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. 75%

etc)
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 Current Ratio

Liabilities

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.

Inventory Turnover = Cost of Goods Sold

Average Inventory

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
 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
 Gross Profit

Year Sales Operating 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
 Net Profit After Net Profit

Year Tax Sales 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

Return On

Year Net Profit Owner’s Equity 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

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.
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.

 Proprietary
Year Net worth Total Asset 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

64.85
64.8
5

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.
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)

Net Profit No. of Equity

Year After Shares EPS
Tax

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)
Net Profit No. Of Equity
Year After Tax Depreciation 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.

 APPENDIX

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