A STUDY

FINANCIAL STATEMENTS

WITH REFERENCE TO TAJ KRISHNA HYDERABAD

A PROJECT REPORT

SUBMITTED FOR PARTIAL FULFILLMENT OF

REQUIREMENT FOR THE DEGREE OF

BACHELOR OF BUSINESS ADMINISTRATION

SUBMITTED BY:

BHAMIDIPATY SAI SESHANK

160541072
 SUBMITTED TO:

Dr VASU DEVA REDDY

OBJECTIVES OF THE SIP

1. To understand the various departments in Taj Krishna which includes the room
division, the food and beverage division, the sales and marketing division, finance
and human resources department.
2. To know the profitability and the inflows and outflows of the company.
3. To know and understand the complete functioning of the entire business.
4. Gain insight into the working environment and understanding the culture of the firm.
5. Develop skills required to interact with senior management and staff (for example:
Controller, managers, senior associates, staff, and office staff) in a professional
manner.
6. Develop time management skills and the ability to be responsible for more than one
project at a time.
7. Gain working knowledge about the credit policies of the company and the
administration of the credit management process.
8. Gain working knowledge about the receivables policies of the company and the
collections procedures.
9. Gain a good understanding about the cash management policies of the company.
10. Learn internal and external financial reporting procedure used by the company.
11. Gain insight into corporate budgeting process used by the company.
12. The main objective has always been to gain knowledge and good working experience
under the senior management.
TARGETS OF THE SIP

 To get a complete understanding of the functioning of the company by going through the
various activities the business operates.
 To work with the company with utmost discipline and punctuality.
 To complete all the given tasks in time.
 Divide all the objectives of the internship into weekly parts and check progress in a
regular manner.
 To be more knowledgeable in the areas of finance than ever before.
 To maintain healthy relations with all the employees in the organization which will lead
to better learning as the staff would also be keen to teach something.
 To visit all the departments in the hotel and get familiar with the working conditions.
 To learn all the activites undertaken by the credit department of the organization.
 To make sure that the work done should be for the benefit of the organization.
 To keep a separate notes and take down all the activities done during the internship for
better remembrance as the information would be very useful in the future and only
writing them down will help you remember.
 To develop better communication skills and learning skills through this internship.
 To learn the verification of all the transactions of the rooms and the restaurants through
the Orion software of the company.
STRATEGY ADAPTED

INTRODUCTION: -

We need to first understand that the credit manager position is responsible for the entire credit
granting process, bill collection, including the consistent application of a credit policy. They also
manage and ensure that the hotel achieves optimum performance and achieves the required credit
target. The credit manager position is responsible for the entire credit granting process, bill
collection, including the consistent application of a credit policy. Also manage and ensure that
the hotel achieves optimum performance and achieves the required credit target. To completely
understand the functioning of the credit department we need to understand the duties and
responsibilities of the credit manager.
 Manage relations with collection agencies.

 Manage relations with credit reporting agencies.

 Manage relations with credit insurance providers.

 Manage relations with the sales department.

 Manage all account queries and disputes.

 Manage Accounts Receivable and ensure all debtors accounts are reconciled regularly.

 Daily review of Accounts Receivable ledger and monitor incoming payment.

 Responsible for Ageing of Debtors and maintaining the same under control.

 Responsible for compiling all group billing.

 Focus on minimizing the AR outstanding balance.

 Responsible for maintaining the debtor’s ledger with regular review of the aged
accounts.

 Monitor the AR ledger on a daily basis, If any discrepancies found then corrective
measures to be taken after co-ordinating with the PMS vendor.

 Ensuring prompt, accurate and efficient system for billing of current and aged accounts.

 Review the AR Aging report on a daily basis.

 Review the Guest Ledger High Balance report daily and reporting discrepancies, ensuring
check-in / check-out procedures are followed.

 Administer credit processes and policies for other departments in the hotel.

 Ensure the accuracy of all charges and credits to the various accounts and that they are
properly posted on a timely basis.

 Ensure the timely credit collections of all outstanding payments.

 Follow up on all overdue accounts and send to debt collectors, as required.

 Monitor any unallocated payments from customers and apply the same with future bills.

 Monitor credit limits of all outstanding accounts.

 Check and verify that all open Paymaster accounts were justified and should comply with
company’s policy and procedure.

 Ensure that all credit applications properly documented approved by the management and
are based on hotel’s policy and procedure.

 Perform an audit trail for all debtors account to ensure that proper documentation is in
place and charges are accurate.

 Respond and resolve customer queries.

  Reconcile all unpaid and short paid aged accounts.

 Reserve for doubtful accounts is maintained in accordance with company policy and the
bad debt reserve report is in agreement with the G/L.

 Assign AR number to the approved accounts.

 Assign credit limit to the approved accounts.

 Black list accounts which are defaulters.

 Ensure compliance on Payment Card Industry (PCI) policy.

 Scrutinising all accounts to ensure adherence to the credit policy; includes pursuing and
collecting delinquent accounts, providing status reports of uncollectable accounts and
referring delinquent accounts to a collection agency.

 Collaborating with managers to ensure that all associated accounting requirements are
adhered to in accordance with established procedures / time lines.

 Supervise Accounts Assistants regarding accurate and timely billing, processing of credit
card inquiries and charge backs, billing of FIT accounts, processing of advance deposits
and advance deposit refunds.

 Schedule and precedes the monthly credit meetings.

 Properly motivate the credit and collections staff.

 Reviewing Credit/Accounts Receivable operation and recommending/implementing

improvements.

 Work with the Finance Manager to build effective working relationships with internal
and external customers.

 Other special duties as and when assigned by the Finance controller.

Understanding the strengths and weaknesses of the company through the technique of SWOT
analysis.
SWOT ANALYSIS TAJ KRISHNA

STRENGTHS

 Group comprises 93 hotels in 55 locations across India with an additional 16 international

destinations.
 Employee strength over 13000 people
 The perfect experience of Indian luxury living
 Employee retention due to good brand image
 Considered to be the most premium hotel chain in India
 Top-of-the-mind brand recall

WEAKNESSES

 Limited market share.

 Tough competition from international and domestic players means
 Terrorist attacks left a question over the security.

OPPORTUNITIES

 Introduce better membership plans.

 Improve hygiene standards.
 Upgrade to international methods of work.

THREATS

 Other heritage property

 Competitors upgrading to international standards of work ethic
 Expectation of clients in terms of technological development.

TO UNDERSTAND CREDIT CONTROL

A guest room is the most perishable article sold in any type of business. The income from
today’s vacant room is lost forever. Often a hotel must accept business, whether for a guestroom
or a banquet even though it may involve a credit risk. Credit limits depend on the operation, the
level of charges and the type of guest. The increased use of credit, the longer time taken by
guests to pay their bills and the cash requirements of the operation also contribute to the greater
stringency of the credit procedures now in effect in most hotels.

WHY IS CREDIT CONTROL NECESSARY?

Hotels need to have a healthy cash flow in order to survive and succeed and they try to achieve
this by exercising control over the credit given to guests. To achieve a balance between the needs
and convenience of the hotel guest (credit facilities) and the needs of the hotel (cash flow), every
organisation will need to have an effective credit policy in place.

FUNCTIONS OF THE CREDIT DEPARTMENT

Credit control refers to the various measures taken by a hotel to ensure that guests settle their
accounts in full at an agreed time. Controlling credit is the responsibility of the credit
department. In larger hotels, the credit department consists of a credit manager, a secretary and a
few assistants. They are members of the accounting department and the credit manager reports
directly to the Controller. The credit dept. has two primary functions: o To investigate the
financial standing of and approve limits of credit for each prospective client; and o To try to
collect the amount due if the customer fails to live up to the terms established for payment of the
account. Individual credit limits are impossible to establish, so an attempt must be made to
control credit while charges are accumulating, with no idea as to what the final total will be. Bad
debts can be prevented or kept within reasonable limits, only while the guest is still in the hotel;
after check out, it is too late.

CREDIT POLICY OF A HOTEL

Elements of a credit policy:
A hotel chain’s general credit policy rules may be interpreted, changed, or modified by the
management to fit their own particular hotel.
A credit policy must take into account the marketing objectives of the organisation. A liberal
policy tends to expand the market, but it entails a certain amount of risk. The tighter the policy,
the more restricted the market. A new hotel has a greater need to solicit and attract business than
does a well-established hotel, which can depend on its reputation to attract new guests and repeat
business from former guests.
In-house guests are those who occupy sleeping rooms; non-guests are those who do not occupy
rooms but who use one or more of the hotel’s other facilities-banquet rooms, restaurants, bars,
etc.
Credit privileges extended to in-house guests are for room charges, food, beverages, laundry,
telephone services, entertainment, and cash.
Since hotels normally allow guests to charge their hotel expenses to their room account, they
have to make certain that the guests are able to pay their bills in full before they extend credit.
The credit limit or house limit refers to the maximum level to which a guest’s bill can amount
before some form of settlement is required. These limits vary according to the guest’s reservation
status and method of payment.

Policy for establishing in-house credit:

To minimise bad debts it is important to establish clear guidelines for operation of in-house
credit provisions. These guidelines should cover:
a. Who is going to be provided with credit?
b. What references or security is required before extending credit facilities?
c. What are the credit limits for individual debtors and within what time span will they be
allowed to pay?
d. What processes are going to be undertaken in the event of default? e. Establishment of a
credit sales journal, and debtors contract accounts should be maintained up-to-date and regularly
reconciled by preparing and aged listing for further review and action. In general, hotels tend to
allow credit to three types of guests, those who have guaranteed bookings. Those whose accounts
will be settled by their companies, those who will settle their accounts by credit or charge cards.
 Guests with guaranteed bookings: Most guests give credit to guests with guaranteed bookings
on credit cards or advance deposits. On the other hand, walk-in guests and guests with non-
guaranteed bookings are usually not given any credit if they settle their bills by cash or cheque.
These guests are usually required to prepay their room rate, together with a deposit for incidental
expenses, at check in.  Settlement by corporate accounts: When a company wishes to have
credit facilities at a particular hotel, the hotel will have to check to ensure that the company is
solvent and able to pay their bills. If the company’s bank gives a favourable reference, it is
approved to receive services on credit. The list of approved companies is circulated to the
reservations, reception and sales office so that all concerned departments are aware which
companies are entitled to credits at the hotel and the different credit limits applicable to them.
Accounts settled by credit or charge card: The types of credit cards or charge cards accepted by
the hotel vary. Reasons for this may be the popularity or otherwise of the card, the fee the hotel
pays on accepting a particular charge or credit card and the time period taken by the company to
settle the account. Signs may be displayed at the front desk showing which credit card or charge
cards are accepted by the hotel. Also, the different companies may agree for different floor limits
and the staff must be aware of these

.
OBJECTIVES OF CREDIT CONTROL MEASURES

The main objectives are: To prevent walkouts or skippers. This includes guests who forget to
check out or think that the billing will be done to their credit card accounts or their company. 
To prevent late settlement of accounts. Accounts that have not been paid within a certain time
period must be followed up. To avoid guests dissatisfaction. Guests feel embarrassed and
annoyed if they discover, at check out, that their credit card is not being accepted by the hotel,
refusal by the hotel to accept certain foreign currency or their account being over the hotel’s
house limit or the floor limit authorized by the credit card company
The Common causes for these problems may include:
Unclear instructions to the guest at check-in (not informing the guest which credit card or
foreign currency is or is not acceptable)
Lack of communication between departments (the credit manager not notifying the cashier when
a guest’s account is over the hotel’s credit limit)
Breakdown in front office procedures (the front desk or reservations clerk not checking the
blacklist for previous skippers) These can be solved by:  Give the guest clear instructions at
check-in regarding account settlement.
Notify the guest when their account has reached the hotel’s credit limit.  Provide a list of
previous skips to all relevant departments.  Ensure good coordination and communication
between all departments in matters relating to guest charges.  Ensure that guests with company
accounts have been notified that the account has to be verified and signed before check out.

CREDIT CONTROL MEASURES DURING VARIOUS STAGES

I. CREDIT CONTROL MEASURES AT RESERVATIONS

1. Check the type of reservations guaranteed bookings are allowed credit, non-guaranteed has
restricted credit.
2. Inform guests with non-guaranteed bookings that they are required to pre-pay at check in.
3. Ensure that correct room rate is quoted to prevent any revenue loss to the hotel in quoting
a lower rate and to prevent later disputes
. 4. Request prepayments for group bookings or special packages and inform guests of
cancellation terms and charges to avoid loss of revenue in the event of cancellation and to
guarantee group bookings.
5. Check the method of settlement to avoid misunderstandings and ensure the guests will pay
cancellation charges.
6. Check the corporate account details for those whose company settles their account only
companies on the approved companies list are to be allowed credit.

II. CREDIT CONTROL MEASURES AT CHECK-IN

1. Check reservation status: collect pre-payments from walk-ins and non-guaranteed
bookings
2. Check type of accounts:
1. Travel agent voucher- ask for voucher and check what charges are covered. Check with
guest for method of settlement of incidental charges.
2. Tour groups - check with tour leader about the billing arrangements (say, master account to
the travel agent and incidentals to the tour members)
3. Corporate accounts - check whether the full account is to be settled by the company. If not,
 agree with the guest on the methods of settlement for incidentals. Inform the guest that he
needs to sign the bill at departure.
5  Check methods of settlements:
1. For cash settlement, record the room rate on the registration card and key card, and remind
the guest of the room rates; inform the guest of house policy on house limits.
2. For charge or credit card settlement, check that the card is accepted by the hotel. Take an
imprint of the card to check the validity of the card; to seek authorization, to guide against
walkouts.

III. CREDIT CONTROL MEASURES DURING OCCUPANCY

Most transactions between a guest and a hotel take place during a guest’s occupancy. So,
during this phase of a guest’s stay the hotel needs to monitor the credit given to guests
closely. Bills with high balances are monitored closely. The cashier will monitor all the bill
totals against the hotel’s set credit limit.
Each day a high balance report will be produced which lists all the accounts whose totals are
near to or in excess of the limit.
The front office cashier, night auditor or the credit manager is usually responsible for
handling accounts with high balances.
The guests will be asked to settle their account to date, and a fresh account will be started for
the rest of the stay. The credit manager will send the bill together with an accompanying
letter to the guest room, asking the guest to settle the account with the cashier.
If guests fail to do the needful, their room will be double-locked and now, the guests will
have to contact the manager before they can access their room.
CREDIT CONTROL MEASURES BY OTHER POS
During occupancy when a guest wishes to charge his purchase of goods or services to his
room number at any POS the staff there must check his credit status carefully. They must
check that . The guest is a resident and or has an account at the hotel . The guest is allowed to
charge services to their account. A walk-in may not be allowed to charge services to their
account and so will have to settle the incidentals by cash or credit at the sales outlet.  If the
guest is part of a tour, their package may allow a meal in the hotel but only up to a certain
value. Any excess on the bill must be settled at the POS.  Often the front office will issue
these group guests with vouchers, which the guest will hand to the restaurant captain upon
entering the restaurant.
ACHIEVEMENTS OF THE SIP

1. Analysis of Daily Business Report.

2. Learning the Tax rates

3. Tax rates on daily transactions.

4. Understood the functioning of the hotel industry.

5. Got aware of the various departments and their contribution towards the organization.

6. Understood the importance of the backend departments to ensure smoother functioning of the
front office.

7. Understood the procedure of check in for a guest.

8. Visited the various luxury restaurants in the hotel.

9. Monitor credit limits of all outstanding accounts.

10. Check and verify that all open Paymaster accounts were justified and should comply with
company’s policy and procedure.

11. The most important and satisfying achievement is to be able to learn how does a hotel
industry function and how much influence the finance derpatment exerts on the functioning of
the organization.
LIMITATIONS OF THE STUDY

1. Being in a company for a couple of months is not merely enough to cover all the aspects of the
organization.

2.The size of the data is so huge that it takes a lot of time to understand and analyse the daily
transactions

3. Though pos and pms make it easy to record and verify transactions it still kills a lot of time
and the organization doesn’t get enough time to spend to better its functioning.

4.The finance department should consist of a greater staff to complete the work timely and get
enough time for development.

5. Couldn’t cover enough contracts due to shortage of time.

CONCLUSION

It has been a wonderful experience working with Taj Krishna for the brand that they are.
It is always very prestigious to work with such an established company that has been making
continuous progress over the years.The guidance by the HR department really helped in getting
along with the activities of the organization.Before you start working it is very important to get
familiar with the working conditions of the company and that was exactly what was provided. In
review this internship has been an excellent and rewarding experience. I have been able to meet
and network with so many people that I am sure will be able to help me with opportunities in the
future.

One main thing that I have learned through this internship is time management skills as
well as self-motivation. When I first started I did not think that I was going to be able to make
myself sit in an office for eight hours a day, five days a week. Once I realized what I had to do I
organized my day and work so that I was not overlapping or wasting my hours.
 I learned that I needed to be organized and have questions ready for when it was the correct
time to get feedback. From this internship and time management I had to learn how to motivate
myself through being in the office for so many hours. Taking things one at a time really helps.It
was really a great learning experience. It would be very good if I could do my internship at the
exact same company to get more insights and develop better relations with the senior
management which is bound to help in the future.