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GALGOTIAS INSTITUTE OF MANAGEMENT &TECHNOLOGY

SUMMER TRAINING PROJECT REPORT Capital expenditure and its accounting process Submitted in partial fulfillment of the requirement for the award of the degree of Master of Business Administration

UNDER THE GUIDANCE OF: Mr. Sandeep Sharma

SUBMITTED BY: GAURAV KUMAR [MBA III SEM]

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PREFACEAs an essential and obligatory part of my course which I have undergone 4 weeks of complete summer training at HEINZ INDIA Pvt. Ltd, ALIGARH. This training helped me in getting knowledge in to business environment. I got the practical knowledge about HEINZ INDIA Pvt.Ltd, on how the work is done in the company and I have tried my best to give all the possible information regarding the history of HEINZ. In this Project Report I have also mentioned about the operation of manufacturing unit of the company and also showed the functions of various departments respectively. I indeed also tried to put some light to the facilities, responsibilities, etc which is provided by the company regarding its workers for their welfare services. I also gave some of my efforts in realizing the importance of training programmes for employees and other workers and how helpful it can be for their welfare. This Project Report overall gives the information which not only serves the comprehensive knowledge base but also helps the reader in understanding the fundamentals related to the subject.

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ACKNOWLEDGEMENT I would like to avail this opportunity to express my deep sense of gratitude and indebt ness to all those who have helped and encourage me towards the successful completion of my project. Firstly I thank to God almighty for his loving providence over me. I am grateful to Mr. Rajesh Sharma (H.R. MANAGER) to allow me for training at Heinz India Pvt. Ltd. I am also thankful to my supervisor for guiding me the right project and help a lot throughout my research period. I thank the entire respondent who have extended their co-operation and helped me to complete my study. I also like to thank my family and friend who have been my strength and inspiration throughout my training period. I thank them for their constant support and encouragement. I am grateful to all of them.

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GALGOTIAS INSTIUTE OF MANAGEMENT & TECHNOLOGYWe are different Vision: 'To earn recognition as a world class shaper of management professionals' Mission 'To prepare and produce competent, passionate and market centric professionals and managers of human emotions, business operations and global quality' GIMT is a symbol of the vision of our Founder the group strongly believes in (Service) and (Relationship). GIMT also realize the economic importance of service and relationship sectors in the Indian and global economy and therefore, has chosen to follow the model of service relationship excellence in its teaching curriculum. Vision : GIMT has chosen to follow on the Niche and Sunrise Sectors of India that require specially trained executives for better service and relationships. Value: The business school benefits its students to become more competent and ready for their destined professions. Vector: GIMT directs its resources towards creating SMART MBA with triple specialization. Vitality: GIMT aims to bring a new vitality to the existing technical programs at campus at GREATER NOIDA with cultural exchange, activities and plans for the academic, social and leadership development of students and faculty.

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The purpose Summer Internship of GALGOTIA INSTITUTE OF MANAGEMENT & TECHNOLOGY (GIMT) for a minimum time of 8 weeks is to connect better theory and practice.

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DECLARATION

I, Gaurav kumar a bonafide student of Galgotias institute of management & technology Gr. Noida , hereby declare that I have undergone the summer training at Heinz India Pvt.Ltd. under the supervision of Mr. Sandeep Sharma on and from 1st July 2009. I also want to declare that the present project report is based on the above mentioned summer training and is my original work. The content of this project report has not been submitted to any other university or either in part or in full for the award of any degree ,diploma or fellowship. Further I assign the right to the university , subject to the permission from the organization concerned , use the information and the content of this project report to develop the cases ,case lets ,case leads and for use in teaching .

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TABLE OF CONTENT INTRODUCTION GLAXO TO HEINZ THE NEW HEINZ

INTRODUCTION TO FINANCE OBJECTIVES OF THE STUDY CAPITAL EXPENDITURE (CAPEX) ACCOUNTING FOR FIXED ASSETS DEPRECIATION FINANCE DEPARTMENT RESEARCH METHODOLOGY LIMITATIONS

CONCLUSION RECOMMANDATION AND SUGGESTION BIBLIOGRAPHY

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INTRODUCTION

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INTRODUCTION OF HEINZ INTERNATIONALHEINZ international company is one of the American paradigms. It began shortly after the civil war, in a family garden near Pittsburgh Pennsylvania. In the year 1869, its founder HENRY JOHN HEINZ was a pioneer in food processing and product marketing. He was a remarkable man, an energetic entrepreneurial boy from a pastor and a village near Pittsburgh, who was not only a business genius, but also a man of high morals, principles and personal rectitude, setting a new standard for the entire world. H.J HEINZ Company is well known player in FMGC category. It stands second in the world among food product companies next to nestle. It has been certified by ISO-9000. HEINZ is the company known as a good place to work since 1869 and is still known by this name. Heinz follows good food manufacturing practices. 1994 was a significant year in the life of the H.J.HEINZ Company. It marked the 125th anniversary of the company. It also marked HEINZ in the mid 1990s - vigorous and full of beans - both executing todays strategies and forging those that would become the foundation of Heinz in the 21st century, the Heinz of tomorrow. The H.J.HEINZ Company is constantly looking forward into the future and backward into the past. By US standards, the Heinz Company at 125 is also one of the dwindling numbers of surviving companies. Fewer and fewer companies, since the take over days of the 1980s, still bear the name of their founder. By any standard, it is a remarkable feat. A distinguished and successful company, genuinely loved by the citizens of its hometown, as well as by the loyal employees and customers around the globe, its brand name has increased in stature and value over years, as has its reputation for world class employees. HENRY JOHN was different; he treated its factory as his mothers spotless kitchen, giving importance to hygiene and cleanliness. He insisted on the best ingredients and clear jars to display the purity of Heinz product. He also treated his employees as though they were members of his family. Of course, like any family, Heinz has had its ups and downs. At successful and lesssuccessful ventures, inspired ideas lucky accidents, missed opportunity, fiascos and funny stories.

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Heinz corporate office of HEINZ INDIA PVT LTD is situated at Mumbai. As succeeding generations sustained the company and maintained its public following throughout a period of enormous social, political and economic upheaval, the constancy of Heinz proved a great comfort in time of depression and world war. A global economy is emerging, uneven but inexorable. In the course of its 125 years, Heinz has grown from an American dream to a global brand. That achievement is treatment to the universal appeal of the Heinz ideal - pure food and healthful, affordable nutrition. It is also a tribute to the tenacity and inventiveness of the world. As a new generation of customers enters a widening world market place, the appeal of the Heinz ideal remains unceasingly durable and filled with promise. In September 1993, at the annual meeting ORELLY amplified the strategies and shared the good news to shareholders. A new Heinz had emerged, poised for substantial growth in 1990s and beyond.

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GLAXO TO HEINZ

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HISTORY OF CHANGING NAME FROM GLAXO TO HEINZThe GLAXO INDIA LTD was incorporated in India on November, 1924 as an agency house for distributing. The well known baby food GLACTO of a British co. which was recognized internationally as one of the leading manufacturers of the research based pharmaceuticals and food products. In the early 1990s Glaxo was going in losses in the manufacturing of food products all over the world. Glaxo was asked to close all its food products over the entire globe. However, Aligarh plant was running in profits so it did not want to close the unit and hence asked the headquarters at Britain to permit her to continue the production. The headquarters agreed on a condition to continue the food product after changing the name so Glaxo India Ltd remained as Glaxo Laboratories India Ltd [GLINDIA]. This change in name caused a negative effect on sales of pharmaceutical product so GLINDIA inquired from the Headquarters again to allow using the old name Glaxo India Ltd. The permission was granted. But due to competition in food product market Glaxo India ltd thought that as the headquarters is not facilitating R and D program regarding food products so it would become difficult in the near future to survive in the growing stiff competition. Therefore Glaxo India Ltd thought that they should sell their Aligarh plant at the time when it is making profits so that good value could be earned from it. Ultimately in1994 Glaxo India ltd took a decision to sell its food products manufacturing unit in Aligarh. Heinz India private ltd took over from Glaxo India ltd, in October 1984, as Glaxo had decided to concentrate only on pharmaceuticals.

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Heinz India private ltd by 1999 has become Deemed Public co. as it has crossed the average annual turnover of Rs. 10 crores for three consecutive years. A limit set by companys act, 1956 which permits a co. to omit writing the word private in its name. So Heinz India private ltd was renamed as Heinz India ltd, and again renames the co. Heinz India ltd.

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THE NEW HEINZ

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THE NEW HEINZIn February 1992, a world wide growth forum attended by the companys top 35 managers, ORELLY and his senior advisor presented the improvement in the market share and profit and implement radical change. A revolutionary idea emerged to replace the companys decentralized purchasing system with a centralized negotiable strategy. Leveraging the companys global strength made an eminent financial sense as it would save the companys millions over the next decade. Procurement of key material was centralized. In the area of marketing, Heinz began to challenge the conventional wisdom about media spending. Taking a more fixable and timely approach to trade, consumer and point of purchase promotion as well as media buys, affiliated aimed to move their marketing dollar towards consumer promotion selfpricing. Heinz, already enjoying $2 billion business in the European community, targeted further growth. During 1992 and 1993, ORELLY and senior management hammered out new reasonable and demanding goals for each affiliate and successfully led the company out of the complacency and mentality that inevitably accompanies two decades of unparalleled financial growth and profitability. In October 1992, with an eye on the dynamic Asia pacific Market Heinz made its largest offshore acquisition, Purchasing Wattles Limited in New Zealand for $300 million. An excellent complement to existing Heinz operation in Australia, Japan and China, significantly strengthened its presence in this fast growing region of world.

CHAIRMENS FOUR IMPERATIVES Drive Profitable Growth Remove the Clutter Squeeze out Cost Measure and Recognize Performance

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HEINZ VISION Delivering high quality products. Adhering to standard. Be a company with strong and motivated workforce. Satisfying customers needs. To become renounced in commercial and social sector.

HEINZ PREMIER VALUES Passion Risk tolerance Excellence Motivation Innovation Empowerment Respect

CULTUREWorlds second largest FMCG company, Heinz has a conducive environment which not only integrates and motivates all the employees towards achieving high standard but also makes sufficient room for everybodys growth. People are a value asset as at Heinz, main emphasis is on the task. Efforts are made towards satisfying the customers and expanding the market share. A good blend of behavior and skill development programs provides stimulus for growth and career development. Over the years Heinz has concentrated on developing internal relationship so that external relationships are enhanced.

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HEINZ: A CONTEMPORARY GLOBAL PLAYERHeinz today is a global player in the food business specialized in providing processed food products and nutritional services. Heinz is famous in over 200 countries. It is well balanced geographically with above 43 percent of its same coming from non U.S. operations with business and territories, has employees approximately plus thousands of part time workers during seasonal peaks. In fruit business the brands dominance is sure. It stands for quality.

ALIGARH FACTORY A BRIEF INSIGHT Heinz took from Glaxo on 1st October 1994. They continue with the same brand name. It now manufactures Complan and Glucon-D at Aligarh unit. Sampriti ghee being a by product. Third party manufactures rest Nycil and biscuits Complan, and Glucon-D also. Factory is located 10 kms away from Aligarh city at a place known as Manzoorgarhi. Factory has an area of 41.7 acres. One-third of the area is vacant and rest has permanent infrastructure. Main office is situated in Mumbai. There is no interface of outside unions. It has its three manufacturing units located at Bangalore. Milk collected from its centre, bulk supplier and private contractors. Heinz has collected 80000-90000 tones of milk/annum costing, around Rs.90-100 crores. Its total holding capacity is 4 lakh litres. In flush session (April-July) the milk collection is 4 lakh litres per day. The factory is connected both by roadways and railways. 17

It has a turnover of Rs. 468 crores. Heinz has only one trade union H.S.A (Heinz Staff Association).

For security purpose, Heinz has divided the whole into different zones as follows:

Zone A B C D E

Department Administration block, MPO office, analytical lab, godown nos. 17 officers colony, area new boundary well. Engineering office, stores, workshop platforms, and generator house, old and new boiler. Production department, old lab, sprays drier no.1 and no.2, factory stores. R.P.U.1, 2, 3 all eastern wing godown and acid stores. Change and rest rooms, dispensary, fumigation godown, guest house.

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PRODUCT RANGE OF HEINZ INDIA PVT. LTD.HEINZ is ranked as a second largest food company in the world. It has many products in the world market. In India it offers 6 products;

1. Instant Energy Drink

Glucon-D [plain]

Glucon-D [orange] Glucon-D [mango] Glucon-D [lime] Glucon-D is manufactured at Aligarh plant.

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2. Energy Rich Health Drink

Vitamin rich under the brand name of Complan is available in following three flavors; Natural Chocolate Mango Complan is manufactured in Aligarh plant.

3. GheeAs a by product of milk is manufactured under the brand name of Sampriti. It is manufactured at Aligarh.

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4. Prickly Heat PowderPrickly heat powder is prepared in the brand name of Nycil. This is available in following three fragrances: Plain Sandal Lavender Nycil is manufactured by third party.

5. Heinz ketchupRecently Heinz has come up with new product Heinz Ketchup. Although Heinz is primarily a ketchup manufacturing company, this is new first ever ketchup produced market. Heinz ketchup is manufactured in Bangalore. by Heinz for India

6. Complan Crunch Timer Milk cream Chocolate These two flavors are available in these biscuits. 21

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FUNCTION OF VARIOUS DEPARTMENTS IN THE COMPANY 1. FINANCE DEPARTMENTIt is connected with the accounts and budgets preparation. Its function is: Funds management and budgetary control. Purchases and sales accounts control. Statutory and audit compliance. Wages administration. Variance analysis and information technology. Revenue budgeting and sending it to the main corporate office.

2. PRODUCTION DEPARTMENTIts functions are: (A)- Processing Area To conduct the dairy activities effectively. To separate fat from milk for the preparation of ghee. To dry up the skimmed milk for the preparation of complan. (B)- R.P.U This unit is setup for the purpose of packing the products.

3. PERSONNEL DEPARTMENTIts functions are: Selection and recruitment of employees. Maintaining the personnel record. Provision of training, promotion and job rotation. Maintaining the record of temporary causal, contract and apprentice workmen.

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4. F.S.UHeinz has a wide range of products, which are mainly the food products. The co. has F.S.U., which mainly looks after safe delivery of the goods to the customers since the factory is located far away from the city. Cleaning the production units, machines, godown and other places in the factory. Pest control and infestation control. To provide fumigation to the raw material and packed products. Maintaining temperature for different goods. Maintaining accounts for incoming outgoing materials.

5. ENGINEERING DEPARTMENTIts main functions are: To help in the operation and maintenance of various equipment used in production process. To provide effluent treatment and pollution control.

6. TRANSPORT DEPARTMENTBasically transport department is the part of engineering department. The chief functions are as follows: To provide tankers for carrying milk from milk collection centers. Provision for transportation of raw material and finished product to the distributors. Provision of contract based conveyance facility to the employees.

7. QUALITY ASSURANCE DEPARTMENT

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As the name suggests quality is not just an accident, it is a collective work of intelligent people with a team of well trained and experienced people in quality assurance department. Quality policy: Heinz India private ltd. Is committed to: 1. Procurement, development, production, and marketing of safe clean wholesome food of high quality, keeping focus on needs of customer by establishing and maintaining proper facilities necessary for controlled production consistency in a controlled manner, so as to ensure that customer confidence is generated and maintained consistently. 2. Establishing and maintaining appropriate operating and monitoring procedures necessary for controlled appropriate production. Establishing and maintaining training programmed so that every person responsible for product integrity and safe guarding quality environments competent to carry out his responsibility. 3. Achieving high safety, occupation health and environment standards establishing interval review procedure to ensure compliance of applicable laws and regulations. Its main functions are: Maintenance of quality assurance department and lab equipment. To conduct quality assurance test of raw materials and packing materials.

8. MILK PROCUREMENT UNITIts main functions are: Collection of milk from various collecting centers. To conduct milk purity test. To provide storage and refrigeration to the milk. Safe transportation of milk collecting centers to the company.

9. PURCHASE DEPARTMENTIts main functions are: 25

Material procurement. Asking for quotations and their evaluation. Order to the suppliers and procurement of order. 10. PLANNING & STORES DEPARMENT Its main functions are: Ensure storage of material under hygienic conditions and meet good food manufacturing practices standards. Ensure compliance of ISO norms. Ensure safe unloading of stock and no discrepancy with ledger balance.

11. SAFETY DEPARTMENTFor the purpose of providing safety to the company: Every department in the company has been equipped with fire. Extinguishing and first aid boxes. At the time of any contingency, the security officers appointed for different zones perform there responsibilities. There main functions are: Safety of employee and companys property. Companies own staff is engaged for security. Controlling and guarding the movement of guards at the gate. Security alert around the factory boundary wall area.

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INTRODUCTION TO FINANCE

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INTRODUCTION OF FINANCEFinance is a circulatory system of the economic body of a firm. The term finance is a broader sense, finance is not money alone, it course future payment also. In an organization composed of number of separate activities, each working for its own end but simultaneously making a contribution to the system as a whole, some force is necessary to bring about direction and coordination of economic activity to facilitate its smooth operation. Finance management is the agent that produces this result. Finance management is viewed as an integral part of overall management rather than as a staff especially concerned with the fund raising operation only. Though all the important financial decisions are made by the top management, the financial executive is deeply involved in this process. His main responsibility is to provide all the necessary accounting information, analysis and discuss the various alternatives and to suggest suitable solutions. His responsibilities lie in the following sphere of finance function: FINANCE FORCASTING: - It is the chief responsibility of financial executive to make a sound financial forecast and then plan for achievements. He sees that the sufficient supply of cash is available at the proper time for the smooth flow of firms activities. He tries for an efficient flow of firms activities. Experience financial crisis and differ its payments. RAISING OF NESSARY FUNDS:- Another major responsibility of financial management is to supply adequate funds to the firm for its various operations. A cost benefit analysis of various alternative sources must be made before raising funds from any particular source. If the company decides to raise the needed funds by the means of security issues, the finance manager has to arrange the issue of prospect for the floatation of issues. Where the company decides to borrow money from financial institutions including commercial banks and special financial corporations, the finance manager has to negotiate with the authorities. ALLOCATIONS OF FUNDS: - In allocating the funds, consideration must be given to the factors such as immediate requirement, management of assets, profit prospects and overall 28

management plans. The finance manager has to ensure proper utilization of cash funds by taking such steps as to help in speeding up the cash inflow on one hand and slowing cash outflow on the other hand. ALLOCATING INCOME:- Income can be retained for financing expansion of business or may be utilized for retiring outstanding debt or it may be distributed to the owners as dividend as to return of capital. DISPOSITION OF PROFIT:- The proper disposition of profit is also an important responsibility of financial management. Regarding the allocation of net profit after payment of taxes, a typical firm may be said to have two choices: 1. To pay dividend to shareholders as a return upon their investment and, 2. To retain earnings for the expansion of business. The financial manager balance the expectation of investors and the need of retained earning to acquire additional assets. Heinz India private ltd. Aligarh is the man manufacturing unit. The stock is transferred from Aligarh plant to Varanasi, Ghaziabad and Unnao (near Lucknow). Unnao is known as Suklagang, Delhi branch of Heinz India private ltd deals with the operation regarding sales. It prepares monthly sales report regarding three locations (Varanasi, Ghaziabad and Suklagang). This report is checked at Aligarh factory. The central sales tax rule, 1975 prescribes use of various forms for the purpose of central sales tax 1956. If the goods are send to outside U.P. than form c is taken by the company. It is the responsibility of a/cs department to receive form c. if form is received then 2% sales charges is taken by the company otherwise 10% is charged. Form f is for transfer otherwise than by sales. Form 31 is only for purchase of material. If the purchase is more than 10 lakhs then form 31 also include entry tax.

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ASPECTS OF FINANCEMoney is all about goes the famous saying. This is also said about finance that money is the life blood of any company and the company also fails without money. It is very important that finance department work very efficiently. Thus it can be said that success of any organization largely depends upon the optimum utilization of funds. The main finance department of Heinz is in Mumbai. Aligarh factory has a finance department which handles the daily affairs of the factory. Finance and accounts department is the backbone of any organization. Almost all kinds of business activities directly or indirectly, involve the acquisition and use of funds. For example: promotion of employees in production is clearly a responsibility of the production department but it requires payment of wages & salaries and other benefits and thus involves finance department. Similarly buying a new machine or replacing an old machine for the purpose of productive capacity affect the flow of funds. The accounts department at Aligarh factory also controls the computer department. Coding is the soul of computer output to avoid this problem, the new technique has been developed which is called coding is defined in numbers as well as in alphabets. It can be either in numeric value or in alphabetical only. It can also be a combination of alphabet and numeric value. Different companies use different type of coding structure. The coding structure of the company is defined as per their own convenience and the requirement of company. Computer is an electronic device and it is unable to understand the HUMAN LANGUAGE. In order to overcome this problem we use the language, which can be understood by computers, which is called coding.

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FINANCE DEPARTMENT

Plant controller Assistant manager finance

Account officer

Account officer

Account officer

Account officer

Section head Clerical staff

Section head Clerical staff

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OBJECTIVES OF THE STUDY

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OBJECTIVES OF THE STUDY

To study the procedure of identifying the needs of fixed assets, purchasing and installing to get output of the capital expenditure. To review the process of Accounting for fixed assets in Company. To study the legal aspects related to the fixed assets investment. To study the depreciation aspects of fixed assets and its impact on the production, in payment of taxes and in maintaining the profit of the company. To study the role of different departments of the company regarding the capital expenditure.

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CAPITAL EXPENDITURE

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CAPITAL EXPENDITURE (CAPEX)Every business needs funds for two purposes for its establishment and to carry out its day to day operations and expenditure. Long-term funds are required to create production facilities through purchase of fixed assets such as plant and machinery, land and building, furniture etc. The investment in these assets represents that part of firms capital which is blocked on a permanent or fixed basis and is called fixed capital. Thus the requirement & investment of funds for these fixed assets of any company is called capital expenditure i.e. CAPEX. On the other hand funds are also needed for short-term purpose for the purchase of raw material, payment of wages and other day-to-day expenses etc. These funds are known as working capital. For the proper and appropriate allocation of funds there is a need of capital budgeting for any firm. A capital expenditure may also be defined as an expenditure whose benefits are going to be received over a long period of time i.e. more than one year. In simple words we can say that capital expenditure is an expenditure incurred on acquiring or improving the fixed assets, the benefit of which are expected to be received over the number of years. The examples of capital expenditure are: Cost of acquisition of permanent assets as land and building, plant and machinery, goodwill etc. Cost of addition, expansion, improvement of alteration in the fixed assets. Cost of replacement of permanent assets. Research and development project cost etc. In Heinz India private limited Aligarh, the capital expenditure is done through the proper capital budgeting for the planning and control of capital expenditure. Companys board of directors and different departments such as engineering department, purchase department, R&D department and finance department of the company decides about capital expenditure whether or not to invest money into a particular long term project whose benefits are going to be realized over a period of time, more than one year.

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The process of capital expenditure starts from the following ways: Identification of needs for the plant where capital expenditure would be needed to achieve the companys objective. Needed items are classified in Capital Appropriation Request (CAR) format, which is basically generated by engineering department of the company. Approval of CAR is done by different authorities such as concern managers, Assistant Manager Project, Manager Quality Assurance and General Manager Operations. It depends upon the amount of the fixed assets. The table showing below:

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Management Grades

Managin g directors

Vice president / directors Rs. 2000000 3000000 3000000 500000 3000000 1000000 500000 5000000 20000 100000

Vice preside nt Rs. 200000 0 300000 0 300000 0 500000 300000 0 750000 500000 250000 0 20000 100000

General manager

Grade 1

Grade 2 Rs. 750000 750000 100000 75000 75000 100000 10000 10000

Grade 3 Rs. 500000 500000 50000 50000 5000 5000

Purchase Order Capital items Coded items Affiliated purchase Non-coded Marketing Services (branches) Services (others) Advance payment Cash payment Traveling expenses Inventory adjustments Branches Factory Credit notes Customer claims Sales Return Material services

Rs. Over 2000000 3000000 3000000 500000 3000000 1000000 500000 Over 5000000 Over 20000 Over 100000 Over 200000 200000

Rs. 2000000 3000000 3000000 500000 3000000 300000 500000 1000000 20000 50000

Rs. 200000 0 300000 0 150000 0 500000 300000 0 150000 500000 500000 20000 30000

200000 200000

200000 200000

200000 200000

25000

10000

Over 200000 200000 200000

200000 200000 200000

100000 200000 100000

100000 200000 100000

25000 25000

10000

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Process of CAR Approval for Purchasing of Fixed Assets

Engineering/user department

Identification of needs

Generating the CAR and its approval by assigned authorities Purchase requisition (PR) Purchase department Asking for quotations and their evaluation

Freezing the specification

Purchase order (PO)

Quality Verification

Supplier/vendor

Finance department

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The Capital Appropriation Request (CAR) form contains the following things:1. Appropriation no. 2. currency 3. Request date 4. department/location 5. Project no. 6. Project title 7. Purpose : purchase/lease 8. Lease payment per year 9. Lease terms 10. Present value of lease payment: discounted at 11. Category 12. Latest approval data 13. Commencement data 14. Completion data 15. Budgeted amount 16. Original request 17. Supplemental request 18. Total project 19. Classification of items 20. Expenditure 21. Total purchase 22. Leased equipment 23. Total lease 24. Total request 25. Memo: capitalized interest 39 capitalized expanded others totals

26. Change in working capital 27. Net profit after tax 28. Return on investment 29. Project IRR 30. Current business plan ROIC 31. Paybacks (purchase only) from commencement of spend to start up operations in yrs. 32. Advantage of owing (lease only) 33. Description of proposal. 34. Space for approval by different authorities of company.

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FORMAT OF CAR

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PURCHASE REQUISITION (PR)It is the statement contains specification of the items what the user wants. After the approval of CAR (capital appropriation request) for required fixed assets, the next step is to generate the purchase requisition (PR) by engineering or user department and this PR is sent to the purchase department for further process. Purchase requisition contains the specific coded number which is created by the user/engineering department. This coded PR no. has information such as name of items, its quality and its cost which is expected by the engineering department. It should not be disclosed to vendor in any way.

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PURCHASE DEPARTMENT Collect the purchase requisition (PR) from engineering or user department. Raise the Tender/Quotation for required items in PR. Analysis of the quotation. Prepare the statement for selected vendors quotation. Placing the order through the purchase order.

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PURCHASE ORDER (PO)It is the binding agreement between both the parties. Both the parties are obliged to follow the contents mentioned in it by the purchase department. Purchase order is basically prepared on the basis of minimum three quotations collect from different vendors. For example: Heinz, in the case of fixed asset in general. Price includes excise duty and cess @ 14.42%. Technical specification and scope of supply as per its condition. Payment terms: 20%advance with PO, 70% at the time of dispatch after inspection of your factory, balance 10% on successful installation. Commissioning and submission of a bank guarantee from a reputed three star rated bank valid for 10% of PO value. Warranty: one year from the date of commissioning. Delivery time: min 7 months from the date of P.O. for the supply of fixed assets. Liquidated damages clauses: min 0.5% and penalty upto a max. of P.O value.

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Characteristics & classification of P.O. according to its SAP no.In SAP, the company opts the different specified number, from which digit the sap no. starts, with the help of this specific digit we can recognize the specific assets or goods as under follows:-

Categories of items Raw material and packing Imported materials Engineering spares Consumable material Services Capital expenditure (CAPEX)

Specific digit starts in the sap no. 1.. 2.. 3.. 5.. 6.. 7..

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ACCOUNTING FOR FIXED ASSETS

ACCOUNTING FOR FIXED ASSETS46

[Under Accounting Standard AS-10]Fixed Assets in Financial Statement: Fixed assets shall be shown in financial statement either at historical cost or revalued price. What is historical cost? The historical cost of acquired fixed assets consists of the following: Purchase price Import duties and other non-refundable taxes. Any directly attributable cost of bringing the assets to the working condition for its intended use like: Site preparation Delivery and handling cost Installation cost Professional fee (i.e., fees of engineers and architects) Expenditure incurred on start up and commission of the project including the expenditure on test runs less income by sales of products. Administrative and other general overheads (such as construction/ acquisition/ installation of the fixed assets). Amount of Govt. grants received/ receivable against fixed assets should be deducted from the cost of fixed assets. Loss/ gain or deferred payment on foreign currency liability. Price adjustment, changes in duties or similar factors. Revalued Price: When a fixed asset is revalued, an entire class of assets should be revalued or the selection of assets for revaluation should be made on a systematic basis. Those are following: By re-stating the gross book value and accumulated depreciation. By re-stating net book value adding there in the net increase on account of revaluation. 47

Maximum amount of revaluation Revaluation of fixed assets should be restricted to the net recoverable amount of fixed assets. Improvements and Repair There are two accounting treatments of cost of improvement and repair. These accounting treatments depend upon the following conditions: After the improvement and repairs, expected future benefits from fixed assets do not change. The expenses of improvement and repairs are charged to profit and loss account. After the improvement and repairs, expected future benefits from fixed assets will increase beyond the previously assessed standard performance. These expenses on improvements and repair are included in the gross book value of fixed assets. Addition or extension of capital nature to an existing asset: If integral part of existing asset it is generally added to gross book value of existing assets. If separate identity and capable to be used after the disposal of existing asset it is accounted for separately. Retirement and Disposals: Fixed assets are deleted from the financial statement either on disposal or if an expected economic benefit is over. Gains or losses arising on disposal are generally recognized in profit and loss account. Capitalization of exchange differences incurred on fixed assets related borrowing: Instruction contained in part-I of schedule-VI of the Companies Act, 1956 regarding adjustment of exchange difference in carrying amount of the fixed assets due to change in the rate of exchange of fixed assets linked liability denominated in foreign exchange has been superseded by issue of companies (Accounting Standards) Rules, 2006. Therefore, AS-11 will apply and such exchange difference shall be recognized in profit and loss account and will not be capitalized with the cost of fixed assets. Treatment of CENVAT Credit on capital goods (Fixed Assets):

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Accounting for fixed assets issued by the ICAI, requires that only nonrefundable taxes and duties in respect of the fixed asset should be included in the cost of that fixed asset. Cenvetable excise duty can be considered as a refundable tax. Therefore CENVAT credit of such duty should be reduced from the purchase cost of capital goods concerned and recognized as a separate asset. The CENVAT Credit in respect of capital goods is allowed for an amount not exceeding 50% of the duty paid on such capital goods in the financial year in which the goods are received in factory and the balance will be allowed in the subsequent year(s). The amount of CENVAT credit taken in the financial year, in which goods are received, should be debited to an appropriate account, say CENVAT Receivable (Capital Goods) Account and balance may be debited in another appropriate account say CENVAT Credit Deferred Account. In the subsequent financial year(s), when the balance CENVAT credit is availed of the appropriate adjustment for the same should be made, i.e., amount of CENVAT Credit Deferred Account with a corresponding debit too CENVAT Credit Receivable (capital goods) Account. On actual utilization, the account will be adjusted in the excise duty on the final products. Accordingly, the purchase cost of the capital goods would be net of the specified duty on capital goods. The unadjusted balance standing in the MODVAT Credit receivable (Capital goods) account, if any should be shown on the asset side under the head Advances.

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DEPRECIATION

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DEPRECIATIONDepreciation may be defined as the measure of the exhausion of the effective life of an Assets from any cause during a given period. Depreciation is a permanent, continuing and gradual shrinkage in the value of fixed assets. With the exception of land most fixed assets have united useful life as they are subject to depreciation, depreciation is the distribution of total cost of assets over its useful life. From the above definition it is clear that the term depreciation means gradually reduction in the value of an assets. This gradually reduction in the value of an assets may be due to its constant use, change in the market value of an assets , depletion in the quantity of an assets (as in the case of mines ) or new inventions or discoveries.

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CAUSES OF DEPRECIATIONThe main causes of depreciation in the value of fixed assests are as follows: 1-

Wear and Tear:- Constant use of an assets reduces its valueand this reduction in value is termed as Depreciation. Even the best repairs may not be able to keep the assets ready for use for a long time, after sometime the assets does not remain fit for use. Thus, constant use of an assets bring reductior in its value.

2-

Depletion of Assets: Some Assets due to their nature arereduced in value because of taking out the content or the material out of them. Examples of such assets are coal mines, Iron ore, Oil wells etc.

3-

Effluxion of Time: Value of some assets is reduced due topassage of time. Patents and Trade marks are some examples of such assets . The life of such assets is fixed for a set number of years and with the passage of time, the value of such assets is reduced to Zero.

4-

Obsolescence: Some assets are discarded due to innovations,inventions, change in technology etc. For example, due to invention a workable existing machine may have to be replaced by the new machine. Such a loss on account of new invention or technological upgradation is termed as loss on accounts to obsolescence.

5-

Accident: Sometimes the value of the assets is very muchreduced due to accidents. Their working capacity is also much reduced and therefore, it does not remain profitable to use them.

6-

Permanent Fall in the Market Value: Sometimes themarket value of some assets falls permanently and therefore, their value is to be reduced in the books of accounts.

On the basis of the above causes, it may be concluded that depreciation is the decrease or depletion in the value of an assets due to wear and tear, exhaustion, exposures to the elements, obsolescence, lapse of time and accidents.

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Objectives & Importance of charging Depreciation

Determination of True Profits:- The capital expenditure on acquisition offixed assets is a periodic cost and on operating charge on this account must be charged to the profits during the life of the assets in order to calculate true profits. Like other business expenses, depreciation is also charged in respect of the service rendered by an assets in earning revenues. Thus, depreciation must be charged as an operating cost from the years current revenue for the use of an assets in that year so that correct profits may be ascertained.

Presentation of True Financial Position:- Another important objective ofproviding depreciation is to present a true statement of affairs of the business by showing assets in the balance sheet at their real value. The assets get depreciated in their values over a period of time on account of various reasons. In order to disclose the true financial position of the business, it is necessary to show the various assets at their depreciated or real values in the balance sheet.

Replacement of Assets:- The main objective of providing depreciation is tokeep the firms capital intact so that an useless assets can be replaced after the expiry of its service life without any additional capital requirement.

Ascertainment of Cost of Production:- In order to ascertain the exact cost ofproduction, it is necessary that depreciation on assets be considered as a cost item like other cost such as wages, salaries, rent etc.

Reduction in Tax Liability:- Depreciation is an admissible deduction underthe Income Tax Act and hence reduces the tax liability of the enterprise. Obviously, by charging depreciation of the profit and loss account the taxable profits of the enterprise are reduced.

Marginal Significance of Depreciation in Capital Investment Decisions:- Depreciation is of particular significance to the management of anenterprise in taking decisions relating to Income measurement and the impact of 53

Inflation, and Investment of capital. The net Income earned by a company is determined by charging the operating costs against the revenue of the period. Depreciation is an important part of the operating cost of the business. Since operating cost are important for business decisions, the management has to take into account the impact of depreciation on the business income. During inflation period, depreciation charged on historical cost of assets will be lower than what is desirable. In order to ensure that the reported income is correct and adequate funds are available for replacement of assets, the management has to make necessary adjustments to restate depreciation and income in terms of replacement cost of the assets. Income tax provision has the strongest effect on depreciation policy pursued by the management of the company. In respect of capital or investment decisions which are made on the basis of rate of return. The management carefully considers the amount of chargeable depreciation as it affects the probable cash inflow from a particular investment project on account of savings in tax liability to the extent of depreciation charged. Thus, depreciation is of particular significance to the management in taking capital investment decisions also. Factors Affecting the Amount of Depreciation The Following are the three important factors which should be considered for determining the amount of depreciation to be charged to the profit and loss Accounts in respect of a particular fixed Assets. Historical cost or other amount in place of historical cost like revalued amount, Estimated useful life of depreciated assets, Estimated residual / scrap value of depreciable assets.

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Methods of DepreciationThere are many methods which are used for charging depreciation in respect of depreciable assets of an enterprise. The Accounting Standard No.6, issued by the Institute of Chartered Accountants of India lays down that the depreciable assets should be allocated on a systematic basis to each accounting period during the useful life of the assets. This accounting Standard, however does not mention any particular methods for arriving at the amount of depreciation. But it does insist that once a methods is selected, it should be consistently used and not changed as and when by the management. If management wants to change the methods of depreciation once used in the previous years due to some reason or the other, i.e, for the compliance of the accounting standard or for making the financial statement more appropriate then the unamortized depreciable amount should be charged to revenue over the remaining useful life of the assets. Further the fact of such change should be expressed in terms of money and be disclosed properly in the final accounts. There are two important methods of depreciation. They are 1- Straight Line Method (SLM), 2- Written Down Value Method (WDVM).

1. Straight Line Method:According to this method, depreciation is charged evenly every year throughout the useful life of the asset. The uniform annual amount of depreciation is determined as follows: Depreciation = (Original cost of fixed assets) (estimated scrap value) estimated useful life of the asset

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SLM is very suitable for assets like leasehold properties patents etc. which get depreciated with the passage of time.

It does not take into account the impact of seasonal fluctuations, inflation, and depression on the replacement cost of the assets.

2- Written Down Value Method :According to this method, depreciation is charged on the book value of the assets each year, with the result that the amount of depreciation goes on decreasing every year. The formula for calculating the rate of depreciation under this method is as follows: Net Salvage Value Rate of Depreciati on = 1 100 Acquisitio n Cost n

Where ,

n= no. of year of useful life of the asset.

This method suit to plant and machinery in which addition , extensions and repair take place frequently.

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Legal Aspects of Depreciation According to Income Tax Act 1961 under sec. 32 the following legal aspects are as follow: (i) (ii) (iii) (iv) Income tax says for charging the depreciation on fixed assets in four categories: Building Plant and machinery Furniture and fittings Intangible assets

Provided further that where an asset referred to in clause (i) or clause (ii) for clause (ii)(a), as the case may be, is acquired by the assessee during the previous year and is put to use for the purposes of business or profession for a period of less than one hundred and eighty days in that previous year, the deduction under this sub-section in respect of such asset shall be restricted to fifty per cent of the amount calculated at the percentage prescribed for an asset under clause (i) or clause (ii). Provided also that, in respect of the previous year relevant to the assessment year commencing on the 1st day of April, 1991, the deduction in relation to any block of assets under this clause shall, in the case of a company, be restricted to seventyfive percent of the amount calculated at the percentage, on the written down value for such assets, prescribed under this Act immediately before the commencement of the taxation laws (Amendment) Act, 1991. Provided that no deduction shall be allowed in respect of (A) any machinery or plant which, before its installation by the assessee, was used either within or outside India by any other person; or

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(B) Any machinery or plant installed in any office premises or any residential accommodation, including accommodation in the nature of a guest-house; or (C) Any office appliances or road transport vehicles; or (D) Any machinery or plant, the whole of the actual cost of which is allowed as a deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head profits and gains of business or profession of any one previous year. Provided that if a plant is ready to use then it would be treated as capitalized. Provided that if plant is ready to use but does not start due to certain legal or other factors then the depreciation should be exempted.

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FINANCE DEPARTMENT

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FINANCE DEPARTMENTFinance is the Life Blood of Every Organization For smooth running of the various business operations adequate supply of funds at the appropriate time is very essential. Owing to improper funds whole of the organization could suffer. Thus to manage the financial matters of the company a finance department is required which controls and regulates the flow of funds to different department as and when required. While preparing a budget the requirements of all the departments is taken into consideration. Specific tasks are assigned to each department and accordingly funds are allocated. Heinz being an MNC (multinational company which is US based) follows different accounting policies as required. In US countries it uses USGAP (United States General Accounting Principles) while in India it follows IGAP (Indian General Accounting Principles). Finance department plays main role in CAPEX (Capital Expenditure). All the CAPEX are checked and analyzed and also plays the role of payment of final stage. Thus, all the activity moving around the finance department with the following significant role such as: Capital management and budgetary control, Purchase and sales account control, Statutory and audit compliance, Wages administration, Take part in approval of CAPEX, Checking the proper documents and invoice of the supplier, Estimation of taxes, Analysis of cost of capital expenditure and their output, Payment for all kinds of purchases and expenditures. 60

SAP as Recording Tool in the Company:System Analysis and Process (SAP) is ERP (Entrepreneur Resource Planning) software package, while Heinz India Private Limited is full-computerized company and it use SAP as recoding tool for all the information and data with specified SAP number. SAP was developed in 2000 in Heinz India Private Limited, Aligarh. The Company used its 40B version. It is monitored and controlled by head quarter in Mumbai.

Advantages of SAP: Full data available. Visibility Online Nothing is deleted only edit. Quick Response. Reduction of paper work. Easy operating.

Material

SAP Entry

Eng. Stores

Goods Receivable Note (GRN)

103

Q.. verefication

Goods Acceptance Note (GAN)

105

User Department

Rejected Goods/Material

124

Finance Department

Example of SAP Entry:61

103:Material supplies by vendor to company is check for the quantity at the time of receiving of goods by stores department and makes goods receivable note (GRN) and make an entry in SAP system of the received material / assets and it provided a code in SAP as 103.

105:After receiving the material it provided to Q.A. department to check the quality of received goods according to the standard of the company and then makes a goods acceptance note (GAN) and makes an entry in SAP with code 105 and Rejected goods which has not standard quality has coded in SAP with 124. The Excise Credit also provided to the goods/material in SAP with 105 at the time of making GAN.

Entry Pattern of Accounts in the Company:All the entries of accounts of the company are processed through MIRO. MIRO is a transaction by which all the entries are to be made in the SAP. Transaction Pattern in MIRO is as follows: User/Engineering Department Dr. WIP (work in progress) Cr. GR/IR Dr. Basic Excise Duty Cr. Aligarh Cenvat Clearing GR/IR Aligarh Cenvat Clearing Vendor Finance Department Dr. Dr. Cr. Final Stage (Ready to Use) Dr. Cr.

Assets (e.g. Turbine) WIP

Note:-

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In SAP System the entry pattern of accounting is done with the symbol of Negative ( ) and positive (+) for credit and debit respectively; it defined as follows:- Credit (Cr.) ( ) (+)

Debit (Dr.)

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PAYMENT SYSTEM Check the entry in SAP by Purchase department, factory store and quality assurance department. Match with invoice which is given by vendor with all details about delivered items, Check the details like tax code ,address , vendor name , delivery address , originality of invoice ,purchase order number and date , If the payment amount is less than purchase order amount then finance manager allows for payment of this invoice, And if the invoice payment amount is more than purchase order amount then finance manager does not allow for payment of this invoice, Finance manger take decision about payment on credit period or without credit period means on discount, Individually and proper check-up of all entries by finance manager in detail before clearing a payment, Finance manager has the right to retain some amount of payment (about 10%) according to the company policy at the time of payment in the companys bank as security money for provided fixed assets.

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DEPARTMENTS RELATED WITH PAYMENT SYSTEMEngineering/ User Department

Planning Department

Purchase Department

Factory Store

Quality Verification Department

Finance Department

Payment

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INVOICEIt is a legal document or a type of bill for any company which is provided by supplier/vendor for getting payment of delivered items /fixed assets. It is a slip for the payment with credit and cash both, and contains the cost /rate of materials. Its characteristic are:1. It should be original entries should be correct & clearly mention. 2. Send by the vendor who delivered the goods. 3. It should have following contents:

Vendors name Invoice number Purchase order number Date of delivery Name of items with their quantity and rates (price) Delivery place Including taxes Information about advance amount of payment Information about retentions amount Total amount for paymentTerms and conditions signed by vendor

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TAXESIn the case of CAPEX (Capital Expenditure) mainly two types of taxes involved such as:12Sales Tax Excise duty

1 - Sales Tax

Sales Tax

Local Sales Tax (LST) i.e.VAT 4% to 12.5%

Central sales tax (CST) 2% to 12.5%

Local State Tax:Transaction of goods within one state: Its minimum range is 4% and maximum 12.5% of the sales & purchase .VAT (Value Added Tax) is the example of LST.

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Central Sales Tax:It applies on transaction of goods in between two or more states. Its minimum percentage is 2% and maximum is 12.5%.

2- Excise Duty:A manufacture or producer of final product is liable to pay the excise duty to Government. And he is also allowed to take CENVAT credit with regard to the excise duty paid by him on fixed assets, raw materials spare parts and other components etc. Excise duty rate is 14% plus 3% education cess. i.e. about 14.42%of total amount .

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MODE OF PAYMENTS After verifying the invoice /bill, the finance manger has the right to make payment with different mode of payment, generally payment through at PAR Cheque. According to Income Tax Act under section 40(a) (3) the payment through cash should not be more than Rs 20000/-.

Mode of payments

Traditional

techniques

Modern techniques

Cash

Cheque

Bill of exchange

EFT

RTGS

1. Cash : Cash payment means direct payment in monitory terms. Cash payment is avoided in Heinz India Pvt .Ltd .Aligarh But still use @ 2% In less amount payment Urgent payment

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2. Cheque : Cheque is a bill of exchange drawn on a specified banker and payable on demand (section 6 of Negotiable Instrument) 90% payment is done by cheque in Heinz India PVT.LTD., Aligarh

3.Bill of Exchange: A bill of exchange is an instrument in writing containing an unconditional order, signed by the maker ,directing a certain person to pay a certain sum of money only to , or to order of , a certain person or to the bearer of the instrument (under section 5 of Negotiable Instrument) Generally it is not used for making any payment in Heinz India PVT.LTD., Aligarh.

4. EFT (Electronic fund Transfer): It is a modern technique by which money is sent from one bank to another bank with the help of internet in a short period of time. This technique is implemented by Heinz India PVT.LTD. It is a easy and secured way of transferring money. Less time consuming. In this way we send the information of payment to bank and bank transfer the money in vendors account directly.

5. RTGS (Real Time Gross Settlement): It is same like EFT but having a small difference it is used when the companys bank and vendors bank both are different, then a reputed bank acts as a mediator in between two banks and help in transferring money. This process is called RTGS. Company makes payment all over India by the help of this new technology.

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RESEARCH METHODOLOGY

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RESEARCH METHODOLOGY This study is related to expenditure which is incurred by the company on the fixed assets. It cover all the aspects related with the sales & purchase of these assets. Research methodology is a way to find out the information and results systematically with the help of research design. Research Design of the study is Descriptive, because this study is about describing and explaining the data which is collected by the different employees related with the process. The main objective of my research study is to find out the impact of CAPEX (Capital Expenditure) on the production and infrastructure of the company and also to know about the working pattern of the company with its business environment. So our research design is the type of non-probabilistic sampling, in which we collect the information from different department such as engineering, purchase stores and finance department. Thus we also called it as purposive sampling in which we collect data according to our purpose regarding CAPEX. This is a case base study about a particular case of Heinz India Pvt ltd. which is related with capital expenditure. Type of data used is secondary in nature which is collected from the published sources like company publications, annual reports etc. useful for capital expenditure.

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Method of Data Collection: The success of any study, survey and analysis depends upon a definite procedure that is followed in collection of data. Mainly data or collected information are of two types:1-Primary data 2-Secondary data Primary data are those which we collected the first time directly from the lot , while my topic of study on CAPEX, therefore there is no any need to collect the primary data because on the CAPEX company provided the information of secondary type from different departments. Primary data is obtained through the observation, interviews and discussion with officer of Heinz India PVT.LTD., Aligarh. Secondary data is derived from the published and unpublished sources, like company publication, policy of company, annual reports, and annual plans and from other useful document related with capital expenditure.

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LIMITATIONS

LIMITATIONS74

The data required for the study is confidential in nature. Hence, any modification in the data cannot be overruled. Paucity of time is one of the major limitation of the study. Analysis of the data is based on response given by the employees of the company. Hence, any biasness in the response cannot be overruled. No primary data is collected for the study. Hence, reliability of the result are limited to the secondary data only.

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CONCLUSION

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CONCLUSIONAs goods things must come to an end so has my project report After six weeks of sincere efforts I have compiled this project report. In this report I have covered the aspects of Fixed Assets Accounting that are being practiced at Heinz India Pvt Ltd. (Aligarh factory). After doing my research work I have arrived at the conclusion that at Heinz the employees are more than just satisfied and they think high of the management and its practices. Heinz India PVT. LTD. Aligarh is one the leading FMCG (Fast Moving Consuming Goods) companies in the world .The company consists of latest technology to maintain best quality products and is careful about the consumer satisfaction . It has a solid finance position. I have thoroughly examined all the aspects regarding the purchase of fixed assets, installation and taken steps for ready to use and also concerned about the payment system, taxation process and the mode of payments for the CAPEX. The company has kept proper book of account as required by law. Its works are fully computerized with proper networking and its transaction are done through the SAP system. i. ii. iii. iv. The CAPEX of the company done in the following mannerPlanning & identification of CAPEX. Appraisal and approval of the required fixed assets. Implementation. Review and control of the fixed assets.

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Payment for the CAPEX is decided by the board of directors according to its importance for the company.

The company maintains proper records showing full particulars, including qualitative details and situation for fixed assets.

The company has calculated the depreciation according to the Company Act 1956 for fixed assets (schedule 13) and Income Tax Act 1961(under section 32), to maintain in the tax payment with getting CENVAT credit.

The company reduces the cost of production and maximizes the profit through applying capital expenditure on recent technology and machinery.

To analyze the life of fixed assets and its working performance and compare with the standard performance to find out its efficiency.

Heinz India PVT.LTD. Aligarh, adopts the proper capital budgeting which involves the planning and control of capital expenditure for the long term investment whose benefits are to be realized over a period of time longer than one year.

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RECOMMANDATION AND SUGGESTION

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RECOMMENDATION/ SUGGESTIONS There are many factors, financial as well as non-financial which influence the capital expenditure decision. The profitability is one of the main factors along with others that should be analyzed at the time of CAPEX. Sometimes a capital expenditure has to be made due to certain emotional and intangible factors such as safety and welfare of workers, prestigious project; social welfare goodwill of the firm etc. In these cases company should be careful and take appropriate steps after analysing the importance of fixed assets. Take care about the legal aspects about the CAPEX which could influence the projects of the company that could lead to the losses. As the capital expenditure generally requires large fund, the availability of funds is an important factor, so that should be arranged with proper capital budgeting, and also calculate the pay-back period of the project. To make availability of funds for alternative fixed assets at the time of any urgency such as breakdown of some plant & machinery, fire accidents etc.

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BIBLIOGRAPHY

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BIBLIOGRAPHY Company Records & Manual. Income Tax Act 1961(section 32) Company Act 1956 for Fixed Assets (schedule 103) Data from the Past Records of the Company. Accounting Standards (AS 6 and AS10) Khan and Jain Financial Management Company Web sites: www.heinzindia.com www.heinz.in.co Other Web Sites: www.incometaxindia.gov.in www.icai.org Personal interaction with-

Mr. Praveen Kumar (Account officer, Finance Department) Mr. Avdhesh Meena (Assistant Manger Project, Engineering Department) Mr. Sanjay Singhal (Manager, Purchase Department) Mr. Rehman (Assistant Finance Department) Mr. Suresh Gupta (Assistant, Stores Department) Mr. Shyam Sunder (Senior Assistant, HR Department) Mr. Raghuveer Singh Chauhan (Production Department)

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