CHAPTER 1: INTRODUCTION
1.1 Industry profile In economics, a financial market is a mechanism that allows people to buy and sell (trade) financial securities (such as stocks and bonds), commodities (such as precious metals or agricultural goods), and other fungible items of value at low transaction costs and at prices that reflect the efficient-market hypothesis. Both general markets (where many commodities are traded) and specialized markets (where only one commodity is traded) exist. Markets work by placing many interested buyers and sellers in one "place", thus making it easier for them to find each other. An economy which relies primarily on interactions between buyers and sellers to allocate resources is known as a market economy in contrast either to a command economy or to a non-market economy such as a gift economy. In finance, financial markets facilitate:
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The raising of capital (in the capital markets) The transfer of risk (in the derivatives markets) The transfer of liquidity (in the money markets) International trade (in the currency markets)
– and are used to match those who want capital to those who have it. Typically a borrower issues a receipt to the lender promising to pay back the capital. These receipts are securities which may be freely bought or sold. In return for lending money to the borrower, the lender will expect some compensation in the form of interest or dividends. In mathematical finance, the concept of a financial market is defined in terms of a continuoustime Brownian motion stochastic process. Definition In economics, typically, the term market means the aggregate of possible buyers and sellers of a certain good or service and the transactions between them.
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The term "market" is sometimes used for what are more strictly exchanges, organizations that facilitate the trade in financial securities, e.g., a stock exchange or commodity exchange. This may be a physical location (like the NYSE) or an electronic system (like NASDAQ). Much trading of stocks takes place on an exchange; still, corporate actions (merger, spinoff) are outside an exchange, while any two companies or people, for whatever reason, may agree to sell stock from the one to the other without using an exchange. Trading of currencies and bonds is largely on a bilateral basis, although some bonds trade on a stock exchange, and people are building electronic systems for these as well, similar to stock exchanges. Financial markets can be domestic or they can be international. Types of financial markets The financial markets can be divided into different subtypes:
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Capital markets which consist of:
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Stock markets, which provide financing through the issuance of shares or common stock, and enable the subsequent trading thereof.
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Bond markets, which provide financing through the issuance of bonds, and enable the subsequent trading thereof.
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Commodity markets, which facilitate the trading of commodities. Money markets, which provide short term debt financing and investment. Derivatives markets, which provide instruments for the management of financial risk. Futures markets, which provide standardized forward contracts for trading products at some future date; see also forward market.
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Insurance markets, which facilitate the redistribution of various risks. Foreign exchange markets, which facilitate the trading of foreign exchange.
The capital markets consist of primary markets and secondary markets. Newly formed (issued) securities are bought or sold in primary markets. Secondary markets allow investors to sell securities that they hold or buy existing securities.The transaction in primary market exist between investors and public while secondary market its between investors
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Raising the capital To understand financial markets, let us look at what they are used for, i.e. what where firms make the capital to invest Without financial markets, borrowers would have difficulty finding lenders themselves. Intermediaries such as banks help in this process. Banks take deposits from those who have money to save. They can then lend money from this pool of deposited money to those who seek to borrow. Banks popularly lend money in the form of loans and mortgages. More complex transactions than a simple bank deposit require markets where lenders and their agents can meet borrowers and their agents, and where existing borrowing or lending commitments can be sold on to other parties. A good example of a financial market is a stock exchange. A company can raise money by selling shares to investors and its existing shares can be bought or sold. The following table illustrates where financial markets fit in the relationship between lenders and borrowers: Relationship between lenders and borrowers Lenders Financial Intermediaries Financial Markets Interbank Companies Funds Stock Money Bond Borrowers Individuals Exchange Companies Market Central Government
Banks Individuals Companies Insurance Pension Mutual Funds
Market Municipalities Public Corporations
Foreign Exchange
Lenders Who have enough money to Lend or to give someone money from own pocket at the condition of getting back the principal amount or with some interest or charge, is the Lender. Individuals & Doubles
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Many individuals are not aware that they are lenders, but almost everybody does lend money in many ways. A person lends money when he or she:
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puts money in a savings account at a bank; contributes to a pension plan; pays premiums to an insurance company; invests in government bonds; or invests in company shares.
Companies Companies tend to be borrowers of capital. When companies have surplus cash that is not needed for a short period of time, they may seek to make money from their cash surplus by lending it via short term markets called money markets. There are a few companies that have very strong cash flows. These companies tend to be lenders rather than borrowers. Such companies may decide to return cash to lenders (e.g. via a share buyback.) Alternatively, they may seek to make more money on their cash by lending it (e.g. investing in bonds and stocks.) Borrowers Individuals borrow money via bankers' loans for short term needs or longer term mortgages to help finance a house purchase. Companies borrow money to aid short term or long term cash flows. They also borrow to fund modernisation or future business expansion. Governments often find their spending requirements exceed their tax revenues. To make up this difference, they need to borrow. Governments also borrow on behalf of nationalised industries, municipalities, local authorities and other public sector bodies. In the UK, the total borrowing requirement is often referred to as the Public sector net cash requirement (PSNCR). Governments borrow by issuing bonds. In the UK, the government also borrows from individuals by offering bank accounts and Premium Bonds. Government debt seems to be permanent. Indeed the debt seemingly expands rather than being paid off. One strategy used by governments to reduce the value of the debt is to influence inflation.
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Municipalities and local authorities may borrow in their own name as well as receiving funding from national governments. In the UK, this would cover an authority like Hampshire County Council. Public Corporations typically include nationalised industries. These may include the postal services, railway companies and utility companies. Many borrowers have difficulty raising money locally. They need to borrow internationally with the aid of Foreign exchange markets. Borrower's having same need can form them into a group of borrowers. It can also take an organizational form. just like Mutual Fund. They can provide mortgaze on weight basis. The main advantage is that it lowers their cost of borrowings. Derivative products During the 1980s and 1990s, a major growth sector in financial markets is the trade in so called derivative products, or derivatives for short. In the financial markets, stock prices, bond prices, currency rates, interest rates and dividends go up and down, creating risk. Derivative products are financial products which are used to control risk or paradoxically exploit risk. It is also called financial economics. Derivative products or instruments help the issuers to gain an unusual profit from issuing the instruments. For using the help of these products a contract have to be made. Derivative contracts are mainly 3 types: 1. Future Contracts 2. Forward Contracts 3. Option Contracts. Currency markets Seemingly, the most obvious buyers and sellers of currency are importers and exporters of goods. While this may have been true in the distant past, when international trade created the demand for currency markets, importers and exporters now represent only 1/32 of foreign exchange dealing, according to the Bank for International Settlements. The picture of foreign currency transactions today shows:
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Banks/Institutions Speculators
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Government spending (for example, military bases abroad) Importers/Exporters Tourists
Analysis of financial markets Much effort has gone into the study of financial markets and how prices vary with time. Charles Dow, one of the founders of Dow Jones & Company and The Wall Street Journal, enunciated a set of ideas on the subject which are now called Dow Theory. This is the basis of the socalled technical analysis method of attempting to predict future changes. One of the tenets of "technical analysis" is that market trends give an indication of the future, at least in the short term. The claims of the technical analysts are disputed by many academics, who claim that the evidence points rather to the random walk hypothesis, which states that the next change is not correlated to the last change. The scale of changes in price over some unit of time is called the volatility. It was discovered by Benoît Mandelbrot that changes in prices do not follow a Gaussian distribution, but are rather modeled better by Lévy stable distributions. The scale of change, or volatility, depends on the length of the time unit to a power a bit more than 1/2. Large changes up or down are more likely than what one would calculate using a Gaussian distribution with an estimated standard deviation. A new area of concern is the proper analysis of international market effects. As connected as today's global financial markets are, it is important to realize that there are both benefits and consequences to a global financial network. As new opportunities appear due to integration, so do the possibilities of contagion. This presents unique issues when attempting to analyze markets, as a problem can ripple through the entire connected global network very quickly. For example, a bank failure in one country can spread quickly to others, which makes proper analysis more difficult.
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1.2 General Introduction about the sector The stock markets in todays times is being affected by the business being carried out by a variety of sectors namely: Banking, Fast moving consumer goods (FMCG), automobiles, real estate, telecom etc. The general introduction about these are given below. Out of these Banking sector is the one which is responsible for the boom in the stock markets in todays’ date. It’s the major player in high inflows of money into the stock markets through the use of various its various products like mutual funds, ELSS, ULIPs, etc. BANKING SECTOR – Banking in India originated in the last decades of the 18th century. The first banks were The General Bank of India, which started in 1786, and Bank of Hindustan, which started in 1790; both are now defunct. The oldest bank in existence in India is the State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal. This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras, all three of which were established under charters from the British East India Company. For many years the Presidency banks acted as quasicentral banks, as did their successors. The three banks merged in 1921 to form the Imperial Bank of India, which, upon India's independence, became the State Bank of India.
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Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848 as a consequence of the economic crisis of 1848-49. The Allahabad Bank, established in 1865 and still functioning today, is the oldest Joint Stock bank in India.(Joint Stock Bank: A company that issues stock and requires shareholders to be held liable for the company's debt) It was not the first though. That honor belongs to the Bank of Upper India, which was established in 1863, and which survived until 1913, when it failed, with some of its assets and liabilities being transferred to the Alliance Bank of Simla.When the American Civil War stopped the supply of cotton to Lancashire from the Confederate States, promoters opened banks to finance trading in Indian cotton. With large exposure to speculative ventures, most of the banks opened in India during that period failed. The depositors lost money and lost interest in keeping deposits with banks. Subsequently, banking in India remained the exclusive domain of Europeans for next several decades until the beginning of the 20th century.Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoire d'Escompte de Paris opened a branch in Calcutta in 1860,
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and another in Bombay in 1862; branches in Madras and Puducherry, then a French colony, followed. HSBC established itself in Bengal in 1869. Calcutta was the most active trading port in India, mainly due to the trade of the British Empire, and so became a banking center. FAST MOVING CONSUMER GOODSThe Fast Moving Consumer Goods (FMCG) industry in India is one of the largest sectors in the country and over the years has been growing at a very steady pace. The sector consists of consumer non-durable products which broadly consists, personal care, household care and food & beverages. The Indian FMCG industry is largely classified as organised and unorganised. This sector is also buoyed by intense competition. Besides competition, this industry is also marked by a robust distribution network coupled with increasing influx of MNCs across the entire value chain. This sector continues to remain highly fragmented. Industry Classification The FMCG industry is volume driven and is characterised by low margins. The products are branded and backed by marketing, heavy advertising, slick packaging and strong distribution networks. The FMCG segment can be classified under the premium segment and popular segment. The premium segment caters mostly to the higher/upper middle class which is not as price sensitive apart from being brand conscious. The price sensitive popular or mass segment consists of consumers belonging mainly to the semi-urban or rural areas who are not particularly brand conscious. Products sold in the popular segment have considerably lower prices than their premium counterparts. Following are the segment-wise product details along with the major players:
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AUTOMOBILES – The Automotive industry in India is one of the largest in the world and one of the fastest growing globally. India manufactures over 17.5 million vehicles (including 2 wheeled and 4 wheeled) and exports about 2.33 million every year. It is the world's second largest manufacturer of motorcycles, with annual sales exceeding 8.5 million in 2009. India's passenger car and commercial vehicle manufacturing industry is the seventh largest in the world, with an annual production of more than 3.7 million units in 2010. According to recent reports, India is set to overtake Brazil to become the sixth largest passenger vehicle producer in the world, growing 1618 per cent to sell around three million units in the course of 2011-12. In 2009, India emerged as Asia's fourth largest exporter of passenger cars, behind Japan, South Korea, and Thailand. As of 2010, India is home to 40 million passenger vehicles and more than 3.7 million automotive vehicles were produced in India in 2010 (an increase of 33.9%), making the country the second fastest growing automobile market in the world. According to the Society of Indian Automobile Manufacturers, annual car sales are projected to increase up to 5 million vehicles by 2015 and
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more than 9 million by 2020. By 2050, the country is expected to top the world in car volumes with approximately 611 million vehicles on the nation's roads. A chunk of India's car manufacturing industry is based in and around Chennai, also known as the "Detroit of India" with the India operations of Ford, Hyundai, Renault and Nissan headquartered in the city and BMW having an assembly plant on the outskirts. Chennai accounts for 60 per cent of the country's automotive exports. Gurgaon and Manesar in Haryana are hubs where all of the Maruti Suzuki cars in India are manufactured. The Chakan corridor near Pune, Maharashtra is another vehicular production hub with companies like General Motors, Volkswagen, Skoda, Mahindra and Mahindra, Tata Motors, Mercedes Benz, Land Rover, Fiat and Force Motors having assembly plants in the area. Ahmedabad with the Tata Nano plant, Halol again with General Motors, Aurangabad with Audi, Skoda and Volkswagen, Kolkatta with Hindustan Motors, Noida with Honda and Bangalore with Toyota are some of the other automotive manufacturing regions around the country.
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REAL ESTATE Real estate is a legal term (in some jurisdictions, such as the United Kingdom, Canada, Australia, USA, Dubai, Trinidad and Tobago and The Bahamas) that encompasses land along with improvements to the land, such as buildings, fences, wells and other site improvements that are fixed in location—immovable. Real estate law is the body of regulations and legal codes which pertain to such matters under a particular jurisdiction and include things such as commercial and residential real property transactions. Real estate is often considered synonymous with real property (sometimes called realty), in contrast with personal property (sometimes called chattel or personalty under chattel law or personal property law). However, in some situations the term "real estate" refers to the land and fixtures together, as distinguished from "real property", referring to ownership of land and appurtenances, including anything of a permanent nature such as structures, trees, minerals, and the interest, benefits, and inherent rights thereof. Real property is typically considered to be immovable property. The
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terms real estate and real property are used primarily in common law, while civil law jurisdictions refer instead to immovable property. TELECOM The Indian telecommunication industry is the world's fastest growing industry with 826.93 million mobile phone subscribers as of April 2011. It is also the second largest telecommunication network in the world in terms of number of wireless connections after China. See List of countries by number of mobile phones in use. As the fastest growing telecommunications industry in the world, it is projected that India will have 1.159 billion mobile subscribers by 2013. Furthermore, projections by several leading global consultancies indicate that the total number of subscribers in India will exceed the total subscriber count in the China by 2013. The industry is expected to reach a size of 344,921 crore (US$76.92 billion) by 2012 at a growth rate of over 26 per cent, and generate employment opportunities for about 10 million people during the same period. According to analysts, the sector would create direct employment for 2.8 million people and for 7 million indirectly. In 2008-09 the overall telecom equipments revenue in India stood at 136,833 crore (US$30.51 billion) during the fiscal, as against 115,382 crore (US$25.73 billion) a year before.
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A large population, low telephony penetration levels, and a rise in consumer spending power has helped make India the fastest-growing telecom market in the world. The market's first operator was the state-owned Bharat Sanchar Nigam Limited (BSNL), created by corporatization of the Indian Telecommunication Service, a government unit formerly responsible for provision of telephony services. Subsequently, after the telecommunication policies were revised to allow private operators, companies such as Bharti Airtel, Reliance Communications, Tata Teleservices, Idea Cellular, Aircel and Loop Mobile have entered the market (Bharti Airtel currently being the largest telecom company in India). In the fiscal year 2008-09, rural India outpaced urban India in mobile growth rate.
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The total number of telephones in the country stands at 861.48 million, while the overall teledensity has increased to 72.08% as of April 30th, 2011. Mobile telephony experiences growths at rates such as 15.34 million subscribers a month, which were added in April 2011. Telecom in the real sense means the transfer of information between two distant points in space. The popular meaning of telecom always involves electrical signals and as a result, people often exclude postal or any other raw telecommunication methods from its meaning. Therefore, the history of Indian telecom can be started with the introduction of telegraph.
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CHAPTER 2: PROFILE OF THE ORGANISATION
Share-Gurukul is the educational division of ICoFP. Its promoters have a long and proud history of educating India’s leading brokerage houses in NCDEX training modules. They have the unique distinction of being awarded the first official training partner status from NCDEX for conducting training for member brokerage houses, spread across the length and breadth of the country. Over the years they have created hundreds of Industry ready professionals occupying positions of responsibilities and prestige in highly reputed brokerage houses. Share-Gurukul believes in de-mystifying the complexities of securities market education, by making it rational, accessible and understandable.
What they do Share-Gurukul provides cutting edge securities education to the discerning audience. They seek to unlock the secrets of wealth creation, to unlock the complexities associated with securities markets. Their inherent strength lies in the high quality faculty they have bringing to the market, rich global capital market experience. They believe in providing equal opportunity to the masses, who share their passion in using share markets to fuel economic upliftment.
Knowledge of stock markets involves taking the path less traveled, learning to convert perceived threats into economic opportunities and capitalizing those opportunities to create wealth. Only an aware and educated investor can make informed investment decisions and informed investment decisions more often than not make rich gains and that is what matter. The company is having team of research & marketing executives including portfolio managers, to manage the portfolios into commodity markets. They analyze the markets in both ways technically & fundamentally. The company offer world class professional consultancy services in the domain of finance, investments, risk management and trading services.
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CHAPTER 3: DISCUSSION ON TRAINING
1.1 STUDENT’S WORK PROFILE Worked as a management trainee
1.2 TOOLS AND TECHNIQUES USED Softwares such as NEAT, ODIN and BOLT 1.3 KEY LEARNINGS
Learnt about the different segments of stock markets like money markets, commodities, derivatives, currencies Learnt the theoretical as well as practical aspects of trading in the stock markets
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CHAPTER 4: STUDY OF SELECTED RESEARCH PROBLEM
4.1 Study of the selected research problem
This project report covers all the aspects relating to the PROFITABILITY ratios of BRITANNIA and CADBURY INDIA LTD interpreted according to standards. This project was done with the help of secondary data as research in finance subjects is done on performance and not potential.
The project selected by me is to do comparative PROFITABILITY ratio analysis for the above mentioned two companies using various financial statements. The main intention was to group or regroup the various figures and information appearing on the financial statement (either profit and loss statement or balance sheet or both) to draw the fruitful conclusions there from. I found that by comparing PROFITABILITY ratios of both the companies unveils why one company is more efficient in its activity as compared to the other. PROFITABILITY ratios are valuable as they depict how are you utilizing and managing your resources. All and all it was a good experience doing this project and will be of great help to me in future as a professional in the finance industry as well as an investor.
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4.2 OBJECTIVES OF THE STUDY
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To identify the comparative financial strengths and weakness of Britannia industries and Cadbury india Ltd.
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Through the net profit ratio and other profitability ratio, understand the profitability position of the company.
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To know the liquidity position of the company, with the help of Current ratio.
To find out the utility of financial ratio in credit analysis and determining the financial capability of the firm.
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4.3 PROFILE OF THE COMPANY UNDER STUDY
BRITANNIA
Britannia was incorporated in 1918 as Britannia Biscuits Co LTD in Calcutta. In 1924, Pea Frean UK acquired a controlling stake, which later passed on to the Associated Biscuits International (ABI) an UK based company. During the 50’s and 60’s, Britannia expanded operations to Mumbai, Delhi and Chennai. In 1989, J M Pillai, a Singapore based NRI businessman along with the Group Danone acquired Asian operations of Nabisco, thus acquiring controlling stake in Britannia. Later, Group Danone and Nusli Wadia took over Pillai’s holdings.
Britannia Industries Limited (Britannia) is one of the largest biscuit manufacturing companies in India. The company is engaged in the manufacture of biscuits, rusks, cookies and cakes. Britannia operates in a single segment, foods including bakery products such as biscuits, bread, cakes, rusk, and dairy products. The company is headquarted in Kolkata, India and employs 2,358 people
Global Markets Direct, the leading business information provider, presents an in-depth business, strategic and financial analysis of Britannia Industries Ltd. The report provides a comprehensive insight into the company, including business structure and operations, executive biographies and key competitors. The hallmark of the report is the detailed strategic analysis and Global Markets Direct’s views on the company. Britannia's plants are located in the 4 major metro cities – Kolkata, Mumbai, Delhi, and Chennai. A large part of products arealso outsourced from third party producers. Dairy products are outsourced from three producers - Dynamic Dairy based in Baramati, Maharashtra, and Modern Dairy at Karnal in Haryana and Thacker Dairy Products at Howrah in West Bengal.
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CADBURY INDIA LTD.
Cadbury India is a fully owned subsidy of Kraft Foods Inc. The combination of Kraft Foods and Cadbury creates a global powerhouse in snacks, confectionery and quick meals.
With annual revenues of approximately $50 billion, the combined company is the world's second largest food company, making delicious products for billions of consumers in more than 160 countries. We employ approximately 140,000 people and have operations in more than 70 countries. In India, Cadbury began its operations in 1948 by importing chocolates. After 60 years of existence, it today has five company-owned manufacturing facilities at Thane, Induri (Pune) and Malanpur (Gwalior), Bangalore and Baddi (Himachal Pradesh) and 4 sales offices (New Delhi, Mumbai, Kolkota and Chennai). The corporate office is in Mumbai. Currently, Cadbury India operates in four categories viz. Chocolate Confectionery, Milk Food Drinks, Candy and Gum category. In the Chocolate Confectionery business, Cadbury has maintained its undisputed leadership over the years. Some of the key brands in India are Cadbury Dairy Milk, 5 Star, Perk, Éclairs and Celebrations.
Cadbury enjoys a value market share of over 70% - the highest Cadbury brand share in the world! Our billion-dollar brand Cadbury Dairy Milk is considered the "gold standard" for chocolates in India. The pure taste of CDM defines the chocolate taste for the Indian consumer. Today, as a combined company with an unmatched portfolio in confectionery, snacking and quick meals, we are poised in our leap towards quantum growth. We are the world's No.1 Confectionery Company. And we will continue to ?make today delicious?!
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4.4 RESEARCH METHODOLOGY
Research Methodology is a way to systematically solve the problems. It may be understood to study how research is done scientifically. In this, we study various steps that are generally adopted by the researcher in studying research problems along with the logic behind them, to understand why we are using particular method or technique so that the research results are capable of being evaluated. During my project work, I have used a lot of data to understand concept of Ratio Analysis. The data collected was interpreted and then used as information in project. The analysis of the data was done by the help of Ms office tools such as MSword and Msexcel.
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4.5 SOURCES OF DATA COLLECTION
Data for this project is collected through Secondary sources. Secondary data is collected with the help of following –
1. Annual report
Majority of information gathered from data exhibited in the annual reports of the company. These includes annual reports of the year 2006-07,2007-08,2008-09 and 200910 and 2010-2011.
2. Reference Books
Theory relating to the subject matter and various concepts taken from various financial reference books.
3. Websites
The websites such as Moneucontrol and NSE were searched in for getting the financial reports and other information about the two enterprises under discussion
4. Journals and Publications
Various journals and research publications were referred to for getting the maximum available information about the ratios and their usage and interpretations
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4.6 UNDERSTANDING THEORETICAL BACKGROUND RATIO ANALYSIS: INTRODUCTION:Ratio analysis is an important technique, which is widely used for interpreting financial statement. The technique serves as a tool for assessing the current and long-term financial soundness of a business. It is also used to analysis various aspects of operating efficiency and level of profitability. A German scholar used ratios for the first time in 1919.
DEFINITION:1)
Wixon, Kell and Bedford, ?Ratio is an expression of quantitative relationship
between figures drawn from financial statements?.
2)
Hunt, Willant Donaldosa, ?Ratios are simply a means of highlighting in
arithmetical terms, of relationship between figures drawn from financial statements.?
Conclusion: - Financial ratios are useful because they summarize briefly the result of detailed
and computation.
IMPORTANCE OF RATIO ANALYSIS
Ratios are useful for the following reasons:1) Helpful in Forecasting: - The ratio can be used by financial managers for future financial planning. Ratio calculated for a number of years work as a guide for the future.
2) Useful in Co-ordination: - Ratios are useful in co-ordination, which is very much needed in business. The efficiency and weakness of an enterprise if communicated properly, will establish a better co-ordination among areas of appreciation and control.
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3) Helpful in Control: - The most important aspect of ratio analysis is that is very useful in controlling the areas of inefficiencies or weakness. It can be use by the management as a technique of correction.
4) Helpful in Communication: - Ratios are used for communication weak and good point to the concerned parties.
5) Helpful in Efficiency Appraisal: - Ratios are the scale of comparison; here the variations in financial statement, if they need appreciation, are brought to limelight.
6) Helpful in Evaluation of Financial Position: - The ratio analysis is useful for financial diagnosis of an enterprise. The under mentioned ratios will make the above clear:
Current Ratio: - It speaks about the working capital the company is having
funds to pay-off its short-term commitments.
and the
Solvency Ratio: - Profitability Ratio, Capital Gearing Ratio are all such ratio that can
evaluate the financial soundless or weakness of a company.
7) Helpful to Investors, Financial Institutions and Employees: - The ratios are economic barometer useful to all mentioned above as they can know the good and bad position of a company by making a comparative study of financial statement.
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VARIOUS TYPES OF FINANCIAL STATEMENTS:Classification of ratio is made based on requirement by end users and they indicate symptoms as characteristic of the company. The ratios can be interpretted on the basis of the various types of financial statements available to the investors and published annually by the business entities. The varipus types of financial statements are:? ? ? ? ? Balance sheet Profit and Loss statements Profit and loss appropraitions accounts Cash flow Funds flow
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PROFITABILITY RATIO:Measures that indicate how well a firm is performing in terms of its ability to generate profit. Formulae of some of the common ratios are as follows:
(1) Book
Value
Per
share: Total common
(ordinary) equity ÷ Number of
common
(ordinary) shares issued and outstanding.
(2)Dividends Per Share: Dividends paid ÷ Number of common (ordinary) shares issued and outstanding.
(3) Earnings Per Share: (Net income - preferred stock or preference shareinterest) ÷ Number of common (ordinary) shares issued and outstanding.
(4) Gross profit percentage: Total cost ofsales in a period x 100 ÷ Total sales revenue for that period.
(5) Net income percentage: Net income for a period x 100 ÷ Total sales revenue for that period.
(6) Operating profit percentage: Earnings before interest and taxes (EBIT) in a period x 100 ÷ Total sales revenue in the sameperiod.
(7) Return On Common equity: (Net income for a period - Dividends) ÷ (Common equity Preferred stock).
(8) Return On Investment: Net income ÷ Total assets.
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1] GROSS PROFIT RATIO:GROSS PROFIT RATIO = GROSS PROFIT X 100 SALES
In 2008-09,the Gross Profit Ratio was 7.85 and it went to 6.12 next year.As there is no standard Ratio,company has to determine its standard ratio based on past GP ratios or GP ratios of other concern.The Ratio if we compare it shows that1)Failure in managing purchases,production,sales and inventory 2)Loose control over direct costs of labour,fuel,freights etc. 3)Lower productivity and lower margin to meet other expenses
2] OPERATING RATIO:OPERATING RATIO = COGS + OPERATING EXPENSES X 100 SALES
In 2008-09,the Operating Ratio was 8.97 and it went to 7.2 next year.It indicates the cost of Expenses.As there is no standard Ratio,company has to determine its standard ratio based on past GP ratios or GP ratios of other concern.The Ratio if we compare it shows that1) High efficiency in managing the Operations of the concern like purchases made at lower prices,optimum level of production,good inventory management and good control of direct cost of labour,fuel,freight etc. 2) A very good Margin available to meet non-operating Expenses.
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3] NET PROFIT RATIO:NET PROFIT RATIO = NPAT X 100 SALES
In 2008-09,the Net profit Ratio was 7.31 and it went to 5.75 next year.It indicates the relationship between net profit and sales.As there is no standard Ratio,company has to determine its standard ratio based on past NP ratios or NP ratios of other concern.The Ratio if we compare it shows that1) Inefficiency in managing its activities like trading.production,financing and investment. 2) unsatisfactory control over operating as well as non operating costs 3) unusual losses like loss by fire,flood etc. 4) Low increase in the net worth or the proprietors funds. 5) Weak capacity of the concern to face bad economic situation.
4] EXPENSES RATIO:EXPENSES RATIO = EXPENSES NET SALES X 100
Expense ratios indicate the relationship of various expenses to net sales. The operating ratio reveals the average total variations in expenses. But some of the expenses may be increasing while some may be falling. Hence, expense ratios are calculated by dividing each item of expenses or group of expense with the net sales to analyze the cause of variation of the operating ratio.
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The ratio can be calculated for individual items of expense or a group of items of a particular type of expense like cost of sales ratio, administrative expense ratio, selling expense ratio, materials consumed ratio, etc. The lower the operating ratio, the larger is the profitability and higher the operating ratio, lower is the profitability.
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CHAPTER 5: DATA INTERPRETATION
COMPARATIVE ANALYSIS OF BRITANNIA INDUSTRIES LTD AND CADBURY PROFITABILITY RATIOS:-
1] GROSS PROFIT RATIO:GROSS PROFIT RATIO = GROSS PROFIT X 100 SALES
14 12 10 8 6 4 2 0 2010 2009 2008 2007 2006
BRITANNIA CADBURY
Norm: - Higher the ratio shows higher efficiency and vice versa.
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Particulars BRITANNIA CADBURY
2010 4.89 11.54
2009 6.12 6.12
2008 7.85 7.85
2007 4,7 4.7
2006 10.46 10.46
INTERPRETATION:The above table shows that the In Britannia Gross profit ratio is decreasing year by year from 2006 to 2010. This is due to increase in cost of sales and in Cadbury india Ltd, gross profit is increasing as compared to previous years.
2] OPERATING RATIO:OPERATING RATIO = COGS + OPERATING EXPENSES X 100 SALES
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10 BRITANNIA 5 CADBURY
0 2010 2009 2008 2007 2006
Norm: - Higher the ratio shows higher efficiency and vice versa.
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Particulars BRITANNIA CADBURY
2010 5.99 13.81
2009 7.20 13.75
2008 8.97 13.27
2007 5.85 13.16
2006 11.72 11.25
INTERPRETATION:-
The above table shows that in Britannia, Operating ratio is decreasing year by year from 2006 to 2010 and in Cadbury india Ltd there is no major change in operating ratios from 2006 to 2010.As we compare we come to know that Cadbury is performing well than Britannia.
3] NET PROFIT RATIO :NET PROFIT RATIO = NPAT X 100 SALES
12 10 8 6 4 2 0 2010 2009 2008 2007 2006 BRITANNIA CADBURY
Norm: - Higher the ratio shows higher efficiency and vice versa. Particulars BRITANNIA CADBURY 2010 3.38 9.68 2009 5.75 10.27 2008 7.31 8.94 2007 4.86 6.42 2006 8.48 5.11
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The above table shows that in Britannia ,the net profit is decreasing year by year like it in 2006, it was 8.48 and it went up to 3.38 in 2010.whereas in Cadbury net profit is increasing year by year. 4] RETURN ON NETWORTH:RETURN ON NETWORTH = NPAT SHAREHOLDERS FUND X 100
60 50 40 30 20 10 0 2010 2009 2008 2007 2006 BRITANNIA CADBURY
Norm: - Higher the ratio shows higher efficiency and vice versa.
Particulars BRITANNIA CADBURY
2010 48.27 35.53
2009 18.40 35.69
2008 24.06 27.77
2007 16.87 19.42
2006 24.99 11.30
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OBSERVATIONS/ INTERPRETATION:The above ratio indicates that in Britannia, the net profit available to equity shareholder is rising from 2006 to 2010 whereas in Cadbury also return on networth is rising from 11.30 in 2006 to 35.53 in 2010.
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CHAPTER 6: OBSERVATION AND FINDINGS
?
In this project I calculate some ratios; these ratios are very useful to interpret financial position of the company. From that it is clear that the Britannia and Cadbury india Ltd are in advanced stage. From the ratios calculated above following conclusions can be drawn.
?
The gross profit earned by the both the companies are declining every year. From 2006 to 2010, it is fluctuating a lot which is due to failure in managing purchases, production, sales and inventory or loses control over direct costs of labor, fuel, freights etc.
?
Operating ratio of Britannia going down from 2006 to 2010 which is nothing but due to certain reasons like low efficiency in managing the operations of the company or low margin available to meet non-operating expenses whereas as compared to Cadbury the fluctuations are not much.
?
The net profit is nothing but profit earned by the company after deducting interest and taxes. The graph is showing that in Britannia from 2006 to 2010,the net profit is declining which is due to inefficiency in managing its activities like trading, production, financing and investment or unsatisfactory control over operating or non operating costs whereas in Cadbury its rising from year year.
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CHAPTER 7: SUGGESTIONS AND CONCLUSION
?
The in-depth analysis of key financial ratios in this project helps in measuring the financial strength, liquidity conditions and operating efficiency of the company. It also provides valuable interpretation separately for each ratio that helps organization implementing the findings that would help the organization to increase its efficiency.
?
Ratios are only post mortem analysis of what has happened between two balance sheet dates. For one thing the position of the company in the interim period not revealed by analysis, moreover they give no clue about the future. Ratio analysis in view of its several limitations should be considered only as a tool for analysis rather than as an end itself.
?
From the analysis it is evident that the gross profit ratio is good, whereas the operating ratio is around optimum level to the industry standards. As a whole the liquidity position of the company is good.
?
The company not very well used its fixed assets efficiently company has reduce it in order to invest the major portion in working capital or investment in current assets. This is one of the reason for profit fluctuation.
?
Thus finally the company must try to improve its profit margins as they are below industry levels. This improvement may also bring up its return on investment and overall efficiency to the company.
?
The business environment of both the company is reasonably good. The company’s track record is always oriented towards profitable growth and with strong fundamentals
40
CHAPTER 8: LIMITATIONS
Though the every researcher tries his/her best to fulfill the objectives of his, her study, but still there are some limitation. ? ? The authority and genuinely of the data received cannot be tested as every company does not disclose al l of its records on internet or discloses bon the financial statement. False result Accounting ratio is based on data drawn from accounting records. In this case if data is correct, then only the ratio will be correct. The data therefore must be absolutely correct. ? Effect of price level changes Price level changes often make the comparison of figures difficult over a period of time. Changes in price affect the cost of production, sales and also the value of the assets. ? ? ? The comparison is rendered difficult because of differences in situations of one company as compared to the other. Ratios are tool of quantitative analysis only. Normally qualitative factors are needed to draw conclusions. Ratio Analysis is only the beginning as it gives only a little information for the purpose of decision making.
41
BIBLIOGRAPHY
Following books were referred for carrying out the project: -
1. Financial Management by N.M. Venchalekar.
2. Financial Management by KHAN AND JAIN.
3. Annual Reports of Britannia and Cadbury India Ltd.
4. Financial Management by Ainapure Ainapure
Following websites were referred: -
1. 2. 3. 4. 5. 6.
www.money.rediff.com www.cadburyindia.com www.cadbury.com www.britannia.co.in www.moneycontrol.com www.nseindia.com
Following journals and papers were referred:1. Ad Hoc Working Group on EC Payment Systems. 1992. Issues of Common Concern to EC Central Banks in the Field of Payment Systems. 2. Arner, Douglas, and Jan-Juy Lin, eds. 2003. Financial Regulation - A Guide to Structural Reform. Hongkong: Sweet and Maxwell. 3. Arner, Douglas, et al. 2007. Property Rights, Collateral, Creditor Rights and Insolvency in East Asia. Texas International Law Journal 42.
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4. Beck, Thorsten and Ross Levine. 2003. Legal Institutions and Financial Development. Policy Research Working Paper 3136. Washington, DC: The World Bank. 5. Beim, David and Charles Calomiris. 2001. Emerging Financial Markets. New York: McGraw-Hill. 6. Bekaert, Geert, et al. 2001. Does Financial Liberalisation Spur Growth? NBER Working Paper No. 8245. 7. Cheffins, Brian. 2001. Does Law Matter? The Separation of Ownership and Control in the United Kingdom. ERSC Centre for Business Research, University of Cambridge, Working Paper No. 172. 8. Coase, Ronald. 1960. The Problem of Social Cost. Journal of Law & Economics. 3(1):144. 9. Dale, Richard S. 1993. Deposit Insurance, Policy Clash over EC and US Reforms. In The Basic Elements of Bank Supervision, edited by Frederick C. Schadrack and Leon Korobow. New York: Federal Reserve Bank of New York. 10. Das, Udaibir, et al. 2004. Does Regulatory Governance Matter for Financial System Stability? An Empirical Analysis. IMF Working Paper WP/04/89. 11. DuBois, Armand Budington. 1971. The English Business Company after the Bubble Act, 1720-1800. New York and London: Oxford University Press. 12. Edison, Hali J., et al. 2002. Capital Account Liberalisation and Economic Performance: Survey and Synthesis. IMF Staff Papers 51(2):220-256. 13. Evans, Owen, et al. 2000. Macroprudential Indicators of Financial System Soundness. IMF Occasional Paper No. 192. 14. Fairgrieve, Duncan and Mads Andenas. Autumn 2000. Securing Progress in Collateral Law Reform: the EBRD's Regional Survey of Secured Transactions Laws. Law in Transition Autumn 2000: 28-36. 15. Galal, Ahmed and Omar Razzaz. 2001. Reforming Land and Real Estate Markets. Policy Research Working Paper 2616. 16. Hadjiemmanuil, C. 1996. Central Bankers' 'Club' Law and Transitional Economies: Banking Reform and the Reception of the Basle Standards of Prudential Supervision in Eastern Europe and the Former Soviet Union. In Emerging Financial Markets and the
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Role of International Financial Organizations, edited by J. Norton and M. Andenas. The Netherlands and the United Kingdom: Kluwer Law International. 17. Harris, Ron. 2000. Industrializing English Law: Entrepreneurship and Business Organization, 1720-1844. Cambridge: Cambridge University Press. 18. Harwood, Alison, ed. 2000. Building Local Bond Markets: An Asian Perspective. Washington, D.C.: International Finance Corporation. 19. Jaffe, Dwight and Bertrand Renaud. 1996. Strategies to Develop Mortgage Markets in Transition Economies. World Bank Policy Research Working Paper 1697. 20. Kireyev, Alexei. 2002. Liberalisation of Trade in Financial Services and Financial Sector Stability (Analytical Approach). IMF Working Paper WP/02/138. 21. Klapper, Leora, et al. 2004. Business Environment and Firm Entry: Evidence from International Data. World Bank Policy Research Working Paper 3232. 22. Kumar, Krishna, et al. 1999. What Determines Firm Size? NBER Working Paper 7208. 23. La Porta, Rafael, et al. 2003. What Works in Securities Law? 24. Macey, Jonathan and Hideki Kanda. 1990. The Stock Exchange as a Firm: The Emergence of Close Substitutes for the New York and Tokyo Stock Exchanges. Cornell Law Review. 76:1007. 25. Micklethwait, John and Adrian Wooldridge. 2003. The Company: A Short History of a Revolutionary Idea. New York: Modern Library. 26. Mishkin, Frederic. 2001. Financial Policies and Prevention of Financial Crises in Emerging Market Countries. NBER Working Paper No. 8087. 27. North, Douglass and Robert Paul. Thomas. 1973. The Rise of the Western World: A New Economic History. Cambridge: Cambridge University Press. 28. Norton, Joseph Jude and Douglas Arner. 2001. Development of Capital Markets, Stock Exchanges and Securities Regulation in Transition Economies. In Transitional Economies: Banking, Finance, Institutions, edited by Yelena Kalyuzhnova and Michael Taylor. New York: St. Martin's Press. 29. Olson, Mancur. 2000. Power and Prosperity: Outgrowing Communist and Capitalist Dictatorships. Tennessee: Basic Books. 30. Pacter, Paul. 1998. International Accounting Standards: The World's Standards by 2002. CPA Journal.
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31. Prentice, Robert. 2002. Whither Securities Regulation? Some Behavioral Observations Regarding Proposals for its Future. Duke Law Journal. 51:1397-1511. 32. Quintyn, Marc and Michael Taylor. 2002. Regulatory and Supervisory Independence and Financial Stability. IMF Working Paper WP/02/46. 33. Rajan, R. and L. Zingales. 1998. Financial Development and Growth. American Economic Review. 88(3):559-586. 34. Reside, Renato, et al., eds. 1999. Mortgage-Backed Securities Markets in Asia. Manila: ADB. 35. Schwarcz, Steven L. 1999. Towards a Centralized Perfection System for Cross-Border Receivables Financing. University of Pennsylvania Journal of International Economic Law. 20:455-476. 36. Seligman, Joel. 1995. The Transformation of Wall Street: A History of the Securities and Exchange Commission and Modern Corporate Finance. 2nd ed. United States: Aspen Publishers. 37. Simpson, John and Joachim Menze. 2000. Ten Years of Secured Transactions Reform. Law in Transition Autumn 2000:20-27. 38. Taylor, John L. and Franoise April. 1997. Fostering Investment Law in Transitional Economies: A Case for Refocusing Institutional Reform.Parker School Journal of East European Law 4(1):1-52. 39. Thieffry, Gilles and Jonathan Walsh. 1997. Securitization: The New Opportunities Offered by Economic and Monetary Union. Journal of International Business and Law. 12(12):463. 40. Valckx, Nico. 2002. WTO Financial Services Commitments: Determinants and Impact on Financial Stability. IMF Working Paper WP/02/214. 41. Vittas, Dimitri. 2002. Policies to Promote Saving for Retirement: A Synthetic Overview. World Bank Policy Research Paper 2801. Washington, D.C. 42. Yergin, Daniel and Joseph Stanislaw. 1998. The Commanding Heights: The Battle Between Government and the Marketplace that is Remaking the Modern World. New York: Simon and Schuster.
APPENDIX
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Annual reports for the year 2005-2006, 2006-2007, 2007-2008, 2008-2009, 2009-2010 for Cadbury India Ltd. Cadbury India
Balance Sheet Dec '05 12 mths Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities
« Previous Years
------------------- in Rs. Cr. ------------------Dec '06 Dec '07 Dec '08 Dec '09
12 mths
12 mths
12 mths
12 mths
35.71 35.71 0.00 0.00 398.10 0.00 433.81 3.71 4.51 8.22 442.03 Dec '05 12 mths
34.36 34.36 0.00 0.00 357.73 0.00 392.09 3.26 6.75 10.01 402.10 Dec '06
33.20 33.20 0.00 0.00 372.94 0.00 406.14 1.28 7.48 8.76 414.90 Dec '07
32.18 32.18 0.00 0.00 432.22 0.00 464.40 32.02 9.68 41.70 506.10 Dec '08
31.07 31.07 0.00 0.00 499.73 0.00 530.80 2.28 9.89 12.17 542.97 Dec '09
12 mths
12 mths
12 mths
12 mths
Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities 395.50 234.88 160.62 29.55 258.21 102.33 10.68 18.40 131.41 53.39 0.00 184.80 0.00 205.09 430.21 265.13 165.08 82.18 253.42 122.08 11.37 11.20 144.65 44.27 0.62 189.54 0.00 275.84 544.77 299.18 245.59 25.58 298.49 151.02 13.14 8.90 173.06 72.34 0.62 246.02 0.00 370.89 586.94 335.55 251.39 123.86 2.92 222.81 19.67 269.59 512.07 69.82 0.00 581.89 0.00 433.56 724.75 372.09 352.66 152.53 18.01 199.82 31.09 271.50 502.41 74.20 0.00 576.61 0.00 534.02
46
Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs)
13.41 218.50 -33.70 27.35 442.03 66.54 121.48
25.96 301.80 -112.26 13.68 402.10 84.75 114.12
29.91 400.80 -154.78 0.00 414.88 106.12 122.32
20.40 453.96 127.93 0.00 506.10 113.74 144.30
22.83 556.85 19.76 0.00 542.96 150.97 1,708.53
Source : Dion Global Solutions Limited
Cadbury India
Profit & Loss account Dec '05 12 mths Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses Dec '06 12 mths Dec '07 12 mths
« Previous Years
------------------- in Rs. Cr. ------------------Dec '08 12 mths Dec '09 12 mths
1,006.02 126.24 879.78 17.87 10.44 908.09 246.22 19.62 94.38 138.85 0.00 292.11 0.00 791.18 Dec '05 12 mths
1,149.97 91.73 1,058.24 8.71 -2.54 1,064.41 441.53 20.83 93.93 57.63 266.54 35.88 0.00 916.34 Dec '06 12 mths 139.36 148.07 2.22 145.85 33.41 0.00 112.44 0.00
1,441.92 148.45 1,293.47 7.68 17.29 1,318.44 563.06 25.30 107.36 76.61 323.54 43.13 0.00 1,139.00 Dec '07 12 mths 171.76 179.44 2.03 177.41 34.32 0.00 143.09 19.23
1,751.24 162.65 1,588.59 25.07 51.32 1,664.98 732.53 29.70 130.22 96.01 2.45 430.46 0.00 1,421.37 Dec '08 12 mths 218.54 243.61 5.20 238.41 36.52 0.00 201.89 0.00
2,045.08 110.71 1,934.37 12.67 -16.28 1,930.76 832.28 37.25 150.62 6.52 0.00 624.19 0.00 1,650.86 Dec '09 12 mths 267.23 279.90 1.72 278.18 43.83 0.00 234.35 0.00
Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items
99.04 116.91 1.70 115.21 34.07 0.00 81.14 0.00
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PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)
81.14 35.19 45.95 544.96 0.00 7.14 1.00 357.10 12.87 20.00 121.48
112.44 43.62 68.81 474.80 0.00 6.87 0.96 343.57 20.03 20.00 114.12
162.32 44.67 117.65 575.93 0.00 6.64 1.13 332.04 35.43 20.00 122.32
201.89 36.11 165.78 688.83 0.00 6.44 1.09 321.83 51.51 20.00 144.30
234.35 45.73 188.63 818.58 0.00 6.21 1.06 31.07 607.15 20.00 1,708.53
Source : Dion Global Solutions Limited
48
Annual report of the years 2005-2006, 2006-2007, 2007-2008, 2008-2009, 2009-2010 for Britannia India Ltd.
Britannia Industries Balance Sheet Mar '05 ------------------- in Rs. Cr. ------------------Mar '06 Mar '07 Mar '08 Mar '09
12 mths
12 mths
12 mths
12 mths
12 mths
Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities 23.89 23.89 0.00 0.00 419.63 0.00 443.52 6.14 0.00 6.14 449.66 Mar '05 23.89 23.89 0.00 0.00 525.20 0.00 549.09 1.62 7.74 9.36 558.45 Mar '06 23.89 23.89 0.00 0.00 590.93 0.00 614.82 1.53 3.25 4.78 619.60 Mar '07 23.89 23.89 0.00 0.00 731.92 0.00 755.81 1.94 104.16 106.10 861.91 Mar '08 23.89 23.89 0.00 0.00 800.65 0.00 824.54 2.20 22.97 25.17 849.71 Mar '09
12 mths 12
12 mths
12 mths
12 mths
49
mths Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets 250.35 154.39 95.96 31.70 330.08 134.22 44.31 16.31 194.84 83.22 0.00 278.06 0.00 223.03 97.34 320.37 -42.31 34.24 449.67 315.37 174.81 140.56 11.08 359.86 184.80 20.85 21.23 226.88 108.12 14.11 349.11 0.00 239.89 78.33 318.22 30.89 16.06 558.45 392.12 193.75 198.37 16.03 320.05 214.94 28.61 48.53 292.08 90.41 0.12 382.61 0.00 238.12 84.91 323.03 59.58 25.58 619.61 453.18 212.19 240.99 9.69 380.83 301.53 46.33 43.54 391.40 185.86 0.23 577.49 0.00 269.66 100.65 370.31 207.18 23.23 861.92 511.50 233.67 277.83 6.02 423.10 253.63 49.61 40.56 343.80 209.61 0.24 553.65 0.00 290.06 147.48 437.54 116.11 26.64 849.70
Contingent Liabilities Book Value (Rs)
61.24 185.65
67.24 229.84
102.63 257.35
169.55 316.37
329.05 345.14
50
Britannia Industries Profit & Loss account Mar '05 ------------------- in Rs. Cr. ------------------Mar '06 Mar '07 Mar '08 Mar '09
12 mths
12 mths
12 mths
12 mths
12 mths
Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses 889.74 14.07 71.64 190.32 191.02 37.12 0.00 1,393.91 Mar '05 1,020.94 22.70 73.07 139.71 233.91 34.34 0.00 1,524.67 Mar '06 1,438.79 24.13 76.71 188.17 327.95 49.09 0.00 2,104.84 Mar '07 1,546.74 22.78 90.53 222.18 382.26 74.00 0.00 2,338.49 Mar '08 1,936.66 21.47 96.02 281.37 499.69 72.45 0.00 2,907.66 Mar '09 1,615.45 27.88 1,587.57 53.93 -9.72 1,631.78 1,817.92 104.58 1,713.34 22.28 12.29 1,747.91 2,317.11 117.79 2,199.32 21.56 34.21 2,255.09 2,617.66 29.80 2,587.86 20.12 -17.05 2,590.93 3,142.89 30.51 3,112.38 31.38 19.44 3,163.20
12 mths
12 mths
12 mths
12 mths
12 mths
51
Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)
183.94 237.87 2.10 235.77 18.97 0.00 216.80 -8.99 207.81 57.95 148.77 504.17 0.00 33.45 4.69
200.96 223.24 5.09 218.15 21.72 0.00 196.43 4.28 200.71 54.29 146.43 503.73 0.00 35.84 5.03
128.69 150.25 8.90 141.35 25.27 0.00 116.08 2.32 118.40 10.76 107.65 666.05 0.00 35.84 6.09
232.32 252.44 9.73 242.71 29.08 0.00 213.63 18.64 232.27 41.26 191.00 791.74 0.00 43.00 7.31
224.16 255.54 16.01 239.53 33.46 0.00 206.07 26.42 232.49 52.12 180.40 970.99 0.00 95.56 16.24
238.90 62.27 140.00 185.65
238.90 61.29 150.00 229.84
238.90 45.06 150.00 257.35
238.90 79.95 180.00 316.37
238.90 75.51 400.00 345.14
Source : Dion Global Solutions Limited
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doc_869506393.docx
1.1 Industry profile In economics, a financial market is a mechanism that allows people to buy and sell (trade) financial securities (such as stocks and bonds), commodities (such as precious metals or agricultural goods), and other fungible items of value at low transaction costs and at prices that reflect the efficient-market hypothesis. Both general markets (where many commodities are traded) and specialized markets (where only one commodity is traded) exist. Markets work by placing many interested buyers and sellers in one "place", thus making it easier for them to find each other. An economy which relies primarily on interactions between buyers and sellers to allocate resources is known as a market economy in contrast either to a command economy or to a non-market economy such as a gift economy. In finance, financial markets facilitate:
? ? ? ?
The raising of capital (in the capital markets) The transfer of risk (in the derivatives markets) The transfer of liquidity (in the money markets) International trade (in the currency markets)
– and are used to match those who want capital to those who have it. Typically a borrower issues a receipt to the lender promising to pay back the capital. These receipts are securities which may be freely bought or sold. In return for lending money to the borrower, the lender will expect some compensation in the form of interest or dividends. In mathematical finance, the concept of a financial market is defined in terms of a continuoustime Brownian motion stochastic process. Definition In economics, typically, the term market means the aggregate of possible buyers and sellers of a certain good or service and the transactions between them.
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The term "market" is sometimes used for what are more strictly exchanges, organizations that facilitate the trade in financial securities, e.g., a stock exchange or commodity exchange. This may be a physical location (like the NYSE) or an electronic system (like NASDAQ). Much trading of stocks takes place on an exchange; still, corporate actions (merger, spinoff) are outside an exchange, while any two companies or people, for whatever reason, may agree to sell stock from the one to the other without using an exchange. Trading of currencies and bonds is largely on a bilateral basis, although some bonds trade on a stock exchange, and people are building electronic systems for these as well, similar to stock exchanges. Financial markets can be domestic or they can be international. Types of financial markets The financial markets can be divided into different subtypes:
?
Capital markets which consist of:
?
Stock markets, which provide financing through the issuance of shares or common stock, and enable the subsequent trading thereof.
?
Bond markets, which provide financing through the issuance of bonds, and enable the subsequent trading thereof.
? ? ? ?
Commodity markets, which facilitate the trading of commodities. Money markets, which provide short term debt financing and investment. Derivatives markets, which provide instruments for the management of financial risk. Futures markets, which provide standardized forward contracts for trading products at some future date; see also forward market.
? ?
Insurance markets, which facilitate the redistribution of various risks. Foreign exchange markets, which facilitate the trading of foreign exchange.
The capital markets consist of primary markets and secondary markets. Newly formed (issued) securities are bought or sold in primary markets. Secondary markets allow investors to sell securities that they hold or buy existing securities.The transaction in primary market exist between investors and public while secondary market its between investors
8
Raising the capital To understand financial markets, let us look at what they are used for, i.e. what where firms make the capital to invest Without financial markets, borrowers would have difficulty finding lenders themselves. Intermediaries such as banks help in this process. Banks take deposits from those who have money to save. They can then lend money from this pool of deposited money to those who seek to borrow. Banks popularly lend money in the form of loans and mortgages. More complex transactions than a simple bank deposit require markets where lenders and their agents can meet borrowers and their agents, and where existing borrowing or lending commitments can be sold on to other parties. A good example of a financial market is a stock exchange. A company can raise money by selling shares to investors and its existing shares can be bought or sold. The following table illustrates where financial markets fit in the relationship between lenders and borrowers: Relationship between lenders and borrowers Lenders Financial Intermediaries Financial Markets Interbank Companies Funds Stock Money Bond Borrowers Individuals Exchange Companies Market Central Government
Banks Individuals Companies Insurance Pension Mutual Funds
Market Municipalities Public Corporations
Foreign Exchange
Lenders Who have enough money to Lend or to give someone money from own pocket at the condition of getting back the principal amount or with some interest or charge, is the Lender. Individuals & Doubles
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Many individuals are not aware that they are lenders, but almost everybody does lend money in many ways. A person lends money when he or she:
? ? ? ? ?
puts money in a savings account at a bank; contributes to a pension plan; pays premiums to an insurance company; invests in government bonds; or invests in company shares.
Companies Companies tend to be borrowers of capital. When companies have surplus cash that is not needed for a short period of time, they may seek to make money from their cash surplus by lending it via short term markets called money markets. There are a few companies that have very strong cash flows. These companies tend to be lenders rather than borrowers. Such companies may decide to return cash to lenders (e.g. via a share buyback.) Alternatively, they may seek to make more money on their cash by lending it (e.g. investing in bonds and stocks.) Borrowers Individuals borrow money via bankers' loans for short term needs or longer term mortgages to help finance a house purchase. Companies borrow money to aid short term or long term cash flows. They also borrow to fund modernisation or future business expansion. Governments often find their spending requirements exceed their tax revenues. To make up this difference, they need to borrow. Governments also borrow on behalf of nationalised industries, municipalities, local authorities and other public sector bodies. In the UK, the total borrowing requirement is often referred to as the Public sector net cash requirement (PSNCR). Governments borrow by issuing bonds. In the UK, the government also borrows from individuals by offering bank accounts and Premium Bonds. Government debt seems to be permanent. Indeed the debt seemingly expands rather than being paid off. One strategy used by governments to reduce the value of the debt is to influence inflation.
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Municipalities and local authorities may borrow in their own name as well as receiving funding from national governments. In the UK, this would cover an authority like Hampshire County Council. Public Corporations typically include nationalised industries. These may include the postal services, railway companies and utility companies. Many borrowers have difficulty raising money locally. They need to borrow internationally with the aid of Foreign exchange markets. Borrower's having same need can form them into a group of borrowers. It can also take an organizational form. just like Mutual Fund. They can provide mortgaze on weight basis. The main advantage is that it lowers their cost of borrowings. Derivative products During the 1980s and 1990s, a major growth sector in financial markets is the trade in so called derivative products, or derivatives for short. In the financial markets, stock prices, bond prices, currency rates, interest rates and dividends go up and down, creating risk. Derivative products are financial products which are used to control risk or paradoxically exploit risk. It is also called financial economics. Derivative products or instruments help the issuers to gain an unusual profit from issuing the instruments. For using the help of these products a contract have to be made. Derivative contracts are mainly 3 types: 1. Future Contracts 2. Forward Contracts 3. Option Contracts. Currency markets Seemingly, the most obvious buyers and sellers of currency are importers and exporters of goods. While this may have been true in the distant past, when international trade created the demand for currency markets, importers and exporters now represent only 1/32 of foreign exchange dealing, according to the Bank for International Settlements. The picture of foreign currency transactions today shows:
? ?
Banks/Institutions Speculators
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? ? ?
Government spending (for example, military bases abroad) Importers/Exporters Tourists
Analysis of financial markets Much effort has gone into the study of financial markets and how prices vary with time. Charles Dow, one of the founders of Dow Jones & Company and The Wall Street Journal, enunciated a set of ideas on the subject which are now called Dow Theory. This is the basis of the socalled technical analysis method of attempting to predict future changes. One of the tenets of "technical analysis" is that market trends give an indication of the future, at least in the short term. The claims of the technical analysts are disputed by many academics, who claim that the evidence points rather to the random walk hypothesis, which states that the next change is not correlated to the last change. The scale of changes in price over some unit of time is called the volatility. It was discovered by Benoît Mandelbrot that changes in prices do not follow a Gaussian distribution, but are rather modeled better by Lévy stable distributions. The scale of change, or volatility, depends on the length of the time unit to a power a bit more than 1/2. Large changes up or down are more likely than what one would calculate using a Gaussian distribution with an estimated standard deviation. A new area of concern is the proper analysis of international market effects. As connected as today's global financial markets are, it is important to realize that there are both benefits and consequences to a global financial network. As new opportunities appear due to integration, so do the possibilities of contagion. This presents unique issues when attempting to analyze markets, as a problem can ripple through the entire connected global network very quickly. For example, a bank failure in one country can spread quickly to others, which makes proper analysis more difficult.
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1.2 General Introduction about the sector The stock markets in todays times is being affected by the business being carried out by a variety of sectors namely: Banking, Fast moving consumer goods (FMCG), automobiles, real estate, telecom etc. The general introduction about these are given below. Out of these Banking sector is the one which is responsible for the boom in the stock markets in todays’ date. It’s the major player in high inflows of money into the stock markets through the use of various its various products like mutual funds, ELSS, ULIPs, etc. BANKING SECTOR – Banking in India originated in the last decades of the 18th century. The first banks were The General Bank of India, which started in 1786, and Bank of Hindustan, which started in 1790; both are now defunct. The oldest bank in existence in India is the State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal. This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras, all three of which were established under charters from the British East India Company. For many years the Presidency banks acted as quasicentral banks, as did their successors. The three banks merged in 1921 to form the Imperial Bank of India, which, upon India's independence, became the State Bank of India.
1.
Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848 as a consequence of the economic crisis of 1848-49. The Allahabad Bank, established in 1865 and still functioning today, is the oldest Joint Stock bank in India.(Joint Stock Bank: A company that issues stock and requires shareholders to be held liable for the company's debt) It was not the first though. That honor belongs to the Bank of Upper India, which was established in 1863, and which survived until 1913, when it failed, with some of its assets and liabilities being transferred to the Alliance Bank of Simla.When the American Civil War stopped the supply of cotton to Lancashire from the Confederate States, promoters opened banks to finance trading in Indian cotton. With large exposure to speculative ventures, most of the banks opened in India during that period failed. The depositors lost money and lost interest in keeping deposits with banks. Subsequently, banking in India remained the exclusive domain of Europeans for next several decades until the beginning of the 20th century.Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoire d'Escompte de Paris opened a branch in Calcutta in 1860,
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and another in Bombay in 1862; branches in Madras and Puducherry, then a French colony, followed. HSBC established itself in Bengal in 1869. Calcutta was the most active trading port in India, mainly due to the trade of the British Empire, and so became a banking center. FAST MOVING CONSUMER GOODSThe Fast Moving Consumer Goods (FMCG) industry in India is one of the largest sectors in the country and over the years has been growing at a very steady pace. The sector consists of consumer non-durable products which broadly consists, personal care, household care and food & beverages. The Indian FMCG industry is largely classified as organised and unorganised. This sector is also buoyed by intense competition. Besides competition, this industry is also marked by a robust distribution network coupled with increasing influx of MNCs across the entire value chain. This sector continues to remain highly fragmented. Industry Classification The FMCG industry is volume driven and is characterised by low margins. The products are branded and backed by marketing, heavy advertising, slick packaging and strong distribution networks. The FMCG segment can be classified under the premium segment and popular segment. The premium segment caters mostly to the higher/upper middle class which is not as price sensitive apart from being brand conscious. The price sensitive popular or mass segment consists of consumers belonging mainly to the semi-urban or rural areas who are not particularly brand conscious. Products sold in the popular segment have considerably lower prices than their premium counterparts. Following are the segment-wise product details along with the major players:
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AUTOMOBILES – The Automotive industry in India is one of the largest in the world and one of the fastest growing globally. India manufactures over 17.5 million vehicles (including 2 wheeled and 4 wheeled) and exports about 2.33 million every year. It is the world's second largest manufacturer of motorcycles, with annual sales exceeding 8.5 million in 2009. India's passenger car and commercial vehicle manufacturing industry is the seventh largest in the world, with an annual production of more than 3.7 million units in 2010. According to recent reports, India is set to overtake Brazil to become the sixth largest passenger vehicle producer in the world, growing 1618 per cent to sell around three million units in the course of 2011-12. In 2009, India emerged as Asia's fourth largest exporter of passenger cars, behind Japan, South Korea, and Thailand. As of 2010, India is home to 40 million passenger vehicles and more than 3.7 million automotive vehicles were produced in India in 2010 (an increase of 33.9%), making the country the second fastest growing automobile market in the world. According to the Society of Indian Automobile Manufacturers, annual car sales are projected to increase up to 5 million vehicles by 2015 and
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more than 9 million by 2020. By 2050, the country is expected to top the world in car volumes with approximately 611 million vehicles on the nation's roads. A chunk of India's car manufacturing industry is based in and around Chennai, also known as the "Detroit of India" with the India operations of Ford, Hyundai, Renault and Nissan headquartered in the city and BMW having an assembly plant on the outskirts. Chennai accounts for 60 per cent of the country's automotive exports. Gurgaon and Manesar in Haryana are hubs where all of the Maruti Suzuki cars in India are manufactured. The Chakan corridor near Pune, Maharashtra is another vehicular production hub with companies like General Motors, Volkswagen, Skoda, Mahindra and Mahindra, Tata Motors, Mercedes Benz, Land Rover, Fiat and Force Motors having assembly plants in the area. Ahmedabad with the Tata Nano plant, Halol again with General Motors, Aurangabad with Audi, Skoda and Volkswagen, Kolkatta with Hindustan Motors, Noida with Honda and Bangalore with Toyota are some of the other automotive manufacturing regions around the country.
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REAL ESTATE Real estate is a legal term (in some jurisdictions, such as the United Kingdom, Canada, Australia, USA, Dubai, Trinidad and Tobago and The Bahamas) that encompasses land along with improvements to the land, such as buildings, fences, wells and other site improvements that are fixed in location—immovable. Real estate law is the body of regulations and legal codes which pertain to such matters under a particular jurisdiction and include things such as commercial and residential real property transactions. Real estate is often considered synonymous with real property (sometimes called realty), in contrast with personal property (sometimes called chattel or personalty under chattel law or personal property law). However, in some situations the term "real estate" refers to the land and fixtures together, as distinguished from "real property", referring to ownership of land and appurtenances, including anything of a permanent nature such as structures, trees, minerals, and the interest, benefits, and inherent rights thereof. Real property is typically considered to be immovable property. The
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terms real estate and real property are used primarily in common law, while civil law jurisdictions refer instead to immovable property. TELECOM The Indian telecommunication industry is the world's fastest growing industry with 826.93 million mobile phone subscribers as of April 2011. It is also the second largest telecommunication network in the world in terms of number of wireless connections after China. See List of countries by number of mobile phones in use. As the fastest growing telecommunications industry in the world, it is projected that India will have 1.159 billion mobile subscribers by 2013. Furthermore, projections by several leading global consultancies indicate that the total number of subscribers in India will exceed the total subscriber count in the China by 2013. The industry is expected to reach a size of 344,921 crore (US$76.92 billion) by 2012 at a growth rate of over 26 per cent, and generate employment opportunities for about 10 million people during the same period. According to analysts, the sector would create direct employment for 2.8 million people and for 7 million indirectly. In 2008-09 the overall telecom equipments revenue in India stood at 136,833 crore (US$30.51 billion) during the fiscal, as against 115,382 crore (US$25.73 billion) a year before.
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A large population, low telephony penetration levels, and a rise in consumer spending power has helped make India the fastest-growing telecom market in the world. The market's first operator was the state-owned Bharat Sanchar Nigam Limited (BSNL), created by corporatization of the Indian Telecommunication Service, a government unit formerly responsible for provision of telephony services. Subsequently, after the telecommunication policies were revised to allow private operators, companies such as Bharti Airtel, Reliance Communications, Tata Teleservices, Idea Cellular, Aircel and Loop Mobile have entered the market (Bharti Airtel currently being the largest telecom company in India). In the fiscal year 2008-09, rural India outpaced urban India in mobile growth rate.
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The total number of telephones in the country stands at 861.48 million, while the overall teledensity has increased to 72.08% as of April 30th, 2011. Mobile telephony experiences growths at rates such as 15.34 million subscribers a month, which were added in April 2011. Telecom in the real sense means the transfer of information between two distant points in space. The popular meaning of telecom always involves electrical signals and as a result, people often exclude postal or any other raw telecommunication methods from its meaning. Therefore, the history of Indian telecom can be started with the introduction of telegraph.
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CHAPTER 2: PROFILE OF THE ORGANISATION
Share-Gurukul is the educational division of ICoFP. Its promoters have a long and proud history of educating India’s leading brokerage houses in NCDEX training modules. They have the unique distinction of being awarded the first official training partner status from NCDEX for conducting training for member brokerage houses, spread across the length and breadth of the country. Over the years they have created hundreds of Industry ready professionals occupying positions of responsibilities and prestige in highly reputed brokerage houses. Share-Gurukul believes in de-mystifying the complexities of securities market education, by making it rational, accessible and understandable.
What they do Share-Gurukul provides cutting edge securities education to the discerning audience. They seek to unlock the secrets of wealth creation, to unlock the complexities associated with securities markets. Their inherent strength lies in the high quality faculty they have bringing to the market, rich global capital market experience. They believe in providing equal opportunity to the masses, who share their passion in using share markets to fuel economic upliftment.
Knowledge of stock markets involves taking the path less traveled, learning to convert perceived threats into economic opportunities and capitalizing those opportunities to create wealth. Only an aware and educated investor can make informed investment decisions and informed investment decisions more often than not make rich gains and that is what matter. The company is having team of research & marketing executives including portfolio managers, to manage the portfolios into commodity markets. They analyze the markets in both ways technically & fundamentally. The company offer world class professional consultancy services in the domain of finance, investments, risk management and trading services.
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CHAPTER 3: DISCUSSION ON TRAINING
1.1 STUDENT’S WORK PROFILE Worked as a management trainee
1.2 TOOLS AND TECHNIQUES USED Softwares such as NEAT, ODIN and BOLT 1.3 KEY LEARNINGS
Learnt about the different segments of stock markets like money markets, commodities, derivatives, currencies Learnt the theoretical as well as practical aspects of trading in the stock markets
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CHAPTER 4: STUDY OF SELECTED RESEARCH PROBLEM
4.1 Study of the selected research problem
This project report covers all the aspects relating to the PROFITABILITY ratios of BRITANNIA and CADBURY INDIA LTD interpreted according to standards. This project was done with the help of secondary data as research in finance subjects is done on performance and not potential.
The project selected by me is to do comparative PROFITABILITY ratio analysis for the above mentioned two companies using various financial statements. The main intention was to group or regroup the various figures and information appearing on the financial statement (either profit and loss statement or balance sheet or both) to draw the fruitful conclusions there from. I found that by comparing PROFITABILITY ratios of both the companies unveils why one company is more efficient in its activity as compared to the other. PROFITABILITY ratios are valuable as they depict how are you utilizing and managing your resources. All and all it was a good experience doing this project and will be of great help to me in future as a professional in the finance industry as well as an investor.
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4.2 OBJECTIVES OF THE STUDY
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To identify the comparative financial strengths and weakness of Britannia industries and Cadbury india Ltd.
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Through the net profit ratio and other profitability ratio, understand the profitability position of the company.
? ?
To know the liquidity position of the company, with the help of Current ratio.
To find out the utility of financial ratio in credit analysis and determining the financial capability of the firm.
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4.3 PROFILE OF THE COMPANY UNDER STUDY
BRITANNIA
Britannia was incorporated in 1918 as Britannia Biscuits Co LTD in Calcutta. In 1924, Pea Frean UK acquired a controlling stake, which later passed on to the Associated Biscuits International (ABI) an UK based company. During the 50’s and 60’s, Britannia expanded operations to Mumbai, Delhi and Chennai. In 1989, J M Pillai, a Singapore based NRI businessman along with the Group Danone acquired Asian operations of Nabisco, thus acquiring controlling stake in Britannia. Later, Group Danone and Nusli Wadia took over Pillai’s holdings.
Britannia Industries Limited (Britannia) is one of the largest biscuit manufacturing companies in India. The company is engaged in the manufacture of biscuits, rusks, cookies and cakes. Britannia operates in a single segment, foods including bakery products such as biscuits, bread, cakes, rusk, and dairy products. The company is headquarted in Kolkata, India and employs 2,358 people
Global Markets Direct, the leading business information provider, presents an in-depth business, strategic and financial analysis of Britannia Industries Ltd. The report provides a comprehensive insight into the company, including business structure and operations, executive biographies and key competitors. The hallmark of the report is the detailed strategic analysis and Global Markets Direct’s views on the company. Britannia's plants are located in the 4 major metro cities – Kolkata, Mumbai, Delhi, and Chennai. A large part of products arealso outsourced from third party producers. Dairy products are outsourced from three producers - Dynamic Dairy based in Baramati, Maharashtra, and Modern Dairy at Karnal in Haryana and Thacker Dairy Products at Howrah in West Bengal.
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CADBURY INDIA LTD.
Cadbury India is a fully owned subsidy of Kraft Foods Inc. The combination of Kraft Foods and Cadbury creates a global powerhouse in snacks, confectionery and quick meals.
With annual revenues of approximately $50 billion, the combined company is the world's second largest food company, making delicious products for billions of consumers in more than 160 countries. We employ approximately 140,000 people and have operations in more than 70 countries. In India, Cadbury began its operations in 1948 by importing chocolates. After 60 years of existence, it today has five company-owned manufacturing facilities at Thane, Induri (Pune) and Malanpur (Gwalior), Bangalore and Baddi (Himachal Pradesh) and 4 sales offices (New Delhi, Mumbai, Kolkota and Chennai). The corporate office is in Mumbai. Currently, Cadbury India operates in four categories viz. Chocolate Confectionery, Milk Food Drinks, Candy and Gum category. In the Chocolate Confectionery business, Cadbury has maintained its undisputed leadership over the years. Some of the key brands in India are Cadbury Dairy Milk, 5 Star, Perk, Éclairs and Celebrations.
Cadbury enjoys a value market share of over 70% - the highest Cadbury brand share in the world! Our billion-dollar brand Cadbury Dairy Milk is considered the "gold standard" for chocolates in India. The pure taste of CDM defines the chocolate taste for the Indian consumer. Today, as a combined company with an unmatched portfolio in confectionery, snacking and quick meals, we are poised in our leap towards quantum growth. We are the world's No.1 Confectionery Company. And we will continue to ?make today delicious?!
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4.4 RESEARCH METHODOLOGY
Research Methodology is a way to systematically solve the problems. It may be understood to study how research is done scientifically. In this, we study various steps that are generally adopted by the researcher in studying research problems along with the logic behind them, to understand why we are using particular method or technique so that the research results are capable of being evaluated. During my project work, I have used a lot of data to understand concept of Ratio Analysis. The data collected was interpreted and then used as information in project. The analysis of the data was done by the help of Ms office tools such as MSword and Msexcel.
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4.5 SOURCES OF DATA COLLECTION
Data for this project is collected through Secondary sources. Secondary data is collected with the help of following –
1. Annual report
Majority of information gathered from data exhibited in the annual reports of the company. These includes annual reports of the year 2006-07,2007-08,2008-09 and 200910 and 2010-2011.
2. Reference Books
Theory relating to the subject matter and various concepts taken from various financial reference books.
3. Websites
The websites such as Moneucontrol and NSE were searched in for getting the financial reports and other information about the two enterprises under discussion
4. Journals and Publications
Various journals and research publications were referred to for getting the maximum available information about the ratios and their usage and interpretations
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4.6 UNDERSTANDING THEORETICAL BACKGROUND RATIO ANALYSIS: INTRODUCTION:Ratio analysis is an important technique, which is widely used for interpreting financial statement. The technique serves as a tool for assessing the current and long-term financial soundness of a business. It is also used to analysis various aspects of operating efficiency and level of profitability. A German scholar used ratios for the first time in 1919.
DEFINITION:1)
Wixon, Kell and Bedford, ?Ratio is an expression of quantitative relationship
between figures drawn from financial statements?.
2)
Hunt, Willant Donaldosa, ?Ratios are simply a means of highlighting in
arithmetical terms, of relationship between figures drawn from financial statements.?
Conclusion: - Financial ratios are useful because they summarize briefly the result of detailed
and computation.
IMPORTANCE OF RATIO ANALYSIS
Ratios are useful for the following reasons:1) Helpful in Forecasting: - The ratio can be used by financial managers for future financial planning. Ratio calculated for a number of years work as a guide for the future.
2) Useful in Co-ordination: - Ratios are useful in co-ordination, which is very much needed in business. The efficiency and weakness of an enterprise if communicated properly, will establish a better co-ordination among areas of appreciation and control.
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3) Helpful in Control: - The most important aspect of ratio analysis is that is very useful in controlling the areas of inefficiencies or weakness. It can be use by the management as a technique of correction.
4) Helpful in Communication: - Ratios are used for communication weak and good point to the concerned parties.
5) Helpful in Efficiency Appraisal: - Ratios are the scale of comparison; here the variations in financial statement, if they need appreciation, are brought to limelight.
6) Helpful in Evaluation of Financial Position: - The ratio analysis is useful for financial diagnosis of an enterprise. The under mentioned ratios will make the above clear:
Current Ratio: - It speaks about the working capital the company is having
funds to pay-off its short-term commitments.
and the
Solvency Ratio: - Profitability Ratio, Capital Gearing Ratio are all such ratio that can
evaluate the financial soundless or weakness of a company.
7) Helpful to Investors, Financial Institutions and Employees: - The ratios are economic barometer useful to all mentioned above as they can know the good and bad position of a company by making a comparative study of financial statement.
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VARIOUS TYPES OF FINANCIAL STATEMENTS:Classification of ratio is made based on requirement by end users and they indicate symptoms as characteristic of the company. The ratios can be interpretted on the basis of the various types of financial statements available to the investors and published annually by the business entities. The varipus types of financial statements are:? ? ? ? ? Balance sheet Profit and Loss statements Profit and loss appropraitions accounts Cash flow Funds flow
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PROFITABILITY RATIO:Measures that indicate how well a firm is performing in terms of its ability to generate profit. Formulae of some of the common ratios are as follows:
(1) Book
Value
Per
share: Total common
(ordinary) equity ÷ Number of
common
(ordinary) shares issued and outstanding.
(2)Dividends Per Share: Dividends paid ÷ Number of common (ordinary) shares issued and outstanding.
(3) Earnings Per Share: (Net income - preferred stock or preference shareinterest) ÷ Number of common (ordinary) shares issued and outstanding.
(4) Gross profit percentage: Total cost ofsales in a period x 100 ÷ Total sales revenue for that period.
(5) Net income percentage: Net income for a period x 100 ÷ Total sales revenue for that period.
(6) Operating profit percentage: Earnings before interest and taxes (EBIT) in a period x 100 ÷ Total sales revenue in the sameperiod.
(7) Return On Common equity: (Net income for a period - Dividends) ÷ (Common equity Preferred stock).
(8) Return On Investment: Net income ÷ Total assets.
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1] GROSS PROFIT RATIO:GROSS PROFIT RATIO = GROSS PROFIT X 100 SALES
In 2008-09,the Gross Profit Ratio was 7.85 and it went to 6.12 next year.As there is no standard Ratio,company has to determine its standard ratio based on past GP ratios or GP ratios of other concern.The Ratio if we compare it shows that1)Failure in managing purchases,production,sales and inventory 2)Loose control over direct costs of labour,fuel,freights etc. 3)Lower productivity and lower margin to meet other expenses
2] OPERATING RATIO:OPERATING RATIO = COGS + OPERATING EXPENSES X 100 SALES
In 2008-09,the Operating Ratio was 8.97 and it went to 7.2 next year.It indicates the cost of Expenses.As there is no standard Ratio,company has to determine its standard ratio based on past GP ratios or GP ratios of other concern.The Ratio if we compare it shows that1) High efficiency in managing the Operations of the concern like purchases made at lower prices,optimum level of production,good inventory management and good control of direct cost of labour,fuel,freight etc. 2) A very good Margin available to meet non-operating Expenses.
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3] NET PROFIT RATIO:NET PROFIT RATIO = NPAT X 100 SALES
In 2008-09,the Net profit Ratio was 7.31 and it went to 5.75 next year.It indicates the relationship between net profit and sales.As there is no standard Ratio,company has to determine its standard ratio based on past NP ratios or NP ratios of other concern.The Ratio if we compare it shows that1) Inefficiency in managing its activities like trading.production,financing and investment. 2) unsatisfactory control over operating as well as non operating costs 3) unusual losses like loss by fire,flood etc. 4) Low increase in the net worth or the proprietors funds. 5) Weak capacity of the concern to face bad economic situation.
4] EXPENSES RATIO:EXPENSES RATIO = EXPENSES NET SALES X 100
Expense ratios indicate the relationship of various expenses to net sales. The operating ratio reveals the average total variations in expenses. But some of the expenses may be increasing while some may be falling. Hence, expense ratios are calculated by dividing each item of expenses or group of expense with the net sales to analyze the cause of variation of the operating ratio.
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The ratio can be calculated for individual items of expense or a group of items of a particular type of expense like cost of sales ratio, administrative expense ratio, selling expense ratio, materials consumed ratio, etc. The lower the operating ratio, the larger is the profitability and higher the operating ratio, lower is the profitability.
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CHAPTER 5: DATA INTERPRETATION
COMPARATIVE ANALYSIS OF BRITANNIA INDUSTRIES LTD AND CADBURY PROFITABILITY RATIOS:-
1] GROSS PROFIT RATIO:GROSS PROFIT RATIO = GROSS PROFIT X 100 SALES
14 12 10 8 6 4 2 0 2010 2009 2008 2007 2006
BRITANNIA CADBURY
Norm: - Higher the ratio shows higher efficiency and vice versa.
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Particulars BRITANNIA CADBURY
2010 4.89 11.54
2009 6.12 6.12
2008 7.85 7.85
2007 4,7 4.7
2006 10.46 10.46
INTERPRETATION:The above table shows that the In Britannia Gross profit ratio is decreasing year by year from 2006 to 2010. This is due to increase in cost of sales and in Cadbury india Ltd, gross profit is increasing as compared to previous years.
2] OPERATING RATIO:OPERATING RATIO = COGS + OPERATING EXPENSES X 100 SALES
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10 BRITANNIA 5 CADBURY
0 2010 2009 2008 2007 2006
Norm: - Higher the ratio shows higher efficiency and vice versa.
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Particulars BRITANNIA CADBURY
2010 5.99 13.81
2009 7.20 13.75
2008 8.97 13.27
2007 5.85 13.16
2006 11.72 11.25
INTERPRETATION:-
The above table shows that in Britannia, Operating ratio is decreasing year by year from 2006 to 2010 and in Cadbury india Ltd there is no major change in operating ratios from 2006 to 2010.As we compare we come to know that Cadbury is performing well than Britannia.
3] NET PROFIT RATIO :NET PROFIT RATIO = NPAT X 100 SALES
12 10 8 6 4 2 0 2010 2009 2008 2007 2006 BRITANNIA CADBURY
Norm: - Higher the ratio shows higher efficiency and vice versa. Particulars BRITANNIA CADBURY 2010 3.38 9.68 2009 5.75 10.27 2008 7.31 8.94 2007 4.86 6.42 2006 8.48 5.11
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The above table shows that in Britannia ,the net profit is decreasing year by year like it in 2006, it was 8.48 and it went up to 3.38 in 2010.whereas in Cadbury net profit is increasing year by year. 4] RETURN ON NETWORTH:RETURN ON NETWORTH = NPAT SHAREHOLDERS FUND X 100
60 50 40 30 20 10 0 2010 2009 2008 2007 2006 BRITANNIA CADBURY
Norm: - Higher the ratio shows higher efficiency and vice versa.
Particulars BRITANNIA CADBURY
2010 48.27 35.53
2009 18.40 35.69
2008 24.06 27.77
2007 16.87 19.42
2006 24.99 11.30
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OBSERVATIONS/ INTERPRETATION:The above ratio indicates that in Britannia, the net profit available to equity shareholder is rising from 2006 to 2010 whereas in Cadbury also return on networth is rising from 11.30 in 2006 to 35.53 in 2010.
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CHAPTER 6: OBSERVATION AND FINDINGS
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In this project I calculate some ratios; these ratios are very useful to interpret financial position of the company. From that it is clear that the Britannia and Cadbury india Ltd are in advanced stage. From the ratios calculated above following conclusions can be drawn.
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The gross profit earned by the both the companies are declining every year. From 2006 to 2010, it is fluctuating a lot which is due to failure in managing purchases, production, sales and inventory or loses control over direct costs of labor, fuel, freights etc.
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Operating ratio of Britannia going down from 2006 to 2010 which is nothing but due to certain reasons like low efficiency in managing the operations of the company or low margin available to meet non-operating expenses whereas as compared to Cadbury the fluctuations are not much.
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The net profit is nothing but profit earned by the company after deducting interest and taxes. The graph is showing that in Britannia from 2006 to 2010,the net profit is declining which is due to inefficiency in managing its activities like trading, production, financing and investment or unsatisfactory control over operating or non operating costs whereas in Cadbury its rising from year year.
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CHAPTER 7: SUGGESTIONS AND CONCLUSION
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The in-depth analysis of key financial ratios in this project helps in measuring the financial strength, liquidity conditions and operating efficiency of the company. It also provides valuable interpretation separately for each ratio that helps organization implementing the findings that would help the organization to increase its efficiency.
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Ratios are only post mortem analysis of what has happened between two balance sheet dates. For one thing the position of the company in the interim period not revealed by analysis, moreover they give no clue about the future. Ratio analysis in view of its several limitations should be considered only as a tool for analysis rather than as an end itself.
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From the analysis it is evident that the gross profit ratio is good, whereas the operating ratio is around optimum level to the industry standards. As a whole the liquidity position of the company is good.
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The company not very well used its fixed assets efficiently company has reduce it in order to invest the major portion in working capital or investment in current assets. This is one of the reason for profit fluctuation.
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Thus finally the company must try to improve its profit margins as they are below industry levels. This improvement may also bring up its return on investment and overall efficiency to the company.
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The business environment of both the company is reasonably good. The company’s track record is always oriented towards profitable growth and with strong fundamentals
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CHAPTER 8: LIMITATIONS
Though the every researcher tries his/her best to fulfill the objectives of his, her study, but still there are some limitation. ? ? The authority and genuinely of the data received cannot be tested as every company does not disclose al l of its records on internet or discloses bon the financial statement. False result Accounting ratio is based on data drawn from accounting records. In this case if data is correct, then only the ratio will be correct. The data therefore must be absolutely correct. ? Effect of price level changes Price level changes often make the comparison of figures difficult over a period of time. Changes in price affect the cost of production, sales and also the value of the assets. ? ? ? The comparison is rendered difficult because of differences in situations of one company as compared to the other. Ratios are tool of quantitative analysis only. Normally qualitative factors are needed to draw conclusions. Ratio Analysis is only the beginning as it gives only a little information for the purpose of decision making.
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BIBLIOGRAPHY
Following books were referred for carrying out the project: -
1. Financial Management by N.M. Venchalekar.
2. Financial Management by KHAN AND JAIN.
3. Annual Reports of Britannia and Cadbury India Ltd.
4. Financial Management by Ainapure Ainapure
Following websites were referred: -
1. 2. 3. 4. 5. 6.
www.money.rediff.com www.cadburyindia.com www.cadbury.com www.britannia.co.in www.moneycontrol.com www.nseindia.com
Following journals and papers were referred:1. Ad Hoc Working Group on EC Payment Systems. 1992. Issues of Common Concern to EC Central Banks in the Field of Payment Systems. 2. Arner, Douglas, and Jan-Juy Lin, eds. 2003. Financial Regulation - A Guide to Structural Reform. Hongkong: Sweet and Maxwell. 3. Arner, Douglas, et al. 2007. Property Rights, Collateral, Creditor Rights and Insolvency in East Asia. Texas International Law Journal 42.
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4. Beck, Thorsten and Ross Levine. 2003. Legal Institutions and Financial Development. Policy Research Working Paper 3136. Washington, DC: The World Bank. 5. Beim, David and Charles Calomiris. 2001. Emerging Financial Markets. New York: McGraw-Hill. 6. Bekaert, Geert, et al. 2001. Does Financial Liberalisation Spur Growth? NBER Working Paper No. 8245. 7. Cheffins, Brian. 2001. Does Law Matter? The Separation of Ownership and Control in the United Kingdom. ERSC Centre for Business Research, University of Cambridge, Working Paper No. 172. 8. Coase, Ronald. 1960. The Problem of Social Cost. Journal of Law & Economics. 3(1):144. 9. Dale, Richard S. 1993. Deposit Insurance, Policy Clash over EC and US Reforms. In The Basic Elements of Bank Supervision, edited by Frederick C. Schadrack and Leon Korobow. New York: Federal Reserve Bank of New York. 10. Das, Udaibir, et al. 2004. Does Regulatory Governance Matter for Financial System Stability? An Empirical Analysis. IMF Working Paper WP/04/89. 11. DuBois, Armand Budington. 1971. The English Business Company after the Bubble Act, 1720-1800. New York and London: Oxford University Press. 12. Edison, Hali J., et al. 2002. Capital Account Liberalisation and Economic Performance: Survey and Synthesis. IMF Staff Papers 51(2):220-256. 13. Evans, Owen, et al. 2000. Macroprudential Indicators of Financial System Soundness. IMF Occasional Paper No. 192. 14. Fairgrieve, Duncan and Mads Andenas. Autumn 2000. Securing Progress in Collateral Law Reform: the EBRD's Regional Survey of Secured Transactions Laws. Law in Transition Autumn 2000: 28-36. 15. Galal, Ahmed and Omar Razzaz. 2001. Reforming Land and Real Estate Markets. Policy Research Working Paper 2616. 16. Hadjiemmanuil, C. 1996. Central Bankers' 'Club' Law and Transitional Economies: Banking Reform and the Reception of the Basle Standards of Prudential Supervision in Eastern Europe and the Former Soviet Union. In Emerging Financial Markets and the
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Role of International Financial Organizations, edited by J. Norton and M. Andenas. The Netherlands and the United Kingdom: Kluwer Law International. 17. Harris, Ron. 2000. Industrializing English Law: Entrepreneurship and Business Organization, 1720-1844. Cambridge: Cambridge University Press. 18. Harwood, Alison, ed. 2000. Building Local Bond Markets: An Asian Perspective. Washington, D.C.: International Finance Corporation. 19. Jaffe, Dwight and Bertrand Renaud. 1996. Strategies to Develop Mortgage Markets in Transition Economies. World Bank Policy Research Working Paper 1697. 20. Kireyev, Alexei. 2002. Liberalisation of Trade in Financial Services and Financial Sector Stability (Analytical Approach). IMF Working Paper WP/02/138. 21. Klapper, Leora, et al. 2004. Business Environment and Firm Entry: Evidence from International Data. World Bank Policy Research Working Paper 3232. 22. Kumar, Krishna, et al. 1999. What Determines Firm Size? NBER Working Paper 7208. 23. La Porta, Rafael, et al. 2003. What Works in Securities Law? 24. Macey, Jonathan and Hideki Kanda. 1990. The Stock Exchange as a Firm: The Emergence of Close Substitutes for the New York and Tokyo Stock Exchanges. Cornell Law Review. 76:1007. 25. Micklethwait, John and Adrian Wooldridge. 2003. The Company: A Short History of a Revolutionary Idea. New York: Modern Library. 26. Mishkin, Frederic. 2001. Financial Policies and Prevention of Financial Crises in Emerging Market Countries. NBER Working Paper No. 8087. 27. North, Douglass and Robert Paul. Thomas. 1973. The Rise of the Western World: A New Economic History. Cambridge: Cambridge University Press. 28. Norton, Joseph Jude and Douglas Arner. 2001. Development of Capital Markets, Stock Exchanges and Securities Regulation in Transition Economies. In Transitional Economies: Banking, Finance, Institutions, edited by Yelena Kalyuzhnova and Michael Taylor. New York: St. Martin's Press. 29. Olson, Mancur. 2000. Power and Prosperity: Outgrowing Communist and Capitalist Dictatorships. Tennessee: Basic Books. 30. Pacter, Paul. 1998. International Accounting Standards: The World's Standards by 2002. CPA Journal.
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31. Prentice, Robert. 2002. Whither Securities Regulation? Some Behavioral Observations Regarding Proposals for its Future. Duke Law Journal. 51:1397-1511. 32. Quintyn, Marc and Michael Taylor. 2002. Regulatory and Supervisory Independence and Financial Stability. IMF Working Paper WP/02/46. 33. Rajan, R. and L. Zingales. 1998. Financial Development and Growth. American Economic Review. 88(3):559-586. 34. Reside, Renato, et al., eds. 1999. Mortgage-Backed Securities Markets in Asia. Manila: ADB. 35. Schwarcz, Steven L. 1999. Towards a Centralized Perfection System for Cross-Border Receivables Financing. University of Pennsylvania Journal of International Economic Law. 20:455-476. 36. Seligman, Joel. 1995. The Transformation of Wall Street: A History of the Securities and Exchange Commission and Modern Corporate Finance. 2nd ed. United States: Aspen Publishers. 37. Simpson, John and Joachim Menze. 2000. Ten Years of Secured Transactions Reform. Law in Transition Autumn 2000:20-27. 38. Taylor, John L. and Franoise April. 1997. Fostering Investment Law in Transitional Economies: A Case for Refocusing Institutional Reform.Parker School Journal of East European Law 4(1):1-52. 39. Thieffry, Gilles and Jonathan Walsh. 1997. Securitization: The New Opportunities Offered by Economic and Monetary Union. Journal of International Business and Law. 12(12):463. 40. Valckx, Nico. 2002. WTO Financial Services Commitments: Determinants and Impact on Financial Stability. IMF Working Paper WP/02/214. 41. Vittas, Dimitri. 2002. Policies to Promote Saving for Retirement: A Synthetic Overview. World Bank Policy Research Paper 2801. Washington, D.C. 42. Yergin, Daniel and Joseph Stanislaw. 1998. The Commanding Heights: The Battle Between Government and the Marketplace that is Remaking the Modern World. New York: Simon and Schuster.
APPENDIX
45
Annual reports for the year 2005-2006, 2006-2007, 2007-2008, 2008-2009, 2009-2010 for Cadbury India Ltd. Cadbury India
Balance Sheet Dec '05 12 mths Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities
« Previous Years
------------------- in Rs. Cr. ------------------Dec '06 Dec '07 Dec '08 Dec '09
12 mths
12 mths
12 mths
12 mths
35.71 35.71 0.00 0.00 398.10 0.00 433.81 3.71 4.51 8.22 442.03 Dec '05 12 mths
34.36 34.36 0.00 0.00 357.73 0.00 392.09 3.26 6.75 10.01 402.10 Dec '06
33.20 33.20 0.00 0.00 372.94 0.00 406.14 1.28 7.48 8.76 414.90 Dec '07
32.18 32.18 0.00 0.00 432.22 0.00 464.40 32.02 9.68 41.70 506.10 Dec '08
31.07 31.07 0.00 0.00 499.73 0.00 530.80 2.28 9.89 12.17 542.97 Dec '09
12 mths
12 mths
12 mths
12 mths
Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities 395.50 234.88 160.62 29.55 258.21 102.33 10.68 18.40 131.41 53.39 0.00 184.80 0.00 205.09 430.21 265.13 165.08 82.18 253.42 122.08 11.37 11.20 144.65 44.27 0.62 189.54 0.00 275.84 544.77 299.18 245.59 25.58 298.49 151.02 13.14 8.90 173.06 72.34 0.62 246.02 0.00 370.89 586.94 335.55 251.39 123.86 2.92 222.81 19.67 269.59 512.07 69.82 0.00 581.89 0.00 433.56 724.75 372.09 352.66 152.53 18.01 199.82 31.09 271.50 502.41 74.20 0.00 576.61 0.00 534.02
46
Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs)
13.41 218.50 -33.70 27.35 442.03 66.54 121.48
25.96 301.80 -112.26 13.68 402.10 84.75 114.12
29.91 400.80 -154.78 0.00 414.88 106.12 122.32
20.40 453.96 127.93 0.00 506.10 113.74 144.30
22.83 556.85 19.76 0.00 542.96 150.97 1,708.53
Source : Dion Global Solutions Limited
Cadbury India
Profit & Loss account Dec '05 12 mths Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses Dec '06 12 mths Dec '07 12 mths
« Previous Years
------------------- in Rs. Cr. ------------------Dec '08 12 mths Dec '09 12 mths
1,006.02 126.24 879.78 17.87 10.44 908.09 246.22 19.62 94.38 138.85 0.00 292.11 0.00 791.18 Dec '05 12 mths
1,149.97 91.73 1,058.24 8.71 -2.54 1,064.41 441.53 20.83 93.93 57.63 266.54 35.88 0.00 916.34 Dec '06 12 mths 139.36 148.07 2.22 145.85 33.41 0.00 112.44 0.00
1,441.92 148.45 1,293.47 7.68 17.29 1,318.44 563.06 25.30 107.36 76.61 323.54 43.13 0.00 1,139.00 Dec '07 12 mths 171.76 179.44 2.03 177.41 34.32 0.00 143.09 19.23
1,751.24 162.65 1,588.59 25.07 51.32 1,664.98 732.53 29.70 130.22 96.01 2.45 430.46 0.00 1,421.37 Dec '08 12 mths 218.54 243.61 5.20 238.41 36.52 0.00 201.89 0.00
2,045.08 110.71 1,934.37 12.67 -16.28 1,930.76 832.28 37.25 150.62 6.52 0.00 624.19 0.00 1,650.86 Dec '09 12 mths 267.23 279.90 1.72 278.18 43.83 0.00 234.35 0.00
Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items
99.04 116.91 1.70 115.21 34.07 0.00 81.14 0.00
47
PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)
81.14 35.19 45.95 544.96 0.00 7.14 1.00 357.10 12.87 20.00 121.48
112.44 43.62 68.81 474.80 0.00 6.87 0.96 343.57 20.03 20.00 114.12
162.32 44.67 117.65 575.93 0.00 6.64 1.13 332.04 35.43 20.00 122.32
201.89 36.11 165.78 688.83 0.00 6.44 1.09 321.83 51.51 20.00 144.30
234.35 45.73 188.63 818.58 0.00 6.21 1.06 31.07 607.15 20.00 1,708.53
Source : Dion Global Solutions Limited
48
Annual report of the years 2005-2006, 2006-2007, 2007-2008, 2008-2009, 2009-2010 for Britannia India Ltd.
Britannia Industries Balance Sheet Mar '05 ------------------- in Rs. Cr. ------------------Mar '06 Mar '07 Mar '08 Mar '09
12 mths
12 mths
12 mths
12 mths
12 mths
Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities 23.89 23.89 0.00 0.00 419.63 0.00 443.52 6.14 0.00 6.14 449.66 Mar '05 23.89 23.89 0.00 0.00 525.20 0.00 549.09 1.62 7.74 9.36 558.45 Mar '06 23.89 23.89 0.00 0.00 590.93 0.00 614.82 1.53 3.25 4.78 619.60 Mar '07 23.89 23.89 0.00 0.00 731.92 0.00 755.81 1.94 104.16 106.10 861.91 Mar '08 23.89 23.89 0.00 0.00 800.65 0.00 824.54 2.20 22.97 25.17 849.71 Mar '09
12 mths 12
12 mths
12 mths
12 mths
49
mths Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets 250.35 154.39 95.96 31.70 330.08 134.22 44.31 16.31 194.84 83.22 0.00 278.06 0.00 223.03 97.34 320.37 -42.31 34.24 449.67 315.37 174.81 140.56 11.08 359.86 184.80 20.85 21.23 226.88 108.12 14.11 349.11 0.00 239.89 78.33 318.22 30.89 16.06 558.45 392.12 193.75 198.37 16.03 320.05 214.94 28.61 48.53 292.08 90.41 0.12 382.61 0.00 238.12 84.91 323.03 59.58 25.58 619.61 453.18 212.19 240.99 9.69 380.83 301.53 46.33 43.54 391.40 185.86 0.23 577.49 0.00 269.66 100.65 370.31 207.18 23.23 861.92 511.50 233.67 277.83 6.02 423.10 253.63 49.61 40.56 343.80 209.61 0.24 553.65 0.00 290.06 147.48 437.54 116.11 26.64 849.70
Contingent Liabilities Book Value (Rs)
61.24 185.65
67.24 229.84
102.63 257.35
169.55 316.37
329.05 345.14
50
Britannia Industries Profit & Loss account Mar '05 ------------------- in Rs. Cr. ------------------Mar '06 Mar '07 Mar '08 Mar '09
12 mths
12 mths
12 mths
12 mths
12 mths
Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses 889.74 14.07 71.64 190.32 191.02 37.12 0.00 1,393.91 Mar '05 1,020.94 22.70 73.07 139.71 233.91 34.34 0.00 1,524.67 Mar '06 1,438.79 24.13 76.71 188.17 327.95 49.09 0.00 2,104.84 Mar '07 1,546.74 22.78 90.53 222.18 382.26 74.00 0.00 2,338.49 Mar '08 1,936.66 21.47 96.02 281.37 499.69 72.45 0.00 2,907.66 Mar '09 1,615.45 27.88 1,587.57 53.93 -9.72 1,631.78 1,817.92 104.58 1,713.34 22.28 12.29 1,747.91 2,317.11 117.79 2,199.32 21.56 34.21 2,255.09 2,617.66 29.80 2,587.86 20.12 -17.05 2,590.93 3,142.89 30.51 3,112.38 31.38 19.44 3,163.20
12 mths
12 mths
12 mths
12 mths
12 mths
51
Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)
183.94 237.87 2.10 235.77 18.97 0.00 216.80 -8.99 207.81 57.95 148.77 504.17 0.00 33.45 4.69
200.96 223.24 5.09 218.15 21.72 0.00 196.43 4.28 200.71 54.29 146.43 503.73 0.00 35.84 5.03
128.69 150.25 8.90 141.35 25.27 0.00 116.08 2.32 118.40 10.76 107.65 666.05 0.00 35.84 6.09
232.32 252.44 9.73 242.71 29.08 0.00 213.63 18.64 232.27 41.26 191.00 791.74 0.00 43.00 7.31
224.16 255.54 16.01 239.53 33.46 0.00 206.07 26.42 232.49 52.12 180.40 970.99 0.00 95.56 16.24
238.90 62.27 140.00 185.65
238.90 61.29 150.00 229.84
238.90 45.06 150.00 257.35
238.90 79.95 180.00 316.37
238.90 75.51 400.00 345.14
Source : Dion Global Solutions Limited
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