. Further considerations: (a) If the venture is connected with the present company, will it occupy too much of the existing management’s time and attention, to the detriment of the existing company? If so, the forecast should include the cost of hiring a venture manager, who should be given a clear job description (including penalties for failure) and a precise brief and clear targets – the five year plan. It may be advisable to offer a two year contract initially (b) If the new venture is concerned with a new technology, great care must be taken to ensure that the management team includes a person or people adequately versed in the new technology. That is absolutely essential. But such a person may not be a good business manager. It is therefore also essential, to ensure that the business has a good chance of flourishing, that an experienced, professional business manger is also recruited. It may indeed be necessary to make the venture manager in charge, with the technical manager, his under study, though the two may be given equal salary packages. (c) It is unlikely that a new venture will make the required return on total assets in the first few months. But in general, as a rule of thumb, you should begin to see the required return, and net profit, in the second half of the second year. If the forecasts show it later than that, there have to be very good long-term reasons for going ahead: in which case a five year plan should be written.

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6. IN EVERY CASE, once the go-ahead is given, start from day one with budgetary control, management accountability, clearly defined lines of authority, simple salary packages related to profitability, Job descriptions, Monthly accounts etc!! NEVER give way to any pressure or temptation to water down or avoid this essential rule. PRODUCER COMPANY Outline sequences: Producing the five-year plan and the weekly budget. The start and finish dates of each sequence will be fixed in the company calendar. FIVE YEAR PLAN 1. Two weeks before the five year plan ‘Start’ date in the company calendar, the accounting manger will issue a detailed timetable to schedule the following: 2. Board issues asset growth and return on total assets required figures, together with any other limitations they wish to impose, or observations they wish to make. 3. The Marketing Manager produces and issues to CEO, Accounting Manager and other Managers an analysis of the past five years activity under agreed headings, forecasts of market potential, and details of any new or special activity proposed in the plan period, together with order, dispatch and collection, and total assets forecasts, with the first two years broken down by month. Fixed asset forecasts must include a list of items. 4. The Accounting Manager derives the Company turnover (income) from this, and issues it to the CEO and Managers, so that 5. The operations manager produces forecasts for the coming five years of prime costs, expenses and total assets, bearing in mind the expansion and new products required by the marketing plan, with the first two years broken down by week and the balance by month. Fixed asset forecasts must list items. 6. Buying 1/c produces similar forecasts, which must also be available to the ops manager before he can complete his. Board, CEO and Admin Accounts/expense accounts are produced, together with itemized fixed asset forecasts. 7. CEO discusses forecasts with Managers / Board, while work is in progress.

1. 2. 3. 4.

Accounts Manager collects, checks and consolidates the plans. CEO gives or withholds approval, in which case amendments are made. CEO seeks Board’s approval. Amendments are made if required. After CEO’s final approval, the Accounting Manager publishes the Company five year plan.

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ANNUAL BUDGET The sequence for the annual budget is the same as for the five year plan, EXCEPT THAT. (a) The Marketing Manager does not provide past analysis or future proposals, but figures only, and MOST IMPORTANT (b) The Accounting Manager must issue to all Managers a list of any price rises expected in the coming year, or increases for: Power, Diesel Oil, Petrol, Copper, PVC, etc., telephone and any other relevant commodity or service, and expected percentage increase in (if any): wages, salaries, employment costs, etc., so that budgeted raw material, labour and expense costs may be as accurate as possible.

CEO It would be useful to set out a few reminders of action to be taken, as well as a few things which we raised but made no decisions on. I.

Introducing budget control by 1st November 1985:

a. Who is responsible for producing each of the figures in the Monthly Account? b. Who is to inform people whose job is to be transferred to another Department? For instance, the people in Dispatch & packaging moving into the Marketing Department. Are there any other changes of organization required? Who is to do what? c. Define clearly the demarcation line both in responsibility on the farms/PC between Ops Manager and Marketing Manager. d. The job card or work ticket was intended not only for control purposes in the farm and the PC but as indication to the Accounting Department that work has been transferred from Farm/PC to Marketing, so job cards must be returned from Farm/PC to Accounting Department as goods move into Marketing. Similar movement of documents must take place at every other inter-departmental movement. e. All accounting or other documents must be printed or duplicated before 1st Nov each year. f. A standard cost sheet must be prepared and standard costs established and issued before 1st Nov. The CEO has just informed me of your forthcoming travels so I think it is important that you set all these matters in hand, saying clearly who is responsible for 12

what, before you leave. (It might be a good idea for you to let the Board know what your foreign visit plans are in advance, to get the proper relationship and system going!) II.

Action required to reduce costs as soon as possible in order to achieve the second-half budget:

a. Reduce scrappage by 1%, if it would help to do a survey of the causes of scrappage before taking corrective action who is to do it? Would a preventive maintenance scheme help? b. Reduce debtors. Sales should be given clear instructions. c. Although we decided to leave the total asset figure as it stands, it would still be a good idea to sell off any unused plant, material or fixed assets. Who should sell what, after consultation with the CEO/Board. Squeeze all expenses. Make clear to Managers what percentage reduction you expect, by when. Issue written orders giving indications where possible as to which particular areas you want squeezed. III.

Other matters:

a. Decide whether to install a processing machine, as soon as possible. b. Talk to major suppliers about your expected requirements for the next 18 months to see whether a contract of some sort might reduce prices. c. Make sure that sales understands that any discount terms to customers should still leave the standard cost as net income and that he only offers prices lower than standard cost, only with your permission. d. Weekly planning meetings to establish required outputs should include not only representatives from Marketing and Ops but also some informed person from purchasing. e. Provide the CEO with a written Statement of the costs of all the products. f. Responsibility for the Guest House to be clearly allocated and defined and a budget and an account raised. I suggest you make a detailed written proposal to discuss and agree with the CEO. IV.

Raise with the CEO the question of Managers having their weekly day off and said that in my view one day off a week is important for the proper running of the Company and should not be interfered with. Would it be possible to give everyone the same day off ? so that if the CEO takes the weekly Meeting on Saturday, everybody is still at work on Sundays? It seems that some such arrangement is sensible and necessary. Any proposals?

V.

CEO must confirm acceptance and adherence to the annual Company Calendar or make changes which will ensure adherence. 13

Outline Job description: CEO The CEO is responsible to the Board for: 1. Ensuring that the Company achieves the required asset growth and return on total assets as detailed in the agreed and published annual budget; 2. Which in turn is based upon the targets outlined in the agreed and published Company five year plan. To that end, he will: 3. Ensure that the Managers responsible to him are capable of producing the required budgeted results by reducing any skill deficiencies they may have through personal instruction or arranging relevant training, or if that proves fruitless replacing them after consultation with the Board. 4. Ensure that those responsible to him are fully aware of the standards of integrity and speed of response required by the Company in their dealings with customers, suppliers, all levels, and take disciplinary action when necessary; 5. Ensure that all Managers and Supervisors are constantly aware of the need for continuous cost reduction, method and product improvement; 6. Initiate and encourage adequate budgeted product development (R&D); 7. Keep abreast of market trends and innovations in raw materials, machinery, technology and products; 8. Be on the look-out for new opportunities in the market, and recommend new investment and/or venture to the Board, always backed by realistic cost/benefit analysis; 9. Ensure production of the three year plan and annual budget by the published date; 10.Give the Board timely warning of possible shortfalls against budget or difficulties which are likely to arise, together with proposals for corrective action; 11.When necessary provide the Board with adequate information additional to the Company’s regular information documents so that the report fully and accurately to the Board when required to do so; 12.Uphold and protect the Company’s good name at all times.

OUTLINE JOB DESCRIPTION: MARKETING MANAGER The Marketing Manager is responsible to the CEO for: 1. Selling at least the volume of products budgeted, at least budgeted prices, which may be reduced only with permission of theCEO; 2. Collecting payments receivable as budgeted or better; 3. Ensuring the inspection, packaging and distribution of all products to delivery date; 4. Monitoring and managing his department’s performance with the help of sales records and the monthly account, and achieving the Marketing Department’s budgeted profit or better; 5. Upholding and protecting the Company’s good name at all times; 14

6. Dealing frankly, fairly, swiftly and efficiently with customers; 7. Keeping adequate records of sales by product, price and customer, of failure to sell (with reasons), of debtors of salesman’s performance; 8. Arranging his own and his salesman’s visits by forward programme, to ensure maximum effect at minimum cost; 9. Producing order-taking, collection, turnover and product forecasts for the five year plan and the annual budget, including any new products required; 10.After consultation and agreement, producing the Marketing Department’s annual budget and three-year plan (see paper “Outline sequences: producing the three year plan and annual budget”); 11.Providing purchasing and the factory with updated twelve week forecasts weekly, and arranging a weekly production planning meeting between his own and those two departments; 12.Ensuring that those responsible to him uphold and depend the Company’s standards of personal integrity and correct and fair dealing; 13.Doing all he can to assist the CEO, and his fellow Managers, to achieve the Company’s objectives as well as those of own Departments; 14.Giving full and accurate information to the CEO at monthly management meetings and whenever need arises; 15.Bringing to the attention of the CEO difficulties and problems which have occurred or are likely to occur, but together with alternative proposals for corrective action.

Outline Job description: Operations Manager The Ops Manager is responsible to the General Manager for: 1. Ensuring that the ops achieves the required return on total assets as detailed in the agreed and published factory annual budget, or better; 2. Ensuring that the factory produces at least the volume of products budgeted, at budgeted cost, on time; 3. Ensuring that agreed information and control systems are operated efficiently; 4. Monitoring and managing the ops performance with the help of weekly controls and monthly accounts; 5. Ensuring that required product quality standards are achieved. 6. Providing a weekly list of output arrears to the CEO and Marketing Manager; 7. Undertaking continual cost reduction, method and produce improvement; 8. Enabling supervisors and all others responsible to him to realize their potential by personal instruction, or by arranging necessary training; 9. Giving full and accurate information to the CEO at monthly management meetings, or whenever need arises; 10.Dealing frankly, fairly and firmly with all those under his command, and meeting the obligations of the Company’s personnel policies; 15

11.Producing the factory’s three year plan and annual budget for agreement by the scheduled date; 12.Upholding and protecting the Company’s good name at all times.

Outline Job description: Accounting Manager. The Accounting Manager is responsible to the CEO for: 1. Providing the CEO, Managers and Supervisors with timely and accurate accounts, financial analysis and control documents as required by the Company’s Management information, budgetary and cost control systems; (sec 12 below). 2. Providing information and documents to the CEO and Managers such that the three year plan and annual budget may be formulated; 3. Writing up, checking, consolidating and publishing the three year company plan and annual budget, and providing with each a cash flow analysis for theCEO; 4. Publishing the Company calendar annually, with fixed dates for start and completion of the three year plan and budget, quarterly Board Meetings, monthly management meetings and any other important Company fixture; 5. Calculating and publishing standard costs for the company’s products; 6. Proposing, and agreeing to the Accounting Dept’s three year plan and annual budget with the CEO, and operating the department to budget or better; 7. Ensuring that the Company’s ledgers are kept accurately, legibly and up-to-date; 8. Ensuring that all information required by Government departments and agencies is accurately, regularly and readily available; 9. When necessary supplying the CEO with supplementary or expanded reports for Board Meetings and management meetings and whenever need arises, either by routine or on request, or at his own initiative; 10. Proposing corrective action to the CEO and fellow Managers when shortfalls against budget occur or are likely to occur; 11. Monitoring and occasionally checking and when necessary correcting shortcomings in the Company’s management information, budgetary control and costing systems; 16

12. Ensuring the regular production and publication of the Company’s monthly accounts not more than seven days after each financial month end, and publishing all other system and control documents by the due date; 13. Proposing innovation and improvement in the Company’s financial control systems to the CEO; 14. Providing adequate and trained personnel for his department’s budgeted activity; 15. Working with the Company’s auditors to produce the Annual Report; 16. Upholding and protecting the Company’s good name at all times.

Reimbursement of Managers 1. Conveyance (Transport) a. The Managers will use their own car. When they use the car on Company business, the Company will pay him as allowance of Rs. 5 per K.m. driven, while petrol costs Rs. 50/- per liter. No driver will be provided. No allowance will be paid for driving between home and office. Alternatively, be paid a flat allowance of Rs. 1000/- monthly, which may be raised at the discretion of the CEO in the light of future cost or inflation increases. 2. Telephone The Company will pay the rental, but not the security deposit, for one home telephone each for the Marketing Manager, the Factory Manager, and the Accounting Manager. The Company will reimburse each of them for all billed trunk calls made on its behalf. 3. Housing Allowance. The Mangers will be paid a housing allowance of 30%. 4. Profit-related Award: The Managers will be paid a profit-related award as specified in “Award for Managers related to profit achieved”.

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PRIVATE AND CONFIDENTIAL

Award for Managers related to profit achieved, Scale 1 1. ‘Profit’ means profit after depreciation but before tax and interest. 2. ‘Total assets’ means fixed assets plus all stocks including work in progress plus debtors. 3. The amount of award paid will depend upon the percentage Company profit on total assets achieved above a minimum. No payment will be made below. 4. The award if earned will be paid in May June each year for percentage profit achieved in the previous financial year, EXCEPT THAT this first payment will be made for the last six months of that year only. 5. The total possible award for a full year will be Rs. 6,000/- which will be paid only if the achieved profit is 25% on total assets or more. If a lower profit is achieved, the following pro-rata payments will apply: Below 20% From 20% to 21% Above 21% to 22% Above 22% to 23% Above 23% to 25% 25% and above

Nil Rs. 1,500/Rs. 2,500/Rs. 4,000/Rs. 5,000/Rs. 6,000/-

6. This award applies only to theCEO.

Award for Managers related to Company profit achieved, Scale 2 1.’Profit’ means profit after depreciation but before tax and interest. 2. ‘Total assets’ means fixed assets plus all stocks including work in progress plus debtors. 3. The amount of award paid will depend upon the percentage Company profit on total assets achieved above a minimum. No payment will be made below. 4. The award if earned will be paid each year for percentage profit achieved in the previous financial year, EXCEPT THAT this first payment will be made for the last six months of that year only.

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5. The total possible award for a full year will be Rs 5,000/- which will be paid only if the achieved profit is 25% on total assets or more. If a lower profit is achieved, the following pro-rata payment will apply: Below 20% From 20% to 21% Above 21% to 22% Above 22% to 23% Above 23% to 25% 25% and above

Nil Rs. 1,000/Rs. 2,000/Rs. 3,000/Rs. 4,000/Rs. 5,000/-

Award to be paid in May 1986 on the annualized percentage profit achieved in the second-half of 1985-86 will be at half these rates.

6.The total possible award for a full year will be Rs 4,000/- which will be paid only if the achieved profit is 25% on total departmental assets or more. If a lower profit is achieved, the following pro-rata payment will apply: Below 20% From 20% to 21% Above 21% to 22% Above 22% to 23% Above 23% to 25% 25% and above

Nil Rs. 500/Rs. 1,000/Rs. 1,500/Rs. 2,500/Rs. 4,000/-

☼☼☼☼☼☼

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