“A STUDY ON FINANCIAL STATEMENTS ANALYSIS AT

WORKING CAPITAL MANAGEMENT

COMPARATIVE STATEMENTS”
Submitted to Andhra University, Visakhapatnam in partial fulfillment for the award of the

Degree of Bachelor of Business Administration

SUBMITTED BY

SANAPALA MEGHANA

(Redg.No: 820107528043)

Under the Esteemed Guidance of

Dr. Swaroopa Datla

Associate Professor

Andhra University School of International Business

PEPSICO

Visakhapatnam

2020-2023

1
 DECLARATION

I hereby declare that the project report entitled “Working Capital” with reference to
“PEPSICO” is submitted to Andhra University School of International Business AU
[Andhra University],Visakhapatnam under the guidance of Dr. Swaroopa Datla, in partial
fulfilment for the award of the Degree of Bachelor of Business Administration is entirely
based on my own study and is being submitted for the first time and the result embodied
in this project work is not been submitted to any other university or institution for any
degree or diploma.

Place: Visakhapatnam SANAPALA MEGHANA

Date: 18-07-2020 (Redg.No: 820107528043)

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3
 ACKNOWLEDGEMENT

I would like to extend my heartfelt thanks towards all those have helped me in accomplishing
this project works. Without their active guidance, assistance and cooperation, I would have not
been able to present this project on time.

I sincerely thank Dr. S. SARABANDI, Head of the Department, AUSIB for his valuable
cooperation and encouragement.

I extend my gratitude to S.K Goyal, PEPSICO Visakhapatnam and my guide

Dr. SWAROOPA DATLA, for providing continuous assistance and guidance throughout the

project.

MEGHANA SANPALA
(Redg.No: 820107528043)

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 CONTENTS
CHAPTERS

Chapter 1:
 Introduction
 Need of the study
 Scope of the study
 Objectives of the study
 Methodology
 Limitations of the study

Chapter 2:
 Profile of Telecom industry
 Profile of Baharat Sanchar Nigam Limited

Chapter 3:
 Theoretical Framework

Chapter 4:
 Data Analysis and Interpretation

Chapter 5:
 Summary
 Findings
 Suggestions
 Conclusion
Bibliography

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 PREFACE

Success Organizations does not just happen and they do not just stay
successful. Great Organizations is made up of individually successful people who do
the right things at the right time in the right circumstances.

The management of these organizations is leaders who work their people to

create direction and vision, build affective teams, and focus on customers need and
particular sounds Business Management.

At PEARL Bottling Private Limited, they believed that good managers can
become even better ones through the proper use of experiences, relationships,
education, and training. These four avenues of development allow individual to
enhance their strengths and overcome their limitations.

They have been committed to help managers grow and develop the kind of
great managers that create success individually, within their teams, and for the
organizations.

An understanding of organizations and their nature is important to bring about

any improvement in that organization. I have done my project for the duration of 10
weeks at PEARL Bottling Private Limited, over the topic on “Working Capital
Management”.

The Project has helped me to discover the various aspects and scope of the
Finance of this Organization

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 CONTENTS

TITLE OF THE PAGE PAGE NO.

CHAPTER- I 1-19
INTRODUCTION
CHAPTER- II 20-30
INDUSTRY PROFILE
CHAPTER- III 31-58
COMPANY PROFILE
CHAPTER – IV 59-82
DATA ANALYSIS & INTERPRETATION
CHAPTER – V 83-86
SUMMARY & FINDINGS
BIBLOGRAPHY 87-89

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 TABLES
Table Page
Table Name
No No
3.1 Designation of Employees 58
4.1 Statement showing working capital Proforma 61
Working Capital Statement of PBPL from 2010-11 to
4.2 62
2014-15
4.3 Current ratio of PBPL from 2010-11 to 2014-15 66
4.4 Quick ratio of PBPL from 2010-11 to 2014-15 67
Inventory Turnover ratio of PBPL from 2010-11 to 2014-
4.5 69
15
4.6 Debtors’ Turnover ratio of PBPL from 2016-17 to 2019-20 71
Working Capital Statement of PBPL from 2016 to 2017
4.7 73
4.8 Working Capital Statement of PBPL from 2017 to 2018 75
4.9 Working Capital Statement of PBPL from 2018 to 2019 77
4.10 Working Capital Statement of PBPL from 2019 to 2020 79
4.11 Working Capital Statement of PBPL from 2016 to 2020 81

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 CHARTS
CHART NO CHART NAME PAGE NO
1.1 Operating Cycle 13
2.1 GDP Growth rate from 2010 to 2020 30
3.1 PepsiCo Companies 45
3.2 PepsiCo Product List 46
3.3 Changes in PepsiCo logo 47
3.4 Organization chart 50
4.1 Net Working Capital from 2010-11 to 2014-15 64
4.2 Current Ratio from 2010-11 to 2014-15 66
4.3 Quick Ratio from 2010-11 to 2014-15 68
4.4 Inventory Turnover Ratio from 2010-11 to 2014-15 70
4.5 Debtors Turnover Ratio from 2010-11 to 2014-15 72
4.6 Creditors Turnover Ratio from 2010-11 to 2014-15 74
4.7 Net Working Capital of 2011-12 76
4.8 Net Working Capital of 2012-13 78
4.9 Net Working Capital of 2013-14 80
4.10 Net Working Capital of 2014-15 82

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 CHAPTER-
I
INTRODUCTIO
N

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 CHAPTER – I
INTRODUCTION

Every business need funds for two purposes i.e for its establishment and to
carry out its day to day operations. Working capital refers to that part of the firm’s
capital which is required for financing short term or current assets such as cash,
marketable securities, debtors and inventories. Working capital is the amount of
funds necessary to cover the cost of operating the enterprise.
The goal of working capital management is to manage the current assets
and current liabilities of the firm in such a way that a satisfactory level of working
capital is maintained. Working capital is the difference between the inflow and out
flow of funds. Working capital is also known as revolving or circulating capital or
short term capital.

WORKING CAPITAL:-
Working capital is that capital which is involved in the current assets of the
business. It is the capital which is required to meet day to day expenses of the
business, Such as for purchasing raw material for meeting day-to-day expenditure on
salaries, wages, rent, advertising etc. Working capital is the life and nerve centre of a
business. No business can run successfully without an adequate amount of working
capital.

Working Capital refers to that part of the firm’s capital, which is required for
financing short-term or current assets such a cash marketable securities, debtors and
inventories. Funds thus, invested in current assets keep revolving fast and are
constantly converted into cash and this cash flow out again in exchange for other
current assets. Working Capital is also known as revolving or circulating capital or
short-term capital.

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 Working capital is just like the heart of the business. If it becomes weak; the
business can hardly prosper and service. Its proper circulation provides to the
business the right amount of cash to maintain in business. Without adequate amount
of working capital, production interruption may take place and results in reduction of
profit.

Working capital management is classified on the basis of concept and on the

basis of need. On the basis of concept there are Gross working capital and Net
working capital.

Gross working capital = Total Current Assets

Net working capital = Current Assets – Current Liabilities

On the basis of need there are permanent working capital and temporary working
capital. Permanent working capital classified as regular working capital and reserve
working capital. Temporary working capital classified as seasonal working capital
and special working capital.

Definition:-
According to Ralph Kennedy and Steward Mc Muller “a study of working
capital is of major importance to internal and external analysis because of its close
relationship with the current day to day operations of business”.

Meaning:-
Working capital refers to the funds invested in current assets i.e.
investment in stocks, sundry debtors, cash and other current assets. Current assets are
essential to use fixed assets profitably. For example, a machine cannot be used
without raw material. Thus, it is obvious that certain amount of funds is always
tied up in raw materials and work in progress, finished goods. However, the business
also
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enjoys credit facilities from its suppliers who may supply raw materials on credit and
the firm may not pay immediately all expenses. Therefore, certain amount of funds is
automatically available to finance the current assets requirements. However the
requirements for current assets are usually greater than the amount of funds payable
through current liabilities. In other words, current assets are to be kept at a higher
level than the current liabilities.

Concepts of working capital:-

There are two concepts of working capital:

(a) Gross working capital
(b) Net working capital

(a) Gross Working Capital:-

Gross Working capital refers to the firm’s investment in current assets.
Current assets are the assets which can be converted into cash within an accounting
year and include cash, short-term securities, debtors, (accounts receivables or book
debts), bills receivable and stock (inventory).

(b) Net Working Capital:-

Net working capital refers to the difference between current assets and
current liabilities. Current liabilities are those claims of outsiders which are
expected to mature for payment within an accounting year and include creditors
(accounts payable), bills payable, and outstanding expenses. Net working capital can
be positive or negative. A positive working capital will arise when current assets
exceed current liabilities. A negative working capital occurs when current liabilities
are in excess of current assets.

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 NEED FOR STUDY

Studying working capital is crucial for businesses because it helps them

maintain financial stability, manage liquidity effectively, support growth and
expansion, optimize inventory levels, improve supplier and customer relationships,
mitigate financial risks, and make informed decisions. By understanding and
analyzing working capital, businesses can ensure they have enough resources to
cover day-to-day operations, meet short-term obligations, and navigate unexpected
challenges. It also enables them to make strategic decisions related to pricing,
investments, cost control, and overall financial strategy. Overall, studying working
capital is essential for businesses to optimize their financial health and position
themselves for long-term success.
PepsiCo is one of the largest food and beverage companies globally,
operating in various markets and industries. Studying working capital management in
PepsiCo allows you to focus on a company with significant financial operations and
gain insights into managing working capital in a dynamic and
challenging environment. PepsiCo's reputation as an industry leader in the food and
beverage sector provides a unique opportunity to study the working capital
management practices of a successful company. Analyzing their strategies and
approaches can provide valuable lessons and best practices applicable to
other organizations.
PepsiCo's operations span multiple product lines, including beverages,
snacks, and other food products. The complexity of managing working capital in such
a diverse business portfolio offers a rich field for research and analysis. Studying
PepsiCo's working capital management can help in understanding the intricacies
involved in managing cash, inventory, receivables, and payables in a large
multinational corporation. PepsiCo's financial performance and stability make it an
attractive subject for study. Analyzing the company's working capital management
practices can shed light on how effective management of current assets and liabilities
contributes to overall financial performance, profitability, and liquidity.

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 Effective working capital management can provide a competitive
advantage to companies. Studying PepsiCo's approach to working capital
management can help identify strategies and techniques that enable the company to
optimize cash flow, reduce costs, improve operational efficiency, and maintain a
competitive edge in the market. PepsiCo has been actively engaged in innovation and
sustainability initiatives, such as developing healthier product options, reducing
environmental impact, and improving supply chain efficiency. Exploring the
connection between working capital management and these broader objectives can
provide insights into how sustainability practices can be integrated into
financial operations.
Working capital management is a critical aspect of financial management
and corporate finance. Researching and studying this topic in the context of PepsiCo
allows for a deeper understanding of theoretical concepts and their practical
application in a real-world setting. It is important to note that these reasons are based
on general observations, and the specific motivations for your study on working
capital management in PepsiCo Private Limited may be unique to your personal
interests, academic requirements, or career aspirations.

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 SCOPE OF THE STUDY

The area of work for the study is Pearl Bottling Pvt Ltd (Visakhapatnam
branch) to understand the financial implications of working capital management.

MISSION:
Our mission is to be the world's premier consumer products focused on
convenient foods and beverages. We seek to produce financial rewards to investors as
we provide opportunities for growth and enrichment to our employee, our business
partners and the communities which we operate. And in everything we do, we strive
for honestly, fairness and integrity.

VISION:
"PepsiCo responsibility is to continually improve all aspects of the world in
which we operate environment, social, economic creating a better tomorrow than
today". Our vision is put in to action through programs and a focus on environmental
stewardship, activities to benefit society, and a commitment to build shareholder
value by making PepsiCo a truly sustainable company.

FRAME WORK OF THE STUDY:-

The study attempts to analyze the working capital management of PEARL

BOTTLING PRIVATE LIMITED. The information related to period 2016-2017 to
2020-2021. The study contents with 5 chapters. The first chapter deals with the
introduction of working capital, Need & significance for the study, objectives of
study, methodology, limitations of study and frame work. The Second chapter deals
with the overview of PEARL profile, mission, objectives, functional departments,
organization chart. The Third chapter deals with concept of working capital. The
fourth chapter deals with Data analysis & Interpretation. The fifth chapter consists of
summary, findings, and conclusions.
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 OBJECTIVES OF THE STUDY

The objectives of your study on working capital management in PepsiCo Private

Limited will depend on your specific research goals and the scope of your project.
However, here are some common objectives that you may consider:
Understand the Concept of Working Capital Management: One objective
could be to gain a comprehensive understanding of the concept of working capital
management, including its importance, components, and the impact it has on the
financial performance of a company like PepsiCo. Assess PepsiCo's Current Working
Capital Management Practices: Evaluate and analyze the existing working capital
management practices implemented by PepsiCo. This objective involves examining
their policies, procedures, and strategies related to managing cash, inventory,
receivables, and payables.
Identify Areas for Improvement: Identify specific areas within PepsiCo's
working capital management where improvements or optimizations can be made.
This objective focuses on pinpointing potential inefficiencies, gaps, or opportunities
for enhancement in managing working capital to enhance financial performance.
Analyze the Impact of Working Capital Management on Financial
Performance: Investigate the relationship between working capital management and
PepsiCo's financial performance. This objective entails conducting a quantitative
analysis to determine how effectively managing working capital influences key
financial metrics such as liquidity, profitability, and cash flow. Recommend
Strategies for Effective Working Capital Management: Develop practical
recommendations and strategies for PepsiCo to enhance its working capital
management practices. These recommendations should be based on your analysis and
should consider industry best practices, potential risks, and the unique characteristics
of PepsiCo's operations.

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Explore the Connection Between Working Capital Management and Sustainability:
Investigate how PepsiCo's working capital management practices align with
sustainability goals. This objective aims to analyze how sustainable practices can be
integrated into working capital management strategies to achieve both financial and
environmental objectives.

Specific outcome you want to achieve with your project:

The specific outcome or goal of your project will depend on your research
objectives. However, a potential specific outcome could be to produce a
comprehensive research report or thesis that provides valuable insights into working
capital management in PepsiCo Private Limited. The report should include an
analysis of their current practices, recommendations for improvement, and an
evaluation of the impact of working capital management on financial performance.
The ultimate goal is to contribute to the existing body of knowledge in the field of
working capital management and provide actionable insights for PepsiCo or other
companies operating in similar industries.

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 METHODOLOGY
Financial ratios namely current ratio, quick ratio, Inventory turnover ratio,
debtors’ turnover ratio, creditors turnover ratio has been utilized for the study. The
formulas used for computing the working capital ratios, discussed earlier are;
 Inventory Period = (Inventory /Cost of Goods Sold) x 365
 Receivable Period = (Receivables/ Sales) x 365
 Payable Period = (Accounts Payables/ CGS)/ 365
 Operating Cycle = Inventory Period + Receivable Period
 Cash conversion cycle (CCC) = Operating Cycle –Accounts Payables
 Net Trade Cycle = {(Receivables + Inventory + Payables) / Sales} x 365

The term research refers to the systematic method consisting of

enunciating the problem, formulating a hypothesis collecting the data, analyzing the
facts and reaching the certain conclusions either in the form of solution towards the
concern problem or in certain generalization for some theoretical formulation.
Research Methodology is a way to systematically solve the research problem. It may
be understood as a science of studying how research is done scientifically.
For completing the project work, data inputs were collected from the
following sources:

Primary data:
• Collected data through discussion with the Finance manager in Pepsi.

• Collected data during working in Pepsi.

Secondary Data:
• Collected data from personnel manual of Pepsi.

• Collected data from different magazines, journals, Newspapers and Internet.

The methodology used here is the horizontal analysis since the financial

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data is compared and differentiated for a consecutive reporting interval of four years.

LIMITATIONS OF THE STUDY

 The study is limited to 12 weeks.

 The availability of information is always a constraint.
 The study is limited to the Visakhapatnam branch only. A larger area of study
would have provided more results.
 The study is focused only to Pearl Bottling Pvt Ltd and no attempt is made to
comparative study.

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 CHAPTER- II
INDUSTRY PROFILE

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 CHAPTER- II
INDUSTRY
PROFILE

INDUSTRY PROFILE:-

"SOFT DRINK" market is like an ocean; the demand for it can never be
estimated properly, for as long as the competition from unorganized sector and
homemade drinks continue unabated.
Non-alcoholic soft drink beverage market can be divided into fruit drinks and
soft drinks. Soft drinks can be further divided into carbonated and non-carbonated
drinks. Colas, lemon and oranges are carbonated drinks while mango drinks come
under non-carbonated category. The soft drinks market till early 1990’s was in hands
of domestic players like Campa, thumps up, limca etc but with the opening up of
economy and coming of MNC players Pepsi and coke the market has come totally
under their control. Worldwide, coke is the leader in carbonated drinks market. In
India it is Pepsi, which scores over coke hut this difference is fast decreasing. Pepsi
entered Indian market in 1991. Coke re-entered (after they were thrown out in 1977,
by the then central government) in 1993.
Pepsi has been targeting the youth and the sales have been doing well by
sticking to this youth segment. Soft drinks are available in glass bottles, aluminum
cans and PET bottles for home consumption. Fountains also dispense then in
disposable containers.

Segmentation:

The soft drinks market can be segmented on the basis of place of consumption
and on the basis of type of products. The soft drinks market can be segmented on the
basis of place of consumption divides the market into two parts:

 On premise-80% of the consumption of soft drinks is on premise i.e.

22
restaurants, railways stations, cinema etc.

23
  At home the rest 20% of the market compromises of the soft drink purchased
for consumption’ at home.

 The soft drinks market can be segmented on the basis of types of products
into cola products and non-cola products.

 Cola products account for nearly 62% of the total soft drinks market.

 The brands that fall in this category are Pepsi, coca cola, and thumps up, diet
coke, diet Pepsi etc.

 Non-cola segment, which constitutes 36%, can be divided into four

categories based on the type of flavor available, namely

 Orange

 Cloudy lime

 Clear Lime

 Mango

i. Orange flavor based soft drinks constitute around 17% of the market. The
segment is largely dominated by national brands like Fanta of coca cola and
Miranda orange of Pepsi co. rest of the market is in hands of smaller brands
like crush (earlier of Cadbury Schweppes and now of coca cola), gold spot etc.

ii. Cloudy lime flavor constitutes 14% of the market and is largely dominated by
limca of coca cola and Miranda lemon of Pepsi co.

iii. Clear lime this segment of the market witnessed good growth initially with all
the players launching their brands in the segment. But now the growth in the
segment has slowed down, the brands available in this segment are 7up,
mountain dew of Pepsi, sprite of coca cola and Canada thy (earlier of Cadbury
Schweppes and now of coca cola). The segment constitutes 3% of the total soft
drinks market.

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iv. Mango flavor segment constitutes 2% of the total soft drinks market and it
directly competes with mango-based fruit drinks like footie. The leading
brands in this segment are: Mazza of coca cola and slice of Pepsi Co.

 There is very thin line of difference between the clear and cloudy lime. The
most obvious feature is that clear lime has to be bottled in green bottles as
sunlight harms the drink and changes the taste. There are some small local
brands at city or regional levels. Most of these are either merging with the two
big players (coca cola and Pepsi).

GENESIS OF INDIAN SOFT DRINK MARKET:-

India having a hot climate has always been a place of variety of drinks
to cool, off from the hot sunny days. Perhaps this aspect has served as a boom to soft
drinks market that made a simple appearance to the middle of hostile people but soon
gained as access that has carried over the past five decades which has also seen the
ups and downs of this thirst-quenching market.

With the introduction of liberalization policies, many foreign multinationals

have started business ventures in India. The first attempt to enter India market in the
soft drinks market was made by Cock Pure Drinks Pvt. Ltd. Delhi was the first
franchise bottles of Coca-Cola. Export Corporation in 1950 with Swadeshi
Movement started by Janata party CCEC was asked to reduce its foreign capital
holding 40% and delivers the know how to Indian company. This refused forced
CCEC to leave the country in 1977.

With the leaning of Coca-Cola, the domestic soft drinks market got a lift and
is raise to capture the Indian market with Parle as the main leader, Gold spot,
Thumps-up, Maaza and Kismat became a house hold name. Its market share grew to
60% in 1991 and it emerged as the market leader, the first challenge to the supremacy
of Pane brands came from Pepsi cola in May 1990. Pepsi that was in India from
1956-61 had left the country, as its products were not found acceptable to the Indian
publi

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TOP PLAYERS IN THE SOFT DRINKS INDUSTRY IN INDIA:-

The soft drinks industry in India is dominated by some of the top players and the
names of these top players are given below:

• PepsiCo India

• Coco-Cola India

• Rasna International

 PepsiCo India:

PepsiCo is an international company that entered into Indian soft drink

industry in the year 1989 and within a short period of its entry, the company has
started dominating the Indian soft drink market. The company is operating with the
vision of Performance with purpose and the meaning of this vision is that when the
business increases the value of the shares, they become responsible for improving the
society they serve and the environment whose resources are being used by them.
Thus, PepsiCo India serves the society to grow along with it. Some of their popular
products are Slice, Pepsi, Nimbooz, Mountain Dew, Marinda and 7UP.

 Coco-Cola India:

Coco-Cola Company entered into India in the name of Coco-Cola India,

which is its wholly owned subsidiary. The company was launched in India in the year
1993 and this launch was actually a re-launch since India encouraged foreign
investments in different industries. The company has more than 1.3 million retailers
and more than 7000 distributors in India and their brands are the leading brands in the
soft drinks industry in India. Some of their popular brands in India are Thumps up,

26
Sprite, Limca, Fanta Apple, and Fanta Orange and of course coco-cola. Their recent
introduction to the soft drink industry in India is Minute Maid Juice.

 Rasna International:

Rasna is another popular name in the soft drinks industry in India and
this company has in-depth and adequate information and knowledge on market
behaviors, market sizes, finances, government policies, project viabilities, etc… They
have emerging and huge market for their products all over the world and they have
made their mark in the food & beverages industry in India. They have introduced a
wide range of ready to make soft drinks that can be prepared at the comfort of the
home of users.

Two large entities have dominated the nonalcoholic beverage

landscape: Pepsi (PEP) and Coca-Cola (KO - Free Coca-Cola Stock Report). They
distribute their well-known carbonated and noncarbonated drinks internationally via
sizeable bottling companies. The bottlers depend on these two industry leaders to
create new products, improve existing offerings and maintain sufficient advertising.
Related capital spending amounts to several billion dollars each year. The industry
titans often boost their results (and those of their subsidiaries) by purchasing smaller
market players or by inking promising distribution agreements.

In prosperous economic times, consumers usually favor the most famous brand
names. Still, when customers are short of disposable income, they can turn to
competing, inexpensive private label and lesser-known beverages. Sales are seasonal,
not surprising, peaking during warm summer months. Consumer preferences will
drive product diversification. Most notably, greater awareness of the causes of
common health issues, e.g., obesity and diabetes, has increased demand for bottled
water and other low-sugar or sugar-substitute drinks. Soda, including diet options,
continues to fall out of favor.

27
 In response, beverage companies have capitalized on the popularity of energy
drinks and ready-to-drink coffee. However, energy drinks have come under scrutiny
due to their high levels of caffeine, as regulators attempt to size up the associated
risks. Product diversification may be achieved through internal or external means.
The same goes for geographic expansion. The BRIC Nations (Brazil, Russia, India,
and China), key markets in the global arena, have gotten much attention. Beverage
companies have spent heavily to open new bottling plants and develop distribution
networks in these countries.

Transparency Market Research (TMR) has published a new report, titled

“Non-Alcoholic Drinks Market - Global Industry Analysis, Size, Share, Growth,
Trends and Forecast, 2014 - 2020”. TMR states that the global non-alcoholic drinks
market stood at US$1435.25 billion in 2013 and is expected to grow to US$1937.73
billion by 2020, displaying a 4.3% CAGR between 2014 and 2020. By volume, the
global non-alcoholic drinks market will reach 1289.03 billion liters by 2020,
increasing from 912.77 billion liters in 2013 at a CAGR of 4.9% from 2014 to
2020.Changing customer food and beverage preferences due to globalization, altering
needs, and introduction of new product variants and flavors are the prime factors
driving the global non-alcoholic drinks market.

With emerging business utilities in construction, power, and automotive

sectors in developing countries, GDP is expected to strengthen, thus increasing the
disposable income in these regions. Growing disposable income in developing
economies will boost demand for convenience foods and drinks, influencing demand
for non-alcoholic drinks in the coming years. However, rising health awareness
regarding long-term health implications of excess consumption of sugary and
artificially sweetened drinks will impact growth of the non-alcoholic drinks market.
North America leads the global non-alcoholic drinks market, followed by Asia
Pacific. With rapid urbanization and changing lifestyle in developing economies such

28
as India, China, and Singapore, Asia Pacific will emerge as the largest market for
non-alcoholic drinks by 2020.

Obesity is a major health problem in North America and Europe and is

significantly related to excess consumption of sugary and artificially sweetened
drinks. To cater to changing consumer requirements, several non-alcoholic drinks
manufacturers have introduced diet drinks and no-sugar drinks to offer reduced
calories in drinks. By product, the non-alcoholic drinks market is divided into soft
drinks, tea and coffee, dairy drinks, bottled water, and juice. Soft drinks stand as the
largest product segment and their total consumption was 471.07 billion liters in 2013.
Rapid industrialization has led to increasing disposable incomes, predominantly in
emerging markets, fueling demand for soft drinks. However, the tea and coffee
product segment is expected to exhibit the fastest growth, at a 7.0% CAGR between
2014 and 2020.

North America accounts as the dominant market for non-alcoholic drinks and
was valued at US$220.79 billion in 2013. Due to rising health awareness, the non-
alcoholic drinks market in this region will witness stable growth in the coming years.
Asia Pacific, however, is expected to exhibit the fastest growth in the coming years.
The non-alcoholic drinks market in the region was valued at US$332.22 billion 2013
and will display a 6.8% CAGR from 2014 to 2020. The Rest of the World (Row)
region holds significant promise for non-alcoholic drinks, with major product variants
yet to be launched in these markets. Major companies operating in the global non-
alcoholic drinks market are A.G. Barr, plc, Dydo Drinco, Inc., Nestle S.A.
(Switzerland), The PepsiCo Inc, Coca-Cola Company, Dr. Pepper Snapple Group
Inc., Attitude Drinks, Inc., Calcol Inc., Danone.

29
Board of directors:-
The business strategy and affairs are overseen by our board of directors
comprised of one executive director and 13 independent directors. Only independent
directors make up our three standing board committees: Nominating and Corporate
Governance; Audit; and Compensation. Get to know our PepsiCo Board of Directors
below.

Indira K.Nooyi (Chairman & CEO)

1) George W.Buckley 8) Shona L.Brown

2) Cesar Conde 9) David C.Page
3) Ian M.Cook 10) Robert C.Pohlad
4) Dina Dublon 11) Loyed G.Trotter
5) Rona A.Fairhead 12) Daniel Vasella
6) Richard W.Fisher 13) Albarto Weisser
7) William R.Johnson

GDP GROWTH RATE FROM 2010 TO 2020:-

The statistic shows the growth of the real gross domestic product (GDP) in India
from 2010 to 2014, with projections up until 2020. GDP refers to the total market
value of all goods and services that are produced within a country per year. It is an

30
important indicator of the economic strength of a country. Real GDP is adjusted for
price changes and is therefore regarded as a key indicator for economic growth.

Fig.2.1. GDP Growth rate from 2010 to 2020

Source:http://www.statista.com/statistics/263617/gross-domestic-product-gdp-
growth-rate-in-india/

31
 COMPANY PROFILE
COMPANY PROFILE OF PEPSICO INDIA:-

Pepsi co. INC is founded by Donald M. Kendall, President and chief

executive officer of Pepsi-coca and Herman W.Lay chairman & chief executive
of Frito-lay through the merger of two companies in the year 1965. Caleb
Bradham, a New Bern, created Pepsi-cola in the late 1890's; Elemer Doolin
formed C.Pharmacist, Frito-lay, and Inc.in 1932.

Pepsi food India limited drinks is owned by multinational giant of

beverages of company incorporation of New York, USA which has a turnover
of $28 billons and an average sales volume of $10billion in the world. Prior
o0fliberalization in 1990, corporation entered into a joint venture with TATA
group company Volta’s with 24% equity under the Punjab agro industry
corporation with 36% equity and with an investment of %95 million. After
Liberalization of our economy, Volta’s share was acquired by leaving only 8%
to the Punjab agro industries and later on it bought all the equity shares and
converted food from a three-way joint venture to a fully owned subsidiary.

Pepsi foods India limited is head quartered in New Delhi. It has 11

companies owned bottling plants and 15 franchisees throughout the country.
Company earlier used Lehar as a prefix to each of its brand names. Later it was
asked by the government to drop the prefix to each of its brand name

MILESTONES OF PEPSICO:

1965 PepsiCo, inc founded by Donald M. Kendall,

president and chief Executive officer of Pepsi-cola
and Herman W.Lay, chairman and chair executive
officer of Frito- lay, through the merger of the two

32
 companies. Pepsi- cola (formulated in 1898), Diet
Pepsi (1964) and Mountain Dew (introduced by tip
corporation in 1948).
1966 Pepsi enters Japan and Eastern Euro pen

1967 Pepsi Generation advertising, "Come Alive! You're

in the Pepsi generation" campaign that named and
claimed a whole generation (1963-67), introduced
a new theme: “taste that beats the others cold.
Pepsi pours it on!"
Pepsi co. stock split two for one.
1968 North American Van Lines (NASL) a premier
transportation company, Pepsi co.., and remained a
strong contributor to Pepsi until it has divested in
1984.
1969 Bold modern Pepsi-cola packing using red, white
& blue is introduced. Frito-lay introduces funyuns
brand onion flavored snacks.
1970 Pepsi introduces the industry's first two- l i t e r
bottles. Pepsi is the first company to respond to
consumer preference with lightweight, recyclable
plastic bottles. The company has 36,000
employees. Pepsi introduces the industry's first
two-liter bottle
1971 PepsiCo Chief Executive Officer Donald M.
Kendall assumes the position of chairman of the
board of directors on the retirement of Herman
Wiley. Lay maintains an active role in the
corporation until his death December 6, 1982.

33
 Andrall E.Pearson is appointed president of Pepsi
co., a position he holds until his retirement in 1984.
1972 Mountain Dew, acquired by Pepsi-cola in 1964,
switches its advertising and package graphics from
hill billies to action oriented scenes sales club and
mountain dew will become one of the 10 best-
selling soft drinks in the United States. Don
Kendall announces agreement making Pepsi-cola
the first foreign product sold in the then U.S.S.R.
1973 Foods International, later called PepsiCo Foods
International (PFI) and subsequently named Frito-
Lay International, is established to market snack
foods around the world.
1974 PepsiCo sales pass the $2billion mark. Pepsi-cola
becomes the first American consumer product to
be produced, marketed and sold in the former
Soviet Union Pepsi Light, with a distinctive lemon
taste , is introduced as an alternative to traditional
diet colas.
1975 Pepsi co. has 49,000employes. Pepsi light, with a
distinctive lemon taste, is introduced as an
alternative to traditional diet colas.
1976 PepsiCo adopts code of Worldwide Business
Conduct.
1977 PepsiCo acquires pizza Hut, Inc. Pizza Hut was
founded in 1958 by Dan and Frank Camey. It is
spun off along with Taco Bell and KFC businesses
as Tricon Global Restaurants, Inc.in 1997. PepsiCo
stock splits three-for-one.

34
1978 Taco Bell is acquired. Glen Bell established taco
bell in the mid 1960's, it is spun off along with
pizza Hut and KFC business as Tricon Global
Restaurants Inc in 1997. Later becomes YUM.
1979 Opening of PepsiCo Research and Technical
Center in Valhalla, N.Y.Pepsi introduces twelve-
pack cans.
1980 PepsiCo food service international (PFSI) is
formed to focus on overseas development of
restaurants. PepsiCo now has 111,000 employees.
1981 PepsiCo Fitness Center is completed; making
PepsiCo one of the most advanced companies in
the area of employee health and fitness.
1982 Pepsi Free and Diet Pepsi Free, the first major
brand caffeine-free colas, are introduced.
Inauguration of the first Pepsi-cola operation in
china
1983 "Dew it to it"; theme is incorporated to brand
mountain Dew. The Bottler Hall of Fame is
established to recognize the achievement &
dedication of international bottlers.
1984 PepsiCo is restructuring to focus on its three core
business Soft drinks, snacks foods and restaurants.
Transportation and sporting goods business are
sold
1985 Pepsi-cola products are available in nearly 150
countries and territories around the world. Snacks
are in 10 international markets

35
1986 The corporation is reorganized and decentralized
beverages operations are combined under PepsiCo
worldwide beverages; snack foods operations are
combined under PepsiCo worldwide foods.
1987 Pepsi sponsors tours of major music stars,
including Miami sound machine, David Bowie and
Tina Turner
1988 Pepsi-cola international enters a landmark joint
venture agreement in India.
1989 PepsiCo acquires smart food ready-to-eat popcorn
business PepsiCo enters top 25 of Fortune 500
ranking with sales of $15.4 billion, it is number 23.
The company has more than 300,000 employees.
1990 PepsiCo stock splits three-for-one. PepsiCo signs
the largest commercial trade agreement in history
with the Soviet Union.
1991 Pepsi-cola introduce a new logo, its eighth in 93
years.
1992 Pepsi introduce a new slogan "be young -have fun
–drink Pepsi". Pepsi-cola begins distribution of
Lipton line of ready-to-drink teas nationwide.
1993 Pepsi introduced "the cube”, an innovative 24 can
multipack that satisfies growing consumer demand
for convenient large size soft drink packaging.
1994 Pepsi -cola launches its sports drink all sport. It is
sold in 2001.
1995 7 up international launches 7 up ice cola, a new
clear cola. Pepsi Company introduced lay's

36
 brand potato chips in 20 markets throughout the
world.
1996 Pepsi-cola launches Pepsi world at http:
//www.Pepsi.com/ Pepsi cola and MTV establish a
partnership to develop international programming.
1997 Pepsi-cola celebrates 100th anniversary with first
worldwide bottler's conference, held in Hawaii.
1998 Pepsi-cola introduces two-liter plastic bottle with
built-in “grip handle" that makes it easier to grip
and pour.
1999 Tropicana juices are entering the huge India market
for the first time. Orange juice will appear in the
New Delhi and Bangalore market.
2000 Pepsi-cola teams up with yahoo Inc.., the biggest
web navigation company, in the multimedia
marketing campaign.
2001 Pepsi-cola launches the bold new Mountain Dew
code Red nationwide. It is Mountain Dew first line
extension since the introduction of Diet Mountain
Dew in 1988.
2002 Mr. Green," a green tinted carbonated soft drink
with caffeine and ginseng, is launched under So
Be's new age beverage line in April.
2003 Pepsi-cola trademark turns 100 years old. Pepsi
vanilla is launched in the United States.
2004 PepsiCo is mentioned among 26 companies that
earned governance Metrics international highest
governance rating. PepsiCo is chosen for the 2005

37
 list of the NAFE top 35 companies for executive
women.
2005 PepsiCo celebrated its 40th anniversary.
2006 Pepsi celebrates its participation in its 20th
consecutive Super Bowl. Indra k.Nooyi named
chief executive officer of PepsiCo. Pepsi acquires
IZZE Beverage Company. PepsiCo announced its
intent to acquire Naked Juice Company and the
New Zealand snack company Bluebird Foods.
PepsiCo completes the acquisition of Stacy's Pita
Chip Co.
2007 PepsiCo introduces Performance with Purpose,
making it one of the first contemporary companies
to recognize the important interdependence
between corporations and society. PepsiCo and
Pepsi Americas jointly acquire Sandora, a leading
juice company in Ukraine.
2008 PepsiCo announces plans to invest US $1 billion in
China over the next four years as part of the
strategy to expand in emerging markets and
broaden the portfolio of locally relevant products.
2009 PepsiCo and Calbee Foods Company announce a
strategic alliance to make and sell a wide range of
food products in Japan. PepsiCo introduces the first
climate-friendly vending machines to the United
States.
2010 PepsiCo completed the acquisition of The Pepsi
Bottling Group, Inc. and PepsiAmericas, Inc., its
two largest anchor bottlers. PepsiCo announces its

38
 intent to acquire Russia's Wimm-Bill-Dann,
Russia's leading branded food-and-beverage
company. AMP Energy Juice launches across the
United States.
2011 PepsiCo and Tingyi Holding, one of the major food
and beverage companies in China, announce an
agreement to form a strategic alliance in China.
PepsiCo acquires Mabel, a leading producer of
cookies, crackers and snacks in Brazil.
2012 Diet Mountain Dew, Brisk and Starbucks ready-
to-drink beverages join PepsiCo's portfolio of
billion-dollar brands, bringing the total to 22. Pepsi
launches reduced-calorie cola innovation Pepsi
Next.
2013 Müller Quaker Dairy, a joint venture between
PepsiCo and The Müller Group opens a new state-
of-the-art yogurt manufacturing facility in Batavia,
New York.
2014 Pepsi introduces Pepsi Spire, a portfolio of
innovative fountain beverage dispensers.
Consumers can create more than 1,000 customized
beverages with the touch of a button.
2015 PepsiCo celebrates its 50th anniversary as a
combined food and beverage company.
PepsiCo has stepped up work on reducing salt and
sugar in the beverages and snacks it sells in India.
2016 PepsiCo named among Fortune’s World’s Most
Admired Companies (2016), ranked 28th on
Barron’s World’s Most Respected Companies list

39
 (2016), received an Ethical Corporation
Responsible business Award for PepsiCo’s food
for good program.
CURRENT ASSESTS AND CURRENT LIABILITIES:-

CURRENT ASSETS:-

Current assets sometimes called liquid assets are those resources of a

firm which are either held in the form of cash are expected to be converted in

cash with in the business.

The accounting period is one year duration these assets include.

1. Cash:

It is the most liquid asset. It is the current purchasing power in the hands

of the firm and can be used for the purpose of acquiring resources of paying

obligations. Cash include actual money in hand and deposits and bank accounts.

2. Marketable securities:

They are temporary or short-term investments in shares, debentures,

bonds and other securities. These are readily marketable and can be converted

into cash within the accounting period. A firm usually invests in them when it

has temporary surplus cash.

3. Account receivable:

These are the amounts due from debtors to whom goods or services have
been sold on credit. These generally realizable in cash within the accounting
period. The firm may realize all account receivable. Some may remain

40
uncontrolled and are called bad debtors. An estimate or provision it made for
such debts are separate from goods debts.
4. Bills receivable:
These present the premises made in writing by the debtors to pay definite
sums of money after some specified period of time. Bill a written by the firm
and become effective when accepted by the debtors these are discounted with
bank and are converted to cash immediately.
5. Stock or inventory:
These include raw materials, working process and finished goods in case
of manufacturing firms. This is maintained for smooth production and serving
customers on a continue basis. They are carried into balance sheet at the original
or market cash, which even is less they are the least liquid current assets. They
are he expenses of future period paid advance. Example of these is period
insurance, prepaid rent or taxes pain in advance. They are current assets because
their benefits will be received within the committing period.
6. Loans and advances:
They include dues from employees or associated advances for current
suppliers and advances against requisition of capital assets. Except for th
advance payment for current suppliers. It is not proper to include loans and
advances in current assets.

41
CURRENT IABILITIES:-

They are debts payable within the accounting period. Current assets are
converted to cash to pay current liabilities sometime new current liabilities may
incur to liquidate to existing ones. These are mainly classified as:
1. Sundry creditors or account payable:
They represent the current liabilities towards suppliers when the firm
has purchased raw materials on credit.
2. Bills payable:
They are the promises made in working by the firm to make payments
of a specified sum to creditors at some specific date. A bill is written by
creditors over the firm and becomes bill payable a life of less than a year.
3. Bank borrowing:
Commercial banks advance short term credit to firms for purchasing
their current assets. They may also provide financing fixed assets. Such loans
will be grouped under long term liabilities in India, both long and short
borrowing are included under loan funds.
4. Provisions:
They include provision for taxes or provision for dividends. Every
business has to pay taxes on its income. Usually, it takes some time to the
amount of with the tax authorities. Therefore, the amount of tax is estimated and
shown as provision for taxes.
5. Outstanding expenses:
The firm may own payments to its employees and others at the end of
the accounting period for the service received in the current year. There are
payable within a year short period examples are wages payable, ren payable or
commission payable income.
6. Income received in advance:
A firm can sometimes receive income for goods or services to be
supplied in future. Ad goods or services have to provide within the accounting
42
period. They are treated under current liabilities.
7. Income received in advance:
A firm can sometimes receive income for goods or services to be
supplied in future. Ad goods or services have to provide within the accounting
period. They are treated under current liabilities.
8. Deposits from public:
These are raised by a firm for finances its current assets. They are
raised for duration of one year through three years.

43
PEPSI CO. MISSION STATEMENT:-

At PepsiCo we believe that business and society can thrive

together. We are guided by Performance with Purpose: delivering top-tier
results in a way that sustains and respects business, society and the planet.

Our Mission

As one of the largest food and beverage companies in the world, our
mission is to provide consumers around the world with delicious, affordable,
convenient and complementary foods and beverages from wholesome
breakfasts to healthy and fun daytime snacks and beverages to evening treats.
We are committed to investing in our people, our company and the communities
where we operate to help position the company for long-term, sustainable
growth.

Our Vision

At PepsiCo, we're committed to achieving business and financial success

while leaving a positive imprint on society – delivering what we
call performance with purpose.

In practice, Performance with Purpose means providing a wide range of

foods and beverages from treats to healthy eats; finding innovative ways to
minimize our impact on the environment and reduce our operating costs;
providing a safe and inclusive workplace for our employees globally; and
respecting, supporting and investing in the local communities where we operate.
Wherever we do business, Performance with Purpose is our guide. We believe
that delivering for our consumers and customers, protecting the environment,
sourcing with integrity and investing in our employees are not simply good

44
 things to do, but that these actions fuel our returns and position PepsiCo for
long-term, sustainable growth.

COMPANY LEADERSHIP:-

We are a company full of strong, talented individuals starting at the top of

our organization. Get to know the inspiring people helping lead PepsiCo on its
'Performance with Purpose' journey. “Together we are all building on the
platform of human, environmental and talent sustainability while continuing to
deliver great results."

Chairman
INDRA
and Chief
K.NOOYI
Executive Officer Executive Vice President, Communications
President,
JONPepsiCo
BANNER North America Nutrition Senior Vice President and Chief HR
Officer,OSWALD BARCKHAHN
UMRAN BEBA
PepsiCo AMEA Senior Vice President, Global Supply Chain
RICH BECK
OPERATIONS, PepsiCo Chief Executive Officer
ALBERT P.CAREY
PEPSICO COMPANIES:-

 Pepsi-Cola
 Gatorade
 Quaker
 Frito Lay
 Tropicana

45
 Fig.2.1. PepsiCo Companies

Source: http://pepsicoindia.co.in/brands/pepsi.html

PEPSICO PRODUCT LIST:-

Beverages:
 Pepsi
 7UP
 Aquafina
 Gatorade
 Mountain Dew
 Nimbooz
 Slice
 Tropicana`
 Mirinda
Foods:
 Cheetos
 Kurkure
 Lay's
 Lehar Namkeen
 Quaker Oats
 Uncle Chipps
 Dukes

46
 Fig.2.2 PepsiCo Product List

Source: http://www.pepsico.com/brands
CSR ACTIVITIES OF PEPSICO:-

CSR MOTTO: Performance with Purpose articulates PepsiCo India's belief

that its businesses are intrinsically connected to the community and world that
surrounds it.
CSR policies:
1. Human sustainability policies
i. Quality & Food Safety Programs
ii. Responsible Marketing
iii. Healthcare Reform
2. Environmental sustainability policies
i. PepsiCo's Environmental Policy
ii. Sustainable Agriculture Policy
iii. Sustainable Packaging Policy
Core CSR activities:

1. Replenishing Water
2. PepsiCo Solid Waste Management Program
3. Partnership With Farmers
4. Healthy Kids

47
CHANGES IN PEPSICO LOGO:

Fig.2.3. Changes in PepsiCo logo

Source:http://www.gmdist.com/2012/12/11/pepsi-slogans-and-logos-

throughout-the-years/

AWARDS & RECOGNITION:

Fortune’s World: Named among Fortune's World's Most Admired Companies

(2015)
Barron's World: Ranked 33rd on Barron's World's Most Respected Companies
list (2014)
Financial Times Bowen Craggs Index: Included in Financial Times Bowen
Craggs Index of corporate online effectiveness (2014)
Best Global Brands: Ranked 22nd in Best Global Brands by Interbrand (2013)
Core Brand: Ranked 2nd on Core Brand’s list of Most Respected Companies
(2014)
Fortune 500: Ranked 43rd on the Fortune 500 list (#1 in Food Consumer
Products category) (2014)

48
New York Stock Exchange (NYSE): Awarded Best Governance, Risk and
Compliance Program (Large-Cap Company) by the NYSE
Governance Services' (2014)
Corporate Secretary Magazine: Awarded Best Overall Governance,
Compliance and Ethics Program (Large Cap Category 2013)
Corporate Secretary Magazine: Awarded Best Shareholder Engagement at
Corporate Governance Awards (2014)
Working Women: Named among Working Mother’s Best Companies for
Multicultural Women (2014)
Latin Style: Named among Latina Style’s 50 Companies for Latinas (2014)
Black Enterprise: Acknowledged by Black Enterprise as one of the Best 40
Companies for Diversity (2013)
Corporate Equality Index: Scored 100 percent on the Corporate Equality
Index for the Human Rights Campaign for our LGBT efforts (2014)
Hispanic Business: Ranked 10th on Hispanic Business' Best Companies for
Diversity (2014)
Women Business Enterprise National Council (WBENC): Named among the
America's Top Corporations for Women's Business Enterprises by the Women
Business Enterprise National Council (WBENC) (2014)
Diversity Business: Named 17th on Diversity Business’ list America's Top
Organizations for Multicultural Business Opportunities (2014)

PARTNERSHIP:-

PepsiCo is a member of numerous industry and trade groups and partners

with various nonprofit organizations and nongovernmental organizations
(NGOs). We work with these groups because they represent the food and
beverage industry and the business community on issues that are important to
PepsiCo's business and its stakeholders. Importantly, such organizations help

49
 develop consensus among varied interests. At times, we do not share or agree
with all of the views of each of our peers or associations. PepsiCo
representatives on the boards and committees of such groups ensure that we
voice PepsiCo's positions regarding policies or related activities.

Group Membership:

 2030 Water Resources Group

 American Beverage Association

 Beverage Industry Environmental Roundtable

 Consumer Goods Forum

 Food Drink Europe

 Food Industry Asia

 International Council of Beverage Associations

 International Food & Beverage Alliance

 International Life Sciences Institute

 Latin America Conservation Council

 Mexican Council of Consumer Goods Products (ConMexico)

 Snack Food Association

 The Grocery Manufacturers Association

 U.S. Council for International Business

 World Business Council for Sustainable Development

 World Economic Forum

50
 ORGANIZATION CHART OF PEPSICO:-
Fig.2.4. Organization chart

Managing director

CEO

Executive CEO

Head Finance Head AVP Managing Head Head Head

Sales Marketing Operations Human Transport
Resource & Shipping

Manager Manager Manager Manager

Finance TDM Modern Production
Trade
Manager Executives
TPT Shipping

Executive
Asst.
Asst. Manager Manager
Manager Marketing Quality
ADC Control
Asst. Accts

Sales Executives Manager

Executives Maintenance

51
PROFILE ON VISAKHAPATNAM FRANCHISE (PEARL

BOTTLING PVT.LTD)

PBPL was incorporated in 1982 at Madhurawada in Visakhapatnam

district of Andhra Pradesh for the purpose of manufacturing soft drinks. It
was since then the company has started commercial production of company cola
products. It produced cola, orange and lemon flavors under the brand names of
thrill rush and sprint. It also produces Mc-Dowell- bagpiper soda. It produced
these drinks under franchise agreement, but the company could not exist in the
market due to the stiff competition from parley products. In February 1991, the
company singed to manufacture and market the products under franchise
agreements. Franchise is a contract, which gives the company the right to do the
business under the name and image of principal’s according to this agreement,
PBPL has given its consent “To manufacture soft drink using the concentrate
supplied by Pepsi foods”.

To sell the soft drinks and prices faced by advertises and market
within specified areas for the products of from April 23rd, PBPL started
distributing the stocks received from Cuttack plant. Commercial production
started in PBPL from June 1992 on words Initially four brands viz., seven-up,
Miranda and Lehar soda were bottled and distributed where as slice were
supplied by Cuttack plant. In May 1993, a cloudy lemon flavor called “TEEM”
was introduced which was not very well received by many consumers because
of the well established “LIMCA”.

In April 1988 a new cloudy lemon flavor, namely Miranda lemon

was introduced after discounting TEAM. PBPL limited was appointed as
franchise by food limited, in activities originally constructed by camp-cola soft
drink in 1980 at Madhurawada due to losses suffered camp-cola, the unit
became insolvent.

52
 As a result Andhra Pradesh state finance corporation auctioned the
premises, in 1990s, after which it was purchased by PBPL. It started production
in 19s91, initially it produced Mc-Dowell company’s brand-THRILL, RUSH,
SPRINT,L MC-DOWELL’S SODA AND BAGPIPER SODA. In February
1992, PBPL signed a memorandum with foods. The product was launched in
1992. From April 1992, PBPL signed a memorandum with foods. The product
was launched in 1992. From April 23rd it started its distribution on receiving
stocks form Cuttack. However commercial production started at Visakhapatnam
form June 1992 onwards, in the beginning four drinks were bottled namely.
PEPSI, Miranda, LEHAR SODA SEVEN-UP were bottled and distributed were
as SLICE continues to be supplied form Guntur plant.

Distribution:

The company distributes its products in six districts, in Andhra Pradesh

(India). They are:

1. Visakhapatnam

2. Srikakulam

3. Vizianagaram

4. East Godavari

5. West Godavari

OBJECTIVES:-
The objectives of the company set out in memorandum of association
and franchise agreement are as follows:
1. To manufacturing soft drinks by concentrate supplied by Pepsi foods.

53
 2. To market and advertise with in specified area for Pepsi product.
3. To sell soft drink at a fixed price.

Plant layout:-
The machines and equipment have been imported from Germany,
which are4 arranged in the plant according to the sequence of operation. All the
operation is carried on a continuous movement. The reasons choosing the
product layout are:
1. There is continuous supply of material.
2. The brands are all standardized products.
3. The demand for the product brand is reasonable stable.
4. The volume of production is adequate for the reasonable utilization of
equipment.
Since the company follows continuous operations, the cost of
material handling goes low. The total floor space required by the machine is less
than other types of plant layout.

Plant capacity:-
The company installed latest up to date automatic plant
conforming to plant layout. At present the company installed 4 different lines of
production two glass lines, one pet line & one slice line. The installed
production capacity in Bottles Per Minute (BPM) are as below.
Second glass line – 550BPM
Pet line – 160BPM
Pet line – 160BPM
Slice line – 300BPM
During season the plant runs three shifts and during un season the plant runs
double shift.

54
PRODUCTION SCHEDULE:

The production schedule is fixed by taking into consideration.

1. The present or current market demand.

2. The availability of empty bottles and
3. The inventory position filled bottles of different flavors. The
production schedule for each brand is fixed daily, filling the bottles of
each brand and flavor. This has an advantage in manufacturing the
branded products one at a time.

QUALITY CONTROL:-
Pearl beverages private ltd takes great care to maintain the quality
control of the products in their factory. The bottles are visually examined for
impurities continuously, as the bottles move out .samples are checked every ten
minutes of production time by the chemist for its quality & hygiene condition.
The chemical analysis is also made for flavor, gas content and sugar
percentage. The appearance smell and taste of the products are also checked. If
any defected are noticed, the production is suspended and the correcting
measures are taken so as to set right the bottling process irregularities. Further
samples from each batch are dispatched to the affiliated parent agency company
in each week for quality checkup. Moreover, agency of the company also lifts
samples from the market at random for quality checkup at any time to make
sure that the quality is maintain to the exact standard of the parent company.
At the end of the production schedule, daily all the equipment
floor and wet patches are cleaned with bleaching powder or some other solution.
The standard of hygiene maintained inside the production shops are
commending.

55
MANUFACTURING IN PEARL BOTTLING PVT.LTD:-

The process of manufacturing soft drinks is mainly divided into 4

parts. They are:

1. Syrup making

2. Water treatment

3. Bottling

4. Crating
1. SYRUP MAKING:
In this process, the syrup of the particular product is prepared by
heating sugar with activated carbon powder and filter aid (Hyflousuper cell) in
treatment tank for a specified time and up to a particular temperature.
During the treatment most of the color, Adour and some organic
impurities are removed from sugar syrup. This treated syrup then passes through
filter press, filter papers and heat exchanges and clear syrup is collected in the
syrup making tank, the essence of particular product will be added for which a
required amount of sugar is taken for treatment. Sugar syrup and essence are
mixed in the tank with the help of mechanical stirrer and eventually the flavor
syrup is ready to be used in the end use product.

2. WATER TREATMENT:
This is the second stage in the process of soft drink manufacture
water is the basic ingredient in the soft drink, which comprises up to 90% of the
quantity. Hence the quality ofH20 is of the great significance to the soft drinks
manufacturer. Here H20 is brought to treatment tank and then H20 treatment

56
chemicals such as hydrated lime, bleaching powder and ferrous sulphate are
added to the tank and mixed thoroughly with the help if mechanical stirrer.
The reasons of water treatment are:
1. It removes the water and converts the water into soft water.
2. It frees the water of microorganisms.
3. Reduces the alkalinity to a required level.
4. Removes suspended matter in water.
This treated water passes through the specially designed filtration
plant containing chemicals such as activated carbon (granular) & the
manufacturer will get the H20 suitable for soft drink bottling. For managing
equipment’s in hygiene conditions soda bicarbonate is used.

3. BOTTLING:
In this process both the concentrate and the purified water are
mixed together along with C02 gas and them bottled. In soft drinks field, only
reusable glass bottles sparking clean and they are sterilized before the beverages
are filled. For this purpose, the company makes use of machine known as
“Bottle washer “. For clean of bottles washing chemicals such as caustic soda
and tri-soda phosphate are used. In the bottle washing system in one end of
washer the dirty bottles are fed and the bottles washed automatically while
passing through various designed container chemical solution at different
temperature and concentration. Hot H20 is used for cleaning the bottle. The
bottles after sterilization are collected at the other end of the washer. They are
then sending towards "filler" on conveyer belts. Before the beverage reaches the
filling machine it is saturated with C02 gas in carbonate after being chilly. This
C02 gas fizz to the soft drinks and alongside prolonged the shelf life of the
products.

57
4. CRATING:

The bottle collected from conveyor belts are placed manually into
plastic creates. Each plastic case has capacity of 24 bottles. These protect the
bottles from breakage and for easy handling on bottles. These create are put on
specially designed vans for carrying bottles and are sent to various consumption
points.

ORGANIZATION STRUCTURE IN PEARL BOTTLING PRIVATE

LIMITED:-

Organization structure can be defined as the arrangement & relationship

of the component ports & position of the compass. An organization structure
specifies its division of work activities and shows how different functions and
activities are linked.

There are mainly 5 elements are organization structure:

1. Specialization of activities.

2. Standardization of activities.

3. Coordination of activities.

4. Centralization and decentralization of deviation making.

5. Size of the work unit.

The M.D.Mr RUCHIRANS JAIPURIA is the head of the

organization & administration. The company is managed by director, and is
assisted by a team of well qualified & experience senior management
personnel the following table shows the description of employees along with
the designation & no. of employees:

58
 Table 2.1.Designation of Employees
S.NO DESIGNATIONS NO.OF
EMPLOYEES
1 C.E.O 1
2 EXECUTIVE VICE 1
PRESIDENT(Finance)
3 VICE PRESIDENT(Sales) 1
4 GENERAL MANAGER 1
5 Asst. GENERAL MANAGER 2
6 MANAGERS 6
7 Dept. MANAGERS 6
8 Asst. MANAGERS 18
9 Sr. EXECUTIVES 27
10 EXECUTIVES 53
11 Asst. EXECUTIVES 47
12 TRAINING ENGINEERS 2
13 TRAINING CHEMISTS 9
14 ASSISTANTS 13
15 FOREMEN/Asst. FOREMEN 14
16 Sr. OPERATORS/ OPERATORS/ 33
Asst .OPERATORS
17 FORKLIFT OPERATORS 6
18 TECHNICIANS 4
19 SALES MEN CUM DRIVERS 16
20 HELPERS 12

59
 CHAPTER- III
THEORITACAL
FRAMEWORK

60
 THEORITACL PERSPECTIVE

Every business need funds for two purposes i.e for its establishment
and to carry out its day-to-day operations. Working capital refers to that part of
the firm’s capital which is required for financing short term or current assets
such as cash, marketable securities, debtors and inventories. Working capital is
the amount of funds necessary to cover the cost of operating the enterprise.
The goal of working capital management is to manage the current
assets and current liabilities of the firm in such a way that a satisfactory level of
working capital is maintained. Working capital is the difference between the
inflow and out flow of funds. Working capital is also known as revolving or
circulating capital or short-term capital.

COMPUTATION OF WORKING CAPITAL:

Working capital is that capital which is involved in the current assets

of the business. It is the capital which is required to meet day to day expenses of
the business, such as for purchasing raw material for meeting day-to-day
expenditure on salaries, wages, rent, advertising etc. Working capital is the life
and nerve Centre of a business. No business can run successfully without an
adequate amount of working capital.
Working Capital refers to that part of the firm’s capital,
which is required for financing short-term or current assets such a cash
marketable securities, debtors and inventories. Funds thus, invested in current
assets keep revolving fast and are constantly converted into cash and this cash
flow out again in exchange for other current assets. Working Capital is also
known as revolving or circulating capital or short-term capital.

61
 Table.3.1. STATEMENT SHOWING WORKING CAPITAL
PROFORMA

PARTICULARS AMOUNT IN (Rs.)

Estimation of current assets [A]

(I) Inventories
---
 Raw Materials
 Work in Progress
 Finished goods

(II) Debtors ---

(III) Minimum cash and bank balance ---
(IV) Payment in advance ---

Total current Assets[A] XXX

Examination of current liabilities [B]

(I) Creditors ---
(II) Lag in payment of wages ---
(III) Lag in payment of overheads ---
(IV) Other expenses bag ---

Total current Liabilities [B] XXX

Net Working Capital [A-B] XXX

62
 LIST OF CURRENT ASSETS & CURRENT LIABILITIES: -

Current Assets Current Liabilities

 Cash in Hand Bills payable
 Cash at Bank Sundry creditors
 Bills Receivable Accrued expenses
 Sundry Debtors Short term loans
 Stock Dividend payable
 Prepaid Expenses Bank overdraft
 Accrued Income Provision for taxes
 Short term Investments

Classification of working capital: -

Working capital may be classified in two ways.
(a) On the basis of concept
 Gross Working Capital
 Net Working Capital
(b) On the basis of time
Permanent or Fixed Working Capital
 Regular Working Capital
 Reserve Working Capital

Temporary or Variable Working Capital

 Seasonal Working Capital
 Special Working Capital

Sources of working capital: -

63
 There are two sources of working capital. They are
1. Permanent or Fixed: - The fixed proportion of working capital should be
generally financed from the fixed capital sources like

 Shares
 Debentures
 Public deposits
 Retention of profit
 Loans from financial institutions
2. Temporary or variables: - Variables or temporary working capital requirement
of a concern may be met from the short-term sources of capital like:
 Commercial bankers
 Indigenous bankers
 Trade creditors
 Accrued expenses
 Commercial papers
 Accounts receivables

Measuring the working capital: -

Working capital is very essential to maintain the smooth running of a business. No
business can run successfully without an adequate amount of working capital.
However it must also be noted that working capital is a means to run the business
smoothly and profitably and not an end. Thus concept of working capital has its own
importance in a going concern. The analysis of working capital can be conducted
through a number of devices such as
1. Ratio Analysis
2. Funds flow analysis
3. Budgeting

64
1. Ratio analysis: -
A Ratio is a simple arithmetic expression of the relationship of one
number to another. The technique of ratio analysis can be employed for measuring
short-term liquidity or working capital position of a firm. Several ratios like current
ratio, quick ratio, inventory turnover ratio, receivable turnover ratio, payables
turnover ratio, working capital turnover ratio, cash position ratio etc.

1. Funds flow analysis: -

Funds flow analysis is a technical device designated to study the sources
from which additional funds were derived and the use to which these sources were
put. It is an effective management tool to study changes in the financial position
(working capital) of a business enterprise between beginning and ending of financial
statements dates. The funds flow analysis consists of:
(1) Preparing schedule of changes in working capital
(2) Statement of sources and application of funds.

2. Working capital budget: -

Working capital budget, as a part of total budgeting process of a
business, is prepared estimating future long-term and short-term working capital
needs and the sources to finance them, and then comparing the budgeted figures with
the actual performance for calculating variances, if any, so that corrective actions
may be taken in the future. Its main objective is to ensure availability of funds as and
when needed, and to ensure effective utilization of these resources. The successful
implementation of working capital budget involves preparation of separate budgets
for various elements of working capital, such as, cash, inventories and receivables.

65
OBJECTIVES OR NEED OF WORKING CAPITAL: -

The need for working capital cannot be over emphasized. Every business
needs some amount of working capital. The need for working capital arises due to the
time gap between production and realization of cash from sales. It requires

1. For the purchase of materials, components and spares.

2. To pay wages and salaries.
3. To incur day-to-day expenses and overheads such as fuel, power and
office expenses etc.
4. To meet the selling costs as packing, advertising etc.
5. To provide credit facilities to the customers.
6. To maintain the inventories of raw materials, work in progress, stores and
spares and finished stock.

Importance of working capital: -

Working capital is just like the heart of the business. If it becomes weak;
the business can hardly prosper and service. It is an index of solvency of a concern.
Its proper circulation provides to the business the right amount of cash to maintain in
business. Without adequate amount of working capital, production interruption may
take place and results in reduction of profit. Just as circulation of blood is very
necessary in human body to maintain life, smooth flow or circulation of working
capital is necessary for the health of the enterprise. The prime object of management
is to make profit. Whether or not this is accomplished in most businesses depends
largely in the manner in which the working capital is administered.

Gross Working Capital: -

Gross working capital is simply called as working capital refers to the firm’s
investment in current assets. Current assets are the assets which in ordinary course of
business can be converted into cash and bank balances, short-term loans and

66
 advances, bills receivables, sundry debtors, inventory, prepaid expenses, accrued
incomes, money receivables in 12 months. The gross working capital concept
focuses attention of the current assets management i.e. optimum investment in current
assets and financing of current assets.

Net Working Capital: -

Net working capital refers to the excess of the current assets over the current
liabilities. Current liabilities are those claims of outsiders which are accepted, to
mature for payment with an accounting year and include creditors, bills payable and
outstanding expenses. Net working capital can be positive or negative. A positive net
working capital will arise when current assets exceed current liabilities. It is a
quantitative concept. In indicate the liquidity position of the firm and suggests the
extent to which working capital need may be financed by permanent sources of
funds.

A business firm must maintain an adequate level of working capital in order

to run its business smoothly. It is worthy to note that both excessive earned
inadequate working capital positions are harmful. Out of two, inadequacy of working
capital is more dangerous for a firm. Excessive working capital results in
interruptions of production. This will lead to inefficiencies, increased in costs and
reduction in profits. Working capital is just like the lifeblood of business. If it
becomes weak, the business can hardly prosper and survive. No business can run
successfully without an adequate amount of working capital.

Static view of working capital: -

Traditionally the term working capital is defined in two ways. Gross working
capital is equal to the total of all current assets concluding loans and advances of
company. Net working capital current liabilities (including provisions) sometimes
Net working capital is also referred to as net current assets. And Important
characteristic assets is conventionally considers being their convertibility in to cash
with in a single accounting year unlike fixed assets which provide the production
67
capacity; for the manufacture of finished goods for sale.

68
 Current liabilities arise in the context of and hence are derived from current
assets conventionally current liabilities are of short-term nature and come up for
payment with in single accounting year. Consequent a lot of emphasis is traditionally,
placed on the current assets is considered to be satisfactory by short term creditors. The
underlying logic being that a company a can face the unlikely situation of meeting all
of its current liabilities by liquidation its currents even at half their recorded value
without any financial embarrassment.

Dynamic view of Working Capital: -

In the lighting of shorting comings of the traditionally view of working

capital there is a need for evaluating a more expensive definition that highlights the
importance’s of working capital a company working capital can be viewed as the
amount of the normal business operation of a company ranging from the procurement
of raw material converting the same finished products for sale and realizing cash
along with profit from the accounts receivables that a rise from the sale of finished
goods on credit.

Implication for Working Capital: -

Our conceptual overview of decision concerning cash and marketable

determined is any active decision sense but falls out as a residual from the decision
sense but falls out as a residual from the decision just names.
Thus, working capital current assets fewer current liabilities have no
economic meaning in the sense of implying some type of normative behavior.
Working capital of firm is not managed the term describes affecting types of current
assets and current liabilities. In turn that decision should be routable in the overall
valuation of the fund.

69
Factors determining the working capital requirements: -
A firm should plan its operations in such a way that it should have neither too
much nor too little working capital. The working capital requirements are determined
by a wide variety of factors.
1. Nature and size of business: Working capital requirements of a firm are
basically influenced by the nature of its business. Trading and financial firms
have a very small investment in fixed assets, but require a large sum of money
to be invested in working capital. Whereas public utilities have a very limited
need for working capital and have to invest abundantly in fixed assets. Their
working capital requirements are nominal because they may have cash sales
only and supply services but not products. Working capital needs of most
manufacturing concerns fall between too extreme requirements of trading
firms and public utilities. Such concerns have to make adequate investments in
current assets depending upon the total assets structure and other variables.
The size of the business that is measured in terms of scale of operations also
has an impact on the working capital needs.
2. Manufacturing cycle: The manufacturing cycle comprises of the purchase
and use of raw material in the production of finished goods. As the firm’s
manufacturing cycle is lengthy the working capital requirement of the firm is
large.
3. Sales growth: The working capital needs of firm increase as its sales grow.
Current assets will have to be employed before growth takes place. A growing
firm needs to invest funds in fixed assets in order to sustain its growing
production and sales. This in turn increases investment in current assets to
support enlarged scale of operations. A growing firm needs funds
continuously.
4. Demand conditions: The business variations such as seasonal and cyclical
fluctuations in the demand for products and services affect the working capital
requirements. When there is an upward swing in the economy, sales will

70
increase. their productive capacity.

71
5. Production policy: To reduce working capital problems arising due to
changes in demand for the firm’s products, a steady production policy may be
maintained. If the firm’s productive capacities can be utilized for
manufacturing varied products, it can have the advantage of diversified
activities and solve its working capital problems.
6. Price level changes: Generally, rising price levels will require a firm to
maintain higher amount of working capital. However, companies which can
immediately revise their product prices with rising price levels will not face a
severe working capital problem.
7. Operating efficiency and performance: The operating efficiency of the firm
relates to the optimum utilization of resources at minimum costs. The use of
working capital is improved and the pace of cash cycle is accelerated with
operating efficiency. Better utilization of resources improves profitability and
thus helps in decreasing the pressure on working capital. A high net profit
margin contributes towards the working capital pool. In fact, the net profit is a
source of working capital to the extent it has been earned in cash. A firm can
enhance its working capital funds by saving taxes through appropriate tax
planning.
8. Firm’s credit policy: The credit policy of the firm affects working capital by
influencing the level of book debts. The credit terms to be granted to
customers may depend upon norms of the industry to which the firm belongs.
The firm should be discretionary in generating credit terms to its customer.
Depending upon the individual case different terms may be given to different
customers.
A liberal credit policy without rating the credit worthiness of customers will
be detrimental to the firm and will create a problem for collecting funds later
on. Slack collection procedures result in increase of book debts. The firm
should follow a rationalized credit policy based on the credit standing of
customers and other relevant factors.

72
OPERATING CYCLE: -

Operating cycle is the time duration required to convert sales, after the
conversion of resources into inventories and inventories into debtors and debtors into
cash. The operating cycle of a manufacturing company involves three phases:

 Acquisition of resources such as raw material, labor power and fuel etc.
 Manufacturing of the product which includes conversion of raw material into
work-in-progress and WIP into finished goods.
 Sale of the product either for cash or on credit. Credit sales create accounts
receivable for collection.
Operating cycle involves the following sequence of events.
 Conversion of cash into raw materials and labor.
 Conversion of raw material and labor into work in progress.
 Conversion of working progress into finished goods.
 Conversion of finished goods into debtors through credit sales.
 Conversion of debtors and bill receivables into cash.

73
 Fig 3.1.Operating Cycle

Source: http://nptel.ac.in/

Uses of operating cycle:

The operating cycle is helpful to the company in two ways:

 It helps in forecasting working capital requirements.

 Control of working capital can be done efficiently by the use of operating
cycle.

Determination of the length of operating cycle:

The length of the operating cycle of a manufacturing firm is the sum of:

 Inventory conversion period.

 Book debts conversion period.

74
Key areas of working capital: -

Generally, in the working capital management, there are three important

areas which are very important. Those are

1. Cash management
2. Receivables management
3. Inventory management

1. Cash Management: -
Cash management is one of the key areas of working capital management
.The term cash reference to cash management is used in two senses. In a narrow
sense it is used broadly to cover currency and generally accepted equivalent of cash
such as cheques, drafts and demand deposits in banks. The broader view of cash also
includes near cash assets such as marketable securities and time deposits in banks.
The main characteristic of these is that they can be readily converted into cash.

The three primary motives for main cash balance are as follows:
 Transaction motives: -This refers to the holding of cash to meet routine
cash requirements to finance the transactions which a firm carries on, in
the ordinary course of business.
 Precautionary motive: - This motive of holding cash implies the need to
hold cash to meet unpredictable obligations.
 Speculation motive: -It refers to the desire of a firm to take advantage of
opportunities which present themselves at unexpected moments and which
are typically outside the normal course of business.
 Cash cycle: -The cash cycle refers to the process by which cash is used to
purchase material from which goods are produced and then sold to

75
 customers to pay bills later. The firm receives cash from customers and the
cycle repeats itself.
 Cash Budget: -It is a device to help a firm to plan and control the use
of cash.
It is a statement showing the estimated cash inflow and cash outflow over the firms
planning horizon.

2. Receivables Management: -
When a firm makes an ordinary sale of goods and services and does
not receive payment, the firm grants trade credit and creates accounts receivables,
which would be collected in future. The management of these is known as
receivables management. The management of receivables involves crucial decision in
three key areas: credit policies, credit terms and collection policies.

 Credit policy: - The credit policy of a firm provides a frame work to determine
whether or not to extend credit to customer.

 How much credit to extend.

 Credit standards are criteria to decide the type of customer to whom the goods
could be sold on credit. If a firm has more slow paying customers, its
investment in accounts receivables will increase. The firm will also be exposed
to higher risk of default. The choice of optimum credit standards involves a
tradeoff between incremental return and incremental cost.
 Analysis of customers: - Credit standards influence the quality of the firm’s
customers. The two aspects of the quality of customers
(a) The time taken by customer to repay credit obligations and
(b) The default rates

76
  Credit Terms: -
Credit terms specify the duration of credit and terms of payment by
customers. Investment in account receivables will be high if customers are allowed
extended time period for making payments.
 Credit period: -
Credit period is the length of time for which credit is extended to customers,
represented as net date. A firm lengthens credit period to increase its operating profit
through expanded sales.

 Cash Discount: -
Cash discount is a reduction in payment offered to customer to induce them
to repay credit amount within a specified period of time which will be less than the
normal credit period.

 Collection Efforts: -
This determines actual collection period. The lower the collection period, the
lower the investment in accounts receivables and vice versa. Prompt collection is
needed for fast turnover of working capital. Keeping collection costs and bad debts
within limits and maintaining collection efficiency also influence the working capital
needs of the firm.

77
 CHAPTER- IV
DATA ANALYSIS & INTERPRETATION

78
 CHAPTER-IV

DATA ANALYSIS & INTERPRETATION

Statement Showing Changes in working Capital of PERAL

BOTTLING PRIVATE LIMITED (PBPL)

Table 4.1 Working Capital Statement of PBPL from 2016 to 2017

Particulars 2016 2017 W.C Increase W.C Decrease

(A) Current Assets: -

Inventories 93,362,030.00 74,493,207.09 18868822.91

Sundry debtors 57,590,248.00 47,393,179.58 10197068.42

Cash & Cash equivalents 31,835,037.00 14,205,054.83 17629982.17

Loans & advances 175,881,843.00 54,570,809.55 121311033.45

Total Current Assets 358,669,158.00 190,662,251.05 168006907

(B) Current Liabilities:-

Trade payables 217803093 197543190.7 20,259,902.30

Other current liabilities 30,842,424.00 12,924,641.34 17,917,782.66

Total Current Liabilities 248,645,517.00 210,467,832.04 38,177,684.96

Net Working Capital(A-B) 110,023,641.00 -19,805,580.99 129,829,221.99

79
 Fig 4.1 Net Working Capital of 2016-17

400
350
300
250
200 2016
150 2017
100
50
0
-50 Current Assets Current Liabilities Net Working Capital

Data Analysis and Interpretation:

The above table is a statement for comparing the working capital of the years 2016
and 2017.The current asset has significantly decreased in the year as compared to
that of current liabilities. The company has recovered most of its loans and
advances in the year.

80
 Statement Showing Changes In working Capital of PERAL BOTTLING
PRIVATE LIMITED (PBPL)

Table 4.2 Working Capital Statement of PBPL from 2017 to 2018

Particulars 2017 2018 W.C Increase W.C Decrease

(A) Current Assets :-

Inventories 74,493,207.09 74,512,170.78 -18963.69

Sundry debtors 47,393,179.58 89,508,280.25 -42115100.67

Cash & Cash equivalents 14,205,054.83 16,823,062.74 -2618007.91

Loans & advances 54,570,809.55 5,323,052.00 49247757.55

Other current Assets 26,608,756.68 26,608,756.68

Total Current Assets 190,662,251.05 212,775,322.45 -22113071.4

(B) Current Liabilities:-

Trade payables 197543190.7 181945675.2 15,597,515.50

Other current liabilities 12,924,641.34 222,779,774.24 -209,855,132.90

Total Current Liabilities 210,467,832.04 404,725,449.44 -194,257,617.40

Net Working Capital(A-

B) -19,805,580.99 -191,950,126.99 172,144,546.00

81
 Fig 4.2 Net Working Capital of 2017-18

500
400
300
200
2017
100
2018
0
-100 Current Assets Current Liabilities Net Working Capital

-200
-300

Data Analysis and Interpretation:

The above table is a statement for comparing the working capital of the
years 2017 and 2018.The current liabilities in 2018 have increased more
than current liabilities in 2017 have been increased by 194257617.4.The
current assets have significantly decreased in the year as compared to that of
Current liabilities. Over the years working capital position of the firm is
unsatisfactory.

82
 Statement Showing Changes In working Capital of PERAL BOTTLING
PRIVATE LIMITED (PBPL)

Table 4.3 Working Capital Statement of PBPL from 2018 to 2019

Particulars 2018 2019 W.C Increase W.C Decrease

(A) Current Assets :-

Inventories 74,512,170.78 94,190,987.37 -19678816.59

Sundry debtors 89,508,280.25 80,641,133.91 8867146.34

Cash & Cash equivalents 16,823,062.74 14,621,124.17 2201938.57

Loans & advances 5,323,052.00 3,990,192.21 1332859.79

Other current Assets 26,608,756.68 27,121,615.21 -512,858.53

Total Current Assets 212,775,322.45 220,565,052.87 -20191675.12 12401944.7

(B) Current Liabilities:-

Trade payables 181945675.2 141231806.6 40,713,868.60

Other current liabilities 222,779,774.24 228,569,732.65 -5,789,958.41

Total Current Liabilities 404,725,449.44 369,801,539.25 34,923,910.19

Net Working Capital(A-B) -191,950,126.99 -149,236,486.38 -42,713,640.61

83
 Fig 4.3 Net Working Capital of 2018-19

500

400

300

200
2018
100
2019
0
Current Assets Current Liabilities Net Working Capital
-100

-200

-300

Data Analysis and Interpretation:

The above table is a statement for comparing the working capital of the
year 2018 and 2019.The current liabilities are more than the current
assets. The cash & bank balances, loans and advances are decreased
compared to its previous year which reduced overall current asset of the
firm.

84
 Statement Showing Changes In working Capital of PERAL BOTTLING
PRIVATE LIMITED

Table 4.4 Working Capital Statement of PBPL from 2019 to 2020

Particulars 2019 20120 W.C Increase W.C Decrease

(A) Current Assets :-

Inventories 94,190,987.37 73,338,250.22 20852737.15

Sundry debtors 80,641,133.91 68,212,798.71 12428335.2

Cash & Cash equivalents 14,621,124.17 11,089,298.31 3531825.86

Loans & advances 3,990,192.21 3,740,192.00 250000.21

Other current Assets 27,121,615.21 19,783,892.59 7337722.62

Total Current Assets 220,565,052.87 176,164,431.83

(B) Current Liabilities:-

Trade payables 141231806.6 208059124.2 -66,827,317.60

Other current liabilities 228,569,732.65 269,854,683.67 -41,284,951.02

Total Current Liabilities 369,801,539.25 477,913,807.87 -108,112,268.62

Net Working Capital(A- - -

B) 149,236,486.38 301,749,376.04 152,512,889.66

85
Fig 4.4 Net Working Capital of 2019-20

600
500
400
300
200
2019
100
2020
0
-100 Current Assets Current Liabilities Net Working
Capital
-200
-300
-400

Data Analysis and Interpretation:

The above table is a statement for comparing the working capital of the
year 2019 and 2020.The current liabilities are increased more compared to
the 2019 increased by 4061667784.4.The net working capital of 2020 is
decreased compared to 2019.

86
 Working Capital Statement of Pearl bottling private limited from 2016-17 to 2019-20

Table 4.2 Working Capital Statement of PBPL from 2016-17 to 2019-20

Particulars 2016-17 2017-18 2018-19 2019 2020

(A) Current
Assets :-

Inventories 93,362,030.00 74,493,207.09 74,512,170.78 94,190,987.37 73,338,250.22

Sundry
debtors 57,590,248.00 47,393,179.58 89,508,280.25 80,641,133.91 68,212,798.71

Cash & Cash

equivalents 31,835,037.00 14,205,054.83 16,823,062.74 14,621,124.17 11,089,298.31

Loans &
advances 175,881,843.0 54,570,809.55 5,323,052.00 3,990,192.21 3,740,192.00

Other current
Assets - - 26,608,756.68 27,121,615.21 19,783,892.59
Total
Current
Assets 358,669,158.0 190,662,251.05 212,775,322.45 220,565,052.87 176,164,431.83

(B) Current
Liabilities:-

Trade 217803093 197543190.7 181945675.2 141231806.6 208059124.2

payables

Other current
liabilities 30,842,424.00 12,924,641.34 222,779,774.24 228,569,732.65 269,854,683.67
Total
current
liabilities 248,645,517.0 210,467,832.04 404,725,449.44 369,801,539.25 477,913,807.87
Net
Working
Capital(A- -
B) 110,023,641.0 -19,805,580.99 191,950,126.99 -149,236,486.38 -301,749,376.04

87
 15 Net Working Capital
10
5
0
-5 2010-11 2011-12 2012-13 2013-14 2014-15
-10
-15
Net Working Capital
-20
-25
-30
-35

Interpretation:

The above analysis of the graph shows us the working capital of Pearl
Bottling Pvt. Ltd. In the year 2011-12, 2012-13, 2013-14, 2014-15 the working
capital is less than zero and is negative which means the current assets are less
than the current liabilities. This situation is not good for the long run survival of
the firm as it is not able to meet its current liabilities with the current assets.
When the current liabilities are more, it indicates more debt.

88
CHAPTER- V
SUMMARY

89
 CHAPTER-V
SUMMARY AND SUGGESTIONS

Financial management is mainly concerned with the proper

management of finance function risk, cost and control considerations are
properly balanced in a given situation and there is optimum utilization of funds.
Financial management is an important function because it has an impact on all
other activities of a firm. Its primary responsibility is to discharge the finance
function successfully also it touches on all the other business functions because
all decisions have financial implications.
As working capital gives an idea to the investor as well as the
management of any firm about the functioning of organization. The preparation
of a separate statement of working capital gives us an idea about the gross as
well the net working capital of the statement one can know or plan about the
day to day expenses.
The working capital system should be established to take care of
management of all aspects of the current assets. Efforts should be made to
establish a built-in-internal control system to take note of the level as well as
fluctuations in all components of the working capital.
The efficient working capital management is important from the point of
view of both the liquidity and the profitability. Keeping in view the important
from the point of both the liquidity and the profitability. Keeping in view the
important of working capital management, the financial manager should look
into the farming of a suitable working capital policy for the firm.

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SUMMARY:

In this study an attempt is made to analyze the working capital position

of the company. The study shows that the overall performance of the company
is satisfactory.The analysis and interpretation of various data relating to
working capital management helped to reach conclusion that the efficiency of
working capital in the year 2010-11, 2011-12, 2012-13, 2013-14 the working
capital is less than zero and is negative which means the current assets are less
than the current liabilities.
Working capital of the Pearl bottling Pvt Ltd should try to increase its
current assets and decrease its current liabilities.The current assets are less than
the current liabilities where this situation is not good for the long run survival of
the company.
The overall success of any company depends upon its working
capital position. So they should be handled properly because it shows the
efficiency and financial strength of the company. Therefore the company should
continue to enforce strict and possible measures in every sphere of its activity to
maintain the company in sufficient working capital position for better prospects
in the coming days which again requires better short term fund management.

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FINDINGS:

 The working capital management throughout the period of study

has been showing a downward trend.

 The creditor’s turnover ratio for all the years is improving except
for 2012 when it has dropped as compared to 2011.

 The comparison of working capital of the two consecutive years

has always shown a negative result as compared to the previous
year.

 The inventory turnover ratios have not shown any sign of any
problem and have been increasing along the period.

 The overall working capital ratios has shown a downward trend

however it has found because of specific nature of business, certain
items of current assets like glass bottles, vise coolers, crates have
been included in the fixed assets.

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SUGGESTIONS:

 Reviewing existing literature on working capital management,

financial management, and the food and beverage industry. This
will provide you with a solid theoretical foundation and help
identify any gaps in knowledge that your study can address.
 Considering including academic journals, industry reports, books,
and reputable online sources in your review.
 Calculating and interpret ratios such as current ratio, cash
conversion cycle, days sales outstanding (DSO), days inventory
outstanding (DIO), and days payable outstanding (DPO). Compare
these metrics with industry benchmarks and historical trends to
identify areas of strength and potential improvement
 Applying appropriate financial and operational metrics to analyze
PepsiCo's working capital management.
 Investigating the impact of working capital management on
PepsiCo's financial performance. Analyze financial statements and
perform ratio analysis to understand how working capital
management influences profitability, liquidity, cash flow, and
return on investment. Identify any correlations or patterns that
emerge from the analysis.
 Considering broader industry and market trends that may impact
PepsiCo's working capital management. Explore factors such as
changing consumer preferences, technological advancements,
supply chain disruptions, and regulatory changes that can affect
working capital requirements and strategies in the food and
beverage industry.

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BIBILOGRAPH
Y

94
 BIBILOGRAPHY

 I.M. Pandey : Financial Management – Vikas

Publishers

 M.Y.Khan & P.K.Jain : Financial Management – Tata

McGraw Hill

 Website : WWW.Pepsico.com

 http://iosrjournals.org/iosr-jbm/papers/ies-mcrc-icscm/Part%203/26.pdf

 http://www.tesdo.org/shared/upload/pdf/papers/IJSSMS-1_2_,%2067-
79.pdf

 http://www.sciencepublishinggroup.com/journal/paperinfo.aspx?journal
id=173&doi=10.11648/j.ijefm.20140203.12

 http://www.hindawi.com/journals/tswj/2014/953945/

 http://www.academia.edu/9905049/The_effect_of_Working_Capital_M
anagement_on_the_Profitability_A_study_on_Indian_cement_companie
s

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 https://globaljournals.org/GJMBR_Volume14/5-Working-Capital-
Management.pdf

 http://www.journalofbusiness.org/index.php/GJMBR/article/viewFile/1
350/1257

 http://theglobaljournals.com/gra/file.php?val=February_2014_13935946
61_2cd81_06.pdf

 http://ku.ac.ke/schools/business/images/stories/research/working_capital
_management.pdf

 http://indianresearchjournals.com/pdf/IJMFSMR/2012/August/13.pdf

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