The kinetic formulation described in a previous paper has been extended to include intramolecular reaction. The extension includes the incorporation of spatial correlation among chain species caused by volume exclusion. The need for consideration of spatial correlation among polymer species is reflected in the self-consistency of the kinetic theory. We provide a general procedure to look into the effect of intramolecular reaction on the branching process. Under a certain approximation in our grafting system, we obtain exact expressions for the weight-average molecular weight and gel point of the system. A thorough discussion is given of the various parameters that are important to the extent of intramolecular reaction and the branching process. It is concluded that intramolecular reaction cannot be simply neglected in the grafting system, since gel point and weight-average molecular weight are fairly sensitive to the extent of intramolecular reaction.