A STUDY OF WORKING CAPITAL

MANAGEMENT BRITANNIA INDUSTRIES LTD.

SUBMITTED BY
Name of the candidate:-
Registration No.:-
Roll No.:-
Name of the college:-

Supervised by
Name of the supervisor:-
Name of the college:-

Month & Year of submission

February 2013

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 SUPERVISOR’S CERTIFICATION
This is to certify that Ms. Rini Das, a student of B. Com. Honours in
Accounting & Finance in Business of ..............................under the
University of Calcutta has worked under my supervision and
guidance for her project Work and prepared a Project Report with
title A STUDY OF WORKING CAPITAL
MANAGEMENT BRITANNIA INDUSTRIES LTD. This
project report, which she is submitting, is her genuine and
original work to the best of my knowledge.

Place: Signature:
Date:

STUDENT’S DECLERATION

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I hereby declare that the project work with the title ‘A
STUDY OF WORKING CAPITAL MANAGEMENT
BRITANNIA INDUSTRIES LTD.’ submitted by  me for the
partial fulfilment of the degree of B.COM. Honours in
Accounting & Finance under the University of Calcutta is my
original work and has not been submitted earlier to any other
University for the fulfilment of the requirement for any course
of study.
I also declare that no chapter of this manuscript in whole or in
part has been incorporated in this report from any earlier work
done by others or by me. However, extracts of any literature
which has been used for this report has been duly
acknowledged providing details of such literature in this
references.

Place: Signature:
Date:

ACKNOWLEDGEMENT
It is not a single man’s effort which is sufficient for the
accomplishment of a research. I acknowledge here the names of

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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 .........................and his team
whose constant encouragement and valuable suggestions gave back
bone support in completing this project.

I take the opportunity to thank my friend, 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.

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 PREFACE
It gives great pleasure to present on the topic
o f “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
inth e o r y   o f   F i n a n c e .   A   l a r g e   n u m b e r   o f   t o o l s   a n d   t e c
h n i q u e s   h a v e   b e e n developed  in the  past to  insure  opti-
mal 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.

In any economy, the financial sector plays a major role in the

mobilizationand allocation of savings. In changing economic environ
ment, 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.

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 Table of CONTENTS
Chapter 1: introduction
 Objective of Study
 Objective of Research
 Research Methodology
 Source of Data Collection
 Limitation

Chapter 2: conceptual framework

 Type of Working Capital
 Need for Working Capital
 The Importance of Good Working Capital Management
 Source of Working Capital
 Approaches of Working Capital

Chapter 3: data analysis, presentation & Findings

 Management of Working Capital
 Analysis of Working Capital
 Significance & Need of a Adequate Working Capital
 Company Overview
 Company Profile
 Board of Directors
 History of Biscuits
 Our Product
 Achievement of the Company
 Calculation using Working Capital Ratio
 Finding

Chapter 4: recommendations conclusion

 Recommendation
 Conclusions
 Bibliography

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 1. INTRODUCTION
Working Capital Management is the process of planning and controlling the
level and mix of the current assets of the firm as well as
f i n a n c i n g t h e s e assets. 

Decisions relating to working capital and short term financing are

r e f er r e d   t o   a s   w or k i n g   c a p i t a l   m a n a g e m e n t .   T h e s e   i n v o l v e   m a n a
g i n g   t h e 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 a n d t h a t i t h a s s u f f i c i e n t c a s h
f l o w t o s a t i s f y b o t h maturing short-term debt and upcoming operational
expenses.

What is working capital?

Working capital refers to short term funds required to meet the day to
day operating expenses of the firm.

According to RAMAMOORTHY,
“Working capital refers to the funds, which a company must possess to
finance its day  to day operations.”

It relates with the problems that arise in attempting to manage the Current

Assets, Current Liabilities and their inter-relationship that exists between them.
If a firm cannot maintain a satisfactory level of working capital, it is likely to
become insolvent and may even be forced into bankruptcy. Therefore, the goal
of working capital management is to manage the firm’s Current Assets and
Current Liabilities in such a way that a satisfactory level of working capital is
maintained.

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
&knowhow 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 liquidity position of the firm.

OBJECTIVES 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.

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.
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

8
inflexible sequence of steps and type of problems to be studied will determine
the particular steps to be taken and their order too.

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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.
 Books
 Reports
 Magazine
 Internet

LIMITATIONS
 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.

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 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.

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 2. CONCEPTUAL FRAMEWORK
A managerial accounting strategy focusing on maintaining efficient levels of
both components of working capital, current assets and current liabilities, in
respect to each other is working capital management. Working capital
management ensures a company has sufficient cash flow in order to meet its
short-term debt obligations and operating expenses.

Implementing an effective working capital management system is an excellent

way for many companies to improve their earnings. The two main aspects of
working capital management are ratio analysis and management of individual
components of working capital.

A few key performance ratios of a working capital management system are the

working capital ratio, inventory turnover and the collection ratio. Ratio analysis
will lead management to identify areas of focus such as inventory management,
cash management, accounts receivable and payable management.

TYPES OF WORKING CAPITAL:

I. Concept based
II. Time based
 
I. CONCEPT BASED
a) Gross working capital
 b) Net working capital
a) GROSS WORKING CAPITAL:-
 The term “gross working capital “, refers to the firms investment in current
assets. Current assets are the assets which can be converted into cash within an
accounting year.
b) NET WORKING CAPITAL:-
 Net working capital (NWC) is the difference B\W Current assets &current
liabilities. It is that portion of firm’s current assets which is financed with long
as well as short term funds.
WORKING CAPITAL = CURRENT ASSETS - CURRENT
LIABILITIES
 

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Current Assets:-
 Cash and Bank deposits
 Inventory
 Debtors and Receivables
 Prepaid Expenses
 Marketable Securities
 
Current Liabilities:-
 Bank Overdraft
 Creditors and Payables
  Notes Payable
 Accrued Expenses etc.
 
II. TIME BASED
 a) Permanent or fixed working capital
b) Temporary or variable working capital

a) PERMANENT WORKING CAPITAL:-

It is the minimum investment kept in the form of inventory of raw material,
work-in-process, finished goods, stores & spares & book debts to facilitate
uninterrupted operation in a firm. Though this investment is stable in short run,
it may vary in the long run. The minimum level of Current Assets maintained in
a firm is usually known as permanent or regular working capital.
b) TEMPORARY WORKING CAPITAL:-
A firm is required to maintain additional Current Assets temporarily over &
above permanent working capital to satisfy cyclical demands. An amount over
& above the permanent working capital is temporary or fluctuating working
capital. At times, additional working capital is required to meet the unforeseen
events like floods, strikes, fire, & price hike tendencies and contingencies.

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

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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
instantaneously. 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
 Exploitation of favorable market conditions
 Ability to face crisis

SOURCES OF WORKING CAPITAL

 Long term
 Shares sources  Accounts
(Permanent
 Debentures or Fixed)  Advances
 Public  Short term  Instalment
Sources
Deposit (temporary) credit
 Ploughing  Commercial
Permanent or
back of bank
Fixed
profits Temporary or
Variable

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APPROACHES TO WORKING CAPITAL
 HEDGING OR MATCHING
 CONSERVATIVE
 AGGRESSIVE

Hedging:-
This requires that 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:-
A firm can adopt a conservative approach in financing its current and fixed
assets. a financial policy of the firm is said to beconservative  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:-
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.

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16
 3. DATA ANALYSIS, PRESENTATION
AND FINDINGS

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 a firm in such a way that a satisfactory level of working
capital is maintained, it is neither inadequate or excessive

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

heads-

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
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.

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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, about60% 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.
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.

ANALYSIS OF WORKING CAPITAL

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

Fund Flow 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’

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SIGNIFICANCE & NEED OF  ADEQUATE 
WORKING CAPITAL
1. OPERATING CYCLE:-
Operating cycle is the time duration within 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.

2. ADEQUATE WORKING CAPITAL:-

Working capital helps in maximizing the value of money if it is used correctly.
There are dangers of idle funds if there is excessive working capital and it does
not earn any profit or the firm. The problems are as follows:-
 In case of excessive working capital, there will be a high accumulation
of inventory which is not required.
 Excessive working capital means that the company does not have any
efficiency in its credit policy. This would lead to bad debts.
 It also leads to theft, wastage and managerial inefficiency. The following
problems arise in inadequate working capital:-
 The firm is unable to carry out its business and thus it results into losses
and affects the profits of the firm.
 Inadequate working capital affects the goodwill of the firm when it will
not be able to meet its liabilities in required time.
 Production logs will occur when there is inadequate working capital to
run the business.

3. FINANCING MIX :-
Working capital significance is also due to the management of the pattern of
financing the Current Assets. The firm has to continuously measure and decide
the source from which fund can be used for making investments. For which,
the usual sources are decided:-
 Debt or equity
 Long or short term

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COMPANY OVERVIEW
The story of one of India’s favourite 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 Indianness of the firm. The following year, Britannia Biscuit
Company was re-christened Britannia Industries Limited (BIL). Four years later
in 1983, it crossed theRs.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 “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 Mask a-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.

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 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 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 21 st 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 2005mainly for
production with a production coverage area of approximately 20 acres.

The control of management is through Board of Directors. The Company’s head

and registered office and works place are located at the below mentioned
addresses:
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

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BOARD OF DIRECTORS

NAME DESTINATION
Mr. Nusli Neville Wadia Chairman
Ms. Vinita Bali Managing Director
Mr. A. K. Harjee Director
Dr. Ajai puri Director
Mr. Avijit Deb Director
Mr. Jeh N Wadia Director
Mr. Keki Dadiseth Director
Mr. Nimesh N Kampani Director
Mr. S. S. Kelkar Director
Mr. Raju Thomas Cheif Finalcial Officer
Mr. P Govindan Company Secretary

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 travelling 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 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 favourite of Christopher Columbus who
discovered America!

22
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 19 th 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!
 

Our Products
 LITTLE HEARTS 
 Britannia GOOD DAY 
 TIGER
 TREAT 
 MARIE GOLD
 NUTRICHOICE 
 MILK BIKIS 
 BREAD
 CAKES 
 RUSKS 
Achievement of the company

23
 

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.

Calculations using working capital ratios

Working capital ratio is calculated to know whether a business has sufficient
short term assets to meet its short term liabilities. The mathematical formula for
calculating it is:

Working capital ratio = current assets / current liabilities

24
 Britannia Annual Report 2011-12
BALANCE SHEET
In crores
As at Note No. 31 March 2012 31
March 2011

I. EQUITY AND LIABILITIES

(1) Shareholders’ funds

(a) Share capital 2 23.89
23.89
(b) Reserves and surplus 3 496.15
427.41
520.04
451.30
(2) Non-current liabilities
(a) Long-term borrowings 4 28.15
430.57
(b) Deferred tax liabilities (net) 5 8.16
6.24
(c) Other long-term liabilities 6 19.91
15.99
(d) Long-term provisions 7 116.82
122.68
173.04
575.48
(3) Current liabilities
(a) Trade payables 8 336.20
239.68
(b) Other current liabilities 9 518.26
119.38
(c) Short-term provisions 10 124.80
96.65
979.26
455.71
1,672.34
1,482.49
II. ASSETS
(1) Non-current assets
(a) Fixed assets 11
(i) Tangible assets 370.63
298.68
(ii) Intangible assets 8.46
5.02
(iii) Capital work-in-progress 79.73
11.70
458.82
315.40

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 (b) Non-current investments 12 218.40
308.94
(c) Long-term loans and advances 13 125.02
142.13
(d) Other non-current assets 29 12.12
12.12
(2) Current assets
(a) Current investments 14 210.54
236.06
(b) Inventories 15 382.28
311.20
(c) Trade receivables 16 52.14
57.26
(d) Cash and bank balances 17 30.94
28.75
(e) Short-term loans and advances 18 182.08
70.63
857.98
703.90
1,672.34
1,482.49

In 2011, the current assets of ‘Britannia industries ltd’ are Rs. 857.98 crores
and the current liabilities are Rs. 979.26 crores, then the working capital ratio
for ‘Britannia industries ltd’ is calculated as current assets / current liabilities,
that is, Rs. 857.98 crores / Rs. 979.26 crores, which is 0.87.
In 2012, the current assets of ‘Britannia industries ltd’ are Rs. 703.90 crores
and the current liabilities are Rs. 455.71 crores, then the working capital ratio for
‘Britannia industries ltd’ is calculated as current assets / current liabilities, that
is, Rs. 703.90 crores / Rs. 455.71 crores, which is 1.54.

Ideally, the working capital ratio should be somewhere between 1.2 and 2.0. In
case of Britannia industries ltd in 2012, the working capital ratio is 1.54. This
indicates that its current liquidity position is good. However, a very high ratio,
that is, above 2, indicates that the business has underutilized current assets, that
is, it is not investing its assets properly.

On the other hand, negative working capital, that is, working capital ratio which
is less than one, indicates that the business might not be in a position to meet its
short term liabilities. In case of Britannia industries ltd in 2011, the working
capital ratio is 0.87. It shows that the business will not be able to pay its
creditors in time. A negative working ratio could also be due to reduced current
assets. Negative working ratio should be analyzed very intently, as it might
indicate that the sales of a company are going down and hence, accounts
receivables are shrinking, thus causing a reduction in the current assets value.

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FINDINGS
Working capital has increased in comparison to previous year 2009-10 by Rs.
57.91 Min. Due to:-
 Fuel Consumption has gone down in 2009-10 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 highinventory
in engineering, Store & Raw material.
 The production of Pant Nagar unit was 245.10 MT on 04.03.09.

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 4. RECOMMENDATIONS
CONCLUSION
RECOMMENDATION
 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.
 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.
 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.

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
 Financial Management : Sudhindra Bhatt
 Financial Management : I M Pandey
 www.Google.com

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 www.britannia.com

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