INDIRA INSTITUTE OF BUSINESS MANAGEMENT

Prajakta Suresh Shirke

MMS 1ST Year ( 2022040 A )
Sub : Analysis Of Financial Statement
Analysis of Financial Statement of Britannia Industries Limited.
 About Company
o Britannia Industries Limited is one of India’s leading FMCG companies.
o Established in Kolkata in 1892.
o Company is part of Wadia group headed by Nusli Wadia.
o Britannia is one of India’s oldest existing companies and best known for
its Biscuits Products.

Mission
To dominate the food and beverage market in India through a profitable range
of ‘Tasty and Healthy’ products by making every Indian Britannia consumer.

Vision
To dominate the food and beverage market in India with a distinctive of Tasty
yet Healthy Britannia brands.

Goal
To provide consumer the highest standard of food safety and ensure hygiene
in new diversified food category.
 Company Analysis
Britannia Industries Limited is an Indian food products corporation that
operates in the FMCG (Fast-Moving Consumer Goods) sector. Here's a brief
company analysis:

1. Overview: Britannia is one of India's oldest and most well-known food

companies, established in 1892. It is headquartered in Bangalore, India,
and is part of the Wadia Group.
2. Product Portfolio: Britannia primarily manufactures and markets bakery
and dairy products, including biscuits, cakes, bread, and dairy products
like cheese, milk, and yogurt. Their brand portfolio includes popular
names like "Good Day," "Tiger," "Marie Gold," and "NutriChoice."
3. Market Presence: Britannia has a significant presence not only in India
but also in other countries. It exports its products to more than 60
countries and has a growing international footprint.
4. Financial Performance: As we see the financial statement of Britannia
Ind. Ltd. Itd it shows the positive growth from last 3 years .
5. Competitive Landscape: Britannia faces competition from various
domestic and international players in the food industry. Analyzing their
market share and strategies in comparison to competitors would provide
valuable insights. Competitiors are Nestle and Parle etc.
6. Innovation and R&D: Look into their investments in research and
development, as innovation is crucial in the food industry. Britannia has
been known to introduce new products and variants.
7. Sustainability Initiatives: Consider their sustainability efforts and
corporate social responsibility activities, as these are increasingly
important factors for both consumers and investors.
 8. Forecast : Britannia earnings are forecast to grow, but significantly.
Birtannia offers healthy long-term prospects.
9. COVID-19 Impact: During the COVID-19 pandemic, Britannia, like other
FMCG companies, faced initial disruptions in the supply chain but
adapted quickly to meet increased demand for packaged food products
as consumers shifted to at-home consumption.

Industry Analysis
Britannia Ind. Ltd. is one of India's leading FMCG Companies. The Company's
international food print includes presence is more than 60 Countries across the
globe.
Market Segmentation
Demographic
Age
Kids : fruit Rolls. Tiger & Treat Matured Good day.
Youth : little hearts, Cream Biscuits
Lower Income Group :(Tiger. Marie)
Higher income group : Good day, Nutri choice! Higher Income
Psychographic: Britannia has adopted itself according to the Convenience &
lifestyle of The Indian Consumers so Britannia Came up with a different & new
Product line.
Swot Analysis of Britannia
For Britannia Swot analysis can help the brand. 4 focus on building upon it's
strengths & opportunities. while addressing it's weaknesses as well as threats
to improve its market position.
Strengths
• It has been around 120 yrs in the industry
• Wide range of bakery products.
• Major shave in biscuits industry
 • Innovative Health product.
• Strong presence in rural.
Weaknesses:
• Lower market in dairy segment
• Heavy expenditure on advertising & marketing
• Similar products produced by many companies. (High Brand Switching)
Opportunities:
• Increase in purchasing power of people in Judia
• Increase its shave in dairy industries.
• Product line extension as company has loyal customers.
• Expansion in other countries
Threats
• lower price offering competitions can affect the Britannia market price.
• Rise in cost of raw materials.
• Inflation Can Cause fall in Sales & revenue.
• Local dairies and bakeries can cause business lossess.
Various factors that can impact its operations and competitiveness. Here are
some key aspects to consider:
Market Size and Growth: The FMCG industry is one of the largest and most
rapidly growing sectors globally. Population growth, urbanization, and
changing consumer lifestyles are driving increased demand for FMCG products.
Distribution Channels: Analyze how FMCG products reach consumers,
including retail, e-commerce, and direct-to-consumer channels. Evaluate the
company's distribution network and its effectiveness.
Regulatory Environment: Understand the regulatory framework governing
FMCG products, including labeling, safety standards, and advertising
restrictions. Assess how these regulations impact the company.
Supply Chain Management: Examine the company's supply chain efficiency,
including sourcing, manufacturing, and logistics. Evaluate the impact of supply
chain disruptions and efforts to mitigate risks.
Technology Adoption: Investigate the adoption of technology in operations,
such as data analytics, automation, and e-commerce platforms.
Consumer Feedback and Reviews: Pay attention to customer reviews and
feedback on social media and e-commerce platforms to gauge consumer
sentiment.

Economic Analysis
Here are some key aspects to consider:
Gross Domestic Product: Britannia's performance is closely tied to India's GDP.
As GDP grows, consumers tend to have more disposable income, which can
positively impact Britannia's sales, especially in the consumer goods sector.
Gross National Product: GNP measures the total economic output produced
by a country's residents, including those living abroad. Britannia, as an Indian
company, contributes to India's GNP through its domestic and international
operations.
Inflation Rate: Inflation can affect Britannia's operations in several ways. If
inflation is high, it can increase the cost of raw materials and production,
potentially squeezing profit margins. Moreover, consumers' purchasing power
may be affected, leading to changes in demand for Britannia's products.
Unemployment: High unemployment rates can impact consumer spending. If
unemployment is high, people may cut back on discretionary spending, which
could affect Britannia's sales, especially for non-essential food products.
Export and Import Dynamics: Exchange rates and trade policies can influence
Britannia's international operations. Changes in the exchange rate can affect
the cost of imports and exports, impacting profitability.
Government Policies: Government policies related to taxation, trade, and
investment can significantly impact Britannia's economic performance. For
instance, changes in tax rates can affect their profitability, and trade policies
can influence their international expansion.
 Organizational Structure
( Hierarchical )
Chairman
Mr. Nusli N Wadia

Managing Director
Mr Varun Berry

Directors
( Mr Varun Deb, Mr Keki Dadiseth, Dr Ajai Puri, Mr Ness Wadia, Dr Ajay Shah, Dr Y. Thorat,
Mr.Keki Elavia, Mrs Tanya Dubash )

Managing Team
Mr Vinay Kushwala ( Supply chain officer )
Mr Sudhir Nema ( Development and quality officer )
Mr Manoj Balgi ( Procurement officer )
Mr Vipin Kataria ( Sales officer )
Mr Amit Doshi ( Marketing officer )
Mr Yudhishter Shringi ( Business officer )
Mr Ritesh Rana ( Human Resource )
Mr Annu Gupta ( International Business )

Company Secretary
Mr T V Thulsidass

Auditors
M/S Walker Chandiok and co LLP
Charted Accountants
 Analysis of Financial Statements
Analysis of Profit and Loss statement ( 2020-2021 )
o As we see the profit and loss statement of Britannia for the year 20-21
,the total income of company is high in the percentage of 13.21% as
compare to with the 2020.
o Total expenses are same for the both year, therefore the profit for the
before tax is 2513.61 which is more as compared to last year, its
1844.30.
o Profit for the year 2021 after tax is 1850.59 and for the year 2020 its
1393.60 means increase in 32% in the current year.
o Total Comprehensive income for the year 2021 is 1849.09 and for the
year 2020 its 1398.72 menas the company earn more profit in the
current year as compared to last year.
 Analysis of Profit and Loss statement ( 2021-2022 )
o The Income of the company in the year 2022 is 1439.09 and for the year
2021 it's 13449.01 quite higher as compared to last year.
o Total expenses for the year 2022 is 12279.58 and for the year 2021 it's
10935.60.Expenses are more as compared to last year 2021.
o Profit before tax is quite less in the year 2022 as compared to last year
2021. Nearly -17.31% less as compared to last year. Because the
expenses are more in this year.
o Profit after tax is less as compared to last year as company have more
expenses in the current year which highly affect the profit of the year.
Nearly -18% less as compared to 2021.
 Analysis of Profit and Loss statement ( 2022-2023 )
o The total income for the year 2023 is 16516 and for the year 2022 it's
14359.09 means nearly 15% high than last year.
o Total expenses are 13864 which higher as compared to last year it
was only 12279 in the year 2022.
o As we compared to Income to the profit we expect more profit but
due to expenses acquired more the profit get impacted.
o There is increase in 52.79% in the profit of 2023 as compared to
2022.
o It shows company is in profit making as compared to last year as
income is more than the expenses.
 Analysis of Cash flow statement ( 2020-2021 )
o As we see the cash flow statement of the 20-21, The net cash generated
from operating activities for the year 2021 is 1851.07 and for the year
2020 it's 1484.53 nearly 24% increase as compared to last year.
o Increase in inventories and changes in loans receivables which affect
highly on cash flows amount.
o Cash generated from investing activities is higher as compared to last
year because sale of investment for the year 2021 is pretty high.
o Interest paid in the year 2021 is more as com6 to 2020. In 2021 company
paid high dividend and no issue of bonus debentures in the year which
highly affect the financing cashflow.
o Cash and cash equivalents at the end of the year for the 2021 is 141.45
and for the year 2020 is 75.26 means as compared to 2020 company
have greater cash flow. It means company can easily meet its short term
debts.
 Cash flow statement ( 2021-2022 )
o As we see the cash flow, net flow generated from operating activities in
2022 is probably less than 2021. In the year 2022 amount is 1206.09 and
in 2021 it's 1791.56.
o As compared to last year 2021 the shared based expenses get 5 lower
which affect the net flow from operating activities.
o Inventories and other assets are less as compared to 2021 i.e. having
huge difference in their balances.
o Changes in trade payables and other liabilities both of them are less as
compared to 2021. In 2021 its 476 and in 2022 it's 37.04 only.
o As we see the net cash flow from investing activities is higher than FY
2022 because of acquisition of property and the sale of investment is
greater in 2022 which affect the net flow from investing activities.
o The net cash used in financing activities is nearly same i.e. 2211
o The issue of bonus debentures in 2022 is 698.52 and in 2021 it's 0.
Similarly proceeds from issued of commercial paper is 0 in 2022 and
1431 in 2021 which affect the cash flow activities of finance.
o So the cash and cash equivalents is very much less as compared to
2021.so company may faced some problem because of this.
 Cash flow statement ( 2022-2023 )
o In the financial year 22-23 the profit for 2023 is 3027.36 and for the year 2022 it's
2078.33 means nearly 45% higher as compared to last year
o Cash flow from operating activities means the cash remain from day to
day activities double in the year 2023 as compared to 2022. Because the
major changes happen in net gain on financial asset and changes in
other financial asset. Trade payables also higher as compared to 2022.
o Cash generated from investing activities is amted -1517.06 which is less
as compared to last year 2022. Means company invested more as
compare to last year. The major investment of 2023 are acquisition,
Capital WIP, investment in joint venture and also the sales of current
investment affect the amt of investment activities.
o Cash generated from financing activities goes down by -54.21 in current
year . In this year company repayment of bonus debentures, proceeds
from non current borrowings and also repayment term also affect the
cash and cash equivalents in the year 2023. In the year 2024 company
has less cash and cash equivalents as compared to last year because in
this year company majorly paid all the loans.
 Ratio Analysis of Britannia Ind Ltd.

1) LIQUIDITY RATIO:

• Current Ratio = Current Assets / Current Liabilities.

Current Ratio (2021) = 4419.46 / 3608.90 = 1.22
Current Ratio (2022) = 3970.42 / 4155.73 = 0.95
Current Ratio (2023) = 4746.23 / 4134.40 = 1.14

• Quick Ratio = Current Assets - Inventories / Current Liabilities.

Quick Ratio (2021) = 3327.97 / 3608.90 = 0.92
Quick Ratio (2022) = 2602.93 / 4155.73 = 0.62
Quick Ratio (2023) = 3552.97 / 4134.40 = 0.85

• Cash Ratio = Cash & Cash Equivalents / Current Liabilities.

Cash Ratio (2021) = 141.45 / 3608.90 = 0.039
Cash Ratio (2022) = 109.32 / 4155.73 = 0.026
Cash Ratio (2023) = 100.16 / 4134.40 = 0.024

• Operating Cash Flow Ratio = Operating Cash Flow / Current Liabilities.

Operating Cash Flow Ratio (2021) =2508.33 / 3608.90 = 0.69
Operating Cash Flow Ratio (2022) = 1886.43 / 4155.73 = 0.45
Operating Cash Flow Ratio (2023) = 3251.96 / 4134.40 = 0.78

2) LEVERAGE RATIO:

• Debt Ratio = Total Debt / Total Assets

 Debt Ratio (2021) = 2104.3 / 8008.78 = 0.26
Debt Ratio (2022) = 2465.54 / 7515.53 = 0.32
Debt Ratio (2023) = 2980.51 / 9352.72 = 0.31

• Debt to Equity Ratio = Total Liabilities / Shareholder’s Equity

Debt to Equity Ratio (2021) = 2481.2 / 2558.1 = 0.96
Debt to Equity Ratio (2022) = 2121.51 / 3547.66 = 0.59
Debt to Equity Ratio (2023) = 2997.37 / 3534.27 = 0.84

• Interest Coverage Ratio = Operating Income / Interest expenses

Interest Coverage Ratio (2021) = 2822.36 / 110.90 = 25.44
Interest Coverage Ratio (2022) = 2423.16 /144.29 = 16.79
Interest Coverage Ratio (2023) = 3427.78 / 169.10 = 20.27

• Debt Service Coverage Ratio = Operating Income / Total Debt Service

Debt Service Coverage Ratio (2021) = 2822.36 / 2104.3 = 1.34
Debt Service Coverage Ratio (2021) = 2423.16 / 2465.54 = 0.98
Debt Service Coverage Ratio (2021) = 3427.78 / 2980.51 = 1.15

3) EFFICIENCY RATIO:

• Asset Turnover Ratio = Net Sales / Average Total Asset

Asset Turnover Ratio (2021) = 13136.14 / 7925.5 = 1.65
Asset Turnover Ratio (2022) = 14136.26 / 7762.1 = 1.82
Asset Turnover Ratio (2023) = 16300.55 / 8440.06 = 1.93
 • Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory
Inventory Turnover Ratio (2021) = 7700.34 / 916.22 = 8.40
Inventory Turnover Ratio (2022) = 8910.82 / 1229.49 = 7.2
Inventory Turnover Ratio (2023) = 9736.36 / 1280.37 = 7.60

4) PROFITABILITY RATIO:

• Gross Margin Ratio = Gross Profit / Net Sales * 100

Gross Margin Ratio (2021) = 5435.8 / 12883.04 *100 = 42.19
Gross Margin Ratio (2022) = 5225.44 / 13944.67*100 = 37.47
Gross Margin Ratio (2023) = 6564.19/ 15984.90 *100 = 41.06

• Return on Asset Ratio = Net Income / Total Assets

Return on Asset Ratio (2021) = 2513.41/ 8008.78 = 0.31
Return on Asset Ratio (2022) = 2079.51 / 7515.53 = 0.27
Return on Asset Ratio (2023) = 2651.76 / 9352.72 = 0.28

• Return on Asset Ratio (2021) = Return on Equity Ratio = Net Income /

Shareholder’s Equity
Return on Equity Ratio (2021) = 2513.41 / 3547.66 = 0.7
Return on Equity Ratio (2022) = 2079.51 / 2558.1 = 0.81
Return on Equity Ratio (2023) = 2651.76 / 3534.27 = 0.15
 Free Cash Flow to Equity

Particulars 2020 2021 2022 2023

Cash from operations 1987.78 2508.33 1886.43 3251.96

Acquisition of (244.17) (240.51) (550.18) (712.91)
property , plant
Proceeds from sale (0.73) (2.17) (3.16) (78.43)

Capital Expenditure 1742.88 2265.65 1333.09 2460.62

Net Debt 747.99 1357.15 1758.55 2460.62

FCFE 2490.87 3622.8 3091.64 3889.33

Free Cash flow to firm

Net Income + Depreciation & Amortization + [ Int ( 1-tax )] – CAPEX – Change

in working capital

FCFF ( 2021 ) = 2513.41 + 197.85 + [101.30(1-0.30)] -238.34-671.18

= 1872.65
FCFF (2022) = 2079.51 + 200.54 +[118.61(1-0.30)] – 547.02-222.27
= 2219.07
FCFF (2023) = 2651.76 + 225.91 [195.66(1-0.30)] – 633.03 -405.66
= 1975.94
 Valuation of Company
Step : 01
Determine the current year FCFE
YEAR FCFE

2020 2490.87

2021 3622.8

2022 3091.64

2023 3889.33

Step : 02
Determine the projected FCFE based on expected growth rate
Calculation of Growth Rate on the basis of FCFE
= Current year(FCFE) – Last year(FCFE) / Last year(FCFE)
(20-21) = 3622.8 – 2490.87 / 2490.87
= 0.45
(21-22) = 3091.64 – 3622.8 / 3622.8
= 0.14
(22-23) = 3889.33 – 3091.64 / 3091.64
= 0.25

GROWTH RATE = 0.45 + 0.14 + 0.25/3

= 0.28
Now Projected FCFE for Next 5 Years
Projected FCFE = Current Year FCFE ( 1 + Growth Rate )n
Projected FCFE (2024) = 3889.33(1+0.28)1
= 4978.34
Projected FCFE (2025) =4987.34(1+0.28)1
= 6372.27
Projected FCFE (2026) = 6372.27(1+0.28)1
= 8156.51
Projected FCFE (2027) = 8156.51(1+0.28)1
= 10440.34
Projected FCFE (2028) = 10440.34 (1+0.28)1
= 13363.63

Step : 03
Determine the Discount Rate
Discount Rate : 7.5

Step : 04
Calculate the Present Value of all future free cashflow of equity
value.
Year Face Value Discount Present
Factor Value
2024 4978.34 0.930 4629.85
2025 6372.27 0.865 5512.01
2026 8156.51 0.804 6557.83
2027 10440.34 0.748 7809.37
2028 13363.63 0.696 9301.08
Step 05:
Calculate the Terminal Value Based on last Projected Year FCFE
Terminal Value= Last Projected Year FCFE ( 1/Discount Factor )
= 13363.63 ( 1/0.075)
= 1,78,181.73
Present Value of Terminal Value
= Last Year Discount Factor ( Terminal Value)
= 0.696 ( 178181.73)
= 1,24,014.48

Step 06 :
Calculate Intrinsic Value of a Company
Intrinsic Value = FCFE of Current Year + Total Of Present Value + Present
Value Of Terminal Value
Intrinsic Value = 3889.33 + 33810.14 + 124014.48
= 1,61,713.95

Step 07 :
Intrinsic Value Per Share = Intrinsic Value / Outstanding number of
shares
Intrinsic Value Per Share = 6712