PROJECT_REPORT_Yogesh_Sharma_-Briefly

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PROJECT REPORT:

PROJECT REPORT On Payment Process in HUL At Hindustan Unilever Limited , Etah Tea Factory Submitted to: Prof. Rajesh Mehrotra Director School of Business management JAIPUR NATIONAL UNIVERSITY JAGATPURA, JAIPUR (RAJSTHAN ) MASTER OF BUSINESS ADMINISTRATION Submitted By: Yogesh Kumar Sharma Master of Business Administration Jaipur National University, Jaipur (RAJSTHAN.)

Preface:- :

Preface :- It is well evident that work experience is an indispensable part of every professional course. In the same manner, practical training in any organization is must for each and every individual who is undergoing management course . Hence to fulfill this requirement, I completed The TwoMonths Summer Training at HINDUSTAN UNILEVER LTD.TEA FACTORY ( Etah Unit). Entering in this organization is like stepping into altogether a new world. At first everything seems strange and unheard but as the time passes I understand the concept and working of the organization and thereby develop professional relationship. I have done my project in a very healthy atmosphere. I learn a lot of things which I could never have been learnt from my theory classes . (Yogesh Kumar Sharma)

Introduction Of Payment Concept:

Introduction Of Payment Concept 1. Payment A payment is the transfer of wealth from one party to another. A payment is usually made in exchange for the provision of goods and services or both, or to fulfill a legal obligation. The simplest and oldest form of payment is barter, the exchange of one good or service for another. In the modern world, common means of payment by an individual include money, cheque, debit, credit, or bank transfer, and in trade such payments are frequently preceded by an invoice or result in a receipt. However, there are no arbitrary limits on the form a payment can take and thus in complex transactions between businesses, payments may take the form of stock or other more complicated arrangements.

2.Payment methods :

2. Payment methods There are two types of payment methods; exchanging and provisioning Exchanging is to change coin, money and banknote in terms of the price. Provisioning is to transfer money from one account to another. In this method a third party must be involved. Credit card, debit card, money transfers, and recurring cash or ACH (Automated Clearing House) disbursements are all electronic payments methods. Electronic payments technologies are magnetic stripe card, smartcard, contactless card and mobile handset. Mobile handset based payments are called mobile payment.

Need and Relevance of Study :

Need and Relevance of Study For Cash Planning : This protects the financial condition of the firm from a forecast of expected cash inflows and outflows for a given period . Cash planning generally depends upon the size of the firm and philosophy of management. B . For Cash Budget :- Most significant device to plan for and control cash receipts and payments. Firm’s decision for appropriate sources of finance should depend upon factors such as cost and risk. The firm can decide to invest surplus cash in marketable securities and earn profits. Helps to utilize funds in a better way

4. Cash Management :

4. Cash Management The efficient collection and payment of cash both inside the organization and to third parties is the treasury department .The involvement of the department with the details of receivables and payables will be a matter of policy. There may be complete centralization within a group treasury or the treasury may simply advice subsidiaries and divisions on policy matter viz. collection/payment periods, discounts, etc. Any position between these two extremes would be possible. Treasuries will normally surplus funds in an investment portfolio. Investment policy will consider future needs for liquid funds and acceptable levels of risk as determined by company policy . Management of Cash Management of cash is an important function of the finance manager. The finance manager has to provide adequate cash to each of the units. For the survival of the business it is absolutely essential that there should be adequate cash. Financial manager has to ensure that there are no funds blocked in idle cash. Hence, question of costs of idle cash must also be kept in mind by the finance manager. A cash management scheme is a delicate balance between the twin objectives of liquidity and costs .

The Need for Cash :

The Need for Cash There are three basic considerations in determining the amount of cash or liquidity as have been outlined by Lord Keynes : Transaction Need : Cash facilitates the meeting of day to day expenses and other debt payments. In such cases, it is only the reserve cash balance that can enable the firm to make its payments in time. Speculative Need: Cash may be held in order to take advantage of profitable opportunities that may present themselves and which may be lost for want of ready cash. Precautionary Motive : Cash may be held to act for providing safety against unexpected events.

Slide 8:

Payments Receivables Collections Liquidity management Internet front end Forecasting

Objectives of Summer Internship :

Objectives of Summer Internship To know the Factory Process. To know the Payment Process in Hindustan Unilever Ltd. To get the knowledge about the accounting proceedings of HUL. To be familiarize with the financial working of the organization. To get the knowledge of organization’s cash management system.

Slide 10:

I n t r o d u c t i o n t o O r g a n I z a t I o n Chairman Of HUL Ltd.

HINDUSTAN UNILEVER LTD. :

HINDUSTAN UNILEVER LTD. INTRODUCTION : Hindustan Unilever Limited (HUL) is India's largest fast moving consumer goods (F.M.C.G.) company, with leadership in Home & Personal Care Products and Foods & Beverages. HUL's brands, spread across 20 distinct consumer categories, touch the lives of two out of three Indians. They endow the company with a scale of combined volumes of about 4 million tones and sales of Rs.10, 000 crores. Each of the business divisions is further sub divided into Profit Centers. These Profit Centers drive the strategy for growth. The broad divisions of the businesses of HLL would be :- Home and Personal Care : Detergents Personal Products Foods and Beverages: Beverages Culinary Products Ice Creams Popular Foods ( Annapurna / Modern Foods  ) Oils and Fats Exports Chemicals/ Agri Business / Yeast Animal Feeding Stuffs Plantations

Purpose & principles :

Purpose & principles Always working with integrity Positive impact . Continuous commitment. Setting out our aspirations. Working with others.

SUPPLY CHAIN :

SUPPLY CHAIN Supply Chain service levels as measured by CCFOT (Customer Case Fill on Time) were the highest achieved in the recent past. IT solutions based on SAP application systems led to significant improvements in planning and logistics efficiencies. The factories made significant progress in increasing plant and operational efficiencies and helped deliver innovations on time while working on improving product quality. The Company's initiative 'Lever care', focusing on connecting with customers and consumers, gave valuable inputs on product performance which helped to understand consumer behavior and to improve the quality of certain products in design and manufacturing.

FINANCE AND ACCOUNTS :

FINANCE AND ACCOUNTS Focus on cash generation continued and we delivered a strong operating cash flow during the year; this was driven by the business performance, efficiencies and cost savings across Supply Chain and greater focus on working capital management. Your Company managed the investments prudently by deployment of cash surplus in a balanced portfolio of safe and liquid instruments. Capital Expenditure during the year was at Rs. 572 crores (during the 15 months period ended 31st March, 2009 - Rs. 609 crores) and was in the area of capacity expansion, consolidation of operations, information technology, energy and other cost savings.

About HUL –ETAH (U.P.) FACTORY :

About HUL –ETAH (U.P.) FACTORY The HUL Etah Tea Unit is located on the G.T. Road just 6 kms away from HUL instant tea exports factory located at Kasganj road Etah . The factory is engaged in blending &packing CTC Black tea which is sold in the Indian domestic market under various brand names. The brands are as follows:- Brooke Bond Taaza Brooke Bond A1- Taaza Brooke Bond Red Label Brooke Bond A1MP IBS The Unit was setup is 1990 in this backward area for availing commercial benefits under the backward area scheme .Major Equipment is use is the blending drum EOT cranes & packing machines. The factory runs UPSEB power & has one Diesel generator for immediate restoration of power supply .There is a distribution drinking water supply for entire factory through bore well pump in factory premises. The new Production Hall commissioned in Dec.06 to meet all safety norms.

Slide 16:

Key Highlights of the Organization Finance Value Line

Slide 17:

Flow Diagram of Factory Process Arrival of Tea from Kidder pore Factory Arrival of Tea from South India Storage at factory Blending Packing Dispatch

PROJECT TO BE STUDIED PAYMENT PROCESS IN HUL :

PROJECT TO BE STUDIED PAYMENT PROCESS IN HUL In HUL processing of payment is very systematic. There are certain parameters of the company to make the various types of payments. Payment is the most important section of the accounts department. This processes lot of payment. It has more responsibility to make correct payment to our suppliers, service provides etc. on time. If the payment person finds any discrepancies within the certain parameters of the payments, he has to intimate the Manager/Officer and hold the payments. So this the last point to control over any payment. Authorization: For doing payments Bills should be signed by manager. Prepare one cash voucher. Commercial manager has the higher authority to sign the cheque and after that factory manager signs the cheque in the absence of commercial manger. For receiving cash and cheque Prepare one CR (Cash received). Get authorization from commercial officer.

Slide 19:

Structure of Payment Overall cash payment limit is Rs. 20000. Receipt of cash limit is Rs. 20000. Above Rs.20000 limit payment and receiving is done through cheque.

Some Key Features of Unit level Reporting :

Some Key Features of Unit level Reporting (a) Factories The Factory management takes a monthly performance review. The key areas covered would be ; Trial Balance (Financial Analysis) This is sent to the Head Office after the close of the book month, which primarily gives an indication of the financial performance. Business Analysis ( A comparison of the Key Performance Indicators which are driven by the Annual Plan ) (b ) Branches Trial Balance (Financial Analysis) This is sent to the Head Office after the close of the book month, which primarily gives an indication of the financial performance. Business Analysis ( A comparison of the Key Performance Indicators which are driven by the Annual Plan).

Slide 21:

ACTIVITY: Purchases Overview The management of inventory is the key to efficient working capital management in the units. Units have to ensure that they carry optimum inventory at all points of time. It is with this intention the MRP module of MFGPRO is used for scheduling the purchasing activity. Procedures The Unit receives the Replenishment based Distribution Requirement Plan (Indent of Finished goods to the Depots) on a daily basis for the next 8 weeks. Similarly the Central Planning System sends the demand of Promotional Packs on a weekly basis for the next 8 weeks. There could also be manual demands of exceptional nature. These are the inputs for the MRP. The raw material / packing material requirements are also generated in this plan. This takes into account the existing stock of raw materials, pending orders and stock in transit. On MRP having been run the Production Plan is generated. The MRP takes into account the capacity of the unit and schedules the production plan accordingly. In some factories (e.g. GRF) where MRP is not installed the Production Plan is prepared manually on the basis of the above criteria. Key Risks: The MRP may be run without proper ‘tag count’ leading to the errors in the Indent generation / supplier scheduling as the physical stocks would not be accurate. Control Points All unserviceable and open Indents should be closed prior to running MRP. In the absence of closing such indents they would be taken into account during the MRP run thus vitiating the ordering process.

SUB-ACTIVITY: GOODS RECEIPTS :

SUB-ACTIVITY: GOODS RECEIPTS Overview Broadly the following types of materials could be received Raw Material Engineering Stores Packing Materials Procedures; General- The truck reports at the factory gate and the hand over the challan to the security at the gate. The challan is handed over to the store by the security indicating the date and time of arrival. Stores department checks the challan particulars with the PO particulars. A store directs that the goods can be let in by indicating in the challan or by preparing an ‘Arrival form’. This initializes the process of arrivals. Security updates the arrival form (or incoming register where Arrival form is not used) with the details and time of entry in factory. Stores personnel enter the details of challan number, lorry number in Delivery Challan Maintenance Module. Vehicle is brought to the weigh bridge. The weigh bridge clerk checks for any additional items in the vehicle. Gross weight of material is taken and mentioned in the arrival form. The goods are now unloaded at the designated godown and samples obtained for Quality Control department. For some materials QC is made at the time of issue to shop floor and not on arrival.

SUB ACTIVITY: Transporter Payments :

SUB ACTIVITY: Transporter Payments Overview The Factory is responsible for payment of the freight up to factory for raw materials. Factory also pays the primary freight on finished goods from Factory to CFAs. The freight rates from factories to C&FAs are negotiated with the transporter jointly with central authority by the commercial managers of the unit and the Branch Transport Manager. However, Primary freight payments are made at the branch for dispatches made by 2p/3p factories of HPC. Procedures (Factory) Raw Material Freight Logistics department of the Unit fixes the rates for raw material freight. The freight amount is linked to the Purchase Order. At the time of GRR preparation the freight amount is also calculated and credited to the POR Account. The treatment is different for the following If the raw material is inclusive of freight then entire amount is treated as material cost and the credit stands to POR Account. If the freight is to be paid separately then the freight amount is treated as a separate ‘tax class’ in MFGPRO. Finished Goods Freight – Primary Freight - Factory The freight rates are fixed by tender every quarter, destination wise. On receipt of acknowledged challan payments are made. In case of GIR claims debit note is received from branches – the amount is kept in an Advance Account and adjustment is made on receipt of transporter bills.

SUB ACTIVITY: Accounts Payable / Processing of Invoices :

SUB ACTIVITY: Accounts Payable / Processing of Invoices Overview The purchases are booked in the POR accounts at the time of entry of goods. On receipt of supplier invoice this amount has to be crystallized against the supplier account for payment. The POR Account at any point of time should represent liabilities booked for which bills have not yet been received. Procedures Approval , matching and recording invoices; The liability for purchase is booked through the APV. The APV is prepared after the supplier’s bill is received. This is cross checked with the PO, GRR and Quality Reports for crystallizing the amount. The following are stated in the APV by the Accounts Clerk: Relevant PO Invoice Number GRR No. On booking of invoices through the APV the difference between the amount crystallized through APV and the amount booked in the POR Account is charged to AP Price Variance Account. Due date report is generated and submitted to the Accounts Officer along with the APVs and supporting documents. Key Risks Rebates mentioned in the Quality Report may not be taken into account leading to revenue loss. Delayed issue of C forms to supplier’s causes inconvenience to suppliers. Moreover, they may debit HLL with the excess taxes payable by them on account of non – receipt of concessional forms. Control Points Segregation of duties Ensure that there is segregation of duties.

SUB ACTIVITY: Administration and Miscellaneous Expenses :

SUB ACTIVITY: Administration and Miscellaneous Expenses Overview Administration and other Miscellaneous Expenses include the following Rates and Taxes, Filing Fees Telephones, Postage & Courier Charges Printing & Stationery Other Miscellaneous Expenses Procedures The bills received are checked and passed by the relevant department and the particulars about the type of expenditure; the due date of payment etc is forwarded with the supporting bills to the Accounts Department. On the payment date, the APV is generated and the cheque prepared and forwarded as per the procedure discussed in Bank Payments. At the end of the month, a provision is made for the expenses accrued. Key Risks Unauthorized payments leading to fraud. Errors in recording leading to wrong accounting. Control Points Ensure that the bills are authorized by the relevant authorities. Management Checks Check that all original supporting are duly attached before passing the bill. Check the arithmetical and accounting accuracy of the bill.

SUB ACTIVITY: Cash Receipts :

SUB ACTIVITY: Cash Receipts Overview Cash receipts will cover the following Recovery of advance for travel expenses/ other expenses advance from employees Miscellaneous scrap Lunch Coupons Cash receipts on account of other group companies Procedures On receipt of the cash, the cashier will prepare a manual Cash Voucher and get it authorized by relevant authority as per Schedule of Authority (SOA) applicable for the unit before posting. On authorization, the accounting entry is recorded and the Voucher is filed, sorted on document date and number. All the relevant supporting documentary evidences are attached to the voucher to ensure completeness. A manual receipt is issued to the party. Procedures in MFG/PRO as per SOP All cash receipts will be processed through JV module (Ref. MFG/PRO SOP). However, some units follow the procedure of accounting receipts through the AP module. After the cash transactions for the day are prepared the cashier will forward the cash receipts to the Accounts Clerk who will process a JV/APV to record cash receipts. After all the JVs/APVs for the day have been entered, the Accounts Clerk will print the cash account details and hand it over to the cashier, to enable him to check his cash balance on hand as on that date.

Slide 27:

R e s e a r c h M e a t h o d o l o g y

Research Methodology :

Research Methodology In the present fast track business environment marked by cutthroat competition, manyorganizations rely on business research to gain a competitive advantage and greater market share. Business Research is the pursuit of truth with the help of study, observation, comparison and experiment, the search for knowledge through objective and systematic method of finding solution to a problem. To portray accurately the characteristics of a particular individual, situation or a group, Research comprises the following: 1. Defining and redefining problems. 2. The fountain of knowledge for the sake of knowledge is an important source of providing guidelines for solving different business, governmental and social problems. 3. An art of formal training which enables one to understand the new developments in one's field in a better way. 4. Search for knowledge, scientific and systematic search for pertinent information on specific topic, an art of scientific investigation. 5. Careful investigation or inquiry especially through search for new facts in any branch of knowledge. 6. Systematized effort to gain new knowledge. 7. A movement from the known to the unknown. 8. An original contribution to the existing stock of know ledge making for its advancement.

Slide 29:

Flow Chart of Research Process Problem Discovery Secondary (historical) data Pilot Study Experience Survey Case Study Problem Definition (Statement of research objectives) Selection of Exploratory Research technique Selection of Basic research Method Survey (Interview, Questionnaire) Experiment (Laboratory, Field) Secondary Data Study Observation

Slide 30:

T a b l e s & F I g u r e s

Slide 31:

2009-10 Results at a Glance 2009-10(in crores) 2008-09(in crores) Net Sales 17500 16500 Profit After Taxation 2000 2000 Net Profit 2400 2100

Slide 32:

Competition Last price Market cap. (In cr.) Sales turnover Net profit Total assets HUL 290.40 63,322.88 20,601.56 2,496.45 2,483.46 Dabur 140.00 12,117.00 2,417.91 373.56 877.17 Colgate 669.45 9,104.04 1,770.82 290.22 220.98 Godrej Consumer 222.75 5,723.65 1,088.01 161.55 599.80 Gogrej Ind 163.05 5,191.80 880.97 19.33 1,628.10 Marico 83.50 5,085.59 1,921.85 142.12 676.21 P and G 1,074.85 3,489.04 645.02 131.41 346.64 Gillette 920.55 2,999.63 588.84 117.37 425.40 Emami 414.15 2,573.74 651.01 67.36 324.20 Jyothy Labs 114.10 828.01 350.85 40.88 352.51

Slide 33:

Market Share of HUL and Tata Tea

Slide 34:

Financial Performance of the Company

Slide 35:

Comparing Factor Performance In this figure HUL is no.1 in Product Quality. The image of company is also high in comparing the other companies. In delivering and billing it is similar to P&G.

Address Of The Organization:

Address Of The Organization ETAH (U.P.) OFFICE ADDRESS -: HINDUSTAN UNILIVER LIMITED, Tea Factory, Village- Asrauli, G.T.Road ETAH-207001(U.P.) Tel. No. 05742-233315, 231951 Fax No. 05742-234479 Website: - www.hul.co.in Registered Office : Hindustan Uniliver Ltd. Uniliver House, B.D. Sawant Marg, Chakala, Andheri (East) Mumbai-400099(Maharashtra)

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