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PROJECT REPORT
ON
WORKING CAPITAL MANAGEMENT
OF

WITH SPECIAL EMPHASIS ON VARIOUS TECHNIQUES


INVENTORY CONTROL

A training report submitted in partial fulfillment of the requirement for the


degree
Of
MASTERS OF BUSINESS ADMINISTRATION
(2010-2012)
SUBMITTED TO:

SUBMITTED BY:
TARUNDEEP SINGH
ROLL NO: 5691

SCHOOL OF MANAGEMENT STUDIES


PUNJABI UNIVERSITY, PATIALA

Project ~ Working Capital

ACKNOWLEDGEMENT
I feel immense pleasure to give the credit of my project
work not only to one individual as this work is integrated effort of all
those who concerned with it. I want to owe my thanks to all those
individuals who guided me to move on the track.
This report entitled INVENROTY
MANAGEMENT
IN GLAXOSMITHKLINE is the outcome of my summer training
at GLAXOSMITHKLINE CONSUMER HEALTHCARE LTD., Nabha.
I would like to appreciate the pain staking effort of Mr.
Jagdish Rao (General Manager) and & Mr. Munish Kaushal (Manager Finance
& IT) for educating and guiding me at each and every stage and providing me the
information related to my chosen topic. I am equally thankful to the whole team of
Finance

&

IT

Department

HEALTHCARE LTD., Nabha.,

of

GLAXOSMITHKLINE

CONSUMER

who extended their full co-operation and

assistance. Words are not sufficient to express the greatness for the help, guidance
and knowledge dispensed to me by Respected Supervisor, Mr. SUMIT BANSAL
(Deputy Manager, Finance), who not only lent her considerable time and energy to
the understanding, but also helped me a great deal in making this report see the
light of the day.
Last but not least, I owe my special regards to my parents and my elders
for their blessings and good wishes.

PREFACE
The problem of unemployment is one of our major problems. This problem has been troubling us
ever since we gained independence. One reason for growing unemployment in the country is our
faulty education system. Students are given bookish knowledge without any training for specific
jobs. To mitigate such problems of our education system to some extent, training programs are being
introduced. These programs help the students to widen their horizon. Training can be done in
industries, business-houses, sales and income tax department of various central, state, local,
government societies etc.
A training program in industry is to get an overall view and exposure of the industry and its working
environment. It enhances the confidence and boosts the morale of the students preparing themselves
to work in industry in future. These programs continuously find place in curriculum of management
studies for development of the personality of students and to provide them with a firsthand
experience about working in industry.

Project ~ Working Capital

TABLE OF CONTENTS
EXECUTIVE SUMMARY
1. INTRODUCTION
Company profile
Historical Background of the Company
Geographical Overview
Business Stations
Manufacturing Process
Supply Chain Process
2. ABOUT NABHA PLANT
Introduction
Product Profile
Departmental Overview
5S
GSK Mission Culture and Statement

3. WORKING CAPITAL
Meaning of Working Capital
Working Capital
Financial Ratio Analysis
34Operating Cycle
Operating Cycle of GSK
4. SCOPE OF STUDY
Objectives of the Study

5. METHODOLOGY
Data Collection and Interpretation
6. RECOMMENDATIONS
7. CASH MANAGEMENT AT GSK
CONC
LUSION
SWOT ANALYSIS
ASSIGNMENTS OTHER THAN PROJECT
PERFORMED AT COMPANY

Project ~ Working Capital

EXECUTIVE SUMMARY
Working capital nowadays has been identified as a major thrust area by almost all the firms
throughout world in order to manage the current assets and consequentially current liabilities.
Working capital refers to the capital which is used to carry out the day to day operation of a
business. Every business needs funds for two purposes, for its establishment and to carry on its
day to day operations. Long term funds are required to create production facilities through
purchase of fixed assets such as Plant, machinery, and building, furniture etc. Funds are also
needed for short-term purposes i.e. for the purchase of raw material, payment of wages and carry
on day-to-day operations of business etc. These funds are known as working capital.
The above idea of Working capital suggests that lifeline of a business is cash. Cash flows in a
cycle into, around and out of a business. If a business is operating profitably, then it should, in
theory, generate cash surpluses. If it doesn't generate surpluses, the business will eventually run
out of cash and expire.
The faster a business expands the more cash it will need for working capital and investment.
There are two elements in the business cycle that absorb cash - Inventory (stocks and work-inprogress) and Receivables (debtors owing you money). The main sources of cash are Payables
(creditors) and Equity and Loans.
The cheapest and best sources of cash exist as working capital right within business. Good
management of working capital will generate cash will help improve profits and reduce risks.
For similar reasons optimization of working capital came into existence as an exhaustive project
at GlaxoSmithKline, Nabha which started in beginning of year 2009.
The project conducted for optimization of working capital is a live project at GSK, Nabha under
the name Working Capital. The project basically deals with analysis of credit terms of
suppliers, supplying different items at all the seven sites of GlaxoSmithKline involved in

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production as well as packaging of different products of the company. Apart from analyzing the
credit terms of suppliers for the company standard norms for holding the inventory of raw
materials, packaging materials was also analyzed to determine the opportunities for reducing the
working capital. A few more aspects of working capital have also been studied to fulfill the
objectives of the study.

Project ~ Working Capital

COMPANY PROFILE
Company

Glaxo SmithKline Consumer Healthcare Ltd

Head office

Gurgaon (Haryana)

Registered Office

Nabha (Punjab)

Status

Multinational Company.

Originally U.K. Firm


Quality Status

AWARDED Latest Version OHSAS


18001, ISO 9001:2000 and
ISO14001:2004
Rajahmundry Plant Received
ISO14001Accreditation and SA8000
Nabha & Sonepat Plant certified for
HACCP (Hazard Analysis Control
Point for Food safety).

Turnover (2010)

Rs.243077.18 (lacs)

Profit (Before Tax) (2010)

Rs.45180.45 (lacs)

Export to

Bangladesh, Myanmar, Sri Lanka,


Middle east, Nepal, Hong Kong,
Malaysia, Fiji

HISTORICAL BACKGROUND
GlaxoSmithKline Consumer Healthcare Ltd. is a pharmaceutical and healthcare company born
out of the merger of two leading international organizations SmithKline Beecham and Glaxo
Welcome. Its global mission is
To improve the quality of human life by enabling people to do more, feel better and live
Longer ".

YEAR

DESCRIPTION

1955:

Horlicks a milk product manufactured by Horlicks Ltd. Slough, England


was being imported, bottled and sold in India. Due to changes in import
policy import stopped.

195657:

A team from the organization visited to explore the possibilities of setting


up a plant with the support of Maharaja of Nabha, His highness PRATAP
SINGH, and a plant was set up at Nabha.

1958:

On May 31, 1958 His highness Pratap Singh laid the foundation stone of
the Company at Nabha.

1960:

On 24th March 1960, the factory went into production.

1969:

Horlicks Group disposed off their holding in India and U.K. to


BEECHAM GROUP OF INDUSTRIES" which was a multinational
and owned more than 500 companies in more than 200 countries engaged
in manufacturing of Brylcream, Hair cream, Eno Fruit Salt, Macleans,
Toothpaste, Pure Silvikrin etc. Immediately after taking over the
management, Beecham Group shifted its head office from Nabha to Delhi.

1979:

Beecham India (Pvt.) Ltd. Mumbai merged with Hindustan Milk food
Manufacturers Ltd. and the name was changed to H.M.M. Ltd. Beecham
Group Plc.

1991:

SmithKline U.S.A. merged on September 16, 1991 to form Smith Kline


Beecham Consumer Brands, Plc. with its registered office in the U.K.
H.M.M. became a part of Smithkline Beecham Consumer Brands, one of

Project ~ Working Capital


the three sectors of Smithkline Beecham and its name was changed to
SmithKline Consumer Brands Ltd.
1994:

The name was changed to Smithkline Consumer Healthcare Ltd. to


reassert the company's promise of providing Healthcare to consumers. The
company decided to do away with its toiletry products and sold its brands
like Brylcream and Silvikrin to Sara Lee.

2000:

The Company acquired MALTOVA and VIVA brands of nutritional from


Jagatjit Industries Ltd.
A merger took place between Smithkline Beecham and Glaxo Welcome
and the new company Glaxo Smithkline (GSK) was formed on 27-12-00

Glaxo
Merger

Smith Kline
Beecham

GlaxoSmithKlin
e

2002:

Change of name took place from 23-04-02

2003:

Company installed another manufacturing unit in Haryana - Sonepat

2004:

The Bank of Punjab has tied up with the company for facilitating finance

on attractive terms to its milk suppliers.


2005:

Deutsche bank has tied up with GSK for facilitating their fund management
as well as treasury management on a centralized basis

2006:

Companys packing unit at Excise Free Zone Baddi (Himachal Pradesh)


came into existence.

2007:

Companys packing unit at Excise Free Zone Gauhati(Assam) came into


existence.

2008:

Company launched Actibase and Actigrow products - Energy drinks

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GEOGRAPHICAL OVERVIEW

Head Office
Factories

Baddi
Gurgoan

Nabha
Ghaziabad

Mumbai
Pune
(GSK PHARMA)

RSOs

Sonepat

Packing Stations

Guwahati

Kolkatta
Rajahmundry
Kompally

Chennai
Chennai

BUSINESS STATIONS

Project ~ Working Capital

The company started packing Horlicks in Kg and 1kg pouches. Packing machines was
imported and installed at packing stations. The main market for sale of Horlicks was in the South
and East India, need was felt for the sale of Horlicks in small units of the country. Therefore,
different stations were opened at different places. At present Horlicks is dispatched from Nabha
in bulk quantity to the following packing stations:
MANGALDOI, GAUHATI (ASSAM)
KOMPALLY
BADDI (HIMACHAL PRADESH)
Apart from packing stations at mentioned above the malted Food Powder is also send to
Ghaziabad at M/s Parson Nutritionals Pvt Ltd for manufacturing of Biscuits
PARSON GHAZIABAD
The marketing of the company's products is done through various Regional Sales Offices (RSO)
situated at:
NORTH (GURGAON OFFICE)
WEST (MUMBAI OFFICE)
EAST

(KOLKATA OFFICE)

SOUTH (CHENNAI OFFICE)


The company has its head office in Gurgaon. Bulk-malted food manufactured in Nabha is
dispatched to different packing stations in drums for packing in units container or gusseted
pouches (GPs). GlaxoSmithKline Consumer Healthcare Limited is one of the three
sectors of GlaxoSmithKline. The other two sectors are:

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1. GLAXOSMITHKLINE PHARMACEUTICALS:
It is a one of the major players of pharmaceutical companies and has activities in all the major
markets of the world and spends a major part of its income in R&D.

2. GLAXOSMITHKLINE CLINICAL LABORATORIES:


It is the leading network of clinical testing laboratories in North America and its major
laboratories and patient centers provide the broadcast range of testing to help physicians,
hospitals and other private organization to detect disease and monitor health.

Project ~ Working Capital

MANUFACTURING PROCESS
The Manufacturing process for Horlicks is as Follows:
1. The First step in the production process involves the mixing of wheat flour with malted
barley.
2. In the second step water is added to the above mixture and the material is mashed
thoroughly, as a result of which the outer cover of malted barley is removed and remains
after is called Husk.
3. After mashing, the material becomes thick slurry in which the solid content is above
55%.
4. The fourth step involves adding up of milk to the mixture.
5. The next stage is the stage of evaporation in which the material is evaporated and the
result is thick slurry in which the solid content is around 82%.
6. After evaporation, comes the step of spreading out of material in plates and keeping them
in the oven for about half an hour.
7. Once the material is completely dried, the plates are taken out from the oven and the food
item is scrapped out, which comes out in the form of thin layers. Then the vitamins and
other essential nutrients are added to the food items which is then ground and the result is
our final product HORLICKS.

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SUPPLY CHAIN PROCESS


The Supply Chain Process at GSK, Nabha is as follows:

Consumer

Retailers

Wholesalers

Drums

(at factories)

Bottles & GPs (at packing stations)

Sale Depots

Horlicks is manufactured at the Nabha plant, after that it is put in drums with a capacity of 186
kg. The finished good thus packed in drums is either bottled or packed in pouches and then sent
to sales depots situated across the country.

Project ~ Working Capital

PRODUCT PROFILE
The main products of the company are:
New Horlicks
Horlicks Pistachio
Horlicks Export
Boost Intermediate
Horlicks intermediate for Pistachio and Butterscotch variants
Horlicks Premix
Horlicks Vanilla Premix
Junior Horlicks Chocolate with DHA
Actibase Vanilla
Horlicks with FAT
Junior Horlicks Intermediate
New Junior Horlicks DMI
New Mother Horlicks DMI
Horlicks Butterscotch delite
New Improved Boost
Junior Horlicks With DHA
New Elaichi Horlicks
Mothers Horlicks With DHA
Boost Premix
Acitbase Regular
Actigrow Chocolate
Actigrow Vanilla
Ready to drink
Junior horlicks
Biscuits
Foodles

GlaxoSmithKline Consumer Healthcare Ltd. is having three production units, which are at
Nabha, Rajahmundry and Sonepat. The unit at Nabha is the mother unit and its production

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capacity is 99500 MT per annum and the products manufactured by this company fall under two
categories of consumer healthcare:
Nutritional
Health Drinks

Horlicks and its


variants

Gastrointestinal

ENO Fruit Salts

1. HORLICKS
The flagship brand of the company, this product name is associated with that of the company. It
would be interesting to know how and where this global brand took off. Way back in 1883,
James Horlicks, a London based chemist experimented with powered malt mixed with milk and
launched this product in Chicago, USA, as "Malted Milk". In 1906 he returned to England and
set up a factory at Slough. Renamed as 'Horlicks' in 1931, it became a part of the giant Beecham
Group in 1969. India forms almost half the world's market for Horlicks.
2. BOOST
Boost was launched in 1976 as an energy drink in the Brown Powder segment. An Indian Brand,
this is manufactured at the Nabha Plant. It is also exported to Countries in West Asia. Very
popular in the South, Boost has grown an average growth rate of 15% per annum. Sportsmen like
Kapil Dev and Sachin Tendulkar back it, making it the secret of OUR ENERGY!!

3. JUNIOR HORLICKS WITH DHA


Junior Horlicks was launched in 1991 in Karnataka in an attempt to cater to the specialized needs
of certain age groups. This special nourisher, an India brand was targeted at 1-3 years old as a
delicious tasting Milk food drink based on the international standards of nutrition

Project ~ Working Capital


4. MOTHER HORLICKS WITH DHA
Mother Horlicks is manufactured for lactating mothers. Mothers Horlicks (launched in
November96), is a special nourisher scientifically designed to help meet the nutritional
needs of pregnant and lactating women, as part of a healthy diet. It is made with the natural
goodness of Horlicks by a unique spray dried process, which helps make it easy to digest.
It is enriched with natural honey, and a combination of vitamins and minerals that not only
gives excellent flavour but also help in keeping good health during pregnancy and optimal
birth weight of the baby It is also essential for physical and mental development of the
growing foetus. When taken during the breast-feeding period the nourishment of Mothers
Horlicks helps to improve the quality and quantity of breast milk.
5. GOPIKA GHEE (BY PRODUCT)
The main by-product of this company is Gopika Ghee. Gopika Ghee is packed in the factory
itself, rest of the product are bulk packed in containers, which contain 186 kg of Horlicks and
124 kg. of Boost. These are sent to the packing near the major markets.
6. ELAICHI HORLICKS
Elaichi Horlicks was launched in October 1974. Horlicks position as the market leader in the
Milk Food Drinks (MFD) category was further strengthened with the launch of Chocolate
Horlicks in November 1990. Elaichi Horlicks is Horlicks with a fresh cardamom taste and aroma
along with natural goodness of wheat, milk and malted barley making an appetizing and easily
digestible drink.

7. ENO
Eno is a 100 years old global brand. It is a part of Gastrointestinal category Eno is the only
powder antacid and has shown favorable growth over the years. This has been strengthened of
the lemon variant and the sachet pack.

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8. BISCUITS
The biscuit division has spread its wings and set flight with a 54% increase in the turnover.
Horlicks biscuits are now a truly national brand. The division has a number of plans for the
future growth with the lot of exciting new variety up its sleeves.

DEPARTMENTAL OVERVIEW

The various departments in GSKCH, Nabha are:

Project ~ Working Capital


Manufacturing Department
Engineering Department
Quality Assurance Department.
Warehouse & Supply Chain Management
Procurement Department (Milk Sourcing Procurement and Purchase Department)
Finance & IT Department
Human Resources and Administration Department.
Environment, Health and Safety Department (EHS)
Operational Excellence

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DEPARTMENTAL CHART OF FINANCE & IT

Mr. Jagdish B. Rao


General Manager- NABHA

Mr. MUNISH KAUSHAL


Sr. Manager- Finance, IT & Compliance

Sumit Bansal
A.M. FinanceCentral Excise, Income tax,
service tax ,AR VAT, Site
Compliance, Treasury, eTDS.

Sunil Sharma
Sr. Officer Finance
Central excise, VAT, Service
Tax, TDS, Payroll.

Rixon Singla
Manager Finance Fixed Assets & Capex,
Payroll RM, Costing,
Insurance, OE Coordinator.

Aman Bansal
Executive Trainee,
Finance
Budgeting MIS, Fixed
Assets & Capex

Narinder Verma
Dy. Mgr I.T.
Infrastructure, Servers,
Notes, Mail, Applications
Support, IT Training.

Project ~ Working Capital

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DEPARTMENTAL OVERVIEW
The various departments in GSK Ltd. Nabha are:

OPERATIONAL
EXCELLENCE

MANUFACTURING
ENVIORNMENT
HEALTH &
SAFETY

ENGINEERING

HR & A
QUALITY
ASSURANCE
FINANCE
&
I.T.
PROCUREMENT

WAREHOUSE
SUPPLY CHAIN
MANAGEMENT

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ABOUT THE NABHA PLANT


GSKs Nabha plant is a huge manufacturing unit so the requirement of workforce changes with
change in production policy. It is biggest unit of all the three manufacturing units and it is also
the registered office of GSK Consumer Health Care. The plant at present employs a work force
varying from 1500 to 2000 out of which approximately 1100 are permanent. There is a staff and
management of about 140 persons. There is a wage agreement for 3 years. The workers also get
weekly off according to Labour Statutes. The plant runs 24 X 7 and there are 3 shifts which from
5.15 a.m. to 1.15 p.m., 1.15 p.m. to 9.15 p.m. & 9.15 p.m. to 5.15 a.m. The office opens for 6
days in a week.
There are 6 Milk Collection Centers (MCCs) around Nabha, to meet the requirement of 70 tones
of Milk per day. The main purpose of opening collection centers at village level was to get good
quality of Milk directly from the producer and pay them good prices, thus, raising their standard
of living.

Project ~ Working Capital

5S AT NABHA
5S is a tool that aims to create and maintain an organized, clean & high performance workplace.
This tool has been efficiently utilized by Nabha Unit and it has lead to reduce the records
retrieval time drastically.

Sort

Throw out rubbish

Store

Find suitable storage area for everything

Shine

Clean all surface areas

Standardize

Communicate the 5S procedure for your area

Sustain

Participate in site-wise monthly assessment & display

results

Why do it?
How often do you go to use a piece of equipment and its not where you left it? Wouldnt it be
less time consuming if everybody knew where they were supposed to store it?
Where do I start?
Get everyone involved
Get commitment and authorization for area wide improvement
Have leaders set expectations

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Sort - Get rid of what is not needed. Throw out rubbish


Define personal space first (and stay out). Start at one corner touch everything. Ask questions
about each thing: How often do you use it? Where does it go? Place stuff based on frequency of
use. Place red tags on unnecessary stuff.
1. Red tagging visually identifies what is not needed in the workplace.
2. Establish rules for what is needed and where it belongs.
3. Remove and store Red Tagged items in a temporary holding area.
4. Sort through and dispose of those items that are truly unnecessary. Prepare all other items
for relocation. Ensure that all interested parties agree.
5. Continue to Red Tag regularly.
Store - Organize whats Left! Arrange and Identify for ease of use
A place for everything, everything in its place, Know what you have and where its kept to get
rid of waste of searching.
1. Designate locations in a variety of ways
2. Lines on the floor
3. Signs hung from the ceiling
4. Tool boards
5. Fix Storage Methods and Places
Shine - Clean up whats left! Clean Daily
Paint, refurbish, etc.Get the remaining items into the same condition as when they were new!
Standardize - Standardize cleanup methods
1. Make Sort, Storage, and Shine a daily habit
2. Assign responsibilities to apply these procedures
3. Integrate Sort, Storage, and Shine into regular work activities
4. Check on the maintenance of Sort, Storage, and Shine
5. Do you have standards, procedures & assigned responsibilities for Sort, Storage & Shine?

Project ~ Working Capital

Sustain - Set discipline, plan and schedule


1. Follow the rules that you set!
2. Involve everybody in the production of standard documents and checks sheets. Develop
habits you wont forget! Assessment is a key activity and should be carried out on a
regular basis depending on the overall status of the 5S activity. The radar chart is used to
map progress using the data from the assessment checklist within the area. It should be
displayed in a prominent location and updated on completion of the assessment.

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GSK MISSION
Our global quest:
To improve the quality of human life by enabling people to do more, feel better, and
live longer.
People at GlaxoSmithKline Consumer Healthcare Limited are dedicated to deliver medicines and
products that help millions of people around the world to live longer, healthier and happier
lives.

CULTURE
Successful companies have developed something special that supersedes corporate strategy,
market presence, or technical advantage - distinctive culture. What it is, whether it is important
or not, what you deal with indirectly. Why? Because culture is an intangible shadow. You cannot
hold culture. It has no handles, nothing you can touch directly. Having said all that, it is an
important issue GSKs culture is the set of norms that create powerful precedents for
acceptations around acceptable risk, change orientation, creative and innovation, group versus
individuals effort, customers orientation, extra efforts and more. Culture is a powerful force and
can provide an engine to achieve market success or an anchor pulling the firm toward failure.

GSK SPIRIT
We undertake our quest with the enthusiasm of entrepreneurs, excited by the constant search for
innovation. We value performance achieved with integrity. We will attain success as world-class
leader with each and every one of our people contributing with passion and an unmatched sense
of urgency.

Project ~ Working Capital

MEANING OF WORKING CAPITAL


In simple words working capital means that which is issued to carry out the day to day operation
of business. Capital required for a business can be classified under two main categories.
Fixed capital
Working capital
Every business needs funds for two purposes, for its establishment and to carry on its day to day
operations. Long term is required to create production facilities through purchase of fixed assets

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such as Plant, machinery, and building, furniture etc. Investment in these assets represent that
part of firms capital, which is blocked on a permanent or fixed basis, is called fixed capital.
Funds are also needed for short-term purposes i.e. for the purchase of raw material, payment of
wages and carry on day-to-day operations of business etc. These funds are known as working
capital.
The management of fixed and current assets however, differs in three important ways: 1.

In managing fixed assets, time is a very important factor consequently discounting


and compounding techniques play a significant role in capital budgeting and a minor
one in the management of current assets.

2.

Large holding of current assets, especially cash, strengthens firms liquidity position
but it also reduces the overall profitability.

3.

Levels of fixed as well as current assets depend upon expected sales, but it is not only
current assets which can be adjusted with sales fluctuating in short run.

In simple words working capital refers to that part of firms capital, which is required, be
financing short term and current assets such as cash, marketable securities, debtors and
inventories.

CONTENTS OF WORKING CAPITAL


CURRENT ASSETS

CURRENT LIABILITIES

Cash in hand and bank balance

Bills payable

Bills receivables

Sundry creditors

Sundry debtors

Accrued loans

Project ~ Working Capital


Short term loans and advances

Short term loans

Investment of stock as:

Advances and deposits

Raw material

Dividend payable

Work in progress

Bank overdraft

Finished goods

Provision for taxation

Store and spares


Temporary investment
Prepaid expenses
Accrued incomes

GROSS WORKING CAPITAL:


Simply called working capital it is total of current assets, it refers to the firms investment in
current assets. Current assets refer to those assets, which in the ordinary course of business can
be continued into cash within an accounting year.

Debtors
(Receivables)

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Cash

Finished Goods

Raw Materials

Work-in-Progress

GROSS WORKING CAPITAL OF GSK: CURRENT ASSETS


Inventories

RS. LACS

31200.06

Sundry Debtors

5053.34

Cash & Bank Balance

97609.83

Other Current Assets

3438.96

Total

137302.19

Gross Working Capital = Current Assets


Therefore, Gross working Capital of GSK = Rs. 137302.19 Lacs.

NET WORKING CAPITAL


Net working capital is the difference between current assets and current liabilities. Current
liabilities include items payable or expected to be turned within one year from the date of the
balance sheet and the term is used to designate obligation whose liquidation is reasonably
expected require the use of existing resources assets or creation of other current liabilities. Net
working capital may be positive or negative.
A positive working capital arises when current assets exceed current liabilities a negative net
working capital occurs when current liabilities are more than current assets.

Project ~ Working Capital


NET WORKING CAPITAL OF GSK: CURRENT ASSETS
Inventories
Sundry Debtors
Cash & Bank Balances
Other Current Assets

Total

RS. LACS

31200.06
5053.34
97609.83
3438.96

137302.19

CURRENT LIABILITIES &


PROVISIONS
Sundry Creditors
Other Liabilities
Advances
Trade Security Deposits
Unclaimed Dividend
Provisions
Income tax
Other Provisions
Total

RS. LACS

35692.46
7864.61
272.97
3086.44
120.25
3492.45
5136.94
55666.12

Net working capital = Current Assets Current Liabilities


Therefore, Net Working Capital of GSK= Rs. 137302.19 55666.12= Rs. 81636.07 Lacs.

WORKING CAPITAL CYCLE


Cash flows in a cycle into, around and out of a business. It is the business's lifeblood and every
manager's primary task is to help keep it flowing and to use the cash flow to generate profits. If a
business is operating profitably, then it should, in theory, generate cash surpluses. If it doesn't
generate surpluses, the business will eventually run out of cash and expire.
The faster a business expands the more cash it will need for working capital and investment. The
cheapest and best sources of cash exist as working capital right within business. Good
management of working capital will generate cash will help improve profits and reduce risks.
Bear in mind that the cost of providing credit to customers and holding stocks can represent a
substantial proportion of a firm's total profits.

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There are two elements in the business cycle that absorb cash - Inventory (stocks and work-inprogress) and Receivables (debtors owing you money). The main sources of cash are Payables
(your creditors) and Equity and Loans.
Each component of working capital (namely inventory, receivables and payables) has two
dimensions: TIME and MONEY, when it comes to managing working capital - TIME IS
MONEY. If one can get money to move faster around the cycle (e.g. collect money due from
debtors more quickly) or reduce the amount of money tied up (e.g. reduce inventory levels
relative to sales), the business will generate more cash or it will need to borrow less money to
fund working capital. As a consequence, you could reduce the cost of bank interest or you'll have
additional free money available to support additional sales growth or investment. Similarly, if
you can negotiate improved terms with suppliers e.g. get longer credit or an increased credit
limit; you effectively create free finance to help fund future sales.
It can be tempting to pay cash, if available, for fixed assets e.g. computers, plant, vehicles etc. If
you do pay cash, remember that this is now longer available for working capital. Therefore, if
cash is tight, consider other ways of financing capital investment - loans, equity, leasing etc.
Similarly, if you pay dividends or increase drawings, these are cash outflows and, like water
flowing downs a plughole, they remove liquidity from the business. More businesses fail for
lack of cash than for want of profit.
It is this importance of cash that, cash management is one of the key areas of working capital
management. Apart from the fact that it is the most liquid asset, cash is the common denominator
to which all the current assets can be reduced because the other major liquid assets, that is,
receivables and inventory eventually get converted into cash. This underlines the significance of
cash management.
The term cash with reference to cash management is used in two senses. In a narrow sense it is
used to cover currency and generally accepted equivalents of cash, such as cheques, drafts and
demand deposits in banks. The broad view of cash also includes, near cash assets such as
marketable securities and time deposits in banks.

Project ~ Working Capital


A firm is well advised to hold adequate cash balances but should avoid excessive balances. The
firm has, therefore, to assess its need for cash properly. Cash budget is a device that helps affirm
to plan and control the use of cash. It is statement showing the estimated cash inflows and
outflows over the planning horizon. In other words, the net cash position (surplus and deficiency)
of a firm as it moves from one budgeting sub period to other is highlighted by cash budget.
The various purposes of cash budgets are:

To coordinate the timings of cash needs

It pinpoints the periods when there is excess of cash

It helps to arrange the funds on most favorable terms and prevents excess
accumulation of cash.

It enables a firm which has sufficient cash to take advantage of cash


discounts on its accounts payables, to pay obligations when due, to
formulate dividend policy, to help unify the production schedule during
the year so that the firm can easily smooth out the heavy fluctuation
seasons.

NEED OF WORKING CAPITAL


1.

For the purchase of raw material components and stores

2.

For the payment of wages and salaries.

3.

To incur day-to-day expenses and overhead costs such as fuel, power and office
expenses.

4.

To meet the selling cost as packing, advertising etc.

5.

To provide credit facility to the customers.

6.

To maintain the inventories of raw material, work-in-progress, stores and spares and
finished stock.

34

35
7.

To meet the requirement of anticipated needs of future.

8.

To face business crisis in emergencies such as depression, because during such


periods, generally, there is much pressure on working capital.

FINANCIAL RATIO ANALYSIS


Financial ratio analysis is a study of ratios between various items or group of items in financial
statement and the turnover ratios. Ratio analysis is the powerful tool of financial analysis. In
financial analysis, ratio analysis is used as an index or yardstick to measure the performance of
the firm.
Working capital is that part of total capital which is important in current assets. To get better
insights about the working capital position of the firm ratio analysis has been utilized.
To determine the Working Capital position of the firm following ratios have been analyzed:

Project ~ Working Capital

Current ratio

Absolute liquid ratio

Quick ratio

Current asset turnover ratio

Working capital turnover ratio

Inventory turnover ratio

Debtors turnover ratio

Creditors turnover ratio

Inventory to working capital rate

36

Current ratio, Quick ratio and absolute liquidity ratio are regarded ad liquidity ratios. The
liquidity aspect is essential for both the creditors as well as management of a business
enterprise. These ratios are used to judge firms ability to meet short term obligations. These
ratios give an insight about present cash solvency of the firm and its ability to remain solvent
in the event of adversities.

37

CURRENT RATIO:
The current ratio is very popular financial ratio which is used to measure the ability of a
firm to meet its current liabilities. Current assets are converted into cash for the payment of
current liabilities. Apparently higher is the current ratio, greater is the short term solvency.
Current ratio is given by the formula:
Current Assets
Current Liabilities

Particulars
Current Assets
Current Liabilities
CURRENT RATIO

2010(Rs Lacs)
137302.19
52047.46
2.63

A current ratio of 2:1 is generally considered to be acceptable. As the firm has a current
ratio (2.63:1) better than acceptable ratio (2:1), the firm is well within a position to meet its
current liabilities.

Project ~ Working Capital

QUICK RATIO ( ACID TEST RATIO):


Quick ratio is much more exacting measure than the current ratio. By excluding inventories,
it concentrates on really liquid assets, with value fairly certain.
Quick Assets consist of only cash and near cash assets. Inventories are deducted from
current assets on the belief that these are not near cash assets. Quick ratio is given by
the formula:
Liquid assets
__________________
Current liabilities

Particulars
Quick Assets
Current Liabilities
QUICK RATIO

2010(Rs Lacs)
106102.13
52047.46
2.03

A quick ratio of 1:1 is considered as acceptable. A higher ratio of 2.03:1 ensures the ability
of the firms quick assets to meet its current liabilities.

38

39

ABSOLUTE LIQUID RATIO (CASH RATIO):


This ratio measures the absolute liquidity of the business. This ratio considers only the
absolute liquidity of the business and is calculated as:
Cash + Marketable Securities
_________________________
Current Liabilities
.

Particulars
Absolute Liquid Assets
Current Liabilities
ABSOLUTE LIQUID RATIO

2010(Rs Lacs)

97609.83
52047.46

1.87

The acceptable standard for this ratio is 0.5:1


Activity ratios are also called as turnover ratios or performance ratios. These ratios are
employed to evaluate the efficiency with which the firm manages and utilizes its assets.
These ratios usually indicate the frequency of sales with respect to its assets.

Project ~ Working Capital

CURRENT ASSETS TURNOVER RATIO:


The idea of the current assets turnover is to ascertain the contribution of the current assets
to sales. The relationship indicates efficiency or otherwise utilization of current assets to
attain the maximum turnover sales.

Sales
_________________________
Current Assets
.

Particulars

Sales
Current Assets
TURNOVER RATIO

2010 (Rs Lacs)


243077.18
137302.19
1.77

40

41

WORKING CAPITAL TURNOVER RATIO:

Net working capital turnover ratio

indicated the velocity of the utilization of working capital. A higher ratio indicates the
effective utilization of working capital and a low ratio indicate otherwise.

Particulars

2010
(Rs Lacs)

Sales

243077.18

Working Capital

85254.73

WORKING CAPITAL TURNOVER RATIO

2.85

The above Working capital turnover ratio suggests that the working capital is being utilized
efficiently.
Working capital is segregated into Inventory turnover, Debtors turnover and creditors
Turnover.

INVENTORY TURNOVER RATIO:

Project ~ Working Capital


This ratio is also known as stock turnover ratio and establishes the relationship between the
cost of goods sold during the year and average inventory held during the year. It is
calculated as follows:

Sales
Average Inventory

Particulars

2010
(Rs Lacs)

Sales

243077.18

Average Inventory

28901.63

INVENTORY TURNOVER RATIO

8.41

42

43

DEBTORS TURNOVER RATIO:


In case firm sells goods on credit, the realization of sales is delayed and the receivables
are created. The cash is realized from these receivables later on. The speed with which
these receivables are collected affects the liquidity position of the firm. The debtors
turnover ratio throws light on the collection and credit policies of the firm. The debtors
turnover ratio is calculated as follows:

Sales
Average Accounts Receivable

Particulars

2010
(Rs Lacs)

Sales
Average Accounts Receivable
INVENTORY TURNOVER RATIO

243077.18
4094.49
59.36

Project ~ Working Capital

OPERATING CYCLE
There is a difference between current assets and fixed assets in terms of their liquidity. A firm
requires many years to recover the initial investment in fixed assets such as Plant & Machinery.
On the contrary, investment in current assets is turned over many times in a year.
Operating cycle is the time duration required to convert sales (after conversion of resources into
inventories and inventories into finished goods) into cash.
The operating cycle of a manufacturing Company involves three phases: 1.

Acquisition of resources such as raw material labor, power and fuel etc.

2.

Manufacture of the product which includes conversion of raw material into work-inprogress into finished goods.

3.

Sale of the product either for cash or on credit. Credit sales create book debts for
collection.

The length of the operating cycle of a manufacturing firm is the sum of:

Inventory conversion period (ICP) and

Book debts conversion period (BDCP).

The inventory conversion period is the total time needed for producing and selling the product.
It includes: 1.

Raw material conversion period (RMCP)

2.

Work in progress conversion period (WIPCD)

3.

Finished goods conversion period.

44

45
The book debts conversion period is the time required collecting outstanding amount from
customer. The total of inventory conversion period and book debts conversion period is the
maximum time required to collect outstanding amount from customers and sometimes it referred
to as gross operating cycle. Generally, a firm acquires resources on credit and temporarily
postpones payment of certain expenses. The payable deferral period (PDP) is the length of the
time the firm is able to defer payments on various resource purchases. The difference between
operating cycle and payables deferral period is net operating cycle. The length of operating cycle
can be determined as: GOC =ICP+BDCP
NOC=ICP+BDCP-PDP
ICP=RMCP+WIPCP+FGCP
Where, GOC=Gross Operating Cycle; NOC=Net Operating Cycle;
ICP=Inventory Conversion Period; BDCP= Book Debts Conversion Period;
PDP= Payable Deferral Period; RMCP= Raw Material Conversion Period;
FGCP= Finished Good Conversion Period.

OPERATING CYCLE ANALYSIS:


In order to understand the length of time taken to convert sales (after conversion of resources
into inventories and inventories into finished goods) into cash, operating cycle analysis has been
done. The operating cycle of a firm begins with the acquisition of raw material and ends with the
collection of receivables. There are four aspects of operating cycle, which involves commitment
of resources, a material stage, accounts finished stage and account payable stage. The operating
cycle is calculated as the sum of first three stages minus accounts payable stage.

Project ~ Working Capital

OPERATING CYCLE OF GSK

1. Raw Material Conversion Period (RMCP)


Average raw material inventory x 365
Raw material consumed during the year

Particular

2010( Rs. Lacs)

Opening stock of R.M.


Closing stock of R.M.
Average stock
Raw material consumed
Raw material conversion period

5114.09
6935.65
6024.87
58521.16
38 days

2. Finished Goods Conversion Period (FGCP)


Average finished goods inventory x 365
Cost of goods
Particular

2010 ( Rs. Lacs)

Opening stock
Closing stock.

15318.67
17879.23

Average stock
Cost of goods Sold

16598.95
87217.2

Finished Goods Conversion Period

70 days

46

47

3. Work in process conversion period (WIPCP)


Average stock in process inventory x 365
Cost of production

Particular
Opening stock of

2010 (Rs. Lacs)


1977.35

Work in Process
Closing stock of

1932.19

Work in process
Average stock of

1954.77

Work in process
Cost of production
Conversion period

89927.01
2.96

4. Debtors Conversion Period or Book Debts Conversion Period

Average debtors x 365


Credit sales
Particulars
Average debtors
Credit sales
Debtors Conversion Period

Note:

Total Sales are taken as Credit Sales.

2009( Rs. Lacs)


4094.49
243077.18
6 days

Project ~ Working Capital

48

5. Creditors Conversion Period or Payable Deferral Period


Average creditors x 365
Credit purchases
Particular
Opening creditors
Closing creditors
Average creditors
Credit purchase
Creditors Conversion Period

2009(Rs. Lacs)

14393.14
17252.17
15822.65
178381.90
17 days

GROSS OPERATING CYCLE

Year

RMCP

2008

46

WIPCP

FGCP

DCP

23

GOC= ICP +
DCP

80

NET OPERATING CYCLE

Year

GOC

CCP

NOC=GOC-CCP

ICP

2008

80

17

63

72

SCOPE OF STUDY

49
The above project was conducted keeping in mind the components of Working capital
mentioned above i.e. inventory, receivables, and payables and further, credit terms with
suppliers; project Working Capital took its shape. The project Working Capital was started at
Nabha plant of GSKCH Ltd. early this year with an idea of standardization of credit period
across sites, scrutinizing the inventory holding period of raw materials, packaging materials and
finished goods and estimating the working capital thus released through these initiatives.
The study was conducted with following broad and specific objectives:
BROAD OBJECTIVE:
Main objective of the project is to analysis the whole data of GSK of various sites and find
various opportunities to improve the working capital of the company
SPECIFIC OBJECTIVES:

To standardize the credit period provided by the suppliers of raw materials, packaging

materials, finished goods and store items.


To determine the difference between the standard norms and actual number of days for
which the inventory of raw materials, packaging materials, finished goods and store

items is kept.
To determine the difference between the standard norms and actual number of days for
which the inventory of raw materials, packaging materials, finished goods and store

items is kept for purpose of quality clearance.


General PO terms are required to be reduced.
Rationalization of bank balances.
To understand the cash forecasting and budgeting at GSKCH, Nabha.

Project ~ Working Capital

METHODOLOGY
COLLECTION OF DATA:
Data pertaining to supplier credit terms for raw materials, packaging materials, finished goods
and store items; inventory holding period as per standard norms and actual number of days and
inventory holding period for the purpose of quality clearance as per standard norms and actual
number of days for items mentioned above was collected to accomplish the objectives of the
study.
For better consolidation of results data templates were provided to all the concerned sites. These
data templates were framed in a way that desirable information is obtained easily and is readily
accessible for quick interpretations.
ANALYSIS AND INTERPRETATION:
The data thus obtained was ready for analysis, interpretations and drawing conclusions out of it.
Thus the data used for conducting the project was secondary in nature. For purpose of analysis,
data was further captured in spread sheet for better comparisons both within a site as well as
between different sites simultaneously. The results obtained after comparing it within a site and
across different sites was presented in form of power point presentation.

RECOMMENDATONS
The result of the live project done at GSK is presented in the form of following
recommendations:

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Working capital can be improved by:


1. Reducing the inventory holding period of items.

2.

Increasing the credit period of Creditors..

Project ~ Working Capital


3. Decreasing the credit period of Debtors.

Pertaining to the above three major prerequisites of the project following key focus areas
have been suggested.
KEY FOCUS AREAS OF THE PROJECT:

1) Inventory:
Strategic Stock Review
Quality Clearance Norms
FG Stock Inventory Review over Plan
General Stores Min-Max Level Reviews
Review of non-moving inventory
2) Trade Payables:
Increased Credit Period Category wise
Common Suppliers Payment days
Calculation of Payment due date Standardization
Settlement of Pending Advances
3) Trade Receivables:
Review of Credit Period & Credit Limits
Review of payment terms
Review of No. of Clearance days

Credit period of raw material suppliers to be checked for standardization

Credit period of same supplier to be checked for standardization across all locations

General PO terms to be checked for revision for Simplification

Inventory holding to be validated for checking against the norms

FG quality clearance time to be reviewed for reduction

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Upward revision of credit limit of suppliers post discussions

Credit period of same raw material supplied by different supplier to be standardized at


same site in case they differ
If more than one supplier supply raw material at same site then their credit period
should be same
If more than one supplier supply raw material at same site then their credit period
should be same

Project ~ Working Capital


As it is mentioned above in the project report tat cash management serves to be an important part
of working capital management an attempt was made to understand the cash budgeting (Funds
forecasting and budgeting) of GSKCH, Nabha which is as follows:

FUNDS FORECASTING AND BUDGETING AT GSK, NABHA


The principal aim of budgeting as a tool is to predict the cash flows over a given period of time is
to ascertain whether at any point of time there will be excess or shortage of cash. So is the
purpose of cash budgeting done at GSK, Nabha.
The first element of cash budgeting at Nabha is selection of period of time to be covered by the
budget. It is referred to as planning horizon. The planning horizon means the time span and the
sub periods within the time span over which the cash flows are to be projected.
At GSK, Nabha the sub period taken for the purpose of budgeting is a time span of one month
which is further used to consolidate it for quarterly and then annual budgeting.
The second element of cash budgeting is to determine the factors that have a bearing on cash
flows. The items included in cash budget are only cash items; non cash items such as
depreciation and amortization are excluded. The factors that generate cash flows are generally
divided into two broad categories: Operating and Financial. Cash flows generated by the
operations of the firm are known as operating cash flows while the others are termed as financial
cash flows.
At GSK, Nabha as per the limits of the project only operating cash flows have been considered.
The operating cash flow items which are require to be considered are mentioned as below:

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OPERATING CASH FLOW ITEMS

Inflows/Cash receipts
Cash Sales
Collection of accounts receivable
Disposal of fixed assets

Outflows/Disbursements
Accounts payable
Purchase of raw materials
Wages and Salary
Factory expenses
Administrative and selling expenses
Maintenance expenses
Purchase of fixed assets

As is mentioned in the table above the operating cash flow items which are used at GSK for the
purpose of budgeting are mentioned in the template attached. This template is used for obtaining
the inputs for the cash flow items from the various departmental heads on monthly basis. The
major heads in the template are receipts, payments for purchase of raw materials, packaging
materials, freight, employee salaries, electricity expenses and provision for taxation.
After the time span of the cash budget is decided, the final step is the construction of the budget.
Post receiving inputs from various departments the budget is constructed.

Project ~ Working Capital

CASH BUDGETING
6 MONTHS
PARTICULARS
Receipts
Ghee
Scrap Sales
Other receipt
Total

PAYMENTS
SMP/PSMP(From HO Purchase)
Raw Barley(From HO Purchase)
Others(RH/PM)
Salary/wages
Excise Duty
Sales Tax/TDS
Stores & Services
Coal
Concession Charges
Freight
Capital Expenditure
Others
Total
Net requirement

56

57

3 YEARS
INVENTORY
Raw & Packing Material
Raw Material
Packing Material
SUB-TOTAL
FINISHED GOODS
Bulk/Packed Stock
SUB-TOTAL
TOTAL-INVENTORY

TOTAL TRADE CREDITORS


TRADE CREDITORS
Raw Material
Packing Material
Stores/Services
Milk
Marketing
Freight
Other expenses

Project ~ Working Capital

TOTAL TRADE CREDITORS

OTHER DEBTORS
Advances
Loans to employees
Other Debtors-excise
Modvat
Employee Advances
Other Debtors
Interest Receivable
TOTAL OTHER DEBTORS
OTHER CREDITORS
Payroll
Excise Payable
Other Creditors
Interest payable
Capex
Gratuity etc.
TOTAL OTHER CREDITORS

58

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CASH AND PAYMENT PROCEDURE IN GSK


FORMAT FORECASTING
The format of cash forecast plays a very important role in the management of funds in an
enterprise asset is on the basis of this forecast only that the company makes all its decision
regarding the use & application of funds. Thus the forecast should be simple, compact & should
contain all the relevant information. In GSK Nabha the present method of preparing the forecast
for the whole of the organization starts with the submission of forecasts of individual
departments of the finance department by 24 th of every month. It is only after receiving the
monthly forecasts of the different departments that the finance department consolidates them into
one cash forecast for the whole of the organization.
The final cash forecast is on a monthly basis which starts with an opening balance &
consists of a proper record of the day wise receipts & payments and also gives information about
the closing balance..

UTILISATION OF FUND
The excess of cash or fund in the enterprise can be utilized it somewhere, keeping in view the
safety, maturity & marketability aspect of the securities purchased.

SAFETY
Usually a firm would be interested in receiving a high rate of return on its investment in
marketable securities as is possible. But the higher return yielding securities are relatively more
risky. The form should thus invest in very safe security as the transactions & precautionary
balance invested in them are needed in near future. The default risk, which means the possibility
of default in payment of interests or principal on time and in the amount promised, should be
minimum.

MATURITY
Maturity refers to the time period over which interest & principal are to be made. The price of
the long-term security fluctuates more widely with the change in the interest than the price of
short-term security. Overtime interest rate has a frequency to change. Because of these two
reasons the long-term securities are more risky & the form should go in for short-term securities,
preferable for investing surplus cash.

Project ~ Working Capital


Suppliers of raw material dont receive direct cash payment from GSK. All the payments are
made by Head Office through Deutsche bank. Head office is in Gurgaon. To make the payments
to suppliers the 1st step is booking of payment vouchers/bills. The cashier at head office
generates the payments on daily basis except Saturday & Sunday because these are holidays at
head office.

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CONCLUSION
Working capital management is concerned with the problems that arise in attempting to manage
the current assets, the current liabilities and the interrelationship that exists between them. The
major current assets are cash, marketable securities, accounts receivable and inventory.
Current liabilities are those liabilities which are intended, at their inception, to be paid in the
ordinary course of business, within a year, out of the current assets or earnings of the concern.
The basic current liabilities are accounts payable, bills payable, bank overdraft, and outstanding
expenses.
The goal of working capital management is to manage the firms current assets and liabilities in
such a way that a satisfactory level of working capital is maintained.
The majority of Indian companies maintain relatively lower cash/bank balances. Marketable
securities are yet to emerge as a popular means of cash management. The excess cash is
deployed to retire short term debt/ in short term bank deposits.
Though there is a notable decline over the years but yet inventory constitutes an important part of
total current assets.
Debtors/ receivables also constitute an important part of current assets. The collections are
required to be as quick as possible and thus corporates offer cash discounts for the purpose.
Accounts payables and short term loan/ advances are major components of current liabilities.
The project Working Capital cardinally focuses on inventory and credit terms for the creditors
and debtors.
The approach followed in the project is to reduce the inventory so as to adhere to the standard
norms of the inventory holding thereby releasing the working capital out of it.
Secondly to revise the credit terms in such a way so as to make them uniform across all the sites.
Thus releasing the working capital at the sites where the credit terms were proposed to be
revised.

Project ~ Working Capital

SWOT ANALYSIS
SWOT analysis provides the information that is helpful in matching the firms resources and
capabilities to the competitive environment in which it operates. Environmental factors internal
to the firm can be classified as Strengths (S) and Weaknesses (W) and those external to the firm
are classified as Opportunities (O) and Threats (T). Such an analysis of strategic environment is
called SWOT ANALYSIS.
SWOT ANALYSIS OF GSK, NABHA IS AS FOLLOWS:

STRENGTHS
The firms strengths are its resources and capabilities that can be used as competitive advantage.
The main strengths of Glaxo SmithKline consumer healthcare ltd. are:

Strong brand names. Recently brand equity has place the brand Horlicks on 6 th position in
the list of top 10 brands in terms of brand equity.

Good reputation among the customers

Capability for troubleshooting and crises management

Creative and innovative thinking

Peaceful Industrial Environment

Strong discipline and positive attitude culture

Strong HRD development tools for work force

WEAKNESS
The absence of certain strengths may be viewed as weakness and the major weakness faced by
the GSK is:

Non availability of tax exemptions and subsidies.

Approach to the plant at Nabha is not through national Highway.

Over dependence on single product Horlicks.

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OPPORTUNITIES
External environment analysis may reveal certain new opportunities for profit and growth and
the opportunities before GSK are:

Rising household incomes, increasing urbanization, changing life styles, growth and
working women population demand for processed food products

Capturing niche markets with customer specific features in the products such as Junior
Horlicks, Mothers Horlicks etc.

Liberalization in Gov. policies and tax laws

Availability of latest / state of art technology

THREATS

Changes in external environment may also poses threats to the firm Major threats to GSK
are:
High inflation has offset the rise in household incomes as the disposable income of
people has declined vis--vis previous years.
Government Policies, Rules and Regulations.

Shift in consumer taste away from the firms product

Competition from other MNCs like Cadburys and Nestle.

Project ~ Working Capital

BANK RECONCILIATION
Bank reconciliation is a process under which each month bank sends the company a
statement detailing the activity that has taken place in the account during the month.
The bank statement shows the balance at the beginning of the month, the deposits, the
cheques paid, and other debits and credits during the month, and the balance at the
end of the month. As part of on job training bank reconciliation has been performed.

SERVICE TAX AUDIT


Service tax is levied on specified taxable services and the responsibility of payment
of the tax is cast on the service provider. System of self-assessment of Service Tax
Returns by service tax assesses has been introduced w.e.f. 01.04.2001. The
jurisdictional Superintendent of Central Excise is authorized to cross verify the
correctness of self assessed returns. Tax returns are expected to be filed half yearly.
Under service tax audit I was assigned the job of internal tax auditors. As part of
internal tax audit following tasks were performed.
The concerned documents were checked for fulfillment of certain criteria such as

Service tax number on the bill


Description of the service being provided
Classification of service type
Service tax being charged is as per the prescribed regulation

ISSUING C - FORMS

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The C-form allows companies to avail lower tax rates for Interstate sales.
Here's how it works when a company sells goods to a customer in another state, the
customer is supposed to give company a C- form, which allows company a to pay just
4% central sales tax. Without a C-form the tax burden on company is for a local sale
as high as 12.5%.
As part of training C- Forms were issued and the records were maintained for the
companys own use as well as for transferring the data to the concerned government
authorities.

ISSUING A.R.E FORMS:


Application for Removal of Excisable Goods was issued for goods
being exported as part of one of the assignments done at the company.

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