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PROJECT REPORT
AT
CONCEPT OF FINANCIAL MANAGEMENT AND PERFORMANCE RELATED TO
GODREJ AGROVET LIMITED.
A Project Report submitted in partial fulfillment of the requirements for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION (Industry Integrated)
TO
MADURAI KAMARAJ UNIVERSITY, MADURAI
BY
ABDUL RAHMAN RAHUF Reg. No.: A8750401
Under the guidance of
Miss. NIRMALA
T.JOHN BUSINESS SCHOOL, BANNARGHATTA ROAD, BANGALORE
JULY 2010
CERTIFICATE
This is to certify that the project report at
CONCEPT OF FINANCIAL MANAGEMENT AND PERFORMANCE RELATED TO
GODREJ AGROVET LIMITED, BANGALORE
Submitted in partial fulfillment of the requirements for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION (Industry Integrated)
To
MADURAI KAMARAJ UNIVERSITY, MADURAI
Is a record of bonafide training carried out by
Abdul Rahman Rahuf
Under my Supervision and Guidance and that no part of this report has been submitted for the award of any other Degree/ Diploma/ fellowship or similar titles or prizes.
FACULTY GUIDE
Signature: Name : MISS NIRMALA
Signature and seal of the Learning centre
STUDENT’S DECLARATION
I here by declare that the Project Report conducted at
GODREJ AGROVET LTD, BANGALORE
Under the guidance of
MISS. NIRMALA
Submitted in Partial fulfillment of the requirements for the Degree of
MASTER OF BUSINESS ADMINISTRATION (Industry Integrated)
TO
MADURAI KAMARAJ UNIVERSITY, MADURAI.
Is my original work and the same has been submitted for the award of any other degree/diploma/fellowship or other similar titles or prizes.
Place: Bangalore ABDUL RAHMAN RAHUF
Date: 31/06/2010 Reg.No.A8750401
01/07/2010
CERTIFICATE OF THE ORGANIZATION To, The Training Officer, National Institute of Applied Management, Bangalore / New Delhi.
This is to certify that Mr. ABDUL RAHMAN RAHUF of MBA (Industry Integrated)
course of Madurai Kamaraj University at T. John Business School learning center has
undergone training at our organization, from 01/07/2009 to 31/06/2010.
His performance during the training period was Good.
Authorized Signatory
ACKNOWLEDGEMENT An individual cannot do project of this scale. I take this opportunity to express my
acknowledgement and deep sense of gratitude to the individuals for rendering valuable
assistance and gratitude to me. Their inputs have played a vital role in success of this
project.
I am grateful to Mr. Balram Singh Yadav, who provided me an opportunity to
undertake a project, which enabled me to interact with company financial structure to
have better understanding, practical exposure of industry.
I express my sincere thanks to my project guide Miss. NIRMALA for his generous
support, constant direction and mentoring at all stages of training.
I am also indebted to Mr. Shiva Shankar (Finance manger) who was a real
source of help and assistance to me during the course of project. I take this opportunity to thank all senior manger and officer who spared their
precious time to provide me with valuable inputs for project without which it would have
not been possible.
I firmly believe that there is always a scope of improvement. I welcome any
suggestions for further enriching the quality of this report.
CONTENTS Sl. No. Page N0.
Chapter 1: INTRODUCTION
1.1 General Introduction about the Sector 01 - 01
1.2 Industry Profile
(A) Origin and Development of the Industry 01 - 07
(B) Growth And Present Status Of Industry 07 - 10
(C) Future of the Industry 11 - 12
Chapter 2: PROFILE OF THE Organization
2.1 Origin of the Organization
(1) History 13 - 13
(2) Landmark 13 - 14
(3) Mission 14 - 14
(4) Value 14 - 15
2.2 Growth and Development of the Organization 15 - 17
2.3 Present Status of the Organization 18 - 19
2.4 Functional Department of the Organization 20 - 23
2.5 Organization Structure and Organization Competitors 24 - 34
2.6 Market Profile of the organization 34 - 34
Chapter 3: DISCUSSION ON TRANING
3.1 Roles and Responsibility in the organization 35 - 35
3.2 Description of Live Experience 36 - 36
3.3 Student Contribution to the organization 37 - 37
Chapter 4:
Study Of Selected Researcher Problem
4.1(a) Introduction to Financial Management 38 - 51
4.1(b) Statement of Research Problem 51 - 53
4.2 Research Objective 53 - 53
4.3 Research Design and Research Methodology 54 - 54
4.4 Analysis of Data 55 - 76
4.5 Summary of Findings 77 - 78
Chapter 5:
SUMMARY AND CONCLUSION OF STUDY
5.1 Executive Summary 79 – 80
5.2 Conclusion and Recommendation 80 – 81
APPENDIX
Bibliography 82 – 83
CHAPTER 1: INTRODUCTION 1.1 General Introduction about the sector.
1.2 Industry Profile.
a) Origin and development of the Industry.
b) Growth and present status of the Industry
c) Future of the industry.
1.1 General Introduction About The Sector.
The Indian feed industry is about 35 years old. It is mainly restricted to dairy and
poultry feed manufacturing; the beef and pork industry is almost non-existent. The
quality standards of Indian feeds are high and up to international levels. Raw materials
for feed are adequately available in India. The industry's production is about 3.0 million
tones, which represents only 5 percent of the total potential, and feed exports are not
very high. The feed industry has modern computerized plants and the latest equipment
for analytical procedures and least-cost ration formulation, and it employs the latest
manufacturing technology. In India, most research work on animal feeds is practical and
focuses on the use of by-products, the upgrading of ingredients and the enhancing of
productivity.
The country has entered into a period of liberalization and this is bound to influence
the livestock industry. The per capita consumption of milk, eggs and broiler meat will
grow. The Indian feed industry is undergoing a very exciting phase of growth for the
next decade.
1.2 a) Origin And Development Of Industry
INTRODUCTION TO FEED INDUSTRY: Feed manufacturing on a commercial and
scientific basis started around 1965 with the setting up of medium-sized feed plants in
northern and western India. Feed was produced mainly to cater to the needs of dairy
cattle. The poultry sector was not developed at that time and was restricted to backyard
production, with the desi kept mainly for the production of eggs. The poultry industry is
now growing in importance. Today, the Indian feed industry is worth approximately Rs
45 billion that is about US$1 billion.
THE LIVESTOCK INDUSTRY OF INDIA
India's animal wealth is quite large in terms of its populations of cattle, poultry,
sheep and goats, camels, horses and pets. Recently, aquaculture has also been
growing in importance in India.
TABLE 1
Livestock Type Population (Millions)
Cattle 204.5
Buffaloes 84.2
Sheep 50.8
Goats 115.3
Pigs 12.8
Horses/ponies 0.8
Mules 0.2
Donkeys 0.9
Camels 1.0
Yaks 0.06
Mithuns 0.15
Total Livestock 470.86
Dairy cattle
Worldwide, India is number one in milk production, at 78.0 million tones per
annum, and the dairy industry is spread across the whole country. India has one of the
largest populations of cattle and buffalo in the world. In a total of 288 million head, there
are 10 million crossbred cows, 15 million good milk cows of local varieties and 36 million
buffaloes of good milk varieties. The remainder of the cattle population is of a non-
descript variety and a sizeable proportion consists of bullocks.
TABLE 2
Cattle and Poultry Indicators
Dairy Millions
Cross-bred cows 10.0
Improved cows 15.0
Improved buffaloes 36.0
Milk production (tones) 78.0
Per capita consumption (g/day) 240
Poultry
Commercial layers 150
Commercial broilers 650
Stock breeders 6.5
Egg production (109) 40
Per capita availability (eggs/year) 40
Poultry meat production) (million tones 1.0
Per capita availability (g/year) 1 000
Poultry feed production (million tonnes) 9.0
Annual growth
Dairy industry 5%
Layer industry 6-7%
Broiler industry 10%
The crossbred population is either Jersey or Holstein-Friesian, crossed with local
cows. Crossbreeding was a natural solution to upgrading the milk yield in the absence
of high-value imported varieties of purebred animals. The buffalo breeds are unique to
India, and produce milk with a fat content of 7 to 8 percent. Milk is seen as a health
drink and a variety of Indian sweets are prepared from milk. The ice-cream market is
growing.
Farms are located on the outskirts of cities and within cities. Almost all villages
have a number of cattle, but there are only a few organized dairy farms. In India, dairy is
not so much an industry as a smallholder farming activity.
Growth in the milk sector has occurred mainly through cooperative efforts.
Cooperatives started by supplying milk collection centre, where milk was collected from
villagers in quantities as small as 1 liter, and gradually started to provide other services
to farmers, including education, artificial insemination, veterinary health support and
feeding. The small farmers became prosperous, loan facilities were made available
through banks, and member farmers started to share the profits from cooperatives.
Cooperatives also set up their own modern computerized feed plants. They have
modern milk processing plants from which they produce and market pasteurized milk,
butter, butter oil, chocolate, ice-cream and milk sweets, which are very popular with
Indian consumers. Today, the feed production from cooperatives is about 0.6 million
tones per year.
The National Dairy Development Board (NDDB), which has excellent facilities for
research on breeding, nutrition and health care, has played a pivotal role in setting up
cooperatives. Without NDDB and several of the existing dairy cooperatives, the milk
sector in India would have suffered.
The dairy industry in India is expected to grow, but growth will be restricted to
individual small farmers. It is unlikely that India will see the advent of large, organized
dairy farming in the near future.
Poultry
Compared with the rest of the livestock sector, the poultry industry in India is more
scientific, better organized and continuously progressing towards modernization.
Breeding and feeding management has improved through education, training,
competition, expansion and survival instincts. India is the world's fifth largest egg
producer, with a total production of 40 billion eggs per year. The broiler industry is
growing at the rate of 10 percent per annum. Indicators are given in Table 2.
India has 150 million layers and 650 million broilers. Annual per capita
consumption of eggs is 40, and that of broiler meat is 1000 grams. Although these
figures are low in comparison with those for developed countries, the industry has great
potential to expand because 30 percent of the country's population (about 300 million
people) is developing economically and the demand for poultry products is therefore
likely to grow.
The poultry industry has witnessed several ups and downs in the last 25 years as a
result of unplanned growth and a lack of government regulation. Currently, it is growing
at the rate of 10 percent in broilers and 6 to 7 percent in layers and is going through a
phase of integration in broilers, which is likely to change the face of the industry.
Sheep, Goats and Camels
The sheep and goat sector is mostly in the hands of nomadic tribes and no
significant scientific husbandry, rearing and management practices are implemented.
Research on breeding and nutrition is being conducted at research institutes and
agricultural universities.
Most of the country's camels are located in the desert area of the western part of
India, in the states of Rajasthan and Gujarat, bordering Pakistan. Camels are reared by
individuals who feed them local ingredients. There is a lack of scientific management
practices, genetic studies and scientific feeding practices in camel rearing and the
industry survives mostly on the basis of local, long-established knowledge of feeding
and breeding.
Swine
India is a multilingual, multiracial country whose people hold various religious
beliefs. Although the majority of the population is Hindu, there are sizeable minorities of
Muslims, Christians, Sikhs, Buddhists, Jains, Parsees and others. India also has a large
tribal population and is a plural society in which the sentiments of each social and
religious group need to be respected for harmony and peaceful coexistence. Thus, most
states in India have banned cow slaughter and the beef industry is therefore non-
existent. The majority of people disapprove of pork consumption, maybe because of the
lack of scientific management on swine farms. Swine reared on the streets are very
unhygienic and buyers are always suspicious about the source of pork, so there is no
organized pork industry.
Horses and Pets
The Indian equine industry goes back more than 50 years and is considered
modern, scientific and very well equipped in terms of every aspect of animal husbandry
practices. The equine industry is spread across India and is restricted to horse racing.
Imports of good genetic material are quite common in this industry. The feeding of these
valuable animals is mostly at the farm level under the supervision of experienced people
following traditional practices. What innovation there is tends to be closely guarded by
the companies concerned.
The Indian pet industry is in a nascent stage, with the main focus being on dogs
rather than cats and the emphasis on breeding and training. Regular dog shows are
held by enthusiastic dog owners to increase awareness of the rearing of good-quality
pure-breeds; dogs are a source of pride for households. In many cities, animal health
care systems are run by qualified vets with well-equipped facilities such as X-ray
machines, surgical facilities, imported vaccines and the latest drugs. The feeding of pets
is however, left to the household. Some commercial preparations are available in the
form of dog biscuits, chews, etc., but dogs are fed mostly on home-cooked food. One of
the reasons for this could be the high cost of commercial pet food.
1.2 b) Growth And Present Status Of The Industry
India is currently self-sufficient in livestock feeds and does not depend on imports.
Instead, the country exports large quantities of solvent extracted meals, which are a
major source of foreign exchange earning.
Cereals and Grains
Maize, sorghum and bajra (a type of millet) are commonly used in animal feeds.
Wheat and rice are mainly retained for human consumption.
Cakes and Meals
Commonly used commodities of this kind are soybean, groundnut, rapeseed, and
sesame and sunflower meals in poultry feed. In cattle feed, in addition to these meals,
others such as cottonseed and copra are used as premium ingredients.
Feeds of Animal Origin
Meat-meal, fishmeal, bone meal and dicalcium phosphate of bone origin are the
common raw materials available for animal feeding. It is interesting to note that, with the
exception of some bone-based dicalcium phosphate, the Indian feed industry does not
use materials of animal origin in dairy cattle feed. This was not out of fear of any
zoonotic problems but the result of deep-rooted beliefs that the cow is sacred and must
therefore be vegetarian. Now even the use of bone-based dicalcium phosphate has
been banned and mineral-based dicalcium phosphate is used instead.
Fishmeal and meat-meal were popularly used in poultry feed, but the increased
production, improved availability and better awareness of soybean meal has led to its
replacing fishmeal and meat-meal in most poultry rations. It should be mentioned that
farmers have faced production problems owing to the bacterial contamination of
fishmeal and meat-meal. The quality of fishmeal is also very poor.
Popular By-Products
Some by-products are very nutritious and palatable to cattle, and these products
form the bulk of cattle feed. They include wheat bran, rice bran and oil-extracted rice
bran, tapioca, guar meal, safflower meal, maize gluten and molasses. A special mention
should be made of Indian cattle feed's unique use of hulls or shells, popularly known as
chunis in the local language. These shells come from pulses: horse gram, black gram,
mung bean and pigeon pea.
Minerals and Vitamins
Cattle feed is necessarily enriched with vitamins A and D3, and trace minerals such
as iron, zinc, manganese, copper, cobalt and iodine. Calcium and phosphorus are also
included. Poultry feed is enriched with all of these and all of the B complex vitamins.
Feed Additives and Supplements
Feed additives and supplements have played a very important role in enhancing
the performance of dairy animals and, even more so, poultry. Today they are necessary
in any feed formulation and essential for the formulation of a balanced diet. The
additives and supplements used are antibiotic growth promoters (their usage is not
banned in India), prebiotics, probiotics, enzymes, mould inhibitors, toxin binders, anti-
coccidian supplements, acidifiers, amino acids, by-pass fat, by-pass protein, non-
antibiotic growth promoters, milk boosters, antioxidants, feed flavors and herbal
preparations of Indian origin. A number of these products are imported from developed
countries.
COMPOUNDED FEED
In India, the term "compound feed" refers to feed that is nutritionally balanced and
has been manufactured using the facilities of an analytical laboratory and under the
supervision of nutritionists. There are also a large number of small-scale feed mixers
who produce feed for local consumption. Such feed is termed "self-mixed feed" or
"home-mixed feed".
Cattle Feed
Cattle feeding practices are very traditional. Farmers choose their own ingredients
and prepare their own formulations, believing that by these means they are able to pay
more individual attention to their cattle. The productivity of the cattle is limited because
of their poor genetic make-up, so high-quality compound feed (industry feed) may not
necessarily generate a significant improvement in productivity and this has hampered
growth of the cattle feed industry because most farmers are reluctant to use compound
feed fully. Instead they compromise by using such feed in proportions of 5 to 60
percent, making up the balance with their own formulations. It is only in the case of
highly productive animals that compound feed has been able to show its real potential
and the importance of technology has been demonstrated.
The share of compound cattle feed manufactured by the industry, in relation to the
overall potential, is low for the following reasons:
The cattle population is fragmented and spread over large parts of the country.
Farmers' low level of education and strong traditional beliefs mean that there is
generally little awareness of compound cattle feed.
More than 50 percent of the country's total milk production comes from a very
large number of low-yielding cows and buffaloes. A further 25 percent of milk
production comes from buffaloes and only the remaining 25 percent of the total is
produced by crossbred and improved cows.
Industrially manufactured compound cattle feed has proved its value for
crossbred cows and buffaloes but not for low-yielding cattle because of their
genetic limitations. Home-mixed feed is very frequently used for buffaloes and
low-yielding cattle.
Poultry Feed
Poultry feed is divided into layer and broiler feed. In the case of layer feed, cost is
the main constraint in using compound feed. An innovative, high-value compound feed
can result in increased numbers of eggs, but the risks are too high because of the birds'
long life cycle.
Compound feed has, however, made a major contribution to broiler feeding. This is
an example of excellent coordination among instrument technology, formulations and
use of feed additives and supplements. Cost is a less important factor because the
performance improvements are greater than the cost increases and the birds' life cycle
is short.
Two types of poultry feed are prepared. One is ready-made and in the form of mash
or pellets. The second is in concentrated form for mixing with an energy source.
Concentrates are protein sources, balanced in amino acids and containing vitamins,
minerals and feed additives. They are mixed with energy sources such as maize,
sorghum or bajra to prepare poultry rations.
1.2 c) FUTURE OF INDIAN FEED INDUSTRY
At the beginning of the twenty-first century, India has a population of 1 billion
people. Although the annual growth rate has slowed from 2 to 1.8 percent, the base is
so broad that changes in population dynamics are not perceptible. The population may
stabilize by sometime between 2030 and 2040 if all sections of society support family
planning wholeheartedly. The purchasing power of the middle class is growing (the
middle class accounts for approximately 300 million people) and food habits are also
changing.
The Indian economy is growing at the rate of 6 to 8 percent per annum. The
livestock industry in India is the second largest contributor to gross domestic product
(GDP), after agriculture, and accounts for 9 percent of the total. Consumption is likely to
increase as follows: per capita milk from 240 to 450 g per year; per capita eggs from 40
to 100 per year; and per capita broiler meat from 1000 to 2000 g per year.
A major change is occurring in India on the economic front. The country has
adopted a model that lays midway between liberal and public sector production, but
growth has been affected by the poor performance of most of the public sector units,
rising government costs and fiscal deficit, and the economy has suffered. A process of
liberalization was set in motion by the government and has been implemented for the
last eight to ten years. This has caused India to open up and invite investment from
multinationals, liberalize imports, reduce government expenditure and remove public
sector businesses. It also means that the days of nationalization, unnecessary
government controls and restrictions will soon be over thanks to progress in the
country's economy.
India has entered into an agreement with its trade partners under the World Trade
Organization (WTO). The changes brought about by the liberalization process will be
slow but certain. The government is opening up imports in a phased manner, and it is
expected that this process will be completed by April 2003. In the meantime, about 930
items, including agricultural products, will be open for import under open general license
from April 2001, making it possible to import dressed chicken, milk and milk products.
Various livestock industry associations have taken issue with such imports in an
attempt to protect their members. If the livestock industry is affected, the feed industry
will also be affected. The Government of India has raised the tariff on all poultry and
poultry products from 35 percent to the WTO boundary level of 100 percent. It therefore
appears that there will be a level playing field.
In view of the expected rise in per capita consumption of chicken meat, eggs and
milk, livestock production and productivity will grow. The dairy industry, which is
cooperative-based, is growing with the increased capacities of milk processing units.
The population of crossbred cattle and buffaloes is also growing. Milk is very popular in
India. The poultry industry is developing towards vertical integration and a few
multinational companies have already entered the Indian poultry business. Although the
live bird market currently accounts for about 90 percent of the total market, it is
expected that the consumption of dressed chicken will grow in the next five years, from
the existing 10 percent to 25 percent or more. This would mean establishing very
hygienic and scientific processing units. Cold chains, branded chicken, chicken cuts,
etc. will be introduced and, depending on the success and consistent quality, consumer
preference for dressed meat will grow.
The next decade will see significant changes in restructuring, mergers, acquisitions,
amalgamations, joint ventures, diversification, integration and efficient service chains, e-
commerce and use of the latest information technology in global tenders, trading,
export/import and other commercial activities. At the root of all these developments will
be the scientific development of feed manufacturing technology. The Indian feed
industry will increasingly use biotechnology, more scientific formulations, new molecules
and natural and herbal products to improve animal productivity. Indian agriculture will
also use biotechnology and genetically modified organisms (GMOs) to support the feed
industry, which is entering a very exciting phase of growth for the next decade.
CHAPTER 2: PROFILE OF THE ORGANIZATION 2.1 Origin of the Organization 2.1.1 History 2.1.2 Landmark 2.1.3 Mission 2.1.4 Value 2.2 Growth and development of the Organization 2.3 Present status of the organization 2.4 Functional Departments of the Organization 2.5 Organization Structure and Organization competitors 2.6 Market profile of the organization
2.1 ORIGIN OF THE INDUSTRY
2.1.1History
The Company celebrated its centenary in 1997. In 1897 a young man named
Ardeshir Godrej gave up law and turned to lock making. Ardeshir went on to make safes
and security equipment of the highest order, and then stunned the world by creating
toilet soap from vegetable oil. His brother Pirojsha Godrej carried Ardeshir's dream
forward, leading Godrej towards becoming a vibrant, multi-business enterprise. Pirojsha
laid the foundation for the sprawling industrial garden township (ISO 14001-certified)
now called Pirojshanagar in the suburbs of Mumbai. Godrej touches the lives of millions
of Indians every day. To them, it is a symbol of enduring ideals in a changing world.
Time and again, with the launch of every new product, Ardeshir Godrej changed
perceptions in the Industry by adding exciting new dimensions. Be it the manufacture of
the finest range of security equipment or soap from vegetable oils, the world was thrilled
and stunned too. His dream had become a huge movement, which was carried forward
by another just as capable Godrej. The man, who did so, was Ardeshir Godrej's own
brother Pirojsha Godrej. He laid the foundation of the Godrej Empire.
2.1.2 LANDMARK
Incorporation
Established in 1897, the Company was incorporated with limited liability on March
3, 1932, under the Indian Companies Act, 1913.
The Beginning
The beginning of the Godrej Group can be traced to India's freedom struggle. Its
founder, Ardershir Godrej, a lawyer by profession and a staunch nationalist, believed
that India could attain freedom only by being self-reliant. In doing so, India would
overcome economic degradation.
The Godrej Name
The Godrej Name displaced well-established foreign brands from the Indian
market. The name 'Godrej' engraved into the shiny metal of the Godrej Locks came to
be known as a symbol of self-reliance, trust-worthiness, assertiveness and
progressiveness for a new generation of Indians.
1971 Started as Animal Feeds division of Godrej Industries Ltd.
1984 Diversified into Agricultural Inputs
1992 Godrej Agrovet born as a separate corporate entity expanded into
Chemical Pesticides.
1993 Acquired Unicorn Biotech a Tissue Culture business.
1995 Foray into branded chicken- Real Good Chicken .
1997 Acquired Oil Palm Plantation business of Godrej Industries Ltd.
1999 Acquired India Poultry Farm breeding and hatchery business to become an
integrated player.
2001 Acquired Hindustan Unilever Feed business - GOLDMOHUR FOODS &
FEEDS LTD. (Now a 100% subsidiary of Godrej Agrovet Limited)
2.1.3 GODREJ MISSION
Our Mission is to operate in existing and new businesses, which capitalize on the
Godrej brand and our corporate image of reliability and integrity. Our objective is
to delight our customer both in India and abroad.
We shall achieve this objective through continuous improvement in quality, cost
and customer service. We shall strive for excellence by nurturing, developing and
empowering our employees and suppliers.
We shall encourage an open atmosphere, conducive to learning and teamwork.
2.1.4 GODREJ VALUES
Commitment to Quality
Customer Orientation
Dedication & Commitment
Discipline
Honesty & Integrity
Openness & Transparency
Respect/Care & Concern for People
Team work
Trust
2.2 GROWTH AND DEVELOPMENT OF THE COMPANY
Godrej Agrovet was formerly a division of Godrej Soaps Limited. It was set up as a
separate company with focus on the Agri-sector. Over the years, the company has
developed and nurtured a close relationship with farmers. Providing them with
innovative Products as well as educating them on world-class farming practices.
Together with its subsidiaries Goldmohur Foods and Feeds Limited and Golden
Feed Products Limited , Godrej Agrovet has revenues close to Rs 1250 Crores (FY
2009). The activities of the company are vast: Compound Animal feeds, Agricultural
Inputs, Integrated Poultry Business, Oil Palm Plantations, Plant Biotech, Retailing of
Fresh Farm Produce in urban areas, and rural retailing of a wide range of products
including Agricultural inputs.
Godrej Agrovet acquired Goldmohur Foods and Feeds Limited from Hindustan
Lever, a Unilever subsidiary in India, in 2001. Goldmohur Foods and Feeds Limited
enjoys strong brand equity due to its poultry and cattle feed brands. Goldmohur Foods
and Feeds Limited have a state-of-the-art R&D centre in Bangalore named 'ANIC'
(Animal Nutrition Innovation Centre). This centre is devoted to development of
innovative animal feed products. Today, Godrej Agrovet together with its subsidiaries
has manufacturing facilities spread over 40 strategic locations and a network of over
10,000 distributors, dealers and C&F agents. In its journey of growth, Godrej Agrovet
has set new standards of corporate performance, reliably delivering quality products
and services to all its customers at competitive prices.
GLOBAL FORAYS: Having successfully grown to be the leader in many segments,
Godrej Agrovet feels confident to take on global competition and has started making its
presence felt in the international arena too. A joint venture with ACI Group of
Bangladesh for poultry and feed operations in Bangladesh, and acquisition of controlling
stake in Al-Rahaba, which runs broiler farms in UAE exemplify this confidence.
HISTORY OF GODREJ AGROVET
Godrej Agrovet Limited is an Rs 1000 Crores company. Manufacturing facilities
spread over 40 strategic locations. Its network is over 10000 distributors, dealers and
C&F agents. First Company in India to retail processed fresh chicken, under the brand
name "Godrej Real Good Chicken". First Company in India to retail fresh fruits and
vegetables under the brand name “Godrej Nature‟s Basket”, first Company in India to
set up rural service & retail chain for complete Agri-solutions under the brand name
“Godrej Aadhaar”.
Started in 1897 as a lock manufacturing company, the Godrej Group is today one of
the most accomplished and diversified business houses in India. Godrej‟s success has
been driven by the company‟s commitment to delivering innovation and excellence.
Through the consistent application of this commitment and a century of ethical business
conduct, Godrej has earned an unparalleled reputation for trust and reliability.
In 1930, Godrej became the first company in the world to develop the technology to
manufacture soap with vegetable oils; that spirit of innovation has continued throughout
the organization‟s history. Today Godrej is delivering consumers exciting innovations
across a spectrum of businesses. The company‟s pursuit of excellence is equally well
established and enduring. In the 1944 Mumbai docks blast, Godrej safes were the only
security equipment whose contents were unharmed; an equal level of product quality
continues to be expected from every product bearing the Godrej brand name. Godrej
management understands that the company‟s greatest asset is the trust and faith that
consumers have reposed in it, and recognizes that the company must continue to earn
this trust. This translates to the organization delivering outstanding quality and value in
everything it does.
Godrej‟s ethical and visionary practices have allowed the company to successfully
expand into a number of businesses. Today Godrej is a leading manufacturer of goods
and provider of services in a multitude of categories: home appliances, consumer
durables, consumer products, industrial products, and agri products to name a few. A
recent estimate suggested that 400 million people across India use at least one Godrej
product every day. The group has more recently entered the real estate and information
technology sectors, and management views these as avenues for enormous growth.
The 6000 Crores - FY 2007 (US $1.5 Billion) Godrej Group is one of India's largest
professionally run private sector groups. It has a well-established presence in varied
businesses ranging from foods and consumer durables to real estate and information
technology. In 1997, Godrej completed 100 years of service to the nation. Today, the
name Godrej is synonymous with Quality & Trust. It is amongst the most admired
Business Groups in India, delivering quality products and services to its customers at
competitive costs.
2.3 PRESENT STATUS OF THE ORGANIZATION
Godrej Agrovet Limited (GAVL) is a diversified agri businesss company with
interests in animal feed, oil palm plantations, agrochemicals and poultry. The business
was set up in 1971. GAVL today has 45 manufacturing facilities across india, a network
of over 10,000 rural distributors, dealers and agents, and 1,900 employees committed
to improving the lives of Indian farmers. The Company has a presence in 21 states. In
FY‟08 GAVL‟s sales were INR 1,250 crores. Under the leadership of Chairman Nadir
Godrej and CEO Balram Singh Yadav, GAVL today occupies the position of India‟s
largest animal feed company, producing almost one million tons of nutritionally balanced
feed for dairy cattle, poultry and aquaculture every year. The Oil Pal Plantation business
is the market leader in India, with over 29,000 hectares of small holder cultivation
across Andhra Pradesh, Karnataka, Tamil Nadu, Goa, Gujarat, and Mizoram. With the
intent of radically improving farmer economies, the agrochemicals business focuses on
innovate and environmentally sensitive products. It has dominant market shares in Plant
growth promoters and Soil conditioners.
GAVL has introduced fresh, Chilled chicken to Indian consumers over the past
decade, and now has a 20% market share in processed poultry. Its Real Good Chicken
brand is the best known fresh poultry product in India, with a consumer loyalty of above
80%.
Partners
Tyson Foods: GAVL‟s poultry division is partnered with Tyson Foods, the world‟s
largest meat processor and marketer and the second largest food production company
in the United States.
Gold Coin: GAVL‟s aqua feed division is partnered with Gold coin, one of East Asia‟s
largest feed companies.
ACI Group: In Bangladesh, GAVL has a feed milling and poultry JV with the ACI Group.
IJM Plantations: For its Oil palm plantations in Goa and Karnataka, GAVL has a JV
with IJM Plantations, a fast growing and highly respected oil palm plantation company in
Malaysia.
Strategic tie-ups and acquisitions have been a way of life at Godrej Agrovet
Limited. Meaningful alliances and useful acquisitions have been providing impetus to its
growth. The acquisition of business has been in different segments ranging from
Goldmohur Foods and Feeds (Animal Feed), to India Poultry Farm (Poultry), Krithika
(Oil Palm Plantations), and Higashimaru (Marketing of Shrimp Feed). Strategic
investments have been made in business, which have a strategic fit and which
complement our business. E.g.: Creamline (Diary), Polchem (Bio-technology).
2.4 FUNCTIONAL DEPARTMENT OF ORGANIZATION
A) PRODUCTION DEPARTMENT
Production Management is the conversion of inputs into outputs, using physical
resources, so as to provide a desired utility of form place, possession or state or a
combination there- of to the customer while meeting the other organization objectives of
effectiveness, efficiency and adaptability.
B) MARKETING DEPARTMENT
Marketing at Godrej Agrovet covers an array of activities. Advertising, branding,
marketing development, channel support, direct and alliance, marketing and corporate
communications. The people in these sections perform a unique job.
C) FINANCE DEPARTMENT
Finance department deals with procurement of money at the time it is needed and
its effective utilization in company. Finance departments of Godrej Agrovet deals with
the things shareholders, deals with secured and unsecured loans, creditors,
government, prospective investors, security and financial analysis, economists and
researchers. They follow all procedures of accounts. Journal, ledger, Subdivision
journal, Cash book, Petty cash book, Journal proper, Trial balance, profit and loss
Account, Balance sheet, Budget allocation and creating sales order for the financial
year.
The success of FY2009-10 credit goes the effort of the finance and systems
team. In this year successful treasury management allowed Godrej Agrovet to save Rs.
6 crores in the interest expenses. This has the huge achievement done by the finance
team and expected to carry forward this achievement in up coming years.
D) LEGAL DEPARTMENT
Legal Management consists of legal authorities of the company like registration of
contract of the project to be undertaken by the company, department as the authority for
the due of debts in the view of law or any illegal activities are maintain by the legal
department of the Godrej Agrovet.
E) RESEARCH AND DEVELOPMENT DEPARMENT
The R & D department developed processes for the manufacturing of premium
quality fatty acids from economy grade raw materials, high value fractionated fatty acids
for the polymer, oilfield and lubricant industries, specialty surfactants for oral care and
personal care products and value added derivatives of glycerin so as to enter certain
niche markets.
F) INFORMATION SYSTEM DEPARMENT
Company has successfully implemented SAP in the Chemicals Business.
Knowledge Management, Business intelligence, Collaboration with customers
and Centralized Architecture are the key components of SAP implementation.
Initiatives like Godrej Connect works as an effective Knowledge Management
tool and ensures speedy and effective information flow within the
organization. SAP's centralized architecture allows business to achieve
operational efficiency with help of consistent data, better controls and
visibility.
G) HUMAN RESOURCE AND RELATIONSHIP MANAGEMENT DEPARTMENT
Company encourages a culture that develops and empowers people,
promotes team building and nurtures new ideas. Company put great emphasis on
optimizing people performance through various people oriented processes starting from
recruitment, training, performance management and talent building. Regular structured
safety meetings were held with employees and safety training programmes were
conducted for them throughout the year. Training has also been an important means of
raising productivity. At the Valia factory skill Matrix system has been implemented for
assessing the skills of every employee related to their jobs and filling the skill gap
through focused training.
F) AUDIT AND ASSURANCE DEPARTMENT:
Company has a proper and adequate system of Internal Controls, to ensure that
all assets are safeguarded and protected against loss from unauthorized use or
disposal and those transactions are authorized, recorded and reported correctly. Your
Company's Corporate Audit and Assurance Department which is ISO 9001 certified,
issues well documented operating procedures and authorities with adequate built-in
controls at the beginning of any activity and any time there is any major change. The
internal control is supplemented by an extensive program of internal, external audits
and periodic review by the management. The system is designed to adequately ensure
that financial and other records are reliable for preparing financial information and other
data and for maintaining accountability of assets.
Corporate Audit & Assurance Dept., during the year, facilitated a review of
your company's risk management program. During the year the Corporate Audit &
Assurance Dept was involved in facilitating IT outsourcing & other initiatives for
leveraging SAP for business benefits.
G) INFORMATION SECURITY DEPARTMENT:
Company accords great importance to the security of its information assets. To
ensure that this gets desired focus and attention, a Chief Information Security Officer,
who is attached to the Corporate Audit and Assurance Department, is entrusted with the
task of ensuring that your Company has the requisite security posture. Company has in
place, all the procedures and practices that are in line with the ISO Security Standards.
Your company has since obtained ISO 27001certification for its HO location and is in
the process of obtaining for its factories.
2.5 ORGANIZATION STRUCTURE AND ORGANIZATION COMPETITORS
Board of Directors
ORGANIZATION CHART
PRODUCT AND SERVICE PROFILE OF THE ORGANIZATION COMPETITORS
ANIMAL FEED DIVISION
Godrej Agrovet has a rich experience of over 5 decades in the business of
Animal Feeds. Starting from humble beginnings of a single feed mill in Mumbai, it has
grown into the largest producer of commercial Animal Feed in India, with a strong
presence in Dairy Feed, Aqua Feed and Poultry Feed sectors. Its production facilities
are spread over 40 locations across the country. Despite the vast geographical and
cultural diversity of India, Godrej Agrovet has managed to develop quality feeds
appreciated by farmers across the country. This can only be attributed to its strong
grass root level understanding of India.
Godrej Agrovet's success in the livestock sector is based on a single guiding
principle what‟s good for the consumer is good for the business. A great example of this
philosophy in action is Manthan - a highly creative and effective demand creation model
that guides and provides customized solutions to help cattle farmers increase milk
output and also market the end produce. Such successful initiatives have not only
benefited the farmers, but have also made Godrej Agrovet the leader in this business.
Key Highlights
No. 1 in cattle feed
1st to market poultry feed in crumb form
1st to market poultry feed in pellet form
No. 1 in commercial broiler feed
State-of-the-art R&D centre 'ANIC'
Strong brand equity for poultry feed brands
POULTRY BUSINESS
It is foresight that led the way for Godrej Agrovet in the Indian poultry industry.
Godrej Agrovet envisaged that poultry farming would evolve from a backyard business
to a consolidated, value added business.
Godrej Agrovet set up Integrated Poultry Business (IPB) in 1999 with a view to
organize the chicken processing industry and give it a professional and modern
approach. Today, the company covers the whole spectrum of the poultry business.
Right from breeding, hatching rearing of broilers to processing and marketing of its
branded chicken ' Godrej Real Good Chicken‟
Integrated Poultry Business has turned out to be one of the key diversifications of
Godrej Agrovet. It has the support of world-class infrastructure, professionalism and the
relentless pursuit of providing the Indian consumer with superior quality products.
From Breeding to Retailing
Grandparent Farm:
Is located at Bangalore and has an in-house laboratory that follows global standards for
bio-security, sanitation and management practices.
Parent Breeding:
Over 20 parent breeding farms in south and west India
Hatchery: Has state-of-the-art facilities, catering to both domestic and international
markets.
Contract Farming: Has operations spread over South and West India. Working with
over 1000 farmers
GAVL has a fully integrated poultry business that covers the entire value chain
from breeding, hatching, and rearing of broilers. GAVL is also involved in a joint venture
with Tyson foods which focuses on the front end of the production process including
processing and marketing chilled chicken. This is delivered through the brand “Godrej
Real Good Chicken” and marketing of ready to cook range through the brand “Godrej
Yummiez”. Yummiez brand introduced for quick serve poultry products.
Godrej Real Good Chicken:
In May 1999, Godrej Agrovet introduced the Indian consumer to the concept of
processed fresh chicken by launching Godrej Real Good Chicken. Godrej Real Good
Chicken has over the years, become a popular household name across various cities in
India.
Key Highlights
Real Good Chicken brand is market leader for fresh poultry in India.
– 20% market share in processed poultry.
– Consumer loyalty over 80%.
First to give the poultry industry in India a professional and modern approach.
Covers entire spectrum of the poultry business, from farm to plate.
Has world-class farms and state-of-the-art processing plants
AGRI-INPUTS
The Agri-Inputs division of Godrej Agrovet Limited was started in the year 1997.
Its primary objective was to market plant growth promoters developed by the company's
very own in-house R&D Department. There's been no looking back since then. Today,
the division can take credit for creating many unique and innovative agricultural
solutions that cover the entire range of agricultural crops. These products, while
improving agricultural productivity and profitability, cause zero -minimal damage to the
environment. The company also provides farmers with technical advice and services. A
technically qualified field force works with the farmers, conducting method and result
demonstrations to educate them on maximizing farm productivity.
AGRI PORTFOLIO FOCUSED ON INNOVATIVE PRODUCTS
Key Highlights
Largest marketer of unique innovative agricultural products
OIL PALM DIVISION
In order to bridge the widening gap between demand and production for edible
oils in India, Oil Palm Division was started in the early 90's. Over the years, Godrej
Agrovet has developed 6500 hectares of oil palm in the States of Andhra Pradesh, Goa
and Karnataka. Oil mills have been set up in Andhra Pradesh and Goa. Oil Palm
plantation activities have also been taken up in Gujarat, Orissa and Mizoram.
Godrej Agrovet has put together a dedicated extension team that helps oil palm
growers improve productivity. Godrej Agrovet has set up one-stop shops providing
farmers with seeds, fertilizers, pesticides, technical guidance on cultivation and 100%
buyback of fresh fruit bunches. With such a strong commitment to development and
service, it is no wonder that Godrej Agrovet is today, the largest producer of palm oil in
the country.
Key Highlights
Largest producer of palm oil in India
Dedicated and trained team
Factories in Andhra Pradesh and Goa
Supported by best quality seeds & 100% buyback of fresh fruits
PLANT BIOTECH DIVISION
Godrej Plant Biotech Division is engaged in micro-propagation of plants through
tissue culture. It is also actively involved in contract research on another culture,
seasonal variation, production of secondary metabolites through plant cell culture and
genetic engineering. It also exports foliage, flowering, fruits and medicinal and oil
bearing plants.
The Division has four growth rooms conforming to US class 100, 40 laminar
airflow workstations and a large environmentally controlled fully automated greenhouse
for hardening tissue culture plants.
Its also provides technical guidance ranging from resource analysis to crop
production and produce marketing. This guidance is provided in three phases:
Phase 1: Pre-planting: The Company carries out resource analysis on soil and water
and provides advice on climatic suitability to the crop.
Phase 2: Planting to harvest: A wholesome crop cultural practice is provided. Periodic
visits are conducted to monitor the crop and ensure full productivity.
Phase 3: Post-harvest and marketing: The company provides market intelligence on
produce marketing in different parts of the country.
Godrej Aadhaar
The first Godrej Aadhaar Centre was started in December 2003 in Manchar, Pune
District. Since then Godrej Aadhaar Centre‟s have been set up across the country in the
states of Maharashtra, Gujarat, Punjab, Haryana, Andhra Pradesh, Tamil Nadu, Orissa
and West Bengal. These centres provide valuable technical guidance, soil & water
testing services. They also retail quality products of leading companies. Aadhaar
centre‟s also a facilitate credit to farmers and provide a platform to sell their produce. To
farmers, it‟s a complete solution under one roof.
Key Highlights
Godrej Aadhaar, to provide complete agricultural solutions to farmers
NATURE'S BASKET
Nature‟s Basket is the first-of-its-kind store selling a wide range of vegetables,
fruits and herbs, both local and exotic. The first Nature‟s Basket outlet was opened at
Bhulabhai Desai Road, Mumbai. Two more Nature‟s Basket outlets have opened at
Cuffe Parade, South Mumbai and Lokhandwala, North Mumbai. Many more outlets are
in the offing in different cities across the country.
2.6 MARKET PROFILE OF THE ORAZINATION
That is a proximate view about demand of all Compounded feed.
Compounded feed Brands Percentage of Demand
Local Brands (Goka, P4, Chardi, Kla.
etc)
75%
Tara 20%
Godrej 15%
Mark fed 5%
CHAPTER 3: DISCUSSION TRAINING
3.1 Student’s Work Profile 3.2 Description of Live Experience 3.3 Student’s Contribution to the organization
3.1) Roles and Responsibilities In The Organization:- My work profile:-
The responsibilities which were handed over to me as an Finance cum Account
Trainee was to follow all the instructions of my seniors and giving them positive
reply fulfilling with all the required criteria of my work profile.
Attain daily meeting in morning at 9.30 am and a day report must be submit in the
evening to our senior leader.
The basic profile comprised of arranging the financial statement, which primarily
consisted of Balance Sheet, P&L A/c, Analysis the Ratio and Bank reconciliation
Statement.
I had done a Voucher for payment for salary and office expenses.
Maintain the well behave attitude in the organization with everybody, focusing with
on my work profile.
The initial training was given on the job were senior‟s would assist me in my work.
I had assigned the duty E-Filing of C-Form for Commercial tax department of
Karnataka.
I had filing of voucher and c-form of purchases from the supplier.
Attended SAP training for week.
3.2) Description Of Live Experience:-
The experience as a working person in an organization was a best experience in
my life. I was totally unknown about corporate/ organization culture and field work job
profile. My job in Godrej Agrovet was really not easy in the first time, as it is right now.
This was the phenomenon experience in my life to get practical work job knowledge,
adopt different culture & communication skill .I learnt many things in this organization. It
was difficult in the initial stage of my work, first time I went with my senior manager for
an appointment and that was the day of learning after getting training as a practical
moment the senior manager taught me to work in MS-GBRO software, in the begin it
was bit difficult to work in it but my senior manger guide how to work in it. I had always
doubt and query with my manager and he very much helpful and friendly with me. I had
worked in MS-GBRO software for a month.
Our organization had installed the new software called SAP; again it was difficult
to was a sudden change in the organization. I had attended the training program which
was conduct by the Organization for a week. My seniors taught me to punch the invoice
in SAP, how to make a entries in payment of cash voucher, receipt, creating sales
order, fund transfer like RTGS and NEFT, payment to vendors and there advances,
schedule of travelling expenses, freight charges, etc.
I had been to commercial tax department of Karnataka to bring C-Form to the
supplier of the company. I had taught how to communicate with tax department officer.
I am very grateful to work as a family member in Godrej Agrovet, my senior
manager and financial manager had taught me to how to behave, how to be punctuality
and maintain the discipline in a work environment.
3.3) STUDENT CONTRIBUTION TO ORGANIZATION
This project is the result of one year training at Godrej Agrovet Bangalore
Regional Office. Management training is an integral part of “Master in Business
management” course and it aims at providing a first hand experience of industry to
students. This practical experience helps the students to view the real Business World
closely. I was really fortunate of getting an opportunity to pursue my management
training in finance and account in reputed, well established, fast growing and
professionally managed organization like Godrej Agrovet. Project assigned, “financial
concept and performance of Godrej Agrovet Ltd.” required a lot of extensive study,
as I did a lot of study of financial and accounting concept of Bangalore. It gave me a
great deal of exposure and practical experience.
During the first month I was more into the learning phase, where knowledge
was imparted to me by my senior‟s trainers; but simultaneously I had been taking care
of work related responsibilities. In the Initial Stage, I had given a task to arrange the
financial statement with the help of the previous recorded data. I had help the senior in
there work which was assign to them. I had work hard and given my leisure time with my
senior with accomplishing there works. I am very responsible about my work and to
organization.
CHAPTER 4: STUDY OF SELECTED RESEARCHER PROBLEM
4.1 Statement of Research Problem
4.2 Research Objectives
4.3 Research Design and Methodology
4.4 Analysis of Data
4.5 Summary of Findings
4.1 (a) INTRODUCTION TO FINANCIAL MANAGEMENT
Finance is life blood of the business. We need finance for the production of
goods and services as well as their distribution. The efficiency of the production and the
marketing operation is directly influenced by the manner in which the financial
personnel. Finance function plays an important role in the business systems and it
should be given equal importance as with the production and the marketing function.
Thus, business finance is defined -“That business activity concerned with the acquisition
and conversion of capital funds in the accepting the financial aids and the over all
objective of the business enterprise.”
Importance of finance and financial management in a business concern:
There is an unavoidable time lag between the planning of the product and its final
sale. However any business concern needs finance for the following purpose:
1) Discovery of an idea or a product, product planning and development.
2) Acquisition of the fixed asset.
3) Acquisition of current asset like inventory, cash etc.
4) As remunerate the factors of production.
5) To push the product in the open market, the money should be spent for
advertising and other various marketing expenses.
6) To make payment of dividend, interest, taxes, and other business expenses.
Importance of Financial Management:
A business management as a system has a dynamic flow of funds represented by
the funds flow cycle. Financial management is in charge of the efficient planning and
control the cycle of flow of this inflow and out flow of funds. There are three
responsibilities of the flow of funds as per plan.
1) The appropriate volume of funds needed for the efficient operations.
2) The wise allocations of financial resources to particular assets either fixed or
current.
3) Funds raising activities such as short term and long term borrowings
However the funds raised from the owners or from the long term resources
should be efficiently invested in the varies fixed or current assets. The funds borrowed
must be duly protected and conservative as to make maximum use of funds. Any
financial manager should strike a balance between these conflicting items and optimize
utilization of the funds, thus the major objectives of financial management.
1) Procurement of the money needed by the business.
2) Investing the money through the sound financial plan
3) Generation income /profit for the business.
Objective of financial management:
As there are 3 fundamental financial divisions like investment, financial and profit
disposal decisions under the financial management. These fundamental decisions are
based upon the basic criterion as the objective of the financial management. However it
is generally agreed that financial objective of the concern is to maximize the owner‟s
economic welfare. There are two well know criterion to achieve these objective. They
are
a) Profit Maximization
b) Wealth Maximization
Profit Maximization
As per this objective every company is oriented to maximize the overall profit of
the company. Thus, it simply means that maximizing the rupee income of the company.
As per this objective the efficiency of the company is measured by considering profits.
As the merit of this objective the profit is a test of economic efficiency and the
profit is a yard stick for measuring the economic performances. On the other hand as
the limitation is concerned there is no perfect definition as regards to “profit” and further
it also ignores the time value of money and the element of risk associated.
Wealth Maximization
It implies the maximization of the present value course of action, it is the
difference between a total present value of the profit of a project and the investment
required to achieve the benefits. As per the objective of any project which shows the
positive net present value will be accepted as it creates the wealth and any financial
proposal which creates the negative wealth will be rejected.
Financial Decisions:
Under financial management with reference to any company comprising of three
important decisions other than the working capital management such as investment
decisions, financing or capital structure decisions and dividend policy and profit disposal
decisions. They are explained here below.
A) Investment Decisions:
Under investment decisions the acceptation or rejection of the proposal will be
considered by using the capital budgeting technique. The capital budgeting technique
deals with the investment of the capital in a profitable project. While evaluating the
capital expenditure proposal a company must be extremely perfect in making decisions
because the acceptations or rejection of the proposals depends upon the criteria or
method used to evaluate the concerned project. The important capital budgeting
technique are grouped under two heads
1) Traditional Method
a) Payback Period Method
b) Accounting Rate of Return Method
2) Discounting Cash Flow Techniques
a) Net Present Value Method
b) Internal Rate of Return Method
c) Profitability Index Method
Pay Back Period Method:
The payback period can be defined as the “the number of years required to
recover the original cash outlay in a project. If the cash flows are unequal the payback
period can be ascertained by adding up the cash inflows until the total is equal to the
initial cash outlay.
While evaluating a project, the project will be accepted when payback period is
equal or lower than the payback period determined by the management. The project
with the minimum payback period will be accepted for execution.
Pay-Back Period Method = Initial Investment No. of years
Accounting Rate of Return:
The accounting rate return is calculated by dividing the average investment (after
tax) by the average investment. While evaluating the project will be accepted if its
accounting rate of return is equal t o or higher the minimum rate of return fixed by the
management, when a company has to or more mutually exclusive and independent
projects. The project with the highest accounting rate of return will be accepted.
As the traditional techniques are concerned, it is not considering the time value of
money and also it is not consistent with wealth maximization objective.
Accounting Rate of Return = Average Annual Profit After Tax X 100 Average or Initial Investment
Discounted Cash Flow: As the merit of the discounted cash flow techniques are
concerned, it considers the time value of money. Further it also considers the cash
flows of the project and also it is consistent with the wealth maximization objective. As
the limitations is concerned to implement these techniques is too difficult. Further these
technique are based on the cost of capital whose computation is most difficult.
Net Present value Method:
Under Net present value method the cash flows are to be discounted by a
discounting factor. It is the Godrej Agrovet cost of capital after ascertaining the present
value of the cash out flows and the in flows. The present value of the cash outflows is
deducted out of present value of the cash inflows in order to arrive at the net present
value.
The other discounted cash flow techniques like internal rate of return method
profitability index method are the simple modifications of net present value method.
Net Present Value = 1
( 1 + r )n
Where as: r refers to Rate of Interest p.a
n refers to number of years over which we are discounting
Internal Rate of Return Method ( IRR ) :
IRR is a percentage discount rate used in capital investment which brings the cost of
project and it‟s future cash inflows into equality. The IRR is also defined as the rate at
which the net present value is zero. The rate for computing IRR depends as bank
lending rate or opportunity cost of funds to invest which is often is called as personal
discount rate or accounting rate. The IRR can be stated in the form of a ratio as shown
below:
IRR = Cash Inflows = 1 Cash Outflows
If the cash inflow is not uniform, then IRR will have to be calculated by trial and
error method better to find out „factors‟. The factors reflects the same relationships of
investment and cash inflows as in case of pay back calculations
Factors = Original Investment Average cash inflow per year
Profitability Index Method ( PI ):
PI is the present value of an anticipated future cash inflows dived by initial
outlay. The only difference between the net present value method and profitability index
method is the when using the NPV technique. The initial outlay is deducted from the
present value of anticipated cash inflows. A project is acceptable if it is profitability index
value is greater than 1.
A project offering a PI method is greater than one must also offer a NPV which
is positive. When more than one project proposals are evaluated, for the selection of
one among them, the project with higher PI will be selected. This method is also called
as cost benefit ratio or desirability ratio method.
Profitability Index = Present value of Cash Inflows Present Value of Cash Outlay
B) Financing Decisions:
The financing or the capital structure decisions is a significant managerial
decisions as it influences the owners return and risk. The total wealth of the company is
adversely affected by improper capital structure decisions. Thus every company will
have to plan its capital structure initially at the time of promotion and subsequently
whenever the funds have to be raised to finance investments and a capital structure
decision is involved.
Whenever the firm employs debts and the personal capital the financial leverage
will be operated in the capital structure. The financial leverage may be favorable, when
the return on fixed assets is more than the interest payable on debt. The favorable
financial leverage will minimize the economic welfare and vice versa.
While planning the capital structure of the firm that should be optimum and
economical. The optimum capital structure can be obtained when the total value of
owners capital is minimum.
WORKING CAPITAL MANAGEMENT
Working capital management is significant in financial management due to the
fact that it plays a pivotal role in keeping the wheels of a companies running. Working
capital management is concerned with short term financial decisions. A firm invests a
part of its permanent capital in fixed assets and keeps a part of it for working capital.
Working capital is also known as circulating capital, fluctuating capital and revolving
capital. The magnitude and composition keep on change continuously in the course of
business. If the working capital level is not proper maintained and managed, then it may
result in unnecessary blockage of scare resources of the company. Therefore, Finance
Manger should give utmost care in management of working capital.
Concept of Working Capital:
The working capital is the capital required by an industrial unit to carry out day
to day operation and in particular to complete a working cycle. Basically there are two
working capital concepts.
1) Gross Working Capital: It refers to the firm‟s investment in current asset.
The current assets are the assets which can be converted into cash within an
accounting year or an operating cycle.
2) Net Working Capital: It refers to the different between current asset and
current liabilities. The difference is positive or negative whenever the difference is
positive it indicates the working capital margin.
Optimum Quantity Working Capital
Firms need certain quantity of current assets for a particular level of operations
mainly to buy and stock necessary inventory and give credit on sales. The sum of these
assets constitutes the gross working capital. Since the level of holding current assets
differ from industry to industry and to firm to firm in the same industry. There is no
absolute volume of working capital required for a firm. This requirement is differed by
many factors like efficiency of management price of material, nature of business and so
many other factors. Therefore to determine the working capital requirement level the
current assets must be examined in relation to business operation.
Concepts of Operating Cycle:
Working capital is the life blood of the business, without which the fixed
assets are in operative. Working capital circulates in the business, and the current
assets changes from one from to another. Cash is used for procurement of raw
materials and stores item and for the payment of operating expenses, an converted in
work-in-progress, than to finished goods. When the finished goods are sold on credit
terms receivable balance will be formed. When the receivable are collected, it is again
converted into cash. The need of working capital arises because of time gap between
production of goods and their actual realisation after sales. This time gap is called as
operating cycle or working capital.
Operating capital is an important concept in management of cash and
management of working capital. Quicker the operating cycle less amount of investment
in working capital is needed and it improves the profitability. The knowledge of operating
cycle is essential for smoothing running of the business without shortage of working
capital. The operating cycle calls for proper monitoring of external environment of the
business. Changes in government policies like taxation, import restrictions, credit policy
of central banks. Will have impact on the length of operating cycle, it‟s the task of
Finance Manger to manage the operating cycle effectively and efficiently.
The operating cycle of any company undertaking consist of the following
progresses.
a) Raw Material Holding Period = Average Raw Material Stock
Average Consumption of Raw Material /365 Days
b) Work-In-Progress Period = Average Working – In – Progress Average Cost of Goods /365 Days
c) Finished Goods Holding Period = Average Finished Goods Stock Average Cost of Goods Sold/365 Days d) Debtors / Receivables Collection Period = Average Receivables Average Sales / 365 Days e) Creditors Payment Period = Average Creditors Average purchase of raw materials / 365 days
The time needs for the completion of the operating cycle is an important factor
determining the working capital requirements. A company with a very short period of
operating cycle like trading banking companies etc needs less amount of working
capital. Where as the company like Godrej Agrovet Ltd. having the lengthier operating
cycle period like manufacturing companies need large amount of working capital.
Determination of working Capital of the company
1) Nature and price of the business
2) Manufacturing cycle
3) Business fluctuation
4) Production policy
5) Firms credit policy
6) Availability of credit
7) Seasonal variations
8) Scale of operation
9) Inventory policy
10) Growth of business
11) Market conditions
12) Price level changes
13) Profit margin and profit appropriation
14) Supply situation
15) Environment factors
Components of working capital
1) Current Assets: Current Asset are those assets which convertible into cash
within a period of one year and those which are required to meet the day to day
operations of the business. It include
a) Inventory of raw materials, stores and Spares
b) Inventory of working-in-progress
c) Inventory of finished goods
d) Cash and bank balances
e) Temporary investments
f) Short-term advances
g) Prepaid expenses
h) Receivables
2) Current liabilities: Current liabilities are those claims of outsiders which are
expected to mature for payment within an accounting year. These include:
a) Creditors for goods purchased
b) Outstanding expenses
c) Short-term borrowings
d) Advances received against sales
e) Taxes and dividends payable
f) Other liabilities maturing within a year
4.1 (b) STATEMENT OF RESEARCH PROBLEM
FINANCIAL ANALYSIS
The roots of major management decisions revolve around financial
information. A careful scrutiny of alternative choices on the basis of projected
information depicting the comparative results of each is needed to arrive at the selection
of most favorable decision for eventual implementation. This brings us to the question
what constitute financial information? What information enables the finance manager to
evaluate and plan the firm‟s earning ability?
The basic source covering financial information about a firm‟s affairs is its
annual financial accounts. i.e. profit and loss statement for the last operating
period(quarter, half year, annually, etc) and the balance sheet as at the end of that
period. Profit and loss accounts reveal the operating results of the business activities of
the firm and how they are put to use. In other words the acquired assets at the disposal
of the firm and liabilities that the firm has incurred and remains indebted to others.
These sources however reveal only part of the necessary information and a
considerable gap. It is therefore necessary to further examine and break down the
information in these statements with a much greater elaboration and detail to translate
the comparative strengths and weakness of the firm. The finance manager, for this
purpose employs certain analytical tools and perceptive statements based on the source
data from the balance sheet and profit and loss account statements.
Before we enter into the methodology and procedure for financial analysis, it is
desirable to identify to whom such information is useful and how? Financial analysis
serves the following purposes to the concerned authorities/bodies.
The shareholders as well as perspective investors desirous to know the
present and anticipated trends.
The Government to take different projects and to study performance, growth etc.
Banks, financial institutions and insurance who are interested with project to
ascertain the credit worthiness of the firm.
Financial data is to be analyzed with reference to the particular objectives of the person
concerned either external or internal as regards the firm. Before commencing analysis
and the type of information needed are to be ascertained as well as identification of
source, data and analytical tools to be employed.
Basically a financial analysis consists of a 3 step process as under:
1) Identify the source of information relevant to the decision to be made from the total
pool of data provided by the annual financial statements.
2) Rearrange the particular data selected to highlight significant relationship.
3) Study the analyzed information critically and draw pertinent conclusions.
4.2 Statement of Research Objectives
The statement of the problem is “financial performance related to Godrej Agrovet
Limited.” The study concentrate on understanding and analyzing the various transaction
of the company which were carried to attain its main objectives, to evaluate the growth
achieved in terms of finance and the problems involved in various decision making.
The other objectives are as follows:
To analyze the current financial position of the Company.
To estimate the future profit of the Company.
To know about the fund management of the company.
To know about the past financial drawbacks.
To analyze the financial statement of Company with others.
To analyze about the products that were sold for the last five years.
4.3 Research Design and Methodology. To finding performance of Godrej Agrovet Limited in the field of animal
division business segments, this study is restricted to analyzing the financial statements
of last 5 years.
METHODOLOGY
The objective of the present study can be accomplished by conducting a systematic
analysis of the balance sheet of the company. Analysis means detail collection,
observation, reporting of data, calculation and finding that are relevant to the company
balance sheet. This constitutes the secondary source of data which includes collection
of annual report of the company and many journals.
PRIMARY DATA
Primary data is the first hand data collected for the main and sole purpose of the study,
primary data was collected in the finance department of the company with the direct
interaction with the officials there.
SECONDARY DATA
The secondary data was obtained through the company‟s audit reports and the annual
books. Data was also collected from many newspapers and journals for understanding
in deep the company progress and achievements.
Text books
Internet
Application forms
4.4 ANALYSIS OF DATA
RATIO ANALYSIS AND FINANCIAL STATEMENT OF GODREJ AGROVET
Liquidity Ratios:
These are those ratios, which are intended to measure the liquidity position of the
company. Liquidity ratios indicate whether it will be possible for a company to meet its
short term obligations or liabilities out of its short term resources or assets. Further they
indicate whether a company has sufficient working capital to carry on its day to day
operations.
The trade creditors, bankers, and other short term tenders are interested in these
ratios as they indicate capacity to pay off the short term obligations. The long term
creditors, employees, shareholders are interested in these ratios as they would like to
know whether the concern would be able to pay the interest on the loans, on the due
date, remuneration of staff in time, dividend respectively.
A). Current Ratio:
Current ratio which express the relationship between current assets and
current liabilities. Current assets normally mean assets convertible and meant to be
converted into cash within a year‟s time.
Current assets usually include cash in hand, cash at bank, prepaid
expenses, bills receivable, sundry debtors, inventories, loans and advance, deposits
and other short term high quality investments. Current liabilities means, which fall due
for payment within a year. It usually includes sundry creditors, outstanding and accrued
expenses, bills payable and provision for income tax, unclaimed dividends and bank
overdrafts.
CURRENT RATIO = Current Assets
Current Liabilities
(In Crores)
Year
Current Asset
Current
Liabilities
Current Ratio
2005 122.59 131.03 0.94
2006 194.51 140.19 1.39
2007 246.56 156.35 1.58
2008 357.37 190.45 1.88
2009 426.98 163.64 2.61
Table – 01
GRAPH SHOWING THE CURRENT RATIO
Chart - 01
INTERPRETATION:
In a sound business a current ratio of 1.33:1 is considered an ideal one.
This logic underlying the conventional rule is the even with drop-out of 50% in the value
of current assets the firm can meet its obligations, that is 50% margin of safety is
assumed to be sufficient to be in worst situation .
In the case of Godrej Agrovet the current ratio we can see in above table
that expect in all the years the ratio is above and only in 2005 ratio is below 1 and
incurred the worst situation. While comparing to other year, in the year 2009 the firm as
higher current ratio and have the high liquidity and short term solvency in the business
and can meet there short term liquidity in the business. This shows that increase in the
value of current assets will increase the ability of the company to meets its obligations &
therefore from the point of view of creditors the company is less risky.
B). Inventory Turn Over Ratio
The liquidity of inventories is measured by number of times per year that
inventory is converted into cost of goods sold. Hence, it is a device to measure the
efficiency of the inventory management. However, in its zeal to show a high ratio,
inventories are not allowed to drop down below the danger level.
Inventory turn over rates vary tremendously by nature of the business. It is
usually desirable to compare a firm‟s inventory turnovers experience by comparable
companies. It is not usual for the perishable commodities retailers to experience a
higher inventory turnover than those retailers who deal in durable goods.
Year Cost of Goods Sold Average Inventory Inventory Turnover
2005 539.12 52.24 10.32
2006 585.37 67.83 8.63
2007 690.88 118.30 5.84
2008 853.15 84.05 10.15
2009 1260.66 116.84 10.79
Table 02
Inventory Turnover = Cost of Goods Sold
Average Inventory
GRAPH SHOWING BELOW INVENTORY TURNOVER RATIO
Chart 02
INTERPRETATION
Inventory turnover ratio shows the relationship between the sales & stock it
means how stock is being turned over into sales. The inventory turn over ratio indicates
how fast inventory is sold. A high ratio is good from the point of view of liquidity and the
low inventory turn over ratio does not sell fast and stays on the shelf or in the
warehouse for a long time.
The stock turnover ratio is 2005 was 10.32 times which indicate that the stock is
being turned into sales 10.32 times during the year. The inventory cycle makes 10.32
around during the year. It helps to work out the stock holding period, it means the stock
turnover ratio is 10.32 times then the stock holding period is 1.16 months
[12/10.32=1.16 months]. This indicates that it takes 1.16 months for stock to be sold out
after it is produced.
For the last 5 years stock turnover ratio is lower than the standard but it is in
increasing order. In the year 2005 to 2009 the stock turnover ratio has improved from
10.32 to 10.79 times expect in the year 2007 it had stock turn over of 5.84. Thus, the
stock of the company is moving fast in the market.
PROFITIABILTY RATIO
Profit has always been considered as the main indicator of a successful
business. However, the real test of success or failure of a business is to evaluate its
profit earning capacity in relation to capital employed. It is against this background that
financial experts developed profitability ratios which are used to measure the ability of
the firm to convert sales into profits and earn profits on assets employed. These indicate
degree of success in achieving profit levels. This ratio consists of (i) Profitability ratio
related to sales (ii) Profitability ratio related to Investment.
PROFITABITIY RATIO RELATED TO SALES:
The profit margin measures the relationship between profit and sales. As the profit may
be gross or net, there are two types of profit margins:
(i) Gross Profit Margin
(ii) Net Profit Margin
A) Gross Profit Margin:
This ratio indicates the relationship between gross profit and sales. It reflects
how well cost of goods sold, a major expenses items, is being controlled. It shows the
profit made on sales concern. It is always preferred to express this ratio in terms of
percentage. The gross profit margin is computed by deducting cost of goods sold from
the amount of sales as shown below:
Gross Profit Margin = Gross Operating Profit *100
Sales
Year
Sales
Operating Profit
Gross Profit
Margin(%)
2005 740.00 28.06 3.79
2006 1047.00 17.38 1.66
2007 133.00 -1.38 -1.04
2008 622.00 -35.77 -5.75
2009 1661.00 32.89 1.98
Chart-03
Graph-03
INTERPRETATION
The Gross profit margin indicates the limit beyond which fall in sales prices are
outside the tolerance limit. The gross profit ratio used to determining the extent of loss
caused by theft, spoilage, damage and so on in the case of those firms which follows
the policy of fixed gross profit margin in the pricing their products.
In the year 2007 and 2008, the firm incurred gross loss margin of 1.04 and 5.75.
It may be of those important factors are (i) A high cost of production, incurred high cost
in acquisition of raw material and other inputs and inefficient utilization of current assets.
(ii) A low selling price resulting from severe competition, inferior quality of product and
lack of demand for product. In the year 2009, it was Incurred the gross profit margin
ratio reach to 1.98. It signifies that of good management over factory expenses of the
firm.
B) Net Profit Margin:
The net profit margin monitors the net profit made in relation to sales. This ratio,
also known as net operating margin, is calculated by dividing the net profit after tax by
the amount of sales.
The net profit margin provides a relatively clear picture of how efficiently the firm
maintains control over its total expenses. In addition, the analyst may wish to calculate
the relationship between each expense item and sales to determine the degree to which
specific expenses are under control or are tending to move out of control.
Net Profit Margin = Net Profit After Tax *100
Sales
Year
Net Profit After
Tax
Sales
Net Profit
Margin(%)
2005 18.43 740.00 2.49
2006 11.73 1047.00 1.12
2007 0.51 133.00 0.38
2008 27.99 622.00 4.50
2009 73.25 1661.00 4.41
Table 04
Graph 04
INTERPRETATION
The profit margin evaluated in relation to the turnover ratio. In other words the
overall rate of return is the product of the profit margin ratio and the turn over ratio. The
gross margin may show a substantial increase over into period of time but net profit
margin may (i) have remained constant or (ii) it may not increased as fast as the gross
margin (iii) may have actually have decline. It may be due to the fact of increase in the
operating expenses.
The ratio of net profit to sales essentially expresses the cost price effectiveness of
the operation. In year 2007, it had decline in the net profit to 0.38 but in 2008 and 2009
the firm had a good return of net profit margin of 4.5 and 4.41 this had a constant net
profit for two consecutive years. This ensure the Godrej Agrovet that adequate return to
the owners as well as enable a firm to withstand adverse economic conditions when
selling price is declining, cost of production is rising and demand for the product is
falling.
Profitability Ratios Related to Investment
Return on owner’s equity:
While the ratio of net profit to sales is a very useful indicator of performance
relative to the company‟s experience in prior periods or relative to the current
experience of other companies, it does not give a direct answer to a vital question : Is
the business providing an adequate return on the owner‟s investment, taking into
account the risk associated with the company‟s business and what this investment
could earn in alternative ventures? To help answer this question, the ratio of return on
owner‟s equity needed. The profit earned by owner‟s of a business is called return on
owner‟s equity. The return on owner‟s equity is worked out with the help of the following
formula:
Return on Owner’s Equity = Net Profit *100
Owner’s Equity
Table 05
Graph 05
INTERPRETATION
The Return on owner‟s equity reveals how profitability the owners funds have
been utilized by the firm. In 2008 and 2009 the firm‟s return on owner‟s equity ratio
shows that the there is increase in relative performance and strength of the firm.
Year
Net Profit
Owner’s Equity
Return On
Owner’s Equity
2005 14.17 59.02 24.02
2006 6.83 62.6 10.90
2007 2.75 84.23 3.26
2008 38.22 221.03 17.29
2009 58.37 268.36 21.75
24.02
10.90
Leverage Ratio (Test of Solvency)
Leverage is an indication of the use of company makes of the borrowed funds to
increase the return on owner‟s equity. Leverage ratio measures the contribution of
financing by owners compared with financing provided by the firm‟s creditors. As the
liquidity test measures the ability of a firm to meet its current financial obligations, the
leverage ratios, a test of solvency, attempts to monitor the ability of a firm to pay all of
its debts- current as well as non-current, as they became due. The capital structure of
almost every company consists of two major components:
i) Equity capital – Capital that belongs to owners or investors.
ii) Debt capital – Amount that belongs to creditors.
A). Proprietary Ratio
It expresses the relationship between shareholder‟ net worth and total assets. The
ratio indicates the proportion of funds on the earnings available to the equity
shareholders.
Proprietary Ratio = Shareholders Net Worth
Total Assets
Net Worth = Equity share capital + Reserves – Fictitious assets.
Total assets = Fixed assets + Current assets –Fictitious assets.
64.8
5
Year
Net worth
Total Asset
Proprietary Ratio
( Percentage)
2005
59.02
91.01
64.85
2006
62.6
196.08
31.92
2007
84.23
255.34
32.98
2008
221.03
392.29
56.34
2009
268.36
501.00
53.56
Chart 06
Table 06
INTERPRETATION The proprietary ratio shows what portion of the total assets financed by the
owner‟s capital. If the firm as low proprietary ratio of debt to total assets is desirable
from the point of the creditors as there is sufficient margin of safety available to them.
64.85
But its implications for the share holders are that debt is not being exploited to make
available to them the benefit of trading on equity. If the firm has high proprietary ratio
would expose the creditors to higher risk. The implications of the ratio of equity capital
of total assets are exactly opposite to that of the debt to total assets. A firm should have
neither a very high ratio nor a very low ratio.
In the year 2006 and 2007, the Godrej Agrovet had bite low proprietary ratio
while comparing to other years. But they had the sufficient margin to safety the owner‟s
capital. And in the year 2008 and 2009 the firm had the average ratio of 56.34 and
53.56.
B) Debt-Equity ratio
Debt-Equity ratio develops relationship between owned funds and the borrowed
funds. This reflects the extent to which borrowed capital is used in place of equity
capital Business firms acquire assets both with owners and creditors funds. The larger
the portion of funds provided by owners, the less risk is assumed by creditors.
Debt-Equity Ratio = Total Debt Owner’s Equity
Year
Total Debt
Owner’s Equity
Debt-Equity
Ratio
2005 31.98 59.02 0.54
2006 133.48 62.6 2.13
2007 171.11 84.23 2.03
2008 171.26 221.03 0.77
2009 232.65 268.36 0.86
Chart 07
Table 07
INTERPRETATION
The debt equity ratio is an important tool of financial analysis to appraise the
financial structure of a firm. The debt equity represents the proportion of external equity
to internal equity in the capital structure of the firm. As the rule of thumb, debt equity
ratio of less than 1.00 is taken as acceptable, but this is not based on any scientific
analysis. As the ratio increases, the amount of risk assumed by creditors increases,
because the ratio indicates decreasing solvency.
In the year 2006 and 2007, the Godrej Agrovet had high in debt equity ratio of 2.13
and 2.03 because the management is not taking advantages of opportunities to
maximize profits through borrowings. In the year 2008 and 2009, the firm had average
debt equity ratio of 0.77 and 0.86.
MARKET BASED RATIO
The market based ratios relates the firm‟s stock price to its earnings and book value
per share. These ratios give management an indication of what investors think of the
company‟s past performance and future prospects. If firm‟s profitability, solvency and
turnover ratios are good, then market based ratios will be high and its share price is also
expected to be high.
A ) Earnings Per Share (EPS)
The EPS is one of the companies under the economic performance of a corporate
entity. The flow of capital to the companies under the present imperfect capital market
conditions would be made on the evaluation of EPS. Earning Per Share is a valuable
and widely used ratio.
EPS = Net profit after tax
No of Equity Shares
Table 08 (Rs. In Crores)
Year
Net Profit
After Tax
No. of Equity
Shares
EPS
2005 14.17 0.712 19.91
2006 6.83 0.712 9.59
2007 2.97 1.012 2.93
2008 -40.15 1.212 -33.13
2009 13.32 1.212 10.99
B ) Cash Earnings Per Share
This ratio is a more reliable yardstick for measurement of performance of
companies, especially for highly capital intensive industries where provision for
depreciation is substantial. This measures the cash earnings per share and is also a
relevant factor for determining the price for the company‟s shares. However, this
method is not as popular as EPS and is used as a supplementary measure of
performance only.
Cash Earnings Per Share = Net Profit After Tax + Depreciation
No. of Equity Shares
Table 09 (Rs. In Crores)
Year
Net Profit
After Tax
Depreciation
No. Of Equity
Shares
Cash EPS
2005 14.17 7.22 0.712 29.13
2006 6.83 7.36 0.712 19.96
2007 2.97 5.82 1.012 8.69
2008 -40.15 11.29 1.212 -23.81
2009 13.32 7.22 1.212 16.94
Graph Shown below is the Market Based Ratio by considering table no. 8&9
29.13
FINANCIAL STATEMENT OF GODREJ AROVET
Profit And Loss Account:
Profit and loss account reports the results of business activities for an accounting
period. It includes the income and expenditure of a business concern over a period of
time and then by comparing such a income and expenditure gives a final figure which
respects the amount of profit and loss for the period. If the income exceeds expenditure
the difference is called the net profit and in case the expenditure exceeds income the
difference is called net loss. The profit and loss account is also called as income
statement or the operating statement.
For The Year Ending Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05
Income
Operating income 1,293.55 817.38 689.50 602.76 567.18
Expenses
Material consumed 1,051.26 642.46 517.37 441.43 421.30
Manufacturing expenses - - - 14.10 11.90
Personnel expenses 43.42 53.13 39.53 30.27 27.71
Administrative expenses 165.98 157.55 133.98 99.58 78.21
Cost of sales 1,260.66 853.15 690.88 585.37 539.12
Operating profit 32.89 (35.77) (1.38) 17.39 28.06
Other recurring income 27.14 30.43 23.35 2.80 1.24
Adjusted PBDIT 60.03 (5.34) 21.97 20.19 29.30
Financial expenses 25.97 22.59 12.42 5.19 3.24
Depreciation 7.22 11.29 5.82 7.36 6.56
Adjusted PBT 26.84 (39.22) 3.73 7.61 19.50
Tax charges 13.53 0.92 0.76 0.79 5.32
Adjusted PAT 13.32 (40.15) 2.97 6.83 14.17
Non recurring items 45.06 78.36 - - -
Reported net profit 58.37 38.22 2.75 6.83 14.17
Earnings before appropriation 118.25 59.41 32.60 33.79 35.49
Equity dividend 1.21 1.21 9.75 2.85 -
Dividend tax 0.21 0.21 1.37 0.40 -
Retained earnings 116.83 57.99 21.48 30.55 35.49
Balance Sheet:
Balance Sheet contains information about the resources and obligations of a
business entity and about its owner interests in the business at a particular point of time.
Thus, the balance sheet of a firm prepared on 31st March reveals the firm‟s financial
position on this specific date. It communicates information about assets, liabilities and
owner‟s equity for a business firm as on a specific date.
Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05
Sources of funds
Owner's fund
Equity share capital 12.12 12.12 10.12 7.12 7.12
Reserves & surplus 256.24 208.91 74.11 55.48 51.9
Loan funds
Secured loans 29.03 55.96 49.45 0.13 13.96
Unsecured loans 203.62 115.3 121.66 133.35 18.02
Total 501 392.29 255.34 196.08 91.01
Uses of funds
Fixed assets
Gross block 109.5 139.09 153.08 119.42 103.15
Less : accumulated depreciation 42.35 43.75 45.37 43.88 38.01
Net block 67.14 95.33 107.71 75.54 65.13
Capital work-in-progress 4.15 2.48 5.02 14.64 0.8
Investments 166.37 127.55 52.41 51.59 33.5
Net current assets
Current assets, loans & advances 426.98 357.37 246.56 194.51 122.59
Less : current liabilities & provisions 163.64 190.45 156.35 140.19 131.03
Total net current assets 263.34 166.92 90.21 54.31 -8.44
Total 501 392.29 255.34 196.08 91.01
Notes:
Book value of unquoted investments 166.37 - 52.41 51.59 33.5
Contingent liabilities 26.79 84.97 78.38 91.97 5.41
Number of equity shares outstanding (Lacs) 121.19 121.19 101.19 71.19 71.19
INTERPERATION:
The balance sheet provides an account of capital structure of the company. The
net worth and the outstanding long term debt are known from the balance sheet. The
debt has certain advantages in terms of cost and market acceptability. The use of debt
creates financial leverage beneficial or detrimental to the shareholders depending on
the size and stability of earnings.
Comparing to year by year the Godrej Agrovet is keep on increase in there
capital structure in the year 2007, they have invested 10.1crores and in the year 2008
and 2009 have invested 12.1 crores and continuously having the improvement in there
reserve and surplus of the company while comparing to the pervious years. Godrej
Agrovet provides a good return to there shareholder‟s fund.
Cash Flow Statement:
A business is in many ways a living organization and cash flow is its life
stream because few transactions take place that don‟t begin or end with cash. Profitable
venture fails because of insufficient cash, but unprofitable ones have been know to
continue for long periods if sufficient cash is somewhat pumped into the system. Thus
one of the important task of the management is to control and monitor firms cash
position so that adequate cash is available to meet the requirement of the business. To
discharge this function efficiently, management makes use of a statement called cash
flow statement.
Mar ' 09 Mar ' 08 Mar ' 07
Profit before tax 71.87 39.14 3.73
Net cash flow-operating activity -51.59 -116.68 -64.43
Net cash used in investing activity 68.86 53.5 6.07
Net cash used in fin. activity -16 80.88 40.84
Net inc / dec in cash and equivalent 1.28 17.71 -17.51
Cash and equivalent begin of year 29.92 9.02 26.74
Cash and equivalent end of year 31.19 26.73 9.23
Interpretation:
The Godrej Agrovet had incurred huge cash out flows for operating activities
and cash used in investing activity is consistently very good from the past 2009 and
2008. In the financing activity is very poor comparing to the year 2008. Cash
accumulated in the end of year is improving year by year.
4.5 SUMMARY OF FINANCIAL POSITION OF GODREJ AGROVET
Godrej Agrovet had a fantastic Financial Year 2009-10, with the highest ever
operating in the history of the company. It shows tremendous efforts of the
company to achieve the all target set for the year.
In Year 2007, the company was in very bad position and the future was
uncertain. Now almost 3 years later the Godrej Agrovet is the one of the Godrej‟s
best companies.
Joint venture, Godrej Tyson Foods (GTFL) had a sales growing by 22.4% over
FY2009-10 and Profit before tax increase by 55.1%. GTFL had prove their
efficiency in there work,
Joint Venture, ACI Godrej delivered excellent results, with sale growing by 68.2%
over FY2009-10 and Profit before tax increasing by 31%.
There is no consistency in the current ratio form past 5 years and the firm had a
satisfactory level of meeting there short term solvency in the business.
The company had a satisfactory level of meeting there short term obligation. The
company can meet its urgent obligations immediately.
The company had high level of inventory turn over. The stock of the company is
moving fast in the market.
The company had incurred loss in two consecutive gross losses; thou in the year
2009 with the good management manage to retain the gross profit with the good
management skills in the manufacturing expenses.
The company had accumulated a gross of reserve and surplus of Rs.256.24
crores. It signify that the management to meet there liabilities in the future.
Over all profitability position of the company is quite satisfactory.
There is stability in equity share capital.
Effective selling technique or product modification may be adopted to face the
competitors and to improve the financial position of the company by taking
appropriate decisions.
CHAPTER 5: SUMMARY AND CONCLUSIONS OF MY STUDIES 5.1 Summary of learning experience 5.2 Conclusions and Recommendations
5.1) Executive Summary:
The object of this management training of finance cum account process
imparted is to provide us an insight into the methods, both culture and the ground
realities of an industry. I undertook my training at the Godrej Agrovet in Bangalore
South regional office from July 2009 up to June 2010 for a period of 1 year. I was
allotted the duty to preparing the book keeping, filing of vouchers and financial
statements. And i was allowed to seek the information about the company required for
my analysis and for my study purpose. This report is the reflection of what I have
assimilated during the training period at Godrej Agrovet.
I have studied about all the financial and accounting aspects of the company.
The first few pages talk about the introduction of the subject and also of the
organization. This is followed by literature review followed by the objectives of the study
and research methodology. Then comes real part of the study in which I have written all
what I had learnt there in the bank about the various components of working capital
management.
The objectives of the study which I undertook in Godrej were to know the
financial structure of Godrej Agrovet, for this I have used the Ratio analysis and balance
sheet of the company presenting it in very effective manners by tables, chart and
interpretation for the same has been done and also in order to make it more effective I
have used tables and line charts.
My study was to know the actual results given by comparing various years
balance sheet and profit and loss account of last five year. I found that Tara feed has
more demand than Godrej feed in the area. I also found that there are some complaints
about Godrej feed by the consumer and same has to be looked upon. I also found that
consumer has a good perception toward Tara than Godrej and it is fulfilling their
expectations. As from my all study, I have concluded that Godrej feed has not capture
as such market as in other cities or states because of lack in advertisement and lack of
knowledge about the product to the farmers.
I learnt how to behave in the organization and how to deal with the financial
aspects. I learnt how the financial aspects are applied in management to take decisions.
I learnt an organizational culture, discipline and managing our work task. I hope that my
experience at Godrej will not only help me in my future in financial field but also in my
current studies.
5.2 ) Conclusion And Recommendation of My Studies
Conclusion
The focus of financial analysis is on key figures contained in the financial
statements and the significant relationship that exits. The reliability and significance
attach to the ratios will largely on hinge upon the quality of data on which they are best.
They are as good for as bad as the data it self.
Financial ratios are a useful by product of financial statement and provide
standardized measures of firms financial position, profitability and riskiness. It is an
important and powerful tool in the hands of financial analyst. By calculating one or other
ratio or group of ratios he can analyze the performance of a firm from the different point
of view.
The ratio analysis can help in understanding the liquidity and short-term solvency
of the firm, particularly for the trade creditors and banks. Long-term solvency position as
measured by different debt ratios can help a debt investor or financial institutions to
evaluate the degree of financial risk. The operational efficiency of the firm in utilizing its
assets to generate profits can be assessed on the basis of different turnover ratios. The
profitability of the firm can be analyzed with the help of profitability ratios.
However the ratio analyses suffer from different limitations also. The ratios need
not be taken for granted and accepted at face values. These ratios are numerous and
there are wide spread variations in the same measure. Ratios generally do the work of
diagnosing a problem only and failed to provide the solution to the problem.
Recommendations
It could be concluded that people are well aware of GODREJ AGROVET when
compared to other animal feed or agricultural industry. Because of its brand image it is
attracting more number of farmers, which are proved to be the advantageous factor for
Godrej Agrovet. By considering this advantageous factor the company must provide
promotional activities like advertisement of product. Advertisement playing a crucial role
in promotional activities in the sale of products.
Frequently changes in the software package, it affects the efficiency of workers
and company has to spend huge amount of investment to provide training to the
employees and software packages.
AAPPPPEENNDDIIXX
BOOK REFERED:
M Y Khan & P K Jain, “Financial Management”, Tata McGraw-Hill, New Delhi.
I M Pandey, “Financial Management”, Vikas Publishing House Pvt Ltd, New Delhi.
Ravi M.Kishore, “Financial Management”, Taxmann Allied Service Pvt.Ltd, New Delhi.
Aggarwal .S.L.,Bharwaj .S.L., Gupta .S.P., Singh .Hardeep (2000), “Ouantitative
Techniques” Kalyani Publishers, Ludhiana.
Kotler Phillip (2007),”Marketing Management” Macgroth Hill, New Delhi.
Punithavathy Pandian, “Security Analysis and Portfolio Management”, Vikas Publishing
House Pvt Ltd, Noida.
ARTICLES:
Cattle feed ban allows calves to be fed blood, Written by Mark Sherman (2004)
Cattle Update: BVD In the Feedlot, Written by Bethany Lovaas (2006)
Feed Intake, Written by Mike Mehren (2005)
Feed Mixing, Written by Mike Mehren (2007)
Feeding a Niche, Written by Mike Mehren (2008)
Limit Feeding Young Calves, Written by Mike Mehren (2006)
THE DREADED FEED TAG, Written by Mike Mehren (2007)
NOVEL FEEDS FOR CATTLE, Written by Mike Mehren (2007)
WEBSITES:
www.godrejagrovet.com
www.feedmachinery.com/articles
www.feedmachinery.com/articles/feed
www.wind-works.org/articles/feed_laws.html
www.oregonfeed.org/mehren.htm
www.poulvet.com/poultry/articles/mycotoxins_binders.php
www.feedmanufacturing.com
www.amazines.com/article_feed.cfm
www.articlegimp.com
www.netmanners.com/email-etiquette-rss-feed.html
www.4kids.tv/buzz/feed
www.yardbarker.com/sites/view_rssarticles/402
www.feedmanufacturing.com/articles/feed-safety