Documente Academic
Documente Profesional
Documente Cultură
PROJECT REPORT
ON
WORKING CAPITAL MANAGEMENT
OF
SUBMITTED BY:
TARUNDEEP SINGH
ROLL NO: 5691
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
of
GLAXOSMITHKLINE
CONSUMER
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.
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
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.
COMPANY PROFILE
Company
Head office
Gurgaon (Haryana)
Registered Office
Nabha (Punjab)
Status
Multinational Company.
Turnover (2010)
Rs.243077.18 (lacs)
Rs.45180.45 (lacs)
Export to
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:
195657:
1958:
On May 31, 1958 His highness Pratap Singh laid the foundation stone of
the Company at Nabha.
1960:
1969:
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:
2000:
Glaxo
Merger
Smith Kline
Beecham
GlaxoSmithKlin
e
2002:
2003:
2004:
The Bank of Punjab has tied up with the company for facilitating finance
Deutsche bank has tied up with GSK for facilitating their fund management
as well as treasury management on a centralized basis
2006:
2007:
2008:
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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
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)
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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.
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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Consumer
Retailers
Wholesalers
Drums
(at factories)
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.
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
Gastrointestinal
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!!
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
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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.
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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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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
Store
Shine
Standardize
Sustain
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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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.
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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.
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.
CURRENT LIABILITIES
Bills payable
Bills receivables
Sundry creditors
Sundry debtors
Accrued loans
Raw material
Dividend payable
Work in progress
Bank overdraft
Finished goods
Debtors
(Receivables)
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Cash
Finished Goods
Raw Materials
Work-in-Progress
RS. LACS
31200.06
Sundry Debtors
5053.34
97609.83
3438.96
Total
137302.19
Total
RS. LACS
31200.06
5053.34
97609.83
3438.96
137302.19
RS. LACS
35692.46
7864.61
272.97
3086.44
120.25
3492.45
5136.94
55666.12
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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.
It helps to arrange the funds on most favorable terms and prevents excess
accumulation of cash.
2.
3.
To incur day-to-day expenses and overhead costs such as fuel, power and office
expenses.
4.
5.
6.
To maintain the inventories of raw material, work-in-progress, stores and spares and
finished stock.
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7.
8.
Current ratio
Quick ratio
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.
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.
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Particulars
Absolute Liquid Assets
Current Liabilities
ABSOLUTE LIQUID RATIO
2010(Rs Lacs)
97609.83
52047.46
1.87
Sales
_________________________
Current Assets
.
Particulars
Sales
Current Assets
TURNOVER RATIO
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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
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.
Sales
Average Inventory
Particulars
2010
(Rs Lacs)
Sales
243077.18
Average Inventory
28901.63
8.41
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Sales
Average Accounts Receivable
Particulars
2010
(Rs Lacs)
Sales
Average Accounts Receivable
INVENTORY TURNOVER RATIO
243077.18
4094.49
59.36
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:
The inventory conversion period is the total time needed for producing and selling the product.
It includes: 1.
2.
3.
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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.
Particular
5114.09
6935.65
6024.87
58521.16
38 days
Opening stock
Closing stock.
15318.67
17879.23
Average stock
Cost of goods Sold
16598.95
87217.2
70 days
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Particular
Opening stock of
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
Note:
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2009(Rs. Lacs)
14393.14
17252.17
15822.65
178381.90
17 days
Year
RMCP
2008
46
WIPCP
FGCP
DCP
23
GOC= ICP +
DCP
80
Year
GOC
CCP
NOC=GOC-CCP
ICP
2008
80
17
63
72
SCOPE OF STUDY
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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
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
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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2.
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 same supplier to be checked for standardization across all locations
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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.
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
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3 YEARS
INVENTORY
Raw & Packing Material
Raw Material
Packing Material
SUB-TOTAL
FINISHED GOODS
Bulk/Packed Stock
SUB-TOTAL
TOTAL-INVENTORY
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
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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.
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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.
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.
WEAKNESS
The absence of certain strengths may be viewed as weakness and the major weakness faced by
the GSK is:
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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.
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.
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.
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.