A

PROJECT REPORT
ON

‘WORKING CAPITAL MANAGEMENT’

IN
BRITANNIA INDUSTRY LIMITED
FOR

THE PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE DEGREE OF

MASTER OF BUSINESS ADMINISTRATION (2008-10)

FROM

SARASWATI INSTITUTE OF
MANAGEMENT
AND TECHNOLOGY
(AFFILIATED TO UTTRAKHAND TECHNICAL UNIVERSITY DEHRADUN)

SUBMITTED TO: SUBMITTED BY:

Mr. Mudit Agarwal Mr. Prakash Chandra
Tiwari
(Accounts Manager) MBA III (semester)
1
 ACKNOWLEDGEMENT

It is not a single man’s effort which is sufficient for the accomplishment of a

research. No task can be successfully by a single individual. I acknowledge here the
names of those people who have been instrumental in preparation of my project.

I readily acknowledge my indebted to my parents whose support, dedication

and honest efforts have given me an immense help in doing this project.

It gives me immense pleasure to express my deep sense of gratitude and

appreciation to my external guides Mr. Mudit Agarwal, Mr. Sumit Mathur and
his team whose constant encouragement and valuable suggestions gave back bone
support in completing this project.

I take the opportunity to thanks Mr. SUMIT MATHUR for motivating,

encouraging, guiding and supporting at every step and sparing his valuable time for
me.
Last but not the least I record my sincere thanks to all beloved and
respectable persons who helped me and could find any separate mention.

Above all I praise “GOD” the most beneficial, the most merciful that I have
been able to complete my training project successfully.

2
 Prakash Chandra

Tiwari

DECLERATION

I Prakash Chandra Tiwari student of MBA III sem. of Saraswati Institute of

Management and Technology (SIMT) hereby declare that this project report on
“WORKING CAPITAL MANAGEMENT” is written and submitted by me
under the guidance of Mr. Mudit Agarwal & Mr. Sumit Mathur is my original
work. The entire analysis and conclusion of this report are based on the information
which is collected by me during the training period.
The empirical finding in the report are based on the data collected myself
while preparing this project. I have not copied any thing from any source or other
project submitted for the similar purpose, if any.

Prakash Chandra

Tiwari
3
 PREFACE

It gives great pleasure to present on the topic of “Working Capital Management”

of Britannia industries limited. I have selected this topic because to know about the
relationship between current assets and current liabilities.

As “Working Capital Management” holds an important place in the theory of

Finance. A large number of tools and techniques have been developed in the past to
insure optimal allocation of Working Capital Management funds more than Eighty
Percent of finance manager is spent in dealing with day to day problem which are
part & parcel of working capital requirements of the enterprise. Efficient use of
working capital has direct bearing on profitability of an enterprise. It augments the
productivity of the investment in the fixed assets. Basic survival of the firm may be
at stake if adequate working capital is not available in time. It is essential to
maintain constant supply of working capital for healthy growth of an enterprise.

Management of working capital assumes added significance in the context of small

scale and medium sized industries in our country. Most of them have weak financial
base and limited access to the institutional finance. Their risk capacity is also low.
Working capital management deals with management of each of the firm current
assets in such way that is maximizes the value of the firm.

4
 In any economy, the financial sector plays a major role in the mobilization and
allocation of savings. In changing economic environment, manufacturing industries
have to become more competitive, they have to keep their cost in check an efficient
use of working capital would release the funds locked in the current assets.

Table of CONTENTS
 Introduction
⇒ About Britannia industries
 Company overview
 Company profile
 Board of directors
 Mile stones
 History of Biscuits
 Company Products
 Activities of the company
 Achievement of company

 Introduction
⇒ About Britannia industries Pantnagar unit

• Company profile
• Departments of Britannia Rudrapur
• Production in Rudrapur branch
• Principles of the company
• Objective of the Rudrapur branch
 Introduction about the topic-Working capital management
 Objectives of the study
5
 Research Methodology
o Method of Data collection
o Objective of Research
o Limitations
 Analysis & Findings
 Recommendations
 Conclusions
 Bibliography

CHAPTER-I
INTRODUCTION
ABOUT
THE COMPANY
6
 COMPANY OVERVIEW

The story of one of India’s favorite brands reads almost like a fairy tale. Once upon
a time, in 1892 to be precise, a biscuit company was started in a nondescript house
in Calcutta (now Kolkata) with an initial investment of Rs. 295. The company we all
know as Britannia today.

The beginnings might have been humble-the dreams were anything but. By 1910,
with the advent of electricity, Britannia mechanized its operations, and in 1921, it
became the first company east of the Suez Canal to use imported gas ovens.
Britannia’s business was flourishing. But, more importantly, Britannia was
acquiring a reputation for quality and value. As a result, during the tragic World
War II, the Government reposed its trust in Britannia by contracting it to supply
large quantities of “service biscuits” to the armed forces.
As time moved on, the biscuit market continued to grow and Britannia grew
along with it. In 1975, the Britannia Biscuit Company took over the distribution of
biscuits from Parry’s who till now distributed Britannia biscuits in India. In the
subsequent public issue of 1978, Indian shareholding crossed 60%, firmly
establishing the Indian ness of the firm. The following year, Britannia Biscuit

7
Company was re-christened Britannia Industries Limited (BIL). Four years later in
1983, it crossed the Rs.100crores revenue mark.

On the operations front, the company was making equally dynamic strides. In
1992, it celebrated its Platinum Jubilee. In 1997, the company unveiled its new
corporate identity – “Eat Healthy, Think Better” – and made its first foray into the
dairy products market. In 1999, the “Britannia Khao, World Cup Jao” promotion
further fortified the affinity consumers had with ‘Brand
Britannia’.

Britannia strode into the 21st Century as one of India’s

biggest brands and the pre-eminent food brand of the country. It was equally
recognized for its innovative approach to products and marketing: the Lagaan Match
was voted India’s most successful promotional activity of the year 2001 while the
delicious Britannia 50-50 Maska-Chaska became India’s most successful product
launch. In 2002, Britannia’s New Business Division formed a joint venture with
Fonterra, the world’s second largest Dairy Company, and Britannia New Zealand
Foods Pvt. Ltd. Was born. In recognition of its vision and accelerating graph, Forbes
Global rated Britannia ‘One amongst the Top 200 Small Companies of the World’, and
“The Economic Times” pegged Britannia India’s 2nd Most Trusted Brand.
Today, more than a century after those tentative first steps, Britannia’s fairy tale
is not only going strong but blazing new standards, and that miniscule initial
investment has grown by leaps and bounds to crores of rupees in wealth for
Britannia’s shareholders. The company’s offerings are spread across the spectrum
with products ranging from the healthy and economical Tiger biscuits to the more
lifestyle-oriented Milkman Cheese. Having succeeded in garnering the trust of
almost one-third of India’s one billion populations and a strong management at the

8
helm means Britannia will continue to dream big on its path of innovation and
quality. And millions of consumers will favor the results, happily ever after.

COMPANY PROFILE
Registered office of Britannia Industries Limited is situated in West Bengal. This
company is registered under Companies Act, 1956.

Britannia Biscuits Company Limited was originally incorporated on 21st March

1918 under Indian Companies Act under the name “The Britannia Biscuits
Company Limited” under section 21 of Companies Act and approval of Central
Government.

The main aim of the Company is to make available good and improved quality
biscuits to each and every part of the country.

The Company has got ISO14001certificate and it is ISO 22000 certified.

The Company was established at the Pantnagar branch on 1st April 2005 mainly
for production with a production coverage area of approximately 20 acres.

The control of management is through Board of Directors.

9
 The Company’s head and registered office and works place are located at the
below mentioned addresses:

Registered & Head office: - Britannia Industries Limited

5/1A, Hungerford Street
Kolkata- 700017

Works Places: - (a) Britannia Industries Limited

33, Industrial Area
Lawrance Road,
Delhi- 110035

(b) Britannia Industries Limited

Plot No.1, Sector- 1

Integrated Industrial Estate

Pantnagar, Rudrapur- 263153

(c) Britannia
Industries Limited
15, Taratola road,
Kolkata – 700088
10
BOARD OF DIRECTORS

Name Designation

Mr. Nusli Neville Wadia Chairman

Ms. Vinita Bali Managing Director

Mr. A.K.Hirjee Director

Dr. Ajai Puri Director

Mr. Avijit Deb Director

11
 Mr. Jeh N Wadia Director

Mr. Keki Dadiseth Director

Mr. Nimesh N Kampani Director

Mr. Pratap Khanna Director

Mr. S.S.Kelkar Director

MANAGEMENT TEAM

12
GAUTAM BANERJEE -
ASHOK KUMAR GUPTA -
R K AGRAWAL -
R S SUBRAMANIAM -
Projects
ANURADHA NARASIMHAN -
SHALINI DEGAN -
BALAJI REDDIPALLI -
R. ANAND -
JEHANGIR TANKARIWALA -
VINOD MENON -
SHRIDHAR PANSHIKAR -
PURNENDU ROY -
P. GOVINDAN -
Dr. K.N. SHASHIKANTH -
VALIVETI V PADMANABHAM -
13
General Manager - Materials
General Manager - Accounts & Planning
General Manager – Manufacturing
General Manager – Technology, Strategy,
Engineering
Category Director - Health & Wellness
Category Director - Delight & Lifestyle
Head Replenishment
Business Operations Director
General Manager - Human Resources
Head of BNZF
National Sales Manager
Head of R&D
Company Secretary & Head of Legal
Corporate Quality Assurance Manager
Corporate Manager - Information Systems
 MILESTONE
1892 The Genesis – Britannia established with an investment of
Rs.295 in a small house in central Calcutta.
1910 Advent of electricity sees operation mechanized

1921 Imported machinery introduced ; Britannia becomes the first

company East times to reach Rs.1.36crore

1939-44 Sales rise exponentially to Rs.16,27,202 in 1939 During

1944 sales ramp up by more than eight times to reach
Rs.1.36crore
1975 Britannia Biscuit company takes over biscuit distribution
from parry’s
1978 Public issue – India shareholding crosses 60%

1979 Re-christened Britannia industries ltd.(BIL)

1983 Sales crossed Rs.100 crore.

1989 The executive office relocated to Bangalore

1992 BIL celebrate its platinum jubilee and launched ‘Little Heart’

1993 Wadia Group acquires stake in ABIL,UK and becomes an

equal partner with Group DANONE in BIL
1994 Volume cross 1,00,000 tons of biscuits

1997 Re-birth-new corporate identity ‘Eat Healthy, Think Better’

leads to new mission. Make every third Indian a Britannia
consumer BIL enters the dairy product market

14
1999 “Britannia Khao World Cup Jao” a major success profit up
by 37 %

2000 Forbes Global Ranking- Britannia among Top 200 small

companies. Britannia was ranked No.1food brand of the
company.
2001 BIL ranked one of India’s biggest brands No.1 food brand of
the country.

2002 BIL launches joint venture with Fonterra, the world’s second
largest dairy company
Britannia New Zealand Foods Pvt. Ltd. Is born
Economic Times ranks BIL India’s 2nd Most Trusted Brand
Pure Magic –Winner of the World star, Asia star and India
star award for packaging
2003 ‘Treat Duet’- most successful launch of the year

2004 Britannia accorded the status of being a ‘Super brand’

Volumes cross 3,00,000 tons of biscuits Good
Day adds a new variant – Coconut – in its range

2005 Re-birth of Tiger – ‘Swasth Khao, Tiger Ban Jao’ becomes

the popular chant! Britannia launched ‘Greetings’ range of
premium assorted gift packs.

The new plant in Uttarakhand, commissioned ahead of

schedule. The launch of yet another exciting snacking option
– Britannia 50-50 Pepper Chakkar
2007 Britannia industries formed a joint venture with the khimji
Ramdas Group and acquired a 70% beneficial stake in the
Dubai- based Strategic Foods International Co.LLC and
65.4% in the Oman-based Al Sallan Food Industries Co.
SAOG.
2008 Britannia launched Iron fortified ‘Tiger biscuits, ‘Good Day
Classic Cookies’, Low Fat Dahi and renovated ‘Marie Gold’.

15
THE ORIGIN OF ‘EAT
HEALTHY THINK BETTER

Britannia –the ‘biscuit’ leader with a history-has withstood the tests of time. Part of
the reason for its success has been its ability to resonate with the changes in
consumer needs-needs that have varied significantly across its 100+ year epoch.
With consumer democracy reaching new levels, the one common thread to emerge
in recent times has been the shift in lifestyles and a corresponding awareness of
health. People are increasingly becoming conscious of dietary care and its
correlation to wellness and matching the new pace to their lives with improved
nutritional and dietary habits. This new awareness has seen consumers seeking
foods that complement their lifestyles while offering convenience, variety and
economy, over and above health and nutrition.

Britannia saw the writing on the wall. It’s “Swasth Khao Tan Man Jagao”
(Eat Healthy, Think Better) re-position directly addressed this new trend by
promising the new generation a healthy and nutritious alternative – that was also
delightful and tasty.

Thus, the new logo was born, encapsulating the core essence of Britannia – healthy,
nutritious, and optimistic – and combining it with a delightful product range to offer
variety and choice to consumers.

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 HISTORY OF BISCUITS

Sweet or Salty, Soft or Crunchy, Simple or Exotic, Everybody loves munching on

biscuits, but do they know how biscuits began? The history of biscuits can be traced
back to a recipe created by the Roman chef Apicius, in which “a thick paste of fine
wheat flour was boiled and spread out on a plate. When it had dried and hardened it
was cut up and then fried until crisp, then served with honey and pepper.”
The word ‘Biscuit’ is derived from the Latin words ‘Bis’ (meaning ‘twice’) and
‘Coctus’ (meaning cooked or baked). The word ‘Biscotti’ is also the generic term
for cookies in Italian. Back then, biscuits were unleavened, hard and thin wafers
which, because of their low water content, were ideal food to store.

As people started to explore the globe, biscuits became the ideal traveling food
since they stayed fresh for long periods. The seafaring age, thus, witnessed the
boom of biscuits when these were sealed in airtight containers to last for months at a

17
time. Hard track biscuits (earliest version of the biscotti and present-day crackers)
were part of the staple diet of English and American sailors for many centuries. In
fact, the countries which led this seafaring charge, such as those in Western Europe,
are the ones where biscuits are most popular even today. Biscotti is said to have
been a favorite of Christopher Columbus who discovered America!

Making good biscuits are quite an art, and history bears testimony to that. During
the 17th and 18th Centuries in Europe, baking was a carefully controlled profession,
managed through a series of ‘guilds’ or professional associations. To become a
baker, one had to complete years of apprenticeship – working through the ranks of
apprentice, journeyman, and finally master baker. Not only this, the amount and
quality of biscuits baked were also carefully monitored.

The English, Scotch and Dutch immigrants originally brought the first cookies to
the United States and they were called teacakes. They were often flavored with
nothing more than the finest butter, sometimes with the addition of a few drops of
rose water. Cookies in America were also called by such names as “jumbles”,
“plunkets” and “cry babies”.
As technology improved during the Industrial Revolution in the 19th century, the
price of sugar and flour dropped. Chemical leavening agents, such as baking soda,
became available and a profusion of cookie recipes occurred. This led to the
development of manufactured cookies.
Interestingly, as time has passed and despite more varieties becoming available,
the essential ingredients of biscuits haven’t changed – like ‘soft’ wheat flour (which
contains less protein than the flour used to bake bread) sugar, and fats, such as butter
and oil. Today, though they are known by different names the world over, people
agree on one thing – nothing beats the biscuit!

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 Our products
Little Hearts

Little Hearts was launched in 1993 and targeted the growing youth segment. A completely
unique product, it was the first time biscuits were retailed in pouch packs like potato
wafers. In 1997, the 'Direct Dil Se' campaign encouraged youngsters to openly express
their feelings. And in 2003, two variants called Little Hearts Chocolate and Little Hearts
Sesame were rolled out with a campaign "Dil sabka actually sweet hai". With Little Hearts,
Britannia has tasted the sweet taste of success.

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Britannia tiger Banana

Britannia is committed to help secure every child s right to growth and development
through good food every day. Purpose fully taking forward the credo of ‘Eat Healthy
Think Better’ launched a new variant under our power brand tiger.
Britannia Tiger Banana packed with IRON ZOR and goodness of banana is accessible to
all, being available to convenient pack priced at Rs.2, Rs.4and Rs.10.

Britannia Good Day

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Britannia Good Day was launched in 1986 in two delectable avatars - Good Day Cashew
and Butter. Over the years, new variants were introduced - Good Day Pista Badam in
1989, Good Day Chocochips in 2000 and Good Day Coconut in 2004.

TIGER:

Tiger, launched in 1997, became the largest brand in Britannia's portfolio inthe very first
year of its launch and continues to be so till today. Tiger has grown from strength to
strength and the re-invigoration in June 2005 has further helped bolster its growth in the
highly competitive glucose biscuit category.

TREAT

21
Britannia launched Treat in 2002. Treat has a range of tasty delights for all kids with yummy
creamy treasures within the biscuit shells. Britannia Treat offers a wide variety of flavors, such as
the classic Bourbon & Elaichi, the Fruit Flavored Creams such as Orange, Pineapple, Mango, and
Strawberry, the Jam Filled Centers under the Jim Jam range, and the Duet Range (biscuits with
two flavours of cream between three layers of biscuit) comprising Strawberry Vanilla and Duet
Strawberry Chocolate.

MARIE GOLD

Britannia's oldest brand enjoys a heritage that spans the last 50 years - and going strong. In a
market swamped with me-too products and where even the name 'Marie' has become generic,
Britannia Marie Gold has maintained its stronghold. Today, the ever-popular Marie Gold is
synonymous with the 'Tea Time Biscuit'. Its taste, crispiness and lightness make it a must for
every tea break. It is the #1 brand in its category by a long shot.

NUTRICHOICE

22
In continuation of the promise of "Swasth Khao, Tan Man Jagao," Britannia introduced
NutriChoice range of healthy biscuits in 1998. The brand is targeted towards overall health and
wellness for adults.
The range has for long comprised of three popular variants, namely NutriChoice Thin
Arrowroot, NutriChoice Cream Cracker and NutriChoice Digestive.

MILK BIKIS

Milk Bikis, the favorite growth partner of Kids, now brings greater value and delight to all with its
new product and pack design. Recently re-launched in its existing Southern & Eastern markets,
and extended across India, the new Milk Bikis is all set to add excitement and appeal to
‘nutritious’ food. Whoever said that ‘good food’ needs to look ‘dull and boring’, will just have to
take a look at Milk Bikis.
With a unique and attractive honeycomb design and an enhanced product experience, the new
23
biscuit prompts the ‘Kid’s will love it’ reaction amongst mothers.

BREAD

Till 1958, there were no breads in the organized sector and bread
consumption was a habit typed by the British. Then, a mechanized
bread unit was set up in Delhi with the name “Delbis” which produced sliced bread and
packed it under the Britannia name.
The Mumbai unit came up in 1963. And there again Britannia was the first branded
bread in the city.
Cakes

Britannia entered the cake market in the year 1963 and is the top player in the market.
Britannia Cakes range is divinely scrumptious and has both Bar Cakes and Cup Cakes

24
which were launched in 2005. Bar Cakes are available in variants that include Fruit, Butter
Sponge, Chocolate, Pineapple, Milk, Vanilla Chocolate and Orange.

RUSKS
Britannia launched its Rusks in the year 2005. In a Market full of unbranded players,
Britannia rusks have stood head and shoulders above the rest in terms of sheer quality
.They are made from the finest ingredients and baked with care as they are twice as crisper
as and tastier than ordinary rusks. The communication for this mouthwatering offering is
aptly “Enliven your spirits with Britannia rusks”.

ACTIVITIES OF THE
COMPANYA
C
T

I
V
I
T

I
E
S

O
F

SALES FINANCE &

T
IT
H
E
25
RESEARCH &
DEVELOPMENT
C
O
M
P
A
 Y

MARKETING

TECHNICAL &
EXPORT OPERATION

HUMAN
RESOURCE
PRODUCTION
&LEGAL

QUALITY E
ASSURANC

COMPANY PERFORMANCE (FY 2007-08)

26
For the year ended 31st march, 2008 our Company achieved a sale growth of 17.5% on an expanded
base arising from 27.5% growth in the previous year. Net profit of the Company increased 77.5%to
Rs. 1910 Mn compared to Rs. 1076 Mn in 2006-07. Operating margin increased by 307 basis points to
7.5%

Exceptional items for the year include Rs. 130.5 Mn towards amortization of VRS costs. Earnings
Share is Rs. 80 compared to Rs. 45.1 last year.

Achievement of the
company

27
THE Economic Times and AC Nielsen have announced the most trusted brands
rated by consumers all over India and across categories. Britannia was in the India
Top 10 list, ranked 9 across all categories and 2 in the food category. Last year,
Britannia rank was 7 and 2 respectively.

28
 CHAPTER-II
INTRODUCTION
ABOUT
THE
PANTNAGAR UNIT

INTRODUCTION ABOUT THE

UNIT
(PANTNAGAR BRANCH)
INTRODUCTION
29
 Britannia industries limited was established at Pantnagar on 1stApril 2005 in the
area of approximately 20 acres mainly for the purpose of production of biscuits as
this area is free from almost all types of taxes.

In Britannia Industries Limited there are many types of departments which

are inter connected to each other and work together for the welfare of the Company
as the whole. There is a well built communication system inside the Company
which helps in doing the work on time and with full efficiency and effectiveness.

The departments of the Company includes Quality assurance, Stores,

Production, Purchase, Maintenance, Engineering, Packaging and dispatch,
Personnel and training, Finance, legal and administrative security.

New concept like 5S is also being implemented in Britannia Industries

Limited. The Company has got ISO 14001 certificate and it is ISO 22000 certified.

There are four plants in operation in the Company at this branch. First plant is
for Marie Gold which has a flexi line for Good day also. Second plant is for Good
Day, Third one is for 50:50 variants, pepper chakkar and Maska Chaska. Forth and
last plant is for Bourbon which has a flexi line for Orange cream also.

COMPANY EVENTS

1) Bhumi Poojan of Britannia industries limited was on 1st April 2004.

30
 2) Machinery was set up on 21st March 2005.
3) Production trial was taken on 23rd March 2005 itself.
4) Actual production was started on 1st April 2005.
5) First dispatch of finished goods was done on 20th April 2005.
6) Biggest plant of the company is plant number two.
7) The company is set up in an area of approximately 20 acres.
8) Minimum production of the company is 200 tons per day.
9) Maximum production is 245.10 tons per day.
10) Control of management is through Board of Directors.
11) It is a public limited company.
12) The auditors of the company are Lovelock & Lewes.
13) The bankers of the company are:

 State Bank of India.

 Standard Chartered Bank.
 ABN Aroma Bank.

 City Bank.

 The Hong Kong & Shanghai Banking Corporation limited.

 Bank of America.
 HDFC Bank limited.
 ICICI Bank limited.

DEPARTMENTS OF THE
COMPANY

31
  HUMAN RESOURSE
 FINANCE
 PURCHASE
 PRODUCTION
 MAINTANANCE
 QUALITY ASSURANCE

HEADS OF DEPARTMENTS OF THE

COMPANY

Unit Head : Mr. V.K. Pruthi

Finance : Mr. Mudit Agarwal

Human Resource : Mr. Mayank Shrivastava

Production : Mr.Mahak Singh / Mr.Srinivasan Iyer/

Ms.Gunjan Chawla

Purchase : Mr. Anil Sharma

Engineering : Mr. Sajeev Khoshy

Quality : Ms Vaishali Pant

32
OBJECTIVES OF THE UNIT

 Working collaborators with the business partners.

 Quality products to customers.

 Continuous training and retraining of the employees to create culture that value

quality and food safety as a core pillar of the business.

 Investing in appropriate technology.

 To control the wastage and save time and efforts.

 To work under the principals of Kiazen, Hassap and 5 ‘S’

NUMBER OF PLANTS AND

PRODUCTION AT THE PANTNAGAR
BRANCH

Not all the brands of Britannia are produced in this branch only some brands of
biscuits are produced at this branch.
Production of biscuits in Britannia Pantnagar branch is divided in to four Plants.

1) Plant I

a) Good Day Butter

b) Good Day Pista Badam

33
2) Plant II

a) Good Day Cashew

b) Good Day Butter

3) Plant III

i) 50-50

ii) 50-50 Maska Chaska

iii) 50-50 Pepper Chakkar

4) Plant IV

a) Chocolate Bourbon

b) Orange treat

c) Milk Bikis Milk Cream

34
STORAGE AND USAGE OF RAW
MATERIAL
There are many types of raw materials which are used in Britannia for the production
of different types of biscuits. Some of them are – wheat flour, sugar, butter, skimmed
milk powder, cashew, salt, different types of fats which includes different oils, sodium
bi carbonate, ammonium bi carbonate etc.
Some of the materials which are used in Britannia industries need cold
storage while some needs normal storage. So on the basis of the need of different raw
materials they are stored in different storage places. The materials which are stored in
cold storage are at the temperature of 5 degree Celsius while the materials which need
normal storage are stored at the normal temperature. There classification of some of the
raw materials is as follows:

Normal storage raw material

 Sugar
 Ammonia
 Palm oil
 Salt
 Skimmed milk powder
 Wheat flour
 Cocoa powder
 GMS powder

Cold storage raw material

 Butter
 Condensed milk
35
  Essences
 Cashew

SWOT ANALYSIS

STRENGTH

 Goodwill of company
 Superior quality and service to provide maximum benefits to
customers.
 The family environment in the company.
 Continuous growth.
 Market share of the company.
 Fully Automation of the company.
 All India coverage.
 Economical Price.
 Tax benefit to the company.
 Financially a very strong company
 Dedicated work force.
 Effective well designed and developed production and marketing
network.

WEAKNESSES

 Wastage of the material.

 There is small board of Britannia at the entry gate.

36
  Unit is situated far away from main plant.
 Land is not properly utilized.
 Sound And Heat of machinery is high it effect the efficiency of worker.

OPPORTUNITY

 There must be more efficient utilization of the raw material.

 There can be minimization of waste.
 Land can be used more efficiently

 To hire the workers as permanent bases to reduce the contract labors, it

helps to motivate workers as a result the morale of workers increase

and the productivity of the workers too.
 There can be use of the foreign technologies for efficient utilization of
raw material so that the production of a biscuit can be increased.

THREATS

 New entrance in the business.

 Availability of the other brands.

 Taste and preference of customers.

 Threats of substitute products.

 Rivalry among the competitions.

37
 5s’ of Britannia industries
limited

I. SEIRI (Organization)

II. SEITON (Neatness)

III. SEISO (Cleanliness)

IV. SEIKETSO (Standardizations)

V. SHITSUKE (Discipline)

SEIRI (Organization)

It is sorting between waited and unwanted things in a selected area, region or

domain.

38
SEITON (Neatness)

It means a place for everything and everything in its place.

SEISO (Cleanliness)
It deals with the job of thoroughly cleaning the workplace.

SEIKETSO (Standardization)

It means standardization which is needed to maintain SEIRI,

SEITON and SEISO. It leads to use of visual management to avoid mistakes.

SHITSUKE (Discipline)

It means discipline which is called for strict adherence to a system form our present
unsystematic way.

39
 QUALITY AND FOOD SAFETY
POLICY OF THE COMPANY

The purpose of this policy is to ensure that we win through

quality in the market place. This means that we must do every thing’s to ensure
consistent delivery of quality products to the customers every time.
Our commitment to quality and food safety will be reflected in every action and
is non negligible. That means:

 All ingredients used in our factories always meet specified quality standards.

 All factories and depots maintain high standard of hygiene which ensures that

our products are healthy and safe for consumption.

 Our manufacturing products always ensure delivery of products consistent

with product and pack specifications which are free from contamination.

 Our supply chain practices enable delivery of fresh products to our customers.

40
We will fulfill these objectives through:-

 Investing in appropriate technology and equipping our factories adequately.

 Working Collaborate with our business partners to create ‘win win’ business

Outcomes.

 Developing process which enable consistent delivery of quality products to

our customers.

 Continually training and retraining our employees and business partners to

create a culture that values quality and food safety as the core pillars of our

business.

CHAPTER-III
INTRODUCTION
ABOUT
41
 THE TOPIC
-WORKING CAPITAL
MANAGEMENT

Working capital
management
Working Capital Management is the process of planning and controlling the level and
mix of the current assets of the firm as well as financing these assets.

Decisions relating to working capital and short term financing are referred to
as working capital management. These involve managing the relationship between a
firm's short-term assets and its short-term liabilities. The goal of Working capital
management is to ensure that the firm is able to continue its operations and that it has
sufficient cash flow to satisfy both maturing short-term debt and upcoming operational
expenses.

WORKING CAPITAL:-
Definition Working Capital

42
Working Capital is the amount of funds necessary to cover the cost of operating the
enterprise.

Shubin

The term working capital refers to the amount of capital which is readily available to an
organization. That is, working capital is the difference between resources in cash or
readily convertible into cash (Current Assets) and organizational commitments for
which cash will soon be required (Current Liabilities).

Current Assets are resources which are in cash or will soon be converted into cash in
"the ordinary course of business".

Current Liabilities are commitments which will soon require cash settlement in "the
ordinary course of business.

Thus:

WORKING CAPITAL = CURRENT ASSETS - CURRENT LIABILITIES

Current Assets:-
 Liquid Assets (cash and bank deposits)
 Inventory
 Debtors and Receivables
 Prepaid Expenses
 Marketable Securities

Current Liabilities:-
 Bank Overdraft
 Creditors and Payables
 Notes Payable
 Accrued Expenses
 Other Short Term Liabilities

43
 WORKING CAPITAL- CONCEPTUAL
FRAMEWORK

The concept of working capital has been matter of greater controversy among
the financial wizards. Broadly speaking different view on working capital can
be categorized into two groups, viz. gross concept and net concept these two
concepts are not to be regarded as mutually exclusive each has its relevance
in specific situation .gross working capital is deal with the problem of
managing individual current assets in day to day operations. Thus gross
concept is in nature of a quantitative definition that focuses attention on the
level of current assets for given activity.

The emphasis ,however ,shift when we consider the net working concept .this
is a qualitative definition which focuses attention on the character of the
sources from which the fund have been procured to support that portion of
current liabilities.

WORKING CAPITAL MANAGEMENT

INTRODUCTION TO THE TOPIC:-

It involves the relationship between a firm's short-term assets and its short-term
liabilities. The goal of working capital management is to ensure that a firm is able to
44
continue its operations and that it has sufficient ability to satisfy both maturing
short-term debt and upcoming operational expenses. The management of working
capital involves managing inventories, accounts receivable and payable, and cash.

Working capital is represented by current assets .It constitutes a dominant segment

of investment ,particularly in manufacturing enterprises management of working
capital assumes added significance in the context of small scale and medium sized
industries in our country .most of them have weak financial base and limited access
to the institutional finance .their risk capacity is also low. An effort is to reduce or
optimize its size releases funds and improves profitability working capital
management deals with management of each of the firm’s current assets in such a
way that maximizes the value of the firm.
Shortage of funds for working capital as well as the uncontrolled over
expansion has caused many business to fail and in less severe cases has stunted their
growth .specially in small firms, working capital management may be the factor that
decides success or failure: in large firms, efficient working capital management can
significantly affect the firm’s risk, returns and share price.
Commercial banks are the major source of finance to the industry and commerce
banks in India provides mainly short term credit for financing working capital needs
.the various types of advances provided by them are: loans cash credit and
overdrafts are running accounts .borrower can draw funds up to the sanctioned
credit limit interest is charged on the daily outstanding amount.

WORKING CAPITAL CONCEPT:-

There are two concept of working capital:
 Balance Sheet Concept
 Operating Cycle or Circular Flow Concept

Balance Sheet Concept

45
 There are two interpretation of working capital under the Balance sheet
concept.

 Gross working capital

 Net working capital

 Gross working capital:-

The terms “gross working capital “, refers to the firms investment in current
assets .current assets are the assets which can be converted into a cash within an
accounting year .and includes cash, short term securities, debtors bill receivable, and
stock also referred to as total current assets.

 Net working capital:-

The term net working capital can be defined as two ways:
(I) The most common definition of net working capital (NWC) is the difference
B\W
Current assets &current liabilities.

(ii) NWC is that portion of firm’s current assets which is financed with long term
funds.
Working capital management involves not only administration of firm’s current
assets: viz. cash and marketable securities, receivables and inventory – but also
the
financial needed to support current assets.
Current assets of a typical manufacturing firm account for more than half of its
total
assets Firms invest in inventory, which consist of raw material, work in
progress
and finished goods .the cost of holding inventory includes not only storage cost
or
risk of obsolescence but also the opportunity cost of capital.

Another important current assets is account receivable. When one company sells
goods to another company or a govt. agency it does not usually expect to be paid
immediately. This trade credit builds up account receivable.

46
 The other important Current Assets is cash & marketable securities. Current
assets may typically vary from industry to industry .A company should monitor and
control inventory and receivables closely. In a typical fast growing company
investment in such assets can go out of control. Too few current assets may result in
frequent shortage and problem in smooth operations of the firm, while excessive
investment in current assets in sub optimal return on investment.

A firm may finance current assets through a variety of short term loans. A typical
small company resorts to current assets financing through current liabilities alone
these firms do not have access to long term capital market. Some firm do get finance
through banks and from other private financers at a high interest rate.
Short term financial decision involves management of short term assets
and liabilities and usually they are easily reversed .A finance manager responsible
for short term financial decisions does not have look far into the future.

The fundamental issues in management in the working capital are:-

 The optimal of investment in the current assets.

 The appropriate mix of short term and long term financing used to support
this investment in the current assets.

47
 A. Operating Cycle or Circular Flow
Concept.

The circular flow concept of working capital is based upon this operating or
working cycle of a firm. The cycle starts with the purchase of raw material and
other resources and ends with the realization of cash from the sale of finished
goods. It involves purchase of raw material and stores, its conversion into stock
of finished goods through work-in-progress with progressive increment of labour
and service costs, conversion of again from cash to purchase of raw material and
so on. The time duration required to complete one cycle determines the
requirements of working capital-longer the cycle, large is the requirement of
working capital.

Thus gross operating cycle of a firm is equal to the length of the inventories
and receivables conversion period. Thus

Gross Operating Cycle = RMCP + WIPCP + FGCP + RCP

Where: - RMCP = Raw Material Conversion Period

WIPCP = Work-in-process Conversion Period
FGCP = Finished Goods Conversion Period
RCP = Receivables Conversion period

48
 Net operating cycle period = Gross operating cycle Period
-Payable
Deferral Period

NEED FOR WORKING CAPITAL

The need for working capital to run day to day business activities cannot be
overemphasis. We will hardly find a business firm which does not require any
amount of working capital.
We know that the firm aims at maximizing the wealth of the shareholder. In its
endeavor to maximize shareholder wealth the firm should earn sufficient return
from its operation earning a steady amount of profit requires successful sales
activity. The firm has invested enough funds in current assets for the success of
sales activity. Current assets are needed because sales do not convert into cash
instaneously. There is always operating cycle involved in the conversion of cash.

THE IMPORTANCE OF GOOD

WORKING CAPITAL MANAGEMENT

 Solvency of the business-

 To Maintain good will-
 Easy Loans-
 Cash Discount-
 Regular Supply of Raw Material-
 Regular Payment of Salary, Wages, Other day-to-day expenses-
49
  Exploitation of favorable market conditions-
 Ability to face crisis-

APPROACHES TO WORKING
CAPITAL MANAGEMENT:-

The objective of working capital management is to maintain the optimum balance of

each of the working capital components. This includes making sure that funds are
held as cash in bank deposits for as long as and in the largest amounts possible,
thereby maximizing the interest earned. However, such cash may more
appropriately be "invested" in other assets or in reducing other liabilities.

Ratio analysis can be used to monitor overall trends in working capital and to
identify areas requiring closer management.

The individual components of working capital can be effectively managed by using

various techniques and strategies

When considering these techniques and strategies, departments need to recognize

that each department has a unique mix of working capital components. The
emphasis that needs to be placed on each component varies according to
department. For example, some departments have significant inventory levels;
others have little if any inventory.

Furthermore, working capital management is not an end in itself. It is an integral

part of the department's overall management. The needs of efficient working capital
management must be considered in relation to other aspects of the department's
financial and non-financial performance.

50
 USES OF WORKING
CAPITAL MANAGEMENT

Working Capital is the money used to make goods and attract sales. The less
Working Capital used to attract sales, the higher is likely to be the return on
investment. Working Capital management is about the commercial and financial
aspects of Inventory, credit, purchasing, marketing, and royalty and investment
policy. The higher the profit margin, the lower is likely to be the level of Working
Capital tied up in creating and selling titles. The faster that we create and sell the
books the higher is likely to be the return on investment.

MANAGEMENT OF WORKING
CAPITAL

Working Capital management involves the problem of decision making regarding

investment in various current assets with an objective of maintaining the liquidity of
funds of the firm to meet its obligation promptly and efficiently. The basic goal of
working capital management is to manage the current assets and current liabilities of
51
a firm in such a way that a satisfactory level of working capital is maintained, it is
neither inadequate nor excessive.

The management of working capital has-been studies under the following three
heads-

1- Management of Cash Balance.

2- Management of receivable.
3- Management of Inventory.

1- Management of Cash Balance: -

Cash is one of the current assets of a business. It is needed at all times to keep
business concern should always keep sufficient cash for meeting its obligations.
Any shortage of cash will hamper the operations of a concern and any excess of
it will be unproductive.

Cash not only include hard cash but also include which can be easily
converted into cash with in no time.

Tool for Cash Control:-

a) Cash Budget.
b) Inflow or Outflow of cash.
c) Ratio Analysis.

2- Management of receivable: -

“Receivable result from credit sales”. A concern is required to allow credit sales
in order to expand its sales volume. It is not always possible to sell goods on

52
cash basis only. Sometimes, other concerns in that line might have established a
practice of selling goods on credit basis. Under these circumstances, it is not
possible to avoid credit sale without adversely affecting sale.

Tool for receivable control:-

a) Deciding acceptable level of risk.

b) Terms of credit sale.
c) Credit collection policy.
3- Management of Inventory: -

Inventories mean the stock of the product and the components of the product
that is Raw Material, W-I-P, Finish good, Spares. Inventories hold the prime
position among the current assets in India. In India, about 60% of the current
assets are representing by inventories.

Thus large part of working capital is invested in inventories. The management

of inventories is therefore necessary to avoid heavy losses due to leakage,
theft and wastage because neglecting the management of inventories may
jeopardize the long run profitability of the concern and the concern may fall
ultimately. Inventory management will minimize these costs.

Tool for Inventories control:-

a) Classification and identification of inventories.

b) Adequate storage facilities.

53
 c) Record of inventories.
d) Standardization and simplification of inventories.
e) Use the appropriate method of inventory control for ex. - JIT, HML,
EOQ, FSN etc.
f) Intelligent and experience person.

 Commercial bank
Sources of  Indigenous

Working capital bankers

 Trade creditors

 Long term sources (Permanent or  Installments

Fixed) credit
 Short term Sources (temporary)  Advances
 Account
receivable
Permanent or Fixed
Temporary or Variable

54
  Shares
 Debentures
 Public deposits
 Ploughing back
of profits
 Loans from

financial
institutions

Permanent
or Fixed Source:-
Permanent or Fixed Working Capital is the minimum amount
which is required to ensure effective utilization of fixed facilities and for
maintaining the circulation of current assets. There is a minimum level of current
assets which is continuously required by the enterprise to carry out its business
operation.

55
 Characteristics of Permanent Working
Capital:-

 It is classified on the basis of the time period.

 Its Size increase with the growth of business operation

 It constantly changes from one asset to another and continues to remain

the business process.

Some of the sources of Permanent Working Capital are given below:-

Shares: Issue of share is the most important source for raising the permanent or
long term capital. A company can issue various types of shares as equity shares,
preference share and differed shares. According to company act, 1956 a public
company cannot issue differed shares. As far as possible, a company should raise
the maximum amount of permanent capital by the issue of share.

Debentures: A debentures is an instrument issued by the company

acknowledging its debt to its holder. It is also an important method of raising long
term or permanent working capital. The debenture holders are the creditors of the
company. A fixed rate of interest is paid on debenture. The interest on debenture is a
charge against profit and loss account.

Public deposits: public deposits are the fixed deposit accepted by a

business enterprise directly from the public. This source if raising short term and
medium term finance was very popular in absence if banking facilities earlier time
56
period 6 month to 1 year. But now a day even long term deposits for 5 to 7 year are
accepted by the business houses. Public deposit as a source of finance have a large
number of advantages such as very simple and convenient source of finance ,
taxation benefit , trading on equity, no need of securities and an inexpensive source
of finance.

Ploughing Back Of Profit: Ploughing back of profit means the re-

investment by concerns of its surplus earning in its business. It is an internal source
of finance and is most suitable for an established firm for its expansion,
modernization and replacement etc.

Loans from financial institution: Financial Institution such as

Commercial bank, Life Insurance Corporation, Industrial Finance Corporation of
India etc. also provides short term and long term loans. This source of finance is
more suitable to meet the medium of working capital. Interest is charged on such
loans at a fixed rate and the amount of the loan is to be repaid by way of
installments in a number of years.

Temporary or variable source:-

Temporary Working Capital is the amount of Working Capital which is required to
meet the seasonal demand and some special exigencies.

57
Characteristics of Temporary Working
Capital:-

It is not always gainfully employed, though it may change from one asset to another
asset, as permanent capital does.

It is particularly suited to business of a seasonal or cyclical nature

Some of the sources of Temporary Working Capital are given below:-

Commercial bank: Commercial banks are the most important

source of short term capital. Different forms in which the bank normally provide
loans and advance are as follows-

Loans: When a bank an advance in lump sum against some security it is

called a loan. Commercial bank generally provides short term loans up to 1 year for
meeting working capital requirement.

Overdrafts: Overdrafts means an agreements with a bank by which a current

account holder is allowed to withdraw more than the balance to his credit up to a
certain limit.

The interest is charges of daily overdrawn balances. The main difference between
cash credit & overdraft is that overdraft is allowed.

58
  Indigenous Bankers: Private money lenders and other country
bankers used to be the only source of finance, prior to the establishment of
commercial banks. They charge a very high rate of interest but now a day
with development of commercial banks, they have lost their monopoly but
even today some houses have to depend upon indigenous bankers for
obtaining loans to fulfill their requirement.

Trade creditors: Trade credit refers to the credit extended by the suppliers
of goods in the normal course of business. The trade credit arrangement of a firm
with its suppliers in an important source of short term finance. The main advantages
of trade credit as a source of short term finance include:

It is an easy and convenient method of finance.

It is flexible as the credit increases with the growth of the

firm.

It is informal and spontaneous source of finance.

Installment Credit: This is another method by which the assets are

purchased and the possession of goods is taken immediately but the payment is
made in installments over a predetermined period of time generally, interest is
charged on the unpaid price or it may be adjusted in the price. But in any case it
provides funds for sometimes and is used as a source of short term working capital
by many business houses which have difficult fund position.

59
  Advances: Some business houses
get advances from their customers and agents
against orders and this source is a short term source of finance for them. It
is a cheap source of finance and in order to minimize their investment in
working capital, some firm having long production cycle, specially the
firms manufacturing industrial products prefer to take advances from their
customer.

 Account receivable: Another method of raising short-term

finance is through account receivable credit offered by commercial banks
and factors.

Accrued expenses: Accrued expenses are the expenses which have

incurred but not hence not yet paid also. These simply represent a liability that a
firm has to pay for the services already received by it. The most important item of
accruals is wages and salaries, Interest and taxes.

Commercial papers: Commercial paper represents unsecured promissory

notes issued by the firm to raise short-term funds. It is an important money market
instrument in advance countries like U.S.A. In India, the Reserve Bank of India
introduced commercial paper in the India money market on the recommendation of
the working group on Money Market (Vaughal Committee).
60
FACTORS DETERMINING
WORKING CAPITAL
REQUIREMENT

1 Nature or Character of business

2 Size of Business/ Scale of Operation

3 Production policy

4 Manufacturing Process/Length of production Cycle

5 Seasonal variations

6 Working capital cycle

7 Rate of Stock Turnover

8 Credit policy

9 Business Cycle

10 Rate of Growth of Business

11 Earning Capacity and Dividend Policy

12 Price Level Changes

13 Other Factors

61
 ITEMS AFFECTING THE
LEVEL OF WORKING
CAPITAL

Items that reduce Working Capital Items that increase Working

levels for publishers Capital levels for publishers
1-Increased profit margins 1- Lower profit margins
2- Customers who pay promptly 2- Long print runs except where all the
books are required on publication e.g.
School and university textbooks
3- Inventory which is sold and paid for 3- Slow authors who deliver late and
quickly by customers after publication whose manuscripts require substantial
editing
4- Lower Inventory levels by reducing 4- Holding paper stock unless market
print quantities and working with printers conditions demand and the savings are
who will deliver quickly and produce low large
print runs economically
5- Successful promotion that speeds up the 5- Slow schedules for the development of
rate of sale new titles
6- Slow schedules for the development of 6- Making advance payments to printers
new titles

62
MEASURES TO IMPROVE WORKING
CAPITAL MANAGEMENT:-

The essence of effective Working capital management is proper cash flow

forecasting. This should take into account the impact of unforeseen events, market
cycles, loss of a prime customer and actions by competitors. The effect of
unforeseen demands of Working capital should be factored in.
It pays to have contingency plans to tide over unexpected events. While market-
leaders can manage uncertainty better, even other companies must have risk-
management procedures. These must be based on objective and realistic view of the
role of Working capital.

Addressing the issue of Working capital on a corporate-wide basis has certain

advantages. Cash generated at one location can well be utilized at another. For this
to happen, information access, efficient banking channels, good linkages between
production and billing, internal systems to move cash and good treasury practices
should be in place.

An innovative approach, combining operational and financial skills and an all-

encompassing view of the company’s operations will help in identifying and
implementing strategies that generate short-term cash. This can be achieved by
having the right set of executives who are responsible for setting targets and
performance levels.

Effective dispute management procedures in relation to customers will go along way

in freeing up cash otherwise locked in due to disputes. It will also improve customer
service and free up time for legitimate activities like sales, order entry and cash
collection. Overall, efficiency will increase due to reduced operating costs.

63
Collaborating with your customers instead of being focused only on own operations
will also yield good results. If feasible, helping them to plan their inventory
requirements efficiently to match your production with their consumption will help
reduce inventory levels. This can be done with suppliers also.

WORKING CAPITAL FINANCING POLICY

 HEDGING FINANCING POLICY

 CONSERVATIVE FINANCING POLICY
 AGGRESSIVE FINANCING POLICY

Hedging financing policy: This requires that financing of each

asset would be offset with a financing of each asset would be offset with a financing
instrument of approximately the same maturity. Short term or seasonal variations in
current assets would be financed with short term debt. The fixed assets and the
permanent component of current assets would be financed with long term debt or
equity. And the firm can adopt a financial plan which matches the expected life of
source of fund s raised to finance assets.

Conservative financing policy: A firm can adopt a conservative

approach in financing its current and fixed assets. a financial policy of the firm is
said to be conservative when its depends more on long term funds for financing
needs .under a conservative plan, the firm finances its permanent assets and also a
part of temporary current assets, with long term financing .

Aggressive financing policy: A firm may be aggressive in financing its

assets. An aggressive policy is said to be followed by the firm when it uses more
short term financing than warranted by matching plan .under a aggressive policy,
the firm finance a part of permanent current assets with short term financing .

64
Principles OF WORKING CAPITAL
management

 Principle of Risk Variation: Risk here refers to the

inability of a firm to meet its obligations and when they become due for
payment. Large investment in current assets with less dependence on short
term borrowing increases liquidity, reduce risk thereby decreases the
opportunity for gain or loss. On the other hand less investment in current
assets with greater dependence on short –term borrowings increases risk,

65
 reduces liquidity and increases profitability. In other words, there is a definite
inverse relationship between the degree of risk and profitability.

 Principle of Cost of Capital: The various sources of raising

working capital finance have different cost of capital and the degree of risk
involved. Generally, higher the risk is the lower is the cost and lower the risk
higher the cost. A sound working capital management should always try to
achieve a proper balance between these two.

 Principle of Equity Position: This principle is concerned with

planning the total investment in current assets. According to this principle, the
amount of working a\capital invested in each component should be
adequately justified by a firm’s equity position. Every rupee invested in the
current assets should contribute to the net worth of the firm.

 Principle of Maturity of Payment: This principle is

concerned with planning the sources of finance for working capital.
According to this principle, a firm should make every effort to relate
maturities of payment to its flow of internally generated funds.

66
FORECAST/ ESIMATE OF WORKING
CAPITAL REQUIREMENT
“Working capital is the life blood and controlling never centre of a business.” No
business can be successfully run without an adequate amount of working capital. To
avoid the shortage of working capital at once, an estimate of working capital
requirements should be made in advance. For a manufacturing organization, the
following factors have to be taken into consideration while an estimate of working
capital.

Factor Requiring Consideration While Estimating Working Capital

1 Total costs incurred on material, wages and overheads.

The length of time for which raw material are to remain In stores before they are
2
issued for production.
The length of sales cycle during which finished goods are to be kept waiting for
3
sales.
The length of the production cycle or work in process, i.e., the time taken for
4
conversion of raw material into finished goods.

67
 5 The average period of credit allowed to customers.

6 The amount of cash required to pay day-to-day expenses of the business.

7 The average amount of cash required to make advance payments, if any.

8 The average credit period expected to be allowed by suppliers.

9 Time-lag in the payment of wages and other expenses.

ANALYSIS OF WORKING CAPITAL:-

There are three Techniques to analysis the working capital

 Schedule of change in working capital

 Ratio Analysis
 Fund statement

Schedule of change in Working Capital

The working capital of a business concern is subject to change due to several
business transactions. Working Capital represents excess of current assets over
current liabilities. The Schedule of Change in Working Capital presents a detailed
and analytical picture of changes in current assets and current liabilities during two
balance sheet dates.

Ratio Analysis
Ratio is one of the methods of analyzing financial statement. Ratio analysis
measures the Profitability, Efficiency and Financial soundness of the business

68
 According to Myers, ratio analysis is a “study of relationship among the
various financial factors in a business”.

Fund statement
Fund flow statement is the technique of analyzing and interpreting the financial
statement of business concern. It is a technical device designed to analyze the
changes in the financial or working capital position of a business enterprise between
two dates.
The Fund Flow Statement is a statement, depicting change in working capital.
It is also termed as a ‘statement of source and Application of Funds’, ‘Statement of
Change in Financial Position’, ‘Statement of Change in Working Capital’.

TECHNIQUES OF FORECASTING
WORKINGCAPITAL
1. Operating cycle method
2. Forecasting of current assets and current liabilities
3. Cash forecasting method
4. Projected balance sheet method
5. Profit & loss adjustment method

Operating cycle method:-

Operating cycle is the time duration with in one cycle of business operation is
completed. Business operations involve a number of stages from purchase of raw
material till conversion of receivable into cash.

69
Forecasting of Current Assets and
Current Liabilities:-
This is the Traditional method of forecasting the Working Capital requirements.
Working Capital is the excess of Current Assets over Current Liabilities; its
requirement can easily be forecasted by making the estimate of the amount of each
component of current assets and current liabilities. The procedure for estimating the
component is as under:-

• Stock of Raw-materials- The average amount of such stock of raw-

materials would depend upon the quantity of raw-materials required for
production during a particular period as well as upon the average time taken
in obtaining fresh delivery.

• Stock of Work-in-Progress - Raw-materials, wages, overheads are

included in the cost of work-in-progress. In order to determine the stock of
work-in-progress, the time-period for which the inputs will be in the process
of production will be determined.

• Finished Goods Stock- Finished goods are not immediately sold these are
to be kept in godowns or warehouses for certain period. This is an important
factor in determining the amount to be locked up in finished goods stock. On
the basis of year’s production, the amount of finished goods for the storage
period may be calculated.

70
 • Sundry Debtors- The amount of capital locked up in sundry debtors can be
computed on the basis of credit sales, period of credit allowed/time lag in
collecting the payments.

• Cash and Bank Balances- These are estimated on the basis of past
experience

• Sundry Creditors- This is estimated on the basis of credit purchases and the
time lag in payments to creditors/credit period allowed by suppliers of raw-
materials.

• Outstanding Expenses – These are ascertained having considered the time

lag in payment of various types of expenses.

Cash forecasting method:

This method is very much related to cash budgeting and it attempts to estimate the
cash surplus and deficiency.
Every operating cycle starts with a cash outflow and after passing through various
channels it ultimately ends with an inflow of cash. A statement of month, cash
forecast is prepared which includes cash inflow and outflow for the various
methods. The difference between the total cash flow will indicate surplus or
deficiency for which necessary adjustment can be planned in advance.

71
 Cash turnover = No. of days in operating period

Duration of cash cycle in days

Projected balance sheet method:-

Under this method, various items of assets and liabilities (both long-term as well as
short-term) are estimated for the future period. On the basis of these assets and
liabilities, a projected Balance Sheet is prepared and then Working Capital estimate
is made by deducting current liabilities from the current assets.

Profit & loss adjustment method:-

According to this method, estimated profit is calculated first on the basis of
transactions likely to take place in future. Working Capital magnitude is ascertained
by making necessary adjustments for cash inflow and outflow in the estimated
profit.

Objective of study
The objective for doing my summer training is to make myself capable for moving
forward in corporate world, to gain knowledge & experience &know how to work in
the organization environment. It will help me to gain more & more about corporate
sector, which was very essential for me to do. There- fore I joined BIL Pantnagar to
improve my capabilities.

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Main objective
To analyze how ‘working capital management’ method is done in Britannia
industries limited.

SUB OBJECTIVE

 To see the difference between the theoretical knowledge & practical

knowledge.

 To know about industrial environment.

 To know how theoretical knowledge apply in the practical approach.

 To know the techniques of working capital management in their business.

 To know whether they open to adopt new methods and techniques to manage
their financial resources better.

 To know whether they are satisfied with the changes or not.

 To know what are their option to current credit delivery mechanism.

 To know the signals of changes.

 To know the liquidity position of the firm.

 To search the new methods and configuration of data.

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 Chapter–iv
about
Research
-methodology/
Analyzing
And
finding

Research methodology
The purpose of the methodology is to describe the process involve in the research
work. This includes the overall research design, the data collection method.

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 Research Methodology refers to the various sequential steps (along with a
rationale, of each such steps) to be adopted by a researcher in studying a problem
with certain object or objectives in view. It would be appropriate to mention that
research project are not susceptible to any one complete and inflexible sequence of
steps and type of problems to be studied will determine the particular steps to be
taken and their order too.

SOURCES OF DATA COLLECTION

Data was collected by using both primary and secondary methods. In primary
method of data collection personal interview and questionnaire was used and in case
of secondary ways of data collection the magazines of Britannia was used.

Primary DATA

Primary data are those which are collected a fresh and for the first time and thus
happen to be original in character. There are numbers of method of collecting
primary data.

 Calculation
 Observation

Secondary data
Secondary data means data that are already available i.e. they refer to the data which
have already been collected and analyze by someone else.
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 Books
 Reports
 Magazine
 Internet

Objective of research
 The main aim of research is to find out the truth which is hidden and which

has not been discovered yet.

 To test the hypothesis of a casual relationship between variables (such studies

are known as hypothesis-testing research studies).

 To discover answer to questions through application of scientific procedure.

 To gain familiarity with a phenomenon or to achieve new insights.

 To determine the frequency with which something occurs or which it is

associated with something else.

LIMITATION

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 The time period for the project is very less for understanding the wide
organization.

 The ratio of the one company cannot always be compared with the
performance of the other firm.

 Price level change affects the validity of comparisons of ratios computed for
different time periods.

 Comparisons are also made difficult due to differences of the terms like gross
profit, operating profit, net profit etc.

 If company resort to ‘window dressing’, outsiders cannot look into the facts
and affect the validity of comparisons.

 There is no free access of reputed libraries.

 The scope off study is very wide .A large sample would have provided more
confidence in the findings but due to cost and time constraint the sample size
was kept small.

 Most of the business units in our country do not have confidence that the
information shared by them with the people will not be misused. So this
makes the employees reluctant to share information with them. Reluctance is
more if information pertains to financial position and business operations.

Finding
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Working capital has increased in comparison to previous year 2008-09 by Rs. 57.91

Mn.

The reasons are-

 Fuel Consumption has gone down in 2008-09 by using the Alternative

banking fuel ‘Propane’ which required to be procured in high quantity.

 Stock of engineering material has gone up as the material is kept for

contingency.

 Reduction in packing material shows that the release of working capital needs

to be used in other activities.

 Inventory of raw material has increased due to increases in production which

shows increase in the value of Inventory.

 Dispatching of goods on time has reduced the amount of FG inventory, which

is a good indication for maintaining inventory. Debtors have decreased due

to subsequent realization.

 Prepaid miscellaneous expenses were reduced as no additional expenses were

incurred.

 Current assets are increased by 45.51% due to maintaining high inventory in

engineering, Store & Raw material.

 The production of Pant Nagar unit was 245.10 MT on 04.03.09.

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 Chapter- v

Recommendation
Conclusion

And

bibliography

Recommendations
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 Management of Britannia ensures the efficient use of various resources &

increases the productivity of the enterprise.

 Keeping & maintaining good working condition to ensure fair wage for

worker security of employment.

 Maintaining good relations with suppliers to get maximum raw materials &

capital so that the organization can continue dealing in future as well.

 The organization structure must be flattered for the quicken decision making

which will result in higher profitability.

 Complaint and replace the defective product in time, otherwise it will tarnish

the image of the company among the retailers.

 To ensure the proper quality of raw materials before placing an order to the

vendor terms and conditions of penalties should be given to the vendors if

they supply defected material.

 The company can diversify itself by undertaking the manufacturing of various

different products apart from manufacturing biscuits at the Rudrapur Branch.

 Storage capacity of the company should be increased by properly utilizing the

waste land of the company.

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 Conclusions
This report is whole on the basis of financial analysis. The main object of doing this

study is to analysis the condition of organization. The tools of financial are used to

find out the soundness of the company.

It can be concluded that in the fiercely competitive FMCG market with regional

players striking so hard at BILs market share the company has not made any

compromise with quality, systems and practices in spite of feeling the pinch in its

profitability not only due to competition but also because being an agro based

industry and because of the seasonality and unpredictability in the availability and

price of one of its major raw material Maida.

The company is doing well in terms of its marketing approach and the financials of

the company seem to be healthy as of now.

Bibliography
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 Working Capital Management - V.K.Bhalla

 Management Accounting - S.P Gupta

 Financial Management - I.M Pandey

- Shashi K. Gupta

 www.Britannia.com

 www.Google.com

 Magazine of Britannia

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