Analyze for zonal sales of Square Toiletries Limited

Overview of SQUARE:

SQUARE today symbolizes a name – a state of mind. But its journey to the growth and prosperity has been no bed of roses. From the inception in 1958, it has today burgeoned into one of the top line conglomerates in Bangladesh. Square Pharmaceuticals Ltd., the flagship company, is holding the strong leadership position in the pharmaceutical industry of Bangladesh since 1985 and is now on its way to becoming a high performance global player.

SQUARE today is more than just an organization, it is an institute. In a career spanning across four and half decades it has pioneered the development of the local business in fields as diverse as Pharmaceuticals, Toiletries, Garments, Textile, Information Technology, Health Products, Food Products, Hospital, etc. With an average Annual turnover of over US$ 200 million and a workforce of about 3500 the SQUARE Group is a true icon of the Bangladesh business sector.

Corporate History:

Square group is not just successful company; it is a symbol of achievement. The journey of the company has been tough but it managed to sail through and have made it to the list of top companies of Bangladesh. Square Pharmaceuticals, which is the flagship company of the conglomerate is the leader among the pharmaceuticals companies in Bangladesh and currently gaining popularity across the globe.

It was a partnership effort of four young and enterprising men whose determination and passion saw it through the turmoil’s of the incipient period. By its four year SQUARE turned into a profit making organization. Today SQUARE Group is becoming a leading local corporate conglomerate in Bangladesh.

Square group has consistently been at the top position since 1958 and has worked hard to achieve all the success which has come its way so far. The company has turned into a public limited company in the year 1991. The total turnover of the company was more than $163 million in the year 2010 with a steady year on year growth of 16.72%.

Chronology since inception:

1958: Debut of SQUARE Pharma as a Partnership Firm.

1964: Converted into a Private Limited Company.

1974: Technical Collaboration with Janssen Pharmaceuticals, Belgium, a subsidiary of Johnson and Johnson International, USA.

1982: Licensing Agreement signed with F. Hoffman-La Roche & Co Ltd., Switzerland.

1985: Achieved market-leadership in the pharmaceutical market of Bangladesh among all national and multinational companies. 1987: Pioneer in pharmaceutical export from Bangladesh.

1991: Converted into a Public Limited Company

1994: Initial Public Offering of shares of SQUARE Pharmaceuticals Ltd.

1995: Chemical Division of SQUARE Pharmaceuticals Ltd. starts production of Active Pharmaceutical Ingredients (API).

1997: Won the National Export trophy for exporting pharmaceuticals.

1998: Agro-chemicals & Veterinary Products division of SQUARE Pharmaceuticals starts its operation.

2001: US FDA/UK MCA standard new pharmaceutical factory goes into operation built under the supervision of Bovis Lend Lease, UK.

2004: SQUARE enlisted as UNICEF’s global supplier.

2005: New State-of-the-Art SQUARE Cephalosporins Ltd. goes into operation; built under the supervision of TELSTAR S.A. of Spain as per US FDA/ UK MHRA requirements.

2007: SQUARE Pharmaceuticals Ltd., Dhaka Unit gets the UK MHRA approval.

2009: Starts manufacturing of insulin maintaining quality standards of US FDA & UK MHRA. Dedicated hormone & steroid products manufacturing facility complying with the current Good Manufacturing Practice (cGMP) of WHO, US FDA & UK MHRA starts operation.

2012: SQUARE Pharmaceuticals Ltd., Dhaka Unit and SQUARE Cephalosporins Ltd. get the Therapeutic Goods Administration (TGA) of Australia approval.

2015: PAI (Pre-Approval Inspection) by US FDA was successful for Dhaka Site’s solid dosage unit.

WHO approved Square’s GMP.

Associate companies and SQUARE concerns:

As part of vast diversification, square has the following associated companies:

Sheltech (Pvt.) Limited.
Pioneer Insurance Co. Ltd.
Mutual Trust Bank Ltd.
National Housing Finance and Investments Ltd.

Vision, Mission and Quality Policy:

Vision

We attempt to understand the unique needs of the consumer and translate that needs into products which satisfies them in the form of quality products, high level of service and affordable price range in a unique way.

Mission

To treasure consumer understanding as one of our most valued assets and thereby exerting every effort to understand consumers’ dynamic requirements to enable us in offering maximum satisfaction.
To offer consumer products at affordable price by strictly maintaining uncompromising stance with quality. With continuous R&D and innovation we strive to make our products complying with international quality standards.
To maintain a congenial working environment to build and develop the core asset of STL –its people As well as to pursue for high level of employee motivation and satisfaction.
To sincerely uphold the responsibility towards the government and society with utmost ethical standards as well as make every effort for a social order devoid of malpractices, anti environmental behaviors, unethical and corruptive dealings.

Quality Policy

Dedicated to make every effort to understand consumer needs to provide maximum satisfaction and to achieve market leadership.

Strive to continuously upgrade manufacturing technology and to maintain optimum level of quality measures in conformity with the international standard – ISO 9001: 2008.

Committed to achieve quality objective through continuous employee training and maintaining congenial working environment.

Objectives:

To increase cumulative sales in volume & value
To create strong barriers and presence against competitors
Motivate customer to increase investment apart from regular.

Control and adjustment Modality:

Sales representative will ensure spot cash discount against any of one slab in a single memo from proposed slab while making order one copy of invoice will give to retailer other copy to submit to distributors for ensuring deliveries.
While making order respective SR/SSR must fill the mention area like, Name of distributors point, Route name, Name of retailer / Wholesaler, Address, Mobile Number & Signature; Order receiving and delivery date, name of the SR/SSR, Signature & Mobile Number; Mention the slab option in value.
While delivered instant cash discount % to retailer all delivery man will get signature & cell number from retailer and send back to distributors for keep in file with seal & signature for adjustment purpose.
Respective ASS/SS/SSS will check and verify with seal & signature daily basis all entitle invoice under this program while visiting distributor’s point as well ASC-ZM also check current program status.
After closing this program ASS/SS/SSS will send to CHQ concern person for final adjustment purpose.
Respective area head will send Distributors point weekly cumulative program sales report with CHQ specified format to concern person at CHQ through e-mail.

Claim Adjustment Process:

We also propose to adjust 70% of the cash discount claim of the distributor account immediately after receiving the distributor wise summary from Area Head and recommendation of CHQ concern person within the week of program completion. Rest of the claim will be adjusted through proper auditing and validation of the submitted documents.

Reasons of rejected invoice:

Providing the same number invoice twice: Each number carries two invoices on which one copy should go to the retailer and another should come to the company through distributor. But here we are getting both the copies having same invoice number. That is why the distributors are not getting their expected commission.
The number of invoices is less than it mentions: Total number of invoices that are claimed by the distributors does not exist and sometimes the difference is huge. Due to less amount of invoice resulting reduction in commission claimed by the distributors.
Overwriting the date and invoice number: Regarding any special offer, top management specifies the date or period which is a very important issue to take care of. So whenever the company finds out any existence of overwriting or fluid on date; it is regarded as rejected invoice.
Not classifying or separating the invoices for special offer: Regarding any special offer i.e. Mega Offer; the distributor is supposed to attach and classify the individual retailer’s purchasing amount together as one bundle, so that it can be identified easily; or due to missing of any single invoice cause reduction in expected commission for distributor.
Errors in the value of commission mentioned in invoices: Sometimes the commission that retailers deserve, distributors provide more or less than the actual. So whenever the company justifies the actual commission amount, it does not match with the distributor’s claim.
Not selecting the proper value for providing commission: The commission is provided based on the total amount of sales in a single invoice if it reaches the point of minimum sales amount. Sometimes the retailers get commission twice if the purchasing amount is big enough. After providing single commission, the distributors provide another commission on the remaining balance and they claimed for the second commission amount from the company. The company is providing the commission to the distributors based on the total value of sales. So, here the retailers are not getting the proper commission that they should get.

Program Title: Jui, Chaka & Magic products Cash Discount Program

Square Toiletries Limited

Background:

In 2015 first two month STL experienced a lean period for sales due to unfavorable political situation and some aggressive activities of competitors. From March with the help of trade promotion program on toiletries items STL has experienced a better closing. In this continuity we want to propose a trade program on toiletries items for the month of May.

Objectives:

To increase cumulative sales in volume & value
To create strong barriers and presence against competitors
Motivate customers to increase investment apart from regular.

Program Details:

Slab will be BDT 3,000, BDT 10,000, BDT 20,000; the discount will be BDT 115, BDT 425 and BDT 1,100 respectively.
Party could fulfill the slab in multiple invoices.
One party could enjoy more than one slab.
Chaka (without Super white), Jui and Magic brand will be applicable

Reasons of rejected invoice

Providing the same number invoice twice: Each number carries two invoices on which one copy should go to the retailer and another should come to the company through distributor. But here we are getting both the copies having same invoice number. That is why the distributors are not getting their expected commission.
Difference between Invoice and approved program: Sometimes the invoice that distributors sent has no similarities with the approved program. For scope limitation of the approved program these types of invoices have been rejected.
Overwriting the date and invoice number: Regarding any special offer, top management specifies the date or period which is a very important issue to take care of. So whenever the company finds out any existence of overwriting or fluid on date; it is regarded as rejected invoice.
Not classifying or separating the invoices for special offer: Regarding any special offer i.e. Mega Offer; the distributor is supposed to attach and classify the individual retailer’s purchasing amount together as one bundle, so that it can be identified easily; or due to missing of any single invoice cause reduction in expected commission for distributor.
Errors in the value of commission mentioned in invoices: Sometimes the commission that retailers deserve, distributors provide more or less than the actual. So whenever the company justifies the actual commission amount, it does not match with the distributor’s claim.
Not selecting the proper value for providing commission: The commission is provided based on the total amount of sales in a single invoice if it reaches the point of minimum sales amount. Sometimes the retailers get commission twice if the purchasing amount is big enough. After providing single commission, the distributors provide another commission on the remaining balance and they claimed for the second commission amount from the company. The company is providing the commission to the distributor based on the total value of sales. So, here the retailers are not getting the proper commission that they should get.

Program Title: (Jitun Seetjure) winter gift program

Square Toiletries Limited

Background:

Winter gift program is one of the key activities of STL. Around 30000 value generating store participates in this program in different slabs. Lottery program will be there to increase per invoice value, but we brought noticeable change here to give more excitement in the market.

As competitors’ increased their benefit percentage, we slightly increase the benefit margin for the program participants.

Objectives:

To increase cumulative sales in volume & value
To create strong barriers and presence against competitors
Motivating customer to increase investment apart from regular.

Revenue plan: BDT 175 Crore is planned to ensure from 3 months long trade drive which is 67.31% of BDT 260 Crore IMS target. Only winter product is included for this program.

Scheme details and modality:

The following slab amount will be considered after deducting from commission (if any).
For every slab, the retailer has to purchase at least 50% and above winter product as total.
The purchase account will be calculated and maintained by the distributor of Square Toiletries Ltd and will continuously verify it by providing signature.
To attend this program; maintaining the slab card and purchase invoice is must.
Providing a valid contact number is mandatory for the confirmation of attending the program and the contact number can’t be switch off during the program.
Signature of both the parties (Retailer & Distributor) has to be clear in the order invoice.
(Jitun Seetjure) slab card should be filled properly where it required; and all the involved parties e.g. Distributor, Retailer, Supervisor and Deliverymen should sign according to the procedure.
If any retailer wants to change or switch the slab, he has to do it before 7th November by contacting the distributor. Any retailer can’t switch to any downer slab.
If any retailer don’t follow the procedure or misuse the procedure, his attendance of the program and gift will be cancelled.
Provide all purchase invoices (From 1st October 2015 to 31st December 2015) to the distributor point within 10th January 2016.
Square Toiletries Ltd has ultimate authority to modify, change and cancel the program.

Other benefit:

Every month Bangkok trip

Every day Gold Coin & Cox’s Bazar Trip

Control and adjustment Modality

Sales representative will ensure spot cash discount against any of one slab in a single memo from proposed slab while making order one copy of invoice will give to retailer other copy to submit to distributors for ensuring deliveries.
While making order respective SR/SSR must fill the mention area like, Name of distributors point, Route name, Name of retailer / Wholesaler, Address, Mobile Number & Signature; Order receiving and delivery date, name of the SR/SSR, Signature & Mobile Number; Mention the slab option in value.
While delivered instant cash discount % to retailer all delivery man will get signature & cell number from retailer and send back to distributors for keep in file with seal & signature for adjustment purpose.
Respective ASS/SS/SSS will check and verify with seal & signature daily basis all entitle invoice under this program while visiting distributor’s point as well ASC-ZM also check current program status.
After closing this program ASS/SS/SSS will send to CHQ concern person for final adjustment purpose.
Respective area head will send Distributors point weekly cumulative program sales report with CHQ specified format to concern person at CHQ through e-mail.

Claim Adjustment Process:

Findings:

Audit procedure of this discount program is still running. Some other work findings are given below;

Area Wise Achievement Nationally:

Up to 10 February, 2016 time pass is 37.50% but out of 23 areas no one can meet the time pass. The lowest achievement area is Khulna & highest achievement is B.Baria.

Problems regarding (Jitun Sheetjure) Program:

A single card carrying different purchase parties: To complete the slab card, sometimes the distributors or the salesperson involves different parties. That is why the card has been rejected.
Filling the IMS (In Market Sale) by selling regular products rather than winter products: Jitun Seetjure program is declared mostly for winter product but sometimes the salesperson sell regular products to fill The IMS and claim to attend the program to get gifts.
Overwriting the dates: Sometime there is existence of dates overwriting which is not applicable for Jitun Seetjure program 2015 and considered as rejected. The program has specific duration/period and if there is overwriting in date; the invoice is bound to cancel according to the policy.
Writing with pen in carbon copy: To complete the slab, the salespersons are writing on the carbon copy directly using pen which is cancelable according to the program policy.
Difference in Top sheet and Invoice amount: Often the actual IMS is not present properly in the Top sheet for Jitun Seetjure program
Actual invoice is few in number: Sometimes the number of invoice showed in slab card is less than actual invoice.
Top-sheet serial number is not maintained: Distributor doesn’t provide the slab card according to the serial mentioned in the Topsheet. So, it becomes very difficult for the auditor to find out each and every party (card) while auditing.

For these reasons in course of audit procedure we have rejected many invoices in this (Jitun Sheetjure) winter gift program.

Critical Observation:

Maintaining Accrual-basis Accounting System:

Square Toiletries Limited follows the accrual-basis accounting which only considers an event of expense when sales has occurred. It does not consider whether the cash payment is done or not. The company makes sales as well as makes purchases on credit.

Because of this reason, they have the terms; for instance, accounts payable and accounts receivable on their balance sheet.

Nevertheless, getting the accuracy of the pending issues like, Accounts Payable and Accounts Receivables for a certain period can be really challenging. If STL does not get all the bills at the end of a specific period, they will have to close their accounts for that certain period.

At this stage, STL could have gone for cash-basis accounting. Here, the terms such as accounts payable and accounts receivables would not have existed on their balance sheet. Expenditure would have been recorded only after an expense has occurred. Also, collection of money would have been recorded only after money has been received from the suppliers. Although, now-a days.

This method is becoming backdated and no longer used in any of the organizations.

Tax Deduction at Source:

˗Square Toiletries Limited makes sure that each and every of their suppliers give taxes. Because tax is an income for the government. As a law of government, STL deducts tax on suppliers’ income and deposit it to the government treasury on behalf of their suppliers, on the suppliers’ name and will deliver the “Chalan” copy to their suppliers.

Here, STL acts as the collecting authority. However, STL can only deduct tax on the suppliers’ income only if they supply a minimum of TK. 200001 raw materials.

Manually update sales and stocks:

At STL, all the sales as well as stock related transactions are updated manually to the main server. Each distributor has to send their daily transaction values to the MIS Department and manually it has been updated by the executives of MIS Department in the server. It needs a lot of time to update those data in the server.

However, recently they have started a digital system in some areas where a distributor uses a specialized application in their tab, which are provided by the company. They update their transactions in that application and it is automatically updated in the main server.

Project work: Comparison in Zonal Sales of Square Toiletries Limited –

Summary:

Square Toiletries Ltd distributes its products all over the country. To operate in the country smoothly, STL divided the entire country in nine broad zones. These are:

Dhaka-1
Khulna
Chittagong-1
B-Baria
Mymensingh
Pabna
Sylhet
Rangpur
Barishal

In every zone, there are plenty of areas where Sales Representatives (SR) are selling and promoting the products. These SR directly reports to the area managers. Area managers reports to Zonal Managers (ZM).

Sales for individual zone vary from one another. It varies due to the size and demand. Area consists of large size results huge number of consumers and demand for any specific products raise the sales for that specific area. That ultimately reflects the total sales in zones.

Description of the project:

Objective of the project:

Identifying zone wise sales for individual and total
Identifying area and distributor wise sales incentives
Analyzing zone wise major selling portion
Analyzing of attaining sales target by Sales Representatives
Comparing zonal sales along with cause and potential opportunities

Methodology:

This report was prepared through a series of processes starting from selection of the topic to the completion of the report. I explained my experience and findings as an intern in Square Toiletries Ltd. During these three months in this report.

Project Description: “Comparison in Zonal Sales”

Square Toiletries Limited has a tremendous sales team whose main purpose is to increase their sales percentage comparing last year sales. After every period mostly monthly; the sales people must seat for meeting with their area manager and the area managers meet with Zonal Managers (ZM) informing the progress of the sales. In STL, the entire country has been divided into 9 broad divisions.

Entire Dhaka zone has been divided into three areas. Rangpur and Mymensingh Zones has been divided into four areas according to Square Toiletries Ltd. Pabna, Chittagong, Barishal and Sylhet have two areas each in their zones.

Zone wise Sales:

STL sold its products approximately BDT 6,520,000,000/= (652 Crore) till 30th March, 2016 from 1st April 2015. According to above information, I have identified that; most of the products STL sold in Dhaka Zone as it has already capture the market along with the consumers taste.

Altogether STL has 176 Sales Representatives working in Dhaka Zone in 48 distributor point and their total sales in Tk 1,100,000,000/= (110 Crore).

The lowest selling zone is Barishal Zone which is Tk 520,000,000/= (52 Crore). In Barishal Zone, they have two areas consists of 32 distributor points.

Zonal sales analysis:

As we have already identified that Square Toiletries Ltd has more than twenty product line with different production units. Jui, Meril, Senora are some of its products that has tremendous demand in the Bangladesh market and they have good sales record in last recent years. In every area, the Sales Representatives are supposed to achieve provided target from the upper management. Combining all those sales in specific areas resulting zonal sales. Zone wise sale varies a lot from one another. I have already identified some of the factors depending on which the Sales Representatives attend the target.

As city areas consist of more consumers, so they have more demand for STL products and that ultimately helps Sales Representatives to attend their targets. On the other hand; in rural areas, people have very limited demand and they also demand for low cost products. This ultimately effect the Sales Representatives to cope up with the instructed target to achieve.

Jui, Meril, Senora has huge demand in the urban areas and the Sales Representatives usually selling these products mostly. That’s ultimately help them to get their expected targets.

Recommendations

There are some recommendation of my observation is given below;

To increase sales, promotional programs must be properly introduced to the Company representative, Distributors and Retailers. And that must be followed as much as possible in each audit engagement.
Most of the retailers are so much impatient to fulfill the slabs of the different program campaigns. Sometimes they do a lot of overwriting in their sales invoice, make fake sale invoices etc. to be enlisted for the gifts or bonuses of the promotional programs.
Occasionally the auditors fail to identify these offenders and hence they have to give them expensive gifts or bonuses. This is a huge expense for the company which needs to be addressed by carefully monitoring the audit process. Also the company should give proper training or information about the promotional offers to the retailers and distributors. Invoice which has a lot of overwriting should be rejected.
A team leader should be given appropriate time (neither much nor less) to carry out the entire sales guideline properly.
As we mentioned some reasons of rejected invoice, these reasons are occurred due to negligence or fraud or lack of knowledge of SR/SS/ZM. For this rejection retailers lose their incentives. Which is should be given to retailers. This is a barrier of business expansion. Higher authority should pay more attention about this problem.
As I have mentioned earlier that the audit team of Square Toiletries Ltd. has to perform audit for some other sister concerns of Square Group which is quite difficult to maintain for a three people audit team. Because audit team has to verify every little to big transactions made by these concerns and sometimes it takes a very long time to actually be able to perform an audit properly. So, they should consider hiring more qualified people to distribute the work evenly so that number of mistakes can be reduced and the verifying time of a transaction can be quicker.

Conclusion:

As expected, the internship was an experience that helped me to learn a lot, grow as a person and provide me with valuable knowledge beyond those that I could have obtained from the books.

Thus my experience in Square Toiletries Limited was one of the valuable experiences of my life. After completing my internship and this research, I can say that Square Toiletries Limited is the country’s leading manufacturer of international quality brand with huge number of diversified products. They have a good financial position in Bangladesh and their most of the sales promotional campaigns are helping them to achieve a great benefit. Finally I can say that, the audit procedures, general financial management practice and sales promotional activities of Square Toiletries Limited are very efficient financially and the weaknesses are to be addressed with effective solution. This way Square Toiletries Limited can uphold its position as a business icon.