A

PROJECT REPORT
ON

RATIO ANALYSIS

FOR
GENERAL MILLS INDIA PVT LTD.

SUBMITTED BY
GAURAV RAMESH DHAWANE

SUBMITTED TO UNIVERSITY OF PUNE

IN PARTIAL FULFILLMENT OF
MASTER OF BUSINESS ADMINISTRATION

JSPM’S
JAYWANTRAO SAWANT COLLEGE OF ENGINEERING
HADAPSAR, PUNE

2007-2009
 A
PROJECT REPORT
ON

RATIO ANALYSIS

FOR
GENERAL MILLS INDIA PVT LTD.

SUBMITTED TO UNIVERSITY OF PUNE

IN PARTIAL FULFILLMENT OF TWO YEARS FULL TIME
COURSE
MASTER OF BUSINESS ADMINISTRATION
(M. B. A.)

SUBMITTED BY
GAURAV RAMESH DHAWANE
BATCH 2007-2009

JSPM’S
JAYWANTRAO SAWANT COLLEGE OF ENGINEERING
HADAPSAR, PUNE
 ACKNOWLEDGEMENT

The successful accomplishment of this project undertaken involves

efforts and able guidance from many personalities who directly or indirectly
directed me to learn and adopt correct steps required. I am grateful to my
Management at the Institute and my Company Management who gave me
this opportunity to enhance my learning experience.

I would like to thank to Mr. Manish Shukala, Mr. Ramesh

Warugse, and Mr. Sandip Kulkarni and my General Mills India Pvt. Ltd.
Staff for allowing me to carryout my project and providing me constant
support to this endeavor.

I take this opportunity to express my gratitude to Dr. P. K. Sinha

Director of JAYAWANTRAO SAWANT COLLEGE OF
ENGINEERING (MBA PROGRAMME), HADAPSAR, PUNE. And my
project guide Prof. Shobha Mam.

I am also thankful to complete staff of Jayawantrao Sawant College

of Engineering (MBA Programme) who directly or indirectly helped me to
complete this project.

At last but not least I am very much thankful to my family & friends
for their moral support and facilities to complete this project.

GAURAV R. DHAWANE
 TITLE INDEX

SL.NO.
PARTICULARS PAGE NO.

1 EXECITIVE SUMMARY

2 OBJECTIVE & SCOPE

3 COMPANY PROFILE

4 INTRODUCTION

5 RESEARCH METHODOLOGY

6 DATA ANALYSIS

7 FINDINGS

8 LIMITATION OF THE PROJECT

9 CONCLUTION

10 RECOMMENDATIONS

11 BIBLIOGRAPHGY
EXECUTIVE
SUMMERY
 EXECUTIVE SUMMERY

“Ratio analysis” is a technique of analysis and interpretation of financial. It is a process

of establishing and interpretation various ratios for helping in making more meaning
decision. The ratio analysis is the most powerful tool of financial analysis.

Analysis of ratio provides dues to the financial position of a concern. There are the
pointers or indicates of financial strength, soundness, position or weakness of an
enterprise. One can draw conclusions about the exact financial position of a concern with
the help of ratios.

The topic was chosen to analyses the performance in terms of short term solvency and
profitability position of "GENERAL MILLS INDIA PVT LTD”

Yet another factor, which efforts the useless of ratio is that there is difference of opinion
regarding the various concepts used to compute the ratios. Different firms may use the
terms in different senses of the same firm may interpret and see them different at
different situation.

Reliance on a single ratio for a particular purpose may not be conclusive indication.
Ratios are only postmortem of what has happened between two balance sheet data.
Moreover they give no clues to the future.

Even though the ratios suffer from serious limitation, the analyst should not be carried
away by it’s over simplified nature. Easy computation with high degree of precision,
Nevertheless there are important tool of financial analysis the reliability and significance
attached to ratio will largely depend upon the equity of data on which they are based.
OBJECTIVE &
SCOPE
 OBJECTIVE & SCOPE

The topic selected for the study is ratio analysis of "GENERAL MILLS INDIA PVT
LTD” The analysis of the financial statement of "GENERAL MILLS INDIA PVT LTD”
is done in order to know the company’s financial position during past 4 years.

Scope of the study

The scope of study of is limited to "GENERAL MILLS PVT. LTD.” And is an attempt to
find out the financial position during past 4 years. From the Balance sheet and Profit &
loss A/c of company with reference given to ratio analysis.

Objective of the study

 To analyze the financial statement of "GENERAL MILLS INDIA PVT LTD”

 To analyze the ratios of the firm for concern for consecutive 4 years.

 To ascertain the liquidity position of "GENERAL MILLS INDIA PVT LTD”

During consecutive 4 years.

 To gain insight into long tern solvency of "GENERAL MILLS INDIA PVT
LTD”

 To ascertain the overall profitability position of "GENERAL MILLS INDIA PVT

LTD”

 To know the financial Position of the Company by calculating the ratio analysis
of the company.
COMPANY
PROFILE
 COMPANY PROFILE

GENERAL MILLS
The Company of Champions
Company Brands

General Mills India

General Mills India is committed to delighting the discerning consumer with a range
of exciting, innovative and relevant food products. The emphasis is on bringing in
global brands and technology, then adapting these to local market requirements.

General Mills has a vibrant export business, as well as a Bakeries & Foodservice
division.

The Indian retail portfolio includes:

• Pillsbury Chakki Fresh Atta (whole wheat flour)
• Pillsbury Non-Sticky Semiya (vermicelli)
• Pillsbury cake mixes (cooker and oven)
• Pillsbury Custard Powder
• Pillsbury Variety Mix (multi-purpose snack and sweet mix)
• Green Giant (canned corn and specialty vegetables)
• Betty Crocker (baking mixes)
• Dip Trix (cookies and cream dipping snack)
• Nature Valley (crunchy granola bars)
We are one of the world's leading food companies, with more than 150 years of
experience in the food industry.
We are one of the world's leading food companies, with more than 150 years of
experience in the food industry.

General Mills offers consumers around the world products that enhance nutrition, shorten
preparation times, provide health benefits, enable on-the-go eating and — of course —
taste great.

Consumers in India can enjoy an array of General Mills brands, from Betty Crocker
baking mixes to Dip Trix snacks.

We also market great-tasting products that are easy to prepare in your home, such as
Pillsbury Variety Mix and Green Giant vegetables.

Away from home

General Mills is committed to providing the foodservice industry with the best from start
to finish in terms of quality products, customer service, technical support and training.

Our foodservice offerings in India cater to hotels, restaurants, schools, among others
Brands

Our brands

General Mills India is committed to delighting the discerning consumer with a range
of exciting, innovative and relevant food products. The emphasis is on bringing in
global brands and technology, then adapting these to local market requirements.

General Mills has a vibrant export business, as well as a Bakeries & Foodservice
division.

Pillsbury Chakki Fresh AttaTM (Whole Wheat Flour)

Pillsbury Chakki Fresh Atta was introduced in 1998 as a high-quality, nutritious
alternative to the age-old tradition of purchasing grain and having it ground at the local
"chakki" or flour mill. Used to make "Rotis" or Indian flat bread, “atta" flour is the
bedrock of the Indian diet.

Pillsbury Chakki Fresh Atta flour offers a deliciously soft rotis, along with the
convenience of a packaged, branded product.

Pillsbury has been recognized as a “super brand” in the branded atta category, and is one
of the leading players, with products distributed in more than 500 towns and 100,000
outlets throughout India.

Pillsbury Chakki Fresh Atta has the benefit of “Whole Wheat Atta being good for your
Family’s Heart” (as part of a low fat diet). This claim has been endorsed by the Heart
Care Foundation of India (HCFI).
HISTORY
 History

We started with two flour mills in the 1860s and revolutionized the milling industry,
producing flour with superior baking properties.

By the 1960s, we were marketing beloved children's products that included Play-Doh,
Easy Bake Ovens, Spirograph, Monopoly and Nerf balls.

In between, we became involved with such memorable characters as Betty Crocker,

Bullwinkle, the Lone Ranger and the Pillsbury Doughboy.

And no one could have written a movie script about what happened when our Wheaties
brand began sponsoring baseball radio broadcasts in 1933, when the cereal became
known as The Breakfast of Champions.

One of our announcers, Ronald "Dutch" Reagan was voted the country's most popular
Wheaties baseball announcer in 1937, which earned him a free trip to California. He
traveled from Des Moines, Iowa, for a screen test, became a Hollywood star and, as you
know, eventually was elected president of the United States.

You might not know that when oceanographer Robert Ballard explored the sunken
Titanic in 1985, he had some help from ALVIN, a three-person submarine designed and
built at General Mills in the early 1960s. ALVIN made 11 dives to that Titanic site.

These days, our focus is on food — making lives around the world healthier, easier and
richer.
 Our Milling Roots and Beyond

General Mills traces its roots to the banks of the Mississippi River in
what is now Minneapolis. Harnessing the power of St. Anthony Falls,
Cadwallader Washburn built one of the leading milling companies in
the world. John Crosby eventually became his partner, forming the
Washburn Crosby Company. In 1928, Washburn Crosby merged with
other regional millers to become General Mills.

The Pillsbury Doughboy

Giggling his way to spokescharacter superstardom, Poppin' Fresh, the

Pillsbury Doughboy, first introduced himself to TV viewers across the
nation in 1965. Announcing "Hi, I'm Poppin' Fresh," he sang, "Nothin'
says lovin' like something from the oven, and Pillsbury says it best."
Since his creation, the Pillsbury Doughboy has become one of history's
most popular advertising icons

Green Giant

When the Minnesota Valley Canning Company named its new, extra-
large green pea variety "Green Giant," no one dreamed that one day it
would become the company's name. Today, the Green Giant and his
helper, Sprout; still live happily in their valley growing vegetables
picked at the peak of freshness. Green Giant has been part of General
Mills since 2001.
 The Pillsbury Bake-Off Contest

In 1949, Pillsbury Mills, Inc. held the "Grand National Recipe and
Baking Contest" to celebrate the company's 80th birthday. The
response was overwhelming, and the Pillsbury Bake-Off Contest was
born. Over the years, the Bake-Off Contest has produced winning
recipes that have become classics.

Betty Crocker

Began as a pen name in 1921 to answer cooking-related questions

that were sent to the Washburn Crosby Company, predecessor of
General Mills. This advertising icon has grown to become one of the
more recognizable brands in the grocery store.

Wheaties

Like many great inventions, Wheaties cereal was discovered by

accident. A health clinician spilled bran gruel on a hot stove. The
mixture crackled and sizzled into a crisp flake, and it tasted great. The
clinician brought the idea to the Washburn Crosby Company in 1924,
launching the cereal that later became The Breakfast of Champions.
 Bisquick

Baking mixes are standard these days, but Bisquick was a

revolutionary product in 1931. Never before had a pre-mixed baking
mix appeared on grocery shelves. Consumers loved it, and Bisquick
remains the category leader today

Radio and TV

General Mills was a broadcasting pioneer, purchasing a fledgling radio

station in Minneapolis in 1924. The company's radio programs included
the Betty Crocker Cooking School of the Air; Jack Armstrong, The All-
American Boy; and The Lone Ranger. A Wheaties radio baseball
sponsorship even helped a young broadcaster named Ronald Reagan
find his way to Hollywood.

Company overview:
General mills

On average, U.S. shoppers place at least one General Mills product into their shopping
cart each time they visit the grocery store.

We market global brands such as Green Giant vegetables, Old El Paso Mexican food and
Häagen-Dazs ice cream. Our U.S. portfolio includes Yoplait yogurt, Cheerios, Wheaties
and other Big G cereals.

We also market strong local brands, such as Diablitos meat spread in Venezuela, Latina
pasta in Australia and La Salteña dough in Argentina.

A brief overview of our businesses:

Baking Products

General Mills markets great-tasting baking solutions that feature Betty Crocker dessert
mixes, cakes and frostings, Bisquick baking mixes and Gold Medal flour.

Big G Cereals

A leader in the U.S. ready-to-eat cereal category, Big G offers consumer favorites such as
Cheerios, Wheaties and Lucky Charms.

Meals

General Mills provides convenient dinner options with a line of Helper dinner kits, Betty
Crocker potato mixes, Progresso soups, Green Giant vegetables and meal starters, and
Old El Paso Mexican foods.

Organic

Small Planet Foods features Cascadian Farm and Muir Glen, which hold top positions in
nine organic food categories.

Pillsbury

With a clear leadership share of the U.S. refrigerated dough category, Pillsbury products
include Pillsbury Home Baked Classics frozen dough, Pillsbury frozen breakfast items,
and Totino's frozen pizza and snacks.

Snacks

General Mills features brands such as Fruit Roll-Ups fruit-flavored snacks, Chex Mix
snacks, Pop Secret microwave popcorn, Nature Valley granola bars and Bugles corn
snacks.
Yogurt

Yoplait is a leader in the U.S. yogurt category, with products such as Yoplait Original,
Yoplait Light, Go-GURT, Colombo yogurts.

Bakeries & Foodservice

General Mills markets unbaked, partially baked and fully baked dough products and
mixes to foodservice operators and retail and wholesale bakeries. Our market-leading
branded products also are available through outlets such as school cafeterias, restaurants
and convenience stores.

International

The portfolio includes Häagen-Dazs ice cream, Pillsbury dough-based products, Betty
Crocker desserts and mixes, Green Giant vegetables, Old El Paso Mexican foods and
leading local brands.

Joint Ventures

General Mills and Nestlé formed Cereal Partners Worldwide, which markets ready-to-eat
cereal brands in more than 130 international markets. Among our Häagen-Dazs joint
ventures in Asia, our largest is with Suntory and Takanashi Dairy in Japan.

General Mills India history

• General Mills India was started in 1996 as a joint venture between Godrej &
Pillsbury.

• In 2001, the joint venture was

terminated and Pillsbury bought out
Godrej’s stake in the Company.

• This was followed by the

worldwide acquisition of Pillsbury by
General Mills.

• Consequent to the above changes,

our Company was renamed as “General
Mills India Private Limited”

And so today, General Mills India is a 100 %

subsidiary of General Mills
THEREOTICAL
BACKGROUN
D
Ratio Analysis use and application
Ratio is a simple arithmetical expression of the relationship of one number to another.
It may be defined as “a ratio is an expression of the quantitative relationship between
two numbers.” In simple language ratio is one number expressed in terms of another
& can be worked out by dividing one number into the other.

Nature of Ratio Analysis:-

Ratio analysis is a technique of analysis & interpretation of financial statements. It is the
process of establishing & interpreting various ratios for helping in making certain
decisions. However, ratio analysis is not an end in itself. It is only a means of better
understanding of financial strengths & weaknesses of a firm. Calculation of any ratios
does not serve any purpose, unless several appropriate ratios are analyzed & interpreted.
The following are the four steps involved in ratio analysis:

1. Selection of the relevant data

from the financial statements depending upon the objective of the analysis.
2. Calculation of ratios from above data.
3. Comparison of the calculated ratios with the ratios of the same firm in the
past, or the ratios developed from projected statements or the ratios of the
some other firms or the comparison with ratios of the industry to which the
firm belongs.
4. Interpretation of the ratios.

Use & Significance of Ratio Analysis:-

The ratio analysis is one of the most powerful tools of financial analysis.
It is used as a device to analyze & interpret the health of enterprise. With the help of ratio
analysis one can measure the financial condition of a firm & can point out whether the
firm is strong, good, questionable or poor. The conclusions can also be drawn as to
whether the performance of the firm is improving or deteriorating. Thus ratios have wide
applications & are of immense use today.

A) Managerial Uses of Ratio Analysis:-

Helps in decision making: Financial statements are prepared primarily for decision-
making. Ratio analysis helps in making decisions from the information provided in
these financial statements.
Helps in financial forecasting & planning: Ratio analysis is of much help in financial
forecasting & planning. Meaningful conclusions can be drawn for future from these
ratios.
1. Helps in communicating: the financial strengths & weaknesses of a firm are
communicated in a more easy & understandable manner by use of ratios.
2. Helps in co-ordination: Ratios even help in co-ordination which is of utmost
importance in effective business management. Better communication of efficiency &
weakness of an enterprise results in better co-ordination in the enterprise.
3. Helps in control: Standard ratios can be based upon Performa financial statements for
variances or deviations, if any, can be found by comparing the actual with the
standards so as to take the corrective actions at the right time. The weaknesses or
otherwise, if any, come to the knowledge of the management which helps in effective
control of the system.

B) Utility to shareholders/investors:-

An investor in the company will like to assess the financial position of the concern
where he is going to invest. Long tem solvency ratios will help him in assessing
financial position of the concern. Profitability ratios, on the other hand, will be useful
to determine profitability position. Ratio analysis will be useful to the investor in
making up his mind whether present financial position of the concern warrants further
investment or not.
C) Utility to Creditors:-
The creditors or suppliers extend short term credit to the concern. If the current assets
are quite sufficient to meet current liabilities then the creditors will not hesitate in
extending credit facilities. Current & acid-test ratios will give an idea about the
financial position of the concern.

D) Utility to Employees:-
The employees are also interested in the financial position of the concern
especially profitability. Their wage increases & fringe benefits are elated to the
volume of profits earned by the concern. Various profitability ratios relating to gross
profits, operating profit, net profit, etc. enable employee to put forward their view
points for the increase of wages & other benefits.

E) Utility to Government:-

Government is interested to know the overall strength of the industry.

Government may base its future policies on the basis of industrial information
available from various units. The ratios may be used as indicators of overall financial
strength of public as well as private sector.

F) Tax Audit Requirements:-

Section 44 AB was inserted in the Income Tax Act by the Finance Act, 1984.under this
section every assessed engaged in any business & having turnover or gross receipts
exceeding Rs. 40 lak is required to get the accounts audited by a chartered accountant &
submit the tax audit report before the due date for filing the return under Section 139(1).
Types of Ratios

Income
Profitability
Liquidity
Bankruptcy
Coverage
Leverage

• Income Ratios

Turnover of Total Operating Assets

Net Sales
= Turnover of Total Operating Assets Ratio
Total Operating Assets*

Obviously, an increase in sales will necessitate more operating assets at some point (sales
may rise without additional investment within a given range, however); conversely, an
inadequate sales volume may call for reduced investment.

*Total operating assets = total assets - (long-term investments + intangible assets)

Net Sales to Tangible Net Worth

Net Sales
= Net Sales to Tangible Net Worth Ratio
Net Worth

This ratio indicates whether your investment in the business is adequately proportionate
to your sales volume. It may also uncover potential credit or management problems,
usually called "overtrading" and "under trading."

Overtrading, or excessive sales volume transacted on a thin margin of investment,

presents a potential problem with creditors. Overtrading can come from considerable
management skill, but outside creditors must furnish more funds to carry on daily
operations.

Under trading is usually caused by management's poor use of investment money and their
general lack of ingenuity, skill or aggressiveness.
 • Profitability Ratios

Closely linked with income ratios are profitability ratios, which shed light upon the
overall effectiveness of management regarding the returns generated on sales and
investment.

Gross Profit on Net Sales

Net Sales - Cost of Goods Sold

= Gross Profit on Net Sales Ratio
Net Sales

Does your average markup on goods normally cover your expenses, and therefore result
in a profit? This ratio will tell us. If your gross profit rate is continually lower than your
average margin, something is wrong! Be on the lookout for downward trends in your
gross profit rate. This is a sign of future problems for your bottom line.

This percentage rate can — and will — vary greatly from business to business, even
those within the same industry. Sales, location, size of operations, and intensity of
competition are all factors that can affect the gross profit rate.

• Net Operating Profit Ratios

Net Profit on Net Sales

EAT*
= Net Profit on Net Sales Ratio
Net Sales
This ratio provides a primary appraisal of net profits related to investment. Once your
basic expenses are covered, profits will rise disproportionately greater than sales above
the break-even point of operations.

Net Profit to Tangible Net Worth

EAT
= Net Profit to Tangible Net Worth Ratio
Tangible Net Worth

This ratio acts as a complementary appraisal of net profits related to investment. This
ratio sizes up the ability of management to earn a return.

Net Operating Profit Rate of Return

EBIT
= Net Operating Profit Rate of Return Ratio
Tangible Net Worth

Your Net Operating Profit Rate of Return ratio is influenced by the methods of financing
you utilize. Notice that this ratio employs earnings before interest and taxes, not earnings
after taxes. Profits are taken after interest is paid to creditors. A fallacy of omission
occurs when creditors support total assets.

Management Rate of Return

Operating Income
= Management Rate of Return Ratio
Fixed Assets + Net Working Capital
This profitability ratio compares operating income to operating assets, which are defined
as the sum of tangible fixed assets and net working capital. This rate, which you may
calculate for your entire company or for each of its divisions or operations, determines
whether you have made efficient use of your assets. The percentage should be compared
with a target rate of return that you have set for the business.

• Liquidity Ratios

While liquidity ratios are most helpful for short-term creditors/suppliers and bankers,
they are also important to financial managers who must meet obligations to suppliers of
credit and various government agencies. A complete liquidity ratio analysis can help
uncover weaknesses in the financial position of your business.

Quick Ratio

Cash + Marketable Securities + Accounts Receivable (net)

= Quick Ratio
Current Liabilities

Also known as the "acid test," this ratio specifies whether your current assets that could
be quickly converted into cash are sufficient to cover current liabilities. Until recently, a
Current Ratio of 2:1 was considered standard. A firm that had additional sufficient quick
assets available to creditors was believed to be in sound financial condition.

Receivables Turnover

Total Credit Sales

= Receivables Turnover Ratio
Average Receivables Owing

Another indicator of liquidity, Receivables Turnover Ratio can also indicate

management's efficiency in employing those funds invested in receivables. Net credit
sales, while preferable, may be replaced in the formula with net total sales for an
industry-wide comparison.

Current Debt to Net Worth

Current Liabilities
= Current Debt to Net Worth Ratio
Tangible Net Worth

Your business should not have debt that exceeds your invested capital. This ratio
measures the proportion of funds that current creditors contribute to your operations. For
small businesses a ratio of 60 percent or above usually spells trouble. Larger firms should
start to worry at about 75 percent.

Funded Debt to Net Working Capital

Long-Term Debt
= Funded Debt to Net Working Capital Ratio
Net Working Capital

Funded debt (long-term liabilities) = all obligations due more than one year from the
balance sheet date (Note): Long-term liabilities should not exceed net working capital.
 • Bankruptcy Ratios

Many business owners who have filed for bankruptcy say they wish they had seen some
warning signs earlier on in their company's downward spiral. Ratios can help predict
bankruptcy before it's too late for a business to take corrective action and for creditors to
reduce potential losses. With careful planning, predicted futures can be avoided before
they become reality. The first five bankruptcy ratios in this section can detect potential
financial problems up to three years prior to bankruptcy.

Working Capital to Total Assets

Net Working Capital

= Working Capital to Total Assets Ratio
Total Assets

This liquidity ratio, which records net liquid assets relative to total capitalization, is the
most valuable indicator of a looming business disaster. Consistent operating losses will
cause current assets to shrink relative to total assets.

A negative ratio, resulting from negative net working capital, presages serious problems.

EBIT to Total Assets

EBIT
= EBIT to Total Assets Ratio
Total Assets

How productive are your business's assets? Asset values come from earning power.
Therefore, whether or not liabilities exceed the true value of assets (insolvency) depends
upon earnings generated
Sales to Total Assets

Total Sales
= Sales to Total Assets Ratio
Total Assets

This ratio, which uncovers management's ability to function in competitive situations

while not excluding intangible assets, is inconclusive if studied by itself. But when
viewed alongside, Working Capital to Total Assets, Retained Earnings to Total Assets,
and EBIT to Total Assets, it can confirm whether your business is in imminent danger.

Equity to Debt

Market Value of Common + Preferred Stock

= Equity to Debt Ratio
Total Current + Long-Term Debt

This ratio shows you by how much your business's assets can decline in value before it
becomes insolvent.
 • Coverage Ratios

Times Interest Earned

EBIT
= Times Interest Earned Ratio
I

EBIT = earnings before interest and taxes

I = dollar amount of interest payable on debt

The Times Interest Earned Ratio shows how many times earnings will cover fixed-
interest payments on long-term debt.

• Leverage Ratios

This group of ratios calculates the proportionate contributions of owners and creditors to
a business, sometimes a point of contention between the two parties. Creditors like
owners to participate to secure their margin of safety, while management enjoys the
greater opportunities for risk shifting and multiplying return on equity that debt offers.
Note: Although leverage can magnify earnings, it exaggerates losses.

Equity Ratio

Common Shareholders' Equity

= Equity Ratio
Total Capital Employed

The ratio of common stockholders' equity (including earned surplus) to total capital of the
business shows how much of the total capitalization actually comes from the owners.
Debt to Equity Ratio

Debt + Preferred Long-Term

= Debt to Equity Ratio
Common Stockholders' Equity

A high ratio here means less protection for creditors. A low ratio, on the other hand,
indicates a wider safety cushion (i.e., creditors feel the owner's funds can help absorb
possible losses of income and capital).
 RESEARCH
METHODOLOG
Y
 RESEARCH METHODOLOGY

The study is made on the basis of secondary data. The annual by the firms were of great
help collection the necessary information. In addition to this, the personal of “GENERAL
MILLS INDIA PVT LTD” were very co-operative in forwarding the necessary
information as and when required.

Tools for data collection

Data require for this project is mainly tow type’s i.e. primary data & secondary data and I
also use the Graphs in analysis of ratio which help to understand to every one.

Primary Data: -

Those are collected fresh and the time and this happens to be original in character.
The primary data were collected through personal ineraction with the manager and
official of the frim.

Secondary Data: -

Secondary data means data is already available i.e. they refer the data which have
already been collected and analyzed by someone else, then he has to look into various
sources form whose he can obtain them, usually the publications technical trade
journal books, Magazines and Net and Reports of company etc.

• SOURCES OF COLLECTION OF DATA:-

1. Staff of the GENERAL MILLS INDIA PVT LTD

2. Magazines and Net

3. Journal Books of GENERAL MILLS INDIA PVT LTD

4. Annual General Report of 2002-03, 2003-04, 2005-06 and 2006-07

DATA ANALYSIS
 BALANCE SHEET FOR THE LAST FOUR YEARS (CURRENCY :
IN RUPEES)
Schedule 2003 2004 2006 2007
SOURCES OF FUNDS
Shareholders' funds
Share capital 3 1,253,940,000 1,803,940,000 640,197,000 1,300,197,000
Reserves and surplus- share premium 288,562,500 288,562,500 47,305,294 47,305,294
Loan funds
Secured 4 55,274,469
Unsecured 5 357,500,001 187,500,000 425,574,576

1,955,276,970 2,280,002,500 687,502,294 1,773,076,870

APPLICATION OF FUNDS
Fixed Assets
Gross block 6 506,087,872 226,869,898 298,374,511 322,247,600
Less: Accumulated deprecation 69,937,609 79,190,444 121,491,977 147,737,700
Net block 439,150,263 147,679,454 176,882,534 174,509,900
Capital work in progress 2,221,109 5,051,866 10,197,228 8,343,741

441,371,372 152,731,320 187,079,762 182,853,641

Current Assets, Loans & Advances

Inventories 7 115,927,433 159,588,841 160,182,311 288,456,802
Sundry Debtors 8 22,404,499 67,532,889 81,975,383 195,300,489
Cash and Bank balances 9 40,130,969 73,982,222 40,355,066 684,208,080
Loans and advances 10 72,500,662 88,578,699 114,531,881 156,105,241

250,963,563 389,682,651 397,044,641 1,324,070,612

Less: Current liabilities and
provisions
Current liabilities 11 147,247,819 206,291,962 244,576,327 302,604,084
Provisions 12 4,206,130 11,119,715 15,926,562 26,419,047

Net current assets 99,509,614 172,270,974 136,541,752 995,047,481

Profit and Loss Account 1,414,395,984 1,955,000,206 363,880,780 595,175,748

1,955,276,970 2,280,002,500 687,502,294 1,773,076,870

 PROFIT AND LOSS ACCOUNT FOR THE LAST FOUR YEARS
for the year ended 31 March
Schedule 2003 2004 2006 2007
Income
Gross Sales- manufactured goods 714,620,331 927,630,136 1,142,382,086 1,578,493,729
Less: Excise Duty 3,352,445 3,567,171 13,049,932 24,338,814
Net Sales- manufactured goods 711,267,886 924,062,965 1,129,332,154 1,554,154,915
Sales- Traded goods 38,375,290 17,385,794 29,460,874 46,686,596
Total Net Sales 749,643,176 941,448,759 1,158,793,028 1,600,841,511
Other Income 13 1,574,052 170,350 19,235,293 68,278,198
751,217,228 941,619,109 1,178,028,321 1,669,119,709

Expenses
Cost of goods sold 14 466,637,879 569,265,804 756,065,488 1,076,253,832
Purchase of traded goods 11,610,913 9,000,437 27,935,741 29,363,639
Personnel costs 15 69,845,479 81,213,374 105,675,553 143,944,363
Selling, general and adminirtisation 16 465,529,996 456,543,879 451,363,513 574,896,657
Depreciation and amortization 6 21,031,072 23,022,645 22,519,284 27,618,264
Interest (including interest on term loans) 48,227,920 38,599,784 10,197,887 42,450,612
1,082,883,259 1,177,645,923 1,373,757,466 1,894,527,367

Loss for the year before one off items 331,666,031 236,026,814
Goodwill written off 6a 151,512,500
Settlement of dispute 18 16,014,908
Net loss for the year 331,666,031 403,554,222 195,729,145 225,407,658
Balance in profit & loss A/c brought forward 1,082,729,953 1,414,395,984 165,690,233 363,880,780
Add: Non compete fees written off 6b 137,050,000
Less: Provision for fringe benefit tax 2,461,402 5,887,310
Net loss for the year after taxation 198,190,547 231,294,968
Balance in profit & loss A/c carried
forward 1,414,395,984 1,955,000,206 363,880,780 595,175,748

Earnings per share 25 3 3 4 3.56

 • Current Ratio = Current Assets, Loans & Advances / Current
Liabilities & Provision

Particulars 2007 2006 2004 2003

Current Assets 1,324,070,612 397,044,641 389,682,651 250,963,563

Current Liabilities 754,597,707 260,502,889 404,911,677 564,228,419

Current Ratio 1.75 1.52 0.96 0.44

Cureent Ratio

1.8
1.6
1.4
1.2
1
RATIO
0.8
Cureent Ratio
0.6
0.4
0.2
0
2007 2006 2004 2003
YEAR

• Interpretation:

As a conventional rule, a current ratio of 2:1 or even 1.5:1 is considered satisfactory. The
solvency ratio indicates ability of a concern to meet its total liabilities out of its total
assets. In the 2007 the position is good i.e. 1.75, in the year 2006, 2004 and 2003 the ratio
are 1.52, 0.96 and 0.44 respectively.
 • Liquid Ratio = Current Assets - Inventories / Current Liabilities -
Bank Over Draft

Particulars 2007 2006 2004 2003

Current Assets 1,324,070,612 397,044,641 389,682,651 250,963,563
Inventory 288,456,802 160,182,311 159,588,841 115,927,433
Current Assets - Inventories 1,035,613,810 236.862,330 230,093,810 135,036,130
Current Liabilities 754,597,707 260,502,889 404,911,677 564,228,419
Bank Over Draft Nil Nil Nil Nil
Current Liabilities - Bank Over Draft 754,597,707 260,502,889 404,911,677 564,228,419
Liquid Ratio 1.37 0.9 0.57 0.24

Liquid Ratio

1.4
1.2
1
0.8
RATIO
0.6
Liquid Ratio
0.4
0.2
0
2007 2006 2004 2003
YEAR

• Interpretation:

The Liquid ratio in 2007, 2006, 2004 and 2003 is 1.37, 0.9, 0.57 and 0.24 respectively.
An ideal liquid ratio is 1:1. It is represent the highly solvent position of the company.
 • Absolute Liquid Assets = Absolute Liquid Assets / Current
Liabilities

Particulars 2007 2006 2004 2003

Absolute Liquid Assets 684,208,080 40,355,066 73,982,222 40,130,969
Current Assets 302,604,084 244,576,327 404,911,677 564,228,419
Absolute Liquid Ratio 2.26 0.16 0.18 0.07

Absoluted Liquid Ratio

2.50

2.00

1.50
RATIO
1.00 Absoluted Liquid Ratio

0.50

0.00
2007 2006 2004 2003
YEAR

• Interpretation:

The company Absolute Liquid ratio is 2.26:1 and an ideal ratio is 0.5:1. It means that
more than 50% of current assets are highly liquied.
 • DEBT / EQUITY RATIO = DEBET / EQUITY

Particulars 2007 2006 2004 2003

Debt 287,213,617 228,200,205 389,682,651 250,963,563
Equity 752,326,546 323,621,514 137,502,294 128,258,115
Debt / Equity Ratio 0.36 0.71 1.35 1.00

Debt / Equity Ratio

1.40
1.20
1.00
0.80
RATIO
0.60
Debt / Equity Ratio
0.40
0.20
0.00
2007 2006 2004 2003
YEAR

• Interpretation:

The Debt-Equity ratio of company in 2006 is 0.71 and it is well with in the accepted of
2:1. The company long-term solvency is more satisfactory. Since the proportion of debt
to equity is low, the company is said to be low greater and could not reap the benefit of
trading on equity.
 • Proprietary Ratio = Share Capital + Reserve & Surplus / Total
Assets * 100

Particulars 2007 2006 2004 2003

Share Capital + Reserve & Surplus 752,326,546 323,621,514 137,502,294 1,542,502,500
Total Assets 1,506,924,253 584,124,403 542,413,971 692,334,935
Propriety Ratio 0.5 0.55 0.25 2.22

Properiety Ratio

2.5

1.5
RATIO
1 Properiety Ratio

0.5

0
2007 2006 2004 2003
YEAR

• Interpretation:

The high propriety ratio indicates the strong financial position of the business. The higher
the ratio, the better it is.
 • Inventory Turnover Ratio = Cost of Goods Sold / Average
Inventory

Particulars 2007 2006 2004 2003

Cost of Goods Sold 1,076,253,832 756,065,488 569,265,804 466,637,879
Average Inventory 175,501,199 142,956,404 116,531,601 71,411,326
Inventory Turnover Ratio 6.13 5.29 4.89 6.53

Inventory Turnover Ratio

7
6
5
4
RATIO
3
Inventory Turnover Ratio
2
1
0
2007 2006 2004 2003
YEAR

• Interpretation:

The company is having low inventory turnover ratio, and the company’s working capital
might be tied up in financing inventory. The Inventory Turnover ratio in 2007 and 2006
is 6.13 and 5.29 respectively.
 • Inventory Ratio = Inventory / Current Assets * 100

Particulars 2007 2006 2004 2003

Inventory 288,456,.802 160,182,311 159,588,841 115,927,433
Current Assets 1,324,070,612 397,044,641 404,911,677 250,963,563
Inventory Ratio 21.79 40.34 39.41 46.19

Inventory Ratio

50

40

30
RATIO
20 Inventory Ratio

10

0
2007 2006 2004 2003
YEAR

• Interpretation:

Inventory ratio in the 2007, 2006, 2004 and 2003 is 21.79%, 40.34%, 39.41% and
46.19%. There is clear indication that 40% of current assets are locked up in the form
inventory.
 • Gross Profit Ratio = Sales - Cost of Goods Sold / Sales

Particulars 2007 2006 2004 2003

Sales 524,587,679 402,727,540 372,182,955 283,005,297
Cost of Goods Sold 1,600,841,511 1,158,793,028 941,448,759 749,643,176
Gross Profit Ratio 32.78 34.75 39.53 37.75

Gross Profit Ratio

40
35
30
25
RATIO 20
15 Gross Profit Ratio
10
5
0
2007 2006 2004 2003
YEAR

• Interpretation:

The ratio measures the gross profit margin on the total net sales made by the company. In
2007, 2006, 2004 and 2003 the gross profit ratio is 32.78%, 34.75%, 39.53% and 37.75
respectively.
 • Materials Cost Ratio = Material Consumed / Sales * 100

Particulars 2007 2006 2004 2003

Material Consumed 1,073,274,427 779,831,517 563,945,616 473,685,807
Sales 1,600,841,511 1,158,793,028 941,448,759 749,643,176
Materials Cost Ratio 67.04 67.3 59.90 63.19

Materials Cost Ratio

68

66
64

RATIO 62
Materials Cost Ratio
60
58

56
2007 2006 2004 2003
YEAR

• Interpretation:

The Material Cost ratio in 2007, 2006, 2004 and 2003 is 67.04, 67.3, 59.90 and 63.19
respectively. The Material Cost ratio is very high.
 • Operating Ratio = Cost of Goods Sold + Operating Expenses /
Sales * 100

Particulars 2007 2006 2004 2003

Cost of Goods Sold 1,076,253,832 756,065,488 569,265,804 466,637,879
Operating Expenses 574,896,657 451,363,513 456,543,879 465,529,996
Sales 1,600,841,511 1,158,793,028 941,448,759 749,643,176
Operating Ratio 103.14 104.2 108.96 124.34

Operating Ratio

140
120
100
80
RATIO
60
Operating Ratio
40
20
0
2007 2006 2004 2003
YEAR

• Interpretation:

The Operating ratio is very high. This is not good for company. The operating ratio in
2007, 2006, 2004 and 2003 is 103.14, 104.2, 108.96 and 124.34 repectively.
 • Net Profit Ratio = 100% - Operating Ratio

Particulars 2007 2006 2004 2003

Operating Ratio 103.14 104.2 108.96 124.34
Net Profit Ratio -3.14 -4.2 -8.96 -24.34

Net Profit Ratio

-5

-10
RATIO
-15 Net Profit Ratio

-20

-25
2007 2006 2004 2003
YEAR

• Interpretation

The Net Profit ratio shows a loss for the years 2007, 2006, 2004 and 2003. The net
profit ratio is -3.14, -4.2, -8.96 and -24.34 respectively.
FINDINGS
 FINDINGS

 Current ratio is good in 2007 and 2006 but in 2004 is low. An ideal current ratio is
2:1

 A quick ratio of 1:1 is usually considered satisfactory it is again a rule of thumb

only. In 2007 and 2006 comparatively other two years.

 In 2006 Absolute Liquid ratio is 2.26. In means that more than 50% of current
assets are highly liquid.

 The Debt-Equity ratio of company in 2007 is 0.71 and it is well.

 Inventory ratio us a clear indication that in 21.79% of current assets are locked up
in the form in inventory in 2007.

 In 2007 and 2003 inventory ratio are more than 2006 and 2004. The company
working capital might be tied up in finance inventory.
CONCLUSION
 CONCLUSION

Number of factors should be taken into consideration before reaching a conclusion about
short-term and long-term financial position and performance of the concern.

Some of the factors are

 Type of business carried on.

 Type of product manufacture.
 Reputation of the concern.
 Type of assets available to invest.
 Type of funds brought in for working.

The company is integrated specialized manufacturing food production. For systematic

long rang planning will serve vital and dynamic document, which will guide General
Mills India Pvt Ltd. In the years to make a profit, and further to improve the service to the
specialized food products as well as customers, the food production will be exported to
some of the most discerning markets of the world.

General Mills India Pvt Ltd faces its future nit with apprehension but with full confidence
and in process serve, its owner, the government, its customer, its employees and its
suppliers by effectively fulfilling the role that has been assigned to it.
LIMITATION
 LIMITATION

Following are the limitions which were faced on the project.

Limitation of primary data

Managers executive of a company are not ready to share confidential information about
certain financial issue. Official are bound by some rules and regulation of company so
they are not able.

Confidential financial information cannot be disclosed

Official of a company cannot be disclosed confidential financial information.

Other

 The study is limited to “GENERAL MILLS PVT LTD” and the findings need not
apply in a similar sense to other similar firms.

 The data available are based on annul reports.

 The time was very limited and hence one could not probe as deep into the
problem as one would have linked to.

 The objective was to collect as much as possible having no access to other records
of the company except the published statements, the interpretation of the results
might not be perfect and accurate.
RECOMMONDATIONS
 RECOMMONDATIONS

 The company should maintain the current ratio for the years by proper
maintaining current assets and current liabilities.

 The company should properly utilize its liquid assets by employing it in better
technologies. Which may increase the efficiency and quality of the products?

 The company should reduce cost of production and also operating cost, which
may ultimately increase the profits of the company.

 The company should improve our competitiveness through improved material

utilization and reduced process cost.

 The company should increase there efficiencies of net working capital and to
maintain adequate level of working capital.
BIBLIOGRAPHY
 BIBLIOGRAPHY

Books:-

Financial Management: - Prasanna Chandra

Financial Management: - Ravi M. Vechalakar

Cost & Management Account: - Ravi Kishor

Magazines:-

Annual General Report

Company Document

Internet Cities:-

www.genmills.com

www.google.com.