A Mini Project Presentation onUnder the Guidance of

Dr. G. BhaskarDepartment Of MBA

Presented By

Imran KhanReg.No.15781E00N2MBA (Year II, Semester I)

November, 2016

Presentation Overview

Title of the mini projectChapters in mini project

1. Introduction2. Industry Profile3. Organizational Profile4. Analysis of Financial Performance5. Findings, Conclusion and Recommendations6. References

Q&A Session

A Study onAnalysis of Financial Performance

of Britannia Industries Limited

Title of the Study

Chapter 1.

Introduction

Study of Financial Performance is concerned with assessment of

(1) effectiveness with which funds (investment and debt) are employed in a firm,

(2) efficiency and profitability of its operations, and (3) value and safety of debtors' claims against the firm's assets.

Financial ratios are used to find statistical relationship between the data of Income Statement and Balance Sheet to understand the problems and opportunities inherent in an investment or financing decision.

Brief Overview

Objectives of the studyTo study the financial performance of Britannia Industries Ltd. over a period of five years ( 2011/12 to 2015/16)

Evaluate financial position of the company in terms of solvency, profitability, liquidity and efficiency

Behavior in terms of allocation of various funds to different Assets

• The data has been collected from secondary sources such as annual report and various websites, journals, newspapers, books, etc.

• Detailed analysis of data is made by plotting different graphs and tables.

• The analysis used in this project has been done using Ratio Analysis.

Methods of Study

Limitations• The study has been based on secondary data analysis.

• The study is only about financial performance i.e. use of quantitative data

• The study is for a period of five years only i.e. FY(2011/12 - 2015/16).• Various tools and techniques have their own limitations

Chapter 2.

Industry Profile

India is the second largest manufacturer of biscuits turnover of around Rs. 3000 crores., the first being USA.

According to Federation of Biscuit Manufacturers of India (FBMI), Indian biscuit industry will grow @ 15% p.a. for the next 10 years.

States that have the larger intake of biscuits are Maharashtra, West Bengal, Andhra Pradesh, Karnataka, and Uttar Pradesh.

Production by organized sector is around 60% and by unorganized sectors 40%.

The unorganized sector is estimated to have 30,000 small & tiny bakeries across India

INDUSTRIAL OVERVIEW

COMPETITORS

Chapter 3

Organizational Profile

Overview of the Organization

Britannia Industries Ltd (Britannia) was established in 1892 in Kolkata, West Bengal with an investment of Rs. 265 by Bhavya Chugh.

In 1918, C.H. Holmes, an English businessman in Kolkata, was taken on as a partner and The Britannia Biscuit Company Limited (BBCo) was launched.

Named as "Britannia Industries Limited" in 1979

Its subsidiaries include Manna Foods Private Limited and International Bakery Products Limited.

Operates in two business segments:i. Bakery Products such as biscuits, bread, cakes and rusk

ii. Dairy Products such as milk, butter, cheese, ghee and curd.

Shareholding Pattern

Category No. of Shares PercentagePromoters 4,551 0.004

Foreign Promoters 60,868,345 50.734

General Public 20,721,555 17.271

Financial Institutions 18,347,414 15.293

Foreign Institutions 7,429,685 6.193

NBFC and Mutual Funds 7,293,850 6.079

Others 5,310,415 4.426

“To dominate the food and beverage market in India with a

distinctive range of ‘Tasty Yet Healthy’ Britannia brands by

making every Indian a Britannia consumer.”

“We want to be part of our consumer – at home, out of

home, a natural part of his life.”“Every third Indian should be a Britannia consumer. To be among the

three fastest-growing FMCG companies in the country and to grow

profitably.”

BOARD OF DIRECTORS

CHAIRMAN : Mr. Nusli N Wadia

MANAGING DIRECTOR : Mr. Varun Berry

DIRECTORS : Mr. A K Hirjee Mr. Avijit Deb Mr. S S Kelkar Mr. Nimesh N Kampani Mr. Jeh N Wadia Mr. Keki Dadiseth Dr. Ajai Puri Mr. Nasser Munjee Mr. Ness N Wadia Dr. Vijay L Kelkar Mrs. Ranjana Kumar

COMPANY SECRETARY : Mr. Rajesh Arora

MILESTONES

'One amongst the Top 200 Small Companies of the World'. By FORBES

No # 1 worldwide in Fresh Dairy Products.

No # 2 worldwide in Biscuits and Cereal Products.

No # 1 food brand of the country (2001)

No # 2 Most Trusted Brand(2002) by Economic Times

No # 1 Most Trusted Food Brand in a survey conducted by AC Nielsen ORGO-MARG and published in Economic Times in the year 2007.

Ranked 27th place in the list of India's Fastest Growing Large Companies by Business Today (2008).

‘Global Performance Excellence Award (GPEA)’ by Asia Pacific Quality Organization (APQO) (2012)

BUSINESS VOLUME

Annul Turnover of more than Rs. 8,500 crores (2014/15)

And Rs 622 crore as Net Profit (2014/15).

It has market capitalization of Rs 32,534 crore (FY2015)

It delivers products in over 5 categories through 4.2 million retail outlets to more than half the Indian population.

Employs More than 3,000 (2014/15) including permanent full time and part time employees

PRODUCTS

BISCUITSGood Day,Crackers,NutriChoice,Vita,50-50,Marie Gold,Tiger,Milk Bikis,Treat,Pure Magic,Milk Bikis,Good Morning,Jim Jam + Treat,Bourbon,Little Hearts,Pure Magic,Nice Time

BREADSWhole Wheat Breads,White Sandwich Breads,Bread Assortment

DAIRYoCheese,oFresh Dairy,oAccompaniments

CAKESBar Cakes,Veg Cakes,Chunk Cake,Nut & Raisin,Romance,Muffills,Biscotti

RUSKPremium Bake

Chapter 4.

Analysis of Financial Performance

Ratio Analysis is a method of defining relationships among various financial

statement items.

It helps to identify trends over time for one company or to compare two or more

companies at one point in time.

RATIO ANALYSIS

LIQUIDITY RATIO

LEVERAGE RATIO

ACTIVITY RATIO

PROFITABILITY RATO

Current Ratio Total Debt RatioInventory

Turnover RatioGross Profit

Margin

Quick RatioDebt-Equity

RatioFixed Assets

Turnover Ratio Profit Margin

Interest Coverage Ratio

Total Assets Turnover Ratio

Earnings Per Share

Long term debt equity Ratio

Working Capital Turnover Ratio

Price- Earning Ratio

Investment Turnover Ratio Return on Assets

Days of inventory on hand Return on Equity

Types

2011/12 2012/13 2013/14 2014/15 2015/160.000.200.400.600.801.001.20

0.80 0.77 0.84

1.13 1.05

Current Ratio (CR)

1. LIQUIDITY RATIOS

Interpretation

Ideal CR is 2:1

CR between 1.7-2.0 is encouraging for business

CR less than 1.5 suggests the company is not placed well to pay its debts

2011/12 2012/13 2013/14 2014/15 2015/160.00

0.10

0.20

0.30

0.40

0.50

0.60

0.27

0.37 0.37

0.56 0.54

Quick Ratio

Interpretation

Ideal QR is 1:1

QR lower than 1:1 indicates that the company relies too much on inventory or other assets to pay its short-term liabilities.

2011/12 2012/13 2013/14 2014/15 2015/160.000.200.400.600.801.00

0.78 0.70 0.62 0.55 0.49

Debt to Assets Ratio

2. SOLVENCY RATIOS

Interpretation

Shows the percentage of total assets financed by debt

High ratio increases the financial risk in terms of fixed interest payments

2011/12 2012/13 2013/14 2014/15 2015/160.000.501.001.502.002.503.003.504.00

3.48

2.36

1.631.24

0.95

Debt -Equity Ratio

Interpretation

Low Debt-to-equity ratio suggests that the company is not fully utilizing the cheaper source of finance (i.e. debt)

High Debt-to-equity ratio indicates that the company is facing a very high financial risk.

2011/12 2012/13 2013/14 2014/15 2015/160.00

50.00100.00150.00200.00250.00300.00350.00

10.38 13.22

89.74

321.87293.55

Interest Coverage ratio

Interpretation

Ability of a company to make timely interest payment on its debt.

Lower the ICR, higher the company’s debt burden and greater the risk of default

2011/12 2012/13 2013/14 2014/15 2015/160.002.004.006.008.00

10.0012.0014.0016.00

5.676.80

9.0710.99

14.13

3.64 4.205.72

8.76 9.29

Operating Profit Margin(%) Net Profit Margin(%)

Operating Profit Margin & Net Profit Margin (%)3. PROFITABILITY RATIOS

Interpretation•Both measure the efficiency of a firm by comparing profits against costs•Operating margin takes variable costs and is a better reflection of the effectiveness of the company's overall pricing strategy.

•Net profit margin indicates efficiency of company and its ability to control costs.•Considers the costs of taxes and interest payment

2011/12 2012/13 2013/14 2014/15 2015/160.00

10.00

20.00

30.00

10.84 13.8018.78

24.65 23.31

Return on Assets

2011/12 2012/13 2013/14 2014/15 2015/160.00

20.00

40.00

60.00

80.00

50.02 55.1572.87 65.62 66.63

Return On Capital Employed(%)

ROA measures how effectively company producing income from assets . Higher is better

ROCE shows how much profit per rupee of capital employed generates.Higher value is favorable

2011/12 2012/13 2013/14 2014/15 2015/160

10

2012.84

16.51 16.4519.87 20.22

Inventory Turnover Ratio

4. TURNOVER RATIOS

Interpretation: Inventory Turnover Ratio measures company's efficiency in turning its inventory into sales.

2011/12 2012/13 2013/14 2014/15 2015/160.002.004.006.008.00

10.0012.00 11.20

9.528.04

5.874.21

Investment Turnover Ratio

Interpretation: Determines how efficiently a company uses its resources (debt and equity) to generate revenues. A higher investment turnover ratio is better.  

2011/12 2012/13 2013/14 2014/15 2015/160.002.004.006.008.00

4.996.24 6.03

4.99 5.23

Working Capital Turnover Ratio

2011/12 2012/13 2013/14 2014/15 2015/164.7

4.9

5.1

5.35.23

5.11

4.91

5.175.03

Fixed Assets Turnover Ratio

Interpretation: A higher working capital turnover ratio is better. It means that the company is utilizing its working capital more efficiently i.e. generating more revenue using less investment.

Interpretation: Measures how successfully a company is utilizing its fixed assets in generating revenue. A higher fixed asset turnover ratio is generally better.  

Chapter 5.

FINDINGS, CONCLUSION AND RECOMMENDATIONS

Findings• Sales show the increasing trend in each year. • In all the five years the current ratio is less than the ideal ratio 2:1.

Quick ratio is also less than the ideal ratio of 1:1 in those years. • The debt-equity ratio is decreasing each year from 2011/12• The interest coverage ratio has increased drastically from 2011/12

to 2014/15 but it has slightly decreased in 2015/16 as compared to 2014/15

• The operating profit margin and net profit margin is in increasing trend since 2011/12.

• The ROCE has decreased after 2013/14.• ROA is in increasing trend till 2014/15 but slightly decreased in

2015/16• The inventory turnover ratio is in increasing trend till 2015/16 and

Fixed Assets ratio is lowest in 2013/14

Conclusion• Performance is good in terms of profitability• Generating good earnings on capital employed• Has sufficient resources to meet its tax and interest expenses• Does not have sufficient current assets to meet current liabilities• Use of debt capital is low and it is decreasing in each year

• Current assets should be increased to meet current liabilities • Use of debt capital should be increased• Focus should be given to use the investment more efficiently to increase

shareholders’ value• Also, Innovative strategies, programs and policies should be devised to

counter Patanjali whose growth rate is increasing at a high rate in bakery industry

Recommendations

References• Bhattacharyya, A. K. (2009). Financial accounting for business managers.

New Delhi: PHI Learning Private• Gupta, A. (2009). Financial accounting for management: An analytical

perspective. New Delhi: Published by Dorling Kindersley (India), licensees of Pearson Education in South Asia.

• Jain, S. P. (1980). Advanced accountancy. New Delhi: Kalyani.• Khan, M. Y., & Jain, P. K. (2007). Management accounting: Text, problems and

cases. New Delhi: Tata McGraw-Hill.

• http://britannia.co.in/• http://www.wadiagroup.com/• https://en.wikipedia.org• http://financeformulas.net • http://www.myaccountingcourse.com/financial-ratios/

Websites