Goodfrey Philips

7/30/2019 Goodfrey Philips

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PRESENTED BY:


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India in a large and growing economy with rapidly expanding financialservice sector.

Managing working capital is a matter of balance.

A company must have sufficient cash on hand to meet its immediateneeds while ensuring that idle cash is invested to the organizations bestpossible advantage.

WORKING CAPITAL = CURRENT ASSETS CURRENT LIABILITIES


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The WorkingCapital can be categorized, as funds needed for carrying outday-to-day operations of the business smoothly.

The management of the working capital is equally important as themanagement of long-term financial investment.

The goal of Working capital management is to ensure that the firm is able tocontinue its operations and that it has sufficient cash flow to satisfy bothmaturing short-term debt and upcoming operational expenses.


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Godfrey Phillips India, with 75 years of active industry experience, takepride in our ability to create profit and value for the society withoutcompromising on our core ethical systems and following adopted bestpractices at all times.

Social Commitments

Our commitment to our people and society at large is an extension of ourheritage and business principles, which are to conduct ourselves ethically at alltimes, contribute towards economic development, while improving the

quality of life for our workforce, and thereby their families, local communitiesand the society.


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Vision To become a leading tobacco player in India and beyond.

To sustain and enhance our position as one of Indias most prominent business

organizations, while leveraging our proven competencies to diversify our reach across

the globe.

Values

Passion for winning

The passion to win and never be setback by defeat is organically integrated in all our

employees.

Our ethical system percolates down to every level of management, equipping our

managers to take on even the most challenging situations with utmost positivity.

Treating complaints with gravity, identifying internal and external customer needs,

proactively fulfilling them and working towards zero grievances is our common goal.


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FS1

Four Square

Marlboro

Red & White

North Pole

Cavanders

Tipper


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Pan Vilas Pan Masala

The quest for the perfect pan masala comes to an end with Pan Vilas.

The delicately balanced blend and the rich trove of finest ingredients

give Pan Vilas an unmatched and lingering taste. The brand goes a step further to ensure quality and establish trust by

using a natural alternate to banned Magnesium Carbonate and applyingthe best worldwide technology in manufacturing.

Tea The Godfrey Phillips India group offers an extensive range of fine teas

from a team of highly talented master blenders.

The teas have been crafted to cater to a variety of palates, segmentsand markets.


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According to Ralph Kennedy and Steward Mc Muller a study of workingcapital is of major importance to internal and external analysis because ofits close relationship with the current day to day operations ofbusiness.

CONCEPTS OF WORKING CAPITAL

There are two concepts of working capital

(a) Gross working capital

(b) Net working capital


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CURRENT ASSETS Short term investments

Accrued income

Prepaid expenses Stock

Sundry debtors

Bills receivables

Cash at bank Cash in hand

CURRENT LIABILITIESBills payableSundry creditorsAccrued expenses

Short term loansDividend payableBank overdraftProvision for taxes


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Thus concept of working capital can beconducted through a number of devices such

as Ratio analysis

Funds flow analysis

Budgeting


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For the purchase of materials, components and spares.

To pay wages and salaries.

To incur day- to- day expenses and overheads such as fuel,power and office expenses etc.

To meet the selling costs as packing, advertising etc.

To provide credit facilities to the customers.

To maintain the inventories of raw materials, work inprogress, stores and spares, and finished stock.


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Good solvency position in the business Goodwill, it is easy to get loans Cash discounts

Regular supply of raw materials Regular payment of salaries, wages and other day to day

commitments Exploitation of favorable market conditions Ability to face crisis Quick and regular return on investment High morale


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Nature and size of business: Manufacturing cycle:

Sales growth: Production policy: Operating efficiency and performance: Firms credit policy:


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For the purchase of raw material components and stores For the payment of wages and salaries. To incur day-to-day expenses and overhead costs such as

fuel, power and office expenses. To meet the selling cost as packing, advertising etc. To provide credit facility to the customers. To maintain the inventories of raw material, work-in-

progress, stores and spares and finished stock. To meet the requirement of anticipated needs of future. To face business crisis in emergencies such as depression,

because during such periods, generally, there is muchpressure on working capital.


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To study the Indian banking system and products, services of GoodfreyPhilips India.

To study in general the working capital management procedure inGoodfrey Philips India.

To analyze working capital in Goodfrey Philips India.

To know how the working capital is being financed.

To know the various methods to be followed by Goodfrey Philips India forinventories and accounts receivables.

To give suggestions, if any, for better working capital management inGoodfrey Philips India.


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Secondary Data Secondary Data was gathered from books and journals and

Financial Statements on Goodfrey Philips India.

Sample Plan Universe:

The universe of the study was Goodfrey Philips India, LeelaBhawan, Patiala.

Research Plan

The research study is exploratory in nature. The establishedobjectives were kept in mind during the study, however nohypothesis was formed as the study was more in the form ofdescriptive design attempting to analyze the attitude ofrespondents towards the project.


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2008 2009 2010

1.06 1.24 1.43

1 2 3

20082009 2010

1.06

1.24

1.43

CURRENT RATIO

2008 2009 2010Current Assets 26928.145 41243.266 44358.57Current

Liabilities

25385.33 33027.5 30864.63

2008 2009 2010

26928.14541243.266 44358.57

25385.33

33027.5 30864.63

Current Assets


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2008 2009 20100.12 0.14 0.27

1 2 3

2008 2009 2010

0.12 0.14 0.27

QUICK RATIO (ACID TEST RATIO)

2008 2009 2010Liquid Assets 3122.07 4795.81 44353.57Current

Liabilities

25385.33 33027.5 30864.63

2008 2009 2010

3122.07 4795.81

44353.5725385.33

33027.5

30864.63

Liquid Assets


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2008 2009 20100.032 0.05 0.11

ABSOLUTE LIQUID RATIOABSOLUTE LIQUID RATIO

1 2 3

20082009

20100.032

0.05

0.11

ABSOLUTE LIQUID RATIO

2008 2009 2010Cash+Manlcetabl

e Sec815.87 1760.49 3409.96

Current

Liabilities25385.33 33027.5 30864.63

2008 2009 2010

815.871760.49 3409.96

25385.33

33027.5 30864.63

Cash+ Manlcetable Sec


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2008 2009 20103.353 5.5 5.8

1 2 3

2008 20092010

3.353

5.55.8

CURRENT ASSET TURNOVER RATIO

2008 2009 2010

Net Sale 90293.20 226905.15 260766.27

Current Assets 26928.145 41243.266 44358.57

2008 2009 2010

90293.2

226905.15260766.27

26928.145

41243.266

44358.57

Net sale


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2008 2009 201058.5 27.61 19.33

1 2 3

2008 2009 2010

58.527.61 19.33

WORKING CAP. TURNOVER RATIO

2008 2009 2010

Cost sale or sales

90293.20

226905.15

260766.27

(Net) Working

Capital1542.81 8215.766 13488.394

2008

20092010

90293.2

226905.15 260766.27

1542.818215.766

13488.394

Cost Sale

Cost sale or sales (Net) Working Capital


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2008 2009 20104.63 6.2 7.2

1 2 3

20082009 2010

4.636.2

7.2

INVENTORY TURNOVER RATIO

2008 2009 2010

Net Sale 90293.20 226905.15 260766.27Avg. Inventory 19467.82 36447.45 36231.015

2008 2009 2010

90293.2

226905.15260766.27

19467.82

36447.45

36231.015

Net Sales


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2008 2009 201065.48 74.75 65.48

1 2 3

2008 2009 2010

65.48 74.75 65.48

DEBTORS TURNOVER RATIO

2008

2009

2010

Net Sale 90293.20 226905.15 260766.27Avg. Account Rec. 1937.90 3035.32 3982.175

2008 2009 2010

90293.2

226905.15260766.27

1937.9

3035.323982.175

Sale


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Working capital management is concerned with theproblems that arise in attempting to manage the currentassets, the current liabilities and the interrelationship that

exists between them.

The major current assets are cash, marketable securities,accounts receivable and inventory.


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Current liabilities are those liabilities which are intended, attheir 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, billspayable, bank overdraft, and outstanding expenses.


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Bank reconciliation is a process under which each monthbank sends the company a statement detailing the activitythat has taken place in the account during the month.

The bank statement shows the balance at the beginning ofthe month, the deposits, the cheques paid, and other debitsand credits during the month, and the balance at the end ofthe month.


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The concerned documents were checked forfulfillment of certain criteria such as

Service tax number on the bill

Description of the service being provided

Classification of service type

Service tax being charged is as per the prescribedregulation


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ISSUING C - FORMS The C-form allows companies to avail lower tax rates for Interstate

sales.

As part of training C- Forms were issued and the records were

maintained for the companys own use as well as for transferringthe data to the concerned government authorities.

ISSUING A.R.E FORMS:

Application for Removal of Excisable Goods was issued for goodsbeing exported as part of one of the assignments done at thecompany.


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Working capital can be improved by:

Reducing the inventory holding period of items.

Increasing the credit period of Creditors.. Decreasing the credit period of Debtors.


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The company should look indigenous suppliers for its raw material and spare parts

requirements and reduce its lead time.

The company is increasing its installed capacity and its production too each year but the

increase in production is not in proportion to installed capacity. Thus, the two must be

matched.

Availing more credit from its suppliers.00

Prompt collection from its debtors.

Moving towards zero working capital.

Improvement in Inventory Conversion Period, mainly reduction in Work in Progress.

Reduction in loans and inter-corporate deposits and utilizing the money to pay off debts

and loans taken by the company.

Given the working loan of Rs. 56,84,50,000 and interest thereon is Rs. 4,40,80,000 in 2009

which is almost 7.75%. So, the company might consider some other sources of cheaperloans.

The company can maintain separate books of accounts for their manufacturing and trading

businesses for more clarity and transparency in operations.


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Employees of the Bank were unwilling to share informationdue to data privacy.

The research was carried out in only one branch of GoodfreyPhilips India. As much financial information not fetch outproperly.

Proportional representation was not given to the various

strata of the population as the secondary data in this regardwas not fully available.


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Goodfrey Philips

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