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Submitted in partial fulfillment of the requirement for the award of the MASTER OF BUSINESS ADMINSTRATION
PREFACE
As an essential and obligatory part of my course which I have undergone 4 weeks of complete summer training at HEINZ INDIA Pvt. Ltd, ALIGARH. This training helped me in getting knowledge in to business environment. I got the practical knowledge about HEINZ INDIA Pvt.Ltd, on how the work is done in the company and I have tried my best to give all the possible information regarding the history of HEINZ. In this Project Report I have also mentioned about the operation of manufacturing unit of the company and also showed the functions of various departments respectively. I indeed also tried to put some light to the facilities, responsibilities, etc which is provided by the company regarding its workers for their welfare services. I also gave some of my efforts in realizing the importance of training programmes for employees and other workers and how helpful it can be for their welfare. This Project Report overall gives the information which not only serves the comprehensive knowledge base but also helps the reader in understanding the fundamentals related to the subject.
ACKNOWLEDGEMENT
By the grace of God , I SAMAD ZIA take the opportunity with great pleasure to plot the circle of compliment deep sense of gratitude & profound thanks to all those who have spared their valuable time and giving me their co-operation to make this complete. I am grateful to Mrs. Seema Singh (H.R. Officer) & Mr. Rajesh B. Sharma (Manager- H.R.) to allow me for training at Heinz India Pvt. Ltd. I also express my profound to Mr. Manoj Sharma who help me a lot during the training period. At this moment, we bow to God almighty who gave us the strength and inspiration to complete this project successfully .Without his grace and kindness, it would have been impossible for a humble create like us to accomplish this project. First of all I would like to express my sincere thanks to my project supervisor. Mr. C.S. Tripathi (Accounts officer) and also thankful to Mr. Rakesh Kumar, Deepa Singh HEINZ INDIA PRIVATE LIMITED ALIGARH for his effort , proper guidance, supervision and generous cooperation throughout this work enabled me to present this project report. I express my profound to all office members who help a lot during the training period for giving precious time, giving encouragement time to time. I would be failing in my duty if I do not express my heartiest thanks to lectures and coordinator department for giving all possible support, suggestion and valuable time in preparing this project.
DATE :
DECLARATION
I, Samad Zia a bonafide student of AL- Barkaat Institute Of Management Studies Aligarh , hereby declare that I have undergone the summer training at Heinz India Pvt.Ltd. under the supervision of Mr.Rakesh Kumar on and from July 2011. I also want to declare that the present project report is based on the above mentioned summer training and is my original work. The content of this project report has not been submitted to any other university or either in part or in full for the award of any degree ,diploma or fellowship. Further I assign the right to the university , subject to the permission from the organization concerned , use the information and the content of this project report to develop the cases ,case lets ,case leads and for use in teaching .
DATE:
TABLE OF CONTENT
INTRODUCTION
GLAXO TO HEINZ THE NEW HEINZ
INTRODUCTION TO FINANCE
OBJECTIVES OF THE STUDY CAPITAL EXPENDITURE (CAPEX) ACCOUNTING FOR FIXED ASSETS DEPRECIATION FINANCE DEPARTMENT RESEARCH METHODOLOGY LIMITATIONS
CONCLUSION
RECOMMANDATION AND SUGGESTION BIBLIOGRAPHY
INTRODUCTION
Heinz corporate office of HEINZ INDIA PVT LTD is situated at Mumbai. As succeeding generations sustained the company and maintained its public following throughout a period of enormous social, political and economic upheaval, the constancy of Heinz proved a great comfort in time of depression and world war. A global economy is emerging, uneven but inexorable. In the course of its 125 years, Heinz has grown from an American dream to a global brand. That achievement is treatment to the universal appeal of the Heinz ideal - pure food and healthful, affordable nutrition. It is also a tribute to the tenacity and inventiveness of the world. As a new generation of customers enters a widening world market place, the appeal of the Heinz ideal remains unceasingly durable and filled with promise. In September 1993, at the annual meeting ORELLY amplified the strategies and shared the good news to shareholders. A new Heinz had emerged, poised for substantial growth in 1990s and beyond.
GLAXO TO HEINZ
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Heinz India private ltd by 1999 has become Deemed Public co. as it has crossed the average annual turnover of Rs. 10 crores for three consecutive years. A limit set by companys act, 1956 which permits a co. to omit writing the word private in its name. So Heinz India private ltd was renamed as Heinz India ltd, and again renames the co. Heinz India ltd.
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HEINZ VISION
Delivering high quality products. Adhering to standard. Be a company with strong and motivated workforce. Satisfying customers needs. To become renounced in commercial and social sector.
CULTURE
Worlds second largest FMCG company, Heinz has a conducive environment which not only integrates and motivates all the employees towards achieving high standard but also makes sufficient room for everybodys growth. People are a value asset as at Heinz, main emphasis is on the task. Efforts are made towards satisfying the customers and expanding the market share. A good blend of behavior and skill development programs provides stimulus for growth and career development. Over the years Heinz has concentrated on developing internal relationship so that external relationships are enhanced.
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Heinz has only one trade union H.S.A (Heinz Staff Association).
For security purpose, Heinz has divided the whole into different zones as follows:
Zone A B C D E
Department Administration block, MPO office, analytical lab, godown nos. 17 officers colony, area new boundary well. Engineering office, stores, workshop platforms, and generator house, old and new boiler. Production department, old lab, sprays drier no.1 and no.2, factory stores. R.P.U.1, 2, 3 all eastern wing godown and acid stores. Change and rest rooms, dispensary, fumigation godown, guest house.
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Glucon-D [original]
Glucon-D [orange] Glucon-D [Nimbu pani] Glucon-D [lime] Glucon-D is manufactured at Aligarh plant.
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Vitamin rich under the brand name of Complan is available in following three flavors; Natural Chocolate Mango Complan is manufactured in Aligarh plant.
3. Ghee
As a by product of milk is manufactured under the brand name of Sampriti. It is manufactured at Aligarh.
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5. Heinz ketchup
Recently Heinz has come up with new product Heinz Ketchup. Although Heinz is primarily a ketchup manufacturing company, this is new first ever ketchup produced market. Heinz ketchup is manufactured in Bangalore. by Heinz for India
2. PRODUCTION DEPARTMENT
Its functions are: (A)- Processing Area To conduct the dairy activities effectively. To separate fat from milk for the preparation of ghee. To dry up the skimmed milk for the preparation of complan. (B)- R.P.U This unit is setup for the purpose of packing the products.
3. PERSONNEL DEPARTMENT
Its functions are: Selection and recruitment of employees. Maintaining the personnel record. Provision of training, promotion and job rotation. Maintaining the record of temporary causal, contract and apprentice workmen.
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4. F.S.U
Heinz has a wide range of products, which are mainly the food products. The co. has F.S.U., which mainly looks after safe delivery of the goods to the customers since the factory is located far away from the city. Cleaning the production units, machines, godown and other places in the factory. Pest control and infestation control. To provide fumigation to the raw material and packed products. Maintaining temperature for different goods. Maintaining accounts for incoming outgoing materials.
5. ENGINEERING DEPARTMENT
Its main functions are: To help in the operation and maintenance of various equipment used in production process. To provide effluent treatment and pollution control.
6. TRANSPORT DEPARTMENT
Basically transport department is the part of engineering department. The chief functions are as follows: To provide tankers for carrying milk from milk collection centers. Provision for transportation of raw material and finished product to the distributors. Provision of contract based conveyance facility to the employees.
Quality policy: Heinz India private ltd. Is committed to: 1. Procurement, development, production, and marketing of safe clean wholesome food of high quality, keeping focus on needs of customer by establishing and maintaining proper facilities necessary for controlled production consistency in a controlled manner, so as to ensure that customer confidence is generated and maintained consistently. 2. Establishing and maintaining appropriate operating and monitoring procedures necessary for controlled appropriate production. Establishing and maintaining training programmed so that every person responsible for product integrity and safe guarding quality environments competent to carry out his responsibility. 3. Achieving high safety, occupation health and environment standards establishing interval review procedure to ensure compliance of applicable laws and regulations. Its main functions are: Maintenance of quality assurance department and lab equipment. To conduct quality assurance test of raw materials and packing materials.
9. PURCHASE DEPARTMENT
Its main functions are: Material procurement. Asking for quotations and their evaluation. Order to the suppliers and procurement of order. 22
10. PLANNING & STORES DEPARMENT Its main functions are: Ensure storage of material under hygienic conditions and meet good food manufacturing practices standards. Ensure compliance of ISO norms. Ensure safe unloading of stock and no discrepancy with ledger balance.
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INTRODUCTION TO FINANCE
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INTRODUCTION OF FINANCE
Finance is a circulatory system of the economic body of a firm. The term finance is a broader sense, finance is not money alone, it course future payment also. In an organization composed of number of separate activities, each working for its own end but simultaneously making a contribution to the system as a whole, some force is necessary to bring about direction and coordination of economic activity to facilitate its smooth operation. Finance management is the agent that produces this result. Finance management is viewed as an integral part of overall management rather than as a staff especially concerned with the fund raising operation only. Though all the important financial decisions are made by the top management, the financial executive is deeply involved in this process. His main responsibility is to provide all the necessary accounting information, analysis and discuss the various alternatives and to suggest suitable solutions. His responsibilities lie in the following sphere of finance function: FINANCE FORCASTING: - It is the chief responsibility of financial executive to make a sound financial forecast and then plan for achievements. He sees that the sufficient supply of cash is available at the proper time for the smooth flow of firms activities. He tries for an efficient flow of firms activities. Experience financial crisis and differ its payments. RAISING OF NESSARY FUNDS:- Another major responsibility of financial management is to supply adequate funds to the firm for its various operations. A cost benefit analysis of various alternative sources must be made before raising funds from any particular source. If the company decides to raise the needed funds by the means of security issues, the finance manager has to arrange the issue of prospect for the floatation of issues. Where the company decides to borrow money from financial institutions including commercial banks and special financial corporations, the finance manager has to negotiate with the authorities. ALLOCATIONS OF FUNDS: - In allocating the funds, consideration must be given to the factors such as immediate requirement, management of assets, profit prospects and overall management plans. The finance manager has to ensure proper utilization of cash funds by taking such steps as to help in speeding up the cash inflow on one hand and slowing cash outflow on the other hand. 25
ALLOCATING INCOME:- Income can be retained for financing expansion of business or may be utilized for retiring outstanding debt or it may be distributed to the owners as dividend as to return of capital. DISPOSITION OF PROFIT:- The proper disposition of profit is also an important responsibility of financial management. Regarding the allocation of net profit after payment of taxes, a typical firm may be said to have two choices: 1. To pay dividend to shareholders as a return upon their investment and, 2. To retain earnings for the expansion of business. The financial manager balance the expectation of investors and the need of retained earning to acquire additional assets. Heinz India private ltd. Aligarh is the man manufacturing unit. The stock is transferred from Aligarh plant to Varanasi, Ghaziabad and Unnao (near Lucknow). Unnao is known as Suklagang, Delhi branch of Heinz India private ltd deals with the operation regarding sales. It prepares monthly sales report regarding three locations (Varanasi, Ghaziabad and Suklagang). This report is checked at Aligarh factory. The central sales tax rule, 1975 prescribes use of various forms for the purpose of central sales tax 1956. If the goods are send to outside U.P. than form c is taken by the company. It is the responsibility of a/cs department to receive form c. if form is received then 2% sales charges is taken by the company otherwise 10% is charged. Form f is for transfer otherwise than by sales. Form 31 is only for purchase of material. If the purchase is more than 10 lakhs then form 31 also include entry tax.
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ASPECTS OF FINANCE
Money is all about goes the famous saying. This is also said about finance that money is the life blood of any company and the company also fails without money. It is very important that finance department work very efficiently. Thus it can be said that success of any organization largely depends upon the optimum utilization of funds. The main finance department of Heinz is in Mumbai. Aligarh factory has a finance department which handles the daily affairs of the factory. Finance and accounts department is the backbone of any organization. Almost all kinds of business activities directly or indirectly, involve the acquisition and use of funds. For example: promotion of employees in production is clearly a responsibility of the production department but it requires payment of wages & salaries and other benefits and thus involves finance department. Similarly buying a new machine or replacing an old machine for the purpose of productive capacity affect the flow of funds. The accounts department at Aligarh factory also controls the computer department. Coding is the soul of computer output to avoid this problem, the new technique has been developed which is called coding is defined in numbers as well as in alphabets. It can be either in numeric value or in alphabetical only. It can also be a combination of alphabet and numeric value. Different companies use different type of coding structure. The coding structure of the company is defined as per their own convenience and the requirement of company. Computer is an electronic device and it is unable to understand the HUMAN LANGUAGE. In order to overcome this problem we use the language, which can be understood by computers, which is called coding.
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FINANCE DEPARTMENT
Account officer
Account officer
Account officer
Account officer
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To study the procedure of identifying the needs of fixed assets, purchasing and installing to get output of the capital expenditure. To review the process of Accounting for fixed assets in Company. To study the legal aspects related to the fixed assets investment. To study the depreciation aspects of fixed assets and its impact on the production, in payment of taxes and in maintaining the profit of the company. To study the role of different departments of the company regarding the capital expenditure.
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CAPITAL EXPENDITURE
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The process of capital expenditure starts from the following ways: Identification of needs for the plant where capital expenditure would be needed to achieve the companys objective. Needed items are classified in Capital Appropriation Request (CAR) format, which is basically generated by engineering department of the company. Approval of CAR is done by different authorities such as concern managers, Assistant Manager Project, Manager Quality Assurance and General Manager Operations. It depends upon the amount of the fixed assets. The table showing below:
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Management Grades
Managin g directors
Vice president / directors Rs. 2000000 3000000 3000000 500000 3000000 1000000 500000 5000000 20000 100000
Vice preside nt Rs. 200000 0 300000 0 300000 0 500000 300000 0 750000 500000 250000 0 20000 100000
General manager
Grade 1
Grade 2 Rs. 750000 750000 100000 75000 75000 100000 10000 10000
Purchase Order Capital items Coded items Affiliated purchase Non-coded Marketing Services (branches) Services (others) Advance payment Cash payment Traveling expenses Inventory adjustments Branches Factory Credit notes Customer claims Sales Return Material services
Rs. Over 2000000 3000000 3000000 500000 3000000 1000000 500000 Over 5000000 Over 20000 Over 100000 Over 200000 200000
Rs. 2000000 3000000 3000000 500000 3000000 300000 500000 1000000 20000 50000
Rs. 200000 0 300000 0 150000 0 500000 300000 0 150000 500000 500000 20000 30000
200000 200000
200000 200000
200000 200000
25000
10000
25000 25000
10000
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Engineering/user department
Identification of needs
Generating the CAR and its approval by assigned authorities Purchase requisition (PR) Purchase department Asking for quotations and their evaluation
Quality Verification
Supplier/vendor
Finance department
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The Capital Appropriation Request (CAR) form contains the following things:1. Appropriation no. 2. currency 3. Request date 4. department/location 5. Project no. 6. Project title 7. Purpose : purchase/lease 8. Lease payment per year 9. Lease terms 10. Present value of lease payment: discounted at 11. Category 12. Latest approval data 13. Commencement data 14. Completion data 15. Budgeted amount 16. Original request 17. Supplemental request 18. Total project 19. Classification of items 20. Expenditure 21. Total purchase 22. Leased equipment 23. Total lease 24. Total request 25. Memo: capitalized interest 36 capitalized expanded others totals
26. Change in working capital 27. Net profit after tax 28. Return on investment 29. Project IRR 30. Current business plan ROIC 31. Paybacks (purchase only) from commencement of spend to start up operations in yrs. 32. Advantage of owing (lease only) 33. Description of proposal. 34. Space for approval by different authorities of company.
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FORMAT OF CAR
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PURCHASE DEPARTMENT
Collect the purchase requisition (PR) from engineering or user department. Raise the Tender/Quotation for required items in PR. Analysis of the quotation. Prepare the statement for selected vendors quotation. Placing the order through the purchase order.
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Categories of items Raw material and packing Imported materials Engineering spares Consumable material Services Capital expenditure (CAPEX)
Specific digit starts in the sap no. 1.. 2.. 3.. 5.. 6.. 7..
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Maximum amount of revaluation Revaluation of fixed assets should be restricted to the net recoverable amount of fixed assets. Improvements and Repair There are two accounting treatments of cost of improvement and repair. These accounting treatments depend upon the following conditions: After the improvement and repairs, expected future benefits from fixed assets do not change. The expenses of improvement and repairs are charged to profit and loss account. After the improvement and repairs, expected future benefits from fixed assets will increase beyond the previously assessed standard performance. These expenses on improvements and repair are included in the gross book value of fixed assets. Addition or extension of capital nature to an existing asset: If integral part of existing asset it is generally added to gross book value of existing assets. If separate identity and capable to be used after the disposal of existing asset it is accounted for separately. Retirement and Disposals: Fixed assets are deleted from the financial statement either on disposal or if an expected economic benefit is over. Gains or losses arising on disposal are generally recognized in profit and loss account. Capitalization of exchange differences incurred on fixed assets related borrowing: Instruction contained in part-I of schedule-VI of the Companies Act, 1956 regarding adjustment of exchange difference in carrying amount of the fixed assets due to change in the rate of exchange of fixed assets linked liability denominated in foreign exchange has been superseded by issue of companies (Accounting Standards) Rules, 2006. Therefore, AS-11 will apply and such exchange difference shall be recognized in profit and loss account and will not be capitalized with the cost of fixed assets. Treatment of CENVAT Credit on capital goods (Fixed Assets):
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Accounting for fixed assets issued by the ICAI, requires that only nonrefundable taxes and duties in respect of the fixed asset should be included in the cost of that fixed asset. Cenvetable excise duty can be considered as a refundable tax. Therefore CENVAT credit of such duty should be reduced from the purchase cost of capital goods concerned and recognized as a separate asset. The CENVAT Credit in respect of capital goods is allowed for an amount not exceeding 50% of the duty paid on such capital goods in the financial year in which the goods are received in factory and the balance will be allowed in the subsequent year(s). The amount of CENVAT credit taken in the financial year, in which goods are received, should be debited to an appropriate account, say CENVAT Receivable (Capital Goods) Account and balance may be debited in another appropriate account say CENVAT Credit Deferred Account. In the subsequent financial year(s), when the balance CENVAT credit is availed of the appropriate adjustment for the same should be made, i.e., amount of CENVAT Credit Deferred Account with a corresponding debit too CENVAT Credit Receivable (capital goods) Account. On actual utilization, the account will be adjusted in the excise duty on the final products. Accordingly, the purchase cost of the capital goods would be net of the specified duty on capital goods. The unadjusted balance standing in the MODVAT Credit receivable (Capital goods) account, if any should be shown on the asset side under the head Advances.
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DEPRECIATION
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DEPRECIATION
Depreciation may be defined as the measure of the exhausion of the effective life of an Assets from any cause during a given period. Depreciation is a permanent, continuing and gradual shrinkage in the value of fixed assets. With the exception of land most fixed assets have united useful life as they are subject to depreciation, depreciation is the distribution of total cost of assets over its useful life. From the above definition it is clear that the term depreciation means gradually reduction in the value of an assets. This gradually reduction in the value of an assets may be due to its constant use, change in the market value of an assets , depletion in the quantity of an assets (as in the case of mines ) or new inventions or discoveries.
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CAUSES OF DEPRECIATION
The main causes of depreciation in the value of fixed assests are as follows: 1-
2-
3-
4-
5-
6-
On the basis of the above causes, it may be concluded that depreciation is the decrease or depletion in the value of an assets due to wear and tear, exhaustion, exposures to the elements, obsolescence, lapse of time and accidents.
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Marginal Significance of Depreciation in Capital Investment Decisions:- Depreciation is of particular significance to the management of an
enterprise in taking decisions relating to Income measurement and the impact of 50
Inflation, and Investment of capital. The net Income earned by a company is determined by charging the operating costs against the revenue of the period. Depreciation is an important part of the operating cost of the business. Since operating cost are important for business decisions, the management has to take into account the impact of depreciation on the business income. During inflation period, depreciation charged on historical cost of assets will be lower than what is desirable. In order to ensure that the reported income is correct and adequate funds are available for replacement of assets, the management has to make necessary adjustments to restate depreciation and income in terms of replacement cost of the assets. Income tax provision has the strongest effect on depreciation policy pursued by the management of the company. In respect of capital or investment decisions which are made on the basis of rate of return. The management carefully considers the amount of chargeable depreciation as it affects the probable cash inflow from a particular investment project on account of savings in tax liability to the extent of depreciation charged. Thus, depreciation is of particular significance to the management in taking capital investment decisions also. Factors Affecting the Amount of Depreciation The Following are the three important factors which should be considered for determining the amount of depreciation to be charged to the profit and loss Accounts in respect of a particular fixed Assets. Historical cost or other amount in place of historical cost like revalued amount, Estimated useful life of depreciated assets, Estimated residual / scrap value of depreciable assets.
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Methods of Depreciation
There are many methods which are used for charging depreciation in respect of depreciable assets of an enterprise. The Accounting Standard No.6, issued by the Institute of Chartered Accountants of India lays down that the depreciable assets should be allocated on a systematic basis to each accounting period during the useful life of the assets. This accounting Standard, however does not mention any particular methods for arriving at the amount of depreciation. But it does insist that once a methods is selected, it should be consistently used and not changed as and when by the management. If management wants to change the methods of depreciation once used in the previous years due to some reason or the other, i.e, for the compliance of the accounting standard or for making the financial statement more appropriate then the unamortized depreciable amount should be charged to revenue over the remaining useful life of the assets. Further the fact of such change should be expressed in terms of money and be disclosed properly in the final accounts. There are two important methods of depreciation. They are 1- Straight Line Method (SLM), 2- Written Down Value Method (WDVM).
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SLM is very suitable for assets like leasehold properties patents etc. which get depreciated with the passage of time.
It does not take into account the impact of seasonal fluctuations, inflation, and depression on the replacement cost of the assets.
Where , n= no. of year of useful life of the asset. This method suit to plant and machinery in which addition , extensions and repair take place frequently.
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Provided further that where an asset referred to in clause (i) or clause (ii) for clause (ii)(a), as the case may be, is acquired by the assessee during the previous year and is put to use for the purposes of business or profession for a period of less than one hundred and eighty days in that previous year, the deduction under this sub-section in respect of such asset shall be restricted to fifty per cent of the amount calculated at the percentage prescribed for an asset under clause (i) or clause (ii). Provided also that, in respect of the previous year relevant to the assessment year commencing on the 1st day of April, 1991, the deduction in relation to any block of assets under this clause shall, in the case of a company, be restricted to seventy-five percent of the amount calculated at the percentage, on the written down value for such assets, prescribed under this Act immediately before the commencement of the taxation laws (Amendment) Act, 1991. Provided that no deduction shall be allowed in respect of (A) any machinery or plant which, before its installation by the assessee, was used either within or outside India by any other person; or (B) Any machinery or plant installed in any office premises or any residential accommodation, including accommodation in the nature of a guest-house; or 54
(C) Any office appliances or road transport vehicles; or (D) Any machinery or plant, the whole of the actual cost of which is allowed as a deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head profits and gains of business or profession of any one previous year. Provided that if a plant is ready to use then it would be treated as capitalized. Provided that if plant is ready to use but does not start due to certain legal or other factors then the depreciation should be exempted.
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FINANCE DEPARTMENT
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FINANCE DEPARTMENT
Finance is the Life Blood of Every Organization For smooth running of the various business operations adequate supply of funds at the appropriate time is very essential. Owing to improper funds whole of the organization could suffer. Thus to manage the financial matters of the company a finance department is required which controls and regulates the flow of funds to different department as and when required. While preparing a budget the requirements of all the departments is taken into consideration. Specific tasks are assigned to each department and accordingly funds are allocated. Heinz being an MNC (multinational company which is US based) follows different accounting policies as required. In US countries it uses USGAP (United States General Accounting Principles) while in India it follows IGAP (Indian General Accounting Principles). Finance department plays main role in CAPEX (Capital Expenditure). All the CAPEX are checked and analyzed and also plays the role of payment of final stage. Thus, all the activity moving around the finance department with the following significant role such as: Capital management and budgetary control, Purchase and sales account control, Statutory and audit compliance, Wages administration, Take part in approval of CAPEX, Checking the proper documents and invoice of the supplier, Estimation of taxes, Analysis of cost of capital expenditure and their output, Payment for all kinds of purchases and expenditures. 57
Advantages of SAP:
Full data available. Visibility Online Nothing is deleted only edit. Quick Response. Reduction of paper work. Easy operating.
Material
SAP Entry
Eng. Stores
103
Q.. verefication
105
User Department
Rejected Goods/Material
124
Finance Department
103:
Material supplies by vendor to company is check for the quantity at the time of receiving of goods by stores department and makes goods receivable note (GRN) and make an entry in SAP system of the received material / assets and it provided a code in SAP as 103.
105:
After receiving the material it provided to Q.A. department to check the quality of received goods according to the standard of the company and then makes a goods acceptance note (GAN) and makes an entry in SAP with code 105 and Rejected goods which has not standard quality has coded in SAP with 124. The Excise Credit also provided to the goods/material in SAP with 105 at the time of making GAN.
Note:-
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In SAP System the entry pattern of accounting is done with the symbol of Negative ( and ) positive (+) for credit and debit respectively; it defined as follows:- Credit (Cr.) ( ) (+)
Debit (Dr.)
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PAYMENT SYSTEM
Check the entry in SAP by Purchase department, factory store and quality assurance department. Match with invoice which is given by vendor with all details about delivered items, Check the details like tax code ,address , vendor name , delivery address , originality of invoice ,purchase order number and date , If the payment amount is less than purchase order amount then finance manager allows for payment of this invoice, And if the invoice payment amount is more than purchase order amount then finance manager does not allow for payment of this invoice, Finance manger take decision about payment on credit period or without credit period means on discount, Individually and proper check-up of all entries by finance manager in detail before clearing a payment, Finance manager has the right to retain some amount of payment (about 10%) according to the company policy at the time of payment in the companys bank as security money for provided fixed assets.
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Planning Department
Purchase Department
Factory Store
Finance Department
Payment
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INVOICE
It is a legal document or a type of bill for any company which is provided by supplier/vendor for getting payment of delivered items /fixed assets. It is a slip for the payment with credit and cash both, and contains the cost /rate of materials. Its characteristic are:1. It should be original entries should be correct & clearly mention. 2. Send by the vendor who delivered the goods. 3. It should have following contents:
Vendors name Invoice number Purchase order number Date of delivery Name of items with their quantity and rates (price) Delivery place Including taxes Information about advance amount of payment Information about retentions amount Total amount for payment
Terms and conditions signed by vendor
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TAXES
In the case of CAPEX (Capital Expenditure) mainly two types of taxes involved such as:1 - Sales Tax 2- Excise duty
1 - Sales Tax
Sales Tax
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2- Excise Duty:
A manufacture or producer of final product is liable to pay the excise duty to Government. And he is also allowed to take CENVAT credit with regard to the excise duty paid by him on fixed assets, raw materials spare parts and other components etc. Excise duty rate is 14% plus 3% education cess. i.e. about 14.42%of total amount .
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MODE OF PAYMENTS
After verifying the invoice /bill, the finance manger has the right to make payment with different mode of payment, generally payment through at PAR Cheque. According to Income Tax Act under section 40(a) (3) the payment through cash should not be more than Rs 20000/-.
Mode of payments
Traditional
techniques
Modern techniques
Cash
Cheque
Bill of exchange
EFT
RTGS
1. Cash : Cash payment means direct payment in monitory terms. Cash payment is avoided in Heinz India Pvt .Ltd .Aligarh But still use @ 2% In less amount payment Urgent payment
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2. Cheque : Cheque is a bill of exchange drawn on a specified banker and payable on demand (section 6 of Negotiable Instrument) 90% payment is done by cheque in Heinz India PVT.LTD., Aligarh
3.Bill of Exchange: A bill of exchange is an instrument in writing containing an unconditional order, signed by the maker ,directing a certain person to pay a certain sum of money only to , or to order of , a certain person or to the bearer of the instrument (under section 5 of Negotiable Instrument) Generally it is not used for making any payment in Heinz India PVT.LTD., Aligarh.
5. RTGS (Real Time Gross Settlement): It is same like EFT but having a small difference it is used when the companys bank and vendors bank both are different, then a reputed bank acts as a mediator in between two banks and help in transferring money. This process is called RTGS. Company makes payment all over India by the help of this new technology.
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RESEARCH METHODOLOGY
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RESEARCH METHODOLOGY
This study is related to expenditure which is incurred by the company on the fixed assets. It cover all the aspects related with the sales & purchase of these assets. Research methodology is a way to find out the information and results systematically with the help of research design. Research Design of the study is Descriptive, because this study is about describing and explaining the data which is collected by the different employees related with the process. The main objective of my research study is to find out the impact of CAPEX (Capital Expenditure) on the production and infrastructure of the company and also to know about the working pattern of the company with its business environment. So our research design is the type of non-probabilistic sampling, in which we collect the information from different department such as engineering, purchase stores and finance department. Thus we also called it as purposive sampling in which we collect data according to our purpose regarding CAPEX. This is a case base study about a particular case of Heinz India Pvt ltd. which is related with capital expenditure. Type of data used is secondary in nature which is collected from the published sources like company publications, annual reports etc. useful for capital expenditure.
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LIMITATIONS
LIMITATIONS
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The data required for the study is confidential in nature. Hence, any modification in the data cannot be overruled. Paucity of time is one of the major limitation of the study. Analysis of the data is based on response given by the employees of the company. Hence, any biasness in the response cannot be overruled. No primary data is collected for the study. Hence, reliability of the result are limited to the secondary data only.
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CONCLUSION
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CONCLUSION
As goods things must come to an end so has my project report After six weeks of sincere efforts I have compiled this project report. In this report I have covered the aspects of Fixed Assets Accounting that are being practiced at Heinz India Pvt Ltd. (Aligarh factory). After doing my research work I have arrived at the conclusion that at Heinz the employees are more than just satisfied and they think high of the management and its practices. Heinz India PVT. LTD. Aligarh is one the leading FMCG (Fast Moving Consuming Goods) companies in the world .The company consists of latest technology to maintain best quality products and is careful about the consumer satisfaction . It has a solid finance position. I have thoroughly examined all the aspects regarding the purchase of fixed assets, installation and taken steps for ready to use and also concerned about the payment system, taxation process and the mode of payments for the CAPEX. The company has kept proper book of account as required by law. Its works are fully computerized with proper networking and its transaction are done through the SAP system. i. ii. iii. iv. The CAPEX of the company done in the following mannerPlanning & identification of CAPEX. Appraisal and approval of the required fixed assets. Implementation. Review and control of the fixed assets.
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Payment for the CAPEX is decided by the board of directors according to its importance for the company.
The company maintains proper records showing full particulars, including qualitative details and situation for fixed assets.
The company has calculated the depreciation according to the Company Act 1956 for fixed assets (schedule 13) and Income Tax Act 1961(under section 32), to maintain in the tax payment with getting CENVAT credit.
The company reduces the cost of production and maximizes the profit through applying capital expenditure on recent technology and machinery.
To analyze the life of fixed assets and its working performance and compare with the standard performance to find out its efficiency.
Heinz India PVT.LTD. Aligarh, adopts the proper capital budgeting which involves the planning and control of capital expenditure for the long term investment whose benefits are to be realized over a period of time longer than one year.
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RECOMMENDATION/ SUGGESTIONS
There are many factors, financial as well as non-financial which influence the capital expenditure decision. The profitability is one of the main factors along with others that should be analyzed at the time of CAPEX. Sometimes a capital expenditure has to be made due to certain emotional and intangible factors such as safety and welfare of workers, prestigious project; social welfare goodwill of the firm etc. In these cases company should be careful and take appropriate steps after analysing the importance of fixed assets. Take care about the legal aspects about the CAPEX which could influence the projects of the company that could lead to the losses. As the capital expenditure generally requires large fund, the availability of funds is an important factor, so that should be arranged with proper capital budgeting, and also calculate the pay-back period of the project. To make availability of funds for alternative fixed assets at the time of any urgency such as breakdown of some plant & machinery, fire accidents etc.
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BIBLIOGRAPHY
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BIBLIOGRAPHY
Company Records & Manual. Income Tax Act 1961(section 32) Company Act 1956 for Fixed Assets (schedule 103) Data from the Past Records of the Company. Accounting Standards (AS 6 and AS10) Khan and Jain Financial Management Company Web sites: www.heinzindia.com www.heinz.in.co Other Web Sites: www.incometaxindia.gov.in www.icai.org Personal interaction with-
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