SUMMER TRAINING PROJECT

REPORT
ON
STUDY OF WORKING CAPITAL
MANAGEMENT IN CADBURY PVT.LTD
ON

AT
SUBMITTED TO :- SUBMITTED TO :-
JIWAJI UNIVERSITY GWALIOR JIWAJI UNIVERSITY GWALIOR
FOR THE PARTIAL FULFILLMENT OF FOR THE PARTIAL FULFILLMENT OF
BACHELOR BACHELOR OF BUSINESS ADMINISTRATION OF BUSINESS ADMINISTRATION
2011-1 2011-1
SUBMITTED TO: -
SUBMITTED BY:-
MS. TANU KHARE ANUJ
TIWARI
(FACULTY GUIDE ) BBA V
Semese!
49
JAIN GROUP OF COLLEGES,
GWALIOR
DECLARATION
This is to declare that the Summer Training Report has been Submitted by
me and being submitted in partial fulfillment of requirement for the award
of the Degree of Master of Business Administration JAIN GROUP OF
COLLEGE! GWALIOR from J"#$%" U&"'()*"+, G#$-".) The wor
has not been submitted by me anywhere else for the award of any degree
or diploma! All source of information are based on my on training
e"perience and learning!
D$+(/ ANUJ TIWARI
49
P-$0(/ BBAV SEMESTER
GUIDE CERTIFICATE
This is to certify that MR. ANUJ TIWARI student of BBA
# Semester of JAIN GROUP OF COLLEGE! GWALIOR has
successfully completed his Summer Training dated from 4$ days
and this report is submitted by %im for the completion of the
training requirement under my guidance and super&ision!
D$+( / MS. TANU KHARE
P-$0(/
49
ACKNOWLEDGEMENT
't is great pleasure for me to put on record my appreciation and
gratitude towards (lacement and Training )oordinator JAIN
GROUP OF COLLEGE! GWALIOR My special thans to my
respected faculty MS. TANU KHARE for his &aluable support
and suggestions for the e"ecution of Summer Training! ' than
him for the right direction and pro&iding inputs for the
completion of my summer training pro*ect!
D$+(/ ANUJ TIWARI
P-$0(/ BBAV SEMESTER
49
CONTENTS
P$1( &./-
CHAPTER 1 HISTORY OF THE COMPANY 1-22
CHAPTER -2 CADBURY3S PRICING 24-25
CHAPTER -2 OBJECT OF THE STUDY 26-70
CHAPTER - WORKING CAPITAL 71-72
CHAPTER -2RESEARCH METHODOLOGY 74-78
CHAPTER -4ANALYSIS 9 INTERPRETATION 75-28
CHAPTER 8FINDINGS 25-26
CHAPTER 5CONCLUSION 40-41
BIBLIOGRAPHY 42
49
CHAPTER -1
HISTORY OF THE COMPANY
49
HISTORY OF THE COMPANY
C$:;<), =$* ;((& *,&.&,>.<* #"+= 0=.0.-$+( *"&0( 152+ when ,ohn )adbury
opened his first shop+ establishing a flourishing dynasty that today pro&ides the world
with many of its fa&orite brands of chocolate!
L($)& $;.<+ +=( ?$*0"&$+"&1 ="*+.), .? 0=.0.-$+(-
%ow cacao is the Mayan word for ./od 0ood12 when and how chocolate was first
introduced to 3urope2 how ."ocolatl 4 a bitter frothy drin+ belo&ed by Monte5uma6
made the transaction into food centuries later+ how it1s reputation for heightening
pleasure made it the stuff of myth and legend!
D"*0.'() +=( ="*+.), .? C$:;<),+ from its social pioneering to the perfection of the
recipe for )adbury Dairy Mil2 first launched in 798$+ and still a maret leader today!
0ind out all there is to now about maing chocolate+ and ama5e yourself with the
brand stories and brand timeline that show how many )adbury brands ha&e been
fa&orites since the early 7988s
49
W=(& 0=.0.-$+( ?"&$--, )($0=(: E&1-$&: "& +=( 1420*+ the high import duties on
cocoa beans meant it was a drin only for the wealthy! )hocolate cost the equi&alent of
$869$ pence a pound :appro"imately 488g;+ when pound sterling was worth
considerably more than it is today! /radually chocolate became more freely a&ailable!
'n 7<$9+ =ondon>s first )hocolate %ouse was opened by a 0renchman+ who produced
the first ad&ertisement for the chocolate drin to be seen in =ondon-
T=( ="*+.), .? C$:;<), $* >$&<?$0+<)()* .? 0=.0.-$+( @).:<0+* in Birmingham
dates bac to the early part of the 79th century+ when ,ohn )adbury opened a shop in
the centre of the city+ trading as a coffee and tea dealer! Soon a new sideline was
introduced 6 cocoa and drining chocolate+ which he prepared himself using a mortar
and pestle! %is lifelong in&ol&ement with the Temperance Society led him to pro&ide
tea+ coffee and cocoa as an alternati&e to alcohol+ belie&ed to be one of the causes of so
much misery and depri&ation amongst woring people in Britain at that time!
F$*=".&$;-( 0=.0.-$+( =.<*(* #()( *..& .@(&(: where the people could meet friends
and en*oy &arious rich chocolate drins+ many of which were rather bitter to taste+ while
discussing the serious political+ social and business affairs of the day or gossiping
T=( C$:;<), ?$>"-, #()( 0-.*(-, "&'.-'(: "& +=( ('.-<+".& .? :)"&A"&1 0=.0.-$+(!
0rom his grocery shop in Birmingham+ where he sold mainly tea and coffee+ ,ohn
)adbury started preparing cocoa and drining chocolate+ using cocoa beans imported
from South and )entral America and the ?est 'ndies! %e e"perimented with a mortar
and pestle to produce a range of cocoa and drining chocolates with added sugar!
B, 1571 +=( 0.0.$ $&: :)"&A"&1 0=.0.-$+( *":( .? +=( ;<*"&(** =$: (B@$&:(:+ so he
rented a small factory in )rooed =ane not far from his shop and became a
>manufacturer of drining chocolate and cocoa>! This was the real foundation of the
)adbury manufacturing business as it is today! The earliest preser&ed price list of 7@4A
shows that ,ohn )adbury sold si"teen lines of drining chocolate and cocoa in cae and
powder forms! )ustomers would scrape a little off the bloc and mi" it with hot mil or
49
water! A solid chocolate for eating was introduced by ,ohn )adbury in 7@49+ which by
today>s standards wouldn>t be considered &ery palatable!
I& 1544 G(.)1( C$:;<), :,ohn >s son; brought to 3ngland a press de&eloped in
%olland by #an %outen! The press changed the face of cocoa and chocolate production+
as it was designed to remo&e some of the cocoa butter+ enabling a less rich and more
palatable drin to be produced! There was no longer any need to add the &arious types
of flour and )adbury>s new cocoa essence was ad&ertised as >Absolutely pure!!!therefore
Best>!
E*+$;-"*=(: ;, R"0=$): $&: G(.)1( C$:;<),+ two #ictorian businessmen with great
industrial and social &ision+ Bourne&ille #illage is a story of industrial organi5ation and
community planning co&ering well o&er a century! 't embraces the building of a factory
in a pleasant >green> en&ironment :in star contrast to the oppressi&e conditions of the
#ictorian industrial scene;+ the enhancement of employees> woring conditions and
o&erall quality of life and the creation of a &illage community with a balanced
residential mi" :both employees and non6employees;!
G(.)1( C$:;<), #$* $ =.<*"&1 )(?.)>() interested in impro&ing the li&ing
conditions of woring people in addition to ad&ancing woring practices! %a&ing built
some houses for ey worers when the Bourne&ille factory was built+ in 7@9$ he bought
7A8 acres near the wors and began to build houses in line with the ideals of the
embryonic /arden )ity mo&ement!
M.+"'$+".& ?.) ;<"-:"&1 +=( B.<)&'"--( V"--$1( #$* +#.-?.-:! /eorge )adbury
wanted to pro&ide affordable housing in pleasant surroundings for wage earners! But as
the Bourn&ille factory grew+ local land increased in &alue and was ready to fall into the
hands of de&elopers! The last thing the brothers wanted was that their >factory in a
garden> would be hemmed in by monotonous streets!
49
D$>( E-"C$;(+= C$:;<), was in&ol&ed in the planning of Bourne&ille with her
husband+ /eorge! %er memoirs tell us how these plans became reality-
DW=(& I ?")*+ 0$>( +. B")>"&1=$> and we were li&ing at ?ood Brooe+ morning
after morning ' would wal across the fields and farmland between our home and the
?ors planning how a &illage could be de&eloped+ where the roads should run and the
type of cottages and buildings!
G)$:<$--, +="* :)($> ;(0$>( )($-"+,+ houses arose and many of the first tenants
being men in Mr )adbury>s Adult School )lass 6 which met e&ery Sunday morning at
@!88am in Bristol Street 6 who had pre&iously li&ed in the centre of the city and had
ne&er had a garden! Also worers in the factory became tenants!
T=(, +.. (&%.,(: +=(") =.>(* "& +=( =($-+=, *<)).<&:"&1*+ culti&ating their gardens+
rewarded in many instances by splendid crops of apples from the belt of apple trees
which each tenant found at the bottom of his garden!B
T=( 0.&*(E<(&+ $'$"-$;"-"+, .? 0.0.$ ;<++() led to the de&elopment of the smooth
creamy chocolate we now today!
Manufacturing (rocess
C$:;<), >$A(* $ '$)"(+, .? 0=.0.-$+(* for different purposes but the two main types
are )adbury Dairy Mil+ mil chocolate and )adbury Bourne&ille plain chocolate!
T=( +$*+( $&: +(B+<)( .? C$:;<), 0=.0.-$+( are based on long traditions of e"pertise
in recipe and processing unique to )adbury! Techniques are impro&ing all the time and
new technology enables the whole process to be finely tuned to match e&ol&ing tastes
and preferences!
49
P).:<0+".& *+$)+* $+ +=( C=")A 0.0.$ ?$0+.),+ where the highest quality cocoa beans
are processed to produce cocoa mass containing $$C cocoa butter plus e"tracted cocoa
butter+ the basis for all chocolate products!
W=(& @-$"& 0=.0.-$+( "* >$:( +=( F>$**F 1.(* *+)$"1=+ +. +=( B.<)&('"--( ?$0+.), in
Birmingham while the >mass> for mil chocolate production is taen to the )adbury
mil factory at Marl broo+ %erefordshire+ in the heart of 3nglish dairy country!
A+ +=( >"-A @).0(**"&1 factory fresh liquid full cream mil is cooed with sugar and
condensed to a thic liquid! )ocoa mass is added+ maing a rich creamy chocolate
liquid+ which is then e&aporated to mae mil chocolate crumb! As these ingredients
are cooed together the &ery special rich creamy taste of )adbury chocolate is
produced! 9$+888 tonnes of crumb a year are produced at Marl broo to be made into
chocolate at the )adbury chocolate factories at Bourne&ille+ Birmingham and
Somerdale+ Bristol!
O& $))"'$- $+ +=( 0=.0.-$+( ?$0+.), the crumb is pul&eri5ed by hea&y rollers and
mi"ed with additional cocoa butter and special chocolate fla&orings! The amount of
cocoa butter added depends on the consistency of the chocolate required- thic
chocolate is needed for molded bars+ while a thinner consistency is used for assortments
and co&ered bars!
I& +=( UK <@ +. 2G '(1(+$;-( ?$+ "* $::(: +. 0.>@(&*$+( ?.) '$)"$+".&* "& 0.0.$
;<++()+ allowing the melting properties of the chocolate to be controlled to a precise
standard+ and preser&ing the full taste and te"ture of the chocolate! )adbury use
carefully selected &egetable oils similar in nature to cocoa butter- African Shea+ 'ndian
Sal and Malaysian (alm oils are all part of the recipe!
B.+= >"-A $&: @-$"& 0=.0.-$+(+ which has had sugar and cocoa butter added to the
mass before pul&eri5ing+ undergo the same final special production stages+ producing
the famous smoothness+ gloss and snap of )adbury chocolate!
49
CADBURY PRODUCTS
C$:;<), P()A
A pretty teenager2 a long line+ and hungerD Rings a bellE That was how )adbury
launched its new offering2 )adbury (er in 799<! ?ith its light chocolate and wafer
construct+ )adbury (er targeted the casual snacing space that was dominated
primarily by chips F wafers! ?ith a catchy *ingle and tongue in chee ad&ertising+ this
>anytime+ anywhere> snac 5oomed right into the hearts of teenagers!
Raageshwari started the trend of ad&ertising that featured mischie&ous+ bubbly
teenagers getting out of their >stuc and hungry> situations by ha&ing a )adbury (er!
)adbury (er became the new mini snac in town and its proposition BThodi si pet
poo*aB went on to define its role in the category!
As the years progressed+ so did the messaging+ which changed with changes in the
consumers> way of life! To compliment )adbury (er>s &alues+ the bubbly and
&i&acious (reity Ginta became the new face of (er with the >hunger strie> commercial
in the mid 98>s!
'n the new millennium+ )adbury (er mo&ed beyond *ust owning >hunger> to a BHabhi
bhi aise bhiB position+ because the urge for )adbury (er could strie anytime and
anywhere!
?ith the rise of more &alue6for6money brands in the wafer chocolate segment+ )adbury
(er un&eiled two new offerings 6 (er I= and II=!
The temptation to ha&e more of )adbury (er was made e&en greater with the launch
of )adbury (er Minis in A88J for *ust Rs! AK6
'n A884+ with an added dose of >Real )adbury Dairy Mil> and impro&ed wafer>+ (er
became e&en more irresistible! The product was supported in the maret with a new
49
loo and a new campaign! The ad&ertisement spoe of the irresistible aspect of the
brand+ with >Baai sab Bhoola de> becoming the new mantra for )adbury (er!
D": ,.< A&.#/
)adbury (er ad&ertising has been a launch pad for Bollywood stars 6 (reity Ginta+
Raageshwari+ /ayatri ,oshi and Amrita Rao+ were all (er models before they made it
big on cinema screens!
C$:;<), F"'( S+$)
)hocolate lo&ers for a quarter of a century ha&e indulged their taste buds with a
)adbury $ Star! A leading night in the )adbury portfolio and the second largest after
)adbury Dairy Mil with a maret share of 74C+ )adbury $ Star mo&es from strength
to strength e&ery year by increasing its user base!
=aunched in 79<9 as a bar of chocolate that was hard outside with soft caramel nougat
inside+ )adbury $ Star has re6in&ented itself o&er the years to eep satisfying the
consumers taste for a high quality F different chocolate eating e"perience!
Lne of the ey properties that )adbury $ Star was associated with was its classic /old
colour! And through the passage of time+ this was one property that both+ the brand and
the consumer stuc to as a &aluable association!
)adbury $ Star was always unique because of its format and any communication
highlighting this uniqueness+ went down well with the audiences! 0rom >deliciously
rich+ you>d hate to share it> in the 98>s+ to the >lingering taste of togetherness> F >Soft and
)hewy $ Star> in the late @8>s+ the communication always paid homage to the product
format!
More recently+ to gi&e consumers another reason to come into the )adbury $ Star fold+
)adbury $ Star )runchy was launched! The same delicious )adbury $ Star was now
a&ailable with a dash of rice crispies!
)adbury $ Star F )adbury $ Star )runchy now aim to continue the upward trend! This
different and delightfully tasty chocolate is well poised to rule the maret as an
e"tremely successful brand!
49
C$:;<), D$"), >"-A
The story of )adbury Dairy Mil started way bac in 798$ at Bourn&ille+ M!H!+ but the
*ourney with chocolate lo&ers in 'ndia began in 794@!
The pure taste of )adbury Dairy Mil is the taste most 'ndians cra&e for when they
thin of )adbury Dairy Mil!
The &ariants 0ruit F Nut+ )racle and Roast Almond+ combine the classic taste of
)adbury Dairy Mil with a &ariety of ingredients and are &ery popular amongst teens F
adults!
Recently+ )adbury Dairy Mil Desserts was launched+ specifically to cater to the urge
for >something sweet> after meals!
)adbury Dairy Mil has e"citing products on offer 6 )adbury Dairy Mil ?owie+
chocolate with Disney characters embossed in it+ and )adbury Dairy Mil A in 7+ a
delightful combination of mil chocolate and white chocolate! /i&ing consumers an
e"citing reason to eep coming bac into the fun filled world of )adbury!
O<) J.<)&(,/
)adbury Dairy Mil has been the maret leader in the chocolate category for years!
And has participated and been a part of e&ery 'ndian>s moments of happiness+ *oy and
celebration! Today+ )adbury Dairy Mil alone holds J8C &alue share of the 'ndian
chocolate maret!
49
'n the early 98>s+ chocolates were seen as >meant for ids>+ usually a reward or a bribe
for children! 'n the Mid 98>s the category was re6defined by the &ery popular OReal
Taste of =ife> campaign+ shifting the focus from O*ust for ids> to the Oid in all of us>! 't
appealed to the child in e&ery adult! And )adbury Dairy Mil became the perfect
e"pression of >spontaneity> and >shared good feelings>!
The >Real Taste of =ife> campaign had many memorable e"ecutions+ which people still
fondly remember! %owe&er+ the one with the Bgirl dancing on the cricet fieldB has
remained etched in e&eryone>s memory+ as the most spontaneous F un6inhibited
e"pression of happiness!
This campaign went on to be awarded >The )ampaign of the )entury>+ in 'ndia at the
Abby :Ad )lub+ Mumbai; awards!
'n the late 98>s+ to further e"pand the category+ the focus shifted towards widening
chocolate consumption amongst the masses+ through the >Hhanewalon Ho Hhane Ha
Bahana )hahiye> campaign! This campaign built social acceptance for chocolate
consumption amongst adults+ by showcasing collecti&e and shared moments!
More recently+ the >Huch Meetha %o ,aaye> campaign associated )adbury Dairy Mil
with celebratory occasions and the phrase B(appu (ass %o /ayaB became part of street
language! 't has been adopted by consumers and today is used e"tensi&ely to e"press
*oy in a moment of achie&ement K success!
The interacti&e campaign for B(appu (ass %o /ayaB bagged a Bron5e =ion at the
prestigious )annes Ad&ertising 0esti&al A88< for >Best use of internet and new media>!
The idea in&ol&ed a tie6up with Reliance 'ndia Mobile ser&ice and allowed students to
chec their e"am results using their mobile ser&ice and encouraged those who passed
their e"aminations to celebrate with )adbury Dairy Mil!
The >(appu (ass %o /aya> campaign also went on to win Sil&er for The Best 'ntegrated
Mareting )ampaign and /old in the )onsumer (roducts category at the 300'3S A88<
:global benchmar for effecti&e ad&ertising campaigns; awards!
During the 7st ?orld ?ar+ )adbury Dairy Mil supported the war effort! L&er A+888
male employees *oined the armed forces and )adbury sent boos+ warm clothes and
chocolates to the front!
49
C$:;<),F* ;"1 B,+(*
Huch meetha ho *aye suggests )adbury 'ndia+ its brand ambassador Amitabh Bachchan
smiling down the hoardings lined along Mumbai>s Marine Dri&e right down to the
company>s corporate head office at Mahalashmi! ?hile the chocolate ma*or is waiting
for Diwali to see a turnaround in its business after the worm1s contro&ersy+ at the
moment it>s all about dri&ing growth for the category+ which has seen a decline since
the first quarter of this year!
Being the maret leader in chocolates with a 98 per cent share+ the company has
attempted to stretch the boundaries within chocolate confectionery! 't has also been
ad&enturous in unleashing a brand new category within chocolate early this year!
'ntroducing the concept of sweet snacing+ it launched )adbury Bytes in the south with
the positioning OSnacing a meetha funda!> The product is a crunchy wafer pillow with
a choco6cream centre and is being rolled out nationally!
3"plaining the need to introduce this new category+ Bharat (uri+ Managing Director+
)adbury 'ndia+ says+ B?hile we were sure of our core competencies+ there was need for
inno&ation to deli&er double6digit growth! ?hat we found was that we were under6
represented in the area of snacing on the go and that there was a need for a light
crunchy snac!B ?hile entry into salted snacs was ruled out+ sweet snacs were the
ob&ious choice+ and Bytes is unique to the chocolate ma*or>s 'ndian portfolio!
49
/etting the right product and pacaging was a challenge for the company! 't has sub6
contracted the product to get the &olumes and is poised for a national launch! Adds
(uri+ BAfter all this was the first category anywhere in the world that )adbury was
entering and we did not ha&e the e"pertise! So the best way was to test6maret the
product and today we find that it has already bagged fi&e per cent of the chocolate
maret!B
The company has no apprehensions of cannibali5ation of its chocolate brands! 't
belie&es that while its chocolates are more of indulgence products+ Bytes is about
snacing when one is hungry and can be treated as a snac in between meals!
'n the past when )adbury tried out a biscuit brand+ )hocobi"+ there was fear about
some amount of cannibali5ation! After all+ it was simply a biscuit coated in chocolate+
and was percei&ed to be another chocolate brand in )adbury>s portfolio!
Stresses (uri+ B)adbury Bytes is ad*acent to chocolates and in the marets that we ha&e
launched it+ there has been no cannibali5ation! )hocolates is largely an indulgence
product while Bytes is about between6meals snacing! A product which is consumed
when one is feeling hungry or pecish!B
Another thrust area )adbury has been re6e&aluating is confectionery! ?hile growth
rates in this segment are healthier compared to chocolates+ it has always been a difficult
maret to crac! )adbury>s own e"periences ha&e led it to withdraw certain brands but
now with ?arner>s =ambert>s international itty under its fold+ there are chances of
reconsidering the segment once again!
BThrough the acquisition of ?arner =ambert+ there is a great set of brands already
a&ailable to us! ?e are still e"amining which are the right brands for the 'ndian
49
maret+B says (uri! )adbury has already identified %alls as the strongest brand in
?arner =ambert>s portfolio and re6launched the brand early this year! Adds (uri+ B%alls
was not doing well for a while so we re6launched it this year! ?hen you ha&e the
e"isting assets+ it is necessary to get them right first! %alls is the first brand that we
ha&e re&i&ed and it is now doing well!B
'n April A88J+ )adbury 'ndia>s foreign parent acquired (fi5er>s interests in the
confectionery business for P4!A billion! That included the ?arner6=ambert product
portfolio+ nown best for %alls+ )lorets and )hiclets! The acquisition is now poised to
become a growth area for )adbury 'ndia+ whose confectionery brands include Qclairs
and /oogly! But instead of selling confectionery through its e"isting chocolate
networ+ )adbury has set up an entirely new networ!
?hile %alls has been re&i&ed with new pacaging+ there has been no change in the
status of its other brands! )hiclets had been discontinued long before it belonged to
)adbury and )lorets continues to sell with a small franchise! But now )adbury is
looing closely at ?arner =ambert>s gums portfolio :it is one of the world>s largest gum
manufacturers; and is considering its &iability for the 'ndian maret! Sugarless gum
brands such as Dentyne 'ce and Trident ?hite ha&e been nown for their functional
benefits worldwide but steep pricing may be a deterrent to their entry into the country!
BThe gum maret has not done well in 'ndia! But gum has functional properties and is
not merely a breath freshener! ?e are now e&aluating whether there is a maret for
them in 'ndia and whether it is going to be worth our while+B says (uri!
The confectionery maret may be huge in &olumes but maing money on it remains a
tough tas with its low margins! /o&erned by price points+ one can sell at only at a Re 7
or $8 paise unit price! BThe issue is not of garnering &olumes but maing money out of
those &olumes! The offer should be one which can get you both top and bottom lines+B
states (uri! %a&ing shifted focus from /oogly+ )adbury has tasted success with its age6
old Qclairs which continue to bag almost $8 per cent of the maret!
BThere is scope in the maret! Lur Qclairs has been growing and this has been e&ident
in our past numbers+B claims (uri! At the same time the sugar confectionery maret is
49
highly competiti&e and it>s all about finding the right consumer proposition and a
business model that can deli&er both top line and bottom line growth!
'n spite of the new categories being e"plored by )adbury+ its star brand remains
)adbury Dairy Mil :)DM;+ which continues to corner almost J8 per cent of the
chocolate maret! 't is followed by brands such as $6star+ per and /ems! 3ach of these
has been re&amped o&er the years to generate e"citement for the category! 0or instance+
recently (er was re*u&enated as a crunchier wafer while )DM came up as a white6
and6brown &ariant in the maret!
BThe chocolates category thri&es on e"citement! 't>s all about gi&ing the consumer a
choice and taste which they en*oy+B adds (uri! 0or instance+ in be&erages+ in spite of its
malted food brand Bourn&ita+ )adbury decided to introduce a mil additi&e brand such
as Delite+ *ust to gi&e its consumers the real taste of chocolate! Delite has added fla&ors
such as strawberry and mango and is not e"pected to encroach upon Bourn&ita1s shares!
According to (uri+ BThere is still a large section of people who do not add anything to
mil! This will apply to children for whom mil is a problem and ha&ing an additi&e
will mae it a pleasurable e"perience!B
Maing changes in its distribution networ+ )adbury split its sales and mareting team
between its mass :confectionery; and core brands last year! B)hocolates needed to get
retailed at larger and better outlets while all the products below Rs J needed a different
distribution networ+B says (uri! Today )adbury>s distribution networ reaches out to
si" lah outlets each for its confectionery and chocolate brands!
?ith the worm1s episode behind it+ there are other issues bothering the company+
especially that of the rising input costs of cocoa+ sugar and mil! Although )adbury has
been able to maintain prices+ it is still grappling with the upward trend in prices for its
basic raw materials! But its challenge remains that of growing the chocolate maret in
spite of the odds! (osting a turno&er of Rs 9A9 crore last year+ )adbury is waiting for
Diwali to mae a turnaround for both itself and the category which has been through
troubled times!
49
PRICING BATTLE
)adbury>s efforts to e"ploit untapped potential and reach e&ery pocet ha&e a lot to do
with outwitting Nestle in the war of the wafers!
'ts latest annual report states- O)adbury is all set to satisfy untapped potential! ?ith
brand launches+ re6launches and new products+ the thrust is on reaching e&ery
indi&idual+ satisfying different palates and being within &arying budgets! Basing its
operations on this &ision+ )adbury is charting a new course of action! ?ith the product+
place+ price and promotion synergies woring in tandem+ it won>t be long before we
find a )adbury in e&ery pocet!>
This may sound lie a reiteration of its earlier claims+ but in its heart of hearts+ )adbury
'ndia+ in spite of being the leader in the chocolate maret+ is still trying to settle scores
with Nestle in the wafer6coated chocolate maret+ where it has yet to grab a dominant
share!
)reating new launches and e"tensions may be an ongoing e"ercise for the Rs $776crore
chocolate multinational+ but lately it has set its sights on the Swiss food giant+ Nestle+
which is going through a rough patch with its flagship brand+ Hit Hat!
'n fact+ the wafer chocolate war started in 799$ when both (er :from )adbury; and Hit
Hat :from Nestle; were launched! 't had )adbury running for co&er to protect its largest
brand+ )adbury>s Dairy Mil+ which it did by e"tending its positioning on the adult
platform! The power6paced campaign from %TA :O%a&e a Brea>; did wonders for the
Hit Hat brand at that point of time+ but its premium pricing pro&ed to be the main hitch+
49
which has seen its &olumes dipping from 7$ per cent in 7999 to 9!$ per cent this ,une+
as per LR/6Marg figures!
Despite its share of the &olumes coming down+ Hit Hat still has a dominant share in the
maret while )adbury>s (er has seen steady shares between 7999 and A888 with
present &olume shares at @!@ per cent+ as per LR/6Marg figures! (er has also stretched
itself to &ariants such as Mango+ Strawberry and Mint to generate some e"citement
around the brand!
So+ while Hit Hat has taen a battering with its premium pricing and image+ )adbury
'ndia is taing this chance to put its might behind its wafer category+ with (er and the
newly6launched Mil Treat+ to beat Nestle in this category!
But then+ the price points in the wafer chocolate category were redefined by Nestle
when it launched Munch at Rs $ last year! )adbury had to react to this lowering of
price within the wafer chocolates category and had to stretch (er6to6(er Slims at Rs $
to counter it!
3"plains Ra*at Sabharwal+ an analyst with Hota Securities+ OOthe growth rates ha&e
come to a standstill in wafer chocolates and the maret is not buoyant in this category!
?ith Nestle coming out with a lesser6priced brand+ )adbury is responding now!>> So+
despite NestlR1s flagship brand suffering to a certain e"tent+ a flaning brand such as
Munch has taen care of the dipping shares!
%ighlights Nira& Sheth+ an analyst with SSH' Securities+ OO'n the first three years since
the launch of Hit Hat+ its price rise has been too fast and this has bacfired! Today+ its
price cuts ha&e been prompted by competiti&e pressures and the purpose is ob&iously to
gather &olumes!>> But then+ the prices of cocoa ha&e also been crashing+ perhaps helping
Nestle absorb the price cuts+ which+ possibly it would not ha&e been in a position to do
otherwise!
Today+ Nestle seems content with its strategy and admits that though shares of Hit Hat
ha&e dipped+ Munch has succeeded in doing what it was e"pected to do! Says San*ay
Sehgal+ 3"ecuti&e #ice6(resident :Mareting;+ Nestle 'ndia+ OO)adbury has reacted to
us! 'n fact+ Munch could also be responsible for eating into the shares of Hit Hat along
with )adbury>s own brand! There has been a redefinition of pricing strategy for HitHat
and we are hoping it will show!>>
49
HitHat continues to sell at a slight premium to (er though it is now offering a price
discount of nearly A8 per cent+ which indicates that Nestle either had great margins on
the brand earlier+ or is in trouble!
0or )adbury+ (er is basically a fighter brand being used to flan the mother brand! 'n
fact+ the fight is almost similar to what %== did with ?heel :though it was not maing
money on the brand; to counter Nirma in the detergent maret while Surf sat pretty as
the mother brand in =e&er>s portfolio!
%owe&er+ in the case of wafer chocolates+ it is not a &ery happening category since
consumers ha&e reali5ed that they are not paying for pure chocolate+ but for a
chocolate6coated biscuit! 0or )adbury+ its cash cow will always remain its )adbury>s
Dairy Mil! Both are players fighting with their higher reser&es+ trying to establish
themsel&es with a dominant share in the wafer chocolate category!
The new (er has four wafer layers co&ered with chocolate and is lighter and crisper!
'ts pacaging has also undergone a change and has used )adbury>s trademar purple
bacground with the dar brown wa&e of chocolate on the wrapper+ indicating the
presence of pure dairy mil chocolate+ to set it apart from a common biscuit chocolate!
)adbury is targeting a 7A per cent &olume share for the (er brand after this relaunch
and e"pects to o&erhaul Hit Hat! As Bharat (uri+ Director :Sales F Mareting;+
)adbury 'ndia+ declares- OOour ob*ecti&e is to be the largest wafer6coated brand in the
country!>>
A new campaign has been de&eloped for the relaunch of the brand where through three
commercials the differences in the new (er are highlighted through dialogues alluding
to match fi"ing 66 Hhule Aam Hhayiye! Habhi Bhi! Hahin Bhi!
3"plains (iyush (andey+ National )reati&e Director+ Lgil&y F Mather+ OOThrough the
commercials we are trying to bring out &arious e"planations about the changes in (er!>>
The original campaign of Thodi Si (et (oo*a+ Habhi Bhi+ Hahin Bhi will continue
through another new commercial+ of a lady secretly eating (er on the occasion of
Harwa )hauth!
Meanwhile+ another wafer chocolate brand that has been targeting ids is Mil Treat+
four wafers with butterscotch6fla&ored cream embedded in mily white chocolate!
Though )adbury did ha&e a white bar+ )reamy Bar+ it was ne&er treated as a ma*or
49
brand! Mil Treat is pitted against NestlR1s Mily Bar though it is in a moulded form
unlie the former+ which is in count form! There are e"pected to be more &ariants under
the Mil Treat brand for children! Both Mil Treat and (er are priced on par at Rs 78
for A9 gm!
Despite all the action in the chocolate wafer segment+ growth for )adbury has always
come from its mother brand 6 the Rs 7796crore )adbury>s Dairy Mil which today
straddles all possible price points!
3"plains an analyst with Motilal Lswal Securities+ OO0or )adbury+ its growth has been
coming from )adbury>s Dairy Mil and what it is doing to (er is *ust to gather
momentum in the chocolate maret which thri&es on inno&ation and e"citement!>>
'n 7999+ )adbury recorded an eight per cent turno&er growth in chocolate confectionery
led by its flagship brand )adbury>s Dairy Mil+ which registered a growth of o&er 48
per cent! The malted food drins category reported a growth of 74 per cent while the
sugar confectionery segment rose a mere three per cent! The Qclairs brand grew by a
healthy 74 per cent!
'n fact+ )adbury has consciously stayed away from meddling too much with its heritage
chocolate brands 66 Dairy Mil and $ Star! 3"plains (uri+ OOAs a mareter+ it is best not
to do too much to these heritage brands which already ha&e strong equity! Not that we
will ne&er relaunch them but right now they en*oy a strong equity!>>
But+ it did relaunch its heritage brand of malted drins+ Bourn&ita+ last year when it lost
share to the white drins segment! There are plans to e"tend this strong brand in the
future+ about which )adbury does not want to re&eal its plans right now! 'nterestingly+
there already e"ists a similar sounding dar chocolate brand for adults+ Bourne&ille+ in
its itty for many years+ which has not seen much ad&ertising!
?hile its chocolate brands are continuing to get broad based+ its sugar confectionery
brands will get upgraded to higher price points! 0or instance+ its hard6boiled sweets
such as /oogly+ Moca and 3nglish Toffee are gradually being phased out+ while the
new brands such as 0rutus+ a chewy sweet :Re 7; and the *elly+ /ollups :Rs A;+ are
e"pected to see some healthy growth! Adds (uri+ OO't is not possible to build brands at
such low price points! ?hile there are &olumes+ the margins are thin in this category!>>
49
Besides+ the latest Budget has hied the duties of sugar confectionery products from
eight per cent to 7< per cent+ which in any case has led to an increase in prices and
thereby affected brands such as /oogly!
But one thing that )adbury has reali5ed through all this is that it has got cheaper with
more products in the Rs J6$ category! 'ts premium brands such as )adbury /old+
Truffle and e&en (icnic ha&e ne&er really been accepted in the chocolate maret!
Today+ )adbury is constantly looing at pushing &olumes at the lower end of the
maret and brands such as Relish+ Brea+ $ Star and Dairy Mil ha&e Rs $ &ariants
catering to this lowest price point! (er Slims is the latest Rs $ brand to be added to this
list!
As for taing the chocolate wafer war to the enemy camp+ it might tae a while because
Nestle also has deep pocets and has established itself in the chocolate wafer category
in spite of dipping shares! %owe&er+ )adbury will always be the leader with its heritage
brands! As Ra*at Sabharwal+ an analyst with Hota Securities states+ OONestle may be a
ey player in the 'ndian chocolate maret but there is no possibility of it emerging as a
category leader!>>

49
CADBURY3S PRICING
O)1$&"C$+".&$- *+)<0+<)( .? C$:;<),
%ierarchical structure is based on distinct chain of commands from Managing director
to )lerical Support assistants :according to )adbury;! Decisions are made at the top and
pass down! Such organi5ational are usually based on clearly defined procedures and
roles!
)adbury organi5ation is based on more :(>.0)$+"0! Decisions are made as a
result of a consultation process in&ol&ing &arious members of the organi5ation
:)adbury;! 'deas would be discussed and thought through collecti&ely!
?ithin )adbury organi5ation we can find a Democratic structure+ Because
)adbury tends to be found in situation were it is felt to be important for all
members of the organi5ation to understand what they are doing+ were decisions
require indi&idual initiati&e+ and where member of staff need to wor as a team!
H.# >$&$1(>(&+ *+,-(! C<-+<)( $&: O)1$&"C$+".&$- *+)<0+<)( "&+())(-$+(
Management style+ culture and organi5ational structure interrelate together in
)adbury because they all wor together to help the business to achie&e its
ob*ecti&es2 in order to lead a successful business!
)adbury has strategies for the organi5ation+ continually to moti&ate members of
staff to support this process+ and maret change within the organi5ation!
Management style+ culture and organi5ational structure interrelate together in
)adbury because they all wor together to-
49
UNDERSTANDING COSTS AND PRICING FOR SUCCESS
?e ha&e many ways of pricing our products or ser&ices! The first thing to understand is
the cost elements that mae up our offering! This unbundling of cost must be nown
prior to setting prices+ howe&er it may ha&e only limited influence in the price finally
set! Sou may deliberately price an element at a loss+ and another at a huge profit
because the maret with bear this! The loss leading offering maybe the carrot required
to differentiate you from your competition+ mae your offering seem fresh and maret
leading+ and your competitions offering+ old hat! But if you ha&en1t done your forecasts
and understood your cost models properly before going to maret+ then the end result of
your sales success could be a huge loss!
And in pricing+ you need to loo clearly at your business goals! Do you want to-
- S(-- ,.<) @).:<0+* .) *()'"0(*H
- D.>"&$+( +=( >$)A(+H
- F.)0( +=( >$)A(+ +. @<)0=$*( ,.<) @).:<0+H
- H$'( ?<&H
Sou may try different strategies at different times depending on what result you are
after! 'f you a new to a maret+ then you may employ an Tearly adopterU strategy to
achie&e some presence and reference! =ater in the lifecycle+ you may use a strategy that
achie&es greater returns in a more traditional manner!
?ith our ='N) product in 79@8+ we identified we had only four potential clients 4
'BM+ Burroughs+ N)R+ and Digital! So we had to prepare strategies+ which would
achie&e the business goals we wanted 4 to establish our company as a de&eloper of
good de&elopment and deployment en&ironments+ and to earn and e"cellent stream of
profitable re&enue for se&eral years! ?e sold ='N) to Burroughs for MSP7 plus the
rights to continue manufacturing new feature content for on a predefined costed basis
and to pro&ide product support! Thus profitability was guaranteed so long as product
quality le&els were maintained! So nowing your costs is important if you wish to
position your prices for profitability!
49
But nowing your costs is not enough! Sou also need to now all about yoursel&es as a
company and position your business! Sou need to-
6 K&.# #=$+ (B$0+-, "* ,.<) ;<*"&(** *.-<+".&H
- W=. (B$0+-, $)( ,.<) @.+(&+"$- 0-"(&+*H
- W=$+ "* ,.<) <&"E<( 0<*+.>() $:'$&+$1(H
- W=$+ "* ,.<) ;<*"&(** ":(&+"+,H
- W=$+ "* ,.<) (-('$+.) *+$+(>(&+E
?ithout this business nowledge+ you do not ha&e a hope of pricing your product to
meet your business goals and to effecti&ely compete in the maret place!
'n my days in the fishing industry+ selling Lrange Roughy fro5en fish fillets+ we were
one of se&eral players in a maret place for a &ariety of fish that was not a household
name but was distincti&e! ?e needed to differentiate oursel&es as the product to be
sought after ahead of other fish brands+ and competitor products! Lur ob*ecti&e was to
be the fish fillet pro&ider of choice in the /reat =aes region of the Mnited States of
America! ?e launched our 0letcher Vuality Lrange Roughy brand at a 78C premium
price o&er our competitors! ?e launched as the top quality product+ a MSA hygienic
clean white fish meat :some would say TtastelessU;+ in a special display pac! And in a
maret where e&eryone deli&ers late+ deli&ery on time! So our differentiators were top
E<$-"+,+ *@(0"$- :"*@-$, @$0A and :(-"'(), .& +">(! Lrange Roughy was a distincti&e
name! (eople were ama5ed that such a good6looing fish fillet could ha&e such a horrid
name+ yet if we could get them to try the fish+ they would lo&e it and would tell all their
neighbours and friends! The name TLrange RoughyU was a memorable name and by
maing the fish loo in a class of its own in the shop window display pac+ we captured
a strong maret! ?ithin a year+ 0letcher brand Lrange Roughy was commanding a J8C
margin and was selling ahead of any other brands!
So nowing your business+ your unique customer ad&antage+ who you are+ and what
you are pitching is &ital to your success!
49
CHAPTER -2
OBJECT OF THE STUDY
49
OBJECT OF THE STUDY
The ma*or ob*ecti&es of the resent study are to now about financial strengths and
weaness of CADBURY INDIA LIMITED! MALANPUR through FINANCIAL
WORKING CAPITAL!
T=( >$"& .;%(0+"'(* .? )(*(&+ *+<:, $">(: $* -
To e&aluate the performance of the company by using ratios as a yardstic to measure
the efficiency of the company! To understand the liquidity+ profitability and efficiency
positions of the company during the study period! To e&aluate and analy5e &arious facts
of the financial performance of the company! To mae comparisons between the ratios
during different periods!
7! The study has great significance and pro&ides benefits to &arious parties
whom directly or indirectly interact with the company!
A! 't is beneficial to management of the company by pro&iding crystal clear
picture regarding important aspects lie liquidity+ le&erage+ acti&ity and
profitability!
J! The study is also beneficial to employees and offers moti&ation by
showing how acti&ely they are contributing for company1s growth!
4! The in&estors who are interested in in&esting in the company1s shares
will also get benefited by going through the study and can easily tae a decision
whether to in&est or not to in&est in the company1s shares!
OBJECTIVES
49
7! To study the present financial system at )ADBMRS
'ND'A ='M'T3D+ MA=AN(MR!
A! To determine the (rofitability+ =iquidity Ratios!
J! To analy5e the capital structure of the company with the
help of =e&erage ratio!
4! To offer appropriate suggestions for the better
performance of the organi5ation
WORKING CAPITAL
F"&$&0"$- A&$-,*"*
0inancial analysis is the process of identifying the financial strengths and weanesses
of the firm and establishing relationship between the items of the balance sheet and
profit F loss account!
0inancial ratio analysis is the calculation and comparison of ratios+ which are deri&ed
from the information in a company1s financial statements! The le&el and historical
trends of these ratios can be used to mae inferences about a company1s financial
condition+ its operations and attracti&eness as an in&estment! The information in the
statements is used by
Trade creditors+ to identify the firm1s ability to meet their claims i!e! liquidity
position of the company!
'n&estors+ to now about the present and future profitability of the company and
its financial structure!
Management+ in e&ery aspect of the financial analysis! 't is the responsibility of
the management to maintain sound financial condition in the company!
R$+". A&$-,*"*
T=( +()> W.)A"&1 )(?()* +. +=( &<>()"0$- $&: E<$&+"+$+"'( )(-$+".&*="@
;(+#((& +#. "+(>* .) '$)"$;-(*. T="* )(-$+".&*="@ 0$& ;( (B@.*(: $*
49
(ercentages
0ractions
(roportion of numbers
Ratio analysis is defined as the systematic use of the ratio to interpret the financial
statements! So that the strengths and weanesses of a firm+ as well as its historical
performance and current financial condition can be determined! Ratio reflects a
quantitati&e relationship helps to form a quantitati&e *udgment!
S+(@* I& W.)A"&1 C$@"+$-
The first tas of the financial analysis is to select the information rele&ant to the
decision under consideration from the statements and calculates appropriate
ratios!
To compare the calculated ratios with the ratios of the same firm relating to the
pas<t or with the industry ratios! 't facilitates in assessing success or failure of
the firm!
Third step is to interpretation+ drawing of inferences and report writing
conclusions are drawn after comparison in the shape of report or recommended
courses of action!
B$*"* .) S+$&:$):* .? C.>@$)"*.&
Ratios are relati&e figures reflecting the relation between &ariables! They enable analyst
to draw conclusions regarding financial operations! They use of ratios as a tool of
financial analysis in&ol&es the comparison with related facts! This is the basis of ratio
analysis! The basis of ratio analysis is of four types!
(ast ratios+ calculated from past financial statements of the firm!
)ompetitor1s ratio+ of the some most progressi&e and successful competitor firm
at the same point of time!
'ndustry ratio+ the industry ratios to which the firm belongs to
49
(ro*ected ratios+ ratios of the future de&eloped from the pro*ected or pro forma
financial statements
N$+<)( .? W.)A"&1 C$@"+$-
Ratio analysis is a technique of analysis and interpretation of financial statements! 't is
the process of establishing and interpreting &arious ratios for helping in maing certain
decisions! 't is only a means of understanding of financial strengths and weanesses of
a firm! There are a number of ratios which can be calculated from the information gi&en
in the financial statements+ but the analyst has to select the appropriate data and
calculate only a few appropriate ratios! The following are the four steps in&ol&ed in the
ratio analysis!
Selection of rele&ant data from the financial statements depending upon the
ob*ecti&e of the analysis!
)alculation of appropriate ratios from the abo&e data!
)omparison of the calculated ratios with the ratios of the same firm in the past+
or the ratios de&eloped from pro*ected financial statements or the ratios of some
other firms or the comparison with ratios of the industry to which the firm
belongs!
I&+()@)(+$+".& .? T=( W.)A"&1 *
The interpretation of ratios is an important factor! The inherent limitations of ratio
analysis should be ept in mind while interpreting them! The impact of factors such as
price le&el changes+ change in accounting policies+ window dressing etc!+ should also be
49
ept in mind when attempting to interpret ratios! The interpretation of ratios can be
made in the following ways!
Single absolute ratio
/roup of ratios
%istorical comparison
(ro*ected ratios
'nter6firm comparison
G<":(-"&(* .) P)(0$<+".&* ?.) U*( .? W.)A"&1 *
The calculation of ratios may not be a difficult tas but their use is not easy! 0ollowing
guidelines or factors may be ept in mind while interpreting &arious ratios are
Accuracy of financial statements
Lb*ecti&e or purpose of analysis
Selection of ratios
Mse of standards
)aliber of the analysis
I>@.)+$&0( .? W.)A"&1 C$@"+$-
Aid to measure general efficiency
Aid to measure financial sol&ency
Aid in forecasting and planning
0acilitate decision maing
Aid in correcti&e action
Aid in intra6firm comparison
49
Act as a good communication
3&aluation of efficiency
3ffecti&e tool
L">"+$+".&* .? W.)A"&1 C$@"+$-
Differences in definitions
=imitations of accounting records
=ac of proper standards
No allowances for price le&el changes
)hanges in accounting procedures
Vuantitati&e factors are ignored
=imited use of single ratio
Bacground is o&er looed
=imited use
(ersonal bias
49
RESEARCH METHODOLOGY
T=( R(*($)0=
Research is a Tcareful in&estigation or inquiry especially through search for new
facts in any branch of nowledge!U
T=( @).%(0+ "* $ *,*+(>$+"0 @)(*(&+$+".& 0.&*"*+"&1 .? +=( (&<&0"$+(:
@).;-(>! ?.)><-$+(: =,@.+=(*"*! 0.--(0+(: ?$0+* .) :$+$! $&$-,C(: ?$0+* $&:
@).@.*(: 0.&0-<*".&* "& ?.)> .? )(0.>>(&:$+".&*.
K"&: .? R(*($)0=
T=( )(*($)0= :.&( ;,
EB@-.)$+.), )(*($)0=/
T="* A"&: .? )(*($)0= =$* +=( @)">$), .;%(0+"'( .? :('(-.@>(&+ .? "&*"1=+* "&+. +=(
@).;-(>. I+ *+<:"(* +=( >$"& $)($ #=()( +=( @).;-(> -"(* $&: $-*. +)"(* +. ('$-<$+(
*.>( $@@).@)"$+( 0.<)*(* .? $0+".&.
D$+$ C.--(0+".&
The data for the sur&ey will be conducted from both P)">$)"(* as well as S(0.&:$),
sources!
49
P)">$), D$+$/ -
U*"&1 @()*.&$- "&+()'"(# +(0=&"E<( +=( *<)'(, +=( :$+$ #"-- 0.--(0+ ;, <*"&1
E<(*+".&&$")(. T=( @)">$), :$+$ 0.--(0+".& ?.) ="* @<)@.*( "* *<@@.*(: +. ;( :.&(
;, %<:1>(&+ *$>@-"&1 0.&'()*$+".& *$>@-"&1. I<(*+".&&$")( =$* ;((& ?.)>$++(:
#"+= ;.+= .@(& $&: 0-.*( *+)<0+<)( E<(*+".&*.
The information is collected through secondary sources during the pro*ect! That
information was utili5ed for calculating performance e&aluation and based on that+
interpretations were made!
S.<)0(* .? *(0.&:$), :$+$/
7! Most of the calculations are made on the financial statements of the
company pro&ided statements!
A! Referring standard te"ts and referred boos collected some of the
information regarding theoretical aspects!
J! Method6 to assess the performance of he company method of
obser&ation of the wor in finance department in followed!
R(*($)0= D(*"1&
A research design is the specification of methods and procedure for acquiring the
information needed to structure or to sol&e problems! 't is the o&erall operation pattern
or framewor of the pro*ect that stipulates what information is to be collected from
which source+ and be what procedures!
A )(*($)0= :(*"1& "* +=( $))$&1(>(&+ .? 0.&:"+".& ?.) 0.--(0+".& $&: $&$-,*"* .?
:$+$ "& $ >$&&() +=$+ $">* +. 0.>;"&( R(-('$&0( +. +=( )(*($)0= @<)@.*( #"+=
(0.&.>, "& @).0(:<)(.
D(*"1& :(0"*".& =$@@(&*.
7! ?hat is study aboutE
A! ?hat is study being madeE
J! ?here will the study be carried outE
4! ?hat type of data is requiredE
49
$! ?here can the required data be foundE
<! ?hat will be the sample designE
9! Technique of data collection!
@! %ow will data be analy5edE
9! %ow can the customer can be persuaded for opening current with )ADBMRS
'ND'A ='M'T3D+ MA=AN(MRE
78! %ow to increase the maret share of )ADBMRS 'ND'A ='M'T3D+ MA=AN(MRE
77! ?ho is the competitor of )ADBMRS 'ND'A ='M'T3D+ MA=AN(MRE
WORKING CAPITAL MANAGEMENT
WORKING CAPITAL CONCEPTUAL VIEW
T?oring )apital+ also called net current assets+ is the e"cess of current assets
o&er current liabilities! All organi5ations ha&e to carry woring capital in one form or
another! The efficient management of woring capital is important from the point of
&iew of both liquidity and profitability! (oor management of woring capital means
that funds are unnecessary tied up in idle assets hence reducing the ability to in&est in
producti&e assets such as a plant and machinery+ so affecting the profitabilityU!
?oring capital management may be defined as the management of firm1s
sources and uses of woring capital in order to ma"imi5e the wealth of the
shareholders! The proper woring capital management requires both the medium term
planning:say upto three years; and also the immediate adaptations to changes arising
due to fluctuations in operating le&els of the firm!
49
CONCEPT OF WORKING CAPITAL
7; GROSS WORKING CAPITAL JTOTAL WORKING CAPITALK / The
gross woring capital refers to the firm1s in&estment in all the current assets
taen together! The total in&estments in all the indi&idual current assets is the
gross woring capital! 0or e"ample+ if a firm has a cash balance of Rs!$8+888 +
debtor of Rs!98+888 and in&entory of raw materials and finished goods has been
assessed at Rs!7+88+888 + then the gross woring capital of the firm is
Rs!A+A8+888:i!e! Rs!$8+888 W Rs!98+888 W Rs!7+88+888;!
A; NET WORTH CAPITAL / The term woring capital may be defined as the
access of total current assets o&er total current liabilities! The current liabilities
refers to those liabilities which are payable with in a period of one year! The
e"tent+ to which the payments of these current liabilities are delayed+ the firm
gets the a&ailability of funds for that period! So+ a part of the funds required to
maintain current assets is pro&ided by current liabilities and the firm will be
required to in&est the funds in only those current assets which are not financed
by the current liabilities!
T=( 1).** 0.&0(@+ "* *.>(+">(* @)(?())(: +. +=( &(+ 0.&0(@+ .? #.)A"&1 0$@"+$- ?.)
+=( ?.--.#"&1 )($*.&*/
a; 't enables the enterprise to pro&ide correct amount of woring capital at the
right time!
b; 3&ery management is more interested in the total current assets with which it
has to operate than the sources from where it is made a&ailable!
c; The gross concept taes into consideration the fact that e&ery increase in the
funds of the enterprise would increase its woring capital!
49
d; The gross concept of woring capital is more useful in determining the rate of
return on in&estments in woring capital!
The net woring capital concept+ howe&er+ is also important for the following reasons-
a; 't is a qualitati&e concept which indicates the firm1s ability to meet its
operating e"penses and short6term liabilities!
b; 't indicates the margin of protection a&ailable to the short6term creditors+ i!e!+
the e"cess of current assets o&er current liabilities!
c; 't is an indicator of the financial soundness of an enterprise!
d; 't suggests the need for financing a part of the woring capital requirements out
of permanent sources of funds!
49
COMPONENTS OF WORKING CAPITAL
A -$)1( $>.<&+ .? #.)A"&1 0$@"+$- )(>$"&* +"(: <@ "& '$)".<* #.)A"&1 0$@"+$-
0.>@.&(&+* -"A( /
a; Raw materials
b; ?or6in6progress
c; 0inished goods
d; Recei&ables etc!
An industry has to hold raw materials and wor6in6progress to maintain production
flow and finished goods to meet the timely needs of its customers! The woring capital
requirement is+ therefore+ directly lined with the le&el of in&entory and the time taen
by the purchaser of the goods to pay the amount!
1K RAW MATERIALS/
The stocing of raw materials is lined to a number of factors lie le&el of production+
location of resources of supply and a&ailability position+ storing capacity of godowns+
seasonal a&ailability and price etc!
2K WORK-IN-PROGRESS/
3&ery industry is essentially required to carry some stocs at &arious stages which lie as
semi finished goods at &arious stages of production!
7KFINISHED GOODS/
The quantum and &alue of finished goods depends upon the type and &ariety of
products! This also depends upon the lot si5es+ which are required to be deli&ered+ and
a&ailability of inspection staff! The seasonal effect in some products lie fans+ coolers+
refrigeworing n+ air conditioner etc+ can also force to carry a higher le&el of finished
goods in&entory in the off6season!
K RECEIVABLES/
The amount of money outstanding at a particular point of time representing reali5ation
against sales is termed as recei&ables! These recei&ables are influenced by a number of
factors lie credit policy+ maret strategy+ pricing policy+ type of buyers+ credit allowed
by companies etc!
49
49
CLASSIFICATION OF WORKING CAPITAL
?oring capital may be classified into two ways-
a; on the basis of concept
b; on the basis of time
Ln the basis of concept+ woring capital is classified as gross woring capital and net
woring capital! This classification is important from the point of &iew of the financial
manager! Ln the basis of time+ woring capital may be classified as-
a; (ermanent or fi"ed woring capital!
b; Temporary or &ariable woring capital!
1K P()>$&(&+ .) ?"B(: #.)A"&1 0$@"+$-/
't is the minimum amount which is required to ensure effecti&e utili5ation of fi"ed
facilities and for maintaining the circulation of current assets! There is always a
minimum le&el of current assets+ which is continuously required by enterprise to carry
out its normal business operations! 0or e"ample+ e&ery firm has to maintain a minimum
le&el of raw materials+ wor6in6progress+ finished goods and cash balances!
2K T(>@.)$), .) '$)"$;-( #.)A"&1 0$@"+$-
't is the amount of woring capital which is required to meet the seasonal demands and
some special e"igencies! #ariable woring capital can be further classified as seasonal
woring capital and special woring capital! Most of the enterprise ha&e to pro&ide
additional woring capital to meet the seasonal and special needs!
49
PRINCIPLES OF WORKING CAPITAL
The basic ob*ecti&e of woring capital management is to a&oid o&er in&estment or
under in&estment in current assets+ as both the e"tremes in&ol&e the ad&erse
consequences! L&er in&estment in current assets may lead to reduced profitability due
to cost of bloc funds+ e"tra storing space required+ e"tra efforts for follow up+
possibility of malpractice etc!
The ob*ecti&e of woring capital management is to ensure. 'n other words+ woring
capital management intends to ensure that the in&estment in current assets is reduced to
the minimum possible e"tent! %owe&er+ the normal of the organi5ation should not be
affected ad&ersely! 'f the normal operations of the organi5ations are affected ad&ersely+
reducing the in&estment in current assets is fruitless!
N33D LR LB,3)TS L0 ?LRH'N/ )A('TA=
W.)A"&1 0$@"+$- "* &((:(: ?.) +=( ?.--.#"&1 @<)@.*(*/
7; 0or the purchase of raw materials+ components and spares!
A; To pay salaries and wages!
J; To incur day6to6day e"penses and o&erhead costs such as fuel+ power and office
e"penses etc!
4; To meet the selling costs as pacaging +ad&ertising etc!
$; To pro&ide credit facilities to the customers!
<; To maintain the in&entories of raw material+ wor6in6progress+ stores and spares
and finished stoc!
49
D3BTLR
)AS%
RA?
MAT3R'A=S
0'N'S%3D
/LLDS
?LRH 'N
(RL/R3SS
IM"ORTANCE OF WORKING CA"ITAL
?oring capital is the lifeblood and ner&e center of a business! ,ust as circulation of
blood essential in the human body for maintaining life+ woring capital is &ery essential
to maintain the smooth running of a business! No business can run successfully without
an adequate amount of woring capital! The main ad&antages of maintaining adequate
amount of woring capital are as follows-
7; Sol&ency of the business-
A:(E<$+( #.)A"&1 0$@"+$- =(-@* "& >$"&+$"&"&1 *.-'(&0, .? +=( ;<*"&(** ;,
@).'":"&1 <&"&+())<@+(: ?-.# .? @).:<0+".&.
A; /oodwill-
S<??"0"(&+ #.)A"&1 0$@"+$- (&$;-(* $ ;<*"&(** 0.&0()& +. >$A( @).>@+
@$,>(&+* $&: =(&0( =(-@ "& 0)($+"&1 $&: >$"&+$"&"&1 1..:#"--.
J; 3asy loans-
A 0.&0()& =$'"&1 $:(E<$+( #.)A"&1 0$@"+$-! ="1= *.-'(&0, $&: 1..: 0)(:"+
*+$&:"&1 0$& $))$&1( -.$&* ?).> ;$&A* $&: .+=() .& ($*, $&: ?$'.)$;-(
+()>*.
4; )ash discounts-
A:(E<$+( #.)A"&1 0$@"+$- "* $-*. (&$;-(* $ 0.&0()& +. $'$"- 0$*= :"*0.<&+* "&
+=( @<)0=$*(* $&: =(&0( "+ )(:<0(* 0.*+*.
$; Regular supply of raw material-
S<??"0"(&+ #.)A"&1 0$@"+$- (&*<)(* )(1<-$) *<@@-, .? )$# >$+()"$-* $&:
0.&+"&<.<* @).:<0+".&.
<; Regular payment of salaries+ wages and other day6to6day commitments-
A 0.>@$&, #="0= =$* $>@-( #.)A"&1 0$@"+$- 0$& >$A( )(1<-$) @$,>(&+*
.? *$-$)"(*! #$1(*! $&: .+=() :$,-+.-:$, 0.>>"+>(&+* #="0= )$"*( +=(
49
>.)$-( .? "+* (>@-.,((*! "&0)($*(* +=(") (??"0"(&0,! )(:<0(* #$*+$1(* $&:
0.*+* $&: (&=$&0(* @).:<0+".& $&: @).?"+*.
9; Ability of face crisis-
A:(E<$+( #.)A"&1 0$@"+$- (&$;-(* $ 0.&0()& +. ?$0( ;<*"&(** 0)"*(* "&
(>()1(&0"(* *<0= $* :(@)(**".& ;(0$<*( :<)"&1 *<0= @()".:*! 1(&()$--,!
+=()( "* ><0= @)(**<)( .& #.)A"&1 0$@"+$-.

@; %igh Morale-
A:(E<$+( .? #.)A"&1 0$@"+$- 0)($+(* $& (&'").&>(&+ .? *(0<)"+,!
0.&?":(&0(! ="1= >.)$-(! $&: 0)($+(* .'()$-- (??"0"(&0, "& ;<*"&(**.

9; Vuic and regular return on in&estment-
E'(), "&'(*+.) #$&+* $ E<"0A $&: )(1<-$) )(+<)& .& ="* "&'(*+>(&+*.
S<??"0"(&0, .? #.)A"&1 0$@"+$- (&$;-(* $ 0.&0()& +. @$, E<"0A $&: )(1<-$)
:"'":(&:* +. "+* "&'(*+.)*! $* +=()( >$, &.+ ;( ><0= @)(**<)( +. @-.<1=
;$0A @).?"+*. T="* 1$"&* +=( 0.&?":(&0( .? "+* "&'(*+.)* $&: 0)($+(* $
?$'.)$;-( >$)A(+ +. )$"*( $::"+".&$- ?<&:* "& +=( ?<+<)(.

49
FACTORS DETERMINING WORKING CAPITAL REIUIREMENT
T=( #.)A"&1 0$@"+$- &((:* .? $ ?")> $)( :(+()>"&(: $&: "&?-<(&0(: ;, '$)".<*
?$0+.)*. A #":( '$)"(+, .? 0.&*":(#.)A"&1 &* >$+ (??(0+ +=( E<$&+<> .? #.)A"&1
0$@"+$- )(E<")(: $&: +=(*( 0.&*":(#.)A"&1 &* >$, '$), ?).> +">( +. +">(.
F.--.#"&1 $)( *.>( .? +=( ?$0+.)* #="0= $)( )(-('$&+ "& :(+()>"&"&1 +=( #.)A"&1
0$@"+$- &((:* .? +=( ?")>.
1; Basic nature of business-
The woring capital requirement is closely related to the nature of the firm! 'n case
of 0=3I 3N/'N33R'N/ =TD!+ a manufacturing company+ different types of
production processes are performed! Lne unit of raw material introduced in the
production schedule may tae a long period before it is a&ailable as finished goods
for sale! 0unds are bloced not only in raw materials but also in labor e"penses and
o&erheads at e&ery stage of production! The operating cycle is usually a longer one
and sales are made generally on credit terms! So+ there is always a requirement of
substantial amount of woring capital.
7K B<*"&(** 0,0-( ?-<0+<$+".& /
Different phases of business cycle i!e! boom+ recession+ reco&ery etc! also affect the
woring capital requirement! 'n case of recession period there is usually a dullness
in business acti&ities and there will be an opposite effect on the le&el of woring
capital requirement! There will be fall in in&entories and cash requirement etc!
7K S($*.&$- .@()$+".&* /
'f a firm operating in goods and ser&ices ha&ing seasonal fluctuations in demand+
then the woring capital requirement will also fluctuate with e&ery change! 'f the
opeworing ns are smooth and e&en throughout the year the woring capital
requirement will be constant and will not be affected by the seasonal factors!
49
K M$)A(+ C.>@(+"+"'(&(**/
't has an important bearing on the woring capital needs of firm! 'n &iew of
competiti&e conditions pre&ailing in the maret+ the firm may ha&e to offer liberal
credit terms to the customer resulting in higher debtors! Ln the other hand+ a
monopolistic firm may not require a large woring capital! 't may as the customers
to pay in ad&ance or to wait for some time after placing the order!
2K C)(:"+ P.-"0, /
)redit policy means the totality of terms and conditions on which goods are sold
and purchased! A firm has to interact with two types of credit policies at a time!
Lne+ the credit policy of the supplier of raw materials+ goods etc!+ and two+ the
credit policy relating to credit which it e"tends to its customers! 'n both the cases+
howe&er+ the firm while deciding the credit policy+ has to tae care of the credit
policy of the maret! 0or e"ample+ a firm might purchasing goods and ser&ices on
credit terms but selling goods only for cash! The woring capital requirement of this
firm will be lower than that of a firm which is purchasing cash but has to sell on
credit basis!
K S<@@-, C.&:"+".&*
The time taen by a supplier of raw materials+ goods etc! after placing an order+ also
determines the woring capital requirement! 'f goods are recei&ed as soon as
ordered or in a short period after placing an order+ then the purchaser will not lie to
maintain a high le&el of in&entory of that good! Ltherwise+ larger in&entories should
be ept e!g! in case of imported goods!
49
4K N$+<)( .? P).:<0+* /
?hether the products manufactured by the industry are influenced by seasonal
factors e!g! sugar+ tea+ *ute+ &egetable oil+ fans+ refrigerators etc!
8K O@()$+"&1 C,0-( /
T">( +$A(& ?).> +=( *+$1( #=(& 0$*= "* @<+ "&+. +=( ;<*"&(** <@+. +=( *+$1(
#=(& 0$*= "* )($-"C(: ?).> *$-( .? ?"&"*=(: 1..:*.
NEGETIVE WORKING CAPITAL
ADVANTAGE/
A negati&e woring is a sign of managerial efficiency in a business with low in&entory
and accounts recei&ables : which means they operate on an strictly cash basis ;!

Dabur 'ndia =imited has a negati&e woring capital Rs! crores in the financial year
A88 4 A88 which shows that the company is e"tremely good in controlling its cash
flows! 't has efficient financial management through which has it enabled in bringing
down the woring capital figure to a negati&e one!
LIMITATIONS/
I& $&, .+=() *"+<$+".&! "+ "* $ *"1& $ 0.>@$&, >$, ;( ?$0"&1 ;$&A)<@+0, .) *()".<*
?"&$&0"$- +).<;-(.
S. =$'"&1 $ &(1$+"'( #.)A"&1 0$@"+$- >$, @).'( $ ;..& .) ;$&(.
49
FIGURE BELOW SHOWS THE SOURCES AND USES OF WORKING CAPITAL
SOURCES USES
49
O#e!$%&'s
I**<( .? *=$)(
0$@"+$-
L.&1-T()>
B.)).#"&1*
S$-( .? N.&-
C<))(&+ $**(+*
W.)A"&1
C$@"+$- @..-
D%(%)e')
s
R(@$,>(&+ .?
L.&1-T()>
B.)).#"&1*
P<)0=$*( .?
N.&-C<))(&+
A**(+*
COMPARISON OF CADBURY WORKING CAPITAL WITH OTHER
COMPANIES
C.>@$&,3*
N$>(
F"&$&0"$-
Y($)
C<))(&+
A**(+*
C<))(&+
L"$;"-"+"(*
Networing
capital
CADBURY
L+:.
2002-04 81 74 72
B)"+$&&"$
I&:<*+)"(*
2002-04 2766.41 2724.45 2.67
H"&:<*+$&
L('() L+:.
2002-04 75585.50 76502.6 -1017.46
M$)"0.
I&:<*+)"(*
2002-04 1618.22 1044.80 521.11
C$:;<),
I&:"$ L+:.
2002-04 2182.60 1722.0 527.20
N(*+-( I&:"$
L+:.
2002-04 2212. 5100.5 -2255.74
49

T=( $;.'( 0=$)+ :"*@-$,* +=( #.)A"&1 0$@"+$- .? CADBURY L">"+(:. CADBURY
=$* ;((& 0.&*+$&+-, )(:<0"&1 "+* #.)A"&1 0$@"+$- $&: "& +=( ,($) 2006-
2010! $ *+((@ :(0-"&( =$* +$A(& @-$0( "& +=( 0.>@$&,3* #.)A"&1 0$@"+$-
)(*<-+"&1 "& +=( 0.>@$&,3* #.)A"&1 0$@"+$- 1."&1 &(1$+"'(.
T="* =$* @).'(: +=( >$&$1()"$- (??"0"(&0, $+ CADBURY $+ "+* ?"&$&0(*. T=(
0.>@$&, =$* )(:<0(: "+* @$,>(&+ @()".: ?).> 76 :$,* +. $ &(1$+"'( .?
?"'( :$,*! #="0= *=.#* +=$+ +=( 0.>@$&, =$* (&.<1= .? ?<&:* $'$"-$;-( .&
0)(:"+ ?.) "+* *<@@-"()*! $&: "* 0.--(0+"&1 >.&(, ?).> "+* :(;+.) $+ $ ?$*+
@$0( +. $'.": ><0= .? ;$::(;+*.
49
WORKING CAPITAL OF CADBURY INDIA LTD.
FLY FLY 2008 2008 2005 2005 2006 2006 2010 2010
WORKING WORKING
CAPITAL CAPITAL 947!J4 947!J4 7899!@J 7899!@J 7J89!9 7J89!9 @AJ!$ @AJ!$
The abo&e graph displays the woring capital for &arious year of )adbury
'ndia =imited! The woring capital of this company has been constantly
increases e"cept for the year A8896A878 where it has declined! This shows
thet )adbury 'ndia =imited has lot of cash bloced in the form of current
assets! %ence because of this the woring capital of company is positi&e
and high!
The company needs to strengthen its cash policies and reduce its money
bloced in the current assets! Also+ by decreasing the payment period the
company can impro&e upon the woring capital!
49
WORKING CAPITAL OF HINDUSTAN LEVER LTD WORKING CAPITAL OF HINDUSTAN LEVER LTD
FLY FLY 2004 2004 2008 2008 2005 2005 2006 2006 2010 2010
WORKING WORKING
CAPITAL CAPITAL
7@9A!4@ 7@9A!4@ 6J9JJ!99 6J9JJ!99 7974!J9 7974!J9 J88!9< J88!9< 6787J!<9 6787J!<9
The abo&e graph displays the woring capital scenario of %industan =e&er =imited+ one of the
largest 0M)/ company in the world!The company has been ha&ing an enormous cash for
planning out its future in&estments! The woring capital has been almost nil and negati&e since
the past few years+ showing that the company has an e"cellent and well planned finances!A
company with negati&e woring capital has a faster period and a slower payment period!
49
WORKING CAPITAL OF BRITANNIA INDUSTRIES WORKING CAPITAL OF BRITANNIA INDUSTRIES
FLY FLY
2004 2004 2008 2008 2005 2005 2006 2006 2010 2010
?LRH'N/ ?LRH'N/
)A('TA= )A('TA= $7!$9 $7!$9 A$<!9< A$<!9< $9A!A7 $9A!A7 94<!<$ 94<!<$ 4A!8J 4A!8J
Britannia Industries Ltd. Working capital was increasing set up from 2000 to 2003,
when finally the company realized it had to do something to control its lockage of free
cash in the current assets.!herey, though its managerial skills and efficient functioning
the company reduced its working capital from "s. #$%.%& crores in 200'(20)0 to "s.
$2.03 crores in 200'(20)0, a decline of almost '$*.
WORKING CAPITAL OF NESTLE INDIA LTD. WORKING CAPITAL OF NESTLE INDIA LTD.
49
FLY FLY
2004 2004 2008 2008 2005 2005 2006 2006 2010 2010
?LRH'N/ ?LRH'N/
)A('TA= )A('TA=
694$!7A 694$!7A 6J79!94 6J79!94 694J!@7 694J!@7 67J@@!$J 67J@@!$J 6A$@@!J< 6A$@@!J<
!he ao+e graph displays the working capital of ,estle India Limited, which has een
negati+e 200'(20)0.- rilliant and efficient working and managerial scenario is
depicted through the working capital of the company.
WORKING CAPITAL OF MARICO LIMITED WORKING CAPITAL OF MARICO LIMITED
49
FLY FLY 2000 2000 2001 2001 2002 2002 2007 2007 200 200
?LRH'N/ ?LRH'N/
)A('TA= )A('TA=
494!AA 494!AA 4<<!@@ 4<<!@@ $94!@< $94!@< @A9!<9 @A9!<9 @$7!$7 @$7!$7
!he graph shown depicts the working capital from the year 2000 to 200$ of .arico
Industries Limited, another renowned /.01 company.!he working capital of this
company has een increased continuously, showing that the company is locking its
cash a+ailale in current assets or is incurring large ad dets.
49
/I,2I,13
7! The current ratio has shown in a fluctuating trend as 9!47+ A!79+ 4!4@+ 7!9@+ and J!@A
during A88< of which indicates a continuous increase in both current assets and
current liabilities!
A! The quic ratio is also in a fluctuating trend through out the period A88< 4 89
resulting as 9!47+ 7!<$+ 4!J$+ 7!9+ and J!@7! The company1s present liquidity position
is satisfactory!
J! The absolute liquid ratio has been decreased from J!9A to 7!7@+ from A88< 4 89!
4! The proprietory ratio has shown a fluctuating trend! The proprietory ratio is
increased compared with the last year! So+ the long term sol&ency of the firm is
increased!
$! The woring capital increased from 8!9A to 7!7J in the year A88< 4 78!
<! The fi"ed assets turno&er ratio is in increasing trend from the year A88< 4 78 :7!A<+
7!@A+ 4!A4+ J!<9+ and <!@A;! 't indicates that the company is efficiently utili5ing the
fi"ed assets!
9! The capital turno&er ratio is increased form A88< 4 8@ :8!9@+ 7!87+ and 7!84; and
decreased in A889 to 8!9@! 't increased in the current year as 7!88!
@! The current assets to fi"ed assets ratio is increasing gradually from A88< 4 78 as
A!9J+ J!94+ 4!A8+ <!89 and @!79! 't shows that the current assets are increased than
fi"ed assets!
9! The net profit ratio is in fluctuation manner! 't increased in the current year
compared with the pre&ious year form 8!JJ to 8!4A!
78! The net profit is increased greaterly in the current year! So the return on total assets
ratio is increased from 8!79 to 8!J7!
77! The Reser&es and Surplus to )apital ratio is increased to 4!79 from A!8A! The
capital is constant+ but the reser&es and surplus is increased in the current year!
49
7A! The earnings per share was &ery high in the year A88< i!e!+ 787!$<! That is
decreased in the following years because number of equity shares are increased and
the net profit is decreased! 'n the current year the net profit is increased due to the
increase in operating and maintenance fee! So the earnings per share is increased!
7J! The operating profit ratio is in fluctuating manner as 8!99+ 8!$7+ 8!47+ 8!$9 and 8!<9
from A88< 4 78 respecti&ely!
74! (rice 3arnings ratio is reduced when compared with the last year! 't is reduced from
J!89 to A!J9+ because the earnings per share is increased!
7$! The return on in&estment is increased from 8!JA to 8!4A compared with the pre&ious
year! Both the profit and shareholders funds increase cause an increase in the ratio!
49
CONCLUSION
The employers should eep in mind these four rules of thumb when designing
the company1s strategy and solution-
R<-( M1/ I&+()&(+ +(0=&.-.1, "* +=( A(, +. $ @).?.<&: )('.-<+".& "& -($)&"&1.
The effects of 'nternet technology on employee training are indeed profound2
howe&er+ technology 6 any technology 6 should be seen as a tool+ not a strategy
or final goal! ,ust because they ha&e good word processing software doesn>t
mean you write well! =iewise+ the 'nternet cannot+ in and of itself+ impro&e the
quality of the learning and the content they put on it! The employers need to use
'nternet technology combined with high quality+ effecti&e learning to ma"imi5e
learning and retention le&els!
R<-( M2/ T=()( "* $& (&:<)"&1 $&: ">@.)+$&+ ).-( ?.) +)$:"+".&$- 0-$**)..>
"&*+)<0+".&.
(eople who belie&e technology will totally replace great teachers in front of
classrooms of highly moti&ated learners are as misguided as those who belie&e
the 'nternet is a passing fad! The blended learning solution+ i!e!+ a mi"ture of
classroom and ?eb6based training is the most effecti&e and comprehensi&e
learning strategy!
R<-( M7/ L($)&"&1 "* $ 0.&+"&<.<*! 0<-+<)$- @).0(** - &.+ *">@-, $ *()"(* .?
#.)A*=.@*.
3mployees retain about $8C to <8C of what they learn in a formal training
worshop! Lften+ employees forget what they ha&e learned within two months of
the worshop! Therefore+ access and opportunities to learn should be a&ailable to
49
anyone+ anywhere+ and at any time within an organi5ation! Lrgani5ational
learning is as much about what happens outside formal learning programs as it is
about the programs themsel&es!
R<-( M/ S+)$+(1, :('(-.@>(&+ $&: ">@-(>(&+$+".& $)( &('() )($--,
?"&"*=(:.
3mployers change as their business changes! They ad*ust it as their people
become more silled and nowledgeable! The employers redefine it as new
technology options become a&ailable! And+ they constantly test it against the
mission and &ision of their business+ maing sure they are always in alignment!
Due to training there is greater stability+ fle"ibility and capacity for growth in an
organi5ation! Accidents+ scrap and damage to machinery and equipment can be
a&oided or minimi5ed through training! 3&en dissatisfaction+ complaints+
absenteeism+ and turno&er can be reduced if employees are trained well! 0uture
needs of employees will be met through Training And De&elopment
programmes! Lrgani5ational tae fresh diploma holders or graduates as
apprentices or management trainees! They are absorbed after course completion!
Training ser&es as an effecti&e source of recruitment! Training is an in&estment
in %R with a promise of better returns in future! Though no single training
programme yields all the benefits the organi5ation which de&otes itself to
Training And De&elopment enhances its %R capabilities and strengthens its
competiti&e edge! At the same time+ the employee1s personal goals are furthered+
generally adding to his or her abilities and &alue to the employer! Mltimately+ the
ob*ecti&es of the %R department and also of the organi5ation are also furthered!
49
49

SUGGESTIONS
7! Necessary nowledge and sills about new learning strategies at all le&els2
A! Accreditation of the current teacher training and staff de&elopment programs
offered by &arious pro&iders2
J! A critical mass of local e"perts to spread the new nowledge and sills
throughout the teachers in the country2
4! Suitable alternati&e model for in6ser&ice training2
$! A plan for national implementation2
'ndication of support and commitment by the go&ernment
49
BIBLIOGRAPHY
REFFERED BOOKS
0'NAN)'A= MANA/3M3NT 6 '! M! (AND3S
0inancial Management using 0inancial Modeling by Ru5beh ,! Bodhanwala
REFFERED WEBSITES
www!google!com
www!cadburyindia!com
49