Documentos de Académico
Documentos de Profesional
Documentos de Cultura
ACKNOWLEDGEMENT
I consider it pleasant privilege to express my heartiest gratitude and indebtedness to those who
have assisted me towards the completion of my project report.
I am very much thankful to Mr. Munish kaushal Senior Manager, Finance and IT
GlaxoSmithKline, for making me capable of conducting such a study.
I express my heartiest and sincere thanks to my company guide Mr. Sumit Bansal and Mr.
Anoop Wadhwa, Mr. Rixon Singla, Ms. Pooja Sharma, Mr. Sunil Sharma, Mr. Virender
Arora and Mr. Usman Ali of Finance department, GSK who have been a constant source of
inspiration and encouragement to me in carrying out this study.
I would also like to express my gratitude towards my Faculty guide Prof. Birendra Prasad who
helped me to complete the project.
I owe my special regards to God, my parents and my elders for their blessings and good wishes.
Last, but definitely not the least, I would also like to thank I would like to thank my college
faculty with a worth mentioning name of prof neeraj goyal and mrs richa of modi college for
providing me an opportunity and platform for conducting this study.
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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.
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TABLE OF CONTENTS
EXECUTIVE SUMMARY
1. INTRODUCTION
Company profile 8
Historical Background of the Company
9
Geographical Overview 11
Business Stations 12
Manufacturing Process 14
Supply Chain Process 15
2. ABOUT NABHA PLANT
Introduction 16
Product Profile 17
Departmental Overview 22
5S 23
GSK Mission Culture and Statement 26
3. WORKING CAPITAL
Meaning of Working Capital 27
Need of Working Capital 32
Financial Ratio Analysis 34
Operating Cycle 40
Operating Cycle of GSK 42
4. SCOPE OF STUDY
Objectives of the Study 45
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5. METHODOLOGY
Data Collection and Interpretation 46
6. RECOMMENDATIONS 47
CONC
LUSION 54
SWOT ANALYSIS 55
ASSIGNMENTS OTHER THAN PROJECT
PERFORMED AT COMPANY 57
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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-in-
progress) 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.
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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
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.
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COMPANY PROFILE
CHAIRMAN
Simon J. Scarff, O.B.E
MANAGING DIRECTOR
Zubair Ahmed
DIRECTORS
Ashok Dayal
Gautam K. Chakraborty (till 30.11.07)
Kunal Kashyap
P. Dwarakanath
P. Murari
Praveen K Gupta
Ramakrishnan Subramanian (w.e.f. 1.12.07)
Subodh Bhargava
COMPANY SECRETARY
Surinder Kumar
BANKERS
Deutsche Bank
Citibank N.A.
Bank of America
The Hongkong & Shanghai Banking
Corporation Limited
AUDITORS
Price Waterhouse
REGISTERED OFFICE
Patiala Road
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HISTORICAL BACKGROUND
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.
1956–57: 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.
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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 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
GlaxoSmithKlin
e
Smith Kline
Beecham
2006: Company’s packing unit at Excise Free Zone – Baddi (Himachal Pradesh) came into
existence.
2007: Company’s packing unit at Excise Free Zone – Gauhati(Assam) came into existence.
2008: Company launched Actibase and Actigrow products - Energy drinks
GEOGRAPHICAL OVERVIEW
Head Office
Factories
RSOs
Baddi
Nabha Packing Stations
Gurgoan
Ghaziabad Sonepat Guwahati
Mumbai Kolkatta
Pune
Rajahmundry
(GSK PHARMA)
Kompally
Chennai
Chennai
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BUSINESS STATIONS
The company started packing Horlicks in ½ 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:
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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 unit’s container or gusseted
pouches (GPs). GlaxoSmithKline Consumer Healthcare Limited is one of the three
sectors of GlaxoSmithKline. The other two sectors are:
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.
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.
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MANUFACTURING PROCESS
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.
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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.
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.
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PRODUCT PROFILE
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
• Horlicks Lite Regular Malt
• Junior Horlicks With DHA
• New Elaichi Horlicks
• Mother’s Horlicks With DHA
• Boost Premix
• Acitbase Regular
• Actigrow Chocolate
• Actigrow Vanilla
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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
capacity is 99500 MT per annum and the products manufactured by this company fall under two
categories of consumer healthcare:
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!!
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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
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.
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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.
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.
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DEPARTMENTAL OVERVIEW
♦ 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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DEPARTMENTS
OPERATIONAL
EXCELLENCE
MANUFACTURING
ENVIORNMENT HEALTH &
SAFETY
ENGINEERING
HR & A
QUALITY
ASSURANCE
FINANCE
&
I.T.
WAREHOUSE
SUPPLY CHAIN
MANAGEMENT
PROCUREMENT
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GSK’s 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 7 Milk Collection Centers (MCC’s) 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.
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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.
Why do it?
How often do you go to use a piece of equipment and it’s not where you left it? Wouldn’t it be
less time consuming if everybody knew where they were supposed to store it?
Where do I start?
Store - Organize what’s Left! Arrange and Identify for ease of use
A place for everything, everything in its place, Know what you have and where it’s 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
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GSK MISSION
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 GSK’s 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
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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.
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
such as Plant, machinery, and building, furniture etc. Investment in these assets represent that
part of firm’s 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: -
2. Large holding of current assets, especially cash, strengthens firm’s liquidity position
but it also reduces the overall profitability.
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Project ~ Working Capital
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 firm’s capital, which is required, be
financing short term and current assets such as cash, marketable securities, debtors and
inventories.
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Temporary investment
Prepaid expenses
Accrued incomes
Debtors
(Receivables)
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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.
There are two elements in the business cycle that absorb cash - Inventory (stocks and work-in-
progress) 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.
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Project ~ Working Capital
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.
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.
It helps to arrange the funds on most favorable terms and prevents excess
accumulation of cash.
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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:
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
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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 firm’s 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.
♦ 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
A current ratio of 2:1 is generally considered to be acceptable. As the firm has a current
ratio (2.73:1) better than acceptable ratio (2:1), the firm is well within a position to meet its
current liabilities.
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
A quick ratio of 1:1 is considered as acceptable. A higher ratio of 1.8:1 ensures the ability of
the firm’s quick assets to meet its current liabilities.
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.
Particulars 2008
(Rs Lacs)
Sales 170147.22
Working Capital 11775.98
WORKING CAPITAL TURNOVER RATIO 14.44
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The above Working capital turnover ratio suggests that the working capital is being utilized
efficiently.
Working capital is segregated into Inventory turnover, Debtor’s turnover and creditor’s
turnover
♦ INVENTORY TURNOVER RATIO:
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 2008
(Rs Lacs)
Sales 170147.22
Average Inventory 23599.69
INVENTORY TURNOVER RATIO 7.21
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Particulars 2008
(Rs Lacs)
Sales 170147.22
Average Accounts Receivable 5693.12
INVENTORY TURNOVER RATIO 48.19
This ratio is calculated on same lines as receivable turnover ratio is calculated. This
shows the velocity of debt payment by the firm. A low creditor’s turnover ratio reflects
liberal terms granted by the suppliers. While a high ratio shows the accounts are settled
rapidly. It is calculated as follows:
Credit Purchases
Average Accounts Payable
Particulars 2008
(Rs Lacs)
Credit Purchases 178381.90
Average Accounts Payable 15822.65
CREDITOR’S TURNOVER RATIO 11.27
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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.
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-in-
progress 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: -
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
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.
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Cost of production
Note:
Total Sales are taken as Credit Sales.
SCOPE OF STUDY
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
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Project ~ Working Capital
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 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.
METHODOLOGY
COLLECTION OF DATA:
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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.
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
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The result of the live project done at GSK is presented in the form of following
recommendations:
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Pertaining to the above three major prerequisites of the project following key focus areas
have been suggested.
1) Inventory:
2) Trade Payables:
3) Trade Receivables:
• Credit period of same supplier to be checked for standardization across all locations
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
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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
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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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.
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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 firm’s 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.
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SWOT ANALYSIS
SWOT analysis provides the information that is helpful in matching the firm’s 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.
STRENGTHS
The firm’s 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 6th 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, Mother’s 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-à-vis previous years.
Government Policies, Rules and Regulations.
Shift in consumer taste away from the firm’s product
Competition from other MNCs like Cadburys and Nestle.
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2. 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.
3.FIVE ‘S’
Five ‘S’ is a model used in Nabha for maintenance of records in all the departments.
The five ‘S’ in the model signify:
Sort
Store
Shine
Standardize
Sustain
These are basically the steps which are used to manage and maintain the records so as to
minimize the retrieval time of the documents and files. Same model has been utilized to
store the data for past 10 years.
The model has been efficiently utilized by Nabha unit which ensures effective storage
system for keeping personal records in all departments at the unit viz; Finance, HR,
Quality Control, Procurement and Production.
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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
5. ISSUING C - FORMS
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
company’s own use as well as for transferring the data to the concerned government
authorities.
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Application for Removal of Excisable Goods were issued for goods being exported as part of
one of the assignments done at the company.
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