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Soft drinks constitute one of the largest beverage industries in the world today. Tremendous advances have
taken place in the process technology in the soft drink industries in the past one or two decades.
The beverages are divided into two groups i.e. carbonated soft drink like Coke, Thums up, Limca, Fanta ,Sprite
etc. & non-carbonated soft drink like Maaza, Minute maid.
The major ingredients of soft drinks are
Sugar and/or sugar substitute
Carbon dioxide
Flavor emulsion and emulsifiers
Coloring agents
Acids and preservatives
Coca – Cola: An Insight

Our Roots
While much of the world has changed since 1886, the pure and simple magic of one thing stays the same -
COKE. The name and the product represent simple moments of pleasure for consumers in nearly 200
COUNTRIES around the globe, who reach for products of The Coca Cola Company hundreds of millions
of times every single day.
John Styth Pemberton first introduced The Refreshing Taste of Coke in Atlanta, Georgia. It was May of 1886
when the pharmacist concocted caramel-colored syrup in a three-legged brass kettle in his backyard. He first
‘distributed’ the new product by carrying Coin a jug down the street to Jacobs’s pharmacy. For five cents,
consumers could enjoy a glass of Coca-Cola at the soda fountain. Whether by design or accident, carbonated
water was teamed with the new syrup, producing a drink that was proclaimed

‘Delicious and Refreshing’.

Dr. Pemberton’s partner and bookkeeper, Frank M.Robinson, suggested the name and penner “Coke” in the
unique flowing script that is famous worldwide today. Mr. Robinson thought the “two would look well in

By 1891,
1891 Atlanta entrepreneur Asa G. Candler had acquired complete ownership of the Coca-Cola
Business. Within four years, his merchandising flair helped expand consumption of Coca-Cola to every state
and territory. In 1919, The Coca-Cola Company was sold to a group of investors for 25 Million’s. Robert
W. Woodruff became president of The Coca- Cola Company in 1923, and his more than six decades of
Leadership took the business to unrivaled heights of commercial success, making Coca – Cola an institution
the world over.

COKE began as a fountain product, but candy merchant Joseph A. Bedenharn of Mississippi was looking for
a way to serve this refreshing beverage at picnics. He began offering bottled Coke, using syrup shipped from
Atlanta, during an especially busy summer in 1894.
In 1899, large-scale bottling became possible when Asa Candler granted exclusive bottling rights to Joseph
B. Whitehead and Benjamin F. Thomas of Chattanooga. The contract marked the beginning of The
Company’s unique independent bottling system that remains the foundation of Company Soft drink
As the Company had many imitators, which consumers would be unable to identify until they took a sip.
The answer was to create a distinct bottle for Coke. As a result, the genuine Coke bottle with the contour
shape now known around the world was developed in 1915 by the Root Glass Company.


The trademark “Coke” was registered with the US Patent & Trademark office in 1893, followed by “C” in
1945. The unique contour bottle, familiar to consumers everywhere, was granted registration as a trademark
by the US Patents & Trademark office in 1977, an honor awarded to only a few other packages.
In 1982, The Coca – Cola Company introduced Diet Coke to US consumers, marking the first extension of
the Company’s most precious trademark to another product. Later years saw the introduction of additional
products bearing the name of Coca-Cola, which now encompasses a powerful line of six cola products.
Today, the world’s favorite soft drink, Coke, is also the world’s best known and most admired trademark,
recognized by more than 90 PER CENT of the world’s population

Franchised production model

The actual production and distribution of Coca-Cola follows a franchising model. The Coca-Cola
Company only produces a syrup concentrate, which it sells to bottlers throughout the world who hold Coca-
Cola franchises for one or more geographical areas. The bottlers produce the final drink by mixing the syrup
with filtered water and sweeteners and then carbonate it before putting it in cans and bottles, which the bottlers
then sell and distribute to retail stores, vending machines, restaurants and food service distributors.


Fast Moving Consumer Goods (FMCG), also known as Consumer Packaged Goods (CPG) are products that
have a quick turnover and relatively low cost. Consumers generally put less thought into the purchase of FMCG
than they do for other products.
The Indian FMCG industry witnessed significant changes through the 1990s. Many players had been facing
severe problems on account of increased competition from small and regional players and from slow growth
across its various product categories. As a result, most of the companies were forced to revamp their product,
marketing, distribution and customer service strategies to strengthen their position in the market.
By the turn of the 20th century, the face of the Indian FMCG industry had changed significantly. With the
liberalization and growth of the Indian economy, the Indian customer witnessed an increasing exposure to new
domestic and foreign products through different media, such as television and the Internet. Apart from this,
social changes such as increase in the number of nuclear families and the growing number of working couples
resulting in increased spending power also contributed to the increase in the Indian consumers' personal
consumption. The realization of the customer's growing awareness and the need to meet changing requirements
and preferences on account of changing lifestyles required the FMCG producing companies to formulate
customer-centric strategies. These changes had a positive impact, leading to the rapid growth in the FMCG
industry. Increased availability of retail space, rapid urbanization, and qualified manpower also boosted the
growth of the organized retailing sector.
HLL led the way in revolutionizing the product, market, distribution and service formats of the FMCG industry
by focusing on rural markets, direct distribution, creating new product, distribution and service formats. The
FMCG sector also received a boost by government led initiatives in the 2003 budget such as the setting up of
excise free zones in various parts of the country that witnessed firms moving away from outsourcing to
manufacturing by investing in the zones.
Though the absolute profit made on FMCG products is relatively small, they generally sell in large numbers and
so the cumulative profit on such products can be large. Unlike some industries, such as automobiles, computers,
and airlines, FMCG does not suffer from mass layoffs every time the economy starts to dip. A person may put
off buying a car but he will not put off having his dinner.
Unlike other economy sectors, FMCG share float in a steady manner irrespective of global market dip, because
they generally satisfy rather fundamental, as opposed to luxurious needs. The FMCG sector, which is growing
at the rate of 9% is the fourth largest sector in the Indian Economy and is worth Rs.93000 crores. The main
contributor, making up 32% of the sector, is the South Indian region. It is predicted that in the
year 2010, the FMCG sector will be worth Rs.143000 crores. The sector being one of the biggest sectors of the
Indian Economy provides up to 4 million jobs. (Source: HCCBPL, Monthly Circular, March)
The FMCG sector consists of the following categories:

• Personal Care- Oral care, Hair care, Wash (Soaps), Cosmetics and Toiletries, Deodorants and
Perfumes, Paper products (Tissues, Diapers, Sanitary products) and Shoe care; the major players being;
Hindustan Lever Limited, Godrej Soaps, Colgate, Marico, Dabur and Procter & Gamble.

• Household Care- Fabric wash (Laundry soaps and synthetic detergents), Household cleaners
(Dish/Utensil/Floor/Toilet cleaners), Air fresheners, Insecticides and Mosquito repellants, Metal polish
and Furniture polish; the major players being; Hindustan Lever Limited, Nirma and Ricket Colman.

• Branded and Packaged foods and beverages- Health beverages, Soft drinks, Staples/Cereals, Bakery
products (Biscuits, Breads, Cakes), Snack foods, Chocolates, Ice-creams, Tea, Coffee, Processed fruits,
Processed vegetables, Processed meat, Branded flour, Bottled water, Branded rice, Branded sugar,
Juices; the major players being; Hindustan Lever Limited, Nestle, Coca-Cola, Cadbury, Pepsi and Dabur

• Spirits and Tobacco; the major players being; ITC, Godfrey, Philips and UB


In India, beverages form an important part of the lives of people. It is an industry, in which the players
constantly innovate, in order to come up with better products to gain more consumers and satisfy the existing


Alcoholic Non-Alcoholic

Carbonated Non-Carbonated

Cola Non-Cola Non-Cola


The beverage industry is vast and there various ways of segmenting it, so as to cater the right product to the
right person. The different ways of segmenting it are as follows:

• Alcoholic, non-alcoholic and sports beverages

• Natural and Synthetic beverages

• In-home consumption and out of home on premises consumption.

• Age wise segmentation i.e. beverages for kids, for adults and for senior citizens.
• Segmentation based on the amount of consumption i.e. high levels of consumption and low levels of

If the behavioral patterns of consumers in India are closely noticed, it could be observed that consumers
perceive beverages in two different ways i.e. beverages are a luxury and that beverages have to be consumed
occasionally. These

two perceptions are the biggest challenges faced by the beverage industry. In order to leverage the beverage
industry, it is important to address this issue so as to encourage regular consumption as well as and to make the
industry more affordable.

Four strong strategic elements to increase consumption of the products of the beverage industry in India are:

• The quality and the consistency of beverages needs to be enhanced so that consumers are satisfied and
they enjoy consuming beverages.

• The credibility and trust needs to be built so that there is a very strong and safe feeling that the
consumers have while consuming the beverages.
• Consumer education is a must to bring out benefits of beverage consumption whether in terms of health,
taste, relaxation, stimulation, refreshment, well-being or prestige relevant to the category.

• Communication should be relevant and trendy so that consumers are able to find an appeal to go out,
purchase and consume.

The beverage market has still to achieve greater penetration and also a wider spread of distribution. It is important to look
at the entire beverage market, as a big opportunity, for brand and sales growth in turn to add up to the overall growth of
the food and beverage industry in the economy.


Total site area 40 acres

Built – up area 4 acres
Green belt development 4 acres

Ambitious state-of –the-art Dasna Plant. Second Largest as well as the most hi-tech bottling green Field plant
in Northern India, established on 16th Feb 1999. The plant in spread on an area of 40 acres which is 45 km
away from Delhi. Commissioned in March 1999, it has a sophisticated facility for bottling the PET, RGB as
well as fountain filling. The plant has1 Kinley, 3 PET, 3 RGB lines,1 Tetra, 1 Krones. The sales are made
through indirect distribution and serve 33000 retailers around 7 districts in total.

Built –up area break up

Main building including Process areas , Packaging areas , Warehouse , 13096 m2

Stores & ETP
Utility 1755 m2
Caustic , HSD, Cooling towers, carbon dioxide , raw water tanks 3196 m2

Admin. Block 918 m2

Empty Bottle storage yard 9600 m2
Car parking 490 m2
Truck Parking 1890 m2
Concrete roads 7500 m2
ETP 3000 m2
LPG store 120 m2
Driver amenities 64 m2
Contract Labour amenities 108 m2
Forklift repair area 100 m2

Security building 24.5 m2
Caustic storage area 100 m2
HSD storage area 324 m2
Carbon dioxide storage 1800 m2
Raw water storage area 720 m2
Switch yard 180 m2


Our mission, vision and values outline who we are, what we seek to achieve, and how we want to achieve it.
They provide a clear direction for our Company and help ensure that we are all working toward the same goals.


Our mission declares our purpose as a company. It serves as the standard against which we weigh our actions
and decisions. It is the foundation of our Manifesto.

To refresh the world in body, mind and spirit.

To inspire moments of optimism through our brands and our actions.

To create value and make a difference everywhere we engage.


Our vision guides every aspect of our business by describing what we need to accomplish in order to continue
achieving sustainable growth.

People: Being a great place to work where people are inspired to be the best they can be.

Portfolio: Bringing to the world a portfolio of quality beverage brands that anticipate and satisfy people's
desires and needs.

Partners: Nurturing a winning network of customers and suppliers, together we create mutual, enduring

Planet: Being a responsible citizen that makes a difference by helping build and support sustainable

Profit: Maximizing long-term return to shareowners while being mindful of our overall responsibilities.

Coca-Cola is guided by shared values that both the employees as individuals and the Company will live by; the
values being:

• LEADERSHIP: The courage to shape a better future

• PASSION: Committed in heart and mind

• INTEGRITY: Be real

• ACCOUNTABILITY: If it is to be, it’s up to me

• COLLABORATION: Leverage collective genius

• INNOVATION: Seek, imagine, create, delight

• QUALITY: What we do, we do well

Review of Literature/Theoretical Background

The Sarbanes-Oxley Act of 2(July 30, 2002), also known as the Public Company Accounting Reform and
Investor Protection Act of 2002 and commonly called Sarbanes-Oxley, Sarbox or SOX, is a United States
federal law enacted on July 30, 2002, as a reaction to a number of major corporate and accounting scandals
including those affecting Enron, Tyco International, Adelphia, Peregrine Systems and WorldCom. These
scandals, which cost investors billions of dollars when the share prices of affected companies collapsed, shook
public confidence in the nation's securities markets. Named after sponsors U.S. Senator Paul Sarbanes (D-MD)
and U.S. Representative Michael G. Oxley (R-OH), the act was approved by the House by a vote of 334-90 and
by the Senate 99-0. President George W. Bush signed it into law, stating it included "the most far-reaching
reforms of American business practices since the time of Franklin D. Roosevelt."[1]
The legislation set new or enhanced standards for all U.S. public company boards, management and public
accounting firms. It does not apply to privately held companies. The act contains 11 titles, or sections, ranging
from additional corporate board responsibilities to criminal penalties, and requires the Securities and Exchange
Commission (SEC) to implement rulings on requirements to comply with the new law. Harvey Pitt, the 26th
chairman of the Securities and Exchange Commission (SEC), led the SEC in the adoption of dozens of rules to
implement the Sarbanes-Oxley Act.

Before the signing ceremony of the Sarbanes-Oxley Act, former President George W. Bush meets with Senator
Paul Sarbanes, Secretary of Labor Elaine Chao and other dignitaries in the Blue Room at the White House on
July 30, 2002.


The Enron scandal was a corporate scandal involving the American energy company Enron Corporation based
in Houston, Texas and the accounting, auditing and consultancy firm Arthur Andersen, that was revealed in
October 2001.
Enron’s stock price (former NYSE ticker symbol: ENE), which hit a high of $90 per share in mid-2000,
plummeted to $0.10 in October 2001. The drop in Enron’s stock price is estimated to have caused its stock
holders to lose $11 billion. On December 2, 2001, Enron filed for bankruptcy under Chapter 11 of the United
States Bankruptcy Code, one of the largest ever U.S. corporate bankruptcies (its assets amounted to $63 million
and liabilities to $30 million).
In addition to being the largest bankruptcy reorganization in American history, Enron undoubtedly is the
biggest audit failure.[2] The scandal caused the dissolution of Arthur Andersen, which at the time was one of
the five largest accounting firms in the world. One consequence of these events was the passage of
Sarbanes-Oxley Act in 2002, as a result of the first admissions of fraudulent behavior made by Enron. The
act significantly raises criminal penalties for securities fraud, for destroying, altering or fabricating records
in federal investigations or any scheme or attempt to defraud shareholders.


• Auditor conflicts of interest: Prior to SOX, auditing firms, the primary financial "watchdogs" for
investors, were self-regulated. They also performed significant non-audit or consulting work for the
companies they audited. Many of these consulting agreements were far more lucrative than the
auditing engagement. This presented at least the appearance of a conflict of interest. For example,
challenging the company's accounting approach might damage a client relationship, conceivably
placing a significant consulting arrangement at risk, damaging the auditing firm's bottom line.

• Boardroom failures: Boards of Directors, specifically Audit Committees, are charged with
establishing oversight mechanisms for financial reporting in U.S. corporations on the behalf of
investors. These scandals identified Board members who either did not exercise their responsibilities
or did not have the expertise to understand the complexities of the businesses. In many cases, Audit
Committee members were not truly independent of management.

• Securities analysts' conflicts of interest: The roles of securities analysts, who make buy and sell
recommendations on company stocks and bonds, and investment bankers, who help provide
companies loans or handle mergers and acquisitions, provide opportunities for conflicts. Similar to
the auditor conflict, issuing a buy or sell recommendation on a stock while providing lucrative
investment banking services creates at least the appearance of a conflict of interest.

• Inadequate funding of the SEC: The SEC budget has steadily increased to nearly double the pre-
SOX level. In the interview cited above, Sarbanes indicated that enforcement and rule-making are
more effective post-SOX.

• Banking practices: Lending to a firm sends signals to investors regarding the firm's risk. In the case
of Enron, several major banks provided large loans to the company without understanding, or while
ignoring, the risks of the company. Investors of these banks and their clients were hurt by such bad
loans, resulting in large settlement payments by the banks. Others interpreted the willingness of
banks to lend money to the company as an indication of its health and integrity, and were led to
invest in Enron as a result. These investors were hurt as well.

Sarbanes-Oxley contains 11 titles that describe specific mandates and requirements for
financial reporting. Each title consists of several sections, summarized below.

1. Public Company Accounting Oversight Board (PCAOB)

Title I consists of nine sections and establishes the Public Company Accounting Oversight Board, to
provide independent oversight of public accounting firms providing audit services ("auditors"). It also
creates a central oversight board tasked with registering auditors, defining the specific processes and
procedures for compliance audits, inspecting and policing conduct and quality control, and enforcing
compliance with the specific mandates of SOX.

2. Auditor Independence

Title II consists of nine sections and establishes standards for external auditor independence, to limit
conflicts of interest. It also addresses new auditor approval requirements, audit partner rotation, and
auditor reporting requirements. It restricts auditing companies from providing non-audit services (e.g.,
consulting) for the same clients.

3. Corporate Responsibility

Title III consists of eight sections and mandates that senior executives take individual responsibility for
the accuracy and completeness of corporate financial reports. It defines the interaction of external
auditors and corporate audit committees, and specifies the responsibility of corporate officers for the
accuracy and validity of corporate financial reports. It enumerates specific limits on the behaviors of
corporate officers and describes specific forfeitures of benefits and civil penalties for non-compliance.
For example, Section 302 requires that the company's "principal officers" (typically the Chief Executive
Officer and Chief Financial Officer) certify and approve the integrity of their company financial reports

4. Enhanced Financial Disclosures

Title IV consists of nine sections. It describes enhanced reporting requirements for financial
transactions, including off-balance-sheet transactions, pro-forma figures and stock transactions of
corporate officers. It requires internal controls for assuring the accuracy of financial reports and
disclosures, and mandates both audits and reports on those controls. It also requires timely reporting of
material changes in financial condition and specific enhanced reviews by the SEC or its agents of
corporate reports.

5. Analyst Conflicts of Interest

Title V consists of only one section, which includes measures designed to help restore investor
confidence in the reporting of securities analysts. It defines the codes of conduct for securities analysts
and requires disclosure of knowable conflicts of interest.

6. Commission Resources and Authority

Title VI consists of four sections and defines practices to restore investor confidence in securities
analysts. It also defines the SEC’s authority to censure or bar securities professionals from practice and
defines conditions under which a person can be barred from practicing as a broker, advisor, or dealer.

7. Studies and Reports

Title VII consists of five sections and requires the Comptroller General and the SEC to perform various
studies and report their findings. Studies and reports include the effects of consolidation of public
accounting firms, the role of credit rating agencies in the operation of securities markets, securities
violations and enforcement actions, and whether investment banks assisted Enron, Global Crossing and
others to manipulate earnings and obfuscate true financial conditions.

8. Corporate and Criminal Fraud Accountability

Title VIII consists of seven sections and is also referred to as the “Corporate and Criminal Fraud Act
of 2002”. It describes specific criminal penalties for fraud by manipulation, destruction or alteration of
financial records or other interference with investigations, while providing certain protections for

9. White Collar Crime Penalty Enhancement

Title IX consists of two sections. This section is also called the “White Collar Crime Penalty
Enhancement Act of 2002.” This section increases the criminal penalties associated with white-collar
crimes and conspiracies. It recommends stronger sentencing guidelines and specifically adds failure to
certify corporate financial reports as a criminal offense.

10. Corporate Tax Returns

Title X consists of one section. Section 1001 states that the Chief Executive Officer should sign the
company tax return.

11. Corporate Fraud Accountability

Title XI consists of seven sections. Section 1101 recommends a name for this title as “Corporate
Fraud Accountability Act of 2002”. It identifies corporate fraud and records tampering as criminal
offenses and joins those offenses to specific penalties. It also revises sentencing guidelines and
strengthens their penalties. This enables the SEC to temporarily freeze large or unusual payments.


Section 302: CEO & CFO must personally certify to the accuracy of Financial Statements & the efficacy of
internal disclosure controls.
Section 401: Disclosure of off Balance Sheet transaction.
Section 802: Criminal penalties for failure to comply with record retention policies, including assurance of no
destruction, alteration, or falsification of records.

Section 404: Requires annual report by management on internal controls, attested by external audit firm.

Section 406 & 806: Companies must establish a code of ethics for senior officers and ensure a ‘Safe Harbor’for
Section 409: Companies must provide real time disclosure of material events that might affect performance.

Section 1107: Whoever knowingly, with the intent to retaliate, takes any action harmful to any person,
including interference with the lawful employment or livelihood of any person, for providing to a law
enforcement officer any truthful information relating to the commission or possible commission of any federal
offense, shall be fined under this title, imprisoned not more than 10 years, or both.


• There is always difference between sales order punched by RTM (Route to Market) Team and Stock
available with shipping department.

• Shipments are sometimes not loaded as per sales order i.e

o If there is shortage of thumps up in the stock, Coca cola is sent against it, leading to difference in
stock as per system and physical stock available in warehouse.

• Wrong Shipment: Fanta is loaded instead of sprite.

• Volume loss: when order is punched by the RTM team shipping department do not ship the same
quantity due to loading problem. Their is no intimation about the same is made by the shipping
department to RTM team, leading to
o Volume loss for that day.

• Checker is not performing his duties as per the specified standards. Large discrepancy is found in
checker count.

• FIFO is not strongly followed.

• Excess loading of 200-250 boxes/carat in every 24 hours.

• Credit note generated in case of sales return is not signed on regular basis. It is generally sent to the
finance department on monthly basis for Asst.finance Manger/finance manager Approval.

• Demand Draft of one party credited to the account of another party having common name.

• Goods return is not correctly entered in the system by the shipping department.

• Loss of bottles due to breakage at the time of loading and unloading.

• Distributor agreements are not signed by the AOD & GSM.

• Confidential stamp is stamped on the agreements.

• Bank Proof of some distributors is not available.

• Bank account number is not mentioned on the blank cheques of the distributors.

• Some distributors have issued cheques of saving account instead of current account.

• Logo of Coca cola is printed on the letter attached with the blank cheques.

• There is always difference between cash balance as per system & actual cash available with the cashier
during the day. It gets rectified when the other person passes the cash entry in the system.

The Sarbanes-Oxley Act is one of the most important

Pieces of legislation in recent years in terms of its effect

on corporate world. It was much needed intervention in

the area of corporate responsibility and governance. If the

act was in place four years ago corporate disaster could

have been prevented. This Project has provided an

Overview of its requirements and advice on appropriate

areas that are either unclear or may prove troublesome for

reportinsg entities. The project is basically focused on the

risk attached to the key business process of Hindustan coca

cola beverages pvt. Ltd.It also contains brief discussion on

the various control tools available to counter that business

risks. Perhaps the most interesting question of all is what

the impact of the Act will be on the fair presentation of

financial statements of publicly traded companies and the

Concomitant degree of public confidence as to their

reliability. The project also includes brief discussion on

company profile & Sarbanes-Oxley act.


Congressman Ron Paul and others contend that SOX was an unnecessary and costly government intrusion
into corporate management that places U.S. corporations at a competitive disadvantage with foreign firms,
driving businesses out of the United States. In an April 14, 2005 speech before the U.S. House of

Representatives, Paul stated, "These regulations are damaging American capital markets by providing an
incentive for small US firms and foreign firms to deregister from US stock exchanges. According to a study
by Wharton Business School, the number of American companies deregistering from public stock
exchanges nearly tripled during the year after Sarbanes-Oxley became law, while the New York Stock
Exchange had only 10 new foreign listings in all of 2004. The reluctance of small businesses and foreign
firms to register on American stock exchanges are easily understood when one considers the costs Sarbanes-
Oxley imposes on businesses. According to a survey by Korn/Ferry International, Sarbanes-Oxley cost
Fortune 500 companies an average of $5.1 million in compliance expenses in 2004, while a study by the law
firm of Foley and Lardner found the Act increased costs associated with being a publicly held company by
130 percent."
A research study published by Joseph Piotroski of Stanford University and Suraj Srinivasan of Harvard
Business School titled "Regulation and Bonding: Sarbanes Oxley Act and the Flow of International
Listings" in the Journal of Accounting Research in 2008 found that following the act's passage, smaller
international companies were more likely to list in stock exchanges in the U.K. rather than U.S. stock
During the financial crisis, critics blamed Sarbanes-Oxley for the low number of Initial Public Offerings
(IPOs) on American stock exchanges during 2008. In November 2008, Newt Gingrich and co-author David
W. Kralik called on Congress to repeal Sarbanes-Oxley.
A December 21, 2008 Wall St. Journal editorial stated, "The new laws and regulations have neither
prevented frauds nor instituted fairness. But they have managed to kill the creation of new public companies
in the U.S., cripple the venture capital business, and damage entrepreneurship. According to the National
Venture Capital Association, in all of 2008 there have been just six companies that have gone public.
Compare that with 269 IPOs in 1999, 272 in 1996, and 365 in 1986."









List of risk associated with various business Process of Hindustan Coca Cola
Beverages Pvt. Ltd.
Depreciation property & Equipment: The depreciation schedule is prepared by Finance Officer and
reviewed by Assistant Finance Manager (AFM) and Finance Manager (FM). The purpose is to charge the
operation with the value of the asset that has been utilized in the manufacturing process. The process begins
with the purchase of the asset, the recording of the same, applying the rate of depreciation and calculating
the charge for the period. The depreciation is calculated by the system. Excel based worksheets are used for
the calculation. The accounts involved are the fixed asset account and the depreciation account and
allowance for depreciation.


• What ensures that depreciation is properly recorded on related assets?

• What ensures that disposed fixed assets (sales & write-offs) do not remain recorded?

• What ensures that depreciation expense and gain/loss is recorded at the correct amount?

• What ensures that depreciation is calculated using appropriate bases?

• What ensures that assumptions for impairment indicators are properly identified and communicated?
• What ensures that key factors affecting the impairment estimate are identified and properly assessed?

• What ensures that transfers from construction-in-progress to property are recorded in the correct period?

• What ensures that AP fixed asset register/subledger agrees to general ledger?

• What ensures company assets are properly safeguarded?

• What ensures that fictitious or duplicate assets are not recorded?

• What ensures that fixed asset purchases/interest expense are correctly capitalized (asset or asset under
construction account)?

• What ensures fixed asset register data is sufficient to support recorded assets and tax adjustments?


For asset additions, finance associate ensures appropriate capitalization prior to updating the fixed asset
register/sub ledger per review of supporting documents, asset classification, and capitalization amount.

Assets are periodically verified via physical observation and reconciled to the fixed assets

Assumptions (i.e. useful life) and methods (i.e. straight line, mid-month, mid-year convention) used in
depreciation calculations are in agreement with policy and reviewed/approved.

Actual expenses (i.e. depreciation expense) are reviewed and compared to budget.*

Periodically, the custodian reviews the entire fixed asset register/subledger report for errors and unrecorded
addition, transfers, disposals.

2. Estimate Commitments & Contingencies: The purpose of the Estimated Commitments

and Contingencies process is to ensure that all crystallized as well as un-crystallized liabilities are properly
recorded and disclosed in the financial statements. The process consists of procedures to identify, track,
summarize and report commitments and contingencies, which include purchases commitments and
contingencies from lawsuits or government challenges to which the operation is exposed to.


• What ensures that assumptions for commitments, contingencies, guarantees and embedded derivatives
are correct?

• What ensures that commitments, contingencies, guarantees and embedded derivatives are based on
accurate data?

• What ensures that commitments, contingencies, guarantees and embedded derivatives are correctly

• What ensures that commitments, contingencies, guarantees and embedded derivatives are identified and
• What ensures that What ensures that accumulated amounts in footnote are accurate and disclosures are
correctly presented?

• What ensures that relevant matters for disclosure are identified?


The Operation has established procedures to obtain a complete list of contractual obligations with third
parties, including purchase orders, contracts and recorded liabilities, etc.

Operation has established procedures to track all pending legal matters (e.g. litigations, environmental
issues, pending claims) to ensure completeness of reporting contingencies.

Assessment of the probabilities and estimate of the exposure for the pending legal matters is performed,
supported and properly approved on a quarterly basis

Assessment of the probabilities and estimate of the exposure for the pending tax matters are performed,
supported and properly approved on a quarterly basis

All new/updated guarantees are approved according to DOA.

Cash Disbursements: The purpose of the Cash Disbursement procedures is to ensure controls
surrounding the banking arrangement, the disbursement of cash and cheque, preparation of bank
reconciliations and segregation of duties. The Cash disbursement process starts with opening bank accounts
and ends at preparing and reviewing the bank reconciliation.


• What ensures that cash disbursements are correctly coded for the general ledger entries?

• What ensures that cash disbursements / transfers are recorded in the proper period?

• What ensures that duplicate postings of cash disbursements are not made to the general ledger?

• What ensures that cash disbursements are real?

• What ensures that cash disbursements are recorded?

• What ensures that all cash disbursement amounts recorded agree with amounts paid?

• What ensures that the Chart of Authority is properly followed?

• What ensures that payments are authorized and appropriate?


All unused checks, blank check stock, and signatory plates, if used, are kept in a secured area.

An employee other than the check preparer reviews the numerical sequence of issued checks in the check

The duties related to this process, such as custodian, review, approval, and recording, are properly

All voided checks are returned to designated finance associate for destruction.

System is designed to prevent duplicate payment against an approved invoice.

Estimate Allowance for Doubtful Accounts & Bad Debts Expenses: The purpose
of the process is to put an estimated allowance for bad and doubtful debts in the books of accounts. The
distributor outstanding balance relating to both liquid and cases on loan is reviewed on a regular basis for
recoverability by Finance Executive, AFM & Finance Manager. The finance department draws the attention
of Sales Team and General Manager on potential write off cases. The process starts with reviewing the
outstanding balance of distributors and ending with providing the allowance for bad and doubtful debts and
writing off the receivable, if required.


• What ensures that bad debt provisions and allowances are correctly calculated and recorded?

• What ensures that assumptions for bad debts are correct?

• What ensures that bad debt calculations are based on accurate aging/underlying data?

• What ensures that key factors affecting the bad debts estimate are identified?

• What ensures that bad debt is calculated consistently?

• What ensures that bad debt provision/write-off is properly authorized?


Balance sheet reconciliations for all bad debt related accounts (including allowance for container
receivables) are prepared to ensure balances are supported, analyzed, and reconciling items are cleared in
timely manner. Balance sheet reconciliations are independently reviewed/approved.

Allowance for doubtful accounts (including Accounts Receivable and Container Receivables) is calculated
using approved methodology. The calculation, including the related assumptions used, is properly
supported, independently reviewed and approved in accordance with Company’s policy.

Actual expenses (i.e., bad debt expense) are reviewed and compared to budget.

Manual journal entries are properly supported, and independently reviewed and approved

Accounts receivable (including container receivable) write-offs are properly approved in accordance with

Deduction from Revenue: Deductions from revenue comprise discounts and trade-scheme
originating from single negotiations or campaigns/competitive initiatives that may cover several customers.
Sales Department initiates the schemes and discounts, which are normally based on volumes. The Unit has
an annual budget for discounts, which is further split into Monopoly and Schemes. Most of the schemes are
secondary (Distributor to Outlet) where the deduction for the same is not given at the time of invoicing.
Distributors submit the claims duly approved by the Sales Department periodically and the Finance
Department processes these claims on the basis of approved Marketing Expense Requisitions (MER’s).


• What ensures that rebates, allowances, or fees are properly calculated?

• What ensures that rebates, allowances, or fees are recorded in the proper period?

• What ensures that rebates, allowances, or fees are correctly coded?

• What ensures that fictitious or duplicate rebates, allowances, or fees are not recorded?

• What ensures that rebates, allowances, or fees are authorized and recorded?

• What ensures that rebates, allowances, or fees are paid to qualifying customers/bottlers?

• What ensures that volume is accurate and assigned to the appropriate customer?

• What ensures that the accrual of rebates, allowances, or fees is properly recorded?

• What ensures that the sub ledger agrees to general ledger?

• What ensures payments of rebates, allowances, or fees are authorized and appropriate?

Actual expenses (i.e., rebate/allowances/fees) are reviewed and compared to budget
Independent associate ensures credit memo/invoice from customer/check request for off-invoice
rebates/allowances/fees is properly supported by approved rebate calculation prior to payment.
New /changes to rebate prices are properly approved in accordance with the COA/rebate policy prior to
update in Rebate/Price Master File
Any manual override of rebate prices are properly reviewed and approved in accordance with COA/rebate
policy. (system does not allow to manually override the rebate price,)
The duties related to this process, such as custodian, review, approval, and recording, are properly

Sales & accounts Receivables: The purpose of this process is to ensure that sale of the Units
products is treated within the companies laid down policies and procedures. The Unit follows the indirect
route system for sales (except direct sale to few key Accounts) and the business process given below
enunciates that. The objective is to ensure the following:

Sales are made only to approve distributors at approved prices.
Collections are made from them on a regular basis by sales team as per requirements of the credit policy in
Sales are made to the distributors based on the credit limits for Liquid and cases on loan maintained in the
The distributor outstanding on account of both liquid and cases on loan is reviewed on a regular basis by
finance to identify any bad and doubtful debts and then they are provided for in the books of accounts in line
with the credit policy.


• What ensures that all sales are recorded?

• What ensures that credit memos are issued/recorded for returns?

• What ensures that customer shipments are recorded in the proper period?

• What ensures that invoice and shipping documents are generated upon shipment?

• What ensures that sales are posted to correct customer and sales accounts?

• What ensures that credit memos are not generated without authorization?

• What ensures that fictitious or duplicate sales are not recorded?

• What ensures that goods are shipped to the correct customer?

• What ensures that invoices are not generated or recorded prior to goods being shipped?

• What ensures that shipping documents are only generated when goods are shipped?

• What ensures that invoices correctly state the quantity of goods shipped?

• What ensures that invoices reflect the correct pricing, discounts, taxes, etc.?

• What ensures that perpetual records reflect quantities & amounts?

• What ensures that AR sub ledger agrees to general ledger?


Before sales order is released to warehouse or prior to shipment, sales order is reviewed and approved
(including credit limit check on both finished products and Cases on Loan).
Shipping documents default to information contained in the sales order and customer master file.
The access to ship goods without a valid sales order is properly restricted to prevent unauthorized
shipment (i.e., a valid sales order must exist before shipment can be processed)
An independent count is performed for all product loaded on vehicles.
Reconciliation of goods invoiced to goods shipped is performed monthly
Prior to accepting returned goods, warehouseman ensures that appropriate approval has been obtained in
accordance with sales return policy.
Credit memos are properly supported, and independently reviewed and approved
Product margins are reviewed for reasonableness.(Only with respect to trend)

Purchases & Payables: The objective of this process is to ensure that all purchases are properly
requisitioned, received, utilized and recorded in the books. The process starts from issuance and approval of
Purchase Requisition and ends at payment to vendors and then preparing and reviewing the reconciliation of
inventory, prepaid, and other current/non current assets accounts for AP and accruals. Periodically, the
review of Vendor Master File is performed.

There are various types of goods and services purchased, among others, stores and spares, professional
services (contract labor, excise duty tax consultant), utilities (e.g. telephone, electricity, courier charges,
etc), raw materials, consumables, and finished goods (can, PET).

All purchases in HCCB should go through Logistic and Supply Chain Department, where the process of
raising the POs, performing competitive biddings and vendor verifications as well as completing vendor
master forms happen.


• What ensures that general ledger coding of purchases is correct?

• What ensures that invoices reflect correct prices, quantities and other valuation information?

• What ensures that payables for goods are recorded in a timely manner?

• What ensures that purchases are recorded in the proper period?

• What ensures that purchases/payables are recorded?

• What ensures that receiving documents are generated in the system for all goods received?

• What ensures that debit memos are only generated for real transactions?

• What ensures that fictitious or duplicate purchases are not recorded?

• What ensures that AP sub ledger agrees to general ledger?

• What ensures that the chart of authority is properly followed?

• What ensures that purchases are authorized and appropriate?


Vendor’s addition/change requests are independently approved before being added to the vendor master

A report of open purchase orders is reviewed and old/unusual items are investigated.

For goods received the packing slip is compared to the physical goods before acceptance and used to record
good receipts note.
For goods received the packing slip is compared to the physical goods before acceptance and used to record
good receipts note.

Aged exceptions to 3-way match are investigated and cleared prior to period end.

Process & Control over Inventory Count, Costing & Cost Of Sales: The purpose
of this process is to ensure that physical count of finished goods ,empties and other inventory items(erg:
Raw material & Packaging material) are taken on regular basis and the book to physical differences are
reviewed and adjustments are made accordingly.
The physical inventory (count & compilation) process consists of sub processes involving control over
receipt of material in store, issue of material from store, issue of material from stores for production and
issue of finished goods from production to warehouse.


•What ensures that book-to-physical adjustments are correctly calculated and recorded?

•What ensures that inventory counts include offsite inventory?

•What ensures that inventory counts do not include goods owned by others?

•What ensures that inventory counts, compilations and descriptions are accurate?

•What ensures that inventories are fully counted?

•What ensures obsolete inventory is properly identified and accounted for?

•What ensures that the perpetual records properly reflect the quantities and amounts?

•What ensures that customer shipments/goods receipts are recorded in the proper period?

•What ensures that inventory sub ledgers agree to the general ledger?

•What ensures that production activity (raw materials to work-in-progress to finished goods) is properly

•What ensures that cost of sales is recorded when sales takes place?

•What ensures that purchase/production variances are properly allocated?

•What ensures that the variables (i.e., ingredient costs, packaging costs, manufacturing overhead/global
overhead (pricing conditions) used to calculate cost of sales are accurate?

•What ensures company assets are properly safeguarded?

•What ensures that goods received are properly recorded?


For goods received the packing slip is compared to the physical goods before acceptance and used to record
good receipts note

Operation ensures that goods receipt is recorded at the point of legal transfer of title.

Reconciliation of goods invoiced to goods shipped is performed monthly.

Physical counts (including bottles and cases) are performed periodically to verify quantities on hand.

A count plan is prepared to ensure all related inventories are physically counted within an appropriate

Expired materials are appropriately segregated and restricted from being consumed or shipped to customers.

Tolerances for physical inventory differences (including bottles and cases) are established to require
management approval for significant differences.

Persons who are inventory counters do not authorize adjustments


Proposed Check Out Policy:

All sales vehicles are subject to check-out procedure. All Vehicles with access to finished product are checked
to ensure that no unauthorized goods leave the plant without detection, including a security check at the gate.

Check out procedure ensures that a load of finished product is verified three times prior to it leaving the plant.
The load is verified by the picker, checker and driver as follows.

Picker: Check-out procedure begins when the load is “picked” by a warehouse employee (called a “picker”).
This represents the first check of the load. If the truck is
not immediately available for loading, the load should be
Properly segregated to prevent additional product from being placed with the load.

Checker: The second check of the load occurs when another employee (usually from the warehouse and called
the “checker”) performs an independent count of the load.
Counts are recorded on the load report by package type, size and flavor. Where handhelds are used, the checker
has to key in a password to agree with the load count. Any discrepancies with the load document must be
resolved prior to the load being placed on the truck.

Depending on the timing of the delivery, the checker may perform his/her count in advance of the driver’s
count. If
A load is on a truck before a driver is available (for example, in advance of the first shift0, then the truck must
be secured to prevent unauthorized access to load.

Driver: The third check is performed by the driver. It is recommended that the driver calls out the count, while
the checker verifies the load report: this is an opportunity for the checker to prevent fraud/theft. Any
discrepancies with the load document must be resolved through recount prior to the load leaving the warehouse.
The driver and the checker
Then both sign the agreed-upon load report. The driver keeps one copy of load report, and the warehouse copy
is sent to the check-in associates.

The use of random blind counts during the check out process is a valuable control, because blind counts applied
on a non-routine basis discourages theft and ensure check-out procedures are functioning properly. At a
minimum, 10% of all loads must be subject to a random blind count. Local Management may use it’s discretion
to determine when in the check-out process to perform the blind counts. Some Example of applying this policy
would be:

• A warehouse manager randomly selects 10% of a day’s loads for blind count before the load are placed
on the trucks;
• A security guard performs a random blind count of 10%of the trucks each day leaving the gate: or
• Checker performs 10% of their counts in a blind fashion and on a random basis.

For customer self-pick up, warehouse personnel verify that the invoice is paid (or approved for credit sales)
prior to the truck being loaded. The driver must sign the invoice indicating his/her agreement with the load
quantities, and then must leave the facility immediately.

It is important to have good security during the check-out process. For Example, Sales
representatives/drivers and customers picking up their orders must be restricted from having access to
products in the warehouse or on other route sales vehicles after check-out.

• There should be segregation of work.


List of reference sources mentioned below for the successful completion of the

• Wikipedia
• Google.Com

• Economic Times
• SOX Narratives of Hindustan Coca Cola Beverages Pvt.Ltd.

• Expert Guidance Of my Mentor Mr. Chander Mohan Goel

• Data Received from different Departments.