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LAYOUT OF BRITANNIA INDUSTRIES
Chapter-1: INTRODUCTION ABOUT BRITANNIA
Board of Directors
History of Biscuits
Activities of the company
5’S of BIL
Department of the company
Safety policy of the company
CHAPTER-3: RESEARCH METHODOLOGY
Method of Sampling
Area of work
Parameters of study
Method of Data collection
CHAPTER-4: WORKING CAPITAL MANAGEMENT
About Working capital
Classification of working capital
Working capital management
Difference between Cash flow & Funds Flow
Structure of working capital in BIL
Working capital pattern of BIL
Share holding Pattern of BIL
Management Pattern of Inventory
Management Pattern of Debt
Management Pattern of Cash
Management Pattern of Loans & Advances
Some important Ratios.
Analysis & Findings
CHAPTER-5: CONCLUSION & FINDINGS
The story of one of India’s favorite brands reads almost like a fairy tale. Once upon a time, in
1892 to be precise, a biscuit company was started in a nondescript house in Calcutta (now
Kolkata) with an initial investment of Rs.295. The company we all know as Britannia today.
The beginnings might have been humble-the dreams were anything but. By 1910, with
the advent of electricity, Britannia mechanized its operations, and in 1921, it became the first
company east of the Suez Canal to use imported gas ovens. Britannia’s business was flourishing.
But, more importantly, Britannia was acquiring a reputation for quality and value. As a result,
during the tragic World War II, the Government reposed its trust in Britannia by contracting it to
supply large quantities of “service biscuits” to the armed forces.
As time moved on, the biscuit market continued to grow… and Britannia grew along with
it. In 1975, the Britannia Biscuit Company took over the distribution of biscuits from Parry’s
who till now distributed Britannia biscuits in India. In the subsequent public issue of 1978,
Indian shareholding crossed 60%, firmly establishing the Indian ness of the firm. The following
year, Britannia Biscuit Company was re-christened Britannia Industries Limited (BIL). Four
years later in 1983, it crossed the Rs.100crores revenue mark.
On the operations front, the company was making equally dynamic strides. In 1992, it
celebrated its Platinum Jubilee. In 1997, the company unveiled its new corporate identity – “Eat
Healthy, Think Better” – and made its first foray into the dairy products market. In 1999, the
“Britannia Khao, World Cup Jao” promotion further fortified the affinity consumers had with
Britannia strode into the 21st Century as one of India’s biggest brands and the pre-
eminent food brand of the country. It was equally recognized for its innovative approach to
products and marketing: the Lagan Match was voted India’s most successful promotional activity
of the year 2001 while the delicious Britannia 50-50 Maska-Chaska became India’s most
successful product launch. In 2002, Britannia’s New Business Division formed a joint venture
with Fonterra, the world’s second largest Dairy Company, and Britannia New Zealand Foods
Pvt. Ltd. Was born. In recognition of its vision and accelerating graph, Forbes Global rated
Britannia ‘One amongst the Top 200 Small Companies of the World’, and The Economic Times
pegged Britannia India’s 2nd Most Trusted Brand.
Today, more than a century after those tentative first steps, Britannia’s fairy tale is not only
going strong but blazing new standards, and that miniscule initial investment has grown by leaps
and bounds to crores of rupees in wealth for Britannia’s shareholders. The company’s offerings
are spread across the spectrum with products ranging from the healthy and economical Tiger
biscuits to the more lifestyle-oriented Milkman Cheese. Having succeeded in garnering the trust
of almost one-third of India’s one billion populations and a strong management at the helm
means Britannia will continue to dream big on its path of innovation and quality. And millions of
consumers will favor the results, happily ever after.
Registered office of Britannia Industries Limited is situated in West Bengal. This company is
registered under Companies Act, 1956.
Britannia biscuits Company Limited was originally incorporated on 21st March 1918under Indian
Companies Act under the name “The Britannia Biscuits Company Limited” under section 21 of
Companies Act and approval of Central Government.
The main aim of the Company is to make available good and improved quality biscuits to each
and every part of the country.
The Company is perusing for ISO14001certificate and it is ISO 22000 certified.
The Company was established at the Pantnagar branch on 21st May 2005 mainly for production
with a production coverage area of approximately 20 acres.
The control of management is through Board of Directors.
The Company’s head and registered office and works place are located at the below mentioned
Registered & Head office : Britannia Industries Limited
5/1A, Hungerford Street
(a) Britannia Industries Limited
33, Industrial Area
(b) Britannia Industries Limited
Plot No.1, Sector- 1
Integrated Industrial Estate
Pantnagar, Pantnagar- 263153
(c) Britannia Industries Limited
15, Taratola road,
Kolkata – 700088
(d) Britannia Industries Limited
MTH road, Padi
Chennai – 600050
(e) Britannia Industries Limited
Ready road (East), Mazagaon,
Mumbai – 400010
BOARD OF DIRECTORS
Mr. Nusli N Wadia Chairman
Ms. Vinita Bali Managing Director
Mr. George Casala Director
Mr. Keki Dadiseth Director
Mr. Avijit Deb Director
Mr. Stephan Gerlich Director
Mr. A K Hirjee Director
Mr. Nimesh N Kampani Director
Mr. S. S Kelkar Director
Dr. Vijay Kelkar Director
Mr. Pratap Khanna Director
Mr. Jeh Wadia Director
Mr. Francois Xavier Roger Director
Field Marshall Sam Manekshaw Director Emeritus
GAUTAM BANERJEE − General Manager – Materials
ASHOK KUMAR GUPTA − General Manager – Accounts & Planning
SAROJ KUMAR CHAKRABORTY − General Manager & Head of Technical
RICHA ARORA − General Manager – Marketing
AMITAVA MUKHERJEE − National Sales Manager
PURNENDU ROY − Head of R&D
V. MADAN − Company Secretary & Head of Legal
VINOD MENON − Head of Internal Audit & Projects
Dr. K.N. SHASHIKANTH − Corporate Quality Assurance Manager
TS PURUSHOTHAMAN − Corporate Head – IT & Systems
The Genesis– Britannia established with an investment of Rs. 295
Advent of electricity sees operations mechanized
Imported machinery introduced; Britannia becomes the first
company East of the Suez to use gas ovens
Sales rise exponentially to Rs.16,27,202 in 1939
1939 – 44
During 1944 sales ramp up by more than eight times to reach
Britannia Biscuit Company takes over biscuit distribution from
Public issue – Indian shareholding crosses 60%
Re-christened Britannia Industries Ltd. (BIL)
Sales cross Rs.100crore
The Executive Office relocated to Bangalore
BIL celebrates its Platinum Jubilee
Wadia Group acquires stake in ABIL, UK and becomes an equal
partner with Group Danone in BIL
Volumes cross 1,00,000 tons of biscuits
Re-birth – new corporate identity ‘Eat Healthy, Think Better’ leads
to new mission: ‘Make every third Indian a Britannia consumer’
BIL enters the dairy products market
“Britannia Khao World Cup Jao” – a major success! Profit up by
Forbes Global Ranking – Britannia among Top 300 small
BIL ranked one of India’s biggest brands
No.1 food brand of the country
Britannia Lagaan Match: India’s most successful promotional
activity of the year
Maska Chaska: India’s most successful FMCG launch
BIL launches joint venture with Fonterra, the world’s second
largest dairy company
Britannia New Zealand Foods Pvt. Ltd. Is born
Rated as ‘One amongst the Top 200 Small Companies of the
World’ by Forbes Global
Economic Times ranks BIL India’s 2nd Most Trusted Brand
Pure Magic –Winner of the World star, Asia star and India star
award for packaging
‘Treat Duet’- most successful launch of the year
Britannia Khao World Cup Jao rocks the consumer lives yet again
Britannia accorded the status of being a ‘Super brand’
Volumes cross 3,00,000 tons of biscuits
Good Day adds a new variant – Coconut – in its range
Re-birth of Tiger – ‘Swasth Khao, Tiger Ban Jao’ becomes the
Britannia launched ‘Greetings’ range of premium assorted gift
The new plant in Uttaranchal, commissioned ahead of schedule.
The launch of yet another exciting snacking option – Britannia 50-
50 Pepper Chakkar
THE ORIGIN OF ‘EAT HEALTHY THINK BETTER’
Britannia –the ‘biscuit’ leader with a history-has withstood the tests of time. Part of the
reason for its success has been its ability to resonate with the changes in consumer needs-needs
that have varied significantly across its 100+ year epoch. With consumer democracy reaching
new levels, the one common thread to emerge in recent times has been the shift in lifestyles and
a corresponding awareness of health. People are increasingly becoming conscious of dietary care
and its correlation to wellness and matching the new pace to their lives with improved nutritional
and dietary habits. This new awareness has seen consumers seeking foods that complement their
lifestyles while offering convenience, variety and economy, over and above health and nutrition.
Britannia saw the writing on the wall. Its “Swasth Khao Tan Man Jagao” (Eat Healthy, Think
Better) re-position directly addressed this new trend by promising the new generation a healthy
and nutritious alternative – that was also delightful and tasty.
Thus, the new logo was born, encapsulating the core essence of Britannia – healthy, nutritious,
optimistic – and combining it with a delightful product range to offer variety and choice to
Nutri Choice Sugar Out
Sounds like yesterday when people commented that healthy foods
meant “compromising on the taste.” Nutri Choice Sugar Out is the most
novel product range to have been introduced in the market. The product is
not just sweet but tastes great, and yet contains no added sugar.
This is because Nutri Choice Sugar Out is sweetened with “Sucralose,”
derived from sugar, which provides the same sweetness as any other
biscuit, without the added calories of sugar.
This range is available in 3 delicious variants namely Lifetime,
Chocolate cream, and Orange cream, targeted towards all health
sensitive people. It is also relevant for consumers with sugar related
We are sure that you will be pleasantly delighted with its great taste
and equally surprised to know that it has no added sugar.
Don’t be taken for a ride when you read “Sugar Free” label on many
biscuit packs marketed in India or abroad. Even with 100% no-added
sugar, wheat-cereals in biscuits have their own natural sugar content.
Britannia has chosen to represent these biscuits with “No Added Sugar”
claim, as there is no added sugar in the processing of Nutri Choice Sugar
Nutri Choice Digestive Biscuit
Nothing can be more difficult than making small efforts in our daily
life towards healthy and active living. 24/7 we are engrossed in our busy
schedules; skipping meals, missing walks, along with inadequate sleep and
frequently eating-out, all take a heavy toll on our health.
At least with the new and improved Nutri Choice Digestive Biscuit, we
have one less thing to worry about. Made with 50% whole-wheat and
packed with added fiber (10% of our daily dietary needs), these
delightfully tasty biscuits are amongst your healthiest bites of the day.
In your next visit to a shop just look out for its Golden-green
international carton pack.
Try one and you’ll know that you’ve made one smart choice – Nutri
50-50 Jodi Banao Offer
With a brand name like 50-50, can the product be anything but fun.
And so to enhance this “Masti” 50-50 has now brought the “Jodi Banao”
offer. With assured gifts like Friendship Bands and Mobile Slings which
are a craze with the youth, and grand prizes like Mobile Phones, Laptops,
Sunglasses, Wrist Watches and a Trip to Paris, 50-50 has brought in all the
elements that keep you engaged in fun. And all these prizes with the
unique taste experience of 50-50 products.”50-50 ke saath Apni Jodi
Treat Fruit Rollz
All kids who have relished the yummy creamy treasures of Britannia
Treat in exciting flavors, have yet another reason to celebrate! Britannia
Treat launches the amazingly yummy Treat Fruit Rollz!! These tasty soft
rolls are filled with real fruits and provide a healthy yet mouth-watering
treat to the kids. Fruit Rollz comes in four masti fruit flavors – Juicy
Apple, Strawberry Surprise, Tangy Orange and Delicious Dates!
Want to know a little secret? They make the best tiffin treats! So during
snack time what better than to munch on the delicious and healthy Fruit
Rollz and discover the yummy fruit flavor from within the shells. Keeping
up with Britannia’s platform of ‘taste bhi, health bhi’, Fruit Rollz is indeed
a yummy snacking option for kids, while keeping the Moms assured about
the goodness provided by the fruit filling.
So go on and treat yourself to the lip-smacking snack!
New Britannia Milk Bikis
Milk Bikis, the favorite growth partner of Kids, now brings greater
value and delight to all with its new product and pack design. Recently re-
launched in its existing Southern & Eastern markets, and extended across
India, the new Milk Bikis is all set to add excitement and appeal to
‘nutritious’ food. Whoever said that ‘good food’ needs to look ‘dull and
boring’, will just have to take a look at Milk Bikis.
With a unique and attractive honeycomb design and an enhanced product
experience, the new biscuit prompts the ‘Kid’s will love it’ reaction
amongst mothers. The milk goodness in the recipe is now enhanced with
SMART NUTRIENTS – 4 vital vitamins, iron and iodine, proven to aid
mental and physical development in growing kids. The premium
packaging, besides appealing to kids, also ensures that the biscuits remain
fresh and crisp.
So, whether its breakfast time or snack time at school, rest assured that
kids will look forward to munching these crunchy, milky biscuits which
even helps in their development. And yes, adults won’t be far behind in
reaching out for a pack!
Britannia Marie Gold Doubles
Everybody’s favorite Marie biscuit now comes in a completely new
avatar! Recently launched in Tamil Nadu, Britannia Marie Gold Doubles
is all about doubling expectations and experience. Naturally, everything
about it is new and exciting. This special variant of Marie, through a
patented production process, offers three delicious layers in a new flavor
concept – with the same old crispiness and a subtle new taste. The shape
of the new Marie Gold Doubles biscuit is completely altered and nowhere
resembles the classic round Marie biscuit. The premium packaging is also
a breakthrough design with an outer sleeve and unique shape. So whether
people favor the biscuit themselves or gift it, Britannia Marie Gold
Doubles is definitely double the enjoyment!
Britannia 50-50 Pepper Chakker
The launch of the latest 50-50 variant left everybody guessing “What it
eez?” From TV ads, radio, outdoor and in-store display materials to
events, a website and SMS and email blasts, traditional and new media
were blended synergistically to create excitement and curiosity about the
unique taste of the biscuit. The tangy and distinctive pepper flavored
biscuit, that’s thin and crispy and more like a snack, caught the
imagination of a younger audience craving something to nibble on. The
50-50 Pepper Chakkar launch is truly a case of leveraging the marketing
mix to best advantage.
More Power to Britannia Treat!
In a one-of-its-kind tie-up with the immensely popular kids’ show
“Power Rangers” on Toon Disney, Britannia Treat created a huge buzz
amongst kids. The brand activity targeted children in three cities – Delhi,
Mumbai and Bangalore – at various touch points such as schools, malls,
residential colonies and amusement parks. The idea behind it was to bring
fun and adventure into the Britannia Treat brand of cream biscuits with the
help of a unique new collectible toy – the Power Rangers Shooter. These
exciting new toys were available with packs of Britannia Treat, and kids
had to collect them to solve the “Power Rangers” contest. An eye-catching
float, specially designed to promote this contest, was moved around these
cites and became the pulse point of “Shooter Mania”. At the end of 10
days, the activity touched 225 schools across the three cities and reached
more than 50,000 kids – and got every kid talking about Britannia Treat.
Britannia Tiger’s ‘Alti Palti’ Offer for Children
Alti Palti was an exciting offer to go with the most popular biscuit in
the country – Britannia Tiger. Children love lenticular or 3D picture
collections and Tiger biscuits gave them just that. With the purchase of
Britannia Tiger, kids collected lenticular gifts such as rulers, book labels,
bag tags and stickers. Each gift had the animated Tiger mascot on it doing
crazy things like skateboarding, cycling, dancing and more.
As part of the promotion, a life-size Tiger mascot visited select schools
and distributed the 3D collection to the lucky children. They even got to
photograph themselves with their favorite Tiger! This exciting offer ran at
retail stores across the country. Buzz was created with in-store display
materials like attractive dispensers and branded posters all based on the
Alti Palti theme.
The Alti Palti craze caught on like wildfire amongst the kids – just like
Britannia Tiger biscuits!
OTHER PRODUCTS OF BRITANNIA
Colief® Infant Drops Britaxan™
Lactase Enzyme Drops Astaxanthin Complex
Reduce the hours of Antioxidant Food
Fruisana® Fruit Sugar
Plant Sterols & Sterolins
The Low-GI Sugar
Maintain Immune Defense
Prostabrit™ for Men
Nutritious & Delicious,
Rye Grass Pollen Extract High-Fibre Breakfast
XyloBrit™ LomaBrit™ Lip Balm
Melissa (lemon balm)
Sugar-Free Table-Top Sweetener extract for healthy lips
ANNUAL PERFORMANCE (FY 2006)
Britannia’s gross sales turnover increased to Rs18179 million in 2005-06 from Rs16,154 million
in the previous year, registering a growth of 13%. Operating profit at Rs1,763 million increased
by 7%, profit before tax and exceptional items at Rs.1,958 million declined by 19% against
2004-05 , impacted by the profit on sale of long term investments that accrued to ‘other income’
The Company achieved these results despite significant increases in input cost,
particularly sugar, fuel and oils, coupled with aggressive pricing in the industry. Your
Company’s focused initiatives on commercializing market place opportunities, supply chain
efficiencies and overall cost management resulted in its top line growth and profitability.
Operating margin at 10.3% in 2005-06 compared with 10.9% in the previous year was impacted
by the inflation in input costs.
Despite stiff competition, your Company stabilized and held its overall market share at
31.7% in volume and 38.8% in value for the last year.
Exports turnover during the year was Rs111.71 million against Rs71.65 million in 2004-05, a
growth of 56%.
The major exceptional items during the year were:
Compensation and amortization of VRS costs – Rs.111 million
Profit on sale of properties – Rs.117 million
After considering all the exceptional items, Profit before tax and Net Profit works out to
Rs.2,007 million and Rs.1,464 million respectively. Earnings per Share are Rs.59.96 for 2005-
Britannia believes in giving the best value to consumers through its brands and constantly looks
for ways to enhance the overall consumer experience. 2005-06 witnessed a boost in product
innovation and renovation and as many as six new launches were executed and well received in
the market. The Company’s largest brand – Tiger, was successfully renovated with the re-staging
of Tiger Glucose and the fortification of Tiger Creams. New variants were introduced in Treat
Duet and “Pepper Chakkar” was launched under the 50:50 brand umbrellas. The Company also
introduced Marie Gold Doubles in a totally new to market format and a new range “Greetings” –
an assortment of biscuits was introduced during Diwali, targeted at the large gifting opportunity.
The Company also seized the growing opportunity in adjacent categories like Cakes and the
launch of Cup Cakes was the first step in strengthening this business.
Additionally, new packaging formats were introduced in several markets to tap into attractive
price points from consumers’ perspective. Britannia will continue to invest in its brands and
deliver growth through an emphasis on brand activation, anchored by new product launches.
HISTORY OF BISCITS
Sweet or salty. Soft or crunchy. Simple or exotic. Everybody loves
munching on biscuits, but do they know how biscuits began? The history
of biscuits can be traced back to a recipe created by the Roman chef
Apicius, in which “a thick paste of fine wheat flour was boiled and
spread out on a plate. When it had dried and hardened it was cut up and
then fried until crisp, then served with honey and pepper.”
The word ‘Biscuit’ is derived from the Latin words ‘Bis’ (meaning
‘twice’) and ‘Coctus’ (meaning cooked or baked). The word ‘Biscotti’ is
also the generic term for cookies in Italian. Back then, biscuits were
unleavened, hard and thin wafers which, because of their low water
content, were ideal food to store.
As people started to explore the globe, biscuits became the ideal
traveling food since they stayed fresh for long periods. The seafaring
age, thus, witnessed the boom of biscuits when these were sealed in
airtight containers to last for months at a time. Hard track biscuits
(earliest version of the biscotti and present-day crackers) were part of the
staple diet of English and American sailors for many centuries. In fact,
the countries which led this seafaring charge, such as those in Western
Europe, are the ones where biscuits are most popular even today.
Biscotti is said to have been a favorite of Christopher Columbus who
Making good biscuits is quite an art, and history bears testimony to
that. During the 17th and 18th Centuries in Europe, baking was a
carefully controlled profession, managed through a series of ‘guilds’ or
professional associations. To become a baker, one had to complete years
of apprenticeship – working through the ranks of apprentice,
journeyman, and finally master baker. Not only this, the amount and
quality of biscuits baked were also carefully monitored.
The English, Scotch and Dutch immigrants originally brought the
first cookies to the United States and they were called teacakes. They
were often flavored with nothing more than the finest butter, sometimes
with the addition of a few drops of rose water. Cookies in America were
also called by such names as “jumbles”, “plunkets” and “cry babies”.
As technology improved during the Industrial Revolution in the 19th
century, the price of sugar and flour dropped. Chemical leavening
agents, such as baking soda, became available and a profusion of cookie
recipes occurred. This led to the development of manufactured cookies.
Interestingly, as time has passed and despite more varieties
becoming available, the essential ingredients of biscuits haven’t changed
– like ‘soft’ wheat flour (which contains less protein than the flour used
to bake bread) sugar, and fats, such as butter and oil. Today, though they
are known by different names the world over, people agree on one thing
– nothing beats the biscuit!
Some interesting facts on the origin of other forms of biscuits:
The recipe for oval shaped cookies (that are also known as boudoir
biscuits, sponge biscuits, sponge fingers, Naples biscuits and Savoy
biscuits) has changed little in 900 years and dates back to the house of
Savoy in the 11th century France. Peter the Great of Russia seems to
have enjoyed an oval-shaped cookie called “lady fingers” when visiting
Louis XV of France.
The macaroon – a small round cookie with crisp crust and a soft
interior – seems to have originated in an Italian monastery in 1792
during the French Revolution.
SPRING-uhr-lee, have been traditional Christmas cookies in Austria
and Bavaria for centuries. They are made from a simple egg, flour and
sugar dough and are usually rectangular in shape. These cookies are
made with a leavening agent called ammonium carbonate and baking
The inspiration for fortune cookies dates back to the 12th and 13th
Centuries, when Chinese soldiers slipped rice paper messages into moon
cakes to help co-ordinate their defense against Mongolian invaders.
WHAT MAKES A BRITANNIA
If you think Britannia’s are extraordinary individuals who are passionate about everything
they do…create inspiration through everything they do…and succeed in everything they
do…you’re probably right. Britannians are hand-picked for a singular purpose…to perpetually
ensure Market Leadership and generate exemplary performance in every function.
Britannians exhibit the following leadership behaviors (we fondly call BULBs – Britannia
Universal Leadership Behaviors) :
Drive for Results
System and Process Orientation
If feel you stack up well in terms of all these behaviors…don’t waste time…Join us!!!
ACTIVITIES OF THE COMPANY
Developm the Assurance
OBJECTIVES OF THE COMPANY
The objectives of the company are as follows:
1. To acquire and take over as a going concern the biscuit manufacturing business now
carried on at Dum dum junction under the styles or firms of V.S Brothers and company,
Gupta and company and Britannia biscuits company and all or any of the lands,
buildings, plant and machinery, assets and liabilities of the proprietors of that business in
connection there with and with a view thereto to enter into the agreement referred to in
clause 3 of the companies article of association and to carry the same into effect with or
2. To manufacture, buy, sell, prepare for market and deal in farinaceous foods for all kinds
and in particular biscuits, breads, cakes and confectionary and food of every description
suitable for individuals.
3. To carry on business as millers and grain merchants, dealers in flour, rice and other
4. To carry on business as bakers and confectioners and to manufacture buy, sell, refine
prepare, grow, import export and deal in provisions of all kinds of wholesale and retail,
whether solid or liquid.
5. To make, accept, endorse, discount and issue promissory notes, bills of exchange and
other negotiable instruments etc.
Britannia Industries Ltd.Pantnagar Uttarakhand
Swasth Khao Tan man Jagao
The story of one of India’s favourite brands reads almost like a fairy tale. Once upon a time, in
1892 to be precise, a biscuit company was started in a nondescript house in Calcutta (now
Kolkata) with an initial investment of Rs. 295. The company we all know as Britannia today.
As time moved on, the biscuit market continued to grow… and Britannia grew along with it. In
1975, the Britannia Biscuit Company took over the distribution of biscuits from Parry’s who till
now distributed Britannia biscuits in India. In the subsequent public issue of 1978, Indian
shareholding crossed 60%, firmly establishing the Indian ness of the firm. The following year,
Britannia Biscuit Company was re-christened Britannia Industries Limited (BIL). Four years
later in 1983, it crossed the Rs. 100 crores revenue mark.
Britannia industries limited was established at Pantnagar on 1st may 2005in the area of
approximately 20 acres mainly for the purpose of production of biscuits as this area is free from
almost all types of taxes.
In Britannia Industries Limited there are many types of departments which are inter connected
to each other and work together for the welfare of the Company as the whole. There is a well
built communication system inside the Company which helps in doing the work on time and with
full efficiency and effectiveness.
The departments of the Company includes Quality assurance, Stores, Production,
Purchase, Maintenance, Engineering, Packaging and dispatch, Personnel and training,
Finance, legal and administrative security.
In the Company when the raw material is entered in the Company from that time onwards the
quality of material is taken into consideration. Firstly the material is taken into the laboratory and
it is being tested and after that it is being taken in progress.
At the production plant also care is being taken for the neatness and cleanness of the biscuits
and the biscuits are prepared in full hygienic conditions. For this purpose all the persons who
enter the production or plant area is not allowed to go inside without wearing a cap.
New concept like 5S is also being implemented in Britannia Industries Limited. The Company
is perusing for ISO14001certificate and it is ISO 22000 certified.
There are four plants in operation in the Company at this branch. First plant is for Marie Gold
which has a flexi line for Good day also. Second plant is for Good day, third one is for 50:50
variants, pepper chakker and Maska Chaska. Forth and last plant is for Bourbon which has a flexi
line for Orange cream also.
1) Bhumi poojan of Britannia industries limited was on 20th may 2004.
2) Machinery was set up on 23rd march 2005.
3) Production trial was taken on 23rd march 2005 itself.
4) Actual production was started on 1st April 2005.
5) First dispatch of finished goods was done on 20th April 2005.
6) Biggest plant of the company is plant number two.
7) The company is set up in an area of approximately 20 acres.
8) Minimum production of the company is 210tons per day.
9) Maximum production is 300 tons per day.
10) Control of management is through Board of Directors.
11) It is a public limited company.
12) The auditors of the company are Lovelock & Lewes.
13) The bankers of the company are:
State Bank of India.
Standard Chartered Bank.
ABN Ambro Bank.
The hongkong and shanghai banking corporation limited.
Bank of America.
HDFC Bank limited.
ICICI Bank limited.
NUMBER OF PLANTS AND PRODUCTION AT THE PANTNAGAR
Not all the brands of Britannia are produced in this branch only some brands of biscuits are
produced at this branch.
Production of biscuits in Britannia Pantnagar branch is divided in to four Plants.
1) Plant I
b) Good day butter
c) Good day Pista badam
2) Plant II
a) good day cashew
3) Plant III
a) fifty- fifty (50-50)
ii) 50-50 Maska Chaska
iii) 50-50 pepper chakker
4) Plant IV
a) Chocolate treat bourbon
b) Orange treat
OBJECTIVES OF THE UNIT
Investing in appropriate technology.
Working collaborators with the business partners.
Quality products to customers.
Continuous training and retraining of the employees to create culture that value quality and
food safety as a core pillar of the business.
To control the wastage and save time and efforts.
To work under the principals of Kiazen, Haccp and 5 S.
STORAGE AND USAGE OF RAW MATERIAL
There are many types of raw materials which are used in Britannia for the production of
different types of biscuits. Some of them are – wheat flour, sugar, butter, skimmed milk powder,
cashew, salt, different types of fats which includes different oils, sodium bi carbonate,
ammonium bi carbonate etc.
Now the question comes of their storage. As we can see that some of the materials which are
used in Britannia industries need cold storage while some needs normal storage. So on the basis
of the need of different raw materials they are stored in different storage places. The materials
which are stored in cold storage are at the temperature of 5 degree Celsius while the materials
which need normal storage are stored at the normal temperature. There classification of some of
the raw materials is as follows:
Normal storage raw material
Skimmed milk powder
Cold storage raw material
Skimmed milk powder
HOW THE PRODUCTION PLAN COMES?
The production plan comes directly from company’s head office which is situated at Bangalore
The plan consists of:
How much production to do for the particular variety.
Total production in tons.
Area where varieties will be dispatched along with quantity.
THINGS YOU DON’T KNOW ABOUT BRITANNIA
Britannia products are sold in over two million outlets, reaching millions of
customers who buy approximately 2.4 billion packets each year.
A small army keeps Britannia going – over 180 stock keeping units, 3000
employees, over 2200 authorized whole sellers and 56 depots.
The number of biscuits produced by Britannia in one year would be the equivalent
of one pack of twelve biscuits for every two people in the world.
Stacked on top of each other, all Britannia biscuits sold in a year would stand
10,000 times taller than Mount Everest.
Britannia has had a long association with cricket and cricket players. Nearly half
the members of the current Indian cricket team serve as its brand ambassadors.
Launched in 1997, Tiger became the largest selling Britannia biscuit brand in just
4 months of launch. It crossed Rs.1 billion sales mark in its very first year and is
Goodwill of company
Financially a very strong company
Effective well designed and developed production and marketing network.
Superior quality and service to provide maximum benefits to customers.
The family environment in the company.
Dedicated work force.
Market share of the company.
Tax benefit to the company.
No uniform of the officers and of the workers too.
Storage capacity of the company is limited.
Land is not properly utilized.
Raw material is wasted at the time of unloading.
Unit is situated far away from main plant.
There is no board of Britannia at the entry gate.
There can be minimization of waste.
There must be more efficient utilization of the raw material.
More and more incentives should be given to workers to motivate them which
help in increasing the employee moral.
There can be use of the foreign technologies for efficient utilization of raw
material so that the production of a biscuit can be increased.
Lang can be used more efficiently.
New entrants in the business
Threats of substitute products.
Availability of the other brands.
Rivalry among the competitions.
Taste and preference of customers.
PRINCIPLES OF BRITANNIA PANTNAGAR
BIL works under some principles because it is a food manufacturing unit. The principles are:
Kaizen means change for improvement. The word kaizen is a Japanese word and is made up of
two words “Kai’ and “Zen”. The word kai means change and Zen means better. Kaizen is a
continuous small improvement in personal life as well as in official life.
All human beings have an infinite brain power whose utilization does not require any
expenditure and small changes are easy to implement is the philosophy of kaizen.
Kaizen is of three types:
Management oriented kaizen
Group oriented kaizen
Individual oriented kaizen
Characteristics of kaizen program at BIL:
a. One should work smarter, if not harder.
b. Management attention and responsiveness is very important.
c. Suggestion scheme is internal part of kaizen.
d. Use your head not money.
e. Requires a faith in the people.
f. Opportunities for improvement are every where.
5 S’OF BRITANNIA INDUSTRIES LIMITED
Five “s” is an integrated concept for work place management. It is determination to organize the
workplace, to keep it neat, to clean, to maintain standardized conditions and to maintain the
discipline that is needed to do a good job.
It is sorting between wanted and unwanted things in a selected area, region or domain and get rid
of what you do not need and aims at stratification management and dealing with the causes of
It means a place for everything and everything in its place i.e. establishing a neat layout so you
can always get just as much of what you need it. It aims at:
a. A neat looking workplace.
b. Efficient layout and placement
c. Raising the productivity.
It deals with the job of thoroughly cleaning the workplace. Cleaning as a form of inspection. It
aims at zero dirt and a good degree of cleanliness.
It means standardization which is needed to maintain SEIRI, SEITON and SEISO. It leads to use
of visual management to avoid mistakes. It aims at management standards for maintaining the 5
It means discipline which is called for strict adherence to a system form our present unsystematic
HACCP: HACCP refers to hazardous activities critical control point. It is a structured
application of the basic rules of preventing the food borne diseases.
It includes following:
Identification of potential food safety problems.
Determination of now and where these can be prevented.
Description of what to do and training of the personnel.
Implementation and recording.
Conduct a hazard analysis
Determine the HACCPs
Establish Critical Limit (s)
Establish a monitoring system.
Establish corrective actions.
Establish verification procedures
Need for hygiene requirements (control measures) specific to food and process
and their associated potential hazards.
Prioritizing control measures.
Need for ensuring that essential measures were correctly implemented and carried
Need for planning of corrective measures in case of failure.
Need for monitoring the process parameters to be able to control safety at all
DEPARTMENTS/ HIERARCHY OF THE COMPANY
There are mainly six departments of the company. These are as follows:
Human Accounts Production Purchase Maintenance Quality
Officers Officers Officers Officers Officers Officers
HEADS OF DEPARTMENTS OF THE COMPANY
Unit Head : Mr. Manas Dutta
Accounts : Mr. Mudit Agarwal
Human Resource : Mr. S.K. Mathur
Production : Mr. Mahak Singh
Purchase : Mr. Abhijeet Dutta
Factory assistant : Mr. Neeraj Agarwal
Standards : Mr. Dhananjay
QUALITY AND FOOD SAFETY POLICY OF THE COMPANY
The purpose of this policy is to ensure that we win through quality in the market place. This
means that we must do every thing to ensure consistent delivery of quality products to the
customers every time.
Our commitment to quality and food safety will be reflected in every action and is non
negligible. That means:
All ingredients used in our factories always meet specified quality standards.
All factories and depots maintain high standard of hygiene which ensures that our
products are healthy and safe for consumption.
Our manufacturing product always ensures delivery of products consistent with product
and pack specifications which are free from contamination.
Our supply chain practices enable delivery of fresh products to our customers.
We will fulfill these objectives through:
Investing in appropriate technology and equipping our factories adequately.
Working collaborates with our business partners to create ‘win win’ business
Developing process which enable consistent delivery of quality products to our
Continually training and retraining our employees and business partners to create
a culture that values quality and food safety as the core pillars of our business.
The FMCG sector represents consumer goods required for daily or frequent use, the main
segments of this sector are personal care(oral care, hair care, soaps, cosmetics, toiletries), house
hold care (fabric wash and house hold cleaners), branded and packaged foods, beverages
(health beverages, soft drinks, staples, cereals, dairy products, chocolates, bakery products) and
The Indian FMCG sector is an important contributor to the country’s GDP. It is the fourth largest
sector in the economy and is responsible for 5% of the total factory employment in India. The
industry also creates employment for many people in downstream activities, much of which is
disbursed in small towns and rural India. This industry has witnessed strong growth in the past
decade. This has been due to liberalization, urbanization, increase in disposable incomes and
altered lifestyle. Furthermore, the boom has been also fuelled by the reduction in excise duties,
dereservation from the small-scale sector and the burgeoning affluent segment in the middle
class through product and packaging innovations.
Unlike the perception that the FMCG sector is a producer of luxury items targeted at the elite, in
reality, the sector meets the everyday needs of the masses. The lower-middle income group
accounts for over 60% of the sector’s sales. Rural markets account for 56% of the domestic
Many of the global FMCG majors have been present in the country for many decades. But in the
last ten years; many of the smaller rung Indian FMCG companies have gained scale. As a result,
the unorganized and regional players have witnessed erosion in the market share.
A PEEK IN TO THE PAST…….
In India, companies like ITC, HLL, Colgate, Cadbury and nestle have been a domestic force in
the FMCG sector well supported by relatively less competition and hard entry barriers (import
duty was high). These companies were, therefore able to charge a premium for their products. In
the context, the margins were also on the higher side. With the gradual opening up of the
economy over the last decade, FMCG companies have been forced to fight for a market share. In
the process, margins have been compromised, more so in the last six years (FMCG sector
witnessed decline in demand).
THE CURRENT AND FUTURE SCENARIO……..
The growth potential for FMCG companies looks promising over the long term horizon, as per-
capita consumption of almost all products in the country is amongst the lowest in the world. As
per the consumer survey by KSA-Technopak in 2004, of the total consumption expenditure,
almost 40% and 8% was accounted by groceries and personal care product respectively. Rapid
urbanization, increased literacy and rising per capita income are the key growth driver for the
sector. Around 45% of the population in India is below 20 years of age and the proportion of the
young population in India is below 20 years of age and the proportion of the young population is
expected to increase in the next five years. Aspirations levels in this age group have fuelled by
greater media exposure, unleashing a latent demand with more money and a new mindset. In this
backdrop, industry estimates suggest that the industry could triple in value by 2015 (by some
estimates, the industry could in size by 2010).
In over view, testing times for the FMCG sector are over and driving rural penetration will be the
going forward. Due to infrastructure constraints, companies were unable to grow faster.
Although companies like HLL and ITC have dedicated initiatives targeted are the rural market,
these are still at a relatively nascent stage.
The implementation of VAT with effect from April 1, 2005 is a step in the right direction for the
sector. This has simplified the tax structure in the many ways, as a result of which FMCG
companies are confident that prices will decline over the long term. We believe that the full
benefit of VAT will be reflected over the next 3-5 years.
The bottlenecks of conventional distribution system are likely to be removed once organized
retailing gains in scale. Currently, organized retailing accounts for just 23% of retail sales is
likely to touch 10% over the next 3-5 years. In over view, organized retailing result in discount
prices, forced-buying by offering many choice and also opens up new avenues for growth for the
Given the aggressive plans of players like pantaloon, Trent, shoppers stop and shop rite. We are
confident that on the back of economic transformation that India has witnessed since the early
1990s, the middle class has proposed in the country, growing by around 10% to 12% per annum.
This transformation has been fed partly by the explosion of new jobs for the young population,
primarily in software and other service sectors. This new found prosperity has further fed
consumerism, which has benefited all the constituents of the FMCG sector. Going forward, we
believe that accretion in income levels of the rising Indian middle class and consequent rise in
disposable incomes will fuel consumption driven growth.
Now, while determining the long term outlook for the sector might seem easy, when it comes to
picking an FMCG stock investors. With the markets currently at their all time highs, and on an
upswing, it is even more important to separate the wheat from chaff. Here are some of the
parameters that one should keep in mind while considering an investment in the FMCG sector.
While purchasing power is the function of a economic growth and rising disposable incomes,
awareness is a function as the product reach and its usability. It is in this context that company’s
logistics gain importance. But logistics do not only mean a company’s reach in terms of retail
outlets. It also means the level of sophistication of this distribution reach-how intelligent is this
supply chain and is it well geared for the company’s future growth?
MNCs form almost half of the branded FMCG industry in India. In case of MNCs therefore, it is
relevant to look at the parent’s support and commitment to its subsidiary before making an
investment decision. Again, support and commitment alone is not enough. Investors need to look
at the parent’s product portfolio and its plans for India. If the parent is present only across the
limited category globally, all its support to domestic subsidiary is of little help owing to its
limited product portfolio.
For all companies, be it domestic otherwise, a look at the company’s product introduction track
record can be an eye-opener. Find how many products the company has introduced in it’s year of
existence? How relevant are they to India’s consumer habits? How successful have the products
launches been and what are the future plans of the company in terms of new products?
The success of the FMCG companies is often attributed to their marketing and branding skills-
ability to continuously create successful brands and advertising which convey the message
across. Once a brand is successful, it is easier for the company to piggyback on its initial success
and introduce more products and associate with them known brand. As thy say, “nothing
succeeds like success”.
As mentioned earlier, greater the number the product is offering, greater is the resource
utilization, be it is the distribution channel, the marketing or branding strengths. It is in this
context, that single or few product companies are risky. Firstly, they have to be varying the
competitors coming in and weaning away the market share. Therefore they have to consistently
spend higher amounts on advertising and marketing. This is the double whammy for the
company under pressure. On one hand, revenues are under pressure and on the other hand, costs
go up and on the other, costs go up and margins are squeezed. Also, due to this, the company is
often shy of investing in new product and expanding distribution network. The bottom-line is
that future growth prospects get stunted.
With respect to MNC companies investors should also look at the number of subsidiaries the
parent has in the same country. For example, P&G and glaxo smith Kline both have other
subsidiaries besides the listed entities. If the parent has another subsidiary, especially if it is
100% owned, then it is likely that the former would be inclined to introduce new brands and
products through this subsidiary. As such, shareholders of the listed subsidiary will not be able to
reap the rewards of the product portfolio expansions. Investors should worry of investing in such
companies where parent focus and plans are under a cloud.
OBJECTIVE OF THE STUDY
The objective for doing my summer training is to make my self capable for moving forward in
corporate world, to gain knowledge & experience & know how to work in the organization
environment. It will help me to gain more & more about corporate sector, which was very
essential for me to do. Therefore I joined BIL Pantnagar to improve my capabilities.
“To analyze how WORKING CAPITAL is maintained in Britannia Industries Limited”
Are the working capital system is sufficient enough to analyze the ability of a company.
To know the method of managing the working capital requirement of the organization.
To see the difference between the theoretical knowledge & practical knowledge.
Period of study
I did my summer internship at BRITANNIA INDUSTRIES LTD., which is one of the largest
FMCG Company in India. The duration of my study was 60 days (8 weeks). My timing of work
was from 9:30 A.M. to 5:30 P.M., 6 days in a week.
SCOPE OF THE STUDY
It provides useful information for research and also introduces the researcher with the practical
problem faced in the company. This research is very important for any finance student to gain a
real time experience. I have done my research in Britannia in Working capital management.
There are many departments in Britannia but my research work is confined with finance
department where I studied that how they meet the requirement of working capital and how they
use it in financial activities. In finance department, I studied how they manage their different
ratio with respect to the working capital.
LIMITATION TO THE STUDY
Following are the limitations of this project:
It is mainly a secondary data based report and secondary data has its own limitations.
The source of data collection is limited to annual report of the company only.
The company does not show their cost & operating accounts to any research students.
The interpretations of ratios require great caution and expertise as it misleading in
Due to the tight schedule of managers, there are some difficulties for trainee to get co-
operation and attention.
When we talk of Research Methodology, we not only talk of the research methods but also
consider the logic behind the methods we use in the context of our research study and explain
why we are using a particular method or technique and why we are not using so that research
results are capable of being evaluated either by research himself or by others.
As the title of the project suggests the project is about the study of the working capital
management in the company. So my objective is that to know that how the working capital
should be maintained in the company & which method is used in this.
The sample size refers to the no. of employees selected from the company to constitute a sample.
The sample size used for study includes two companies.
METHOD OF SAMPLING
The process employed for the sample was Cluster Sampling.
Sample Size: 2
Method of Sampling: Cluster
Area of work: Working capital management
Method of Data collection: Secondary
Tools: Annual report, Balance sheet, Internal sources.
SOURCES OF DATA COLLECTION
Secondary data are those which have already been collected by someone else and have already
been passed through the statistical process.
Acc. to Dessel-“Data collected by other persons”
All the data has been collected from internal source that includes:-
DATA COLLECTION METHOD
The data was collected by me from both the sources for my training project report. In case of
secondary ways of data collection of magazines and books of Britannia were used.
Working capital in short may be said as the capital required in meeting the short tem needs. The
requirement of working capital differs from firm to firm. The firm may require large amount of
working capital or may be less, it depends on the kind of work done by the particular
CLASSIFICATION OR KINDS OF WORKING CAPITAL
Kinds of working capital
On the basis On the basis
of concept of time
Gross Net Permanent Temporary
working working or fixed or variable
capital capital working working
Regular working Reserve Seasonal Special
capital working capital working capital working capital
GROSS WORKING CAPITAL: Total current assets
1. Gross working capital: - Gross working capital refers to the firm’s investment in
current assets. Current assets are the assets which can be converted into cash within an
accounting year and include cash, short term securities, debtors, (account receivable or
book debts) bills receivable and stock (inventory).
NET WORKING CAPITAL: Change in current assets and current liabilities
Working capital= current assets- current liabilities
Net working capital: - Net working capital refers to the difference between current
assets and current liabilities. Current liabilities are those claims of outsider which are
expected to mature for payment within an accounting year and include creditors (account
payable), bills payable, and outstanding expenses. Net working capital can be positive. Or
negative. A positive net working capital will arise when current assets exceed current
liabilities. A negative net working capital occurs when current liabilities s are in excess of
The two concepts of working capital –gross and net-are not exclusive rather, they
have equal significance from the management viewpoint.
Permanent or fixed working capital: It is the minimum amount which is required to
ensure effective utilization of fixed facilities and maintaining the circulation of current assets.
For example every firm has to maintain a minimum level of raw material, work-in-progress,
finished goods and cash balance. This minimum level of current asset is called permanent or
fixed working capital as this part of capital is permanently blocked in current asset.
Temporary or variable working capital: It is the amount of working capital which is
required to meet the seasonal demand and some exigencies. Variable working capital can be
further be classified as
Seasonal working capital: the capital required to meet the seasonal needs of the
enterprises is called as seasonal working capital.
Special working capital: That part of working capital which is required to meet special
exigencies such as launching of extensive marketing campaigns for conducting research
OPERATING CYCLE OF WORKING CAPITAL
Sufficient working capital is necessary to sustain sales activity. Technically this is
referred to as a operating/ cash cycle. It can be said to be at the heart of the need of
Cash/operating cycle is the length of time necessary to complete following
Convert cash into raw material.
Raw material into goods in process.
Goods in process into finished goods.
Finished goods into debtors through credit sales, and debtor into cash.
The cycle is a continuous process
FINISHED WORK IN
The Working Capital cycle or Cash Conversion cycle as it is also called is usually expressed in
terms of the number of days. This figure is the average time that it takes to turn investment in
books into cash and profit. Payback expresses the number of days required to recoup the original
investment on a single title. In the organization’s Balance Sheet there will be the costs of paper,
titles still under development, and author advances of books already and not yet published. In
addition there will be the cost of stocks of unsold books, Accounts Receivable, and Accounts
Determinants of working capital
The requirements of working capital generally vary from industry to industry, concern to
concern and time to time. Comparing the production cycle of BHEL with any of the FMCG
Company we will notice that, BHEL takes considerably longer period to manufacture a
turbine while in FMCG companies’ like HLL or P&G takes few minutes to manufacture their
product. Working capital in these companies can be even negative as they take credit from
suppliers and sell their products on cash. So current liabilities are higher due to which figure
of working capital can be negative. The various factor which influence the amount of
working capital required by a business enterprises, may be grouped under two heads.
1) Internal factor: - The factor which are within the control and competence of
management. These may include the risk taking attitude of management, turn over of
receivable and inventories terms of purchase and sale s and credit rating etc.
2) External factor: - these may include the nature of business, volume of production and
sales and business cycle.
PERMANENT AND TEMPORARY WORKING CAPITAL
The operating cycle thus crates the need for current assets (working capital).however this need
does not come to an end after the cycle is completed. It continues to exist. Thus the distinction
between permanent and temporary working capital should be known.
Business keeps on going even after the realization of cash from customers, which creates the
need for regular supply of working capital. However the magnitude of Working capital required
is not constant, but fluctuating. To carry on business, a certain minimum level of Working capital
is necessary on a continuous and uninterrupted basis. For all practical purpose, this requirement
has to be met permanently as with other fixed assets. This requirement is referred to as
Permanent or fixed Working capital.
Any amount over or above the permanent level of Working capital is temporary, fluctuating or
variable Working capital. This portion of the required Working capital is needed to meet
fluctuation in demand consequent upon changes in production and sales as a result of seasonal
changes. The basic distinction between these two is:
PERMANENT WO RKING CAPITAAL
FINANCING OF WORKING CAPITAL
The various sources for the financing of working capital are as follows:
Sources of Working capital
Permanent or fixed Temporary or variable
1. Shares 1. Commercial banks
2. Indigenous bankers
3. Trade creditors
3. Public deposits 4. Installment credit
4. Ploughing back of profits 6. Accounts Receivables-
5. Loans from Financial institutions.
7. Accrued expenses
8. Commercial papers
CALCULATION OF WORKING CAPITAL
Working capital is the excess of current assets over current liabilities. Information regarding
current assets and current liabilities is available from the balance sheet. Working capital should
be sufficient to meet routine requirement of the business.
The two concepts of working capital are current assets and current liabilities. They have a
bearing on the cash operating cycle. In order to calculate the working capital the working capital
needs, what is required is the holding period of various types of inventories, the credit collection
period and credit payment period. Working capital also depends on the budgeted level of activity
in terms of production/sales. The calculation of working capital is based on the assumption that
the production/sales is carried on evenly throughout the year and all costs accrue similarly. As
the working capital requirements are related to the cost excluding and not to the sale price.
Working capital is computed with reference to cash cost. The cash cost approach is
comprehensive and superior to the operating cycle approach based on holding period of debtors
and inventories and payment of creditors.
The computation of working capital can be summarized as follows:
(I) Estimation of current asset :
a) Minimum desired cash and bank balances
Total current assets
(II) Estimation of current liabilities :
Total current liabilities
(III) Net working capital (I-II)
Add: margin for contingency
(IV) Net working capital required
* If payment is received in advance, the item would be listed in current liabilities.
** If 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.
IMPORTANCE OR ADVANTAGES OF WORKING CAPITAL
Working capital is the blood and nerve centre of a business. Just as circulation of blood is
essential in the human body for maintaining life, working capital is very essential to maintain the
smooth running of a business. No business can run successfully without an adequate amount of
working capital. The main advantages of maintaining adequate amount of working capital are as
Solvency of the business.
Regular supply of raw materials
Regular payment of salaries, wages and other day-to-day commitments.
Exploitation of favorable market conditions.
Ability to face crisis
Quick and regular return on investments
WORKING CAPITAL MANAGEMENT
Working Capital is the money used to make goods and attract sales. The less Working Capital
used to attract sales, the higher is likely to be the return on investment. Working Capital
management is about the commercial and financial aspects of Inventory, credit, purchasing,
marketing, and royalty and investment policy. The higher the profit margin, the lower is likely to
be the level of Working Capital tied up in creating and selling titles. The faster that we create and
sell the books the higher is likely to be the return on investment. Thus when we have been using
the word investment in the chapter on pricing, we have been discussing Working Capital.
AFFECT OF BUSINESS TRANSACTIONS ON WORKING CAPITAL
In preparing a statement of changes in financial position, on working capital basis, it is convient
to classify business transactions into three categories:
1. Transactions Affecting only Current Asset or Current liabilities Accounts: These
transactions produce changes in working capital accounts but do not change the account of
working capitals. For example, the purchase of merchandise increases inventory and accounts
payable but has no effect on working capital; it may therefore be ignored in preparing the
statement of changes in financial positions. Similarly, paying accounts payable affects cash, so
this transaction would be reflected in cash basis statement of changes in financial position.
However, the transaction has no effect on working capital since a current asset (cash) and a
current liability (accounts payable) decrease by the same amount. Hence, the transaction would
not be reflected as a source or use in a working capital basis statement of changes in financial
position. Other transactions like collection of receivables, short-term borrowing, purchase of
short-term government securities also fall in this category of transactions. Thus, when funds are
defined as working capital, there is no need to show the details of the more or less continous
movement of resources between current liabilities and current assets which results from the
manufacture and sale of goods and the collection of receivables from customers. Indeed, the
focus is on the usually more significant flows affecting non-current assets (i.e. long term
investments) and permanent capital, the name given to the sum of long-term liabilities and
Thus the funds statement, i.e. Statement of Chances in Financial Position based on changes in
working capital position, is a better and useful tool for highlighting the changes that have taken
place in the financial operations between two balance sheet dates.
2. Transactions Affecting Current Asset or Current Liability Account and a Non-Working
Capital (Non-current) Account: These transactions bring about either an increase or a decrease
in the amount of working capital. The issue of long-term bonds, for example, increases current
assets and increases loan on bonds, a non-working capital account; therefore the issue of bonds
is a source of working capital. Similarly when the bonds approach maturity they are transferred
to the current liability classification in the balance sheet. This causes a reduction (a use) of
working capital. If changes in non-working capital accounts are analyzed, these events are
brought to light, and their effect on working capital will be reported in the statement of changes
in financial position.
3. Transactions affecting only Non-current Accounts: These transactions have no direct effect
on the amount of working capital. The entry to record depreciation is an example of such a
transaction. Other transaction in this category, such as issue of share capital in exchange for plant
assets, are called exchanged transactions involving only non-current accounts and are viewed as
both a source and a use of working capital, but do not change the amount of working capital.
Alternatively, such exchange transactions may not be considered in preparing a statement of
changes in financial position on working capital basis.
WORKING CAPITAL ANALYSIS OR MEASURING THE WORKING
The working capital is a means to run the business smooth and profitably, and not an end. Thus,
concept of working capital has its own importance in a going concern. A going concern, usually,
has a positive balance of working capital i.e., the excess of current assets over current liabilities,
but sometimes the uses of working capital may be more than the sources resulting into a negative
value of working capital. This negative balance is generally offset soon by gains in the following
periods. A study of changes in the uses and sources of working capital is necessary to evaluate
the efficiency with which the working capital is employed in the business. This involves the need
of working capital analysis.
The analysis of working capital can be conducted through a number of devices, such as:
1. Ratio analysis
2. Funds flow analysis
Ratio Analysis: A ratio is a simple arithmetical expression of the relationship of one
number to another. The technique of ratio analysis can be employed for measuring shot-term
liquidity or working capital position of the firm. The following ratios can be calculated for this
Acid test ratio
Absolute liquid ratio or cash position ratio
Inventory turnover ratio
Receivables turnover ratio
Payables turnover ratio
Working capital turnover ratio
Working capital leverages
Ratio of current liabilities to tangible net worth
The assessment of asset usage is important as it helps us to understand the overall level of
efficiency at which a business is performing.
The basic equations for this section are:
Total Asset Turnover = Turnover
Stock Turnover =
Debtors’ Turnover =
Creditors’ Turnover =
The assessment of asset usage is important as it helps us to understand the overall level of
efficiency at which a business is performing.
DIFFERENCE BETWEEN CASH FLOW AND FUND FLOW STATEMENT
BASIS OF CASH FLOW STATEMENT FUNDS FLOW STATEMENT
MEANING It is a statement of changes in It is a statement of changes in the
the financial position of business financial position of business due to
due to the inflow and outflow of the inflow and outflow of funds.
PLANNING Statement of cash flow is Funds flow statement is required for
required for short range long range planning.
RELIABILTY Plans for more immediate future Plans for more immediate future
can rely upon information cannot rely upon information
supplied by cash flow statement. supplied by funds flow statement.
TREATMENT OF It does not treat all current assets It treats all current assets at par with
as cash. funds, although debts are collected
within months and stock is sold
within 6 months.
TREATMENT OF Increase in bank overdraft and Increase in outstanding expenses is
increase in outstanding expenses treated as increase in overdraft.
are treated separately.
CASH/FUNDS While making cash flow While making funds flow statement
statement cash from operation is funds from operation is calculated.
BASIS Prepared on cash basis. Prepared on accrual basis.
Working capital budget:
A budget is a financial and/or quantitative expression of business plans and policies to be
pursued in the future period of time. Working capital budget, as a part of total budgeting process
of a business, is prepared estimating future long-term and short-term working capital needs and
the sources to finance them, and then comparing the budgeted figures 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 preparing of separate budgets for various elements of
working capital, such as cash, inventories and receivables, etc.
Working Capital Management (Debt vs. Equity)
Working capital is the money you will need to keep your business going until you can cover your
operating costs out of revenue. As a small business owner, it will be wise to have enough
working capital on hand to cover items such as the following during the first few months that
you are in business:
• Replacing inventory and raw materials: you will need to fund the purchase of inventory
out of working capital until you start to see cash from sales, which could take months.
• Paying employees: even the most loyal worker wants to get paid on time, regardless of
how much or how little cash your firm earns during its first months.
• Paying yourself: unless you have made other arrangements, you will need to withdraw
some money to support yourself.
• Debt payments: if you have borrowed money to get started, you probably have to begin
repaying it right away. Missing your first loan payments will not do your credit rating any
• An emergency fund: you need some cash on hand to cover unforeseen shortfalls that may
result from any number of factors such as delays in getting your space ready, a slow
paying client, or slow business.
Debt vs. Equity Assessments
It is essential that you assess the relative merits of each form of funding for your specific
Take on Creditors Take on Partners
Low Expected Return High Expected Return
Smaller Funding Amounts Larger Funding Amount
Periodic Payments No Short-Term Payments
Maturity Date Open-Ended “ Exit” Date
More Restrictions Less Restrictions
ADVANTAGES OF USING DEBT DISADVANTAGES OF USING DEBT
Debt is not an ownership interest in the Unpaid debt is a liability of the business. If it is
business. Creditors generally do not have not paid then the creditors can legally claim the
voting power. assets of the firm. This action can result in
liquidation or reorganization.
The payment of interest on debt is considered Your business must earn at least enough money
a cost of doing business and is fully tax to cover for the interest expense, otherwise you
deductible. may not be able to pay you interest which may
lead to default (financial distress).
The creditors will only be concerned that the
business will be able to generate cash flow to
cover interest expenses.
ADVANTAGES OF USING EQUITY DISADVANTAGES OF USING EQUITY
Unlike obligation of debt, your business will Equity is an ownership of the business. So an
not have any contractual obligation to pay for equity partner will have a direct say about your
equity dividend. business.
Equity financing also allows your business to
obtain funds without incurring debt, or without
having to repay a specific amount of money at a
Making more efficient use of Working Capital
The table below lists items, which influence Working Capital levels favorably and adversely
Items that reduce Working Capital Items that increase Working
levels for publishers Capital levels for publishers
- Increased profit margins - Lower profit margins
- Customers who pay promptly - Long print runs except where all the
- Advance payments by customers books are required on publication e.g.
School and university textbooks
- Inventory which is sold and paid for - Slow authors who deliver late and
quickly by customers after publication whose manuscripts require substantial
- Lower Inventory levels by reducing editing
print quantities and working with - Holding paper stock unless market
printers who will deliver quickly and conditions demand and the savings
produce low print runs economically are large
- Slow schedules for the development
of new titles
- Successful promotion that speeds up - Making advance payments to
the rate of sale printers
- Seasonal sales except where the
publishers prints only for the season
- Licensing (but problematic in young
- Paying suppliers on completion with
- Authors who deliver manuscripts on
disk ready for computer make-up
- Incentives to staff , authors , suppliers,
customers , sales staff and agents to
speed up the rate of sale and of
developing new books, delivering
manuscripts on schedule
Measures to Improve Working capital management
•The essence of effective Working capital management is proper cash flow forecasting. This
should take into account the impact of unforeseen events, market cycles, loss of a prime
customer and actions by competitors. The effect of unforeseen demands of Working capital
should be factored in.
• It pays to have contingency plans to tide over unexpected events. While market-leaders can
manage uncertainty better, even other companies must have risk-management procedures. These
must be based on objective and realistic view of the role of Working capital
• Addressing the issue of Working capital on a corporate-wide basis has certain advantages. Cash
generated at one location can well be utilized at another. For this to happen, information access,
efficient banking channels, good linkages between production and billing, internal systems to
move cash and good treasury practices should be in place.
• An innovative approach, combining operational and financial skills and an all-encompassing
view of the company’s operations will help in identifying and implementing strategies that
generate short-term cash. This can be achieved by having the right set of executives who are
responsible for setting targets and performance levels. They are then held accountable for
delivering, encouraged to be enterprising and to act as change agents.
• Effective dispute management procedures in relation to customers will go along way in freeing
up cash otherwise locked in due to disputes. It will also improve customer service and free up
time for legitimate activities like sales, order entry and cash collection. Overall, efficiency will
increase due to reduced operating costs.
• Collaborating with your customers instead of being focused only on own operations will also
yield good results. If feasible, helping them to plan their inventory requirements efficiently to
match your production with their consumption will help reduce inventory levels. This can be
done with suppliers also.
Working capital management is an important yardstick to measure a company operational
and financial efficiency. This aspect must form part of the company’s strategic and
operational thinking. Efforts should constantly be made to improve the Working capital
position. This will yield greater efficiencies and improve customer satisfaction
Structure of Working Capital of BIL
The analysis of structure of working capital enables management of an enterprise to know as
to how the working capital is being administered. It also furnishes valuable information to
the short term creditors and others regarding the strength of working capital of the
The structure of working capital can also be analyzed by measuring the change the
proportion of cash, receivable, inventory and other items to the total current assets in course
This analysis points out the components which have over grown and where unduly high fund
has been tied up. This analysis may be carried further to each component of current assets to
study the changes in its sub-divisions.
Investment in working capital is generally considered as dead investment as it, does not
contribute towards company’s profit generating capacity but are also required, so it should be
done in such a way that it does not create any side-effects like blockage of money. In
comparison to working capital, investments should be more in fixed assets which are
productive and contribute towards firm’s profit.
WORKING CAPITAL PATTERN OF BIL
CURRENT ASSET 2006-07 2005-06 2004-05
Inventory 2149406 1847956 1341899
Sundry debtors 286070 208516 443147
Cash & bank
balance 486460 353395 163062
Other C.A. 1709 5558 2185
Loans & advances 890016 940652 631468
TOTAL C.A. 3813661 3356077 2581761
Current liabilities 2381169 2247006 2059717
Provision 849097 783313 973431
TOTAL 3230266 3030319 3033148
WORKING CAPITAL 583395 325758 (451387)
TURNOVER 14525.49 10336.4
PERIOD (in days) 151 173
(Working Capital = Total current assets – Total current liabilities)
Working capital pattern of BIL of last 2
2004-05 2005-06 2006-07
SHAREHOLDING PATTERN OF BRITANNIA
Category No. of shares held %age of share
2004-05 2005-06 2004-05 2005-06
A. Promoter’s Holding
- Indian 750 750 0.00 0.00
- Foreign 12173219 12173219 50.96 50.96
2. Persons acting in concert - - - -
Sub Total 12173969 12173969 50.96 50.96
B. Non-Promoter’s Holding 11716194 11716194 49.04 49.04
3. Institutional Investor
a. Mutual Funds and UTI 861938 653796 3.61 2.74
b. Banks, Financial institutions, insurance
4137370 3263233 17.32 13.66
companies (Central/State Govt. Institutions/
c. Foreign Institutional Investors (FIIs) 1402489 2977656 5.87 12.46
Sub Total 6401797 6894685 26.80 28.86
a. Private Corporate bodies 338934 235253 1.42 0.98
b. Indian Public 4851195 4467818 20.30 18.70
c. NRIs/OCBs 120388 114148 0.50 0.48
d. Any Other 3880 4290 0.02 0.02
Sub Total 5314397 4821509 22.24 20.18
GRAND TOTAL 23890163 23890163 100.00 100.00
PIE CHART SHOWING SHAREHOLDING PATTERN OF
BILFOR THE YEAR 2005-06
Mutual funds & UTI
Private corporate bodies
PIE CHART SHOWING SHARE HOLDING PATTERN OF BIL
FOR THE YEAR 2004-05
Indian Promoters Foreign Promoters
Mutual funds & UTI Banks
FIIs Private corporate bodies
Indian Public NRIs/OCBs
WORKING CAPITAL FOR THE YEAR 2005-06
BRITANNIA INDUSTRIES LTD. PANTNAGAR (UTTARAKHAND)
G/L PARTICULARS AMOUNT TOTAL
205001 INVENTORY FO 2386279.87
205002 INVENTORY HSD 1319357.44
205003 INVENTORY LDO 775863.92
205004 INVENTORY ENGG.STR 3090080.16
206000 INVENTORY INGREDIENT 29191221.91
206001 INVENTORY PACKING 20387586.5
206002 INVENTORY CBBS,CLSG 2245570.54
207003 INVENTORY FG BISCUITS 5614899.25
207013 INVENTORY WIP- GOOT 151412.25
207019 CLOSING STOCK INV FG 552790.21
210000 ACCOUNTS RECEIVABLE DOMESTIC 12048.89
CASH IN HAND
211002 CASH IN HAND-DEL BR 0
211043 CASH IN HAND-UA 34476
CASH AT BANK
213052 CITI BANK DELHI MAIN 0
213053 CITI BANK DELHI DISB 0
213111 HDFC DISB BANK-UA 233637.48
220002 PREPAID EXPENSES MISC 5836
220003 PREPAID INSURANCE 132845
220009 PREPAID RATES & TAXES 50000
220039 ADVANCE STAFF TRAVEL DOM 0
TOTAL CURRENT ASSETS 66183905.42
111000 ACC PAYABLE DOMESTIC 29455872.51
111001 ACC PAYABLE EXPORT 0
111002 ACC PAYABLE ONE VD 4445
111003 ACC PAYABLE STATUT 66114
111004 ACC PAYABLE EMPL 2029
111005 ACC PAYABLE SSI 90272
111007 ACC PAYABLE AW VENDOR 0
104143 DEPOSIT PAYABLE VENDR 250000
104127 DEPOSIT PAYABLE CUST OTH 175000
104118 C.S.T PAYABLE 11266.5
104165 WORK CONT TAX PAYABLE 52104.55
104004 ACCUED ELECTRICITY 0
104202 GR/IR-CLEARING-PRO 30647374.02
104203 FREIGHT CLEARING (MM) 3987064.02
104030 ACCRUED TELEPHONE 0
104039 ACCRUED SECONDARY FRT 0
ACCRUED & O/S EXPENSES
104016 ACC MISC EXPENSES 4365821.21
104017 ACC ONWARD FREIGH 102624.71
104023 ACCR PRIMARY FREIGHT 13153620.11
104025 ACCR SALARIES & WAGES 253974
104220 ACCR TAX SERVICE 0
104207 TDS CONTRACTOR S 194 C 352159
104209 TDS RENT SEC 1941 0
104210 TDS- PROF.FEES 194 J 7830
104218 TCS CUST SCRAP SALE 2863.14
104244 VAT PAYABLE 78154.01
104245 VAT INPUT CREDIT RM 0
104246 VAT INPUT CREDIT CG 0
104050 CO CONTR GPF LIA A/C 0
104154 RET. PAYABLE VENDOR 6628158.47
104124 ENTRY TAX 257029.2
104125 TDS INT DEP SEC 194 A 0
104126 AACO DEP PAYABLE CUSTM 0
110002 PROV FOR BONUS 262826
110006 PROV GRATUITY FUND 257223.44
110011 PROV. FOR LTA 4800
104014 PROV LEAVE ENCASHMENT 46318
TOTAL CURRENT LIABILITIES 90514942.89
WORKING CAPITAL(CA-CL) -24331037
WORKING CAPITAL FOR THE YEAR 2006-2007
OF BRITANNIA INDUSTRIES LTD. Pantnagar (Uttarakhand)
G/L PARTICULARS AMOUNT TOTAL
205001 INVENTORY FO 1250901.87
205002 INVENTORY HSD 1737552.76
205003 INVENTORY LDO 1322501.12
205004 INVENTORY ENGG.STR 6571934.32
206000 INVENTORY INGREDIENT 84432770.4
206001 INVENTORY PACKING 16249728.09
206002 INVENTORY CBBS,CLSG 2444207.44
207003 INVENTORY FG BISCUITS 19911752.57
207013 INVENTORY WIP- GOOT 132982.7
207019 CLOSING STOCK INV FG 166906.11
209000 LOOSE TOOLS 905051.8
210000 ACCOUNTS RECEIVABLE DOMESTIC 4896050.28
CASH IN HAND
211002 CASH IN HAND-DEL BR 0
211043 CASH IN HAND-UA 15917
220002 PREPAID EXPENSES MISC 14446.68
220003 PREPAID INSURANCE 59052
220004 PREPAID LEASE RENTAL 0
220006 PREPAID MEDICAL INSUR. 0
220009 PREPAID RATES & TAXES 0
220041 PREPAID GROUP INSUR 5515
220039 ADVANCE STAFF TRAVEL DOM 54417
202000 CWIP 0
202001 AUC- D&M(CWIP) 5369271.68
TOTAL CURRENT ASSETS 145540958.8
111000 ACC PAYABLE DOMESTIC 45606390.3
111001 ACC PAYABLE EXPORT 0
111002 ACC PAYABLE ONE VD 51391
111003 ACC PAYABLE STATUT 525202
111004 ACC PAYABLE EMPL 2030
111005 ACC PAYABLE SSI 135300
111007 ACC PAYABLE AW VENDOR 0
104143 DEPOSIT PAYABLE VENDR 275000
104127 DEPOSIT PAYABLE CUST OTH 150000
104118 C.S.T PAYABLE 4154.89
104165 WORK CONT TAX PAYABLE 28377
104201 APMC CLEARING A/C 0
104202 GR/IR-CLEARING-PRO 2721309.9
104203 FREIGHT CLEARING (MM) 12046697.98
ACCRUED & O/S EXPENSES
104016 ACC MISC EXPENSES 8076499.86
104017 ACC ONWARD FREIGH 669362.71
104023 ACCR PRIMARY FREIGHT 26697238.71
104025 ACCR SALARIES & WAGES 614091
104033 ACCR LOADING 81934
104220 ACCR TAX SERVICE 0
104207 TDS CONTRACTOR S 194 C 517762
104209 TDS RENT SEC 1941 21004
104210 TDS- PROF.FEES 194 J 729
104218 TCS CUST SCRAP SALE 6646.51
104244 VAT PAYABLE 86142.02
104245 VAT INPUT CREDIT RM 0
104246 VAT INPUT CREDIT CG 0
104152 MISC RECOVERY 0
104050 CO CONTR GPF LIA A/C 71111
104053 CO CONTR ESI LIA A/C 33200
104154 RET. PAYABLE VENDOR 8426606.06
104064 EMPL CONTR ESIC 12256
104128 STALE CHJEQE /AC 70946.07
104067 EMPL CONTR GPF 62697
104124 ENTRY TAX 102750.37
104125 TDS INT DEP SEC 194 A 0
104126 AACO DEP PAYABLE CUSTM 0
110002 PROV FOR BONUS 925276.44
110006 PROV GRATUITY FUND 635064.63
110011 PROV. FOR LTA 0
104014 PROV LEAVE ENCASHMENT 114398.16
TOTAL CURRENT LIABILITIES 108771568.6
WORKING CAPITAL(CA-CL) 36769390
* AS PER CHANGE IN THE POLICY OF THE ORGANISATION LOOSE
TOOLS HAVE BEEN CONVERTED INTO FIXED ASSETS FROM CURRENT
ASSETS WITH AFFECT FROM APRIL 2007.
MANAGEMENT OF INVENTORY
PERCENTAGE OF INVENTORY TO WORKING CAPITAL
(In ‘000) 2006-07 2005-06 2004-05
Inventory 2149406 1847956 1341899
W.C. 583395 325758 (451387)
Ratio of inventory/
W.C. 368.43 567.27 297.28
Above table shows the inventory and working capital relationship in BIL .It appears from the
analysis that the percentage of inventory to WC is reasonable considering the nature and the
size of the business, for the given period i.e. 04-05 to 05-06 .How ever in 05-06 it has
increased marginally. Generally inventory in any business enterprise should be kept at
minimum. Inventory in excess of this limit is a sign of excessive buying and slow use of
material reason being the large production cycle. How ever this ratio can differ from Industry
to industry. Heavy manufacturing industries characterized by a long production cycle
invariably have higher inventory to working capital ratio as indicated by the figure inventory
to working capital ratio as indicated by the figure.
2000000 1847956 500
2004-05 2005-06 2006-07
Inventory Working capital Ratio of in ventory to WORKING CAPITAL
MANAGEMENT OF DEBTORS
PERCENTAGE OF DEBTORS TO
(In crores) 2006-07 2005-06 2004-05
Debtors 286070 208516 443147
capital 583395 325758 (451387)
capital 49.03 64.009% (98.17)%
The study of debtors and working capital relationship is shown in above table. The analysis of
the table reveals that the amount of debtors in BIL is on an average 81% of working capital
during the above stated period, which means not very large amount of working capital, is
blocked in debtors, but still it should be minimum ass much as possible.
Looking at the trend during the period, BIL debtors to working capital ratio has been fluctuated.
It has increased from 04-05 to 05-06.
208516 0 Debtors
0 Ratio to WORKING
2004-05 2005-06 2006-07
MANAGEMENT OF CASH
PERCENTAGE OF CASH TO WORKING CAPITAL
(In crores) 2006-07 2005-06 2004-05
CASH 486460 353395 163062
capital 583395 325758 (451387)
% of Cash
capital 83.38% 108.48% (36.12)%
Above table shows the relationship of cash to working capital for the companies during the
period 04-05 to 06-07
On analyzing the table we find that cash was on an average 51.91% of working capital in BIL,
which is not, a good sign as excess of liquidity is also harmful. It is clear from above table that
during 04-05 the ratio was negative where as in 05-06 it was too high as to 06-07 which has
decreased to 83.38% along with increasing cash.
This suggests that BIL need to take some good steps for maintaining the adequate liquidity along
with sufficient cash generating power.
At the year end cash collection is high in comparison to whole year that is the reason company
has high percentage of cash to working capital.
2004-05 2005-06 2006-07
CASH Working capital % ofcash to working capital
LOANS AND ADVANCES
LOANS AND ADVANCES AS A % OF WORKING CAPITAL
(In crores) 2006-07 2005-06 2004-05
Capital 583395 325758 (451387)
advances 890016 940316 631468
% of loan
W.C. 152.55 288.65 (139.89)
Table shows the relationship of loans and advances as a percentage of working capital in BIL
during the period 04-05 to 06-07. During this period loans and advances accounted an average
increase of 100.44 %. According to common norms loans and advances should be made as low
as possible unless they earn reasonable returns.
During the above period percentage has been consistently increased along with loans and
advances in last year it, which is a negative sign.
400000 325758 100
2004-05 2005-06 2006-07
Loans & Advances
% of loan & advances to working capital
ANALYSIS OF SOME IMPORTANT SIGNIFICANT RATIOS
RATIOS Formula to be used
2006 2005 2004-05
MEASURES OF INVESTMENT
RETURN ON PROFIT AFTER TAX 17.4% 26.7% 33.5%
EQUITY EQUITY SHAREHOLDERS FUND
SHAREHOLDER’S FUND Rs. Rs. Rs.
BOOK VALUE PER NUMBER OF EQUITY SHARES 257.4 229.8 185.7
EARNING PER SHARE 2.5 3.5 3.8
DIVIDEND COVER DIVIDENDS (plus tax) PER SHARE times times times
MEASURES OF FINANCIAL STATUS
CURRENT ASSETS 1.2 1.1 0.9
CURRENT RATIO CURRENT LIABILITIES times times times
DEBT RATIO BORROWED CAPITAL 0.78% 1.7% 1.4%
EQUITY SHARE HOLDERS FUND
TAX RATIO TAX PROVISION 9.1% 27% 32.5%
PROFIT BEFORE TAX
MEASURES OF PERFORMANCE
PROFIT MARGIN PROFIT BEFORE TAX AND 5.6% 11.3% 15.2%
DEBTORS SALES 81.0 87.2 36.5
TURNOVER DEBTORS+BILLS RECEIVABLES times times times
STOCK SALES 10.8 9.8 12.0
TURNOVER STOCK times times times
COMPETITORS START FROM SCRATCH
As for the threat from the phase-out of the QRs, in respect of biscuits, Britannia has faced this
threat reasonably well over the past one year, without a visible impact on its financial
performance. The proposed foray by Nestle India and Hindustan Lever into confectionery and
dairy products, could pose the only remaining threat to Britannia. On this, Britannia's already
established brand name in the foods business could erect an entry barrier, however temporary,
when it comes to mass market products.
Though both HLL and Nestle have the option of drawing products from their parents' portfolio,
these brands would scarcely be familiar names in India; therefore, investments in brand-building
would be necessarily high, at least in the initial stages. In the bakery business, HLL's acquisition
of Modern Foods, the largest bread manufacturer in India, could pose a threat. However,
Britannia's dependence on the bread segment is now negligible, and any extension of the Modern
brand to biscuits and cakes could take some time, affording some breathing space to Britannia.
As most of the sale is done from its head office, so the requirement of cash is not too
Comparing to its working capital the amount of creditors is quite low.
After introduction of Ferrari project the company was able to maintain its quality and
Company also follows ISO 140001 certified to maintain the quality.
It also performs several activities to motivate the employees such as publishing
magazines, competition, sports and several others.
At last it is concluded that the company as a whole is a well branded company. The goodwill
of the company is very high.
As considered to my topic working capital management it is concluded that the system of
working capital management of the company is very good and the inventory of the company is
also maintained and controlled properly.
It was observed that the requirement of working capital is not too much and what ever amount
is required is being satisfied by its main branch i.e. from Bangalore. As compared to requirement
of working capital the amount of creditors is also too low which shows that company is in itself
sufficient enough its resources. It does not borrow much of funds from outside party. It only
sales its by products and scraps.
Now we see through this analysis that a Britannia industry is doing a good job in trade
sector. If we analysis the Marketing strategy of Britannia industries then we conclude that its
totally customer oriented firm with well managed strategies.
So, in all, it is concluded that the environment (working and cultural) is found very calm and
the employees are pleased to work very hard in the corporation to achieve the desired objectives.
FINANCIAL MANAGEMENT----------- M Y KHAN
FINANCIAL MANAGEMENT----------I M PANDEY
ANNUAL REPORT OF BRITANNIA INDUSTRIES