lovely professional university mohit
DESCRIPTION
lpuTRANSCRIPT
Report on Summer Training
LOVELY PROFESSIONAL UNIVERSITYDEPARTMENT OF MANAGEMENT
VAT For Manufacturing Unit In PEPSI at Jammu
Submitted to Lovely Professional University
In partial fulfillment of theRequirements for the award of Degree of
Master of Business Administration
Submitted by:Mohit Chowdhary
10807541
DEPARTMENT OF MANAGEMENT LOVELY PROFESSIONAL UNIVERSITY
PHAGWARA 2008-2010
1
CERTIFICATE BY GUIDE
Lovely School Of Business
Phagwara , Punjab
Approved by A.I.C.T.E, Govt. of India
Affiliated to Lovely Professional University, Jalandhar
To Whom It May Concern
This is to certify that Summer Training Project entitled “VAT For Manufacturing Unit in
PEPSI in Jammu” submitted in partial fulfillment of the degree of Master of Business
Administration to Lovely Institute of Management, Phagwara (Approved by A.I.C.T.E,
Affiliated to Lovely Professional University, Jalandhar) is a record of final project carried out by
Mohit Chowdhary, under my supervision and guidance, no part of this project report has been
submitted to any other Degree/Diploma and this report may be taken for evaluation.
The assistance and help during the course of investigation has been fully acknowledged.
Lect. Manbir Gill
Faculty (Mgt.),
LIM,LPU, Phagwara
2
ACKNOWLEDGEMENT
At the times when “Human values are been questioned” and ulterior mottoes have
dominated one’s personality here is an occasion rather my privilege to introduce and
express my gratitude to some of the exceptions personalities with whom I have shared
association, during my project task and who prove the above statement “Human values
being questioned” as and only baseless but wrong.
I express my thanks to the company and its staff who gave me opportunity to this project. I
express my thanks to Mr. Debashish Saha the General Manager (Finance) of the company.
Mr. Vikas Bajpai (Training and Development officer) and Mr. Debashish Saha (Finance
Development Manager) give me such a brilliant opportunity to work under their amiable
presence and in such a broad organization.
I express my sincere thanks to Mr.Vikas Bansal (Finance Executive& Our Project Guide).
Jai Beverages Pvt. Ltd. Jammu for their sincere and proper guidance, direction and
encouragement given to me for the successful completion of this project.
Last but not the least, I express my gratitude to all those who directly & indirectly directed
me for successful completion of this project.
MOHIT CHOWDHARY
3
DECLARATION
I Mohit Chowdhary a student of Master of Business Administration, LOVELY
PROFESSIONAL UNIVERSITY, PHAGWARA hereby declare that all information, facts
and figures published in this report are based on my own findings and experience at JAI
BEVERAGES PVT. LTD., BARI BRAHMANA, JAMMU. This information has been purely
used for academic purpose.
I also declare that all information gathered by me during the course of the project will be kept
strictly confidential and will not be disclosed without the prior consent of JAI BEVERAGES
PVT. LTD., BARI BRAHMANA, JAMMU.
MOHIT CHOWDHARY
4
PREFACE
M.B.A is a stepping-stone to management career. It helps to realize the wedded realities of the
situation outside the classroom. This is particularly true of management. To develop effective
potential managers, it is necessary that the theoretical knowledge must be supplemented with
exposure to the practical training so that the measuring of management itself is realized.
I, in accordance with the requirement of M.B.A course, took summer training in JAI
BEVERAGES PRIVATE LIMITED (JBPL), Jammu. In my course of research I undertook the
summer training project on “VAT for Manufacturing Unit in PEPSI in Jammu”.
The basic aim of the project was to know the present value of VAT in manufacturing unit. So,
for that a survey designed to reach the target and help the organization with suggestions based on
findings. This survey gave me opportunity to reach out and communicate with different
categories of people.
5
PEPSI BOTTLING PLANT AT JAMMU
A) NAME OF THE UNIT:
JAI BEVERAGES PVT LTD
B) LOCATION/ ADDRESS OF THE UNIT
Sidco Industrial Complex, Ismailpur Road,
Bari Brahmana, Jammu-181133
Phones: 01923-20284, 21384 Fax: 01923-20183-20184
E-mail: [email protected]
Website: www.jaibeverages.com
Regd. Office: 52, Jan path, New Delhi-110001
Phones: 3321098, 3353625, Fax: 3324769
C) HISTORY OF THE UNIT AND PRESENT POSITION
The year was 1999 and Pepsi Company in India was very eager to improve its extremely poor
market share(less than 3% in the state of Jammu and Kashmir). That was when it approached the
soft drink maestros of India- the Jaipuria family, Mr. C.K Jaipuria in particulars, for starting a
plant in J&K in spite of all the odds, the non-inductive climate in the state for a new business
venture, he took a bold step and went ahead with accepting the challenge and taking the
franchise in the name of his elder son-Mr. Anurag Jaipuria, and Jai Beverages Pvt. Ltd. Was
born.
6
From the day of the decision to this day in 2007, there has been no looking back. In this short
span of time, the company has been formed, sprawling compound of erstwhile M/S HINUSTAN
LEVERS LTD. Taken over from a supportive SIDCO, a prestigious unit in J&K, after an initial
investment of Rs. 27.1 crores, has been established with full backing of the ministry of Industries
(J&K govt.) and an ultra modern plant which releases all the effluent water after full treatment at
a very reasonable, and much under the pollution boards max acceptable BOD and COD levels. In
fact, work is on to stop all the treated effluent going out and instead to utilize this water
internally for horticulture. In the other words, the water is being put back in to the earth to retain
the water table.
Further, work has been done to grow more trees within the premises, in the line with the
universal endeavor of making the earth green.
With coming of this prestigious plant, there has been an upsurge in the economy of the people of
the area in particular, and the state in general. The direct, and indirect employment generated by
the unit has already surpassed a figure of 650 and is growing steadily. The excise deposited to
the govt. exchequer has already crossed an amount of Rs. 361 lakhs, and is again growing. The
once semi deserted main road of the industrial
Complex has become very busy and would soon be required to be widened.
In short, coming of the Jai Beverages Pvt. Ltd. into the state of J&K and surely made a big mark
into the industrialization of the state with many big industrial houses watching eagerly the
outcome of this prestigious unit.
Jai Beverages Pvt. Ltd. is a part of diversified Jaipuria group being the major franchise of the
Pepsi in India. The group has 22 Pepsi’s bottling plant in India and Nepal.
The new beverages plant having state of art machinery from Krones , KHS, O&H, Gaulin &
Magplast among the international industrial giants and Hildon , Tula IDMS etc among the Indian
manufacturers. The fully automatic plant is being run by team of professionals who have already
7
made a mark for themselves by creating history in the international Pepsi system by achieving
the gold medal in the first year of operations from over 400 plants worldwide.
D) COMPANY’S VISION
“To be the best consumer products company in the eyes of our suppliers , customers, consumers,
employees and stake-holders”.
8
EXECUTIVE SUMMARY
PepsiCo was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay. Tropicana was
acquired in 1998, and in 2001. PepsiCo merged with Quaker Oats Company, creating the world’s
fifth-largest food and beverage company, with 15 brands – each generating more than $1 billion
in annual retail sales. PepsiCo’s success is the result of superior products, high standards of
performance, distinctive competitive strategies and high level of integrity of people.
PepsiCo gained entry to India in 1988 by creating a joint venture with the Punjab government-
owned Punjab Agro Industrial Corporation (PAIC) and Voltas India Limited. This joint venture
marketed and sold Lehar Pepsi until 1991, when the use of foreign brands was allowed; PepsiCo
bought out its partners and ended the joint venture in 1994.
The year was 1999 and PEPSI Company in India was very eager to improve its extremely poor
market share (less than 3%) in the state of Jammu and Kashmir. That was when it approached the
soft-drink maestros of India- the Jaipuria family, and Mr. C.K Jaipuria in particular, for starting a
plant in J&K. In spite of all odds, the non-inductive climate in the state for a new business
venture, he took a bold step and went ahead with accepting the challenge and taking the
franchise in the name of his elder son – Mr. Anuraag Jaipuria, and Jai Beverages Private Limited
was born.
The main objective of this study is to find out the value of VAT in Manufacturing Unit, to find
out value of VAT in Pepsi.
Here, we used the Observation method to collect the Primary Data for this study.
9
INDEX
CHAPTER PARTICULARS PAGE NO.
CHAPTER 1 INTRODUCTION TO THE SUBJECT 11-15
CHAPTER 2 INTRODUCTION TO THE INDUSTRY/ ORGANISATION
16-42
CHAPTER 3 OBJECTIVES & RESEARCH METHODOLOGY 43-45
CHAPTER 4 DATA ANALYSIS AND INTERPRETATION 46-56
CHAPTER 5 CONCLUSION & RECOMMENDATION 57-60
………….. ANNEXURE 61-66
BIBLIOGRAPHY 67
10
11
VAT ( VALUE ADDED TAX)
Prior to switching over VAT in 2005 there was Sales-Tax Regime where tax was charged
mostly on the First Sale and later on till the goods passed on to consumer no revenue generation
was possible. VAT is nothing but a multipoint sales tax system. Tax is changeable at every step
of distribution chain of goods in particular State with the mechanism of input tax credit, thus,
obviating the cascading effect. The final burden of tax is no doubt borne by the ultimate
consumer of goods. This system has been considered, worldwide, a more sophisticated alternate
mechanism of collection of tax. Indirectly it may be called a multistage sales tax charged on the
last point of goods.
Before going to the operative part of new tax legislation VAT it is imperative to know as
to what VAT is, why it has been introduced and how the same has been and further going to be
implemented.
12
VAT is tax on the sale, supply or transfer of goods eventually paid by the final consumer.
VAT is tax paid at each point of exchange of goods where value is added-starting from initial
production, distribution or importation to final consumption.
It is charged on the difference between the sale price of goods called outputs and the cost
of purchases called inputs.
Example: Assuming:
One tax period is one month.
Rate of taxes is 12.5%.
Our purchases are Rs. 1, 00,000
Our Sales are Rs. 1, 25,000
Input tax credit (being paid on purchases) Rs. 1, 00,000 x 12.5% =Rs. 12,500
Output tax (on sales) Rs.1, 25,000x12.5% = Rs. 15,625
Net tax payable [O-I] = 15,625-12,500 = Rs. 3,125
Thus, the dealer is liable to pay Rs. 3,125 during this period of one month.
At every step of transfer of goods i.e. sale when value is added the sale price increases
and VAT is collected.
The trader does not have to pay any tax from his pocket; he only collects it from the
customer and pays it to the government.
There is no difference whether one is selling to another dealer or consumer.
HOW VAT IS COMPUTED?
Tax Credit Method: This method is also known as tax invoice method. This method is
prevalent in most of the countries. This method is most appropriate where rates for inputs are
different from the rates of output. In this method tax paid on purchases etc. is calculated and after
13
seeking credit of such input tax with the amount of tax on sales, the net tax liability is calculated.
J & K VAT has also adopted tax credit method for calculation of tax liability by its dealers.
VALUE ADDED TAX is a form of Sales Tax only—the same sale tax is collected—only
difference that it is collected in stages (Installments) rather than at one point (First/Last) from the
transactions involving sale of goods. Say, for goods that are imported from other States and
consumed in Jammu & Kashmir, the first seller pays the First Point Tax, and subsequent seller
pays tax only on the value addition done by him leading to tax burden exactly equal to the last
point tax. If any dealer exports/sells the goods on inter-State, the local tax already levied on
purchases is refunded or adjusted against his inter-State liability. In case of manufacturers, he is
also allowed to get set-off or adjustment from his sales tax liability on his sales up to the extent
of local tax charged on purchases.
The value addition is the difference of sale and purchase value of all taxable supplies.
VAT is not levied if purchase/sale of goods is not made in the course of furtherance of business.
VAT v/s SALES TAX
Following are the relative advantages/disadvantages of the VAT system over the erstwhile Sales
Tax regime :
ADVANTAGES:
1. VAT system is transparent which makes the trader as well as consumer know the element
of tax paid/received by them in a particular transaction of sale or purchase.
2. VAT has high revenue-income elasticity. Thus it yields more revenue for the State exche-
quer.
3. It is a better system as compared to First Point Tax, because, in first point tax system, all
subsequent sales in the State after the first sale are exempt from tax. VAT is also better
than Last Point Tax system where tax is collected at the point of last sale, and at that
time, since the amount of tax is very high, chances of tax frauds increases.
14
4. It eliminates the complex procedure of Local Statutory Forms. However, the State Gov-
ernment has introduced and retained Form VAT-65. Central Forms like ‘C’ & ‘F’ too,
have retained till the Central Sales Tax Act is completely phased out.
5. VAT provides a set-off of tax paid on capital goods, e.g., plant, machinery and other
equipments purchased for manufacturing and trading purpose.
6. VAT system eliminates the cumbersome procedure of Assessments in every case by in-
troducing hassle free procedure of Self-Assessment which shall promote the State-Deal-
ers relationship of trust and cooperation.
7. VAT system provides for Self-assessment which is aimed at reducing the administrative
work of the Department and corresponding hassles to the dealers.
8. The concept of TAX HOLIDAYS AND INCENTIVES has been aimed to be eliminated
in the VAT system but still the States like Jammu & Kashmir in order to boost the indus-
try have a compulsion to grant VAT exemption through of a novel scheme of TAX RE-
MISSION to the manufacturing units(except those in the negative list).
9. VAT is aimed at making India a unified common market after phasing out of Central
Sales Tax; Excise Duty; Service Tax etc. which are likely to be merged into VAT once
the nation switches over to the GOODS and Services Tax (GST) regime.
DISADVANTAGES:
1. Inflation: In the erstwhile General sales tax structure sales tax was levied at the first
point of sale for most of commodities. Imposition of VAT has led to inflation as firstly,
VAT regime levies additional tax on distribution and profit element of intermediaries;
and secondly, as the higher amount of tax is paid, it involves more investment, which has
its own cost.
2. Frauds: Risk of bogus refunds as well as ITC (Input Tax Credit) is very high under
VAT. A dealer might claim set-off on the basis of bogus tax invoice and the Department
may find itself incapable to control such frauds, unless the VAT regime is supported by
15
strong I.T infrastructure. Therefore, it is thought of administratively unworkable except in
advanced nations, since VAT requires an ability and desire to maintain records.
3. VAT involves refunds: Since VAT provides for refund of excess input credit over Out-
put tax liability, it requires the positive mental state of the Department. As under the J&K
General Sales Tax Act, 1962 a cumbersome procedure under VAT has also been intro-
duced and the concept of automatic generation of refund and its issuance jurisdiction
with the jurisdictional Assessing Authorities is missing under the Jammu & Kashmir
VAT ACT, 2005.
A. J & K VAT DEFINED
The J&K VAT Act, 2005 was passed by the State legislature and the Act came into force w. e. f.
01-Apr-2005.
This J&K VAT Act, 2005 is applicable to the whole of State of Jammu and Kashmir.
Section 2 of this Act has defined various terms being used in this Act.
Business [Section 2(VII)]:
a) It is an inclusive definition. Any trade, commerce or manufacture is a business.
b) Any occasional transaction in the nature of trade, commerce, manufacture, adventure or
concern whether or not there is volume, frequency, continuity or regularity of such trans-
action shall be considered a business.
c) Also whether or not such trade, commerce, manufacture, adventure or concern is carried
on with a motive to make gain or profit accrues from such service, trade, commerce,
manufacture, adventure or concern, shall also be business.
d) Also any transaction of sale or purchase of capital assets pertaining to such service, trade,
commerce, manufacture, adventure or concern shall be deemed to be business.
Manufacture [Section 2(XIX)]
The J&K VAT Act has defined the term ‘manufacture’ with all its grammatical variation and
cognate expressions means producing, making, extracting, altering, ornamenting, finishing,
assembling or otherwise processing, treating or adapting any goods, but does not include any
such process or mode of manufacture as may be prescribed.
16
17
The Indian FMCG sector is the fourth largest sector in the economy with a total market size in
excess of US$ 13.1 billion. It has a strong MNC presence and is characterized by a well-
established distribution network, intense competition between the organized and unorganized
segments and low operational cost. Availability of key raw materials, cheaper labor costs and
presence across the entire value chain gives India a competitive advantage. The FMCG market is
set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. Penetration level as well
as per capita consumption in most product categories like jams, toothpaste, Beverages, skin care,
hair wash etc in India is low indicating the untapped market potential. Burgeoning Indian
population, particularly the middle class and the rural segments, presents an opportunity to
makers of branded products to convert consumers to branded products. Growth is also likely to
come from consumer ‘upgrading’ in the matured product categories. With 200 million people
expected to shift to processed and packaged food by 2010, India needs around US$ 28 billion of
investment in the food-processing industry.
18
2.1: OVERVIEW OF THE INDUSTRY:
(A).A BRIEF INSIGHT: THE FMCG INDUSTRY IN INDIA-
Fast Moving Consumer Goods (FMCG), also known as Consumer Packaged Goods (CPG) is
products that have a quick turnover and relatively low cost. Consumers generally put less
thought into the purchase of FMCG than they do for other products.
The Indian FMCG industry witnessed significant changes through the 1990s. Many players had
been facing severe problems on account of increased competition from small and regional
players and from slow growth across its various product categories. As a result, most of
companies were forced to revamp their product, marketing, distribution and customer service
strategies to strengthen their position in the market.
By the turn of 20th century, the face of the Indian FMCG industry had changed significantly.
With the liberalization and growth of the Indian economy, the Indian customer witnessed an
increasing exposure to new domestic and foreign products through different media, such as
television and the Internet. Apart from this, social changes such as increase in the number of
nuclear families and the growing number of working couples resulting in increased spending
power also contributed to the increase in the Indian consumer’s personal consumption. The
realization of the customer’s growing awareness and the need to meet changing requirements and
preferences on account of changing lifestyles required the FMCG producing companies to
formulate customer-centric strategies. These changes had a positive impact, leading to the rapid
growth in the FMCG industry. Increased availability of retail space, rapid urbanization, and
qualified man power also boosted the growth of the organized retailing sector.
HLL led the way in revolutionizing the product, market, distribution and service formats of the
FMCG industry by focusing on rural markets, direct distribution, creating new products,
distribution and service formats. The FMCG sector also received a boost by government led
initiatives in the 2003 budget such as the setting up of excise free zones in various parts of the
country that witnessed firms moving away from outsourcing to manufacturing by investing in the
zones.
Though the absolute profit made on FMCG products is relatively small, they generally sell in
large numbers and so the cumulative profit on such products can be large. Unlike some
industries, such as automobiles, computers, and airlines, FMCG does not suffer from mass
19
layoffs every time the economy starts to dip. A person may put off buying a car but he will not
put off having his dinner.
Unlike other economy sectors, FMCG share float in a steady manner irrespective of global
market dip, because they generally satisfy rather fundamental, as opposed to luxurious needs.
The FMCG sector, which is growing at the rate of 9% is the fourth largest sector in the Indian
Economy and is worth Rs. 93000 crores. The main contributor, making up 32% of the sector, is
the South Indian region. It is predicted that in the year 2010, the FMCG sector will be worth Rs.
143000 crores. The sector being one of the biggest sectors of the Indian Economy provides up to
4 million jobs.
The FMCG sector consists of the following categories:
Personal Care- Oral care, Hair care, Wash (Soaps), Cosmetic and Toiletries, Deodorants
and Perfumes, Paper products (Tissues, Diapers, Sanitary products) and Shoe care; the
major players being; Hindustan Lever Limited, Godrej Soaps, Colgate, Marico, Dabur
and Procter & Gamble.
Household Care- Fabric wash (Laundry soaps and synthetic detergents), Household
cleaners (Dish/Utensil/Floor/Toilet cleaners), Air fresheners, Insecticides and Mosquito
repellants, Metal polish and Furniture polish; the major players being; Hindustan Lever
Limited, Nirma and Ricket Colman.
Branded and Packaged foods and beverages- Health beverages, Soft drinks,
Staples/Cereals, Bakery products (Biscuits, Breads, Cakes), Snack foods, Chocolates,
Ice-creams, Tea, Coffee, Processed fruits, Processed Vegetables, Processed meat,
Branded flour, Bottled water, Branded rice, Branded sugar, Juices; the major players
being; Hindustan Lever Limited, Nestle, Pepsi, Coca-Cola, Cadbury and Dabur.
Spirits and Tobacco- The major players being; ITC, Godfrey, Philips and UB.
(B) A BRIEF INSIGHT: BEVERAGE INDUSTRY IN INDIA-
20
BEVERAGES
Alcoholic Non- Alcoholic
FIGURE 1: BEVERAGE INDUSTRY IN INDIA
The beverage industry is vast and there are various ways of segmenting it, so as to cater the right
product to the right person. The different ways of segmenting it are as follows:
Alcoholic, non-alcoholic and sports beverages
Natural and Synthetic beverages
In-home consumption and out of home on premises consumption.
Age wise segmentation i.e. beverages for kids, for adults and for senior citizens.
Segmentation based on the amount of consumption i.e. high levels of consumption and
low levels of consumption.
If the behavioral patterns of consumers in India are closely noticed, it could be observed that
consumers perceive beverages in two different ways i.e. beverages are luxury and that beverages
have to be consumed occasionally. These two perceptions are the biggest challenges faced by the
beverage industry. In order to leverage the beverage industry, it is important to address this issue
so as to encourage regular consumption as well as and to make the industry more affordable.
Four strong strategic elements to increase consumption of products of the beverage industry in
India are:
The quality and the consistency of beverages needs to be enhanced so that consumers
are satisfied and they enjoy consuming beverages.
The credibility and trust needs to be built so that there is a very strong and safe
feeling that the consumers have while consuming the beverages.
21
Carbonated Non-Carbonated
Cola Non- Cola Non- Cola
Consumer education is a must to bring out benefits of beverage consumption whether
in terms of health, taste, relaxation, stimulation, refreshment, and well-being or
prestige relevant to the category.
Communication should be relevant and trendy so that consumers are able to find an
appeal to go out, purchase and consume.
The beverage market has still to achieve greater penetration and also a wider spread of
distribution. It is important to look at the entire beverage market, as a big opportunity, for brand
and sales growth in turn to add up to the overall growth of the food and beverage industry in the
economy.
(C) MAJOR PLAYERS AND THEIR MARKET SHARE IN THE INDUSTRY-
The Indian soft drink consumer is notoriously conservative. The estimated per capita
consumption of soft drink (annually) in the USA in 800 bottles, 390 bottles in Bangkok, 80
bottles in Thailand, 7 bottles in Bangladesh, 13 bottles in Srilanka, 17 bottles in Pakistan and the
Indian consumption is less than 4 bottles. Moreover volumes in recent years have grown at a
margin of 1% every year.
Soft drink industry can be divided in to two sectors:
1. Organized Sector.
2. Unorganized Sector.
The organized sector controls about 97.5% of the market share in soft drink
industry, where as the unorganized sector holds only 2.5% of market share. The growth of
unorganized sector is showing a negative trend for the last few years which is mainly due highly
competitive marketing strategies adopted by the layers of the organized sector. The heavy Ad-
spend an aggressive sales promotion strategies adopted by the organized sector players have
restricted the entry of new players as the new entrants can’t afford to sustain such a heavy
expenditure on the marketing of their product. The unorganized sector comprises two American
multinational and known rivals:
1. Coca-Cola Co.
2. Pepsi Cola Co.
22
A giant trade war, never witnessed before, has initiated for the Indian soft drinks
industry with the entry of those two multinationals. Prior to the multinationals like Coca-cola and
Pepsi, Parle was the largest soft drink manufacturer in India with a market share of 71%. The
entry of Pepsi in 1991 saw great changes in the industry but with the entry of coca-cola in 1993,
industry witnessed a flurry of activities a change with pumping of huge investment by these
multinationals to broadens their base and increase their market share.
Coca-Cola reckons that the Indian soft drink industry can be treble and grow at a rate of 15%
annually. In the western market scenario, where growth rates have stagnated in a new age health
conscious market, this could be good news not just for Pepsi, but its chief rival, Coke as well.
Meanwhile, a Pepsi India release stated Brand Pepsi as being the largest soft drink brand in
India. “Brand Pepsi ended the year 2002 with 24% share of the overall soft drinks market in the
country. Overall, PepsiCo brands ended with 47.6% share of the domestic soft drinks market.”
The major players being only Coke and Pepsi both have sufficient monopoly power over the
consumer. However, soft drink has a fairly high price elasticity of demand, which ensures that
producer must strike a fine balance between prices and sales volume. Both companies have
decided to peg prices similar to the other’s products and try to gain market share though vigorous
promotional activities. It is a battle for Indian consumer, a battle for his mind to convince him
that there is “something wrong with life style that has no room for branded soft drinks”.
Basically the soft drinks industry comprises six generic which along with their market share as
follows:
Colas 62%
Oranges 17%
Sodas 8%
Cloudy Lime 7%
Clear Lime 3%
Mango 3%
Other than above both giants, Parle cola manufacturing run outfit with plant in Nasik. An
additional dimension to the Indian soft drink industry was of fruit drinks and among the brands
in the market the leader was Parle Frooti with about 40% of the market share. The other players
in this segment who have posed challenges to Parle are Godrej with Jumpin and Ahmadabad
based Pioma Industries with Rasna.
23
The soft drinks industry had total sales of 240 million crates. Half of the annual intake of soft
drinks is consumed during the period for April to July. Indian soft drink manufactures use up to
half of their advertising & marketing budgets during these four months.
(D) GROWTH OF THE SOFT DRINK IN INDIA-
1986 An application for a soft drink cum snack food joint venture by
Pepsi Voltas and Punjab Agro is submitted to the Indian Govt.
1988 Final approval for the Pepsi foods limited project granted by the
cabinet committee on economic affairs of the Rajiv Gandhi Govt.
Coco-Cola Inc. of the USA files an application to manufacture soft
drinks concentrate in Noida (Delhi) free trade zone.
1990 Pepsi Cola and 7Up launched in limited markets in North India.
The Govt. cleared the Pepsi project but the brand name changed to
Lehar Pepsi.
Simultaneously, Govt. rejected the application of Coke.
Citra hit the market from Parle stable.
1991 Britco food filed an application before FIPB to set up new 50 cr.
Facility in Maharashtra.
Pepsi extended its soft drinks reach on a national scale. Product
launched in Delhi and Mumbai.
Britco foods application cleared by the FIPB.
Pepsi and Parle start initial negotiations for strategies, but talks
break off after a while.
1993 Pepsi launched ‘Teem’ to counter ‘Limca’ from Parle and ‘Slice’
to counter ‘Maaza’ from Parle.
Pepsi captures about 305-markets in about two years.
Coke filed an application for a 100% owned soft drinks
company with FIPB.
Voltas pulled out of the PFL joint venture. Pepsi decided to
24
buyout the Voltas share and raised its equity to 92%.
Pepsi launched 1 ltr. Bottle in Pepsi Cola, Mirinda and Teem
flavors.
Coca-Cola bought out Parle and become major leader in the
market.
Coca-Cola hit the Indian market with 300ml at a price of 250ml.
1994 Pepsi 250ml. replaced by Pepsi 300ml operation of replacement
started from Ludhiana.
Pepsi bought out Punjab Agro share of 8% and its equity
increased to 100%.
Pepsi launched 300ml. Pepsi Cola in Ludhiana.
Fanta 300ml. launched by Coca-Cola in Delhi.
1995 Mirinda upgraded from 250ml. to 300ml.
Cadbury’s Schweppes and Crush bottles launched in Delhi and
Punjab.
1996 Coca Cola launched 200ml. bottle.
Cadbury’s Sport Cola is launched.
2001 Pepsi launches 200ml bottle of Mirinda at a price of Rs. 6
Pepsi launches Mirinda in apple flavor.
Coca-Cola launches Maaza with Calcium in it.
Coca-Cola launches Maaza in pineapple and orange flavor.
Coca-Cola launches Limca in 200ml. bottle in competition to
Pepsi’s Mirinda at a price of Rs. 7
Coca-Cola launches Fanta in Green apple and watermelon
flavor.
2002 Pepsi launches Diet Pepsi.
Pepsi launches 200ml. bottles at Rs. 5
Coca-Cola also launches 200ml. bottles at Rs. 5
2003 Pepsi announces plans to launch Mt. Dew Livewire, an orange
drink, this summer.
Pepsi–Cola trademark turns 100 years old.
25
Tropicana introduces Tropicana 100% Juice Blends.
Pepsi unveils a new tagline: "Pepsi. It's the Cola." It is the
brand's first major campaign shift since 1999 .
2004 PepsiCo Launches ‘Health Roads’ Wellness Benefit for Asso-
ciates and Their Families.
PepsiCo publishes first Corporate Citizenship report in its 2003
Annual Report.
2005 Pepsi launches Lipton Iced Tea and Mirinda Bat berry flavor co-
incide with the release of the latest Batman movie.
Frito-Lay Launches Quaker Oats in India.
2006 Tropicana promoted cardiovascular health, by becoming the first
national orange juice to include Omega-3s, the fatty acids known
for helping to promote heart health.
Tropicana debuts Tropicana Pure--a new line of 100% premium
juices.
Indra Nooyi named Chief Executive Officer of PepsiCo as of
October 1, 2006.
2007 Frito-Lay completes the conversion to sunflower oil across all potato
chips brands in the United States, eliminating over 50% of the satu-
rated fat in those brands.
Aquafina launches Aquafina Alive—a low calorie, vitamin-en-
hanced water beverage.
Indra Nooyi receives the Outstanding American by Choice Award
PepsiCo makes Fortune magazine’s ‘100 Best MBA Employers’ list
2008 Forbes Names PepsiCo among Its Best Big Companies.
PepsiCo India Commissions First Remote Wind Turbine to Generate
Renewable, Clean Energy
26
CRO Names PepsiCo to Top 25 100 Best Corporate Citizens 2008
PepsiCo Honored with 2008 Energy Star Partner of the Year Award.
TABLE NO. 1
(2.2) PROFILE OF THE ORGANISATION
PEPSI BOTTELING PLANT IN JAMMU (JAMMU & KASHMIR)
(A). JAI BEVERAGES PRIVATE LIMITED (PEPSI GROUP)
The year was 1999 and PEPSI Company in INDIA was very eager to improve its extremely poor
market share (less than 3%) in the state of Jammu and Kashmir. That was when it approached the
soft-drink maestros of India- the Jaipuria family, and Mr. C.K. Jaipuria in particular, for starting
a plant in J&K. In spite of all the odds, the non-inductive climate in the state for a new business
venture, he took a bold step and went ahead with accepting the challenge and taking the
franchise in the name of his elder son – Mr. Anuraag Jaipuria, and Jai Beverages Private Limited
was born.
From the day of the decision, to this day in 2008, there has been no looking back. In this short
span of time, the company has been formed, sprawling compound of erstwhile M/S Hindustan
Levers Ltd. Taken over from a supportive SIDCO, a prestigious unit in J&K, after an initial
investment of Rs.27.1 Crore, has been established with full backing of the Ministry of Industries
(J&K Govt.), and an Ultra modem plant in swing. The boiler used in oil-fired with a 33m high
chimney and an effluent treatment plant which releases all the effluent water after full treatment
at very responsible, and much under the pollution Board’s maximum acceptable BOD and COD
levels. In fact, work is on to stop all the treated effluent from going out and instead to utilize this
water internally for horticulture. In other words, the water is being put back into the earth to
retain the water table. Further, work has been done to grow more trees with in the premises in
line with the universal endeavor of making the earth green.
With coming of this prestigious plant, there has been an upsurge in the economy of the people of
the area, in particular, and the state in general. The direct and indirect, employment generated by
the unit has already surpassed of figure of 650, and is growing steadily. The excise deposited to
the govt. exchequer has already crossed an amount of Rs.361 lacs, and is again growing. The
once semi-deserted main road of the industrial complex has become very busy and would soon
27
be required to be widened. In short, the coming of Jai Beverages Private Limited into the state of
Jammu & Kashmir has surely made a big mark into the industrialization of the state, with many a
big industrial house watching yearly the outcome of this prestigious unit.
Jai Beverages Pvt. Ltd. is a part of the diversified Jaipuria Group being the major franchise of the
PEPSI in India. The group has 19 Pepsi’s bottling plant in India and Nepal.
It also has the franchise for modern bread, pizza hut besides business interests in information
technology, education, health care and textile retailing.
Jai Beverages Pvt. Ltd. situated at Bari Brahman (SIDCO) Distt. Jammu. The company is
producing and marketing the complete range of Pepsi drinks for the state of Jammu and Kashmir.
The fully automatic plant is being run by a team of professionals who have already
made a mark for themselves by creating history in the international Pepsi system by achieving
the gold medal in the first year of operation from over 400 plants worldwide.
The company is towards environment safety and is trying to convert its unused space into green
garden, recycling waste water and has a modern working effluent treatment plant. The company
gives its first preference to worker safety, quality product and healthy working environment.
As per market share at present Pepsi is enjoying 42% market share. Whereas, leader since 17
years in Jammu market on 50% market share. At present on the basis of commitments, quality,
skills and energetic team Pepsi feels they will give neck to neck fight to our level.
(B): ORGANISATION STRUCTURE OF THE SALES DEPARTMENT IN JBPL
28
AGM/AOD
Plant Manager
Route to Market
Human Resource Manager
Finance Manager
General Sales Manager
Area Sales Manager
Channel Manager
Area Capability Manager
FIGURE 1: ORGANIZATION STRUCTURE OF THE SALES DEPARTMENT
(C). SWOT ANALYSIS OF JBPL –
STRENGTH
To strong brand Mirinda and Mountain Dew in different segment
Advanced Technology
Proper selection of Plant Layout
Low cost of operation
WEAKNESS
Lower level people having irresponsible way of working
Inefficient in making repo building with retailers
Taking too much time to resolve retailer’s complaint
Weak Distribution by their distributor
OPPORTUNITIES
Large domestic markets
29
Sales Executive
Marketing
Sales
Trainers
Market Developer
Key Accounts
Distributors and
Salesmen
Direct distribution
Local Company
Low distribution cost
Export potential
THREATS
Intense competition with Coca-Cola
Illegal distribution done by some distributors
Infiltration of the same brand products in market
Imports of beverages
Slowdown in rural demand
2.3: THE PEPSI COMPANY:
(A)HISTORY IN BRIEF-
Caleb Bradham, a North Carolina pharmacist, invented Pepsi
cola in the 1890’s as a cure for dyspepsia. In 1902 Bradham applied for a trademark to the
U.S. Patent Office for the Pepsi-Cola name. From beginning Bradham understood that
marketing would be in the key to Pepsi Cola prosperity. In his first year of business he
spends $1900 on advertising and praises his drink as “Exhilarating, invigorating, aids
digestion.”
In 1905 he built Pepsi’s first bottling plant Charlotte and Durham, North
Carolina, and a new logo appears the first change from the original of 1898. In 1906 Pepsi
got another logo change, the third in eight years along with the slogan, “The Original Pure
Food Drink”. By 1907 he was selling 38605 gallons a year.
30
Pepsi troubles began at the end of World War I when sugar prices soared from 5
cents per pound to 26 cents per pound. Fearful that the price would still climb higher,
Bradham bought huge amount of sugar and then watched helplessly as the price skidded to 3
cents a pound in 1920. By 1922 the company was insolvent. A year later it went bankrupt
and its assets are sold to a North Carolina concern, Carven Holding Corporation, for $30,000.
Roy C. Megargel, a Wall Street broker, buys the Pepsi trademark, business and
goodwill from Carven Holding Corporation for $35,000, forming the Pepsi-Cola
Corporation. He was no more successful than Bradham. From 1923 to 1928, the company
lost money each year. Megargel poured his own money in to keep it going.
When the crash of 1929 made that impossible Pepsi in 1931 went bankrupt a
second time. At this Charles Guth, president of Loft Candy Company bought the trademark.
Guth was a super salesman. He didn’t like the taste of Pepsi, so he had the formula changed.
He introduces a stylish bottle and positioned Pepsi as lighter, less caloric refresher. In this
process Pepsi becomes at least a significant challenger to coke. In 1963, Pepsi had the good
fortune to get as its president the second of the two giants of the soft drink business Donald
M. Kendall. Even then, Kendall was legend within the company.
Between 1963 and 1986, when he retired, Kendall took a prosperous but
definitely second string soft drink company and turned it to a corporation ranked number 41,
coca cola is 44 on the fortunes 500 list. World War II changed everything. Robert woodruff
promised to put a coke in the hands of every American soldier. This inspired the government
to exempt Coke from sugar rationing, but somehow, not Pepsi. The government also built
almost hundred coke bottling plants overseas, enabling coke to supply American soldier with
95% of the soft drink they consumed during the war and when war ended, coke not only had
millions of consumer, it also had the making of a worldwide bottling network.
31
(B). PEPSICO IN PRESENT ERA-
PepsiCo was founded by Donald M. Kendall, President and Chief Executive Officer of
Pepsi-Cola and Herman W. Lay, Chairman and Chief Executive Officer of Frito-Lay,
through the merger of the two companies in 1965. Pepsi-Cola was created in the late 1890s
by Caleb Bradham, a New Bern, N.C. pharmacist. Frito-Lay, Inc. was formed by the 1961
merger of the Frito Company, founded by Elmer Doolin in 1932, and the H.W. Lay
32
Company, founded by Herman W. Lay, also in 1932. Herman Lay is chairman of the Board
of Directors of the new company; Donald M. Kendall is president and chief executive officer.
Tropicana was acquired in 1998, and in 2001, PepsiCo merged with the Quaker Oats
Company, creating the world’s fifth-largest food and beverage company, with 15 brands –
each generating more than $1 billion in annual retail sales. PepsiCo’s success is the result of
superior products, high standards of performance, distinctive competitive strategies and the
high level of integrity of people. In the new company reports of PepsiCo, it is a world leader
in convenient foods and beverages, with 2004 revenues of more than US$29 billion and
153,000 employees.
In the fourth quarter of 2007, PepsiCo announced a strategic realignment of organizational
structure. Beginning in 2008 they now organized into three business units, as follow:
1) PepsiCo Americas Foods (PAF), which includes Frito-Lay North America, Quaker
Foods North America and all of our Latin America food and snack businesses,
including our Sabritas and Gamesa businesses in Mexico.
2) PepsiCo Americas Beverages (PAB), which includes PepsiCo Beverages North
America and all of our Latin America Beverage businesses.
3) PepsiCo International (PI), which includes all PepsiCo businesses in the United
Kingdom, Europe, Asia, Middle East and Africa.
PepsiCo beverages and foods comprise PepsiCo’s Tropicana, Gatorade and
Quaker Foods businesses.
PepsiCo carbonated soft drinks portfolio includes Pepsi, Diet Pepsi, Pepsi
Twist, Mountain Dew, Mountain Dew Code Red, Sierra Mist, and Mug Root
Beer.
Today, Brand Pepsi is a part of a portfolio of beverage brands that includes
carbonated soft drinks, juices and juice drinks, ready-to-drink teas and coffee
drinks, isotonic sports drinks, bottled water and enhanced waters.
PepsiCo non-carbonated beverage portfolio includes Aquafina, which is the
number one brand of bottled water in the United State and Dole single-serve
juices, which offers a wide range of drinks with herbal ingredients. The
company also makes and markets North America’s best-selling, ready-to-
33
drink iced teas and coffees via joint ventures with Lipton and Starbucks,
respectively.
The second major player in the Indian soft drink market is PepsiCo. Pepsi started their efforts in
the 1980’s to come in India. They added two P’s to marketing mix. They used people and
politics as the market weapons. Although in the 1980’s Pepsi was not sold in India, still huge
sign boards were there on the road of Mumbai, which was to keep in touch with the people,
whether they are there in the market or not. They also made influences to the government to
make an entry in India.
(C). MANIFESTO FOR GROWTH –
Values- Our Values reflect our aspiration—the kind of company we want PepsiCo to be.
We express our values in the form of a commitment.
Our Commitment- Our commitment is to deliver sustained growth, through empowered
people, acting with responsibility and building trust. Here’s what this means:
o Sustained Growth is fundamental to motivating and measuring our success. Our
quest for sustained growth stimulates innovation, places a value on results, and helps
us understand whether today’s actions will contribute to our future. It is about growth
of people and company performance. It prioritizes making a difference and getting
things done.
o Empowered People means we have the freedom to act and think in ways that we feel
will get the job done, while being consistent with the processes that ensure proper
governance and being mindful of the rest of the company’s needs.
o Responsibility and Trust form the foundation for healthy growth. It’s about earning
the confidence that other people place in us as individuals and as a company. Our
responsibility means we take personal and corporate ownership for all we do, to be
good stewards of the resources entrusted to us. We build trust between ourselves and
others by walking the talk and being committed to succeeding together.
Guiding Principles- This is how we carry out our commitment. We must always strive
to:
34
o Care for customers, consumers and the world we live in. We are driven by an
intense, competitive spirit in the marketplace, but we direct this spirit toward
solutions that achieve a win for each of our constituents as well as a win for the
corporation. Our success depends on a thorough understanding of our customers,
consumers and communities. Caring means going the extra mile essentially, this is a
spirit of growing rather than taking.
o Sell only products we can be proud of. The test of our standards is that we must be
able to personally endorse our products without reservation and consume them
ourselves. This principle extends to every part of the business, from the purchasing
of ingredients to the point where our products reach the consumer’s hands.
o Speak with trust and candor. We speak up, telling the whole picture, not just what
is convenient to achieving individual goals. In addition to being clear, honest and
accurate, we take responsibility to ensure our communications are understood.
o Balance short term and long term. We make decisions that hold both short-term
and long-term risks and benefits in the balance overtime. Without this balance, we
cannot achieve the goal of sustainable growth.
o Win with diversity and inclusion. We leverage a work environment that embraces
people with diverse backgrounds, traits and different ways of thinking. This leads to
innovation, the ability to identify new market opportunities, all of which helps
develop new products and drives our ability to sustain our commitments to growth
through empowered people.
o Respect others and succeed together. This company is built on individual
excellence and personal accountability, but no one can achieve our goals by acting
alone. We need great people who also have the capability of working together,
whether in structured teams or informal collaboration. Mutual success is absolutely
dependent on treating everyone who touches the business with respect, inside and
outside the company.
Mission- “Our mission is to be the world’s premier consumer Products Company
focused on convenient foods and beverages. We seek to produce healthy financial
rewards to investors as we provide opportunities for growth and enrichment to our
35
employees, our business partners and the communities in which we operate. And in
everything we do, we strive for honesty, fairness and integrity.”
Vision- Put into action through programs and a focus on environmental stewardship,
activities to benefit society, and a commitment to build shareholder value by making
PepsiCo a truly sustainable company.
Corporate Citizenship- At PepsiCo, we believe that as a corporate citizen, we have a
responsibility to contribute to the quality of life in our communities. This philosophy is
expressed in our sustainability vision which states: “PepsiCo’s responsibility is to
continually improve all aspects of the world in which we operate – environment, social,
economic – creating a better tomorrow than today.”
PepsiCo Headquarters- PepsiCo World Headquarters is located in Purchase, New York,
approximately 45 minutes from New York City. The seven-building headquarters complex was
designed by Edward Durrell Stone, one of America’s foremost architects. The building occupies
10 acres of a 144-acre complex that includes the Donald M. Kendall Sculpture Gardens, a world-
acclaimed sculpture collection in a garden setting.
(D). PepsiCo- Year 2000 onwards-
2000: In more than 30 markets currently conducting the Pepsi Challenge, the
tastes of Pepsi and Pepsi ONE are preferred over Coke products in every
market, especially in Philadelphia, Dayton, Tucson, San Antonio and
Seattle.
Faith Hill, Sammy Sosa and Ken Griffey Jr. – three of the hottest names in
entertainment – signed new deals to endorse Pepsi-Cola products. Signing
sensation Faith Hill, who has rocked the charts with her top 10 hits, starred
in a new “Joy of Cola” ad with “Pepsi Girl” Hallie Eisenberg.
2001: Pepsi put “a little twist on a great thing,” introducing lemon-flavored Pepsi
Twist and Diet Pepsi Twist.
Colombian singing sensation Shakira stars in a series of new commercials
for Pepsi just as her debut English- language album hits stores in the U.S.
At the same time, Pepsi agrees to sponsor the Latin pop star’s worldwide
36
concert tour.
Pop superstar Britney Spears appears in her first Pepsi commercial during
the 2001 Academy Awards. The high-energy spot also runs online, where
more than 2 million fans click their way to Britney’s own version of “The
Joy of Pepsi.”
2002: The company introduces Pepsi Blue.
o Dawn Hudson is named president of Pepsi-Cola North America.
Dawn becomes the second woman to head the Pepsi-Cola business in the
United States. The first was Brenda Barnes, who served with distinction
from April 1996 to late 1997.
Pepsi-Cola becomes the official soft drink sponsor of the National Football
League.
Supermodel Cindy Crawford unveils new Diet Pepsi graphics during the March
Academy Awards telecast. Cindy’s commercial also helps introduce a new Diet
Pepsi tagline, “Think Young. Drink Young”
In a new blockbuster commercial, Britney Spears takes consumers through
a fast-paced look at the “Pepsi Generations,” from the 1950s through today.
Before the commercial debuts during the Super Bowl, more than 415,000
fans click to Pepsiworld.com and vote for their favorite generation
2003: In September, Richard Bay, a 42-year-old high school teacher from
Princeton, West Virginia, became a millionaire on “Pepsi Play for a
Billion”.
Pepsi announces plans to launch Mt. Dew LiveWire, an orange drink, this
summer.
Pepsi-Cola signs an exclusive four-year sponsorship deal with the Canadian
Hockey Association, making Pepsi the official soft drink.
Pepsi announces four-year sponsorship agreement with the UK Football As-
sociation.
Frito-Lay announces new line of snacks made with organic ingredients
called “Natural Snacks.”
37
“Pepsi Stuff” Campaign kicks-off in Canada.
Frito-Lay finds winner of “Would You Name Your Baby Horton” search
celebrating the “re-birth” of its Ruffles brand. The child will receive
$50,000 college tuition fund from Frito-Lay.
2004: PepsiCo and the National Football League announced an agreement to
extend through the 2011 season their strategic sponsorship that began in
2002.
PepsiCo will continue to have rights to all NFL trademarks, including use of
the NFL shield logo, Super Bowl, Pre Bowl and collective use of the 32
NFL team marks for the Pepsi, Tropicana and Frito-Lay brands.
World famous soccer superstar Pele joins 14-year-old soccer sensation
Freddy Adu in a new commercial for Sierra Mist, the official soft drink of
Major League Soccer.
Due to an overwhelmingly positive response from consumers, Mountain
Dew Live Wire returns for summer 2004.
Pepsi announces that it will launch Pepsi EDGE, the first full-flavored cola
with 50% less sugar, carbohydrates and calories than regular colas
2005: Pepsi Lime and Diet Pepsi Lime Launch
Tropicana Twister Soda Launched in April
Pepsi-Lipton Tea Partnership Announces New Lipton Original Iced Tea and
New Lipton Iced Tea; Reformulated Ready-to-Drink Teas Hit Store
Shelves.
Diet Pepsi to take Top Spot in Pepsi Marketing
PepsiCo helps Decontaminated Water in India Following Tsunami
Quaker snack bars re-launched with new branding, packaging and
advertising
TABLE NO. 2
(E). ORGANIZATION STRUCTURE OF PEPSI COMPANY IN INDIA-
38
FIGURE 2: ORGANISATION STRUCTURE IN PEPSICO, INDIA
2.4: RECENT ACHIEVEMENTS & MILESTONE:
On the ground, in cities and towns around the world, good brand strategies were implemented
with operational excellence. Here, we are sharing few notable examples of the big marketplace
as achievements for the company-
39
Chief Executive Officer
Vice President Supply Chain
Human Resource Director
Vice President BSG
Regional Vice President (North)
Regional Vice President (Central)
Chief Finance Officer
They achieved top carbonated soft drink and savory snack brands gained market share in
the United States and in many of them top international markets in 2005.
In the United Kingdom, Baked Walkers crisps were named “New Product of the Year”
by Marketing Week magazine in 2007.
Sun Chips snacks delivered double-digit growth in the United States as a result of great,
innovative marketing and in-store execution.
7Up was the fastest-growing brand in value and volume share in Brazil in its launch year.
PepsiCo beverage brands crossed the $1 billion mark in Russia retail sales.
They posted double-digit volume growth in China beverages and high-single-digit
beverage volume growth in India.
Tropicana introduces two new calcium-fortified Pure Premium juices: Pure Premium
Grovestand Calcium and Pure Premium Ruby Red Grapefruit Calcium.
The Frito-Lay Company purchases Smith's Snack food Company in Australia from
United Biscuits Holdings, Inc. (Purchase completed on Aug. 26.)
Pepsi-Cola's flagship brand will have new tagline, "The Joy of Pepsi."
Tropicana Pure Premium and Quaker Oatmeal launch the Heart and Soul Mates Support
Network featuring nutrition tips, motivational messages and coaching advice, to help
consumers turn healthy habits into life-long changes.
PepsiCo reorganizes to unite all North American beverage operations, including Pepsi-
Cola, Tropicana and Gatorade, into one new division -- PepsiCo Beverages and Foods
North America.
Frito-Lay’s 24-count Multi-Sack variety pack won the Institute of Packaging Profes-
sional's (IoPP) Integrity Award, one of the industry’s top awards, at this year’s AmeriStar
Packaging Awards.
PepsiCo International announced the appointment of Pioneer Foods, a leading South
African food and beverage company, as its franchisee in the Republic of South Africa.
Pepsi-Cola North America adds to its portfolio of Dole 100% juices – Ruby Red Grape-
fruit – as well as a new line of 50% juice beverages called Dole Lights.
Pepsi-Cola North America announced it will add Splenda® brand sweetener to a newly
reformulated Pepsi ONE, creating a full-flavor cola taste with only one calorie.
40
PepsiCo wins two awards –Best Environmental/Wildlife Campaign and Best Cause Mar-
keting Event -- at Fifth Annual Cause Marketing Halo Awards
Frito-Lay teams up with the Make-A-Wish Foundation to help children with life-threat-
ening diseases
2.5: PRODUCT RANGE OF THE INDUSTRY:
(A): PRODUCT RANGE OF PEPSICO WORLDWIDE-
AMP
AQUAFINA WATER
FRAPPUCCINO
41
FRUITS WORKS
LIPTON BRISK
LIPTON ICED TEA
PEPSI
CRYSTAL PEPSI (PRODUCED DURING THE YEAR 1992-93)
DIET PEPSI
DIET PEPSI VANILLA
PEPSI BLUE (DURING WORLD CUP)
PEPSI MAX
PEPSI ONE
PEPSI TWIST
PEPSI VANILLA
WILD CHERRY PEPSI
PEPSI EDGHE
MOUNTAIN DEW (INCLUDE DIET, CAFFEINE FREE, CODE RED AND LIVE
WIRE FLAVORS)
MUG ROOT BEARD (INCLUDING DIET)
SLICE
SIERRA MIST
PEPSI GOLD
MIRANDA
7UP
(B). ADVERTISEMENT AND SALES PROMOTION:
Advertising mean to turn the mind of the customer towards the purchase. Sales promo-
tion schemes are provide for promoting sales of the product. In today business world, advertising
plays an important role for the promotion of the products. If a company is a leading company and
the product is competing with competitor products and if your advertisement is not much better
which is failed to attract the consumer then the company cannot give the clear information about
42
the products. Soft drink industry is worth Rs. 2500 cr. per year and it can capture anybody’s
dream. To advertise vigoursely and to remain “top of mind” is challenge that would make many
advertisers shudder but Pepsi has done it ever since it was launched.
Pepsi food limited being the parent organization involved itself more on the planning
side than implementation taking into consideration that Pepsi Foods Ltd. runs its operation
through franchises, the emphasis laid more on the creative activities.
Various Pepsi Ads are:
“TOSS KA BOSS”
“YEH HAI YOUNGISTAN MERI JAAN”
“YEH DIL MANGE MORE AAHAA!”
“NOTHING OFFICIAL ABOUT IT”
“YEHI HAI RIGHT CHOICE BABY , AAHAA!”
“PEPSI! YEH PAYAS HAI BADI”
“OYE BUBBLY”
(C). DIFFERENT PEPSI BRANDS AVAILLABLE IN INDIAN MARKET
Following products are marketed by JBPL:
43
2.6: FINANCIAL STATUS OF THE PEPSICO:
44
The PepsiCo made great progress toward the long-term corporate objectives they set for
themselves last year. PepsiCo does generate considerable cash, and they are disciplined about
how cash is reinvested in the business. Over the past three years, over $6 billion has been
reinvested in the businesses through capital expenditures to fuel growth. All cash not rein-
vested in the business is returned to their shareholders. Since 2005, $16 billion has been re-
turned to shareholders through a combination of dividends and share repurchases; and in
2007, cash returned to shareholders was up 34%. They will generally use borrowing capacity
in order to fund acquisitions, which was the case in 2007, when we spent $1.3 billion in ac-
quisitions to enhance our future growth and create value for shareholders. Current capital
structure and debt ratings give them ready access to capital markets and keep cost of borrow-
ing down.
Current status of the organization can be shown from following facts, which clearly shows in
2007 financial results:
Net revenue grew 12%, roughly three times the rate of global GDP growth.
Division operating profit grew 10%.
Earnings per share grew 13%.
Total return to shareholders was 26%.
Return on invested capital was 29%.
Cash flow from operations was $6.9 billion.
45
(3.1) OBJECTIVES
46
To conduct the research work, two broad objectives were taken. The study analysed following
objectives:
To find out the VAT in Manufacturing Unit In Pepsi Co.
(3.2) RESEARCH METHODOLOGY
Research methodology is a way to systematically solve the research problem. Generally various
steps are adopted by a researcher in studying the research along with the logic behind them.
Researchers not only need to know to how to apply particular research techniques, but also need
to mean and indicate why. Researcher also needs to understand the assumptions underlying
various techniques and the criteria for the applicability of these techniques to certain problems.
Thus, research methodology helps to give the logic behind the methods used in the context of our
research study so that research results are capable of being evaluated either by the researcher
himself or by others.
(A) SAMPLING DESIGN:
o DATA COLLECTION
Data has been collected through both primary and secondary approach. But most of the data
collected from primary source.
PRIMARY DATA:
Primary data is that data which was collected from the direct interaction with retailers and
which is raw in hand and is used for the first time. The primary data is collected through
questionnaire and interviews from the retailer.
SECONDARY DATA:
47
Secondary data is data which has been collected from the different sources earlier i.e
magazines, journals and the internet.
o STATISTICAL TECHNIQUES:
After collecting the information I analyzed the information by plotting the graphs of different
responses of the survey.
o FINDINGS
After analyzing the date there were some problems, which came into light and were
recommended to the T.D.M about the problems.
o PLAN OF ANALYSIS
The raw data collected directly from the respondents was first transcribed on a master analysis
register. From the master analysis register the data was tabulated question wise, using simple
mathematical and statistical techniques like addition, mean, frequency and percentage
calculation. Ranking of factor in selection of the product and decision making process was also
carried out using simple statistical techniques. By this method of the various objectives of the
study could be thoroughly analyzed. Based on the analysis of the data collected from the
respondents the findings of the study were interpreted and recommendations were given.
48
49
Q1. What is VAT?
Ans: VAT is the abbreviated form of Value Added Tax.V = ValueA = AddedT = TaxEach Commodity passes through several stages of production and distribution. Value at the final stage is the sum of value created/added at each of these stages. Under VAT value added at each stage of production and distribution is taxed. VAT is essentially a Multi-point System of taxa-tion.
Q2. What is VALUE ADDED?
Ans: Value added is the difference between a dealer’s Sales and Purchases.Value Added = Value of Output - Value of Purchased Inputs.
Q3. Is VAT popular?
Ans: VAT is immensely popular throughout the world. VAT system is presently in operation in more than 135 Countries and covers nearly 85% of the World’s population.
Q4. Is VAT system in operation in our neighboring Countries?
Ans: Yes. It is operational in. Pakistan, Bangladesh, Nepal, Srilanka and China.
Q5. Who Pays VAT?
Ans: Only dealers above the taxable limit have a tax liability under VAT.
Q6. What is the taxable limit in J&K?
Ans: Under The Jammu and Kashmir Value Added Tax Act, 2005 taxable limit means in relation to a dealer who:(a) Imports for sale or use in manufacturing or processing any goods into the State on his own behalf or on behalf of his Principal NIL(b) Manufactures or produces any goods for sale or is engaged in any business other than the business specified in (a) above Rs.7.50 lacs
Q7. Who Registers under VAT?
Ans: All dealers above the taxable limit have to register under VAT.
Q8. What will the taxable limit include?
Ans: The taxable limit includes gross turnover of sales or purchases.
50
Q9. What is included in the gross turnover to determine the liability to pay tax?
Ans: The turnover of all sales or purchases as the case may be shall be taken, whether such sales or purchases are taxable or not and the turnover shall include all sales or purchases as the case may be, made by a dealer on his own account and also on behalf of principals whether disclosed or not.
Q10. How does VAT work?
Ans: VAT works on the principle of Input Tax, Output Tax and Input Tax Credit.
Q11. What is Input tax?
Ans: Tax paid by a registered dealer to another Registered dealer for goods purchased is the In-put Tax.
Q12. What is Output Tax?
Ans: The tax charged by a registered dealer for the sale of goods is the Output Tax.
Q13. What is Input tax credit?
Ans: The set-off which a dealer gets for the taxes paid on purchases made within the State is the Input Tax Credit.
Q14. What is the eligibility for Input Tax Credit?
Ans: Facility of INPUT TAX CREDIT is available for tax paid on goods purchased within J&K by a registered dealer having a TIN (Tax Payer Identification Number) from another registered dealer also having a TIN.
Q15. Are inter-state purchases eligible for Input Tax Credit?
Ans: No, Inter-State Purchases are not eligible for Input Tax Credit.
Q16. What is Net Tax payable under VAT?
Ans: The net tax payable under VAT is:Output Tax - Input Tax
Q17. How is VAT liability calculated?
Ans: VAT liability is calculated by deducting Input Tax Credit from Tax collected by a dealer during a tax period.
51
Q18. What is a tax period under the J&K VAT Act?
Ans: The Tax period under The Jammu and Kashmir Value Added Tax Act, 2005 is a quarter which means that the returns have to be filed on a quarterly basis.
Q19. Which dealers are eligible for turnover tax registration?
Ans: Dealers who are neither MANUFACTURERS nor IMPORTERS nor EXPORTERS and whose GROSS ANNUAL TUROVER OF SALES is between Rupees 7.50 lacs and Rupees 20 lacs, have the option to register for TURNOVER TAX and pay tax @ 1% of their taxable turnover.
Q20. Can a dealer registered under turnover tax claim the benefit of Input Tax Credit?
Ans: No, the facility of Input Tax Credit is not available to a dealer registered under turnover tax.
Q21. When shall a VAT invoice be issued?
Ans: A dealer having a TIN (Taxpayer Identification Number) when selling goods to another dealer having a TIN shall issue a VAT INVOICE.
Q22. When shall a retail invoice be issued?
Ans: If a dealer having a TIN (Tax Payer Identification Number) sells goods to a dealer who does not have a TIN or is registered as a dealer under Turnover Tax or as a CasualTrader or is an unregistered dealer or is a customer, the dealer shall issue a RETAIL INVOICE.
Q23. On what kind of invoice is Input Tax Credit available?
Ans: Input Tax Credit is available only on VAT invoice (original) and no Input Tax Credit is available on a retail invoice.
Q24. What is the status of services under VAT in J&K?
Ans: The services have been kept outside the purview of VAT in J&K and are taxed under The Jammu & Kashmir General Sales Tax Act, 1962.
Q25. What is the procedure for filing of returns?Ans: Every registered dealer other than a casual trader shall submit a quarterly return (Form VAT-11 by a VAT dealer or a voluntary registration dealer and Form VAT –12 by a dealer liable to turnover tax) containing particulars of sales and purchases accompanied by proof of full pay-ment of any tax due, to the Jurisdictional Assessing Authority within one month from the expiry of each tax period.Every casual trader shall furnish to the Jurisdictional Assessing Authority a quarterly return in Form VAT-13 along with proof of full payment of tax due within one month after the expiry of
52
the quarter. Every dealer other than a Casual trader liable to pay tax under the Act shall also fur-nish an annual return. Such return shall be filed in Form VAT 11-A by a VAT dealer or a volun-tary registration dealer and in Form VAT 12-A by a turnover tax dealer within 120 days from the expiry of that year. A trading account shall accompany every such return. Every VAT dealer shall also furnish along with annual return and trading account a list of VAT invoice books used during the year mentioning therein the total number of VAT invoices issued out of each VAT in-voice book so used.
53
54
CONCLUSION:
SALES TAX VATMultiplicity of tax rate slabs at times
even upto 10 or 12.
High tax rate slabs even as high as
30%.
Double taxation (tax on tax). Since
there is no set-off therefore tax paid is
added on to the price of the commod-
ity. This leads to tax cascading.
Levy of surcharge increases price of
commodities.
There is no transparency as the compo-
nent of tax is not evident on the invoice.
Every registered dealer has to be as-
sessed and notices for the same are is-
sued by the department.
The system is archaic, procedures are
complex and the compliance is difficult.
Complexity of laws leads to litigation.
Fewer number of tax rate slabs Effective
tax rate slabs are now only two viz. 4%
and 12.5%.
Highest tax rate slab under VAT is only
12.5%.
No double taxation. Tax is not treated as
part of the sale price because set-off for
the tax paid earlier is allowed. This
eliminates tax cascading.
As there is no surcharge the commodi-
ties become cheaper to that extent.
There is absolute transparency as the sale
price and the element of tax is depicted sep-
arately on the invoice.
There is a mechanism of self-assessment
where the dealers assess their tax liability
for a tax period (quarter) and file their re-
turns. The department does not issue any
notices for assessments.
The system is rational and the procedures
are simple which makes compliance much
easier.
Simplicity of laws shall avoid litigation to a
great extent.
APPENDIX:
55
FORM VAT 11A [Refer rule 28(1)] ANNUAL VALUE ADDED TAX RETURN (ORIGINAL/REVISED/FINAL) Commercial Taxes Circle…………. TIN…………… Tax Period Name and address……………………………… From……..To………….……
1. Taxable turnover of sales at 4% rate of tax
18. Output tax collected (relating to Box No. 1)
2. Taxable turnover of sales at 12.5% rate of tax
19. Output tax collected (relating to Box No. 2)
3. Taxable turnover of sales at other rates of tax
20. Output tax collected (relating to Box No. 3)
4. Taxable turnover of inter State sales.
21. Output tax collected (relating to Box No. 4)
5. Turnover of consignment / stock transfers
6. Turnover of tax free sales7. Turnover of exports8. Total (Total of Box Nos. 1
to 7)22. Total output tax collected
(Total of Box Nos. 18 to 21)
9. Value of purchases under Section 14 of VAT Act
23. Tax on purchases under Section 14 of VAT Act (relating to Box No. 9)
10. Net value of purchases at 4% rate of tax (Excepting
Schedule A items)
24. Input tax (relating to Box No. 10)
11. Net value of purchases at 12.5% rate of tax (Excepting
Schedule A items)
25. Input tax (relating to Box No. 11)
12. Net value of purchases at other rates of tax (Excepting
Schedule A items)
26. Input tax (relating to Box No. 12)
13. Value of goods imported and / or purchased in the course
of inter State trade14. Value of goods received by
stock transfer / consignment transfer
15. Value of other purchases (See notes attached)
16. Total value of purchases
(Total of Box Nos. 10 to 15)27. Total input tax (Total of
Box Nos. 24 to 26)
56
17. Net value of purchases of capital goods (Excepting
Schedule 'E' items)
28. Tax paid on capital goods (relating to Box No. 17)
VERIFICATION I solemnly declare that to the best of my knowledge and belief, the information given in this return is correct and complete and in accordance with the provisions of Jammu and Kashmir Value Added Tax Act, 2005.Place: Signature with seal: Date: Status:
Form VAT 48[Refer rule 6 & rule 62(3)(a)]
57
29. Deductible input tax on capital goods
30. Non-deductible input tax - including partial rebating scheme under provisos 2 & 3 to Section
21(4) of VAT Act, excluding Box No.29
31. Deductible input tax under special rebating scheme u/s 21(6)
32. Deductible input tax paid u/s 14 0f VAT Act
33. Amount of Input Tax Credit carried over from previous tax
period return34. Total tax payable or excess Input
Tax Credit (Box 22+23+30) Minus (Box 27+29+31+32+33)
35. Outstanding dues if any against: (a) J&K VAT Act , 2005
(b) CST Act , 1956 To be set off against excess Input
Tax Credit of Box 34
………………
36. Input Tax Credit carried over to next tax period (Box 34(if excess Input Tax Credit) minus Box 35)
37. Tax refundable under section 22(4) of VAT Act
ACKNOWLEDGEMENT
INPUT TAX REGISTER
Exempt @____% @_____% Total Tax Paid
1 2 3 4 5 6 7 8
S.No. Goods Purchased From With Name & TIN
Invoices No. &Date
Value of goods purchased in the State
Notes: I. Value of goods purchased shall not include tax. II. In columns (4) to (6) classify the goods according to different rates of tax applicable. Add more columns, if necessary.
Form VAT 49[Refer rule 6 & rule 62(3) (b)]
58
OUTPUT TAX REGISTER
Exempt @____% @_____% Total OutputTax 1 2 3 4 5 6 7 8
S.No. Goods Purchased From
With Name & TIN
Invoices No. &Date
Value of goods purchased in the State
Notes: I. Value of goods purchased shall not include tax.
II. In columns (4) to (6) classify the goods according to different rates of
tax applicable. Add more columns, if necessary.
FORM VAT 50
59
[Refer rule 63(2) & (4)]INVOICE
Terms of Sale Qty. Description
of goodsUnit Price Value
(Rs.)VAT
Rate (%)Amount of VAT (Rs.)
Total
Signature of SellerPrinter’s name and address
60
Book No. Serial No. Date:
Buyer’s Name : ________________________ Address : ________________________ ________________________ ________________________ Telephone No.________________ Fax No.______________ Taxpayer Identification No.__________________________ (TIN)
Seller’s Name : ________________________ Address : ________________________ ________________________ ________________________ Telephone No.________________ Fax No.______________ Taxpayer Identification No.__________________________ (TIN)
FORM VAT 51[Refer rule 63(2) & (3)]
RETAIL INVOICE FORM
Seller’s Name And Address
TIN………………………………………………… Registration No…………………………………........./CT
Qty. Description of goods
Unit Price Value(Rs.)
VATRate (%)
Amount of Tax (Rs.)
Total
Signature of the Seller
Note: Input credit is not available on this invoice
61
ORIGINAL FOR BUYER
BIBLIOGRAPHY
Sites Visited
http://emeraldinsight.com/Insight/ViewContentServlet?Filename=Published/
EmeraldFullTextArticle/Articles/0070420302.html
http://emeraldinsight.com/Insight/ViewContentServlet?Filename=Published/
EmeraldFullTextArticle/Articles/0420070203.html
http://emeraldinsight.com/Insight/ViewContentServlet?Filename=Published/
EmeraldFullTextArticle/Articles/0560240102.html
http://www.pepsico.com/PEP_Company/BrandsCompanies/index.cfm
http://www.pepsico.com/PEP_Company/Overview/index.cfm
http://www.thehindubusinessline.com/2003/02/15/stories/2003021502420200.htm
http://www.thehindubusinessline.com/2004/10/02/stories/2004100201060700.htm
http://assijammu.com/resources/COMMERCIAL%20TAX/vatfaq.pdf
http://www.caclubindia.com/mobile/articles/display_article_list_mobile.asp?article_id=376
Books Referred
Marketing Research by Aaker Kumar Day
Kothari, C.R. (2006) , Research Methodology
62