WorkingCapital.report

7/25/2019 WorkingCapital.report

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TRAINING PROJECT REPORT

ON

WORKING CAPITAL MANAGEMENT OF GSK

SUBMITTED FOR THE PARTIAL FULFILLMENT OF THE DEGREE OFMASTER OF BUSINESS ADMINISTRATION

of

PUNJAB TECHNICAL UNIVERSITY

Submitted By:

A!"#dee$ %!u&''('&&

MBA III SEMESTER

UNDER THE SUPER)ISION OF

D* R!m!+dee$ S!i+i,A""o-i!te Pofe""o.

Chandia!h B"#in$## S%h&&'( Land!an( M&ha'i

)*+,-+.

&


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CERTIFICATE OF SUPERVISOR

T#i" i" to -etify t#!t M* / M"* A!"#dee$ %!u Ro00 No* &''('&& #!"

-om$0eted t#e e"e!-# $o1e-t tit0ed 2 3o4i+5 C!$it!0 6 u+de my "u$e7i"io+

i+ $!ti!0 fu0fi00me+t of t#e d$!$$ &/ MASTER OF BUSINESS

ADMINISTRATIONof P"n0a1 T$%hni%a' Uni2$!#i34*

Su$e7i"o8" "i5+!tue:

D* R!m!+dee$ S!i+i

A""o-i!te Pofe""o

D!te:

P0!-e:

9


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DECLARATION

I #eeby de-0!e t#!t t#e e"e!-# $o1e-t e$ot tit0ed 23o4i+5 C!$it!06 i" my

o;+ oi5i+!0 e"e!-# ;o4 !+d t#i" e$ot #!" +ot bee+ "ubmitted to !+y

U+i7e"ity/I+"titute fo t#e !;!d of !+y $ofe""io+!0 de5ee o di$0om!*

A!"#dee$ %!u

MBA III "eme"te

C#!+di5!# Bu"i+e"" S-#oo0

D!te:P0!-e:


4/80

A%5n&6'$d$7$n3

3iti+5 ! e$ot i" !0;!y" t#e mo"t -#!00e+5i+5 $!t of ! "tude+t8" 0ife* It ;!" defi+ite0y t#e

mo"t im$ot!+t !-!demi- -o+tibutio+ by me* T#i" #o;e7e ;ou0d +ot #!7e bee+ $o""ib0e

;it#out t#e e+-ou!5eme+t !+d "u$$ot of ! fe; $eo$0e* I -o+"ide it $0e!"!+t $i7i0e5e to

e=$e"" my #e!tie"t 5!titude !+d i+debted+e"" to t#o"e ;#o #!7e !""i"ted me to;!d" t#e

-om$0etio+ of my $o1e-t e$ot*

Fi"t !+d foemo"t I ;ou0d 0i4e to t#!+4 M!8S&7i3 Pandi3 Se+io M!+!5e Fi+!+-e !+d IT

G0!=oSmit#%0i+e fo m!4i+5 me -!$!b0e of -o+du-ti+5 "u-# ! "tudy*

I e=$e"" my #e!tie"t !+d "i+-ee t#!+4" to my -om$!+y 5uide M!8 S"ni' Sha!7a and M!8

Shi2 Ka"#ha' M!8 Vi5a# Ban#a'( M!8 A7an Ban#a'( M!8 P"n$$3 and M!8 S"7i3 Ban#a'of

Fi+!+-e de$!tme+t GS% ;#o #!7e bee+ ! -o+"t!+t "ou-e of i+"$i!tio+ !+d e+-ou!5eme+t

to me i+ -!yi+5 out t#i" "tudy*

I !m 7ey mu-# t#!+4fu0 to D!8 Ra7and$$9 Saini,A""o-i!te Pofe""o !t CBS L!+d!+. fo

#e -o+ti+uou" 5uid!+-e > "u$$ot*

I ;ou0d 0i4e to t#!+4 my $!e+t" fo t#ei b0e""i+5" !+d 5ood ;i"#e" !+d to my fie+d" ;#o

#e0$ed me to -om$0ete t#e $o1e-t*L!"t but +ot t#e 0e!"t? I ;ou0d 0i4e to t#!+4 God fo !00*

T#!+4 @ou*

A!"#dee$ %!u

'


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PREFACE

T#e $ob0em of u+em$0oyme+t i" o+e of ou m!1o $ob0em"* T#i" $ob0em #!" bee+

toub0i+5 u" e7e "i+-e ;e 5!i+ed i+de$e+de+-e* O+e e!"o+ fo 5o;i+5 u+em$0oyme+t i+

t#e -ou+ty i" ou f!u0ty edu-!tio+ "y"tem* Stude+t" !e 5i7e+ boo4i"# 4+o;0ed5e ;it#out

!+y t!i+i+5 fo "$e-ifi- 1ob"* To miti5!te "u-# $ob0em" of ou edu-!tio+ "y"tem to "ome

e=te+t t!i+i+5 $o5!m" !e bei+5 i+todu-ed* T#e"e $o5!m" #e0$ t#e "tude+t" to ;ide+

t#ei #oio+* T!i+i+5 -!+ be do+e i+ i+du"tie" bu"i+e""#ou"e" "!0e" !+d i+-ome t!=

de$!tme+t of 7!iou" -e+t!0 "t!te 0o-!0 5o7e+me+t "o-ietie" et-*

A t!i+i+5 $o5!m i+ i+du"ty i" to 5et !+ o7e!00 7ie; !+d e=$o"ue of t#e i+du"ty !+d it"

;o4i+5 e+7io+me+t* It e+#!+-e" t#e -o+fide+-e !+d boo"t" t#e mo!0e of t#e "tude+t"

$e$!i+5 t#em"e07e" to ;o4 i+ i+du"ty i+ futue* T#e"e $o5!m" -o+ti+uou"0y fi+d $0!-e

i+ -ui-u0um of m!+!5eme+t "tudie" fo de7e0o$me+t of t#e $e"o+!0ity of "tude+t" !+d to

$o7ide t#em ;it# ! fi"t#!+d e=$eie+-e !bout ;o4i+5 i+ i+du"ty*


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A1#3!a%3

3o4i+5 -!$it!0 +o;!d!y" #!" bee+ ide+tified !" ! m!1o t#u"t !e! by !0mo"t !00 t#e fim"

t#ou5#out ;o0d i+ ode to m!+!5e t#e -ue+t !""et" !+d -o+"eue+ti!00y -ue+t 0i!bi0itie"*3o4i+5 -!$it!0 efe" to t#e -!$it!0 ;#i-# i" u"ed to -!y out t#e d!y to d!y o$e!tio+ of !

bu"i+e""* E7ey bu"i+e"" +eed" fu+d" fo t;o $u$o"e" fo it" e"t!b0i"#me+t !+d to -!y o+

it" d!y to d!y o$e!tio+"* Lo+5 tem fu+d" !e euied to -e!te $odu-tio+ f!-i0itie" t#ou5#

$u-#!"e of fi=ed !""et" "u-# !" P0!+t m!-#i+ey !+d bui0di+5 fu+itue et-* Fu+d" !e !0"o

+eeded fo "#ottem $u$o"e" i*e* fo t#e $u-#!"e of !; m!tei!0 $!yme+t of ;!5e" !+d

-!y o+ d!ytod!y o$e!tio+" of bu"i+e"" et-* T#e"e fu+d" !e 4+o;+ !" ;o4i+5 -!$it!0*

T#e !bo7e ide! of 3o4i+5 -!$it!0 "u55e"t" t#!t 0ife0i+e of ! bu"i+e"" i" -!"#* C!"# f0o;" i+ !

-y-0e i+to !ou+d !+d out of ! bu"i+e""* If ! bu"i+e"" i" o$e!ti+5 $ofit!b0y t#e+ it "#ou0d

i+ t#eoy 5e+e!te -!"# "u$0u"e"* If it doe"+t 5e+e!te "u$0u"e" t#e bu"i+e"" ;i00

e7e+tu!00y u+ out of -!"# !+d e=$ie*

T#e -#e!$e"t !+d be"t "ou-e" of -!"# e=i"t !" ;o4i+5 -!$it!0 i5#t ;it#i+ bu"i+e""* Good

m!+!5eme+t of ;o4i+5 -!$it!0 ;i00 5e+e!te -!"# ;i00 #e0$ im$o7e $ofit" !+d edu-e i"4"*

Fo "imi0! e!"o+" o$timi!tio+ of ;o4i+5 -!$it!0 -!me i+to e=i"te+-e !" !+ e=#!u"ti7e

$o1e-t !t G0!=oSmit#%0i+e N!b#!*

T#e $o1e-t -o+du-ted fo o$timi!tio+ of ;o4i+5 -!$it!0 i" ! $o1e-t !t GS% N!b#! u+de

t#e +!me W&!5in Ca9i3a'* T#e $o1e-t b!"i-!00y de!0" ;it# !+!0y"i" of -edit tem" of

"u$$0ie" "u$$0yi+5 diffee+t item" !t !00 t#e "e7e+ "ite" of G0!=oSmit#%0i+e i+7o07ed i+

$odu-tio+ !" ;e00 !" $!-4!5i+5 of diffee+t $odu-t" of t#e -om$!+y* A$!t fom !+!0yi+5

t#e -edit tem" of "u$$0ie" fo t#e -om$!+y "t!+d!d +om" fo #o0di+5 t#e i+7e+toy of !;

m!tei!0" $!-4!5i+5 m!tei!0" ;!" !0"o !+!0yed to detemi+e t#e o$$otu+itie" fo edu-i+5

t#e ;o4i+5 -!$it!0*


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CONTENTS

Cha93$! Pa$ N&8

Cha93$! : +8*I+todu-tio+ ,I+du"ty Pofi0e. &*& M!4et Sie &*9 P0!ye" i+ i+du"ty &*< Ro!d A#e!d &*' Go7e+me+t I+iti!ti7e"

Cha93$! : )8*Com$!+y Pofi0e &&

9*& Hi"toy 9*9 Podu-t"

9*< O5!+i!tio+ "tu-tue

Cha93$! : ;8*****Re"e!-# Met#odo0o5y 9( Co+-0u"io+"

Cha93$! : =8**Re-omme+d!tio+" Su55e"tio+"

Bib0io5!$#y


8/80

Cha93$! +: Ind"#3!4 P!&/i'$

In3!&d"%3i&n

I+di!8" -o+"ume -o+fide+-e -o+ti+ue" to be t#e #i5#e"t 50ob!00y !+d #!" im$o7ed i+ t#e

"e-o+d u!te of -!0e+d! ye! 9(& ,K9. idi+5 o+ ! $o"iti7e e-o+omi- e+7io+me+t !+d

0o; i+f0!tio+* Nie0"e+8" fi+di+5" e7e!0 t#!t t#e -o+"ume -o+fide+-e of ub!+ I+di!

i+-e!"ed by o+e $oi+t i+ t#e "e-o+d u!te of 9(& fom t#!t i+ t#e $e-edi+5 u!te*

Ub!+ I+di!8" -o+"ume -o+fide+-e i" &


9/80

I+di!8" m!4et i" -o+"ume di7e+ ;it# "$e+di+5 !+ti-i$!ted to moe t#!+ doub0e by 9(9*

T#e I+di!+ -o+"ume "e5me+t i" bo!d0y "e5e5!ted i+to ub!+ !+d u!0 m!4et" !+d i"

!tt!-ti+5 m!4ete" fom !-o"" t#e ;o0d*

+8+: Ma!5$3 #i>$

T#e 5o;i+5 $u-#!"i+5 $o;e !+d i"i+5 i+f0ue+-e of t#e "o-i!0 medi! #!7e e+!b0ed I+di!+

-o+"ume" to "$0u5e o+ 5ood t#i+5"*

A "tudy by USb!"ed +et;o4i+5 "o0utio+ 5i!+t CISCO e7e!0" t#!t i+ I+di! t#e "e-o+d

0!5e"t "m!t$#o+e m!4et 50ob!00y t#e +umbe of "m!t$#o+e" i" e=$e-ted to 5o; "to+50y

to o7e ( mi00io+ by 9(&*

A--odi+5 to CISCO8" )i"u!0 Net;o4i+5 I+de= ,)NI. 50ob!0 mobi0e d!t! t!ffi- foe-!"t fo

9(&'& i+ I+di! o+e of t#e ;o0d" f!"te"t 5o;i+5 I+te+et m!4et t#e +umbe of t!b0et" i"

e"tim!ted to e!-# moe t#!+ & mi00io+ by 9(&*

R!ti+5 !5e+-y Ci"i0 e"tim!te" t#!t o+0i+e et!i0i+5 bot# die-t !+d t#ou5# m!4et$0!-e"

;i00 5o; t#eefo0d to be-ome ! R" (((( -oe ,US *( bi00io+. i+du"ty by 9(&* A0"o

t#e 5o;t# i+ I+te+et et!i0 i" e=$e-ted to boo"t off0i+e et!i0 "toe"*

+8): P'a4$!# in Ind"#3!4

Fo00o;i+5 !e "ome m!1o i+7e"tme+t" !+d de7e0o$me+t" i+ t#e FMCG "e-to*


10/80

FMCG m!1o Hi+du"t!+ U+i0e7e ,HUL. !++ou+-ed ! eo5!+i!tio+ of it" 5oto

m!4et o$e!tio+" fom t#e t!ditio+!0 fou "!0e" b!+-#e" to &' -o+"ume -0u"te" i+

ode to $o7ide "e7i-e" to di7e"e -o+"ume" !-o"" -#!++e0" !+d 5eo5!$#ie"* T#e

-om$!+y #!" temed t#e i+iti!ti7e !" 23i++i+5 i+ M!+y I+di!+"6*

Heo Gou$ i" "et to !-uie ! m!1oity "t!4e i+ die-tto#ome de7i-e" m!+uf!-tue

Mybo= Te-#+o0o5ie" t#ou5# it" "ub"idi!y Heo E0e-to+i=* T#e de!0 i" t#e fi"t "te$

by Heo Gou$ ;#i-# o$e!te" i+ +umeou" bu"i+e"" 7eti-!0" to;!d" e+tei+5 t#e

-o+"ume e0e-to+i-" m!4et*

I+ ! "eie" of "t!te5i- buyout" t#i" ye! S+!$De!0 ;#i-# !-uied o+0i+e uti0ity

"e7i-e $o7ide Fee-#!5e !+d fi+!+-i!0 "e7i-e" $ot!0 Ru$eePo;e #!" "i5+!00ed

it" !mbitio+ to bui0d ! "e7i-e $0!tfom "o !" to "t!+d out i+ !+ o+0i+e m!4et$0!-e;#i-# u+ti0 +o; ;!" domi+!ted by !+ !!y of $odu-t" fom -!me!" to !$$!e0 !+d

fu+itue*

C#i+e"e te-#+o0o5y m!1o Hu!;ei i" e+tei+5 t#e -o+"ume bo!db!+d +et;o4i+5

"e5me+t i+ I+di! ;it# ! !+5e of de7i-e" !imed !t #ome" !+d SOHO -u"tome"* 3it#

t#e !im to "te+5t#e+ it" $o"itio+ i+ t#e I+di!+ m!4et o+0i+e -!"#b!-4 !+d -ou$o+

"ite C!"#%!o*-om $0!+" to 0i"t !bout ( 50ob!0 et!i0e" o7e t#e +e=t "i= mo+t#"

!--odi+5 to o+e of it" fou+de"*

+8;: R&ad Ah$ad

A--odi+5 to ! e-e+t0y $ub0i"#ed Te-#S-i Re"e!-# e$ot I+di! Food Se7i-e" M!4et

Foe-!"t > O$$otu+itie" 9(9( t#e food "e7i-e" m!4et i+ I+di! i" e=$e-ted to e=$!+d !t !

CAGR of o7e &9 $e -e+t t#ou5# 9(9( $im!i0y di7e+ by i+-e!"i+5 di"$o"!b0e i+-ome

-#!+5i+5 0ife"ty0e !+d -#!+5i+5 t!"te" !+d $efee+-e" of -o+"ume"* A+ot#e m!1o f!-to

$o$e00i+5 t#e dem!+d fo food "e7i-e" i+ I+di! i" t#e 5o;i+5 yout# $o$u0!tio+ $im!i0y

i+ t#e -ou+ty8" ub!+ e5io+"* I+di! #!" ! 0!5e b!"e of you+5 -o+"ume" ;#o fom t#e

m!1oity of t#e ;o4fo-e !+d due to time -o+"t!i+t" b!e0y 5et time fo -oo4i+5*

&(


11/80

A--odi+5 to t#e e$ot tit0ed I+di! M!-#i+etoM!-#i+e ,M9M. Modu0e" M!4et

O$$otu+itie" > Foe-!"t 9(9( t#e M9M modu0e" m!4et i+ I+di! i" e=$e-ted to e=-eed

US '*' bi00io+ by 9(9(* T#e m!4et e"e!-# fim "t!ted t#!t o7e t#e 0!"t fe; ye!" I+di!

#!" be-ome o+e of t#e f!"te"t 5o;i+5 m!4et" fo M9M modu0e" i+ A"i!P!-ifi- ,APAC.*

+8,: G&2$!n7$n3 Ini3ia3i2$#

T#e Go7e+me+t of I+di! #!" !00o;ed &(( $e -e+t Foei5+ Die-t I+7e"tme+t ,FDI. i+ t#e

e0e-to+i-" #!d;!em!+uf!-tui+5 "e-to t#ou5# t#e !utom!ti- oute* T#e 5o7e+me+t #!"

!0"o e+!b0ed & $e -e+t FDI i+ mu0tib!+d et!i0 !+d &(( $e -e+t i+ "i+50eb!+d et!i0 "o

!" to !tt!-t moe foei5+ i+7e"tme+t i+to t#e -ou+ty*

3it# t#e dem!+d fo "4i00ed 0!bou 5o;i+5 !mo+5 I+di!+ i+du"tie" t#e 5o7e+me+t $0!+"

to t!i+ (( mi00io+ $eo$0e by 9(99 !+d i" !0"o e+-ou!5i+5 $i7!te $0!ye" !+d e+te$e+eu"

to i+7e"t i+ t#e 7e+tue* M!+y 5o7e+me+t -o$o!te !+d edu-!tio+!0 o5!+i"!tio+" !e

;o4i+5 to;!d" $o7idi+5 t!i+i+5 !+d edu-!tio+ to -e!te ! "4i00ed ;o4fo-e*

Cha93$! ): C&79an4 P!&/i'$

In3!&d"%3i&n 3& GSK

G0!=oSmit#%0i+e Co+"ume He!0t#-!e Ltd* ,GS%CH. i" !+ I+di!+ !""o-i!te of

G0!=oSmit#%0i+e $0- U*%*

GS%CH i" o+e of t#e 0!5e"t $0!ye" i+ t#e He!0t# Food Di+4" i+du"ty i+ I+di!* T#e

Com$!+y ;it# it" m!+uf!-tui+5 $0!+t" 0o-!ted i+ Na1ha( Ra0ah7"nd!4 and S&n$9a3(#!"! tot!0 ;o4fo-e of o7e 9(( $eo$0e e!-# di7e+ by ! "$iit of e+te$i"e*

It" f0!5"#i$ $odu-t H&!'i%5#(i" ! #i5#0y e"$e-ted b!+d ;#i-# i" o7e &(( ye!" o0d i+

I+di!* T#e Com$!+y !0"o m!+uf!-tue" !+d m!4et" B&( Vi2a( Ma'3 &2a( Bi#%"i3#!+d i+

&&


12/80

!dditio+ $omote" !+d di"tibute" ! +umbe of $odu-t" i+ di7e"e -!te5oie" i+-0udi+5

$omi+e+t b!+d" "u-# !" En&( C!&%in !+d I&d$?8

GSKCH#!" ! "to+5 m!4eti+5 !+d di"tibutio+ +et;o4 i+ I+di! -om$i"i+5 o7e &((

;#o0e"!0e" !+d die-t -o7e!5e of o7e '((((( et!i0 out0et"*

GSK MISSION

Ou 50ob!0 ue"t i" to im$o7e t#e #um!+ 0ife by e+!b0i+5 t#e $eo$0e

TO DO MORE, FEEL BETTER, AND LIVE LONGER.

Peo$0e !t G0!=o Smit#%0i+e -o+"ume #e!0t#-!e 0imited !e dedi-!ted u" to de0i7ei+5

medi-i+e" !+d $odu-t" t#!t #e0$ mi00io+ of $eo$0e !ou+d t#e ;o0d LIVE LONGER(

HEALTHIER AND HAPPIER LIVES8

GSK Vi#i&n

3e ;!+t to be-ome t#e i+di"$ut!b0e 0e!de i+ ou i+du"ty+ot "im$0y i+ tem" of "ie but i+

#o; ;e u"e t#!t "ie to !-#ie7e ou mi""io+ !+d to im$o7e t#e u!0ity of #um!+ 0ife*

Be-omi+5 t#e i+di"$ut!b0e 0e!de i+ ou i+du"ty me!+" -o+uei+5 t#e -#!00e+5e" t#!t f!-e

u" !" !+ i+du"ty !+d !" 50ob!0 "o-iety*

)8+: HISTORICAL BACKGROUND

G0!=oSmit#%0i+e Co+"ume He!0t#-!e Ltd* i" ! $#!m!-euti-!0 !+d #e!0t#-!e -om$!+y

bo+ out of t#e me5e of t;o 0e!di+5 i+te+!tio+!0 o5!+i!tio+" Smit#%0i+e Bee-#!m !+d

G0!=o 3e0-ome*

YEAR DESCRIPTION

+@


13/80

+@


14/80

)**;: Com$!+y i+"t!00ed !+ot#e m!+uf!-tui+5 u+it i+ H!y!+! So+e$!t

)**,: T#e B!+4 of Pu+1!b #!" tied u$ ;it# t#e -om$!+y fo f!-i0it!ti+5 fi+!+-e

o+ !tt!-ti7e tem" to it" mi04 "u$$0ie"*

)**


15/80

+8 HORLICKS

T#e f0!5"#i$ b!+d of t#e -om$!+y t#i" $odu-t +!me i" !""o-i!ted ;it# t#!t of t#e -om$!+y*

It ;ou0d be i+tee"ti+5 to 4+o; #o; !+d ;#ee t#i" 50ob!0 b!+d too4 off* 3!y b!-4 i+ &


16/80

.8 ELAICHI HORLICKS

E0!i-#i Ho0i-4" ;!" 0!u+-#ed i+ O-tobe &'* Ho0i-4" $o"itio+ !" t#e m!4et 0e!de i+ t#e

Mi04 Food Di+4" ,MFD. -!te5oy ;!" fut#e "te+5t#e+ed ;it# t#e 0!u+-# of C#o-o0!te

Ho0i-4" i+ No7embe &(* E0!i-#i Ho0i-4" i" Ho0i-4" ;it# ! fe"# -!d!mom t!"te !+d

!om! !0o+5 ;it# +!tu!0 5ood+e"" of ;#e!t mi04 !+d m!0ted b!0ey m!4i+5 !+ !$$etii+5

!+d e!"i0y di5e"tib0e di+4*

=8 ENO

E+o i" ! &(( ye!" o0d 50ob!0 b!+d* It i" ! $!t of G!"toi+te"ti+!0 -!te5oy8 E+o i" t#e o+0y

$o;de !+t!-id !+d #!" "#o;+ f!7o!b0e 5o;t# o7e t#e ye!"* T#i" #!" bee+ "te+5t#e+edof t#e 0emo+ 7!i!+t !+d t#e "!-#et $!-4*

8 BISCUITS

T#e bi"-uit di7i"io+ #!" "$e!d it" ;i+5" !+d "et f0i5#t ;it# ! ' i+-e!"e i+ t#e tu+o7e*

Ho0i-4" bi"-uit" !e +o; ! tu0y +!tio+!0 b!+d* T#e di7i"io+ #!" ! +umbe of $0!+" fo t#e

futue 5o;t# ;it# t#e 0ot of e=-iti+5 +e; 7!iety u$ it" "0ee7e"*

)8;: ORGANISATION STRUCTURE

CHAIRMAN

Simo+ J* S-!ff O*B*E

MANAGING DIRECTORub!i A#med

DIRECTORS

Mu4e"# H* But!+i%u+!0 %!"#y!$P* D;!!4!+!t#

&


17/80

P!7ee+ % Gu$t!R!m!4i"#+!+ Sub!m!+i!Subod# B#!5!7!

COMPANY SECRETARYSui+de %um!

BANKERS

Deut"-#e B!+4Citib!+4 N*A*B!+4 of Amei-!T#e Ho+54o+5 > S#!+5#!i B!+4i+5Co$o!tio+ LimitedSt!te B!+4 Of P!ti!0!

AUDITORSPi-e 3!te#ou"e

REGISTERED OFFICE

P!ti!0! Ro!dN!b#! &'9(& ,Pu+1!b.

EMAIL FOR INVESTORS: - in#etor.%.!o&'k.!o(

COMPANY WEBSITE ADDRESS: - ;;;*5"4-#*i+

STATUS

Mu0ti+!tio+!0 Com$!+y ;it# $omote" fom U*%

UALITY STATUS

OHSAS&((&ISO (((:9(((ISO &'((&:9(('

DEPARTMENTST#e 7!iou" de$!tme+t" i+ GS%CH N!b#! !e:

M!+uf!-tui+5 De$!tme+t

E+5i+eei+5 De$!tme+t

Ku!0ity A""u!+-e De$!tme+t* 3!e#ou"e > Su$$0y C#!i+ M!+!5eme+t

Po-ueme+t De$!tme+t ,Mi04 Sou-i+5 Po-ueme+t !+d Pu-#!"e De$!tme+t.

Fi+!+-e > IT De$!tme+t

Hum!+ Re"ou-e" !+d Admi+i"t!tio+ De$!tme+t*

E+7io+me+t He!0t# !+d S!fety De$!tme+t ,EHS.

&
mailto:[email protected]:[email protected]


18/80

Manufacturing

DE.FINA

NCE &IT

Warehouse &Supply Chain

Mgt.

QualityAssurance

Departent.

Engineering

Departent

!perationalE"cellence

En#ironent$%ealth an Safety

De.% '

Ainistration De.

(rocu

Depar

O$e!tio+!0 E=-e00e+-e

Finan%$ D$9a!37$n3 O2$!2i$6

&


19/80

FINANCE DEPARTMENT

&


20/80

Main Fun!tion o) Finan!e De*art(ent are a Follo+-

V$nd&! Pa47$n3: 3#e+ !+ !ti-0e !i7e" !t t#e 5!te !+ e+ty $emit i" m!de !+d t#ey

!e "e+t to t#e GOODS IN3ARD DISPATCH "e-tio+ ,GID.* A 5ood" i+;!d fom ,GID. i"

fi00ed u$ !+d "e+t to t#e fi+!+-e de$!tme+t fo $!yme+t* T#e 7e+do" "ubmit t#e bi00 to

$u-#!"e de$!tme+t* T#e fi+!+-e de$!tme+t !0"o e-ei7e" ! #!d -o$y of t#e -oe"$o+di+5

$u-#!"e ode ,PO.* T#ee i" o+0i+e $!""i+5 !+d $!yme+t "y"tem* T#i" -o+t!i+" ! d!t!b!"e

of !00 $u-#!"e ode i""ued*

Di#1"!#$7$n3 &/ Sa'a!i$#: T#e HR De$!tme+t "e+d" ! -om$i0e 0i"t of !00 em$0oyee"

o+ t#e $!yo00 to5et#e ;it# t#ei mo+t#0y ;o4i+5 e-od" *T#e "!0!ie" !e $!id m!i+0y

t#ou5# t#e b!+4 e=-e$t fo ! fe; tem$o!y ;o4e"*

Pa47$n3 3& G&2$!n7$n3 B&di$#: E=-i"e i" $!id to !00 "u$$0ie" fo 5ood" $u-#!"ed

*T#e -om$!+y obt!i+" eimbu"eme+t fo t#e e=-i"e fom t#e 5o7t* A--odi+5 to t#e

CEN)AT* E=-i"e i" #o;e7e $!id fo t#e fi+i"#ed 5ood"* Po$ety t!= )AT I+"u!+-e -0!im"

!0"o $!id i+ -!"e of !--ide+t" > be!4do;+" fo ;#i-# -0!im" !e -!00ed fo !""e""me+t*

)AT i" $!id to E=-i"e > T!=!tio+ De$!tme+t of Pu+1!b*

Mi'5 A%%&"n3in: E7ey mi04 "u$$0ie #!" ! -ode t#e fi"t t;o di5it" i+di-!ti+5

;#et#e t#e mi04 i" fom -o; buff!0o !+d t#e +e=t t#ee di5it" i+di-!ti+5 t#e "u$$0ie*

P!yme+t" !e m!de ;it#i+ &( d!y" by -#eue/DD*

Ca#hBan5in: T#ee !e "e$!!te !--ou+t" fo !; m!tei!0 e=-0udi+5 mi04 "toe"

"e7i-e" -!$it!0 !+d $!-4i+5 m!tei!0 e7ey de$!tme+t "ubmit" it" mo+t#0y -!"#

euieme+t !+d "e+d" it to fi+!+-e ;#ee it i" -o+"o0id!ted*

Pa47$n3 &/ #$!2i%$#: T#e fi+!+-e de$!tme+t $!y" fo 7!iou" "e7i-e" 0i4e e+t tu-4

#ie et-*

Ca9i3a' 1"d$3in: E7ey de$!tme+t "ubmit" !+ !++u!0 bud5et ;#i-# i" !00o-!ted

u!te ;i"e* T#e -o+-e+ de$!tme+t !0"o "e+d" ! -!$it!0 i+7e"tme+t $o$o"!0 ;#i-# #!" tobe !$$o7ed i+ diffee+t foum" de$e+di+5 o+ t#e i+7e"tme+t euied*

Cha93$! ;: RESEARCH METHODOLOGY

9(


21/80

;8+: LITERATURE REVIEW

E'0$''4( )**,:e0u-id!ted t#!t effi-ie+t 0iuidity m!+!5eme+t i+7o07e" $0!++i+5 !+d -o+to00i+5 -ue+t !""et"

!+d -ue+t 0i!bi0itie" i+ "u-# ! m!++e t#!t e0imi+!te" t#e i"4 of i+!bi0ity to meet due "#ot

tem ob0i5!tio+" !+d !7oid" e=-e""i7e i+7e"tme+t i+ t#e"e !""et"* T#e e0!tio+ bet;ee+

$ofit!bi0ity !+d 0iuidity ;!" e=!mi+ed !" me!"ued by -ue+t !tio !+d -!"# 5!$ ,-!"#

-o+7e"io+ -y-0e. o+ ! "!m$0e of 1oi+t "to-4 -om$!+ie" i+ S!udi A!bi! u"i+5 -oe0!tio+ !+d

e5e""io+ !+!0y"i"* T#e "tudy fou+d t#!t t#e -!"# -o+7e"io+ -y-0e ;!" of moe im$ot!+-e !"

! me!"ue of 0iuidity t#!+ t#e -ue+t !tio t#!t !ffe-t" $ofit!bi0ity* T#e "ie 7!i!b0e ;!"

fou+d to #!7e "i5+ifi-!+t effe-t o+ $ofit!bi0ity !t t#e i+du"ty 0e7e0* T#e e"u0t" ;ee "t!b0e

!+d #!d im$ot!+t im$0i-!tio+" fo 0iuidity m!+!5eme+t i+ 7!iou" S!udi -om$!+ie"* Fi"t it

;!" -0e! t#!t t#ee ;!" ! +e5!ti7e e0!tio+"#i$ bet;ee+ $ofit!bi0ity !+d 0iuidity i+di-!to"

"u-# !" -ue+t !tio !+d -!"# 5!$ i+ t#e S!udi "!m$0e e=!mi+ed* Se-o+d t#e "tudy !0"o

e7e!0ed t#!t t#ee ;!" 5e!t 7!i!tio+ !mo+5 i+du"tie" ;it# e"$e-t to t#e "i5+ifi-!+t me!"ue

of 0iuidity*

D$'&&/( )**;:

di"-u""ed t#!t mo"t fim" #!d ! 0!5e !mou+t of -!"# i+7e"ted i+ ;o4i+5 -!$it!0* It -!+ t#eefoe

be e=$e-ted t#!t t#e ;!y i+ ;#i-# ;o4i+5 -!$it!0 i" m!+!5ed ;i00 #!7e ! "i5+ifi-!+t im$!-t o+

$ofit!bi0ity of t#o"e fim"* U"i+5 -oe0!tio+ !+d e5e""io+ te"t" #e fou+d ! "i5+ifi-!+t +e5!ti7e

e0!tio+"#i$ bet;ee+ 5o"" o$e!ti+5 i+-ome !+d t#e +umbe of d!y" !--ou+t" e-ei7!b0e

i+7e+toie" !+d !--ou+t" $!y!b0e of Be05i!+ fim"* O+ b!"i" of t#e"e e"u0t" #e "u55e"ted t#!t

m!+!5e" -ou0d -e!te 7!0ue fo t#ei "#!e#o0de" by edu-i+5 t#e +umbe of d!y"8 !--ou+t"

e-ei7!b0e !+d i+7e+toie" to ! e!"o+!b0e mi+imum* T#e +e5!ti7e e0!tio+"#i$ bet;ee+ !--ou+t"

$!y!b0e !+d $ofit!bi0ity i" -o+"i"te+t ;it# t#e 7ie; t#!t 0e"" $ofit!b0e fim" ;!it 0o+5e to $!y

t#ei bi00"*

Shin and S&$n$n( +@@:

9&


22/80

#i5#0i5#ted t#!t effi-ie+t 3o4i+5 C!$it!0 M!+!5eme+t ;!" 7ey im$ot!+t fo -e!ti+5 7!0ue

fo t#e "#!e#o0de"* T#e ;!y ;o4i+5 -!$it!0 ;!" m!+!5ed #!d ! "i5+ifi-!+t im$!-t o+ bot#

$ofit!bi0ity !+d 0iuidity* T#e e0!tio+"#i$ bet;ee+ t#e 0e+5t# of Net T!di+5 Cy-0e

-o$o!te $ofit!bi0ity !+d i"4 !d1u"ted "to-4 etu+ ;!" e=!mi+ed u"i+5 -oe0!tio+ !+d

e5e""io+ !+!0y"i" by i+du"ty !+d -!$it!0 i+te+"ity* T#ey fou+d ! "to+5 +e5!ti7e

e0!tio+"#i$ bet;ee+ 0e+5t#" of t#e fim8" +ett!di+5 Cy-0e !+d it" $ofit!bi0ity* I+ !dditio+

"#ote +et t!de -y-0e" ;ee !""o-i!ted ;it# #i5#e i"4 !d1u"ted "to-4 etu+"*

S7i3h and B$$7ann +@@=:

em$#!"ied t#!t t#o"e ;#o $omoted ;o4i+5 -!$it!0 t#eoy "#!ed t#!t $ofit!bi0ity !+d

0iuidity -om$i"ed t#e "!0ie+t 5o!0" of ;o4i+5 -!$it!0 m!+!5eme+t* T#e $ob0em !o"e

be-!u"e t#e m!=imi!tio+ of t#e fim" etu+" -ou0d "eiou"0y t#e!te+ it" 0iuidity !+d t#e

$u"uit of 0iuidity #!d ! te+de+-y to di0ute etu+"* T#i" !ti-0e e7!0u!ted t#e !""o-i!tio+

bet;ee+ t!ditio+!0 !+d !0te+!ti7e ;o4i+5 -!$it!0 me!"ue" !+d etu+ o+ i+7e"tme+t ,ROI.

"$e-ifi-!00y i+ i+du"ti!0 fim" 0i"ted o+ t#e Jo#!++e"bu5 Sto-4 E=-#!+5e ,JSE.* T#e

$ob0em u+de i+7e"ti5!tio+ ;!" to e"t!b0i"# ;#et#e t#e moe e-e+t0y de7e0o$ed !0te+!ti7e

;o4i+5 -!$it!0 -o+-e$t" "#o;ed im$o7ed !""o-i!tio+ ;it# etu+ o+ i+7e"tme+t to t#!t of

t!ditio+!0 ;o4i+5 -!$it!0 !tio" o +ot* Re"u0t" i+di-!ted t#!t t#ee ;ee +o "i5+ifi-!+tdiffee+-e" !mo+5"t t#e ye!" ;it# e"$e-t to t#e i+de$e+de+t 7!i!b0e"* T#e e"u0t" of t#ei

"te$;i"e e5e""io+ -oobo!ted t#!t tot!0 -ue+t 0i!bi0itie" di7ided by fu+d" f0o; !--ou+ted

fo mo"t of t#e 7!i!bi0ity i+ Retu+ o+ I+7e"tme+t ,ROI.* T#e "t!ti"ti-!0 te"t e"u0t" "#o;ed

t#!t ! t!ditio+!0 ;o4i+5 -!$it!0 0e7e!5e !tio -ue+t 0i!bi0itie" di7ided by fu+d" f0o;

di"$0!yed t#e 5e!te"t !""o-i!tio+" ;it# etu+ o+ i+7e"tme+t* 3e00 4+o;+ 0iuidity -o+-e$t"

"u-# !" t#e -ue+t !+d ui-4 !tio" e5i"teed i+"i5+ifi-!+t !""o-i!tio+" ;#i0"t o+0y o+e of

t#e +e7e ;o4i+5 -!$it!0 -o+-e$t" t#e -om$e#e+"i7e 0iuidity i+de= i+di-!ted "i5+ifi-!+t

!""o-i!tio+" ;it# etu+ o+ i+7e"tme+t*

;8): NEED OF STUDY:

99


23/80

Tod!y fi+!+-i!0 "ou+d+e"" !+d $ofit!bi0ity of bu"i+e"" e+te$i"e" 0!5e0y de$e+d u$o+

t#e ;o4i+5 -!$it!0 m!+!5eme+t by t#e fim* If t#ee i" "#ot!5e of ;o4i+5 -!$it!0 it

!ffe-t" t#e d!y to d!y o$e!tio+" of t#e bu"i+e"" fim if t#ee i" e=-e"" of ;o4i+5

-!$it!0 fu+d be-ome id0e it !0"o !ffe-t" t#e fi+!+-i!0 "ou+d+e"" of t#e fim* I+ t#i"

$e"$e-ti7e t#ee i" +eed to m!+!5e t#e ;o4i+5 -!$it!0 effe-ti7e0y i+ !+y bu"i+e""* T#e

ue"tio+ ;#i-# "ti4e t#e mi+d dui+5 e7ie;i+5 7!iou" 0ite!tue" t#!t #o; GS%

m!+!5i+5 it" ;o4i+5 -!$it!0 bei+5 $ub0i- "e-to u+det!4i+5* He+-e "tudy i" u+det!4e+

to !+";e t#e !bo7e me+tio+ed ue"tio+*

9


24/80

;8;: OBJECTIVES OF STUDY

T#e !bo7e $o1e-t ;!" -o+du-ted 4ee$i+5 i+ mi+d t#e -om$o+e+t" of 3o4i+5 -!$it!0

me+tio+ed !bo7e i*e* i+7e+toy e-ei7!b0e" !+d $!y!b0e" !+d fut#e -edit tem" ;it#

"u$$0ie"? $o1e-t 3o4i+5 C!$it!0 too4 it" "#!$e* T#e $o1e-t 3o4i+5 C!$it!0 ;!" "t!ted !t

N!b#! $0!+t of GS%CH Ltd* e!0y t#i" ye! ;it# !+ ide! of "t!+d!di!tio+ of -edit $eiod

!-o"" "ite" "-uti+ii+5 t#e i+7e+toy #o0di+5 $eiod of !; m!tei!0" $!-4!5i+5 m!tei!0"

!+d fi+i"#ed 5ood" !+d e"tim!ti+5 t#e ;o4i+5 -!$it!0 t#u" e0e!"ed t#ou5# t#e"e i+iti!ti7e"*

T#e "tudy ;!" -o+du-ted ;it# fo00o;i+5 bo!d !+d "$e-ifi- ob1e-ti7e":

BROAD OBJECTIVE:

M!i+ ob1e-ti7e of t#e $o1e-t i" to !+!0y"i" t#e ;#o0e d!t! of GS% of 7!iou" "ite" !+d fi+d

7!iou" o$$otu+itie" to im$o7e t#e ;o4i+5 -!$it!0 of t#e -om$!+y

SPECIFIC OBJECTIVES:

To detemi+e t#e !mou+t of t#e ;o4i+5 -!$it!0 em$0oyed by GS%*

To !+!0ye t#e ;o4i+5 -!$it!0 m!+!5eme+t fi+!+-i!0 $efom!+-e of t#e GS%*

To u+de"t!+d t#e -!"# foe-!"ti+5 !+d bud5eti+5 !t GS%CH N!b#!*

To "t!+d!die t#e -edit $eiod $o7ided by t#e "u$$0ie" of !; m!tei!0" $!-4!5i+5 m!tei!0"

fi+i"#ed 5ood" !+d "toe item"*

To detemi+e t#e diffee+-e bet;ee+ t#e "t!+d!d +om" !+d !-tu!0 +umbe of d!y" fo ;#i-# t#e

i+7e+toy of !; m!tei!0" $!-4!5i+5 m!tei!0" fi+i"#ed 5ood" !+d "toe item" i" 4e$t*

;8,: RESEARCH DESIGN

9'


25/80

Da3a C&''$%3i&n:

T#e d!t! euied #!" bee+ -o00e-ted fom t#e fo00o;i+5 "ou-e":

P!i7a!4 S&"!%$#:

Di"-u""io+" ;it# t#e m!+!5eme+t*

Biefi+5" ;it# t#e -o+-e+ed offi-e"*

S$%&nda!4 S&"!%$#:

&* T#e "e-o+d!y d!t! of t#e o5!+i!tio+ #e0$ed me ! 0ot* I #!7e -o00e-ted !00 t#e fi5ue"

fom t#e A++u!0 Re$ot" !+d fi+!+-i!0 "t!teme+t" of GS%*

9* Re-od" of t#e -om$!+y: T#i" #e0$ed me to 5et det!i0" e5!di+5 t#e #i"toy of t#e

o5!+i!tio+*


26/80

CHAPTER ,8: THEORATICAL FRAMEWORK

MEANING OF WORKING CAPITAL

I+ "im$0e ;od" ;o4i+5 -!$it!0 me!+" t#!t ;#i-# i" i""ued to -!y out t#e d!y to d!y

o$e!tio+ of bu"i+e""* C!$it!0 euied fo ! bu"i+e"" -!+ be -0!""ified u+de t;o m!i+

-!te5oie"*

Fi=ed -!$it!0

3o4i+5 -!$it!0

E7ey bu"i+e"" +eed" fu+d" fo t;o $u$o"e" fo it" e"t!b0i"#me+t !+d to -!y o+ it" d!y tod!y o$e!tio+"* Lo+5 tem fu+d" !e euied to -e!te $odu-tio+ f!-i0itie" t#ou5# $u-#!"e

of fi=ed !""et" "u-# !" P0!+t m!-#i+ey !+d bui0di+5 fu+itue et-* I+7e"tme+t i+ t#e"e

!""et" e$e"e+t t#!t $!t of fim8" -!$it!0 ;#i-# i" b0o-4ed o+ ! $em!+e+t o fi=ed b!"i" i"

-!00ed fi=ed -!$it!0* Fu+d" !e !0"o +eeded fo "#ottem $u$o"e" i*e* fo t#e $u-#!"e of

!; m!tei!0 $!yme+t of ;!5e" !+d -!y o+ d!ytod!y o$e!tio+" of bu"i+e"" et-* T#e"e

fu+d" !e 4+o;+ !" ;o4i+5 -!$it!0*

T#e m!+!5eme+t of fi=ed !+d -ue+t !""et" #o;e7e diffe" i+ t#ee im$ot!+t ;!y":

&* I+ m!+!5i+5 fi=ed !""et" time i" ! 7ey im$ot!+t f!-to -o+"eue+t0y di"-ou+ti+5

!+d -om$ou+di+5 te-#+iue" $0!y ! "i5+ifi-!+t o0e i+ -!$it!0 bud5eti+5 !+d ! mi+o o+e i+

t#e m!+!5eme+t of -ue+t !""et"*

9* L!5e #o0di+5 of -ue+t !""et" e"$e-i!00y -!"# "te+5t#e+" fim8" 0iuidity

$o"itio+ but it !0"o edu-e" t#e o7e!00 $ofit!bi0ity*


27/80

WORKING CAPITAL MANAGEMENT

COMPOSITION OF WORKING CAPITALT#e m!+!5eme+t of ;o4i+5 -!$it!0 i" -o+-e+ed ;it# t;o $ob0em" t#!t !i"e i+ !ttem$ti+5

to m!+!5e t#e -ue+t !""et" -ue+t 0i!bi0itie" !+d t#e i+te e0!tio+"#i$ t#!t !""et" bet;ee+

t#em* T#e b!"i- 5o!0 of ;o4i+5 -!$it!0 m!+!5eme+t i" to m!+!5e -ue+t !""et" !+d -ue+t

0i!bi0itie" of ! fim i+ "u-# ! ;!y t#!t ! "!ti"f!-toy of o$timum 0e7e0 of ;o4i+5 -!$it!0 i"

m!i+t!i+ed i*e* it i" +eit#e i+!deu!te +o e=-e""i7e*

CURRENT ASSETS CURRENT LIABILITIES

C!"# i+ #!+d !+d b!+4 b!0!+-e Bi00" $!y!b0e

Bi00" e-ei7!b0e" Su+dy -edito"

Su+dy debto" A--ued 0o!+"

S#ot tem 0o!+" !+d !d7!+-e" S#ot tem 0o!+"

I+7e"tme+t of "to-4 !": Ad7!+-e" !+d de$o"it"

R!; m!tei!0 Di7ide+d $!y!b0e

3o4 i+ $o5e"" B!+4 o7ed!ft

Fi+i"#ed 5ood" Po7i"io+ fo t!=!tio+

Stoe !+d "$!e"

Tem$o!y i+7e"tme+t

Pe$!id e=$e+"e"

9


28/80

DETERMINANTS OF WORKING CAPITAL

T#ee !e +o "et of u0e" to detemi+e ;o4i+5 -!$it!0 euieme+t" of t#e fim"* A 0!5e

+umbe of f!-to" i+f0ue+-e ;o4i+5 -!$it!0 +eed" of fim"* A00 f!-to" !e of diffee+t

im$ot!+-e* T#e fo00o;i+5 i" t#e de"-i$tio+ of f!-to" ;#i-# 5e+e!00y i+f0ue+-e t#e

;o4i+5 -!$it!0 euieme+t" of fim"*

+8 NATURE AND SIE OF BUSINESS:

3o4i+5 -!$it!0 euieme+t of ! fim !e b!"i-!00y i+f0ue+-ed by +!tue of it" bu"i+e""*

T!di+5 !+d fi+!+-i!0 fim" #!7e ! 7ey "m!00 i+7e"tme+t i+ fi=ed !""et" but euie ! 0!5e

"um of mo+ey to be i+7e"ted i+ ;o4i+5 -!$it!0* I+ -o+t!"t $ub0i- uti0itie" #!7e ! 7ey0imited +eed of ;o4i+5 -!$it!0 be-!u"e t#ey $o7ide "e7i-e" o+ -!"# b!"i"* He+-e +o fu+d"

;i00 be tied u$ i+ debto" !+d "to-4"* 3o4i+5 -!$it!0 +eed" of mo"t m!+uf!-tui+5 -o+-e+"

f!00 bet;ee+ t;o e=teme"*

In GSK Na1ha /ina' 9!&d"%3 i# H&!'i%5#( 6hi%h i# 7ad$ 14 7i'5( 6hi%h i# 9$!i#ha1'$ in

na3"!$8 And i3 i# n&3 9#i1'$ 3& #3&!$ i3 /&! '&n 9$!i&d( 1$%a"#$ &/ 3ha3 7i'5 i#

9"!%ha#$d dai'4( /&! 6hi%h 3h$4 n$$d 3& 5$$9 'a!$ a7&"n3 &/ 6&!5in %a9i3a' 6i3h

3h$78

)8 MANUFACTURING CYCLE:

T#e m!+uf!-tue" -y-0e "t!t ;it# t#e $u-#!"e !+d u"e of !; m!tei!0" !+d -om$0ete" ;it#

t#e $odu-tio+ of fi+i"#ed 5ood"* Lo+5e t#e m!+uf!-tui+5 -y-0e 0!5e ;i00 be t#e fim8"

;o4i+5 -!$it!0 euieme+t"*

In GSK 3h$ 7an"/a%3"!in C4%'$ i# 7&d$!a3$# i8$8 n$i3h$! 3&& '&n n&! 3&& #h&!38 S&

3h$i! 6&!5in %a9i3a' !$"i!$7$n3# a!$ 7&d$!a3$8 Thi# i# #"%%$##/"''4 7ain3ain$d 14

3h$78

;8 BUSINESS FLUCTUATION:

Mo"t fim" e=$eie+-e "e!"o+!0 !+d -y-0i-!0 f0u-tu!tio+" i+ t#e dem!+d fo t#ei $odu-t" !+d

"e7i-e"* T#e"e bu"i+e"" 7!i!tio+" !ffe-t t#e ;o4i+5 -!$it!0 euieme+t" "$e-i!00y t#e

tem$o!y ;o4i+5 -!$it!0 euieme+t" of t#e fim* 3#e+ t#ee i" !+ u$;!d ";i+5 i+ t#e

9


29/80

e-o+omy "!0e" ;i00 i+-e!"e -oe"$o+di+50y t#e fim8" i+7e"tme+t i+ i+7e+toie" !+d boo4

debt" ;i00 !0"o i+-e!"e*

In GSK 3h$ 7ain !a6 7a3$!ia'# 3h$4 !$"i!$ /&! 9!&d"%3i&n a!$ Mi'5( Wh$a3 F'&"!(

Ma'3$d Ba!'$4 $3%8 Th$4 9"!%ha#$ !a6 7a3$!ia'# &3h$! 3han 7i'5 &n %&n3!a%3 1a#i# /&! a

4$a!( #& 3h$!$ i# n& /$a! &/ /'"%3"a3i&n &/ 9!i%$# /&! 3h$78 And /&! 7i'5( 3h$!$ i#

/'"%3"a3i&n in 9!i%$# 1"3 3h$#$ /'"%3"a3i&n# a!$ #& #7a'' 3& $//$%3 3h$ 6&!5in %a9i3a'

!$"i!$7$n3# &/ 3h$ %&79an48 And /!&7 #a'$# 9&in3 &/ 2i$6 3h$!$ i# n& /'"%3"a3i&n a3 a''8

,8 PRODUCTION POLICY:

3e 1u"t +oted t#!t ! "t!te5y of -o+"t!+t $odu-tio+ mi5#t be m!i+t!i+ed i+ ode to e"o07e

t#e ;o4i+5 -!$it!0 $ob0em" !i"i+5 due to "e!"o+!0 -#!+5e" i+ t#e dem!+d fo t#e fim8"$odu-t* A "te!dy $odu-tio+ $o0i-y ;i00 -!u"e i+7e+toie" to !--umu0!te dui+5 t#e off

"e!"o+ $eiod !+d t#e fim ;i00 be e=$o"ed to 5e!te i+7e+toy -o"t" > i"4"* T#u"

$odu-tio+ $o0i-ie" ;i00 diffe fom fim to fim de$e+di+5 u$o+ -i-um"t!+-e" of i+di7idu!0

fim*

In GSK( #a'$# /&! n$?3 3h!$$ 4$a!# a!$ /&!$%a#3$d &n 3h$ 1a#i# &/ 3h$i! 9!&d"%3i&n 9&'i%48

A%%&!din'4 3h$4 7ain3ain 3h$i! 6&!5in %a9i3a' !$"i!$7$n3#* S$a#&na' %han$# d& n&3

$//$%3 3h$i! 6&!5in %a9i3a' !$"i!$7$n3#8


30/80

.8 GROWTH AND EPANSION ACTIVITIES:

T#e ;o4i+5 -!$it!0 +eed" of t#e fim i+-e!"e !" it 5o;" i+ tem of "!0e" o fi=ed !""et"* A

5o;i+5 fim m!y +eed to i+7e"t fu+d" i+ fi=ed !""et" i+ ode to "u"t!i+ it" 5o;i+5

$odu-tio+ !+d "!0e"* T#i" ;i00 i+ tu+ i+-e!"e i+7e"tme+t i+ -ue+t !""et" to "u$$ot

e+0!5ed "-!0e of o$e!tio+* It "#ou0d be e!0ied t#!t ! 5o;i+5 fim +eed" fu+d"

-o+ti+uou"0y*

In GSK %a9i3a' 1"d$3 i# 9!$9a!$d $2$!4 4$a!( 6hi%h i# h$'9/"' in d$3$!7inin 3h$

!$"i!$7$n3# &/ 6&!5in %a9i3a' in 3h$ %&7in 4$a!8 S& i/ 3h$!$ i# an4 $?9an#i&n 9'an &/

%&79an4 3h$n i3 5$$9# in3& %&n#id$!a3i&n 6hi'$ 9!$9a!in %a9i3a' 1"d$38 La#3

$?9an#i&n &/ GSK( i3 $#3a1'i#h$d a P'an3 in S&n$9a3 < 4$a!# 1a%58 I3 6a# /&! #9!a4-

d!4in 3$%hn&'&48

=8 OPERATING EFFICIENCY

T#e o$e!ti+5 effi-ie+-y of t#e fim e0!te" to t#e o$timum uti0i!tio+ of e"ou-e" !t

mi+imum -o"t"* T#e fim ;i00 be effe-ti7e0y -o+tibuti+5 to it" ;o4i+5 -!$it!0 if it i"

effi-ie+t i+ -o+to00i+5 o$e!ti+5 -o"t"* T#e u"e of ;o4i+5 -!$it!0 i" im$o7ed !+d $!-e of

-!"# -y-0e i" !--e0e!ted ;it# o$e!ti+5 effi-ie+-y* Bette uti0i!tio+ of e"ou-e" im$o7e"

$ofit!bi0ity !+d t#u" #e0$" i+ e0e!"i+5 t#e $e""ue o+ ;o4i+5 -!$it!0*

GSK in#3a''$d a 9'an3 3ha3 !$-"3i'i>$# 3h$ 6a#3$ &/ %&79an4 in $n$!a3in /"$' /&!

/"!3h$! 9!&d"%3i&n8 Thi# 9'an3 h$'9# in &93i7"7 "3i'i>a3i&n &/ !$%&"!#$# 6hi%h in 3"!n

!$d"%$# % a'#&8


31/80

WORKING CAPITAL CYCLE

C!"# f0o;" i+ ! -y-0e i+to !ou+d !+d out of ! bu"i+e""* It i" t#e bu"i+e""" 0ifeb0ood !+d

e7ey m!+!5e" $im!y t!"4 i" to #e0$ 4ee$ it f0o;i+5 !+d to u"e t#e -!"# f0o; to 5e+e!te

$ofit"* If ! bu"i+e"" i" o$e!ti+5 $ofit!b0y t#e+ it "#ou0d i+ t#eoy 5e+e!te -!"# "u$0u"e"*

If it doe"+t 5e+e!te "u$0u"e" t#e bu"i+e"" ;i00 e7e+tu!00y u+ out of -!"# !+d e=$ie*

T#e f!"te ! bu"i+e"" e=$!+d" t#e moe -!"# it ;i00 +eed fo ;o4i+5 -!$it!0 !+d i+7e"tme+t*

T#e -#e!$e"t !+d be"t "ou-e" of -!"# e=i"t !" ;o4i+5 -!$it!0 i5#t ;it#i+ bu"i+e""* Good

m!+!5eme+t of ;o4i+5 -!$it!0 ;i00 5e+e!te -!"# ;i00 #e0$ im$o7e $ofit" !+d edu-e i"4"*

Be! i+ mi+d t#!t t#e -o"t of $o7idi+5 -edit to -u"tome" !+d #o0di+5 "to-4" -!+ e$e"e+t !

"ub"t!+ti!0 $o$otio+ of ! fim" tot!0 $ofit"*

T#ee !e t;o e0eme+t" i+ t#e bu"i+e"" -y-0e t#!t !b"ob -!"#

I+7e+toy ,"to-4" !+d ;o4i+$o5e"".

Re-ei7!b0e" ,debto" o;i+5 you mo+ey.*

T#e m!i+ "ou-e" of -!"# !e P!y!b0e" ,you -edito". !+d Euity !+d Lo!+"*

E!-# -om$o+e+t of ;o4i+5 -!$it!0 ,+!me0y i+7e+toy e-ei7!b0e" !+d $!y!b0e". #!" t;o

dime+"io+":

TIME

MONE@

3#e+ it -ome" to m!+!5i+5 ;o4i+5 -!$it!0 TIME IS MONE@* If o+e -!+ 5et mo+ey to

mo7e f!"te !ou+d t#e -y-0e ,e*5* -o00e-t mo+ey due fom debto" moe ui-40y. o edu-e

t#e !mou+t of mo+ey tied u$ ,e*5* edu-e i+7e+toy 0e7e0" e0!ti7e to "!0e". t#e bu"i+e"" ;i00

5e+e!te moe -!"# o it ;i00 +eed to boo; 0e"" mo+ey to fu+d ;o4i+5 -!$it!0* A" !


32/80

-o+"eue+-e you -ou0d edu-e t#e -o"t of b!+4 i+tee"t o you00 #!7e !dditio+!0 fee mo+ey

!7!i0!b0e to "u$$ot !dditio+!0 "!0e" 5o;t# o i+7e"tme+t* Simi0!0y if you -!+ +e5oti!te

im$o7ed tem" ;it# "u$$0ie" e*5* 5et 0o+5e -edit o !+ i+-e!"ed -edit 0imit? you

effe-ti7e0y -e!te fee fi+!+-e to #e0$ fu+d futue "!0e"*

It -!+ be tem$ti+5 to $!y -!"# if !7!i0!b0e fo fi=ed !""et" e*5* -om$ute" $0!+t 7e#i-0e"

et-* If you do $!y -!"# emembe t#!t t#i" i" +o; 0o+5e !7!i0!b0e fo ;o4i+5 -!$it!0*

T#eefoe if -!"# i" ti5#t -o+"ide ot#e ;!y" of fi+!+-i+5 -!$it!0 i+7e"tme+t 0o!+" euity

0e!"i+5 et-* Simi0!0y if you $!y di7ide+d" o i+-e!"e d!;i+5" t#e"e !e -!"# outf0o;" !+d

0i4e ;!te f0o;i+5 do;+" ! $0u5#o0e t#ey emo7e 0iuidity fom t#e bu"i+e""* M&!$

1"#in$##$# /ai' /&! 'a%5 &/ %a#h 3han /&! 6an3 &/ 9!&/i38

It i" t#i" im$ot!+-e of -!"# t#!t -!"# m!+!5eme+t i" o+e of t#e 4ey !e!" of ;o4i+5 -!$it!0

m!+!5eme+t* A$!t fom t#e f!-t t#!t it i" t#e mo"t 0iuid !""et -!"# i" t#e -ommo+

de+omi+!to to ;#i-# !00 t#e -ue+t !""et" -!+ be edu-ed be-!u"e t#e ot#e m!1o 0iuid

!""et" t#!t i" e-ei7!b0e" !+d i+7e+toy e7e+tu!00y 5et -o+7eted i+to -!"#* T#i" u+de0i+e"

t#e "i5+ifi-!+-e of -!"# m!+!5eme+t*

T#e tem -!"# ;it# efee+-e to -!"# m!+!5eme+t i" u"ed i+ t;o "e+"e"* I+ ! +!o; "e+"e it

i" u"ed to -o7e -ue+-y !+d 5e+e!00y !--e$ted eui7!0e+t" of -!"# "u-# !" -#eue" d!ft"

!+d dem!+d de$o"it" i+ b!+4"* T#e bo!d 7ie; of -!"# !0"o i+-0ude" +e! -!"# !""et" "u-# !"

m!4et!b0e "e-uitie" !+d time de$o"it" i+ b!+4"*

A fim i" ;e00 !d7i"ed to #o0d !deu!te -!"# b!0!+-e" but "#ou0d !7oid e=-e""i7e b!0!+-e"*

T#e fim #!" t#eefoe to !""e"" it" +eed fo -!"# $o$e0y* C!"# bud5et i" ! de7i-e t#!t

#e0$" !ffim to $0!+ !+d -o+to0 t#e u"e of -!"#* It i" "t!teme+t "#o;i+5 t#e e"tim!ted -!"#

i+f0o;" !+d outf0o;" o7e t#e $0!++i+5 #oio+* I+ ot#e ;od" t#e +et -!"# $o"itio+ ,"u$0u"!+d defi-ie+-y. of ! fim !" it mo7e" fom o+e bud5eti+5 "ub $eiod to ot#e i" #i5#0i5#ted

by -!"# bud5et*


33/80

T#e 7!iou" $u$o"e" of -!"# bud5et" !e:

To -oodi+!te t#e timi+5" of -!"# +eed"

It $i+$oi+t" t#e $eiod" ;#e+ t#ee i" e=-e"" of -!"#

It #e0$" to !!+5e t#e fu+d" o+ mo"t f!7o!b0e tem" !+d $e7e+t" e=-e""

!--umu0!tio+ of -!"#*

It e+!b0e" ! fim ;#i-# #!" "uffi-ie+t -!"# to t!4e !d7!+t!5e of -!"# di"-ou+t"

o+ it" !--ou+t" $!y!b0e" to $!y ob0i5!tio+" ;#e+ due to fomu0!te di7ide+d

$o0i-y to #e0$ u+ify t#e $odu-tio+ "-#edu0e dui+5 t#e ye! "o t#!t t#e fim -!+e!"i0y "moot# out t#e #e!7y f0u-tu!tio+ "e!"o+"*


34/80

OPERATING CYCLE

T#ee i" ! diffee+-e bet;ee+ -ue+t !""et" !+d fi=ed !""et" i+ tem" of t#ei 0iuidity* A fim

euie" m!+y ye!" to e-o7e t#e i+iti!0 i+7e"tme+t i+ fi=ed !""et" "u-# !" P0!+t >

M!-#i+ey* O+ t#e -o+t!y i+7e"tme+t i+ -ue+t !""et" i" tu+ed o7e m!+y time" i+ ! ye!*

O$e!ti+5 -y-0e i" t#e time du!tio+ euied to -o+7et "!0e" ,!fte -o+7e"io+ of e"ou-e"

i+to i+7e+toie" !+d i+7e+toie" i+to fi+i"#ed 5ood". i+to -!"#*

T#e o$e!ti+5 -y-0e of ! m!+uf!-tui+5 Com$!+y i+7o07e" t#ee $#!"e":

A-ui"itio+ of e"ou-e" "u-# !" !; m!tei!0 0!bo $o;e !+d fue0 et-*

M!+uf!-tue of t#e $odu-t ;#i-# i+-0ude" -o+7e"io+ of !; m!tei!0 i+to ;o4i+

$o5e"" i+to fi+i"#ed 5ood"*

S!0e of t#e $odu-t eit#e fo -!"# o o+ -edit* Cedit "!0e" -e!te boo4 debt" fo

-o00e-tio+*

T#e 0e+5t# of t#e o$e!ti+5 -y-0e of ! m!+uf!-tui+5 fim i" t#e "um of:

I+7e+toy -o+7e"io+ $eiod ,ICP. !+d

Boo4 debt" -o+7e"io+ $eiod ,BDCP.*

Th$ in2$n3&!4 %&n2$!#i&n 9$!i&d i" t#e tot!0 time +eeded fo $odu-i+5 !+d "e00i+5 t#e

$odu-t* It i+-0ude":

&* R!; m!tei!0 -o+7e"io+ $eiod ,RMCP.

9* 3o4 i+ $o5e"" -o+7e"io+ $eiod ,3IPCD.


35/80

Th$ 1&&5 d$13# %&n2$!#i&n 9$!i&di" t#e time euied -o00e-ti+5 out"t!+di+5 !mou+t fom

-u"tome* T#e tot!0 of i+7e+toy -o+7e"io+ $eiod !+d boo4 debt" -o+7e"io+ $eiod i" t#e

m!=imum time euied to -o00e-t out"t!+di+5 !mou+t fom -u"tome" !+d "ometime" it

efeed to !" 5o"" o$e!ti+5 -y-0e* Ge+e!00y ! fim !-uie" e"ou-e" o+ -edit !+d

tem$o!i0y $o"t$o+e" $!yme+t of -et!i+ e=$e+"e"* T#e $!y!b0e defe!0 $eiod ,PDP. i" t#e

0e+5t# of t#e time t#e fim i"

!b0e to defe $!yme+t" o+ 7!iou" e"ou-e $u-#!"e"* T#e diffee+-e bet;ee+ o$e!ti+5

-y-0e !+d $!y!b0e" defe!0 $eiod i" +et o$e!ti+5 -y-0e* T#e 0e+5t# of o$e!ti+5 -y-0e -!+

be detemi+ed !":

GOC ICPBDCP

NOCICPBDCP-PDP

ICPRMCPWIPCPFGCP

Wh$!$(GOCGo"" O$e!ti+5 Cy-0eNOCNet O$e!ti+5 Cy-0e

ICPI+7e+toy Co+7e"io+ PeiodBDCP Boo4 Debt" Co+7e"io+ Peiod

PDP P!y!b0e Defe!0 PeiodRMCP R!; M!tei!0 Co+7e"io+ Peiod

FGCP Fi+i"#ed Good Co+7e"io+ Peiod*


36/80

CASH MANAGEMENT

C!"# m!+!5eme+t efe" to $!-ti-e" !+d te-#+iue" de"i5+ed to !--e0e!te !+d -o+to0

-o00e-tio+" e+"ue $om$t de$o"it" of e-ei$t" im$o7e -o+to0 o7e di"bu"eme+t met#od"

!+d e0imi+!te id0e -!"# b!0!+-e"* I+ 5e+e!0 -!"# m!+!5eme+t i+7o07e" t#e effe-ti7e !+d

effi-ie+t u"e of -!"# to m!=imie -!"# f0o; !t mi+imum -o"t* 3#i0e "y"tem i+"titutio+"

5e+e!00y do+8t m!i+t!i+ #i5# -!"# b!0!+-e" t#e -!"# m!+!5eme+t $o-e"" i" !+ i+te5!0 $!t

of o5!+i!tio+8" fi+!+-i!0 !-ti7itie" !+d e+-om$!""e" ! ;ide 7!iety of fi+!+-i!0 de-i"io+"*

Su-# !e!" -!+ i+-0ude i+fom!tio+ "y"tem" m!+!5eme+t i+7e"tme+t m!+!5eme+t fu+d

m!+!5eme+t !+d 0iuidity m!+!5eme+t*

I+ tod!y8" fi+!+-i!0 e+7io+me+t e0e-to+i- de0i7ey "y"tem" !e be-omi+5 i+-e!"i+50y

im$ot!+t be-!u"e of i+-e!"ed -om$etitio+" !+d dem!+d fo moe effi-ie+t !+d -o+7e+ie+t

-!$!bi0itie"* A "i5+ifi-!+t +umbe of t!+"!-tio+" !+d !mou+t" of fu+d" -!+ be mo7ede0e-to+i-!00y fom o+e $0!-e to !+ot#e !0mo"t i+"t!+t!+eou"0y -o+"eue+t0y t#e

o$$otu+itie"8 $e"e+ted -!+ $o"e "i5+ifi-!+t i"4" to ! fi+!+-i!0 o5!+i!tio+* Su-# t#e!t"

i+-0ude i+te+!0 !+d e=te+!0 f!ud t#eft !+d u+!ut#oied m!+i$u0!tio+ of fi+!+-i!0 d!t!*


37/80

M&3i2$ /&! h&'din %a#h

&* T#e t!+"!-tio+" moti7e

9* T#e $e-!utio+!y moti7e


38/80

Th$ 9!$%a"3i&na!4 7&3i2$ i" t#e +eed to #o0d t#e -!"# to meet !+y -o+ti+5e+-ie"

i+ futue* It $o7ide" ! -u"#io+ o buffe to ;it#"t!+d "ome u+e=$e-ted eme5e+-y* T#e

$e-!utio+!y !mou+t of -!"# de$e+d" u$o+ t#e $edi-t!bi0ity of -!"# f0o;"* T#e moe

t#e !--u!-y i+ $edi-ti+5 t#e -!"# f0o;" t#e 0e""e ;i00 be t#e !mou+t euied to be

4e$t fo t#i" $u$o"e* T#e !mou+t of $e-!utio+!y -!"# i" !0"o i+f0ue+-ed by t#e fim8"

!bi0ity to boo; !t "#ot +oti-e ;#e+ t#e +eed !i"e* Bette t#e fim8" $o"itio+ i+ !i"i+5

fu+d" !t "#ot +oti-e t#e 0e"" t#e +eed fo $e-!utio+!y b!0!+-e"* T#i" b!0!+-e m!y be

4e$t i+ -!"# !+d m!4et!b0e "e-uitie" *t#e m!4et!b0e "e-uitie" "#ou0d be "e0e-ted

4ee$i+5 i+ 7ie; t#e i"4 "!fety !+d 0iuidity !+d $ofit f!-to"*

Th$ #9$%"'a3i2$ 7&3i2$e0!te" to #o0di+5 of t#e -!"# fo i+7e"ti+5 i+ $ofit m!4i+5o$$otu+itie" !" !+d ;#e+ t#e i"e i+ ot#e ;od" it i" -o+-e+ed ;it# t#e $o-4eti+5 of

diffee+-e" by t!4i+5 !d7!+t!5e of t#e $i-e f0u-tu!tio+"* T#e fim ;i00 #o0d -!"# ;#e+ it

i" e=$e-ted t#!t i+tee"t !te ;i00 i"e !+d "e-uity $i-e ;i00 f!00* Se-uitie" -!+ be

$u-#!"ed ;#e+ t#e i+tee"t !te i" e=$e-ted to f!00* T#e ;i00 be+efit by t#e "ub"eue+t

f!00 i+ i+tee"t !te" !+d i+-e!"e i+ "e-uity $i-e"* T#e fim m!y !0"o "$e-u0!te o+

m!tei!0" $i-e"* If it i" e=$e-ted t#!t m!tei!0 $i-e ;i00 f!00 t#e fim -!+ $o"t$o+e

m!tei!0" $u-#!"i+5 !+d 7i-e7e"!*

T#e fim mu"t de-ide t#e u!+tum of t!+"!-tio+ !+d $e-!utio+!y b!0!+-e" to be #e0d*

T#i" de$e+d" u$o+ t#e fo00o;i+5 f!-to"?

&* T#e e=$e-ted -!"# i+f0o;" !+d outf0o;" b!"ed o+ t#e -!"# bud5et !+d foe-!"t"*

9* T#e de5ee of de7i!tio+ bet;ee+ t#e e=$e-ted !+d !-tu!0 +et -!"# f0o;"*


39/80

U3i'i>a3i&n &/ /"nd

T#e e=-e"" -!"# o fu+d i+ t#e e+te$i"e" -!+ be uti0ied by i+7e"ti+5 it "ome;#ee

*4ee$i+5 i+ 7ie; t#e "!fety m!tuity > m!4et!bi0ity !"$e-t of t#e "e-uitie" $u-#!"ed*

Sa/$34: U"u!00y ! fim ;ou0d be i+tee"ted i+ e-ei7i+5 ! #i5# !te of etu+ o+ it"

i+7e"tme+t i+ m!4et!b0e "e-uitie" !" i" $o""ib0e* But t#e #i5#e etu+ yie0di+5 "e-uitie"

!e e0!ti7e0y moe i"4y* T#e fom "#ou0d t#u" i+7e"t i+ 7ey "!fe "e-uity !" t#e

t!+"!-tio+ > $e-!utio+!y b!0!+-e i+7e"ted i+ t#em !e +eeded i+ +e! futue* T#e def!u0t

i"4 ;#i-# me!+" t#e $o""ibi0ity of def!u0t i+ $!yme+t of i+tee"t" o $i+-i$!0 o+ time !+d

i+ t#e !mou+t $omi"ed "#ou0d be mi+imum*

Ma3"!i34: M!tuity efe" to t#e time $eiod o7e ;#i-# i+tee"t > $i+-i$!0 !e to bem!de* T#e $i-e of t#e 0o+5tem "e-uity f0u-tu!te" moe ;ide0y ;it# t#e -#!+5e i+ t#e

i+tee"t t#!+ t#e $i-e of "#ottem "e-uity* O7etime i+tee"t !te #!" ! feue+-y to

-#!+5e* Be-!u"e of t#e"e t;o e!"o+" t#e 0o+5tem "e-uitie" !e moe i"4y > t#e fim

"#ou0d 5o i+ fo "#ottem "e-uitie" $efe!b0e fo i+7e"ti+5 "u$0u" -!"#*


40/80

Pa47$n3 9!&%$d"!$ /&! !$"'a! #"99'i$! &/ !a6 7a3$!ia'

Su$$0ie of !; m!tei!0 doe"+8t e-ei7e die-t -!"# $!yme+t fom GS%* A00 t#e $!yme+t"!e m!de by t#e #e!d offi-e t#ou5# deut"-#e b!+4* He!d offi-e i" i+ 5u5!o+* To m!4e t#e

$!yme+t" to "u$$0ie" t#e &"t"te$ i" boo4i+5 of $!yme+t 7ou-#e/bi00"* T#e -!"#ie !t #e!d

offi-e 5e+e!te" t#e $!yme+t" o+ d!i0y b!"i" e=-e$t S!tud!y > Su+d!y be-!u"e t#e"e !e

#o0id!y" !t #e!d offi-e* He!d offi-e u$0o!d t#e $!yme+t to deut"-#e b!+4 o+ it" ;eb "ite

;it# !+ i+"tu-tio+ e5u0!0y di"$!t-#ed of $!yme+t* O+ t#e due d!te" of t#e bi00" $!yme+t

i" m!de to t#e "u$$0ie"* I+ t#e -!"e of die-t $!yme+t to "u$$0ie" deut"-#e b!+4

di"$!t-#ed t#e $!yme+t to "u$$0ie"* Deut"-#e b!+4 t!+"fe" t#e mo+ey to t#e -o+-e+ed

b!+4" fom ;#i-# $!yme+t i" m!de to "u$$0ie"* T#e"e b!+4" m!4e t#e d!ft" > "e+d to

N!b#! f!-toy t#e+ t#e"e d!ft" !e di"$!t-#ed to "u$$0ie"*

Pa47$n3 9!&%$d"!$ /&! #&7$ &3h$! i79&!3an3 i3$7#

Mi'5:Mi04 i" t#e im$ot!+t !; m!tei!0 fo m!+uf!-tui+5 of #o0i-4" > it" $!yme+t$o-edue i" !" fo00o;* P!yme+t fo mi04 i" m!de o+ &( d!y" -edit b!"i"* O+ e-ei7i+5 t#emi04 t#e $e"o+" ;#o e+7i"!5e" t#e mi04 $e$!e" t#e !utom!ti- mi04 -!d e!de i+ ;#i-#t#e fo00o;i+5 i+fom!tio+ i" 5i7e+?

C&d$ n&8 Na7$ &/ #"99'i$! Can 6i#$ 6$ih3 T&3a' Fa3 %'!8

W$ih3

3#ee -0* -oe-ti7e 0!-tomete e!di+5

To m!4e t#e $!yme+t" to t#e mi04 "u$$0ie" fi"t0y $!yme+t bi00 !e boo4ed > deut"-#e b!+4

m!4e" $!yme+t*

Be"ide it by t#e !utom!ti- mi04 -!d e!de t#e !bo7e ;itte+ i+fom!tio+ i" $i+ted !+d

"!7ed i+ t#e e=-e0 "#eet* Afte t#!t t#ey 4ee$ t#e #!d -o$y if i+fom!tio+ i+ t#ei e-od

fi0e"*

Sa'a!i$#S!0!ie" !e of t;o ty$e"?

&*. S!0!ie" fo "t!ff/e=e-uti7e

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41/80


42/80

I+ GS% t#e o+0y -!"# "!0e i" m!de fo 5#ee >"-!$*

Gh$$Fo 5#ee "!0e" t#e -edit $eiod !00o;ed i" of "o+" ;#o $i-4 u$ t#e m!tei!0 fom

t#e f!-toy !--odi+5 to t#ei euieme+t >m!4e" $!yme+t t#ou5# -#eue" o b!+4 d!ft*

S%!a9 2a'"$T#e -edit $eiod !00o;ed i" of d!y" >t#e "-!$ "!0e i+-0ude t#e "!0e of?

Gu++y b!5"

Hi5# de+"ity $0!"ti- >0o; $0!"ti- b!5"

Hu"4,;#i-# i" t#e oute -o7e of m!0ted b!0ey. Co!0 -i+de ,t#i" i" t#e e"idue of -o!0 obt!i+ed o+ bu+i+5 of -o!0 i+ t#e boi0e".

T#e "-!$ "!0e i" m!de o+ -o+t!-t b!"i"* A+ !d7eti"eme+t i" 5i7e+ i+ ! d!i0y +e;" $!$e>

te+de" !e i+7ited fo t#e "!0e of "-!$* T#i" -o+t!-t i" fo ! fi=ed $eiod of time !fte

;#i-# it i" e+e;ed o 5i7e+ to "ome ot#e $!ty* T#e -o+t!-to i" euied to $i-4 u$ t#e

"-!$ e5u0!toy !fte due i+te7!0" fom t#e -om$!+y* T#e $o-edue fo t#i" i" !" fo00o;:

3#e+ !+y 7e#i-0e e+te" t#e f!-toy fo $i-4i+5 u$ t#e "-!$ fi"t0y t#e em$ty 7e#i-0e i"

;ei5#ted > t#e ;ei5#t of t#e 7e#i-0e > 7e#i-0e +o* i" feed i+to t#e -om$ute i+"t!00ed +e!

t#e ;ei5#t m!-#i+e* T#e+ t#i" 7e#i-0e 5oe" to t#e "-!$ y!d !--om$!+ied by ! $e"o+

fom t#e "toe de$!tme+t* Afte $i-4i+5 u$ t#e m!tei!0 ;#e+ t#e 7e#i-0e" 0e!7e" t#e

f!-toy it i" !5!i+ ;ei5#ted > t#e e-od of t#e m!tei!0 t!4e+ t#e d!te of t!4i+5 m!tei!0

t#e ty$e of m!tei!0 t!4e+ i" 4e$t*

G"nn4 1a#

Fo t#e +umbe of b!5" t#!t !e to be 5i7e+ out !" "-!$ to ! $e"o+ fom t#e "toe

de$!tme+t $e$!e" ! de0i7ey +ote fo !00 t#e m!tei!0 5oi+5 out* T#i" +ote i" $e$!ed i+

ti$0!te& -o$y of t#e +ote i" 4e$t by t#e "toe de$!tme+t& -o$y i" 5i7e+ to t#e 5!te

4ee$e ;#o !5!i+ -#e-4" t#e m!tei!0 5oi+5 out >& -o$y i" 5i7e+ to t#e $e"o+ t!4i+5 t#e

m!tei!0*

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RECEIVABLE MANAGEMENT

To i+-e!"e t#e "!0e" fim #!" to e"ot to "e00 t#e 5ood" o+ -edit b!"i"* It #!" t#e e0eme+t of

i"4 !" t#e -!"# $!yme+t i" yet to be e-ei7ed* Re-ei7!b0e" -o+"titute ! bi5 $!t of -ue+t

!""et" i+ m!+y fim"* Bu"i+e"" fim" 5e+e!00y "e00 5ood" o+ -edit t#!t i" 5!+ted to f!-i0it!te

"!0e"*

Re-ei7!b0e m!+!5eme+t i" t#e $o-e"" of m!4i+5 de-i"io+" e0!ti+5 to i+7e"tme+t i+ t!de

debto"* Cet!i+ i+7e"tme+t i+ e-ei7!b0e" i" +e-e""!y to i+-e!"e t#e "!0e" !+d $ofit" of t#e

fim* But !t t#e "!me time i+7e"tme+t i+ t#i" !""et i+7o07e" -o"t -o+"ide!tio+" !0"o* T#ee i"

!0;!y" ! i"4 of b!d debt" too* T#u" t#e ob1e-ti7e of e-ei7!b0e m!+!5eme+t i" to t!4e !

"ou+d de-i"io+ !" e5!d" i+7e"tme+t i+ debto"* T#e ob1e-ti7e of e-ei7!b0e" m!+!5eme+t i"

to $omote "!0e" !+d $ofit" u+ti0 t#!t $oi+t i" e!-#ed ;#ee t#e etu+ o+ i+7e"tme+t i+

fut#e fu+di+5 of e-ei7!b0e" i" 0e"" t#!+ t#e -o"t of fu+d" !i"ed to fi+!+-e t#!t !dditio+!0

-edit*

DIMENSIONS OF RECEIVABLES MANAGEMENT

Re-ei7!b0e m!+!5eme+t i+7o07e" t#e -!efu0 -o+"ide!tio+ of t#e fo00o;i+5 !"$e-t":

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44/80

Fomi+5 t#e -edit $o0i-y

E=e-uti+5 t#e -edit $o0i-y

Co00e-tio+ effot"

+8 FORMING CREDIT POLICY

Fo effi-ie+t m!+!5eme+t of e-ei7!b0e" ! -o+-e+ mu"t !do$t ! -edit $o0i-y* A -edit $o0i-y

i" e0!ted to de-i"io+" "u-# !" -edit "t!+d!d" 0e+5t# of -edit $eiod -!"# di"-ou+t et-*

a C!$di3 #3anda!d#: Cedit "t!+d!d" !e t#e -itei! ;#i-# ! fim fo00o;" i+ "e0e-ti+5

-u"tome" fo t#e $u$o"e of -edit e=te+"io+* T#e 7o0ume of "!0e" ;i00 be i+f0ue+-ed by t#e

-edit $o0i-y of ! -o+-e+* By 0ibe!0ii+5 -edit $o0i-y t#e 7o0ume of "!0e" -!+ be i+-e!"ed

e"u0ti+5 i+to i+-e!"ed $ofit"*

1 L$n3h &/ %!$di3 9$!i&d: Le+5t# of -edit $eiod me!+" t#e $eiod !00o;ed to t#e

-u"tome" fo m!4i+5 t#e $!yme+t* T#e -u"tome" $!yi+5 ;e00 i+ time m!y !0"o be !00o;ed

-et!i+ -!"# di"-ou+t* T#ee i" +o bi+di+5 o+ fi=i+5 t#e 0e+5t# of -edit $eiod* A -o+-e+

fi=e" it" o;+ tem" of -edit de$e+di+5 u$o+ it" -u"tome" !+d t#e 7o0ume of "!0e"*

% Ca#h di#%&"n3:C!"# di"-ou+t i" !00o;ed to e=$edite t#e -o00e-tio+ of e-ei7!b0e"* T#e

fu+d" tied u$ i+ e-ei7!b0e" !e e0e!"ed* T#e -o+-e+ ;i00 be !b0e to u"e t#e !dditio+!0 fu+d"

e-ei7ed fom e=$edited -o00e-tio+" due to -!"# di"-ou+t*

)8 EECUTING CREDIT POLICY

Afte fomu0!ti+5 t#e -edit $o0i-y it" $o$e e=e-utio+ i" 7ey im$ot!+t* T#e e7!0u!tio+ of

-edit !$$0i-!tio+" !+d fi+di+5 out t#e -edit ;ot#i+e"" of -u"tome" "#ou0d be u+det!4e+*

a C&''$%3in %!$di3 in/&!7a3i&n:T#e fi"t "te$ i+ im$0eme+ti+5 -edit $o0i-y ;i00 be to

5!t#e -edit i+fom!tio+ !bout -u"tome"* T#i" i+fom!tio+ "#ou0d be !deu!te e+ou5# "o

t#!t $o$e !+!0y"i" !bout t#e fi+!+-i!0 $o"itio+ of t#e -u"tome" i" $o""ib0e* T#e i+fom!tio+

m!y be !7!i0!b0e fom fi+!+-i!0 "t!teme+t" -edit !ti+5 !5e+-ie"? e$ot fom b!+4" fim8"

e-od" et-*

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45/80

1 C!$di3 ana'4#i#:Afte 5!t#ei+5 t#e euied i+fom!tio+ o+e "#ou0d !+!0ye it to fi+d

out t#e -edit ;ot#i+e"" of $ote+ti!0 -u"tome" !+d !0"o to "ee ;#et#e t#ey "!ti"fy t#e

"t!+d!d" of t#e -o+-e+ o +ot* %ee$i+5 t#ee b!"i- 2-6 f!-to" doe" t#i": -#!!-te -!$!-ity

!+d -o00!te!0* T#e -edit !+!0y"i" ;i00 detemi+e t#e de5ee of i"4 !""o-i!ted ;it# t#e

!mou+t t#e -!$!-ity of t#e -u"tome to boo; !+d #i" !bi0ity !+d ;i00i+5+e"" to $!y*

To e"tim!te t#e $ob!bi0ity of def!u0t t#e fi+!+-i!0 o -edit m!+!5e "#ou0d -o+"ide t#ee

&* C#!!-te

9* C!$!-ity


46/80

T#e "ti$ 7!0u!tio+" u+de ;#i-# t#e fim "e00" o+ -edit to -u"tome !e -!00ed -edit tem*

T#e"e "ti$u0!tio+" i+-0ude

Cedit $eiod

C!"# di"-ou+t

;8 COLLECTION EFFORTS

E7ey fim "#ou0d fo00o; ! ;e00 0!id do;+ -o00e-tio+ $o0i-y t#!t m!y be 0e+ie+t o "ti-t !+d

$o-edue to -o00e-t due" fom it" -u"tome"* 3#e+ t#e +om!0 -edit $eiod 5!+ted to !

-u"tome i" o7e !+d #e #!" +ot m!de t#e $!yme+t t#e fim "#ou0d "e+d ! $o0ite 0ette to #im

emi+di+5 t#!t t#e !--ou+t i" o7edue* If t#e -u"tome doe" +ot e"$o+d t#e fim m!y "e+d

$o5e""i7e0y "to+5;oded 0ette"* If e-ei7!b0e" "ti00 em!i+ u+-o00e-ted te0e$#o+e

te0e5!m !+d $e"o+!0 7i"it of t#e fim8" e$e"e+t!ti7e m!y fo00o; 0ette"* If t#e $!yme+t i"

"ti00 +ot m!de t#e fim m!y i+iti!te ! 0e5!0 !-tio+ !5!i+"t t#e -u"tome*

In 3hi# "ni3( 3h$!$ i# n& !$%$i2a1'$ 7ana$7$n3( a# a'' 3h$ #a'$# a!$ %&n3!&''$d 14 3h$

h$ad &//i%$ #i3"a3$d a3 G"!a&n !$%$i2$# 9a47$n3#8 T& 1& "9 3h$ #a'$#( 3h$ %&79an4

9a4# an a33!a%3i2$ %a#h di#%&"n3 3& i3# %"#3&7$!# /&! $a!'4 9a47$n3# #& 3ha3 3h$ %!$di3

%&''$%3i&n 9$!i&d i# d$%!$a#$d8 Th$ %!$di3 6&!3hin$## &/ 3h$ %"#3&7$! i# %&79a!$d 6i3h

3h$ %!$di3 #3anda!d# &/ 3h$ %&79an48 I3 3a5$# in3& a%%&"n3 3h$ 9!&793n$## &/ 3h$

%"#3&7$! 3& 9a48 F&! i2in %!$di3 3& n$6 %"#3&7$!( 3h$ /inan%ia' 9i3i&n &/ 3h$

%"#3&7$! i# in2$#3ia3$d8 Th$ /!$"$n%4 &/ 9a47$n3 and %a#h di#%&"n3 a2ai'$d h$'9# in

/&!7in an &9ini&n a1&"3 3h$ %"#3&7$!8

NEED OF WORKING CAPITAL

Fo t#e $u-#!"e of !; m!tei!0 -om$o+e+t" !+d "toe"

Fo t#e $!yme+t of ;!5e" !+d "!0!ie"*

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To i+-u d!ytod!y e=$e+"e" !+d o7e#e!d -o"t" "u-# !" fue0 $o;e !+d offi-e

e=$e+"e"*

To meet t#e "e00i+5 -o"t !" $!-4i+5 !d7eti"i+5 et-*

To $o7ide -edit f!-i0ity to t#e -u"tome"*

To m!i+t!i+ t#e i+7e+toie" of !; m!tei!0 ;o4i+$o5e"" "toe" !+d "$!e" !+d

fi+i"#ed "to-4*

To meet t#e euieme+t of !+ti-i$!ted +eed" of futue*

To f!-e bu"i+e"" -i"i" i+ eme5e+-ie" "u-# !" de$e""io+ be-!u"e dui+5 "u-#

$eiod" 5e+e!00y t#ee i" mu-# $e""ue o+ ;o4i+5 -!$it!0*

INVENTORY MANAGEMENT

E7ey bu"i+e"" +eed" i+7e+toy fo "moot# ;o4i+5 of it" !-ti7itie"* It "e7e" !" ! 0i+4

bet;ee+ $odu-tio+ !+d di"tibutio+ !-ti7itie"* I+7e+toy t#e mo"t "i5+ifi-!+t $!t of -ue+t

!""et"*

L!5e "ie of i+7e+toy i" m!i+t!i+ed by fim" ! -o+"ide!b0e !mou+t of fu+d i" euied to

be -ommitted i+ t#em* T#eefoe o+e of t#e mo"t "i5+ifi-!+t de-i"io+ !e!" -o+-e+i+5

fi+!+-e m!+!5e i" i+7e+toy m!+!5eme+t* I+7e+toie" -o+"i"ti+5 !; m!tei!0 3IP fi+i"#ed

5ood" m!i+te+!+-e "$!e $!t" ! "i5+ifi-!+t $e$!!tio+ of tot!0 !""et"*

I+7e+toy m!+!5eme+t me!+" $e$!i+5 t#e "to-4 of 5ood" !t "u-# I 0e7e0 t#!t +eit#e t#e

"to-4 "#ou0d be e=-e""i7e o i+!deu!te* It i" ! "y"tem ;#i-# e+"ue" t#!t i5#t u!0ity of

m!tei!0 i" !7!i0!b0e i+ t#e i5#t u!+tity !t i5#t time !+d i5#t $0!-e ;it# t#e i5#t !mou+t

of i+7e"tme+t* L!5e "ie of i+7e+toy e+"ue" effi-ie+t !+d "moot# $odu-tio+ !+d "!0e"

o$e!tio+" ;#i0e mi+imum i+7e"tme+t i+ i+7e+toie" m!=imie" $ofit!bi0ity* Bot# t#e

e=teme $oi+t" !e d!+5eou"* A+ effi-ie+t m!+!5e !0;!y" detemi+e" t#e o$timum $oi+t" i+

bet;ee+ of t#e t;o e=teme"* E=-e"" i+"t!00me+t" i+ t#e i+7e+toy $ee" d!+5e 0i4e

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48/80

u++e-e""!y t#e u$ of fim8" fu+d" !+d 0o"" of $ofit e=-e"" -!yi+5 -o"t i"4 of 0iuidity

!+d i"4 of $#y"i-!0 deteio!tio+ of i+7e+toie"* O+ t#e ot#e #!+d i+!deu!te i+7e"tme+t i+

i+7e+toie" "ee4" to $odu-tio+ #o0d u$" f!i0ue to meet de0i7ey -ommitme+t"* T#u" t#e !im

of i+7e+toy m!+!5eme+t i" to b!0!+-e bet;ee+ t#e t;o !+d m!i+t!i+ "uffi-ie+t i+7e+toie"*

A--odi+5 to C"!!4!+d F!an5:

2Be-!u"e m!tei!0" -o+"titute "u-# ! "i5+ifi-!+t $!t of $odu-t -o"t !+d "i+-e t#i" -o"t i" -o+to00!b0e

$o$e $0!++i+5 $u-#!"i+5 #!+d0i+5 !+d !--ou+ti+5 !e of 5e!t im$ot!+-e6*

DEFINITION OF INVENTORY

T#e di-tio+!y me!+i+5 of I+7e+toy i" a 'i#3 &/ &&d#* I+ ! ;ide "e+"e i+7e+toy -!+ be

defi+ed !" !+ id0e e"ou-e ;#i-# #!" !+ e-o+omi-!0 7!0ue* It i" #o;e7e -ommo+0y u"ed to

i+di-!te 7!iou" item" of "toe" 4e$t i+ "to-4 i+ ode to meet futue dem!+d"*

I+ !+y o5!+i!tio+ t#ee m!y be fo00o;i+5 fou ty$e" of i+7e+toy:

!. Ra6 7a3$!ia'# 9a!3# T#e"e m!y i+-0ude !00 !; m!tei!0" -om$o+e+t" !+d

!""emb0ie" u"ed i+ t#e m!+uf!-tue of ! $odu-t*

b. C&n#"7a1'$# S9a!$# T#e"e m!y i+-0ude m!tei!0" euied fo m!i+te+!+-e !+d

d!ytod!y o$e!tio+"*

-. W&!5-in-9!&!$## T#e"e !e item" u+de 7!iou" "t!5e" of $odu-tio+ +ot yet

-o+7eted !" fi+i"#ed 5ood"*

d. Fini#h$d &&d# T#e"e !e t#e 5ood" t#!t !e +ot yet "o0d o $ut i+to u"e*

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INVENTORY CYCLE

I+ i+7e+toy -y-0e fi"t of !00 !; m!tei!0 i" $u-#!"ed !+d t#e+ it i" "e+t fo m!+uf!-tui+5

;#ee ;o4 i+ $o5e"" i" t#e+ -o+7eted i+to fi+i"#ed "to-4 ;#i-# i" e!di0y !7!i0!b0e fo

"!0e*

S!me $o-e"" i" fo00o;ed i+ GS% but !t N!b#! $0!+t o+0y m!+uf!-tui+5 of

$odu-t" i" to be do+e ;#ee!" ! "!0e fi+i"#ed $odu-t i" do+e t#ou5# t#e He!d offi-e* I+

GS% !t N!b#! !; m!tei!0" !e m!0ted b!0ey Mi04 3#e!t F0ou )it!mi+" et-* A+d i+

GS% ;o4 i+ $o5e"" i" +ot -o+"ideed fo !--ou+ti+5 be-!u"e it i" +ot -!0-u0!ted it i" o+0y

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t#!t $!t of $odu-tio+ ;#i-# i" i+ $i$e0i+e"* A+d i+ 0!"t fi+i"#ed $odu-t i" $odu-ed ;#i-#

i" fi00ed i+ Dum" !+d "e+d to He!d offi-e ,Gu5!o+. fo "!0e*

VARIOUS INVENTORY MANAGEMENT TECHNIUES

S$'$%3i2$ Mana$7$n3: I+ t#i" te-#+iue 7!iou" item" of "toe" !e -0!""ified i+ 7!iou"

-0!""ifi-!tio+" de$e+di+5 u$o+ t#ei -o+"um$tio+ 7!0ue u+it $i-e -iti-!0ity fo t#e

o5!+i!tio+ "ou-e of "u$$0y $u-#!"i+5 $ob0em" !te of ;it#d!;!0" fom t#e "toe"

"e!"o+!0ity !+d "toe" b!0!+-e" o+ ! $!ti-u0! d!te* Diffee+t !$$o!-#e" of -o+to0 !e bei+5

fo00o;ed fo diffee+t ty$e" of item"*

T;o "u-# -0!""ifi-!tio+" ABC > FSN !e fo00o;ed i+ GS%Mana$7$n3 14 E?%$93i&n: I+ t#i" te-#+iue item" ;it# -et!i+ e=-e$tio+" !e t!-40ed o+

diffee+t $oi+t" of time* Fo e=!m$0e o7e"to-4 item"? "u$0u" item" !+d i+!-ti7e item" m!y

euie moe !tte+tio+*

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I+ GS% m!+!5eme+t by e=-e$tio+ i" fo00o;ed fo "u-# 5ood" t#!t !e "to-4

out" fo "ome $eiod*

Ra3i&na'i>a3i&n: Te-#+iue" of "t!+d!di!tio+ !+d 7!iety edu-tio+ !e u"ed to mi+imie

0e!dtime of t#e m!tei!0 !+d edu-e u++e-e""!y i+7e+toy -!yi+5 -o"t"*

Va'"$ Ana'4#i#: Fu+-tio+" $efomed by t#e m!tei!0" !e !+!0yed !+d !0te+!ti7e

de"i5+"/!; m!tei!0" !e "u55e"ted to !-#ie7e t#e "!me fu+-tio+ !t mi+imum -o"t*

C&79"3$!i>a3i&n: Com$ute out$ut" -!+ be u"ed fo "-ie+tifi- foe-!"t of dem!+d to "o07e

m!+y i+7e+toy mode0" $o7idi+5 o$timum "!fety !+d fo -o+to00i+5 fu+d"*

GENERAL STORE INVENTORY

Ge+e!0 "toe i" ! m!1o $!t of t#e i+7e+toy i+ !00 t#e -o+-e+"* It $o7ide" t#e i+fom!tio+

e5!di+5 #o; mu-# m!tei!0 ;e -!+ $u-#!"e !+d #o; mu-# m!tei!0 ;e -!+ 4ee$ i+ "toe

"u-# !" it i" #e0$fu0 to $o7ide t#e i+fom!tio+ e5!di+5 !00 0e7e0"* T#e m!1o $!t of ;o4i+5

-!$it!0 of !00 t#e -o+-e+ "$e+t i+ Ge+e!0 "toe i+7e+toy*

NATURE OF GENERAL INVENTORY IN GSK

I+7e+toie" !e "to-4 of t#e $odu-t ! -om$!+y i" m!+uf!-tui+5 fo "!0e !+d -om$o+e+t"

t#!t m!4e u$ t#e $odu-t* T#e 7!iou" fom" i+ ;#i-# i+7e+toie" e=i"t i+ ! m!+uf!-tui+5

-om$!+y !e: !; m!tei!0" ;o4 i+ $o5e"" fi+i"#ed 5ood" > "toe" !+d "$!e"*

Ra6 7a3$!ia'#!e t#o"e b!"i- i+$ut" t#!t !e -o+7eted i+to fi+i"#ed $odu-t t#ou5# t#e

m!+uf!-tui+5 $o-e""* R!; m!tei!0 i+7e+toie" !e t#o"e u+it" ;#i-# #!7e bee+ $u-#!"ed

!+d "toed fo futue $odu-tio+"*

In GSK Ma'3$d Ba!'$4( Wh$a3 /'&"!( S5i7 Mi'5 P!&d"%3 SMP( Fin$ C!4#3a''in$ S"a!

FCS( R&a#3$d Ma'3$d Ba!'$4( Ca'%i"7( P&3a##i"7( S&di"7( Vi3a7in F'a2&!# $3%8( a!$

7ain !a6 7a3$!ia'#8

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W&!5-in-9!&%$##* T#e ;o4i+$o-e"" i" t#!t "t!5e ;#i-# i" i+ bet;ee+ !; m!tei!0 !+d

fi+i"#ed 5ood"* T#e !; m!tei!0 e+te" t#e $o-e"" of m!+uf!-tue but t#ey !e yet to !tt!i+ !

fi+!0 "#!$e of fi+i"#ed 5ood"* T#e u!+tum of ;o4i+$o-e"" de$e+d" u$o+ t#e time t!4e+

i+ t#e m!+uf!-tui+5 $o-e""* T#e 5e!te t#e time t!4e+ i+ m!+uf!-tui+5 t#e moe ;i00 be

t#e !mou+t of ;o4 i+ $o-e""*

In GSK a3 Na1ha 3h$!$ i# n& 6&!5 in 9!&!$##8

C&n#"7a1'$#8T#e"e !e t#e m!tei!0" ;#i-# i" +eeded fo "moot# $o-e"" of $odu-tio+*

T#e"e m!tei!0" do +ot die-t0y e+te i+ t#e $odu-tio+ but t#ey !-t !" -!t!0y"t" et-*

-o+"um!b0e" m!y be -0!""ified !--odi+5 to t#ei -o+"um$tio+ !+d -iti-!0ity* Ge+e!00y-o+"um!b0e" "toe" do +ot -e!te !+y "u$$0y $ob0em" !+d fom ! "m!00 $!t of $odu-tio+

-o"t* T#ee -!+ be i+"t!+-e ;#ee t#e"e m!tei!0" m!y !--ou+t fo mu-# 7!0ue t#!+ t#e !;

m!tei!0" T#e fue0 oi0 m!y fom ! "ub"t!+ti!0 $!t of -o"t*

In GSK Na1ha P&'43h$n$( D!"7 S$a'( Ta9$ !&''( La1$'( C'$an#in A$n3( Hand '&2$#(

Oi'( Ch$7i%a'( C&a'( $3%8 a!$ $?a79'$# &/ #&7$ %&n#"7a1'$#8

Fini#h$d &&d#8T#e"e !e t#e 5ood" ;#i-# !e e!dy fo t#e -u"tome"* T#e " to-4 of

fi+i"#ed 5ood" $o7ide" ! buffe bet;ee+ $odu-tio+ !+d m!4et* T#e $u$o"e of m!i+t!i+i+5

i+7e+toy i" to e+"ue $o$e "u$$0y of 5ood" to -u"tome"* I+ "ome -o+-e+" t#e $odu-tio+

i" u+det!4e+ o+ t#e ode b!"i" i+ 5e+e!0 ;it#out ;!iti+5 fo "$e-ifi- ode"*

In GSK 7ain /ini#h$d &&d# a!$ H&!'i%5#( B&( Vani''a H&!'i%5#( E'a%hi H&!'i%5#(

B& in3$!7$dia3$( H&!'i%5# hih /a3( J"ni&! H&!'i%5# DHA( 7&3h$! H&!'i%5# DHA $3%8

a!$ 9!&d"%3#( 6hi%h a!$ 9!&d"%$d /&! %&n#"793i&n in India8 M&3h$! H&!'i%5# DMI and

J"ni&! H&!'i%5# DMI a!$ 9!&d"%3# 7an"/a%3"!$d /&! $?9&!3 9a%5a$ and #$nd 3&

Ban'ad$#h*

S9a!$#* S$!e" !0"o fom ! $!t of i+7e+toy* T#e -o+"um$tio+ $!tte+ of !; m!tei!0

-o+"um!b0e" fi+i"#ed 5ood" !e diffee+t fom t#!t of "$!e"* T#e "to-4i+5 $o0i-ie" of "$!e"

!e diffee+t fom i+du"ty to i+du"ty* Some i+du"ty 0i4e t!+"$ot ;i00 euie moe "$!e"

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t#!+ ot#e -o+-e+* Co"t0y "$!e $!t" 0i4e e+5i+e" m!i+te+!+-e "$!e" et-* !e +ot di"-!ded

!fte u"e !t#e t#ey !e 4e$t i+ e!dy $o"itio+ fo fut#e u"e* A00 de-i"io+ !bout "$!e" i"

b!"ed o+ t#e fi+!+-i!0 -o"t of i+7e+toy o+ "u-# "$!e" !+d t#e -o"t" t#!t m!y !i"e due to

t#ei +o+!7!i0!bi0ity

In GSK $?a79'$# &/ S9a!$# a!$ Ba!!in( V-B&'3 $3%

GENERAL STORE INVENTORY IN GSK

Ge+e!0 "toe i" t#!t ;#i-# t#e $!t of t#e $odu-tio+ be-ome" i+die-t0y* 3it#out "u-#

i+7e+toy +o $odu-tio+ ;i00 be t#ee* T#i" "toe i+7e+toy i+-0ude":

Po0yt#e+e b!5"

Co+"um!b0e" 0i4e die"e0 et-*

C0e!+i+5 m!tei!0 0i4e +iti- !-id -!u"ti- "od! et-*

F0oo -0e!+i+5 to;e0"

S$!e $!t" of t#e m!-#i+e"

Und$! 3h$ $n$!a' #3&!$ in2$n3&!4 3&3a' n&8 &/ i3$7# a!$ )


54/80

!$"i!$d d"!in 3h$ 4$a! a# #"%h d& n&3 /a'' "nd$! an4 %a3$&!4 and #&7$ a!$ %a9i3a'

!$'a3$d #9a!$#*

JUST IN TIME INVETORY SYSTYEM

Ju"t i+ time $u-#!"i+5 i" t#e $u-#!"e of m!tei!0 o 5ood" i+ "u-# ! ;!y t#!t de0i7ey of

$u-#!"e item i" !""ued befoe t#ei u"e o dem!+d* Ju"t i+ time $u-#!"e e-o5+ie" too

mu-# -!yi+5 -o"t !""o-i!ted ;it# #o0di+5 #i5# i+7e+toy 0e7e0"* T#eefoe it !d7o-!te"

de7e0o$i+5 5ood e0!tio+ ;it# "u$$0ie !+d m!4i+5 time0y $u-#!"e" fom $o7e+ "u$$0ie"

;#o -!+ m!4e e!dy de0i7ey of 5ood" !7!i0!b0e !" !+d ;#e+ +eed !i"e" EOK ,E-o+omi-

ode u!+tity. mode0 !""ume" ! -o+"t!+t ode u!+tity ;#ee !" JIT $u-#!"i+5 $o0i-y

!d7o-!te" ! diffee+t u!+tity fo e!-# ode if dem!+d f0u-tu!te"* EOK 0!y" em$#!"i" o+

odei+5 !+d -!yi+5 -o"t but i+7e+toy m!+!5eme+t e=te+d" beyo+d -!yi+5 !+d odei+5

-o"t to i+-0ude $u-#!"e -o"t u!+tity -o"t !+d "t!4eout -o"t *JIT $u-#!"i+5 t!4e" i+to

-o+"ide!tio+ !00 t#e"e -o"t !+d mo7e out"ide t#e !""um$tio+" of t#e EOK mode0*

T#ee !e &( JIT item" i+ GS% N!b#!8

ADVANTAGES: I+7e"tme+t i+ i+7e+toy i" edu-ed be-!u"e moe feue+t $u-#!"e ode

of "m!00 u!+titie" m!de*

C!yi+5 -o"t i" edu-ed !" ! e"u0t of i+7e"tme+t i+ i+7e+toy*

A edu-tio+ i+ t#e +umbe of "u$$0ie"* O+0y $o7e+ "u$$0ie" ;#o -!+ 5i7e ui-4

de0i7ey of u!0ity 5ood" !e 5i7e+ $u-#!"e ode*

Ku!0ity -o"t" "u-# !" i+"$e-tio+ -o"t of i+-omi+5 m!tei!0 o 5ood" "-!$" !+d

e;o4 -o"t" !e edu-ed be-!u"e JIT $u-#!"i+5 !""ue" ui-4 !+d feue+t de0i7eie" of

"m!00 "ie ode" ;#i-# # e"u0t" i+ 0o; 0e7e0 of i+7e+toie" -!u"i+5 mi+imum $o""ib0e

;!"t!5e*

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FINANCIAL RATIO ANALYSIS

Fi+!+-i!0 !tio !+!0y"i" i" ! "tudy of !tio" bet;ee+ 7!iou" item" o 5ou$ of item" i+

fi+!+-i!0 "t!teme+t !+d t#e tu+o7e !tio"* R!tio !+!0y"i" i" t#e $o;efu0 too0 of fi+!+-i!0

!+!0y"i"* I+ fi+!+-i!0 !+!0y"i" !tio !+!0y"i" i" u"ed !" !+ i+de= o y!d"ti-4 to me!"ue t#e

$efom!+-e of t#e fim*

3o4i+5 -!$it!0 i" t#!t $!t of tot!0 -!$it!0 ;#i-# i" im$ot!+t i+ -ue+t !""et"* To 5et bette

i+"i5#t" !bout t#e ;o4i+5 -!$it!0 $o"itio+ of t#e fim !tio !+!0y"i" #!" bee+ uti0ied*

To detemi+e t#e 3o4i+5 C!$it!0 $o"itio+ of t#e fim fo00o;i+5 !tio" #!7e bee+ !+!0yed:

CURRENT RATIO:

T#e -ue+t !tio i" 7ey $o$u0! fi+!+-i!0 !tio ;#i-# i" u"ed to me!"ue t#e !bi0ity of ! fim

to meet it" -ue+t 0i!bi0itie"* Cue+t !""et" !e -o+7eted i+to -!"# fo t#e $!yme+t of


56/80

-ue+t 0i!bi0itie"* A$$!e+t0y #i5#e i" t#e -ue+t !tio 5e!te i" t#e "#ot tem "o07e+-y*

Cue+t !tio i" 5i7e+ by t#e fomu0!:

Cue+t A""et"

Cue+t Li!bi0itie"

UICK RATIO ACID TEST RATIO:

Kui-4 !tio i" mu-# moe e=!-ti+5 me!"ue t#!+ t#e -ue+t !tio* By e=-0udi+5 i+7e+toie"

it -o+-e+t!te" o+ e!00y 0iuid !""et" ;it# 7!0ue f!i0y -et!i+*

Kui-4 A""et" -o+"i"t of o+0y -!"# !+d +e! -!"# !""et"* I+7e+toie" !e dedu-ted fom -ue+t

!""et" o+ t#e be0ief t#!t t#e"e !e +ot +e! -!"# !""et"8* Kui-4 !tio i" 5i7e+ by t#e fomu0!:

Liuid !""et"

Cue+t 0i!bi0itie"

CURRENT ASSETS TURNOVER RATIO:

T#e ide! of t#e -ue+t !""et" tu+o7e i" to !"-et!i+ t#e -o+tibutio+ of t#e -ue+t

!""et" to "!0e"* T#e e0!tio+"#i$ i+di-!te" effi-ie+-y o ot#e;i"e uti0i!tio+ of -ue+t

!""et" to !tt!i+ t#e m!=imum tu+o7e "!0e"*

S!0e"

Cue+t !""et"

WORKING CAPITAL TURNOVER RATIO: Net ;o4i+5 -!$it!0 tu+o7e !tio

i+di-!ted t#e 7e0o-ity oft#e uti0i!tio+ of ;o4i+5 -!$it!0* A #i5#e !tio i+di-!te" t#e

effe-ti7e uti0i!tio+ of ;o4i+5 -!$it!0 !+d ! 0o; !tio i+di-!te ot#e;i"e*


57/80

COGS o S!0e"

Net 3o4i+5 C!$it!0

W&!5in %a9i3a' i# #$!$a3$d in3& In2$n3&!4 3"!n&2$!( D$13&!# 3"!n&2$! and %!$di3&!#

3"!n&2$!

INVENTORY TURNOVER RATIO:

T#i" !tio i" !0"o 4+o;+ !" "to-4 tu+o7e !tio !+d e"t!b0i"#e" t#e e0!tio+"#i$ bet;ee+

t#e -o"t of 5ood" "o0d dui+5 t#e ye! !+d !7e!5e i+7e+toy #e0d dui+5 t#e ye!* It i"

-!0-u0!ted !" fo00o;":S!0e"

A7e!5e I+7e+toy

DEBTORS TURNOVER RATIO:

I+ -!"e fim "e00" 5ood" o+ -edit t#e e!0i!tio+ of "!0e" i" de0!yed !+d t#e e-ei7!b0e" !e

-e!ted* T#e -!"# i" e!0ied fom t#e"e e-ei7!b0e" 0!te o+* T#e "$eed ;it# ;#i-# t#e"e

e-ei7!b0e" !e -o00e-ted !ffe-t" t#e 0iuidity $o"itio+ of t#e fim* T#e debto"8 tu+o7e !tio

t#o;" 0i5#t o+ t#e -o00e-tio+ !+d -edit $o0i-ie" of t#e fim* T#e debto8" tu+o7e !tio i"

-!0-u0!ted !" fo00o;":

S!0e"

A7e!5e A--ou+t" Re-ei7!b0e

CREDITORS TURNOVER RATIO:

T#i" !tio i" -!0-u0!ted o+ "!me 0i+e" !" e-ei7!b0e tu+o7e !tio i" -!0-u0!ted* T#i" "#o;"

t#e 7e0o-ity of debt $!yme+t by t#e fim* A 0o; -edito8" tu+o7e !tio ef0e-t" 0ibe!0 tem"


58/80

5!+ted by t#e "u$$0ie"* 3#i0e ! #i5# !tio "#o;" t#e !--ou+t" !e "ett0ed !$id0y* It i"

-!0-u0!ted !" fo00o;":

Cedit Pu-#!"e"

A7e!5e A--ou+t" P!y!b0e

CHAPTER Ad7!+-e" 9&


59/80

T&3a' +.=**@8;+

In3$!9!$3a3i&n:

Sim$0y -!00ed ;o4i+5 -!$it!0 it i" tot!0 of -ue+t !""et" it efe" to t#e fim8" i+7e"tme+t i+

-ue+t !""et"* Cue+t !""et" efe to t#o"e !""et" ;#i-# i+ t#e odi+!y -ou"e of bu"i+e""

-!+ be -o+ti+ued i+to -!"# ;it#i+ !+ !--ou+ti+5 ye!*

A" $e t#e !bo7e t!b0e 5o"" ;o4i+5 -!$it!0 of GS% i" &((*


60/80

In3$!9!$3a3i&n:

Net ;o4i+5 -!$it!0 Cue+t A""et" Cue+t Li!bi0itie"

Th$!$/&!$( N$3 W&!5in Ca9i3a' &/ GSK R#8


61/80

A7e!5e fi+i"#ed 5ood" i+7e+toy =


62/80

A7e!5e debto" ,'


63/80

CASH AND PAYMENT PROCEDURE IN GSK

FORMAT FORECASTING

T#e Fom!t of -!"# foe-!"t $0!y" ! 7ey "i5+ifi-!+t o0e i+ m!+!5eme+t of fu+d" i+

e+te$i"e" !" it i" o+ t#e b!"i" of t#i" foe-!"t o+0y t#e -om$!+y -!+ m!4e it" de-i"io+"

e5!di+5 t#e u"e !+d !$$0i-!tio+ of fu+d"* T#u" t#e foe-!"t "#ou0d be "im$0e !+d -o+t!i+ !00

t#e euied i+fom!tio+*

I+ GS% +!b#! t#e $e"e+t met#od of $e$!i+5 t#e foe-!"t" fo t#e ;#o0e o5!+i!tio+ "t!t

;it# t#e "ubmi""io+ of foe-!"t" fo t#e i+di7idu!0 de$!tme+t" to t#e fi+!+-e de$!tme+t by

t#e 9t#of e7ey mo+t#*

T#e fi+!0 -!"# foe-!"t i" $e$!ed o+ mo+t#0y b!"i" ;#i-# "t!t" ;it# !+ o$e+i+5 b!0!+-e

!+d -o+"i"t" of $o$e e-od of d!y;i"e e-ei$t" !+d $!yme+t" !+d !0"o 5i7e" i+fom!tio+

!bout -0o"i+5 b!0!+-e"*

T#e -!"# euieme+t" "#o;+ i+ t#e -!"# foe-!"t !e t#e+ -0ubbed !+d ! -o+"o0id!ted

dem!+d d!ft fo t#e euied !mou+t i" -!00ed fo fom t#e #e!d offi-e of t#e -om$!+y

;#i-# i" "itu!ted !t Gu5!o+* T#i" dem!+d d!ft i" m!de fom "t!te b!+4 of P!ti!0! +!b#!

!+d -o00e-tio+ -#!5e" to t#e tu+e !e $!id $e DD*"*

T#i" fom!t "#o;" t#e mo7eme+t of -!"# dui+5 t#e mo+t#* Fo e*5* o+ d!y o+e if t#e tot!0

e-ei$t" !e "i= 0!-" !+d t#e tot!0 $!yme+t !e of &( 0!- ;e !e 0eft ;it# ! -0o"i+5 b!0!+-e

defi-it of R"* ' 0!-"* T#e"e ' 0!-" ;i00 -ome i+ fu+d" euied -o0um+ of d!y &* T#e !mou+t

t#e+ -!00" i+ fo ! dd* T#e !mou+t t#!t ;e 5et !fte ou -!0-u0!tio+ i+ t#e dd euied fo $0u"

-0o"i+5 b!0!+-e -o0um+ ;i00 be t#e o$e+i+5 b!0!+-e of d!y 9* I+ t#i" ;!y ;e ;i00 -o+ti+ue

ou -!"# -!0-u0!tio+" fo t#e e"t of t#e d!y"*


64/80

FUND FORECASTING-JUNE )*+

WorkingCapital.report

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