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%&'()T (* +,-T&NN-& -N.)/T,-0/

CONTENT
P,0*&10 &12N(3%04050NT .01%0,&T-(N

1hapter-6: -NT,(.)1T-(N &+()T +,-T&NN-& Company overview Company Profile Board of Directors Management team Mile stones istory of Bisc!its "ctivities of t#e company
P&NTN&4&, )N-T

$ntrod!ction Company Profile %&OT "nalysis '(% of B$) Department of t#e company %afety policy of t#e company 17&PT0,-8: ,0/0&,17 50T7(.(%(4' %ample %i*e Met#od of %ampling "rea of wor+ Parameters of st!dy Met#od of Data collection Tools )imitations
,

17&PT0,-9: 3(,2-N4 1&P-T&% 5&N&4050NT "-o!t &or+ing capital Classification of wor+ing capital &or+ing capital management Difference -etween Cas# flow . /!nds /low %tr!ct!re of wor+ing capital in B$) &or+ing capital pattern of B$) %#are #olding Pattern of B$) Management Pattern of $nventory Management Pattern of De-t Management Pattern of Cas# Management Pattern of )oans . "dvances %ome important 0atios1 "nalysis . /indings 0ecommendations

17&PT0,-:: 1(N1%)/-(N & *-N.-N4/ 17&PT0,-;: +-+%-(4,&P7'

'

C "PTE02$ $NT0OD3CT$ON "BO3T T E COMP"N4

1(5P&N' (<0,<-03
T#e story of one of $ndia(s favorite -rands reads almost li+e a fairy tale1 Once !pon a time6 in 1782 to -e precise6 a -isc!it company was started in a nondescript #o!se in Calc!tta 9now :ol+ata; wit# an initial investment of 0s128'1 T#e company we all +now as Britannia today1 T#e -eginnings mig#t #ave -een #!m-le2t#e dreams were anyt#ing -!t1 By 181<6 wit# t#e advent of electricity6 Britannia mec#ani*ed its operations6 and in 18216 it -ecame t#e first company east of t#e %!e* Canal to !se imported gas ovens1 Britannia(s -!siness was flo!ris#ing1 B!t6 more importantly6 Britannia was ac=!iring a rep!tation for =!ality and val!e1 "s a res!lt6 d!ring t#e tragic &orld &ar $$6 t#e >overnment reposed its tr!st in Britannia -y contracting it to s!pply large =!antities of ?service -isc!its@ to t#e armed forces1

"s time moved on6 t#e -isc!it mar+et contin!ed to growA and Britannia grew along wit# it1 $n 18B'6 t#e Britannia Bisc!it Company too+ over t#e distri-!tion of -isc!its from Parry(s w#o till now distri-!ted Britannia -isc!its in $ndia1 $n t#e s!-se=!ent p!-lic iss!e of 18B76 $ndian s#are#olding crossed 5<C6 firmly esta-lis#ing t#e $ndian ness of t#e firm1 T#e following year6 Britannia Bisc!it Company was re2c#ristened Britannia $nd!stries )imited 9B$);1 /o!r years later in 18736 it crossed t#e 0s11<<crores reven!e mar+1 On t#e operations front6 t#e company was ma+ing e=!ally dynamic strides1 $n 18826 it cele-rated its Platin!m D!-ilee1 $n 188B6 t#e company !nveiled its new corporate identity E ?Eat ealt#y6 T#in+ Better@ E and made its first foray into t#e dairy prod!cts mar+et1 $n 18886 t#e ?Britannia :#ao6 &orld C!p Dao@ promotion f!rt#er fortified t#e affinity cons!mers #ad wit# FBrand Britannia(1 Britannia strode into t#e 21st Cent!ry as one of $ndia(s -iggest -rands and t#e pre2eminent food -rand of t#e co!ntry1 $t was e=!ally recogni*ed for its innovative approac# to prod!cts and mar+etingG t#e )agan Matc# was voted $ndia(s most s!ccessf!l promotional activity of t#e year 2<<1 w#ile t#e delicio!s Britannia '<2'< Mas+a2C#as+a -ecame $ndia(s most s!ccessf!l prod!ct la!nc#1 $n 2<<26 Britannia(s New B!siness Division formed a Hoint vent!re wit# /onterra6 t#e world(s second largest Dairy Company6 and Britannia New Iealand /oods Pvt1 )td1 &as -orn1 $n recognition of its vision and accelerating grap#6 /or-es >lo-al rated Britannia FOne amongst t#e B

Top 2<< %mall Companies of t#e &orld(6 and T#e Economic Times pegged Britannia $ndia(s 2 nd Most Tr!sted Brand1 Today6 more t#an a cent!ry after t#ose tentative first steps6 Britannia(s fairy tale is not only going strong -!t -la*ing new standards6 and t#at minisc!le initial investment #as grown -y leaps and -o!nds to crores of r!pees in wealt# for Britannia(s s#are#olders1 T#e company(s offerings are spread across t#e spectr!m wit# prod!cts ranging from t#e #ealt#y and economical Tiger -isc!its to t#e more lifestyle2oriented Mil+man C#eese1 aving s!cceeded in garnering t#e tr!st of almost one2t#ird of $ndia(s one -illion pop!lations and a strong management at t#e #elm means Britannia will contin!e to dream -ig on its pat# of innovation and =!ality1 "nd millions of cons!mers will favor t#e res!lts6 #appily ever after1

1<

1(5P&N' P,(*-%0
0egistered office of Britannia $nd!stries )imited is sit!ated in &est Bengal1 T#is company is registered !nder Companies "ct6 18'51 Britannia -isc!its Company )imited was originally incorporated on 21st Marc# 1817!nder $ndian Companies "ct !nder t#e name ?T#e Britannia Bisc!its Company )imited@ !nder section 21 of Companies "ct and approval of Central >overnment1 T#e main aim of t#e Company is to ma+e availa-le good and improved =!ality -isc!its to eac# and every part of t#e co!ntry1 T#e Company is per!sing for $%O1,<<1certificate and it is $%O 22<<< certified1 T#e Company was esta-lis#ed at t#e Pantnagar -ranc# on 21st May 2<<' mainly for prod!ction wit# a prod!ction coverage area of approJimately 2< acres1 T#e control of management is t#ro!g# Board of Directors1 T#e Company(s #ead and registered office and wor+s place are located at t#e -elow mentioned addressesG ,egistered & 7ead office G Britannia $nd!stries )imited 'K1"6 !ngerford %treet :ol+ata2 B<<<1B 3orks Places: 9a; Britannia $nd!stries )imited 336 $nd!strial "rea )awrence 0oad6 Del#i2 11<<3' 9-; Britannia $nd!stries )imited Plot No116 %ector2 1 $ntegrated $nd!strial Estate Pantnagar6 Pantnagar2 2531'3

11

9c; Britannia $nd!stries )imited 1'6 Taratola road6 :ol+ata E B<<<77

9d; Britannia $nd!stries )imited MT road6 Padi C#ennai E 5<<<'< 9e; Britannia $nd!stries )imited 0eady road 9East;6 Ma*agaon6 M!m-ai E ,<<<1<

12

+(&,. (* .-,01T(,/ Name

5r Nusli N 3adia 5s <inita +ali 5r 4eorge 1asala 5r 2eki .adiseth 5r &vijit .eb 5r /tephan 4erlich 5r & 2 7irjee 5r Nimesh N 2ampani 5r / / 2elkar .r <ijay 2elkar 5r Pratap 2hanna 5r =eh 3adia 5r *rancois >avier ,oger *ield 5arshall /am 5anekshaw

.esignation
1hairman 5anaging .irector .irector .irector .irector .irector .irector .irector .irector .irector .irector .irector .irector .irector 0meritus

13

5&N&4050NT T0&5

4&)T&5 +&N0,=00 &/7(2 2)5&, 4)PT& /&,(= 2)5&, 17&2,&+(,T' ,-17& &,(,& &5-T&<& 5)270,=00 P),N0N.) ,(' < 5&.&N <-N(. 50N(N .r 2 N /7&/7-2&NT7 T/ P),)/7(T7&5&N

>eneral Manager E Materials >eneral Manager E "cco!nts . Planning >eneral Manager . ead of Tec#nical >eneral Manager E Mar+eting National %ales Manager ead of 0.D Company %ecretary . ead of )egal ead of $nternal "!dit . ProHects Corporate L!ality "ss!rance Manager Corporate ead E $T . %ystems

1,

5-%0 /T(N0/
6?#@ 6#6A 6#@6

T#e >enesisE Britannia esta-lis#ed wit# an investment of 0s1 28' in :ol+ata "dvent of electricity sees operations mec#ani*ed $mported mac#inery introd!cedM Britannia -ecomes t#e first company East of t#e %!e* to !se gas ovens

6#8# B 99

%ales rise eJponentially to 0s11562B62<2 in 1838 D!ring 18,, sales ramp !p -y more t#an eig#t times to reac# 0s11135crore

6#C: 6#C? 6#C# 6#?8 6#?#

Britannia Bisc!it Company ta+es over -isc!it distri-!tion from Parry(s P!-lic iss!e E $ndian s#are#olding crosses 5<C 0e2c#ristened Britannia $nd!stries )td1 9B$); %ales cross 0s11<<crore T#e EJec!tive Office relocated to Bangalore

6##@ 6##8

B$) cele-rates its Platin!m D!-ilee &adia >ro!p ac=!ires sta+e in "B$)6 3: and -ecomes an e=!al partner wit# >ro!p Danone in B$)

6##9 6##C

Nol!mes cross 16<<6<<< tons of -isc!its 0e2-irt# E new corporate identity FEat ealt#y6 T#in+ Better( leads to new missionG FMa+e every t#ird $ndian a Britannia cons!mer( 1'

6###

B$) enters t#e dairy prod!cts mar+et ?Britannia :#ao &orld C!p Dao@ E a maHor s!ccessO Profit !p -y 3BC

@AAA

/or-es >lo-al 0an+ing E Britannia among Top 3<< small companies

@AA6

B$) ran+ed one of $ndia(s -iggest -rands No11 food -rand of t#e co!ntry Britannia )agaan Matc#G $ndia(s most s!ccessf!l promotional activity of t#e year

@AA@

Mas+a C#as+aG $ndia(s most s!ccessf!l /MC> la!nc# B$) la!nc#es Hoint vent!re wit# /onterra6 t#e world(s second largest dairy company Britannia New Iealand /oods Pvt1 )td1 $s -orn 0ated as FOne amongst t#e Top 2<< %mall Companies of t#e &orld( -y /or-es >lo-al Economic Times ran+s B$) $ndia(s 2nd Most Tr!sted Brand P!re Magic E&inner of t#e &orld star6 "sia star and $ndia star award for pac+aging FTreat D!et(2 most s!ccessf!l la!nc# of t#e year Britannia :#ao &orld C!p Dao roc+s t#e cons!mer lives yet again Britannia accorded t#e stat!s of -eing a F%!per -rand( Nol!mes cross 36<<6<<< tons of -isc!its >ood Day adds a new variant E Cocon!t E in its range 0e2-irt# of Tiger E F%wast# :#ao6 Tiger Ban Dao( -ecomes t#e pop!lar c#antO Britannia la!nc#ed F>reetings( range of premi!m assorted gift pac+s T#e new plant in 3ttaranc#al6 commissioned a#ead of sc#ed!le1 T#e la!nc# of yet anot#er eJciting snac+ing option E Britannia '<2 15

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'< Pepper C#a++ar

1B

T70 (,-4-N (* D0&T 70&%T7' T7-N2 +0TT0,E

Britannia Et#e F-isc!it( leader wit# a #istory2#as wit#stood t#e tests of time1 Part of t#e reason for its s!ccess #as -een its a-ility to resonate wit# t#e c#anges in cons!mer needs2needs t#at #ave varied significantly across its 1<<P year epoc#1 &it# cons!mer democracy reac#ing new levels6 t#e one common t#read to emerge in recent times #as -een t#e s#ift in lifestyles and a corresponding awareness of #ealt#1 People are increasingly -ecoming conscio!s of dietary care and its correlation to wellness and matc#ing t#e new pace to t#eir lives wit# improved n!tritional and dietary #a-its1 T#is new awareness #as seen cons!mers see+ing foods t#at complement t#eir lifestyles w#ile offering convenience6 variety and economy6 over and a-ove #ealt# and n!trition1 Britannia saw t#e writing on t#e wall1 $ts ?%wast# :#ao Tan Man Dagao@ 9Eat ealt#y6 T#in+ Better; re2position directly addressed t#is new trend -y promising t#e new generation a #ealt#y and n!tritio!s alternative E t#at was also delig#tf!l and tasty1 T#!s6 t#e new logo was -orn6 encaps!lating t#e core essence of Britannia E #ealt#y6 n!tritio!s6 optimistic E and com-ining it wit# a delig#tf!l prod!ct range to offer variety and c#oice to cons!mers1

17

(), P,(.)1T/

18

Nutri 1hoice /ugar (ut %o!nds li+e yesterday w#en people commented t#at #ealt#y foods meant ?compromising on t#e taste1@ N!tri C#oice %!gar O!t is t#e most novel prod!ct range to #ave -een introd!ced in t#e mar+et1 T#e prod!ct is not H!st sweet -!t tastes great6 and yet contains no added sugar. T#is is -eca!se N!tri C#oice %!gar O!t is sweetened wit# ?%!cralose6@ derived from s!gar6 w#ic# provides t#e same sweetness as any ot#er -isc!it6 wit#o!t t#e added calories of s!gar1 T#is range is availa-le in 3 delicio!s variants namely %ifetime, 1hocolate cream, and (range cream6 targeted towards all #ealt# sensitive people1 $t is also relevant for cons!mers wit# s!gar related ailments1 &e are s!re t#at yo! will -e pleasantly delig#ted wit# its great taste and e=!ally s!rprised to +now t#at it #as no added s!gar1 Don(t -e ta+en for a ride w#en yo! read ?%!gar /ree@ la-el on many -isc!it pac+s mar+eted in $ndia or a-road1 Even wit# 1<<C no2added s!gar6 w#eat2cereals in -isc!its #ave t#eir own nat!ral s!gar content1 Britannia #as c#osen to represent t#ese -isc!its wit# ?No "dded %!gar@ claim6 as t#ere is no added s!gar in t#e processing of N!tri C#oice %!gar o!t1 Nutri 1hoice .igestive +iscuit Not#ing can -e more diffic!lt t#an ma+ing small efforts in o!r daily life towards #ealt#y and active living1 2,KB we are engrossed in o!r -!sy sc#ed!lesM s+ipping meals6 missing wal+s6 along wit# inade=!ate sleep and fre=!ently eating2o!t6 all ta+e a #eavy toll on o!r #ealt#1 "t least wit# t#e new and improved Nutri Choice Digestive Biscuit6 we #ave one less t#ing to worry a-o!t1 Made wit# '<C w#ole2w#eat and pac+ed wit# added fi-er 91<C of o!r daily dietary needs;6 t#ese delig#tf!lly tasty -isc!its are amongst yo!r #ealt#iest -ites of t#e day1 2<

21

(T70, P,(.)1T/ (* +,-T&NN-&

ColiefQ $nfant Drops )actase En*yme Drops 0ed!ce t#e #o!rs of CryingR /r!isanaQ /r!it %!gar T#e )ow2>$ %!gar BritaJanR "staJant#in CompleJ "ntioJidant /ood %!pplement Mod!careR Plant %terols . %terolins Maintain $mm!ne Defense Nogel(sQ Cereals Prosta-ritR for Men 0ye >rass Pollen EJtract N!tritio!s . Delicio!s6 ig#2/i-re Brea+fast Cereals SyloBritR 1<<C Sylitol %!gar2/ree Ta-le2Top %weetener )omaBritR )ip Balm Melissa 9lemon -alm; eJtract for #ealt#y lips

22

ANNUAL PERFORMANCE (FY 2006)

Britannia(s gross sales t!rnover increased to 0s171B8 million in 2<<'2<5 from 0s1561', million in t#e previo!s year6 registering a growt# of 13C1 Operating profit at 0s16B53 million increased -y BC6 profit -efore taJ and eJceptional items at 0s1168'7 million declined -y 18C against 2<<,2 <' 6 impacted -y t#e profit on sale of long term investments t#at accr!ed to Fot#er income( last year1

T#e Company ac#ieved t#ese res!lts despite significant increases in inp!t cost6 partic!larly s!gar6 f!el and oils6 co!pled wit# aggressive pricing in t#e ind!stry1 4o!r Company(s foc!sed initiatives on commerciali*ing mar+et place opport!nities6 s!pply c#ain efficiencies and overall cost management res!lted in its top line growt# and profita-ility1 Operating margin at 1<13C in 2<<'2<5 compared wit# 1<18C in t#e previo!s year was impacted -y t#e inflation in inp!t costs1

Despite stiff competition6 yo!r Company sta-ili*ed and #eld its overall mar+et s#are at 311BC in vol!me and 3717C in 23 val!e for t#e last year1

EJports t!rnover d!ring t#e year was 0s1111B1 million against 0sB115' million in 2<<,2<'6 a growt# of '5C1

T#e maHor eJceptional items d!ring t#e year wereG

Compensation and amorti*ation of N0% costs E 0s1111 million Profit on sale of properties E 0s111B million

"fter considering all t#e eJceptional items6 Profit -efore taJ and Net Profit wor+s o!t to 0s126<<B million and 0s116,5, million respectively1 Earnings per %#are are 0s1'8185 for 2<<'2<51 Britannia -elieves in giving t#e -est val!e to cons!mers t#ro!g# its -rands and constantly loo+s for ways to en#ance t#e overall cons!mer eJperience1 2<<'2<5 witnessed a -oost in prod!ct innovation and renovation and as many as siJ new la!nc#es were eJec!ted and well received in t#e mar+et1 T#e Company(s largest -rand E Tiger6 was s!ccessf!lly renovated wit# t#e re2staging of Tiger >l!cose and t#e fortification of Tiger Creams1 New variants were introd!ced in Treat D!et and ?Pepper C#a++ar@ was la!nc#ed !nder t#e '<G'< -rand !m-rellas1 T#e Company also introd!ced Marie >old Do!-les in a totally new to mar+et format and a new range ?>reetings@ E an assortment of -isc!its was introd!ced d!ring Diwali6 targeted at t#e large gifting opport!nity1 T#e Company also sei*ed t#e growing opport!nity in adHacent categories li+e Ca+es and t#e 2,

la!nc#

of

C!p

Ca+es

was

t#e

first

step

in

strengt#ening

t#is

-!siness1

"dditionally6 new pac+aging formats were introd!ced in several mar+ets to tap into attractive price points from cons!mers( perspective1 Britannia will contin!e to invest in its -rands and deliver growt# t#ro!g# an emp#asis on -rand activation6 anc#ored -y new prod!ct la!nc#es1

2'

7-/T(,' (* +-/1-T/

25

%weet or salty1 %oft or cr!nc#y1 %imple or eJotic1 Every-ody loves m!nc#ing on -isc!its6 -!t do t#ey +now #ow -isc!its -eganT T#e #istory of -isc!its can -e traced -ac+ to a recipe created -y t#e 0oman c#ef "pici!s6 in w#ic# ?a t#ic+ paste of fine w#eat flo!r was -oiled and spread o!t on a plate1 &#en it #ad dried and #ardened it was c!t !p and t#en fried !ntil crisp6 t#en served wit# #oney and pepper1@ T#e word FBisc!it( is derived from t#e )atin words FBis( 9meaning Ftwice(; and FCoct!s( 9meaning coo+ed or -a+ed;1 T#e word FBiscotti( is also t#e generic term for coo+ies in $talian1 Bac+ t#en6 -isc!its were !nleavened6 #ard and t#in wafers w#ic#6 -eca!se of t#eir low water content6 were ideal food to store1 "s people started to eJplore t#e glo-e6 -isc!its -ecame t#e ideal traveling food since t#ey stayed fres# for long periods1 T#e seafaring age6 t#!s6 witnessed t#e -oom of -isc!its w#en t#ese were sealed in airtig#t containers to last for mont#s at a time1 ard trac+ -isc!its 9earliest version of t#e -iscotti and present2day crac+ers; were part of t#e staple diet of Englis# and "merican sailors for many cent!ries1 $n fact6 t#e co!ntries w#ic# led t#is seafaring c#arge6 s!c# as t#ose in &estern E!rope6 are t#e ones w#ere -isc!its are most pop!lar even today1 Biscotti is said to #ave -een a favorite of C#ristop#er Col!m-!s w#o discovered "mericaO Ma+ing good -isc!its is =!ite an art6 and #istory -ears testimony to t#at1 D!ring t#e 1Bt# and 17t# Cent!ries in E!rope6 -a+ing was a caref!lly controlled profession6 managed t#ro!g# a series of Fg!ilds( or professional associations1 To -ecome a -a+er6 one #ad to complete years of apprentices#ip E wor+ing t#ro!g# t#e ran+s of apprentice6 Ho!rneyman6 and finally master -a+er1 Not only t#is6 t#e amo!nt and =!ality of -isc!its -a+ed were also caref!lly monitored1 T#e Englis#6 %cotc# and D!tc# immigrants originally -ro!g#t t#e first coo+ies to t#e 3nited %tates and t#ey were called teaca+es1 T#ey were often flavored wit# not#ing more t#an t#e finest -!tter6 sometimes wit# t#e addition of a few drops of rose water1 Coo+ies in "merica were also called -y s!c# names as ?H!m-les@6 ?pl!n+ets@ and ?cry -a-ies@1 "s tec#nology improved d!ring t#e $nd!strial 0evol!tion in t#e 18t# cent!ry6 t#e price of s!gar and flo!r dropped1 C#emical leavening agents6 s!c# as -a+ing soda6 -ecame availa-le and a prof!sion of coo+ie 2B recipes occ!rred1 T#is led to t#e development of man!fact!red coo+ies1 $nterestingly6 as time #as passed and despite more varieties

WHAT MAKES A BRITANNIA

$f yo! t#in+ Britannia(s are eJtraordinary individ!als w#o are passionate a-o!t everyt#ing t#ey doAcreate inspiration t#ro!g# everyt#ing t#ey doAand s!cceed in everyt#ing t#ey doA yo!(re pro-a-ly rig#t1 Britannians are #and2pic+ed for a sing!lar p!rposeAto perpet!ally ens!re Mar+et )eaders#ip and generate eJemplary performance in every f!nction1 Britannians eJ#i-it t#e following leaders#ip -e#aviors 9we fondly call B3)Bs E Britannia 3niversal )eaders#ip Be#aviors;

-ntegrity Team (rientation People .evelopment %earning (rientation 1ustomer (rientation Fuality (rientation .rive for ,esults 0ntrepreneurial /pirit /ystem and Process (rientation 1ommunication

$f feel yo! stac+ !p well in terms of all t#ese -e#aviorsAdon(t waste timeADoin !sOOO

27

ACTIVITIES OF THE COMPANY

%ales Prod!ction 0esearc# . Developme nt !man 0eso!rces . )egal /inance . $T Tec#nical . Operations EJports
&ctivities of the company

Mar+eting

L!ality "ss!rance

28

OBJECTIVES OF THE COMPANY

T#e o-Hectives of t#e company are as followsG 11 To ac=!ire and ta+e over as a going concern t#e -isc!it man!fact!ring -!siness now carried on at D!m d!m H!nction !nder t#e styles or firms of N1% Brot#ers and company6 >!pta and company and Britannia -isc!its company and all or any of t#e lands6 -!ildings6 plant and mac#inery6 assets and lia-ilities of t#e proprietors of t#at -!siness in connection t#ere wit# and wit# a view t#ereto to enter into t#e agreement referred to in cla!se 3 of t#e companies article of association and to carry t#e same into effect wit# or wit#o!t modification1 21 To man!fact!re6 -!y6 sell6 prepare for mar+et and deal in farinaceo!s foods for all +inds and in partic!lar -isc!its6 -reads6 ca+es and confectionary and food of every description s!ita-le for individ!als1 31 To carry on -!siness as millers and grain merc#ants6 dealers in flo!r6 rice and ot#er prod!ces1 ,1 To carry on -!siness as -a+ers and confectioners and to man!fact!re -!y6 sell6 refine prepare6 grow6 import eJport and deal in provisions of all +inds of w#olesale and retail6 w#et#er solid or li=!id1 '1 To ma+e6 accept6 endorse6 disco!nt and iss!e promissory notes6 -ills of eJc#ange and ot#er negotia-le instr!ments etc1

3<

C "PTE02$$ $NT0OD3CT$ON "BO3T P"NTN">"0 3N$T

31

3elcome To +ritannia -ndustries %td Pantnagar )ttarakhand

Swasth Khao Tan man Jagao

32

T#e story of one of $ndia(s favo!rite -rands reads almost li+e a fairy tale1 Once !pon a time6 in 1782 to -e precise6 a -isc!it company was started in a nondescript #o!se in Calc!tta 9now :ol+ata; wit# an initial investment of 0s1 28'1 T#e company we all +now as Britannia today1 "s time moved on6 t#e -isc!it mar+et contin!ed to growA and Britannia grew along wit# it1 $n 18B'6 t#e Britannia Bisc!it Company too+ over t#e distri-!tion of -isc!its from Parry(s w#o till now distri-!ted Britannia -isc!its in $ndia1 $n t#e s!-se=!ent p!-lic iss!e of 18B76 $ndian s#are#olding crossed 5<C6 firmly esta-lis#ing t#e $ndian ness of t#e firm1 T#e following year6 Britannia Bisc!it Company was re2c#ristened Britannia $nd!stries )imited 9B$);1 /o!r years later in 18736 it crossed t#e 0s1 1<< crores reven!e mar+1

-NT,(.)1T-(N
Britannia ind!stries limited was esta-lis#ed at Pantnagar on 1st may 2<<'in t#e area of approJimately 2< acres mainly for t#e p!rpose of prod!ction of -isc!its as t#is area is free from almost all types of taJes1 $n Britannia $nd!stries )imited t#ere are many types of departments w#ic# are inter connected to eac# ot#er and wor+ toget#er for t#e welfare of t#e Company as t#e w#ole1 T#ere is a well -!ilt comm!nication system inside t#e Company w#ic# #elps in doing t#e wor+ on time and wit# f!ll efficiency and effectiveness1 The departments of the 1ompany includes Fuality assurance, /tores, Production, Purchase, 5aintenance, 0ngineering, Packaging and dispatch, Personnel and training, *inance, legal and administrative security $n t#e Company w#en t#e raw material is entered in t#e Company from t#at time onwards t#e =!ality of material is ta+en into consideration1 /irstly t#e material is ta+en into t#e la-oratory and it is -eing tested and after t#at it is -eing ta+en in progress1 "t t#e prod!ction plant also care is -eing ta+en for t#e neatness and cleanness of t#e -isc!its and t#e -isc!its are prepared in f!ll #ygienic conditions1 /or t#is p!rpose all t#e persons w#o enter t#e prod!ction or plant area is not allowed to go inside wit#o!t wearing a cap1 New concept li+e '% is also -eing implemented in Britannia $nd!stries )imited1 T#e Company is per!sing for $%O1,<<1certificate and it is $%O 22<<< certified1 33

T#ere are fo!r plants in operation in t#e Company at t#is -ranc#1 /irst plant is for Marie >old w#ic# #as a fleJi line for >ood day also1 %econd plant is for >ood day6 t#ird one is for '<G'< variants6 pepper c#a++er and Mas+a C#as+a1 /ort# and last plant is for Bo!r-on w#ic# #as a fleJi line for Orange cream also1

COMPANY PROFILE
1; B#!mi pooHan of Britannia ind!stries limited was on 2<t# may 2<<,1 2; Mac#inery was set !p on 23rd marc# 2<<'1 3; Prod!ction trial was ta+en on 23rd marc# 2<<' itself1 ,; "ct!al prod!ction was started on 1st "pril 2<<'1 '; /irst dispatc# of finis#ed goods was done on 2<t# "pril 2<<'1 5; Biggest plant of t#e company is plant n!m-er two1 B; T#e company is set !p in an area of approJimately 2< acres1 7; Minim!m prod!ction of t#e company is 21<tons per day1 8; MaJim!m prod!ction is 3<< tons per day1 1<; Control of management is t#ro!g# Board of Directors1 11; $t is a p!-lic limited company1 12; T#e a!ditors of t#e company are )oveloc+ . )ewes1 13; T#e -an+ers of t#e company areG %tate Ban+ of $ndia1 %tandard C#artered Ban+1 "BN "m-ro Ban+1 Citi Ban+1 T#e #ong+ong and s#ang#ai -an+ing corporation limited1 Ban+ of "merica1 D/C Ban+ limited1 3,

 $C$C$ Ban+ limited1

N)5+0, (* P%&NT/ &N. P,(.)1T-(N &T T70 P&NTN&4&, +,&N17

Not all t#e -rands of Britannia are prod!ced in t#is -ranc# only some -rands of -isc!its are prod!ced at t#is -ranc#1 Prod!ction of -isc!its in Britannia Pantnagar -ranc# is divided in to fo!r Plants1 6$ Plant a$ 5arigold

b$ 4ood day butter

3'

35

3B

c$ 4ood day Pista badam

@$ Plant -a$ good day cashew

8$ Plant --a$ fifty- fifty ":A-:A$ i$ :A-:A 37

ii$

:A-:A 5aska 1haska

iii$

:A-:A pepper chakker

9$ Plant -< a$ 1hocolate treat bourbon

b$ (range treat

38

,<

(+=01T-<0/ (* T70 )N-T

$nvesting in appropriate tec#nology1 &or+ing colla-orators wit# t#e -!siness partners1 L!ality prod!cts to c!stomers1 Contin!o!s training and retraining of t#e employees to create c!lt!re t#at val!e =!ality and food safety as a core pillar of t#e -!siness1 To control t#e wastage and save time and efforts1 To wor+ !nder t#e principals of :ia*en6 accp and ' %1

/T(,&40 &N. )/&40 (* ,&3 5&T0,-&%

T#ere are many types of raw materials w#ic# are !sed in Britannia for t#e prod!ction of different types of -isc!its1 %ome of t#em are E w#eat flo!r6 s!gar6 -!tter6 s+immed mil+ powder6 cas#ew6 salt6 different types of fats w#ic# incl!des different oils6 sodi!m -i car-onate6 ammoni!m -i car-onate etc1 Now t#e =!estion comes of t#eir storage1 "s we can see t#at some of t#e materials w#ic# are !sed in Britannia ind!stries need cold storage w#ile some needs normal storage1 %o on t#e -asis of t#e need of different raw materials t#ey are stored in different storage places1 T#e materials w#ic# are stored in cold storage are at t#e temperat!re of ' degree Celsi!s w#ile t#e materials w#ic# need normal storage are stored at t#e normal temperat!re1 T#ere classification of some of t#e raw materials is as followsG

Normal storage raw material

&#eat flo!r %!gar "mmonia %+immed mil+ powder Palm oil %alt ,1

1old storage raw material

B!tter Cas#ew Essences %+immed mil+ powder Condensed mil+

7(3 T70 P,(.)1T-(N P%&N 1(50/G

T#e prod!ction plan comes directly from company(s #ead office w#ic# is sit!ated at Bangalore every mont#1 T#e plan consists ofG Nariety name ow m!c# prod!ction to do for t#e partic!lar variety1

Total prod!ction in tons1 "rea w#ere varieties will -e dispatc#ed along wit# =!antity1 Dispatc# order1

THINGS YOU DONT KNOW ABOUT BRITANNIA

Britannia prod!cts are sold in over two million o!tlets6 reac#ing millions of c!stomers w#o -!y approJimately 21, -illion pac+ets eac# year1 " small army +eeps Britannia going E over 17< stoc+ +eeping !nits6 3<<< employees6 over 22<< a!t#ori*ed w#ole sellers and '5 depots1 T#e n!m-er of -isc!its prod!ced -y Britannia in one year wo!ld -e t#e e=!ivalent of one pac+ of twelve -isc!its for every two people in t#e world1 %tac+ed on top of eac# ot#er6 all Britannia -isc!its sold in a year wo!ld stand 1<6<<< times taller t#an Mo!nt Everest1

,2

 Britannia #as #ad a long association wit# cric+et and cric+et players1 Nearly #alf t#e mem-ers of t#e c!rrent $ndian cric+et team serve as its -rand am-assadors1 )a!nc#ed in 188B6 Tiger -ecame t#e largest selling Britannia -isc!it -rand in H!st , mont#s of la!nc#1 $t crossed 0s11 -illion sales mar+ in its very first year and is growing stronger1

/3(T &N&%'/-/

/T,0N4T7
>oodwill of company /inancially a very strong company Effective well designed and developed prod!ction and mar+eting networ+1 %!perior =!ality and service to provide maJim!m -enefits to c!stomers1 T#e family environment in t#e company1 Dedicated wor+ force1 Contin!o!s growt#1 Mar+et s#are of t#e company1 TaJ -enefit to t#e company1

30&2N0//0/
No !niform of t#e officers and of t#e wor+ers too1 %torage capacity of t#e company is limited1 )and is not properly !tili*ed1 0aw material is wasted at t#e time of !nloading1 3nit is sit!ated far away from main plant1 T#ere is no -oard of Britannia at t#e entry gate1 ,3

(PP(,T)N-T'
T#ere can -e minimi*ation of waste1 T#ere m!st -e more efficient !tili*ation of t#e raw material1 More and more incentives s#o!ld -e given to wor+ers to motivate t#em w#ic# #elp in increasing t#e employee moral1 T#ere can -e !se of t#e foreign tec#nologies for efficient !tili*ation of raw material so t#at t#e prod!ction of a -isc!it can -e increased1 )ang can -e !sed more efficiently1

T7,0&T/
New entrants in t#e -!siness T#reats of s!-stit!te prod!cts1 "vaila-ility of t#e ot#er -rands1 0ivalry among t#e competitions1 Taste and preference of c!stomers1

,,

P,-N1-P%0/ (* +,-T&NN-& P&NTN&4&,

B$) wor+s !nder some principles -eca!se it is a food man!fact!ring !nit1 T#e principles areG a; :ai*en -; 's( c; "CCP

2&-H0N
:ai*en means c#ange for improvement1 T#e word +ai*en is a Dapanese word and is made !p of two words ?:ai( and ?Ien@1 T#e word +ai means c#ange and Ien means -etter1 :ai*en is a contin!o!s small improvement in personal life as well as in official life1 "ll #!man -eings #ave an infinite -rain power w#ose !tili*ation does not re=!ire any eJpendit!re and small c#anges are easy to implement is t#e p#ilosop#y of +ai*en1
2ai!en is of three types:

Management oriented +ai*en >ro!p oriented +ai*en $ndivid!al oriented +ai*en

C#aracteristics of +ai*en program at B$)G a1 One s#o!ld wor+ smarter6 if not #arder1 -1 Management attention and responsiveness is very important1 c1 %!ggestion sc#eme is internal part of +ai*en1 d1 3se yo!r #ead not money1 e1 0e=!ires a fait# in t#e people1 f1 Opport!nities for improvement are every w#ere1

,'

: /E(* +,-T&NN-& -N.)/T,-0/ %-5-T0.

/ive ?s@ is an integrated concept for wor+ place management1 $t is determination to organi*e t#e wor+place6 to +eep it neat6 to clean6 to maintain standardi*ed conditions and to maintain t#e discipline t#at is needed to do a good Ho-1

/0-,-

/0-T(N

:E/ (* +,-T& NN-&

/7-T/)20

/0-/(

/0-20T/)

,5

/0-, $t is sorting -etween wanted and !nwanted t#ings in a selected area6 region or domain and get rid of w#at yo! do not need and aims at stratification management and dealing wit# t#e ca!ses of filt# activities11

/0-T(N
$t means a place for everyt#ing and everyt#ing in its place i1e1 esta-lis#ing a neat layo!t so yo! can always get H!st as m!c# of w#at yo! need it1 $t aims atG a1 " neat loo+ing wor+place1 -1 Efficient layo!t and placement c1 0aising t#e prod!ctivity1

/0-/(
$t deals wit# t#e Ho- of t#oro!g#ly cleaning t#e wor+place1 Cleaning as a form of inspection1 $t aims at *ero dirt and a good degree of cleanliness1

/0-20T/(
$t means standardi*ation w#ic# is needed to maintain %E$0$6 %E$TON and %E$%O1 $t leads to !se of vis!al management to avoid mista+es1 $t aims at management standards for maintaining t#e ' %1

/7-T/)20
$t means discipline w#ic# is called for strict ad#erence to a system form o!r present !nsystematic way1

,B

7&11P
7&11P: "CCP refers to #a*ardo!s activities critical control point1 $t is a str!ct!red application of t#e -asic r!les of preventing t#e food -orne diseases1

7&11P concept
$t incl!des followingG $dentification of potential food safety pro-lems1 Determination of now and w#ere t#ese can -e prevented1 Description of w#at to do and training of t#e personnel1 $mplementation and recording1

HACCP PRINCIPLES
Cond!ct a #a*ard analysis Determine t#e "CCPs Esta-lis# Critical )imit 9s; Esta-lis# a monitoring system1 Esta-lis# corrective actions1 Esta-lis# verification proced!res Esta-lis# doc!mentation1

WHY HACCP
Need for #ygiene re=!irements 9control meas!res; specific to food and process and t#eir associated potential #a*ards1 Prioriti*ing control meas!res1 Need for ens!ring t#at essential meas!res were correctly implemented and carried o!t1 ,7

 Need for planning of corrective meas!res in case of fail!re1 Need for monitoring t#e process parameters to -e a-le to control safety at all times1

.0P&,T50NT/I 7-0,&,17' (* T70 1(5P&N'

T#ere are mainly siJ departments of t#e company1 T#ese are as followsG

)N-T 70&.

7uman resource

&ccounts

Production

Purchase

5aintenance

Fuality

(fficers (fficers

(fficers (fficers (fficers (fficers

,8

70&./ (* .0P&,T50NT/ (* T70 1(5P&N'

)nit 7ead "cco!nts !man 0eso!rce Prod!ction P!rc#ase Engineering . /actory assistant %tandards G G Mr1 NeeraH "garwal Mr1 D#ananHay : G G G G 5r 5anas .utta Mr1 M!dit "garwal Mr1 %1:1 Mat#!r Mr1 Ma#a+ %ing# Mr1 "-#iHeet D!tta

'<

F)&%-T' &N. *((. /&*0T' P(%-1' (* T70 1(5P&N'

T#e p!rpose of t#is policy is to ens!re t#at we win t#ro!g# =!ality in t#e mar+et place1 T#is means t#at we m!st do every t#ing to ens!re consistent delivery of =!ality prod!cts to t#e c!stomers every time1 (ur commitment to Juality and food safety will be reflected in every action and is non negligible That means: "ll ingredients !sed in o!r factories always meet specified =!ality standards1 "ll factories and depots maintain #ig# standard of #ygiene w#ic# ens!res t#at o!r prod!cts are #ealt#y and safe for cons!mption1 O!r man!fact!ring prod!ct always ens!res delivery of prod!cts consistent wit# prod!ct and pac+ specifications w#ic# are free from contamination1 O!r s!pply c#ain practices ena-le delivery of fres# prod!cts to o!r c!stomers1

3e will fulfill these objectives through:

$nvesting in appropriate tec#nology and e=!ipping o!r factories ade=!ately1 &or+ing colla-orates wit# o!r -!siness partners to create win win -!siness o!tcomes1 Developing process w#ic# ena-le consistent delivery of =!ality prod!cts to o!r c!stomers1 Contin!ally training and retraining o!r employees and -!siness partners to create a c!lt!re t#at val!es =!ality and food safety as t#e core pillars of o!r -!siness1

'1

/MC> %ECTO0
T#e /MC> sector represents cons!mer goods re=!ired for daily or fre=!ent !se6 t#e main segments of t#is sector are personal care9oral care6 #air care6 soaps6 cosmetics6 toiletries;6 house hold care 9fa-ric was# and #o!se #old cleaners;6 branded and packaged foods, beverages 9#ealt# -everages6 soft drin+s6 staples6 cereals6 dairy prod!cts6 c#ocolates6 -a+ery prod!cts; and tobacco T#e $ndian /MC> sector is an important contri-!tor to t#e co!ntry(s >DP1 $t is t#e fo!rt# largest sector in t#e economy and is responsi-le for 'C of t#e total factory employment in $ndia1 T#e ind!stry also creates employment for many people in downstream activities6 m!c# of w#ic# is dis-!rsed in small towns and r!ral $ndia1 T#is ind!stry #as witnessed strong growt# in t#e past decade1 T#is #as -een d!e to li-erali*ation6 !r-ani*ation6 increase in disposa-le incomes and altered lifestyle1 /!rt#ermore6 t#e -oom #as -een also f!elled -y t#e red!ction in eJcise d!ties6 dereservation from t#e small2scale sector and t#e -!rgeoning affl!ent segment in t#e middle class t#ro!g# prod!ct and pac+aging innovations1 3nli+e t#e perception t#at t#e /MC> sector is a prod!cer of l!J!ry items targeted at t#e elite6 in reality6 t#e sector meets t#e everyday needs of t#e masses1 T#e lower2middle income gro!p acco!nts for over 5<C of t#e sector(s sales1 0!ral mar+ets acco!nt for '5C of t#e domestic /MC> demand1 Many of t#e glo-al /MC> maHors #ave -een present in t#e co!ntry for many decades1 B!t in t#e last ten yearsM many of t#e smaller r!ng $ndian /MC> companies #ave gained scale1 "s a res!lt6 t#e !norgani*ed and regional players #ave witnessed erosion in t#e mar+et s#are1

& P002 -N T( T70 P&/TKK

$n $ndia6 companies li+e $TC6 ))6 Colgate6 Cad-!ry and nestle #ave -een a domestic force in t#e /MC> sector well s!pported -y relatively less competition and #ard entry -arriers 9import d!ty was #ig#;1 T#ese companies were6 t#erefore a-le to c#arge a premi!m for t#eir prod!cts1 $n t#e conteJt6 t#e margins were also on t#e #ig#er side1 &it# t#e grad!al opening !p of t#e economy over t#e last decade6 /MC> companies #ave -een forced to fig#t for a mar+et s#are1 $n t#e process6 margins #ave -een compromised6 more so in t#e last siJ years 9/MC> sector witnessed decline in demand;1 '2

T70 1),,0NT &N. *)T),0 /10N&,-(KK

T#e growt# potential for /MC> companies loo+s promising over t#e long term #ori*on6 as per2 capita cons!mption of almost all prod!cts in t#e co!ntry is amongst t#e lowest in t#e world1 "s per t#e cons!mer s!rvey -y :%"2Tec#nopa+ in 2<<,6 of t#e total cons!mption eJpendit!re6 almost ,<C and 7C was acco!nted -y groceries and personal care prod!ct respectively1 0apid !r-ani*ation6 increased literacy and rising per capita income are t#e +ey growt# driver for t#e sector1 "ro!nd ,'C of t#e pop!lation in $ndia is -elow 2< years of age and t#e proportion of t#e yo!ng pop!lation in $ndia is -elow 2< years of age and t#e proportion of t#e yo!ng pop!lation is eJpected to increase in t#e neJt five years1 "spirations levels in t#is age gro!p #ave f!elled -y greater media eJpos!re6 !nleas#ing a latent demand wit# more money and a new mindset1 $n t#is -ac+drop6 ind!stry estimates s!ggest t#at t#e ind!stry co!ld triple in val!e -y 2<1' 9-y some estimates6 t#e ind!stry co!ld in si*e -y 2<1<;1 $n over view6 testing times for t#e /MC> sector are over and driving r!ral penetration will -e t#e going forward1 D!e to infrastr!ct!re constraints6 companies were !na-le to grow faster1 "lt#o!g# companies li+e )) and $TC #ave dedicated initiatives targeted are t#e r!ral mar+et6 t#ese are still at a relatively nascent stage1 T#e implementation of N"T wit# effect from "pril 16 2<<' is a step in t#e rig#t direction for t#e sector1 T#is #as simplified t#e taJ str!ct!re in t#e many ways6 as a res!lt of w#ic# /MC> companies are confident t#at prices will decline over t#e long term1 &e -elieve t#at t#e f!ll -enefit of N"T will -e reflected over t#e neJt 32' years1 T#e -ottlenec+s of conventional distri-!tion system are li+ely to -e removed once organi*ed retailing gains in scale1 C!rrently6 organi*ed retailing acco!nts for H!st 23C of retail sales is li+ely to to!c# 1<C over t#e neJt 32' years1 $n over view6 organi*ed retailing res!lt in disco!nt prices6 forced2-!ying -y offering many c#oice and also opens !p new aven!es for growt# for t#e /MC> sector1 >iven t#e aggressive plans of players li+e pantaloon6 Trent6 s#oppers stop and s#op rite1 &e are confident t#at on t#e -ac+ of economic transformation t#at $ndia #as witnessed since t#e early 188<s6 t#e middle class #as proposed in t#e co!ntry6 growing -y aro!nd 1<C to 12C per ann!m1 T#is transformation #as -een fed partly -y t#e eJplosion of new Ho-s for t#e yo!ng pop!lation6 primarily in software and ot#er service sectors1 T#is new fo!nd prosperity #as f!rt#er fed cons!merism6 w#ic# #as -enefited all t#e constit!ents of t#e /MC> sector1 >oing forward6 we '3

-elieve t#at accretion in income levels of t#e rising $ndian middle class and conse=!ent rise in disposa-le incomes will f!el cons!mption driven growt#1 Now6 w#ile determining t#e long term o!tloo+ for t#e sector mig#t seem easy6 w#en it comes to pic+ing an /MC> stoc+ investors1 &it# t#e mar+ets c!rrently at t#eir all time #ig#s6 and on an !pswing6 it is even more important to separate t#e w#eat from c#aff1 ere are some of t#e parameters t#at one s#o!ld +eep in mind w#ile considering an investment in t#e /MC> sector1

%(4-/T-1/ /T,0N4T7
&#ile p!rc#asing power is t#e f!nction of a economic growt# and rising disposa-le incomes6 awareness is a f!nction as t#e prod!ct reac# and its !sa-ility1 $t is in t#is conteJt t#at company(s logistics gain importance1 B!t logistics do not only mean a company(s reac# in terms of retail o!tlets1 $t also means t#e level of sop#istication of t#is distri-!tion reac#2#ow intelligent is t#is s!pply c#ain and is it well geared for t#e company(s f!t!re growt#T

P,(.)1T *(%-(
5N1s form almost #alf of t#e -randed /MC> ind!stry in $ndia1 $n case of MNCs t#erefore6 it is relevant to loo+ at t#e parent(s s!pport and commitment to its s!-sidiary -efore ma+ing an investment decision1 "gain6 s!pport and commitment alone is not eno!g#1 $nvestors need to loo+ at t#e parent(s prod!ct portfolio and its plans for $ndia1 $f t#e parent is present only across t#e limited category glo-ally6 all its s!pport to domestic s!-sidiary is of little #elp owing to its limited prod!ct portfolio1 /or all companies6 -e it domestic ot#erwise6 a loo+ at t#e company(s prod!ct introd!ction trac+ record can -e an eye2opener1 /ind #ow many prod!cts t#e company #as introd!ced in it(s year of eJistenceT ow relevant are t#ey to $ndia(s cons!mer #a-itsT ow s!ccessf!l #ave t#e prod!cts la!nc#es -een and w#at are t#e f!t!re plans of t#e company in terms of new prod!ctsT

1(5P0T-T-<0 /T,0N4T7/
T#e s!ccess of t#e /MC> companies is often attri-!ted to t#eir mar+eting and -randing s+ills2 a-ility to contin!o!sly create s!ccessf!l -rands and advertising w#ic# convey t#e message across1 Once a -rand is s!ccessf!l6 it is easier for t#e company to piggy-ac+ on its initial s!ccess

',

and introd!ce more prod!cts and associate wit# t#em +nown -rand1 "s t#y say6 ?not#ing s!cceeds li+e s!ccess@1 "s mentioned earlier6 greater t#e n!m-er t#e prod!ct is offering6 greater is t#e reso!rce !tili*ation6 -e it is t#e distri-!tion c#annel6 t#e mar+eting or -randing strengt#s1 $t is in t#is conteJt6 t#at single or few prod!ct companies are ris+y1 /irstly6 t#ey #ave to -e varying t#e competitors coming in and weaning away t#e mar+et s#are1 T#erefore t#ey #ave to consistently spend #ig#er amo!nts on advertising and mar+eting1 T#is is t#e do!-le w#ammy for t#e company !nder press!re1 On one #and6 reven!es are !nder press!re and on t#e ot#er #and6 costs go !p and on t#e ot#er6 costs go !p and margins are s=!ee*ed1 "lso6 d!e to t#is6 t#e company is often s#y of investing in new prod!ct and eJpanding distri-!tion networ+1 T#e -ottom2line is t#at f!t!re growt# prospects get st!nted1 &it# respect to MNC companies investors s#o!ld also loo+ at t#e n!m-er of s!-sidiaries t#e parent #as in t#e same co!ntry1 /or eJample6 P.> and glaJo smit# :line -ot# #ave ot#er s!-sidiaries -esides t#e listed entities1 $f t#e parent #as anot#er s!-sidiary6 especially if it is 1<<C owned6 t#en it is li+ely t#at t#e former wo!ld -e inclined to introd!ce new -rands and prod!cts t#ro!g# t#is s!-sidiary1 "s s!c#6 s#are#olders of t#e listed s!-sidiary will not -e a-le to reap t#e rewards of t#e prod!ct portfolio eJpansions1 $nvestors s#o!ld worry of investing in s!c# companies w#ere parent foc!s and plans are !nder a clo!d1

''

(+=01T-<0 (* T70 /T).'

T#e o-Hective for doing my s!mmer training is to ma+e my self capa-le for moving forward in corporate world6 to gain +nowledge . eJperience . +now #ow to wor+ in t#e organi*ation environment1 $t will #elp me to gain more . more a-o!t corporate sector6 w#ic# was very essential for me to do1 T#erefore $ Hoined +-% Pantnagar to improve my capa-ilities1

5&-N (+=01T-<0 ?To analy*e #ow &O0:$N> C"P$T") is maintained in +ritannia -ndustries %imited@

/)+-(+=01T-<0

"re t#e wor+ing capital system is s!fficient eno!g# to analy*e t#e a-ility of a company1 To +now t#e met#od of managing t#e wor+ing capital re=!irement of t#e organi*ation1 To see t#e difference -etween t#e t#eoretical +nowledge . practical +nowledge1

Period of study
$ did my s!mmer interns#ip at +,-T&NN-& -N.)/T,-0/ %T. , w#ic# is one of t#e largest /MC> Company in $ndia1 T#e d!ration of my st!dy was 5< days 97 wee+s;1 My timing of wor+ was from 8G3< "1M1 to 'G3< P1M16 5 days in a wee+1

/1(P0 (* T70 /T).'

$t provides !sef!l information for researc# and also introd!ces t#e researc#er wit# t#e practical pro-lem faced in t#e company1 T#is researc# is very important for any finance st!dent to gain a real time eJperience1 $ #ave done my researc# in Britannia in &or+ing capital management1 T#ere are many departments in Britannia -!t my researc# wor+ is confined wit# finance department w#ere $ st!died t#at #ow t#ey meet t#e re=!irement of wor+ing capital and #ow t#ey !se it in financial activities1 $n finance department6 $ st!died #ow t#ey manage t#eir different ratio wit# respect to t#e wor+ing capital1 '5

%-5-T&T-(N T( T70 /T).'

/ollowing are t#e limitations of t#is proHectG $t is mainly a secondary data -ased report and secondary data #as its own limitations1 T#e so!rce of data collection is limited to ann!al report of t#e company only1 T#e company does not s#ow t#eir cost . operating acco!nts to any researc# st!dents1 T#e interpretations of ratios re=!ire great ca!tion and eJpertise as it misleading in some cases1 D!e to t#e tig#t sc#ed!le of managers6 t#ere are some diffic!lties for trainee to get co2 operation and attention1

'B

C "PTE02$$$ 0E%E"0C MET ODO)O>4

'7

,0/0&,17 50T7(.(%(4'
&#en we tal+ of 0esearc# Met#odology6 we not only tal+ of t#e researc# met#ods -!t also consider t#e logic -e#ind t#e met#ods we !se in t#e conteJt of o!r researc# st!dy and eJplain w#y we are !sing a partic!lar met#od or tec#ni=!e and w#y we are not !sing so t#at researc# res!lts are capa-le of -eing eval!ated eit#er -y researc# #imself or -y ot#ers1 "s t#e title of t#e proHect s!ggests t#e proHect is a-o!t t#e st!dy of t#e wor+ing capital management in t#e company1 %o my o-Hective is t#at to +now t#at #ow t#e wor+ing capital s#o!ld -e maintained in t#e company . w#ic# met#od is !sed in t#is1

/&5P%0 /-H0
T#e sample si*e refers to t#e no1 of employees selected from t#e company to constit!te a sample1 T#e sample si*e !sed for st!dy incl!des two companies1

50T7(. (* /&5P%-N4
T#e process employed for t#e sample was Cl!ster %ampling1 %ample %i*eG 2 Met#od of %amplingG Cl!ster "rea of wor+G &or+ing capital management Met#od of Data collectionG %econdary ToolsG "nn!al report6 Balance s#eet6 $nternal so!rces1

'8

/(),10/ (* .&T& 1(%%01T-(N

/01(N.&,' .&T& %econdary data are t#ose w#ic# #ave already -een collected -y someone else and #ave already -een passed t#ro!g# t#e statistical process1 "cc1 to Dessel2?Data collected -y ot#er persons@ "ll t#e data #as -een collected from internal so!rce t#at incl!desG2 a; Maga*ines -; Boo+s c; &e-sites d; 0eports e; /iles f; %taff

.&T& 1(%%01T-(N 50T7(.

T#e data was collected -y me from -ot# t#e so!rces for my training proHect report1 $n case of secondary ways of data collection of maga*ines and -oo+s of Britannia were !sed1

5<

C "PTE0 E$N $NT0OD3CT$ON "BO3T &O0:$N> C"P$T") M"N">EMENT

51

3(,2-N4 1&P-T&%
&or+ing capital in s#ort may -e said as t#e capital re=!ired in meeting t#e s#ort tem needs T#e re=!irement of wor+ing capital differs from firm to firm1 T#e firm may re=!ire large amo!nt of wor+ing capital or may -e less6 it depends on t#e +ind of wor+ done -y t#e partic!lar organi*ation1

1%&//-*-1&T-(N (, 2-N./ (* 3(,2-N4 1&P-T&%

2inds of working capital

(n the basis of concept

(n the basis of time

4ross working capital

Net working capital

Permanent or fiLed working capital

Temporary or variable working capital

,egular working capital

,eserve working capital

/easonal working capital

/pecial working capital

52

4,(// 3(,2-N4 1&P-T&%: Total current assets

11 4ross working capitalG 2 >ross wor+ing capital refers to t#e firm(s investment in c!rrent assets1 C!rrent assets are t#e assets w#ic# can -e converted into cas# wit#in an acco!nting year and incl!de cas#6 s#ort term sec!rities6 de-tors6 9acco!nt receiva-le or -oo+ de-ts; -ills receiva-le and stoc+ 9inventory;1

N0T 3(,2-N4 1&P-T&%:

T#!s

C#ange in c!rrent assets and c!rrent lia-ilities

&or+ing capitalU c!rrent assets2 c!rrent lia-ilities Net working capitalG 2 Net wor+ing capital refers to t#e difference -etween c!rrent assets and c!rrent lia-ilities1 C!rrent lia-ilities are t#ose claims of o!tsider w#ic# are eJpected to mat!re for payment wit#in an acco!nting year and incl!de creditors 9acco!nt paya-le;6 -ills paya-le6 and o!tstanding eJpenses1 Net wor+ing capital can -e positive1 Or negative1 " positive net wor+ing capital will arise w#en c!rrent assets eJceed c!rrent lia-ilities1 " negative net wor+ing capital occ!rs w#en c!rrent lia-ilities s are in eJcess of c!rrent assets1

The two concepts of working c pit ! "gross n# net$ re not e%c!&si'e r ther( the) h 'e e*& ! signific nce fro+ the + n ge+ent 'iewpoint,

Permanent or fiLed working capital: $t is t#e minim!m amo!nt w#ic# is re=!ired to

ens!re effective !tili*ation of fiJed facilities and maintaining t#e circ!lation of c!rrent assets1 /or eJample every firm #as to maintain a minim!m level of raw material6 wor+2in2progress6 finis#ed goods and cas# -alance1 T#is minim!m level of c!rrent asset is called permanent or fiJed wor+ing capital as t#is part of capital is permanently -loc+ed in c!rrent asset1

Temporary or variable working capital: $t is t#e amo!nt of wor+ing capital w#ic# is

re=!ired to meet t#e seasonal demand and some eJigencies1 Naria-le wor+ing capital can -e f!rt#er -e classified as %easonal wor+ing capitalG t#e capital re=!ired to meet t#e seasonal needs of t#e enterprises is called as seasonal wor+ing capital1 53

%pecial wor+ing capitalG T#at part of wor+ing capital w#ic# is re=!ired to meet special eJigencies s!c# as la!nc#ing of eJtensive mar+eting campaigns for cond!cting researc# etc1

(P0,&T-N4 1'1%0 (* 3(,2-N4 1&P-T&%

%!fficient wor+ing capital is necessary to s!stain sales activity1 Tec#nically t#is is referred to as a operatingK cas# cycle1 $t can -e said to -e at t#e #eart of t#e need of wor+ing capital1 Cas#Koperating cycle is t#e lengt# of time necessary to complete following event1 Convert cas# into raw material1 0aw material into goods in process1 >oods in process into finis#ed goods1 /inis#ed goods into de-tors t#ro!g# credit sales6 and de-tor into cas#1 T#e cycle is a contin!o!s process

.0+T(,/

1&/7

/&%0/

,&3 5&T0,-&%

*-N-/70. 4((./

3(,2 -N P,(4,0//

5,

(P0,&T-N4 1'1%0

T#e &or+ing Capital cycle or Cas# Conversion cycle as it is also called is !s!ally eJpressed in terms of t#e n!m-er of days1 T#is fig!re is t#e average time t#at it ta+es to t!rn investment in -oo+s into cas# and profit1 Pay-ac+ eJpresses t#e n!m-er of days re=!ired to reco!p t#e original investment on a single title1 $n t#e organi*ation(s Balance %#eet t#ere will -e t#e costs of paper6 titles still !nder development6 and a!t#or advances of -oo+s already and not yet p!-lis#ed1 $n addition t#ere will -e t#e cost of stoc+s of !nsold -oo+s6 "cco!nts 0eceiva-le6 and "cco!nts Paya-le1

.eterminants of working capital

T#e re=!irements of wor+ing capital generally vary from ind!stry to ind!stry6 concern to concern and time to time1 Comparing t#e prod!ction cycle of B E) wit# any of t#e /MC> Company we will notice t#at6 B E) ta+es considera-ly longer period to man!fact!re a t!r-ine w#ile in /MC> companies( li+e )) or P.> ta+es few min!tes to man!fact!re t#eir prod!ct1 &or+ing capital in t#ese companies can -e even negative as t#ey ta+e credit from s!ppliers and sell t#eir prod!cts on cas#1 %o c!rrent lia-ilities are #ig#er d!e to w#ic# fig!re of wor+ing capital can -e negative1 T#e vario!s factor w#ic# infl!ence t#e amo!nt of wor+ing capital re=!ired -y a -!siness enterprises6 may -e gro!ped !nder two #eads1 1; -nternal factorG 2 T#e factor w#ic# are wit#in t#e control and competence of management1 T#ese may incl!de t#e ris+ ta+ing attit!de of management6 t!rn over of receiva-le and inventories terms of p!rc#ase and sale s and credit rating etc1 2; 0Lternal factorG 2 t#ese may incl!de t#e nat!re of -!siness6 vol!me of prod!ction and sales and -!siness cycle1

P0,5&N0NT &N. T05P(,&,' 3(,2-N4 1&P-T&%

T#e operating cycle t#!s crates t#e need for c!rrent assets 9wor+ing capital;1#owever t#is need does not come to an end after t#e cycle is completed1 $t contin!es to eJist1 T#!s t#e distinction -etween per+ nent and te+por r) wor+ing capital s#o!ld -e +nown1 B!siness +eeps on going even after t#e reali*ation of cas# from c!stomers6 w#ic# creates t#e need for reg!lar s!pply of wor+ing capital1 owever t#e magnit!de of &or+ing capital re=!ired 5'

is not constant6 -!t fl!ct!ating1 To carry on -!siness6 a certain minim!m level of &or+ing capital is necessary on a contin!o!s and !ninterr!pted -asis1 /or all practical p!rpose6 t#is re=!irement #as to -e met permanently as wit# ot#er fiJed assets1 T#is re=!irement is referred to as Permanent or fiJed &or+ing capital1 "ny amo!nt over or a-ove t#e permanent level of &or+ing capital is temporary6 fl!ct!ating or varia-le &or+ing capital1 T#is portion of t#e re=!ired &or+ing capital is needed to meet fl!ct!ation in demand conse=!ent !pon c#anges in prod!ction and sales as a res!lt of seasonal c#anges1 T#e -asic distinction -etween t#ese two isG

30 25 20 A !" 2 15 10 5 0
TEMPORARY WORKIN# CAPITAL

P0,5&N0NT 3( ,2-N4 1 &P-T&&%

*-N&N1-N4 (* 3(,2-N4 1&P-T&% T#e vario!s so!rces for t#e financing of wor+ing capital are as followsG

/ources of 3orking capital

55

Permanent or fiLed 11 %#ares 21 De-ent!res 31 P!-lic deposits ,1 Plo!g#ing -ac+ of profits '1 )oans from /inancial instit!tions1

Temporary or variable 11 Commercial -an+s 21 $ndigeno!s -an+ers 31 Trade creditors ,1 $nstallment credit '1 "dvances 51 "cco!nts 0eceiva-les2 CreditK/actoring B1 "ccr!ed eJpenses 71 Commercial papers

1&%1)%&T-(N (* 3(,2-N4 1&P-T&%

&or+ing capital is t#e eJcess of c!rrent assets over c!rrent lia-ilities1 $nformation regarding c!rrent assets and c!rrent lia-ilities is availa-le from t#e -alance s#eet1 &or+ing capital s#o!ld -e s!fficient to meet ro!tine re=!irement of t#e -!siness1 T#e two concepts of wor+ing capital are c!rrent assets and c!rrent lia-ilities1 T#ey #ave a -earing on t#e cas# operating cycle1 $n order to calc!late t#e wor+ing capital t#e wor+ing capital needs6 w#at is re=!ired is t#e #olding period of vario!s types of inventories6 t#e credit collection period and credit payment period1 &or+ing capital also depends on t#e -!dgeted level of activity in terms of prod!ctionKsales1 T#e calc!lation of wor+ing capital is -ased on t#e ass!mption t#at t#e prod!ctionKsales is carried on evenly t#ro!g#o!t t#e year and all costs accr!e similarly1 "s t#e wor+ing capital re=!irements are related to t#e cost eJcl!ding and not to t#e sale price1 &or+ing capital is comp!ted wit# reference to cas# cost1 T#e cas# cost approac# is compre#ensive and s!perior to t#e operating cycle approac# -ased on #olding period of de-tors and inventories and payment of creditors1 The computation of working capital can be summari!ed as follows: "-$ 0stimation of current asset : a$ 5inimum desired cash and bank balances b$ -nventories ,aw material 3ork-in-progress 5B

*inished goods c$ .ebtorsM Total current assets "--$ 0stimation of current liabilities : a$ 1reditorsMM b$ 3ages c$ (verheads Total current liabilities "---$ "-<$ Net working capital "----$ &dd: margin for contingency Net working capital reJuired

M -f payment is received in advance, the item would be listed in current liabilities MM -f advance payment is to be made to creditors, the item would appear under current asset The same would be treated for advance payment of wages and overheads

-5P(,T&N10 (, &.<&NT&40/ (* 3(,2-N4 1&P-T&%

&or+ing capital is t#e -lood and nerve centre of a -!siness1 D!st as circ!lation of -lood is essential in t#e #!man -ody for maintaining life6 wor+ing capital is very essential to maintain t#e smoot# r!nning of a -!siness1 No -!siness can r!n s!ccessf!lly wit#o!t an ade=!ate amo!nt of wor+ing capital1 T#e main advantages of maintaining ade=!ate amo!nt of wor+ing capital are as followsG /olvency of the business1 4oodwill 0asy loans 1ash discounts

57

,egular supply of raw materials ,egular payment of salaries, wages and other day-to-day commitments 0Lploitation of favorable market conditions &bility to face crisis Fuick and regular return on investments 7igh morale

3(,2-N4 1&P-T&% 5&N&4050NT

&or+ing Capital is t#e money !sed to ma+e goods and attract sales1 T#e less &or+ing Capital !sed to attract sales6 t#e #ig#er is li+ely to -e t#e ret!rn on investment1 &or+ing Capital management is a-o!t t#e commercial and financial aspects of $nventory6 credit6 p!rc#asing6 mar+eting6 and royalty and investment policy1 T#e #ig#er t#e profit margin6 t#e lower is li+ely to -e t#e level of &or+ing Capital tied !p in creating and selling titles1 T#e faster t#at we create and sell t#e -oo+s t#e #ig#er is li+ely to -e t#e ret!rn on investment1 T#!s w#en we #ave -een !sing t#e word investment in t#e c#apter on pricing6 we #ave -een disc!ssing &or+ing Capital1

&**01T (* +)/-N0// T,&N/&1T-(N/ (N 3(,2-N4 1&P-T&%

$n preparing a statement of c#anges in financial position6 on wor+ing capital -asis6 it is convient to classify -!siness transactions into t#ree categoriesG 11 Transactions &ffecting only 1urrent &sset or 1urrent liabilities &ccountsG T#ese transactions prod!ce c#anges in wor+ing capital acco!nts -!t do not c#ange t#e acco!nt of wor+ing capitals1 /or eJample6 t#e p!rc#ase of merc#andise increases inventory and acco!nts paya-le -!t #as no effect on wor+ing capitalM it may t#erefore -e ignored in preparing t#e statement of c#anges in financial positions1 %imilarly6 paying acco!nts paya-le affects cas#6 so t#is transaction wo!ld -e reflected in cas# -asis statement of c#anges in financial position1 owever6 t#e transaction #as no effect on wor+ing capital since a c!rrent asset 9cas#; and a c!rrent lia-ility 9acco!nts paya-le; decrease -y t#e same amo!nt1 ence6 t#e transaction wo!ld 58

not -e reflected as a so!rce or !se in a wor+ing capital -asis statement of c#anges in financial position1 Ot#er transactions li+e collection of receiva-les6 s#ort2term -orrowing6 p!rc#ase of s#ort2term government sec!rities also fall in t#is category of transactions1 T#!s6 w#en f!nds are defined as wor+ing capital6 t#ere is no need to s#ow t#e details of t#e more or less contino!s movement of reso!rces -etween c!rrent lia-ilities and c!rrent assets w#ic# res!lts from t#e man!fact!re and sale of goods and t#e collection of receiva-les from c!stomers1 $ndeed6 t#e foc!s is on t#e !s!ally more significant flows affecting non2c!rrent assets 9i1e1 long term investments; and permanent capital6 t#e name given to t#e s!m of long2term lia-ilities and owners( e=!ity1 T#!s t#e f!nds statement6 i1e1 %tatement of C#ances in /inancial Position -ased on c#anges in wor+ing capital position6 is a -etter and !sef!l tool for #ig#lig#ting t#e c#anges t#at #ave ta+en place in t#e financial operations -etween two -alance s#eet dates1 @ Transactions &ffecting 1urrent &sset or 1urrent %iability &ccount and a Non-3orking 1apital "Non-current$ &ccount: T#ese transactions -ring a-o!t eit#er an increase or a decrease in t#e amo!nt of wor+ing capital1 T#e iss!e of long2term -onds6 for eJample6 increases c!rrent assets and increases loan on -onds6 a non2wor+ing capital acco!ntM t#erefore t#e iss!e of -onds is a so!rce of wor+ing capital1 %imilarly w#en t#e -onds approac# mat!rity t#ey are transferred to t#e c!rrent lia-ility classification in t#e -alance s#eet1 T#is ca!ses a red!ction 9a !se; of wor+ing capital1 $f c#anges in non2wor+ing capital acco!nts are analy*ed6 t#ese events are -ro!g#t to lig#t6 and t#eir effect on wor+ing capital will -e reported in t#e statement of c#anges in financial position1 8 Transactions affecting only Non-current &ccountsG T#ese transactions #ave no direct effect on t#e amo!nt of wor+ing capital1 T#e entry to record depreciation is an eJample of s!c# a transaction1 Ot#er transaction in t#is category6 s!c# as iss!e of s#are capital in eJc#ange for plant assets6 are called eJc#anged transactions involving only non2c!rrent acco!nts and are viewed as -ot# a so!rce and a !se of wor+ing capital6 -!t do not c#ange t#e amo!nt of wor+ing capital1 "lternatively6 s!c# eJc#ange transactions may not -e considered in preparing a statement of c#anges in financial position on wor+ing capital -asis1

3(,2-N4 1&P-T&% &N&%'/-/ (, 50&/),-N4 T70 3(,2-N4 1&P-T&%

B<

T#e wor+ing capital is a means to r!n t#e -!siness smoot# and profita-ly6 and not an end1 T#!s6 concept of wor+ing capital #as its own importance in a going concern1 " going concern6 !s!ally6 #as a positive -alance of wor+ing capital i1e16 t#e eJcess of c!rrent assets over c!rrent lia-ilities6 -!t sometimes t#e !ses of wor+ing capital may -e more t#an t#e so!rces res!lting into a negative val!e of wor+ing capital1 T#is negative -alance is generally offset soon -y gains in t#e following periods1 " st!dy of c#anges in t#e !ses and so!rces of wor+ing capital is necessary to eval!ate t#e efficiency wit# w#ic# t#e wor+ing capital is employed in t#e -!siness1 T#is involves t#e need of wor+ing capital analysis1 T#e analysis of wor+ing capital can -e cond!cted t#ro!g# a n!m-er of devices6 s!c# asG 11 0atio analysis 21 /!nds flow analysis 31 B!dgeting

,atio &nalysis: " ratio is a simple arit#metical eJpression of t#e relations#ip of one
n!m-er to anot#er1 T#e tec#ni=!e of ratio analysis can -e employed for meas!ring s#ot2term li=!idity or wor+ing capital position of t#e firm1 T#e following ratios can -e calc!lated for t#is p!rposeG 1urrent ratio &cid test ratio &bsolute liJuid ratio or cash position ratio -nventory turnover ratio ,eceivables turnover ratio Payables turnover ratio 3orking capital turnover ratio 3orking capital leverages ,atio of current liabilities to tangible net worth

&sset )sage
B1

T#e assessment of asset !sage is important as it #elps !s to !nderstand t#e overall level of efficiency at w#ic# a -!siness is performing1 T#e -asic e=!ations for t#is section areG

Total &sset Turnover

T!rnover Total "ssets "verage %toc+s Credit %alesK35' "verage De-tors Credit %alesK35' "verage Creditors Credit %alesK35'

/tock Turnover

.ebtorsE Turnover

1reditorsE Turnover

T#e assessment of asset !sage is important as it #elps !s to !nderstand t#e overall level of efficiency at w#ic# a -!siness is performing1

B2

.-**0,0N10 +0T300N 1&/7 *%(3 &N. *)N. *%(3 /T&T050NT

+&/-/ (* .-**0,0N10 ME"N$N> 1&/7 *%(3 /T&T050NT $t is a statement of c#anges in t#e financial position of -!siness d!e to t#e inflow and o!tflow of P)"NN$N> PE0$OD 0E)$"B$)T4 cas#1 %tatement of cas# flow is re=!ired for s#ort range planning1 Plans for more immediate f!t!re can rely !pon information T0E"TMENT O/ C300ENT "%%ET% s!pplied -y cas# flow statement1 $t does not treat all c!rrent assets as cas#1 *)N./ *%(3 /T&T050NT $t is a statement of c#anges in t#e financial position of -!siness d!e to t#e inflow and o!tflow of f!nds1 /!nds flow statement is re=!ired for long range planning1 Plans for more immediate f!t!re cannot rely !pon information s!pplied -y f!nds flow statement1 $t treats all c!rrent assets at par wit# f!nds6 alt#o!g# de-ts are collected wit#in mont#s and stoc+ is sold T0E"TMENT O/ C300ENT )$"B$)$T$E% C"% K/3ND% /0OM OPE0"T$ON B"%$% $ncrease in -an+ overdraft and increase in o!tstanding eJpenses are treated separately1 &#ile ma+ing cas# flow statement cas# from operation is calc!lated1 Prepared on cas# -asis1 wit#in 5 mont#s1 $ncrease in o!tstanding eJpenses is treated as increase in overdraft1 &#ile ma+ing f!nds flow statement f!nds from operation is calc!lated1 Prepared on accr!al -asis1

3orking capital budget:

" -!dget is a financial andKor =!antitative eJpression of -!siness plans and policies to -e p!rs!ed in t#e f!t!re period of time1 &or+ing capital -!dget6 as a part of total -!dgeting process of a -!siness6 is prepared estimating f!t!re long2term and s#ort2term wor+ing capital needs and t#e so!rces to finance t#em6 and t#en comparing t#e -!dgeted fig!res with the actual performance
for calculating variances, if any, so that corrective actions may be taken in the future. The objective of working capital budget is to ensure the availability of funds as and when needed, and to ensure effective utilization of these resources. The successful implementation of working capital budget involves the

B3

preparing of separate budgets for various elements of working capital, such as cash, inventories and receivables, etc.

&or+ing Capital Management 9De-t vs1 E=!ity;

&or+ing capital is t#e money yo! will need to +eep yo!r -!siness going !ntil yo! can cover yo!r operating costs o!t of reven!e1 "s a small -!siness owner6 it will -e wise to #ave eno!g# wor+ing capital on #and to cover items s!c# as t#e following d!ring t#e first few mont#s t#at yo! are in -!sinessG V ,eplacing inventory and raw materials: yo! will need to f!nd t#e p!rc#ase of inventory o!t of wor+ing capital !ntil yo! start to see cas# from sales6 w#ic# co!ld ta+e mont#s1 V Paying employeesG even t#e most loyal wor+er wants to get paid on time6 regardless of #ow m!c# or #ow little cas# yo!r firm earns d!ring its first mont#s1 V Paying yourselfG !nless yo! #ave made ot#er arrangements6 yo! will need to wit#draw some money to s!pport yo!rself1 V .ebt paymentsG if yo! #ave -orrowed money to get started6 yo! pro-a-ly #ave to -egin repaying it rig#t away1 Missing yo!r first loan payments will not do yo!r credit rating any good1 V &n emergency fundG yo! need some cas# on #and to cover !nforeseen s#ortfalls t#at may res!lt from any n!m-er of factors s!c# as delays in getting yo!r space ready6 a slow paying client6 or slow -!siness1

.ebt vs 0Juity &ssessments

$t is essential t#at yo! assess t#e relative merits of eac# form of f!nding for yo!r specific -!siness1

.0+T
Ta+e on Creditors )ow EJpected 0et!rn %maller /!nding "mo!nts B,

0F)-T'
Ta+e on Partners ig# EJpected 0et!rn )arger /!nding "mo!nt

Periodic Payments Mat!rity Date More 0estrictions &.<&NT&40/ (* )/-N4 .0+T De-t is not an owners#ip interest in t#e -!siness1 Creditors generally do not #ave voting power1

No %#ort2Term Payments Open2Ended ? EJit@ Date )ess 0estrictions .-/&.<&NT&40/ (* )/-N4 .0+T 3npaid de-t is a lia-ility of t#e -!siness1 $f it is not paid t#en t#e creditors can legally claim t#e assets of t#e firm1 T#is action can res!lt in li=!idation or reorgani*ation1

T#e payment of interest on de-t is considered a 4o!r -!siness m!st earn at least eno!g# money cost of doing -!siness and is f!lly taJ ded!cti-le1 to cover for t#e interest eJpense6 ot#erwise yo! may not -e a-le to pay yo! interest w#ic# may lead to defa!lt 9financial distress;1 T#e creditors will only -e concerned t#at t#e -!siness will -e a-le to generate cas# flow to cover interest eJpenses1

&.<&NT&40/ (* )/-N4 0F)-T'

.-/&.<&NT&40/ (* )/-N4 0F)-T'

3nli+e o-ligation of de-t6 yo!r -!siness will not E=!ity is an owners#ip of t#e -!siness1 %o an #ave any contract!al o-ligation to pay for e=!ity dividend1 E=!ity financing also allows yo!r -!siness to o-tain f!nds wit#o!t inc!rring de-t6 or wit#o!t #aving to repay a specific amo!nt of money at a partic!lar time1 e=!ity partner will #ave a direct say a-o!t yo!r -!siness1

5aking more efficient use of 3orking 1apital

T#e ta-le -elow lists items6 w#ic# infl!ence &or+ing Capital levels favora-ly and adversely B'

-tems that reduce 3orking 1apital levels for publishers 2 $ncreased profit margins 2 C!stomers w#o pay promptly 2 "dvance payments -y c!stomers 2 $nventory w#ic# is sold and paid for =!ic+ly -y c!stomers after p!-lication 2 )ower $nventory levels -y red!cing print =!antities and wor+ing wit# printers w#o will deliver =!ic+ly and prod!ce low print r!ns economically

-tems that increase 3orking 1apital levels for publishers 2 )ower profit margins 2 )ong print r!ns eJcept w#ere all t#e -oo+s are re=!ired on p!-lication e1g1 %c#ool and !niversity teJt-oo+s 2 %low a!t#ors w#o deliver late and w#ose man!scripts re=!ire s!-stantial editing 2 olding paper stoc+ !nless mar+et conditions demand and t#e savings are large 2 %low sc#ed!les for t#e development of new titles 2 Ma+ing advance payments to printers 2 %easonal sales eJcept w#ere t#e p!-lis#ers prints only for t#e season

2 %!ccessf!l promotion t#at speeds !p t#e rate of sale

2 )icensing 9-!t pro-lematic in yo!ng economies; 2 Paying s!ppliers on completion wit# credit 2 "!t#ors w#o deliver man!scripts on dis+ ready for comp!ter ma+e2!p 2 $ncentives to staff 6 a!t#ors 6 s!ppliers6 c!stomers 6 sales staff and agents to speed !p t#e rate of sale and of developing new -oo+s6 delivering man!scripts on sc#ed!le

5easures to -mprove 3orking capital management

B5

VT#e essence of effective &or+ing capital management is proper cas# flow forecasting1 T#is s#o!ld ta+e into acco!nt t#e impact of !nforeseen events6 mar+et cycles6 loss of a prime c!stomer and actions -y competitors1 T#e effect of !nforeseen demands of &or+ing capital s#o!ld -e factored in1 V $t pays to #ave contingency plans to tide over !neJpected events1 &#ile mar+et2leaders can manage !ncertainty -etter6 even ot#er companies m!st #ave ris+2management proced!res1 T#ese m!st -e -ased on o-Hective and realistic view of t#e role of &or+ing capital V "ddressing t#e iss!e of &or+ing capital on a corporate2wide -asis #as certain advantages1 Cas# generated at one location can well -e !tili*ed at anot#er1 /or t#is to #appen6 information access6 efficient -an+ing c#annels6 good lin+ages -etween prod!ction and -illing6 internal systems to move cas# and good treas!ry practices s#o!ld -e in place1 V "n innovative approac#6 com-ining operational and financial s+ills and an all2encompassing view of t#e company(s operations will #elp in identifying and implementing strategies t#at generate s#ort2term cas#1 T#is can -e ac#ieved -y #aving t#e rig#t set of eJec!tives w#o are responsi-le for setting targets and performance levels1 T#ey are t#en #eld acco!nta-le for delivering6 enco!raged to -e enterprising and to act as c#ange agents1 V Effective disp!te management proced!res in relation to c!stomers will go along way in freeing !p cas# ot#erwise loc+ed in d!e to disp!tes1 $t will also improve c!stomer service and free !p time for legitimate activities li+e sales6 order entry and cas# collection1 Overall6 efficiency will increase d!e to red!ced operating costs1 V Colla-orating wit# yo!r c!stomers instead of -eing foc!sed only on own operations will also yield good res!lts1 $f feasi-le6 #elping t#em to plan t#eir inventory re=!irements efficiently to matc# yo!r prod!ction wit# t#eir cons!mption will #elp red!ce inventory levels1 T#is can -e done wit# s!ppliers also1 &or+ing capital management is an important yardstic+ to meas!re a company operational and financial efficiency1 T#is aspect m!st form part of t#e company(s strategic and operational t#in+ing1 Efforts s#o!ld constantly -e made to improve t#e &or+ing capital position1 T#is will yield greater efficiencies and improve c!stomer satisfaction

BB

/tructure of 3orking 1apital of +-%

T#e analysis of str!ct!re of wor+ing capital ena-les management of an enterprise to +now as to #ow t#e wor+ing capital is -eing administered1 $t also f!rnis#es val!a-le information to t#e s#ort term creditors and ot#ers regarding t#e strengt# of wor+ing capital of t#e !nderta+ing1 T#e str!ct!re of wor+ing capital can also -e analy*ed -y meas!ring t#e c#ange t#e proportion of cas#6 receiva-le6 inventory and ot#er items to t#e total c!rrent assets in co!rse of time1 T#is analysis points o!t t#e components w#ic# #ave over grown and w#ere !nd!ly #ig# f!nd #as -een tied !p1 T#is analysis may -e carried f!rt#er to eac# component of c!rrent assets to st!dy t#e c#anges in its s!-2divisions1 $nvestment in wor+ing capital is generally considered as dead investment as it6 does not contri-!te towards company(s profit generating capacity -!t are also re=!ired6 so it s#o!ld -e done in s!c# a way t#at it does not create any side2effects li+e -loc+age of money1 $n comparison to wor+ing capital6 investments s#o!ld -e more in fiJed assets w#ic# are prod!ctive and contri-!te towards firm(s profit1

3(,2-N4 1&P-T&% P&TT0,N (* +-%

B7

9$n F<<<;

1),,0NT &//0T -nventory /undry debtors 1ash & bank balance (ther 1 & %oans & advances T(T&% 1 & 1),,0NT %-&+-%-T-0/ 1urrent liabilities Provision T(T&% 3(,2-N4 1&P-T&% T),N(<0, 3 1 1(N<0,/-(N P0,-(. "in days$

@AA;-AC 21,8,<5 275<B< ,75,5< 1B<8 78<<15 3713551

@AA:-A; 17,B8'5 2<7'15 3'338' '''7 8,<5'2 33'5<BB

@AA9-A: 13,1788 ,,31,B 153<52 217' 531,57 2'71B51

2371158 7,8<8B 323<255 '7338'

22,B<<5 B73313 3<3<318 32'B'7 1,'2'1,8 1'1

2<'8B1B 8B3,31 3<331,7 9,'137B; 1<3351, 1B3

B8

"3orking 1apital N Total current assets B Total current liabilities$

3orking capital pattern of +-% of last @ years &00000 5&33(5 600000

%00000 200000 0 $200000 $%00000 $600000 $%513&'
200%$05 2005$06 2006$0'

325'5&

7<

71

/7&,07(%.-N4 P&TT0,N (* +,-T&NN-&

1ategory & PromoterEs 7olding 11 Promoter(s 2 $ndian 2 /oreign 21 Persons acting in concert /ub Total + Non-PromoterEs 7olding 31 $nstit!tional $nvestor a1 M!t!al /!nds and 3T$ -1 Ban+s6 /inancial instit!tions6 ins!rance companies 9CentralK%tate >ovt1 $nstit!tionsK Non2>ovt1 $nstit!tions; c1 /oreign $nstit!tional $nvestors 9/$$s; /ub Total ,1 Ot#ers a1 Private Corporate -odies -1 $ndian P!-lic c1 N0$sKOCBs d1 "ny Ot#er /ub Total 4,&N. T(T&% No of shares held @AA9-A: B'< 121B321 8 2 6@6C8#; # 66C6;6# 9 751837 ,13B3B< 1,<2,78 ;9A6C#C 33783, ,7'118' 12<377 377< :8698#C @8?#A6; 8 @AA:-A; B'< 121B321 8 2 6@6C8#; # 66C6;6# 9 5'3B85 3253233 28BB5'5 ;?#9;?: 23'2'3 ,,5B717 11,1,7 ,28< 9?@6:A# @8?#A6; 8 Oage of share holding @AA9-A: @AA:-A; <1<< '<185 2 :A #; 9# A9 3151 1B132 '17B @; ?A 11,2 2<13< <1'< <1<2 @@ @9 6AA AA <1<< '<185 2 :A #; 9# A9 21B, 13155 121,5 @? ?; <187 171B< <1,7 <1<2 @A 6? 6AA AA

72

P-0 17&,T /7(3-N4 /7&,07(%.-N4 P&TT0,N (* +-%*(, T70 '0&, @AA:-A;

0)%& 1&)' 0)(& 12)%6 13)66 I*+,"* P -.-/! 0 M2/2"3 42*+0 5 UTI FII0 I*+,"* P2:3,8 O/<! 2)'%

0)02 0

50)(6

F- !,1* P -.-/! 0 B"*60 P ,7"/! 8- 9- "/! :-+,!0 NRI0;OCB0

73

P-0 17&,T /7(3-N4 /7&,0 7(%.-N4 P&TT0,N (* +-% *(, T70 '0&, @AA9-A:

0)5 20)3 1)%2 5)&' 1')32 3)61

0)02 0

50)(6

I*+,"* P -.-/! 0 M2/2"3 42*+0 5 UTI FII0 I*+,"* P2:3,8 O/<!

F- !,1* P -.-/! 0 B"*60 P ,7"/! 8- 9- "/! :-+,!0 NRI0;OCB0

7,

7'

3(,2-N4 1&P-T&% *(, T70 '0&, @AA:-A; +,-T&NN-& -N.)/T,-0/ %T. P&NTN&4&, ")TT&,&27&N.$
4I% P&,T-1)%&,/ &5()NT T(T&%

1),,0NT &//0T/
1%(/-N4 /T(12 2<'<< 1 2<'<< 2 2<'<< 3 2<'<< , 2<5<< < 2<5<< 1 2<5<< 2 2<B<< 3 2<B<1 3 2<B<1 8 $NNENTO04 /O $NNENTO04 %D $NNENTO04 )DO $NNENTO04 EN>>1%T0 $NNENTO04 $N>0ED$ENT $NNENTO04 P"C:$N> $NNENTO04 CBB%6C)%> $NNENTO04 /> B$%C3$T% $NNENTO04 &$P2 >OOT C)O%$N> %TOC: $NN /> 23752B817B 13183'B1,, BB'753182 3<8<<7<115 28181221181 2<37B'751' 22,''B<1', '51,78812' 1'1,1212' ''2B8<121

&I1 ,010-<&+%0 21<<< < "CCO3NT% 0ECE$N"B)E DOME%T$C 1&/7 -N 7&N. 211<< 2 211<, 3 C"% $N "ND2DE) B0 C"% $N "ND23" 1&/7 &T +&N2 213<' 2 213<' 3 21311 1 C$T$ B"N: DE) $ M"$N C$T$ B"N: DE) $ D$%B D/C D$%B B"N:23" < < 23353B1,7 < 3,,B5 12<,7178

75

(* +,-T&NN-& -N.)/T,-0/ %T. Pantnagar ")ttarakhand$ 4I% P&,T-1)%&,/ &5()NT T(T&%

1),,0NT &//0T/
2<'<<1 2<'<<2 2<'<<3 2<'<<, 2<5<<< 2<5<<1 2<5<<2 2<B<<3 2<B<13 2<B<18 2<8<<< 21<<<< 1%(/-N4 /T(12 $NNENTO04 /O $NNENTO04 %D $NNENTO04 )DO $NNENTO04 EN>>1%T0 $NNENTO04 $N>0ED$ENT $NNENTO04 P"C:$N> $NNENTO04 CBB%6C)%> $NNENTO04 /> B$%C3$T% $NNENTO04 &$P2 >OOT C)O%$N> %TOC: $NN /> )OO%E TOO)% &I1 ,010-<&+%0 "CCO3NT% 0ECE$N"B)E DOME%T$C 1&/7 -N 7&N. C"% $N "ND2DE) B0 C"% $N "ND23" P,0P&-. 0>P0N/0/ P0EP"$D ESPEN%E% M$%C P0EP"$D $N%30"NCE P0EP"$D )E"%E 0ENT") P0EP"$D MED$C") $N%301 P0EP"$D 0"TE% . T"SE% P0EP"$D >0O3P $N%30 "DN"NCE %T"// T0"NE) DOM 3-P 2<2<<< 2<2<<1 C&$P "3C2 D.M9C&$P; T(T&% 1),,0NT &//0T/ < '3582B1157 69::9A#:? ? 12'<8<117B 1B3B''21B5 1322'<1112 5'B183,132 7,,32BB<1, 152,8B271<8 2,,,2<B1,, 18811B'21'B 1328721B 1558<5111 8<'<'117 ,785<'<127

211<<2 211<,3

< 1'81B

22<<<2 22<<<3 22<<<, 22<<<5 22<<<8 22<<,1 22<<38

1,,,5157 '8<'2 < < < ''1' ',,1B

1),,0NT %-&+-%-T-0/
111<<< 111<<1 111<<2 111<<3 111<<, 111<<' 111<<B +-%%/ P&'&+%0 "CC P"4"B)E DOME%T$C "CC P"4"B)E ESPO0T "CC P"4"B)E ONE ND "CC P"4"B)E %T"T3T "CC P"4"B)E EMP) "CC P"4"B)E %%$ "CC P"4"B)E "& NENDO0 ,'5<538<13 < '1381 '2'2<2 2<3< 13'3<< <

7B

1<,1,3 1<,12B 1<,117 1<,15' 1<,2<1 1<,2<2 1<,2<3

DEPO%$T P"4"B)E NEND0 DEPO%$T P"4"B)E C3%T OT C1%1T P"4"B)E &O0: CONT T"S P"4"B)E "PMC C)E"0$N> "KC >0K$02C)E"0$N>2P0O /0E$> T C)E"0$N> 9MM;

2B'<<< 1'<<<< ,1',178 273BB < 2B213<818 12<,558B187

1<,<15 1<,<1B 1<,<23 1<,<2' 1<,<33 1<,22< 1<,2<B 1<,2<8 1<,21< 1<,217 1<,2,, 1<,2,' 1<,2,5 1<,1'2

&11,)0. & (I/ 0>P0N/0/ "CC M$%C ESPEN%E% "CC ON&"0D /0E$> "CC0 P0$M"04 /0E$> T "CC0 %")"0$E% . &">E% "CC0 )O"D$N> "CC0 T"S %E0N$CE TD% CONT0"CTO0 % 18, C TD% 0ENT %EC 18,1 TD%2 P0O/1/EE% 18, D TC% C3%T %C0"P %")E N"T P"4"B)E N"T $NP3T C0ED$T 0M N"T $NP3T C0ED$T C> M$%C 0ECONE04 1,0.-T(,/ CO CONT0 >P/ )$" "KC CO CONT0 E%$ )$" "KC 0ET1 P"4"B)E NENDO0 EMP) CONT0 E%$C %T")E C DELE K"C EMP) CONT0 >P/ ENT04 T"S TD% $NT DEP %EC 18, " ""CO DEP P"4"B)E C3%TM P,(<-/-(N/ P0ON /O0 BON3% P0ON >0"T3$T4 /3ND P0ON1 /O0 )T" P0ON )E"NE ENC"% MENT T(T&% 1),,0NT %-&+-%-T-0/ 3(,2-N4 1&P-T&%"1&-1%$

7<B5,88175 5583521B1 2558B2371B1 51,<81 7183, < '1BB52 21<<, B28 55,51'1 751,21<2 < < <

1<,<'< 1<,<'3 1<,1', 1<,<5, 1<,127 1<,<5B 1<,12, 1<,12' 1<,125

B1111 332<< 7,255<51<5 122'5 B<8,51<B 5258B 1<2B'<13B < <

11<<<2 11<<<5 11<<11 1<,<1,

82'2B51,, 53'<5,153 < 11,387115 6A?CC6:;? ;

8;C;#8#A

77

- "% PE0 C "N>E $N T E PO)$C4 O/ T E O0>"N$%"T$ON )OO%E

TOO)% "NE BEEN CONNE0TED $NTO /$SED "%%ET% /0OM C300ENT "%%ET% &$T "//ECT /0OM "P0$) 2<<B1

78

5&N&4050NT (* -N<0NT(,'
P0,10NT&40 (* -N<0NT(,' T( 3(,2-N4 1&P-T&%

9$n F<<<; -nventory 31 ,atio of inventoryI 31

@AA;-AC 21,8,<5 '7338' 3571,3

@AA:-A; 17,B8'5 32'B'7 '5B12B

@AA9-A: 13,1788 9,'137B; 28B127

"-ove ta-le s#ows t#e inventory and wor+ing capital relations#ip in B$) 1$t appears from t#e analysis t#at t#e percentage of inventory to &C is reasona-le considering t#e nat!re and t#e si*e of t#e -!siness6 for t#e given period i1e1 <,2<' to <'2<5 1 ow ever in <'2<5 it #as increased marginally1 >enerally inventory in any -!siness enterprise s#o!ld -e +ept at minim!m1 $nventory in eJcess of t#is limit is a sign of eJcessive -!ying and slow !se of material reason -eing t#e large prod!ction cycle1 ow ever t#is ratio can differ from $nd!stry to ind!stry1 eavy man!fact!ring ind!stries c#aracteri*ed -y a long prod!ction cycle invaria-ly #ave #ig#er inventory to wor+ing capital ratio as indicated -y t#e fig!re inventory to wor+ing capital ratio as indicated -y t#e fig!re1

8<

2500000 567.27 2000000 2149406

600

1847956

500

1500000

1341899 400 368.43

1000000 297.28 500000 325758 200 0 2004-05 2005-06 2006-07 100 -451387 583395 300

-500000

-1000000 Inventory Working capital Ratio of in ventory to W R!I"# $%&I'%(

81

5&N&4050NT (* .0+T(,/

9$n crores;

@AA;-AC 275<B< '7338'

@AA:-A; 2<7'15 32'B'7

@AA9-A: ,,31,B 9,'137B;

.ebtors 3orking capital

O of debtors to working capital ,81<3 5,1<<8C 98711B;C P0,10NT&40 (* .0+T(,/ T( 3(,2-N4 1&P-T&%

T#e st!dy of de-tors and wor+ing capital relations#ip is s#own in a-ove ta-le1 T#e analysis of t#e ta-le reveals t#at t#e amo!nt of de-tors in B$) is on an average 71C of wor+ing capital d!ring t#e a-ove stated period6 w#ic# means not very large amo!nt of wor+ing capital6 is -loc+ed in de-tors6 -!t still it s#o!ld -e minim!m ass m!c# as possi-le1 )oo+ing at t#e trend d!ring t#e period6 B$) de-tors to wor+ing capital ratio #as -een fl!ct!ated1 $t #as increased from <,2<' to <'2<51

82

800000 64.009 600000 443147 400000 286070 208516 200000 49.03

80

60

40 20

)e*tor+ Working capital Ratio to W R!I"# $%&I'%(

-20 0 2004-05 2005-06 2006-07

-40

-200000

-60 -80

-400000 -98.17 -100

-600000

-120

83

5&N&4050NT (* 1&/7
P0,10NT&40 (* 1&/7 T( 3(,2-N4 1&P-T&%
9$n crores;

@AA;-AC ,75,5< '7338'

@AA:-A; 3'338' 32'B'7

@AA9-A: 153<52 9,'137B;

1&/7 3orking capital O of 1ash to working capital

73137C

1<71,7C

935112;C

"-ove ta-le s#ows t#e relations#ip of cas# to wor+ing capital for t#e companies d!ring t#e period <,2<' to <52<B On analy*ing t#e ta-le we find t#at cas# was on an average '1181C of wor+ing capital in B$)6 w#ic# is not6 a good sign as eJcess of li=!idity is also #armf!l1 $t is clear from a-ove ta-le t#at d!ring <,2<' t#e ratio was negative w#ere as in <'2<5 it was too #ig# as to <52<B w#ic# #as decreased to 73137C along wit# increasing cas#1 T#is s!ggests t#at B$) need to ta+e some good steps for maintaining t#e ade=!ate li=!idity along wit# s!fficient cas# generating power1

8,

"t t#e year end cas# collection is #ig# in comparison to w#ole year t#at is t#e reason company #as #ig# percentage of cas# to wor+ing capital1

8'

800000 108.48 600000 583395 486460 83.38 400000 353395 325758

120

100

80

60

200000

163062

40

0 2004-05 2005-06 2006-07

20

0 -200000 -20 -400000 -36.12 -451387 -600000 -60

-40

$%,-

Working capital

. ofca+/ to 0orking capital

85

%(&N/ &N. &.<&N10/

%(&N/ &N. &.<&N10/ &/ & O (* 3(,2-N4 1&P-T&%

9$n crores;

@AA;-AC '7338' 78<<15

@AA:-A; 32'B'7 8,<315

@AA9-A: 9,'137B; 531,57

3orking 1apital loans and advances O of loan and advances to 31

1'21''

27715'

9138178;

Ta-le s#ows t#e relations#ip of loans and advances as a percentage of wor+ing capital in B$) d!ring t#e period <,2<' to <52<B1 D!ring t#is period loans and advances acco!nted an average increase of 1<<1,, C1 "ccording to common norms loans and advances s#o!ld -e made as low as possi-le !nless t#ey earn reasona-le ret!rns1 D!ring t#e a-ove period percentage #as -een consistently increased along wit# loans and advances in last year it6 w#ic# is a negative sign1

8B

1200000

350 300 890016 250

1000000

940316 288.65

800000 631468 600000 200 583395 152.55 325758 150 100 50 0 2004-05 -200000 -100 -400000 -451387 -600000 -200 -139.89 -150 2005-06 2006-07 -50

400000

200000

0orking capital (oan+ 1 %2vance+ . of loan 1 a2vance+ to 0orking capital

87

&N&%'/-/ (* /(50 -5P(,T&NT /-4N-*-1&NT ,&T-(/

,&T-(/

*ormula to be used @AA; -AC @AA: -A; @AA9-A:

50&/),0/ (* -N<0/T50NT
,0T),N (N 0F)-T'
&R 3I' %3'4R '%5 467I'8 ,-%R4- ()4R, 37")

1B1,C

251BC

331'C

+((2 <&%)0 P0, /7&,0 .-<-.0N. 1(<0,

% "0E O)DE0(% /3ND N3MBE0 O/ EL3$T4 % "0E% E"0N$N> PE0 % "0E D$N$DEND% 9pl!s taJ; PE0 % "0E

0s1 2'B1, 21' times 112 times <1B7C 811C

0s1 22817 31' times 111 times 11BC 2BC

0s1 17'1B 317 times <18 times 11,C 321'C

50&/),0/ (* *-N&N1-&% /T&T)/

1),,0NT ,&T-( .0+T ,&T-( T&> ,&T-(
C300ENT "%%ET% C300ENT )$"B$)$T$E% 9 RR W4) $%&I'%( 467I'8 ,-%R4 - ()4R, 37") '%5 &R :I,I " &R 3I' 943 R4 '%5

50&/),0/ (* P0,*(,5&N10
P,(*-T 5&,4-N .0+T(,/ T),N(<0, /T(12 T),N(<0,
P0O/$T BE/O0E T"S "ND ESCEPT$ON") $TEM %")E%POT E0 $NCOME %")E% DEBTO0%PB$))% 0ECE$N"B)E% %")E% %TOC:

'15C 711< times 1<17 times

1113C 7B12 times 817 times

1'12C 351' times 121< times

88

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"s for t#e t#reat from t#e p#ase2o!t of t#e L0s6 in respect of -isc!its6 Britannia #as faced t#is t#reat reasona-ly well over t#e past one year6 wit#o!t a visi-le impact on its financial performance1 T#e proposed foray -y Nestle $ndia and ind!stan )ever into confectionery and dairy prod!cts6 co!ld pose t#e only remaining t#reat to Britannia1 On t#is6 BritanniaWs already esta-lis#ed -rand name in t#e foods -!siness co!ld erect an entry -arrier6 #owever temporary6 w#en it comes to mass mar+et prod!cts1 T#o!g# -ot# )) and Nestle #ave t#e option of drawing prod!cts from t#eir parentsW portfolio6 t#ese -rands wo!ld scarcely -e familiar names in $ndiaM t#erefore6 investments in -rand2-!ilding wo!ld -e necessarily #ig#6 at least in t#e initial stages1 $n t#e -a+ery -!siness6 ))Ws ac=!isition of Modern /oods6 t#e largest -read man!fact!rer in $ndia6 co!ld pose a t#reat1 owever6 BritanniaWs dependence on t#e -read segment is now negligi-le6 and any eJtension of t#e Modern -rand to -isc!its and ca+es co!ld ta+e some time6 affording some -reat#ing space to Britannia1

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"s most of t#e sale is done from its #ead office6 so t#e re=!irement of cas# is not too m!c#1 Comparing to its wor+ing capital t#e amo!nt of creditors is =!ite low1 "fter introd!ction of /errari proHect t#e company was a-le to maintain its =!ality and red!ce wastages1 Company also follows $%O 1,<<<1 certified to maintain t#e =!ality1 $t also performs several activities to motivate t#e employees s!c# as p!-lis#ing maga*ines6 competition6 sports and several ot#ers1

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"t last it is concl!ded t#at t#e company as a w#ole is a well -randed company1 T#e goodwill of t#e company is very #ig#1 "s considered to my topic wor+ing capital management it is concl!ded t#at t#e system of wor+ing capital management of t#e company is very good and t#e inventory of t#e company is also maintained and controlled properly1 $t was o-served t#at t#e re=!irement of wor+ing capital is not too m!c# and w#at ever amo!nt is re=!ired is -eing satisfied -y its main -ranc# i1e1 from Bangalore1 "s compared to re=!irement of wor+ing capital t#e amo!nt of creditors is also too low w#ic# s#ows t#at company is in itself s!fficient eno!g# its reso!rces1 $t does not -orrow m!c# of f!nds from o!tside party1 $t only sales its -y prod!cts and scraps1 Now we see t#ro!g# t#is analysis t#at a Britannia ind!stry is doing a good Ho- in trade sector1 $f we analysis t#e Mar+eting strategy of Britannia ind!stries t#en we concl!de t#at its totally c!stomer oriented firm wit# well managed strategies1

%o6 in all6 it is concl!ded t#at t#e environment 9wor+ing and c!lt!ral; is fo!nd very calm and t#e employees are pleased to wor+ very #ard in t#e corporation to ac#ieve t#e desired o-Hectives1

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