Britannia Industries Ltd Case Study

FSA  Report  of  Britannia Industries Ltd. for Financial Year 2012-2013, 2013-14 and 2014-15

END TERM PROJECT REPORT
Submitted to - Dr.Pawan Jain

Britannia Industries Ltd

Britannia Industries Ltd is an India-based food company. The Company was born in 21st March of the year 1918 as a public limited company in Kolkata which initially used to manufacture biscuit in a small house. But now it has plants in Kolkata, Delhi, Chennai, Mumbai and Uttarakhand and is recognized as one of the most trusted, valuable and popular brands among Indian consumers in various reputed surveys. Over the last century and a quarter, Britannia has been serving the Indian consumer with a range of fresh, nutritious and flavour-rich products. Company offers a range of bakery products and dairy products, its product range includes Britannia Cheese Slices, Britannia Tiger, Britannia NutriChoice Oat Cookies, Britannia NutriChoice Ragi Cookies, Veg Cakes, Nutrichoice Health Starter Kit, NutriChoice 5 Grain, NutriChoice SugarOut, NutriChoice Digestive Biscuit, Treat Fruit Rollz, and many more.

Biscuits manufacturing is the main divisions of the company, the company's factories have an annual capacity of 433,000 tonnes. The brand names of biscuits include VitaMarieGold, Tiger, Nutrichoice Junior, Good day, 50 50, Treat, Pure Magic, Milk Bikis, Good Morning, Bourbon, Thin Arrowroot, Nice, Little Hearts among others.

Tiger, the mass market brand, realised $150.75 million in sales including exports to countries including the U.S. and Australia, or 20% of Britannia revenues in 2006.

Today, Britannia is a leading food company in India with over Rs. 6000 Crores in revenues, delivering products in over 5 categories through 3.5 million retail outlets to more than half the Indian population. Britannia is also listed in one of India's 100 Most Trusted brands in The Brand Trust Report and currently having an estimated market share of 38%.

Section 2:

• Objective-“To carry out the Financial Statement Analysis –Britannia Industries Ltd.

• Period of study-2012-13, 2013-14, 2014-15.

• Mode of Research-“Secondary Data”

• Ratio analysis as a tool to analyze Financial statements

Ratio analysis is used to evaluate various aspects of a company’s operating and financial performance such as its efficiency, liquidity, profitability and solvency. Here we are using different ratios to understand various financial results and trends of Britannia Industries over time and analyze company’s performance

• List of Ratios used-

1. Net Profit ratio=Profit after tax*100/Total revenue

1. Percentage change in Profit after tax with that of Net operating Revenue

1. Percentage of Operating profit with that of Net Operating Revenue

1. Debt Equity=Total Non-current liability/shareholder’s Funds

1. Current ratio=Current assets/Current liability

1. Percentage of total assets with that of Non-current liabilities

1. Trade receivable turnover ratio=Net credit sales/Average accounts receivables

1. Inventory turnover ratio=(Cost of material consumed+ purchase of stock in trade+ change in inventory Manufacturing expenses)/closing stock

1. Cash realization=cash generated by operations/PAT

1. Earnings per share = Profit after tax / Number of Equity Shares/issued

Section 3:

• Revenue Generating Activities (Main Business) of the company

The primary business segment of your Companyis Foods comprising (i) Bakery products - Biscuit,Bread, Cake and Rusk, and (ii) Dairy products –Milk, Butter, Cheese, Ghee, Dahi, Milk-based ready
to drink beverages and Dairy Whitener. Sale of Products in the domestic market for bakeryproducts and exports from India representing the standalone performance of Company’s  growth of 14.5% from 6,347.85 crores in 2013-14 to 7,269.26 crores in 2014-15 and at present, 90% of Britannia’s annual revenue of Rs22 billion comes from biscuits alone.

• Areas which are being covered by the Company in its Accounting Policies

There are various areas which are being covered by the company in its Accounting Policies: (a) Basis of preparation of consolidated financial statements, (b) Subsidiaries and associate companies considered in the consolidated financial statements, (c) Principles of consolidation, (d) Basis of accounting and preparation of financial statements, (e) Use of estimates, (f) Fixed assets, (g) Depreciation and amortisation , (h) Impairment of assets (i) Leases  Assets, (j) Inventories, (k) Trade receivables and loans and advances, (l) Investments, (m) Revenue recognition, (n) Foreign currency transactions, (o) Derivative contracts, (p) Taxes on income, (q) Employee benefits, (r) Borrowing costs, (s) Employee share based payments, (t) Provisions and contingent liabilities, (u) Earnings per share, (v) Cash flow statement, (w) Capital subsidy, (x) Government grants related to revenue.

• Specify the Accounting Policy being followed for:
  

• Depreciation

Depreciation in respect of all the assets is provided on straight line method over the useful lives of assets estimated by the Company. Depreciation for assets purchased / sold during the period is proportionately charged. Intangible assets are amortised over their respective individual estimated useful lives on a straight line basis, commencing from the date the asset is available to the Company for its use. The Company estimates the useful life of fixed assets as follows:

 Plant and equipment (7.5 - 15 years), Furniture and fixtures (10 years), Motor vehicles (8 years), Computer software (6 years), Office equipment (3-5 years), Building (60 years), Leasehold land (Lease period), Moulders, cutters and spare parts (1 year).