A Study On Biscuit Industry

A Industry Analysis Report Submitted to

Jawaharlal Nehru Technological University, Hyderabad

In partial fulfillment of the requirementsfor the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

By

V.SANDHYA RANI (14881E0029)

Under the guidance of

G. RAMESH Associate Professor

Department of Management studies

Department of Management StudiesVARDHAMAN COLLEGE OF ENGINEERING

(Permanently Affiliated to JNTUH, Hyderabad, Approved by AICTE and Accredited by NAAC with ‘A’ grade & ISO 9001:2008 certified )

Shamshabad - 501 218, Hyderabad2014 - 2016

Department of Management StudiesVARDHAMAN COLLEGE OF ENGINEERING

(Permanently Affiliated to JNTUH, Hyderabad, Approved by AICTE and Accredited by NAAC with ‘A’ grade & ISO 9001:2008 certified)Shamshabad - 501 218, Hyderabad

CertificateThis is to certify that the industry analysis report work entitled “Biscuit Industry” is the bonafide work done By V.SANDHYA RANI (14881E0029) in the Department of Management studies, VARDHAMAN COLLEGE OF ENGINEERING, Shamshabad is submitted to Jawaharlal Nehru Technological University, Hyderabad in partial fulfillment of the requirements for the award of MBA degree during 2014 - 2016.

Guide: Head of the Department:

G. Ramesh K. Jaahnavi Associate Professor, Associate Professor & Head, Dept of Management studies, Dept of Management studies, Vardhaman College of Engineering, Vardhaman College of Engineering, Hyderabad. Hyderabad.

Viva-Voce held on……………………………………………

_________________ Internal Examiner

ACKNOWLEDGEMENT

The satisfaction that accompanies the successful completion of the task would be put

incomplete without the mention of the people who made it possible, whose constant guidance

and encouragement crown all the efforts with success.

I thankful to my guide G.Ramesh, Associate Professor, Management studies for his sustained

inspiring Guidance and cooperation throughout the process of this industry analysis report. His

wise counsel and suggestions were invaluable.

I thankful to G.Suresh Kumar, Assistant Professor, Management studies for his sustained

cooperation throughout the process of this industry analysis report.

I would like to thank K.Jaahnavi,Associate professor & Head, Management studies for her

expert guidance and encouragement at various levels of my project.

I show gratitude to Dr. S.Sai Satyanarayana Reddy, Principal & Management for provided all

the facilities and support.

I express my deep sense of gratitude and thanks to all the Teaching and Non-Teaching Staff of

our college who stood with me during the project and helped me to make it a successful

venture.

I place highest regards to my Parents, my Friends and Well wishers who helped a lot in making

the report of this project.

V. SANDHYA RANI

(14881E0029).

DECLARATION

I hereby declare that this industry analysis report is titled “Biscuit Industry” is a genuine project

work carried out by me, in MBA degree course of Jawaharlal Nehru Technology University,

Hyderabad and has not been submitted to any other course or university for the award of my

degree by me.

Signature of the Student

INDEXS.NO : CHAPTER PAGE NO:

1. CHAPTER-I

Industry profile INTRODUCTION HISTORY IMPACT ON INDIAN ECONOMY

2. CHAPTER-II

Company profile-I INTRODUCTION

HISTORY PRODUCTS & SERVICES AWARDS & ACHIEVEMENTS FINANCIAL DATA ANALYSIS

3. CHAPTER-III

Company profile-II INTRODUCTION

HISTORY PRODUCTS & SERVICES AWARDS & ACHIEVEMENTS FINANCIAL DATA ANALYSIS

4. CHAPTER-IV

Data analysis & interpretation

Bibliography

BISCUIT INDUSTRY

History

India Biscuits Industry came into major existence and started gaining a sound status in the bakery industry in the later part of 20th century when the urbanized society called for ready made food products at a tenable cost. Biscuits were assumed as sick-man's diet in earlier days. But today it has become one of the most loved fast food products for every age group. Biscuits are always easy to carry, tasty to eat, cholesterol free and reasonable at cost. States that have the larger intake of biscuits are Maharashtra, West Bengal, Andhra Pradesh, Karnataka, and Uttar Pradesh. Maharashtra and West Bengal are the most industrially developed states; hold the maximum amount of consumption of biscuits. Even, the rural sector consumes around 55 % of the biscuits in the bakery products.

Indian Biscuits Industry seems to be the largest among all the food industries and has a turnover of around Rs.3000 crores. Indian subcontinent is known to be the second largest manufacturer of biscuits, the first being USA. The industry is classified under two sectors: organized and unorganized. Bread and biscuits are the major part of the bakery industry and covers around 80 % of the total bakery products in India. Biscuits today stand at a higher value and production level than bread. This belongs to the unorganized sector of the bakery Industry and covers over 70% of the total production.

1990

In the year 1990 the total production of bakery products have risen from 5.19 lakh tonnes in 1975 to 18.95 lakh tonnes. Today Biscuits contributes to over 33 % of the total production of bakery and above 79 % of the biscuits are manufactured by the small scale sector of bakery industry comprising both factory and non-factory units in the country. The production capacity of wafer biscuits is 60 MT and the cost is Rs.56, 78,400 with a motive power of 25 K.W. Indian biscuit industry has occupied around 55-60 % of the entire bakery production. Today the large scale bakery manufacturers like Cadbury, Nestle, and Brooke bond had traded in the biscuit industry but couldn't hit the market because of the local companies that produced only biscuits. Government has established The Federation of Biscuit Manufacturers of India (FBMI) which has confirmed a bright future of India Biscuits Industry in the year 1953. According to FBMI, a steady growth of 15 % per annum in the next 10 years will be achieved by the biscuit industry of India. Besides, the export of biscuits will also surpass the target and hit the global market successfully.

Biscuit Brief introduction

Today the total production of biscuits in India is estimated to be around 30 lakh MT, the organized sector accounts for 65% and the unorganized sector accounts for 35% of the total

industry volume and the organized sector is valued at above Rs 8000 crores. While the the biscuit industry is estimated to grow over 15-17% in the next few years. The biscuits per capita consumption in India is 2.0 kg. India is ranked 3rd after US and China amongst the global biscuits producers. The export of biscuits is approximately 17% of the annual production, the export of sweet biscuits for year 2007-08 was Rs 145.93 Cr and for year 2008-09(April-Dec) was Rs 280 Cr, the major exporting regions were Haiti, Angola, USA, Ghana, UAE. The imports are not significant amount as compared to the total consumption.

The penetration of biscuits in India among the urban and rural market is 85% and 55% respectively. The annual turnover for the organized sector of the biscuit manufacturers at 2001-02 is Rs. 4,350 crores. The annual Growth showed a decline of 3.5% in 2000-01, mainly due to 100% hike in Central Excise Duty (from 9% to 16%) by the government. Production in the year 2001-02 increased very marginally by 2.75% where in 2002-03 the growth is around 3%. Government took initiatitive for the development as The Union Budget for 2003-04 granted 50% reduction in the rate of Excise Duty on Biscuit i.e. from 16% to 8%. The Federation's estimate indicates a growth of approximately 8% to 9% per year.

Biscuit is always hygienically packaged nutritious snack food available at very competitive prices, volumes and different tastes. According to the NCAER analysis, biscuits are predominantly consumed by people from the lower strata of society, particularly children in both rural and urban areas with an average monthly income of Rs. 750and above.

The organized biscuit manufacturing industries annual production

Year 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Annual Production(Lakh MT) 11.00 12.54 14.29 16.14 17.14 19.5

Biscuit Market capitalization

Biscuits Industry is the largest among all the food industries and has a turnover of around Rs.4350 crores.

Biscuit Size of the industry

The production capacity of wafer biscuits is 60 MT and the cost is Rs.56, 78,400 with a motive power of 25 K.W. Indian biscuit industry has occupied around 55-60 % of the entire bakery production.

The Indian Biscuit industry for the organized sector produces around 60% of the total production, the balance 40% being contributed by the unorganized bakeries. The industry consists of two large scale manufacturers, around 50 medium scale brands and small scale units ranging up to 2500 units in the country, as at 2000-01. The unorganized sector is estimated to approximately have 30,000 small & tiny bakeries across the country.

Biscuit Total contribution to the economy/ sales

Biscuit industry contribute Rs 8,000 crore to the FMCG industry today, provides vast opportunity for growth, as the per capita consumption of biscuits is less than 2.1 kg in our country. India is classified under two sectors: organized and unorganized. Branded /Organized to Unbranded/Un organized market share of biscuit has been 70% for Organized sector and 30% for Unorganized sector. Apart from Big 3(Britannia, Parle, ITC) there are around 150 medium to small biscuit factory in India.

Top leading biscuit Companies

Parle Britannia Sunfeast Priya Gold Cremica Dukes Anmol Horlicks Biskfarm Rose Sobisco Nezone

Biscuit Employment opportunities

The Biscuit industry employs almost 3.5 lakh people directly and 30 lakh people indirectly. Britannia brand is now available in nearly 1.8 million outlets. Britannia claims that it has a superior distribution clout with its presence which is nearly 3.3 million outlets. Parle, the seasoned player itself, says it is available in 1.5 million outlets. Sunfeast next step was to step up its branding and promotion.

Biscuit Latest developments

Indian biscuit market is 1.1 million tonnes per annum at Rs 50 billion. About 90% of Indians buy and eat biscuits.

According to estimates the bakery industry in India is worth Rs 69 billion. Out of which bread and biscuits hold about 82% of the share. The bread market has a business volume of 1.5 million tonnes. The major factors for growth in this segment are: Brand loyalty, volumes and strong distribution networks.

Growth in the over 40-year-old Indian biscuit industry has remained slow. The analyst's calculations will show that per capita consumption is less than Rs 3 per month on biscuits or less than Rs 15 per household per month.

Back in 2003, nobody thought Sunfeast would have consumers eating out of its hands.

According to the AC Nielsen retail sales audit in March 2006, both Britannia and Parle have lost volumes. Britannia's shares have dropped from 35.8 % in 2004-05 to 30.5 % in May 2006 (volumes). Parle's shares have also dropped from 42.2 to 38.4 % in the same period.

Even Priya Gold has seen a minor dip from 6.4 % to 5 %. ITC's Sunfeast has been a big gainer with its share increasing from 2.7 to 6.7 %.

BISCUIT INDUSTRY IN INDIA - AN OVERVIEW

Biscuit industry in India in the organized sector produces around 60% of the total production, the balance 40% being contributed by the unorganized bakeries. The industry consists of two large scale manufacturers, around 50 medium scale brands and small scale units ranging up to 2500 units in the country, as at 2000-01. The unorganized sector is estimated to have approximately 30,000 small & tiny bakeries across the country.

The annual turnover of the organized sector of the biscuit manufacturers (as at 2001-02) is Rs. 4,350 crores.

In terms of volume biscuit production by the organized segment in 2001-02 is estimated at 1.30 million tonnes. The major Brands of biscuits are - Britannia, Parle Bakeman, Priya gold ,Elite ,Cremica, Dukes, Anupam, Horlicks, Craze, Nezone, besides various regional/State brands.

Biscuit industry which was till then reserved in the SSI Sector, was unreserved in 1997-98, in accordance with the Govt Policy, based on the recommendations of the Abid Hussain Committee.

The annual production of biscuit in the organized sector, continues to be predominantly in the small and medium sale sector before and after de-reservation. The annual production was around 7.4 Lakh tonnes in 1997-98. In the next five years, biscuit production witnessed an annual growth of 10% to 12%, up to 1999-00.

The annual Growth showed a decline of 3.5% in 2000-01, mainly due to 100% hike in Central Excise Duty (from 9% to 16%). Production in the year 2001-02 increased very marginally by 2.75% where in 2002-03 the growth is around 3%.

The Union Budget for 2003-04 granted 50% reduction in the rate of Excise Duty on Biscuit i.e. from 16% to 8%. The Federation's estimate for the current year indicates a growth of approximately 8% to 9%.

However the average utilization of installed capacity by biscuit manufacturers in the country has been a dismal 60% over the last decade up to 2001-02.

Though dereservation resulted in a few MNCs, i.e. Sara Lee, Kellogs SmithKline Beecham, Heinz etc entering the biscuit industry in India, most of them, with the exception of SmithKline Beecham (Horlicks Biscuits), have ceased production in the country.

On the other hand, import of biscuits, specially in the high price segment has started from 1998-99, but however, the quantum of imports has not so far increased alarmingly and has remained at around 3.75% of the consumption of biscuits in the country in the year 2001-02. However, recent imports from china industries cheaper verities of biscuit, needs to be examined with cautions, especially in the context of the price as the low margin based domestic industry, which is operating at 60 % of the total installed capital. Exports of biscuits from India has been to the extent of 5.5% of the total production. Export are expected to grow only in the year 2003-04 and beyond.

Biscuit is a hygienically packaged nutritious snack food available at very competitive prices, volumes and different tastes. According to the NCAER Study, biscuit is predominantly consumed by people from the lower strata of society, particularly children in both rural and urban areas with an average monthly income of Rs. 750.00.

Biscuit can he broadly categorized into the following segments:

(Based on productions of 2000-01)

Glucose 44%

Marie 13%

Cream 10%

Crackers 13%

Milk 12%

Others 8%.

In recognition of industry's obligations towards the community, being a part of it, biscuit manufacturers supply biscuits to the social welfare agencies in all States for the benefit of school children, senior citizens and other needy sections of the society. FBMI Members have always responded positively to our appeal as also by the Government, to rush truck loads of biscuits to the people affected by earthquakes, floods, famine etc. Our industry has also participated in supplying biscuits to the people of war ravaged Afghanistan and presently to the Iraqi people, under the aegis of the UN.

As regards the consumption pattern is concerned. surveys and estimates by industry from time to time indicate the average consumption scenario in the four Zones have been more or less close to each other, as below:

Northern States: 28%

Southern States: 24%

Western States: 25%

Eastern States: 23%

Though India is considered as the third largest producer of Biscuits after USA and China, the per capita consumption of biscuits in our country is only 2.1 Kg., compared to more than 10 kg in the USA, UK and West European countries and above 4.25 kg in south cast Asian countries, Le. Singapore, Hong Kong, Thailand, Indonesia etc. China has a per capita consumption of 1.90 kg, while in the case of Japan it is estimated at 7.5 kg.

In view of the meager per capita consumption even as penetration of biscuits manufactured by the organised sector, into rural areas in India, has been very good during the last 10 years, as also in the metro and other cities, small towns etc. However, in spite of this, the industry has not been able to utilize about half of their installed capacities.

Biscuit is a comparatively low margin food product in the PMCG (Packaged Mass Consumption Goods ) sector. The commodity is also price sensitive, as a consequence of which, even when the Excise Duty was doubled on biscuits in 2000-01 biscuit manufacturers, including the major brands, were not able hike MRPs to the extend of the steep increase in the Duty. Taxation, both Central Excise Duty as also State Sales Tax, other miscellaneous levies i.e. turnover tax, local area tax, mandi taxes, purchase tax, octroi etc, has been a major deterrent in the growth of the biscuit industry. The CII Study Report has identified Biscuit as one of the products that should treated as "Merit Good for the purpose of liberal tax policy both by the Centre and States.

Besides lack of technology upgradation in manufacturing, packaging etc has also been a factor affecting our industry, along with inadequate financial credit and support particularly for the medium and small scale biscuit units.

On the other hand, the Government of India has identified food processing industries as a priority area to be encouraged for growth and development and created the Ministry of Food Processing Industries (which was till then a Dept in the Ministry of Agriculture), headed by an Ministry of State with Independent charge.

The Food Processing Ministry has been rendering yeomen service to the industry, of which biscuit manufacturing is an important part. The Ministry, with the objective of enabling food processing Industries to undertake technology upgradation diversification. expansion as also to set up new units has formulated scheme of Grants and Financial Assistance. Please see www.mofpi.nic.in

Other areas of concern to industries of food products like Biscuits include multiplicity of food laws and their enforcing agencies in the Central and State Governments with overlapping functions & implementation. At the persistent instance of industry organizations including FBMI the Ministry of FPI took the initiative in evolving an Integrated Food Act, harmonizing the existing multifarious legislations enabling better compliance. The Draft Unifled Food Bill 2002 has been prepared and now awaits approval by the Cabinet and the Parliament, which will fulfill an important need of the industry and pave way for accelerated development and growth.

Biscuit manufacturing as well as other bakery products like Bread etc are agro based industries, with the major inputs - wheat flour/atta sugar, milk vanaspati/vegetable oil etc all being agriculture produces.

Industries such as Biscuit are also languishing as they are not able to achieve their potentials for higher production, in the absence of the concrete food Processing Industry Policy. FBMI in close coordination with other organizations and apex Chambers, initiated to urge the Govt of India to formulate a comprehensive Policy Document, for smooth growth and harmonious development of the industry. The Food Processing Industry Policy, which has been evolved as a result of various workshops, deliberations and representations by a large cross section of food processing industries, is yet to be finalized. It is hoped that the Ministry of Food Processing Industries, GOI would initiate action for implementation of the Policy expeditiously.

Biscuit Production

According to the production figures of members available upto the calendar year 2003, the total production was 625000 tonnes as against 475000 tonnes in the previous year. The production of biscuit for the last 11 years is as under:

1993 - 167750 1994 - 180526

1995 - 202567 1996 - 222371

1997 - 362000 1998 - 400000

1999 - 425000 2000 - 450000

2001 - 465000 2002 - 475000

2003 – 625000

The production of members of FBMI consist of 50% (approx) of the total production of biscuit in the organized sector.

The production capacity of wafer biscuits is 60 MT and the cost is Rs.56,78,400 with a motive power of 25 K.W.

Geographical distribution

Maharashtra, West Bengal, Andhra Pradesh, Karnataka, and Uttar Pradesh.

Output per annum

Biscuit industry contribute Rs 8,000 crore to the FMCG industry today provides vast opportunity

Percentage in World Market Indian subcontinent is known to be the second largest manufacturer of biscuits, the first being USA.

Impact of industry in India

The biscuit industry in India enjoys a comparative advantage in manufacturing with abundant supply of the primary ingredients required by the industry, such as wheat flour, sugar, milk, vegetable oils, etc. The Agricultural and Processed Food Products Export Development Authority (APEDA), set up by the Ministry of Commerce and Industry, Government of India, has been playing an important role over the years in promoting the export of biscuits from the country through its various initiatives like arranging buyer-seller meets, participation in trade fairs both in India and abroad, publicity campaigns, etc. The Federation of Biscuit Manufacturers of India (FBMI) has come to stay as a premier forum of the organised segment of the Indian biscuit industry. Its estimates indicate that the share of biscuit production by the organised sector in the country is 60 per cent while that of the unorganised segment is 40 per cent. The FBMI, through its quarterly newsletter, disseminates important information relating to the biscuit industry. To know about the latest developments of the industry, one can access its website: http:// www.biscuitfederation.org/ indus_profile.htm.

India’s exports

Segmentwise export. India’s export of biscuits in 2005-06, as may be seen from Table 1, registered an unprecedented growth of 61.06 per cent over the previous year with sweet biscuits continuing to dominate the export market. However, a glance at the table reveals that the share of sweet biscuits, which accounts for the lion’s share of the biscuit market in the country, underwent a marginal decline.

Biscuit is an item of mass consumption in view of its low price and high nutrient value. In developing countries, Indian biscuits are in great demand. Realising the growth potential in global markets, biscuit majors like Parle, Britannia and ITC Foods have chalked out their strategies to explore overseas markets. ITC Foods has tied up with the New York based company, House of Spices to launch its biscuit brand Sunfeast across the USA. On the other

hand, Parle is soon spreading its wings in Russia and Bangladesh to launch its flagship brand Parle-G. Parle-G is the largest-selling glucose biscuit brand across the globe. Notwithstanding, Britannia still holds on to its leadership position in the biscuit industry. The Rs 95-billion domestic biscuit industry including the per cent growth in India as consumers are increasingly shifting from non-branded to branded products for health reasons.

In terms of value, Britannia and Parle account for around 38 per cent share each of the total volume of branded biscuits marketed in India. Biscuits, along with similar packaged food products belonging to the food processing sector, enjoy a place of pride in the country. The finance minister’s recent announcement of excise duty exemption for biscuits, not exceeding the retail price of Rs 100 per kg, will keep a check on prices.

BUDGET

CENTRAL EXCISE DUTY ON BISCUITS

In the Union Budget 2000-01, the finance Minister who had imposed a 100% increase in the rate of Excise Duty on biscuit from 8% as a part of the rationalisation of CENVAT and introduction of single rate of Duty did not offer any concesison on the Budget for 2001-02. On the other hand the 50% exemption to small packs was withdrawn. During these years and in 2002, the Federation submitted strong representations to the Union finance

Minister seeking relief in the Excise Duty on biscuits, giving biscuit special treatment that it deserves on account of the exceptional nature and sensitivity to price increase.

The Federation submitted its Pre- Budget Memorandum for 2002 demanding at least 50% Excise Relief.

It is a matter of great satisfaction that the Govt. has, after 3 years, acceded to our demand and grated reduction in Excise Duty (from 16% to 18%) in the Union Budget for 2003-2004.

INTEGRATION OF VARIOUS FOOD LAWS

The Food Processing Industry have been experiencing the adverse affect of multiplicity of various Acts/ Rules and Regulations for food standards under the Prevention of Food Adulteration Act Standards of Weights & Measures Act, Food Products Order, the Meat

Products Order, the Bureau of Indian Standards & MMPO, etc. affected the Food & Food Processing Sectors. They need to be modernised & converged.

As a consequence of various representations of industry, the Govt. of India has decided to set up a Group of Ministers (GOM) to propose legislation and other changes for preparing a Modem Integrated Food Law and related regulations. The Ministry of State for Food Processing Industries is the Nodal Ministry to coordinate the bill.

Our federation submitted its recommendations and suggested to placed before the Group of Ministers, covering the broad frame work required for the food legislation as well as specific issues such as:

The main objectives of the new Integrated Food Laws & its structure

Methodology of development of Standards

Provisions of Labelling

Acceptance of a basic list of additives

Matters relating to GMP, GHP & HACP

Issues related to Codex

Procedure for sampling& launching of Proseutin

Grading of violations according to the nature of discrepancy.

Recent Changes / Amendments

Prevention of Food Adulteration Rules The Ministry of Health & Family Welfare, Govt. of India vide its Notification No. GSR 908 (E) Dt. 20.12.2001 has provided for printing of statutory symbol on all products containing vegetarian ingredients. The notification came into effect from 20 June 2002. As members may be aware the Govt. has earlier amended PFA Rules vide notification No. 245(E) Dt.4.4.2001 provided for statutory printing of the symbols of food packages containing non vegetarian ingredients. This notification has already come into effect from 4 October 2001.

Our Federation along with apex organizations such as CII & CIFTI have represented to Hon'ble Union Minister for Health and Family Welfare seeking extension of a minimum period of 6

months for implementation of the notification, particularly on account of hardships in printing vegetarian symbol in advertisements. A delegation from the industry met the Secretary, Ministry of Health and Family Welfare and apprised him of the hardships faced by industry. Further follow up is in hand.

Standards of Weight and Measures (PC) Rules 1977

The Standing Committee on Food Standards has decided that the following issues be referred to Technical Committees to look into all aspects and to make recommendations to the Standing Committee:

(i) Revision of First Schedule as regards tolerance (maximum permissible error.)

(ii) Deletion of Rule 11 (a) and the Fourth Schedule for declaration of words "when packed" with net quantity declaration on packages.

At our request the representatives of industry have been included in the Technical Committee for each zone. Members of the Technical Committees will be visiting the factories of manufacturers for ascertaining the position regarding industry's plea for not reducing the maximum permissible error in weight.

BUREAU OF INDIAN STANDARDS

The Meeting of the Bakery Confectionery and Nutritious Supplements Sectional Committee of BIS was held on 1 March 2002. The Draft standards for biscuit were discussed. FBMI submitted its suggestions on various issues including classification of biscuits into 5 categories – sweet /semi sweet, crackers, cookies and speciality biscuits. It has also been suggested that separate standards should be evolved for wafers. FBMI has also represented that proposal for Peroxide value should not be included in the standards for biscuits and there should not be any requirement of checking biscuits for micro biological parameters. Supporting data received from members on total plate count, coliform count, E coli and stapylococcus aureus, etc., have already sent to the Bureau of Indian Standards showing that bacteria cannot remain alive at the temperature at which biscuits are baked.

OFFER OF GRANT FOR FOOD PROCESSING INDUSTRIES

The FBMI along with other organizations of industry had requested the Ministry of Food Processing Industries to revise its assistance for promotion of food of processing industry. Accordingly the Ministry has offered grants unto Rs. 25 lakhs or 25% of the Capital cost for setting

up / expansion / modernisation of units in all sectors of food processing industries. The Ministry is also presently revising its outline of assistance under the schemes of 10 th Plan. The information has been circulated to members vide No. FB 1nd 7 52 Dt. 1.2.2002.

SALES TAX / VAT ON BISCUITS

As members are aware, though the Empowered Committee of finance Ministers fixed the minimum floor rate of Sales Tax on biscuits at 8%, various State Governments are levying Sales Tax on Biscuits in the range of 8% to 16%.

The Sales Tax regime is proposed to be replaced with Value Added Tax (VAT) from 1 April 2003. The Federation has already represented that biscuits being a nutritious snack food product predominantly consumed by the consumers from the lower strata of society should be included in the list of goods at the minimum level of VAT. Representations have already been sent to Chief Ministers and other officials concerned in Punjab, Haryana, UP, Karnataka MP and Kerala. Many States such as Himachal Pradesh, Delhi, Arunachal Pradesh, Kerala have however, deferred introduction of VAT. The trading communities in Delhi, Tamil Nadu, etc. have resorted to agitations against levy of VAT. As far as biscuit is concerned, it is learned that VAT @ 12.5% is proposed to be levied by many states. FBMI has therefore, urged States to fix the rate of VAT on biscuits at the minimum level of 4% meant for items of mass consumption.

FOOD SAFETY AND QUALITY

The Ministry of Health and Family Welfare and the Ministry of Food Processing Industries have formed different Sectoral Groups in order to facilitate formulation of a proper and efficient Food Safety Programme towards implementation of GMP , GHP and HACCP in the food industry, either under law or voluntary.

In the Group on Bakery products sector, FBMI has been made the Convenor of the Group with AIBMA, Society of Indian Bakers and Britannia Industries Ltd as members. The meeting of the Sectoral Groups was held on 20 June 2002 at Nirman Bhawan New Delhi. The President, FBMI attended the meeting. Subsequently, FBMI has submitted its objections 1 suggestion to the Ministry of Health, Govt. of India, and the text of which is given in Arnnexure- A.

FOOD PROCESSING INDUSTRY POLICY

As the members may he aware, the Ministry of Food Processing Industry is presently undertaking the formulation of a comprehensive Food Processing Industry Policy.

Our Federation has submitted its views / suggestions for appropriate incorporation in the Policy, the text of which is given in Annexure B

TRAINING PROGRAMME IN BISCUIT MANUFACTURE

With the objective of imparting Training to the personnel in the biscuit industry as also to prospective entrepreneurs, FBMI in collaboration with its members and other organizations, conducts training programme in

Biscuit Manufacture for the last two decades. The XIII Training Programme was organized at CFTRI Mysore on 28 to 30th August 2001. The XIV Training Programme has just concluded at the Resort Country Club, Gurgaon, Haryana, from 25th to 28th March 2003. M/s Britannia Industries Ltd and Parle Products Ltd cosponsored both the Training Programmes.

FOOD REGULATORY MEASURES – AN OVERVIEW

During the period underreport, there has been various proposals for changes/amendments in the important Food Law affecting our industry, such as PFA Act/Rules, Standards of Weights & Measures (Packaging Commodities) Act/Rules, etc.

Some of the important issues in this area of Food Laws and follow up action by FBMI are given below :-

The Dept of Consumer Affairs (Director of Metrology), Govt. of India, proposed mandatory printing of 1st point price, in addition to MRP, for food products like biscuit etc. Our Federation submitted objections to the said proposals, as there has never been any grievance from consumer forums against the biscuit industry and this would on the one hand add to the cost of packaging/printing and on the other hand would only create confusion for the consumers without any benefit. The proposal has been kept in abeyance.

Similarly, our Federation on its own and through apex organizations, effectively pursued and objected to the proposed amendment in the Standards of Weights & Measures (PC) Rules, for making 50% reduction in the present Maximum Permissible Error in weight of biscuit (Tolerance Limit), on the ground that various factors such as atmospheric/environmental changes affect

moisture, temperature, and consequently affect the weight of biscuit, at both the manufacturing, marketing/retail levels, and hence the present Tolerance Limit should be maintained. The Sub-Committee of the Committee on Food Standards, constituted sub grounds of experts in various Zones/States to review the issue with representatives of industry, to visit biscuit units and recommend their view points on Tolerance Limit, together with another proposed amendment of discontinuing with the proviso of printing “When Packed” on the packages of biscuit and other food products, which was also objected to by our Federation by representations and meetings in the Sub Committee of the CFS. Expert from our membership participated in this process through CIFTI. At the time of this Report, the issues involved are under consideration/ review by the Committee on Food Standards (CFS).

Approval of Additives

The list of various additives needed for making Biscuit is required to be approved by the Standing Committee on Weights & Measures. The Committee has held various sittings in this connection. FBMI has represented on he Committee for scrutinizing various additives for which various food processing industries have sought approval.

Prevention of Food Adulteration Act / Rules

Members reported various instances where the PFA authorities in the States are adopting penal action, even in cases of very minor offences / errors under the PFA Rules. FBMI suggested that such minor errors etc should be compounded, avoiding prosecution, harassment and resultant losses to biscuit units. This issue has also been referred to CIL and CIFTI for further follow up.

The Govt. of India (Ministry of Health), has formulated proposals to introduce the concepts of Hazard Analysis Control Convention Procedures (HACCP), Good Manufacturing Practices (GMP) and Good Hygienic Practices (GHP), as a step towards eventual adoption in the various states in accordance with the International Codex Alumnus, in the context of trade terms and regulatory, measures under the WTO regime.

After discussions with FBMI and other organizations, the Dept of Health constituted Sectoral Groups on various categories of food processing industries. The Sectoral Group on Bakery Products consisted of FBMI, as Convener and FBMI and SIB as members. After detailed deliberations, the Federation submitted our comments and suggestions, highlighting the hardships that the biscuit units would face in the event of statutory enforcement of HACCP/GMP/GHP.

The Federation suggested that the concepts of HACCP etc should be made voluntary in the first two/three years, keeping in view the ground realities in the bakery sector and due to the fact that the implementation of HACCP/GMP/GHP may be beyond he financial and technical capabilities of majority of the biscuit manufacturers and compulsory introduction of these regulations would adversely impact the viability and may lead to closure of a large number of bakeries in the country. FBMI, after detailed deliberations by the Executive Committee, suggested to the Govt. of India that, in the first instance projects for imparting training to the Managers/Executives and workforce in the bakery industries should be organized so as to create awareness and knowledge on these complex regulatory aspects and educate the personnel in the industry on various aspects of HACCP etc. FBMI has proposed to organize such Training Programs and Workshops, in collaboration with the Dept of Health, Govt. of India. Specific project application has since been submitted by FBMI, which is Convener or the Sectoral Group on Bakery Industries a mentioned above.

Federation is glad to inform members that the government of India has accepted our suggestion and as desired by the Ministry of Health, Govt. of India, a four day Training Programme / Workshop on HACCP/GMP/GHP will be held as per the following programme:

As members are aware, the food processing industries, including Biscuit / Bakery segment, are subjected to and administered by a large number of statues i.e. PFA Act / Rules, Weights & Measures Act, Packaged Commodities Rules, MMPO / FPOA orders under Essential Commodities’ Act / Rules, Agmark, BIS etc. There are much multiplicity of implementing / enforcing Agencies / Departments for watch one of these Acts and Rules, both at Central and State levels. Unfortunately, many a time there are instances of overlapping and even contradictions between such Agencies / Departments. PFA Act / Rules are recipe based, and focus on prosecution / penal action, even for minor / technical errors etc. which are also different in the States.

Similarly, in the Standards of Weight & Measures Act and PC Rules, there have been plethoras of amendment, and proposals for more restrictions on the food processing industries including Biscuit and this has resulted in unavoidable hindrances in the development and growth of the industries.

It is in this context that our Federation in close coordination with CIFTI, CII, FICCI, PHDCCI urged he Government to evolve a single Integrated Food Law, encompassing the existing legislation’s mentioned above, with main focus on development and promotion of the Food Processing, Agro Based industries in the country, paving way for creation of large employment generation, consumption of varied types of safe food products of good quality, at reasonable prices benefiting consumers particularly those in the lower and middle segments of the society. Exports and better capacity utilization also need to be encouraged in the proposed Integrated law, which would also result in higher productivity and better revenue for the Central and State Governments.

Accordingly, the Govt. formed a Group of Ministers with the Ministry of Food Processing Industries as the nodal point and this comprehensive exercise has resulted in the Draft Food Bill 2002 presented to the Group of Ministers. The said Draft Food Bill 2002 has been formulated to “provide for the production, manufacture, processing and sale of safe and suitable food systematic and scientific development of food industry, introducing new technologies, imparting new inputs of market dynamics, and to create an enabling environment for innovation and value additions, ensuring high degree of objectivity and transparency and to provide for the establishment of a Food Development an Regulatory Authority of India an the Council for Food Standards and for matters connected therewith or incidental thereto.

FOOD LAWS – A REVIEW OF THE SCENARIO

The year under report witnessed controversial development relating to allegations against certain food processing industries such as mineral / drinking water, soft drinks, etc. regarding contents of pesticides, heavy metals, etc, leading to constitution of a Joint Parliamentary Committee (JPC) and issuance of a Draft Notification by the Government of India stipulating permissible contents of pesticides, heavy metals, etc in various food products. FBMI interacted with the Government and with the apex organizations of industry. The Executive Committee discussed these developments in detail, in the context of the manufacturing process involved in the biscuit industry.

Milestones

There are more than 2,000 organized/semi-organized bakeries and 1,00,000 unorganized bakeries in India

The bakery products are accessible to every person in India through organized and unorganized bakeries.

Most of India population consumes bakery products in form of traditional wheat based products (Chapati, Naans, Puri, Parathas, etc.) and a variety of bakery products (Biscuits, cookies, croissants, buns, breads, cakes, muffins, etc.).

The second largest producer of biscuits after USA. Bread and biscuits most popular – consist of 80% of total market Biscuit production is mainly in the States of Maharashtra, West Bengal, Andhra

Pradesh, Bihar, Karnataka and Uttar Pradesh. The per capita consumption is very high in States like Maharashtra, Gujarat, Kerala and West Bengal.

Bakery products are the cheapest of the processed ready to eat products in the country.

BRITANNIA COMPANY

HISTORY

Britannia Industries Limited (BIL) is a major player in the Indian Foods market with leadership position in Bakery category. Its brand portfolio includes Tiger, Marie Gold, Good Day, 50:50 and Treat. The Company was born in 21st March of the year 1918 as a public limited company.

The Company's plants are situated in Kolkata, Delhi, Chennai, Mumbai and Uttarakhand. In 1921, it became the first company east of the Suez Canal to use imported gas ovens. Britannia's business was flourishing. But, more importantly, Britannia was acquiring a reputation for quality and value.

As a result, during the tragic World War II, the Government reposed its trust in Britannia by contracting it to supply large quantities of 'service biscuits' to the armed forces. A new factory was established in the year 1924 at Kasara Pier Road in Mumbai. In the same year, the Company became a subsidiary of Peek, Frean & Company Limited, U.K., a leading biscuit manufacturing company, and further strengthened its position by expanding the factories at Calcutta and Mumbai.

In 1952, the Kolkata factory was shifted from Dum Dum to spacious grounds at Taratola Road in the suburbs of Kolkata. During the same year automatic plants were installed in Calcutta and later in 1954 the automatic plants were installed in Mumbai plant, also in the same year the development of high quality sliced and wrapped bread in India was initiated by the company and was first manufactured at Delhi and a new bread bakery was set up at Delhi in the year 1965.

Britannia Biscuit Company takes over biscuit distribution from Parry's during the year 1975. In 1976, the company had introduced Britannia bread in Calcutta and Chennai. During the year 1978, the company made Public issue, in that Indian shareholding crossed 60%. The Company re-christened from Britannia Biscuit Company Limited to Britannia Industries Limited with effect from 3rd October of the year 1979. The Company had signed a 10-year technical collaboration agreement with Nebico Pvt Ltd., Nepal during the year 1980 for the supply of know-how relating to manufacturing, packaging and marketing of biscuits and selection of plant and machinery.

During the year 1989, BIL's Executive Office was relocated to Bangalore. During the year 1990, two new brands of biscuits, Elaichi Creamand and Petit Beurre were launched. Also, in the same year a new cashew badam variant of the brand Milk Bikis and brand extension of pure magic biscuit Vanilla cream were launched, Fruit bread was launched in Delhi. The Company launched two new speciality brands in the year 1991 viz., Britannia milk bread and Britannia brown bread in Delhi and extended nationally its main brands Petit Beurre and Elaichi Cream.

In 17th August of the year 1991, the Company handed over its Soya unit at Vidisha, MP to SM Dychem Ltd. BIL had celebrated its Platinum Jubilee in the year 1992. After a year in 1993, Wadia Group had acquired the stake in ABIL, UK and becomes an equal partner with Group Danone in BIL. The Company was in re birth phase during the year 1997, new corporate identity 'Eat Healthy, Think Better' leads to new mission of 'Make every third Indian a Britannia consumer' and in the same year BIL entered into the dairy products market.

In the same year, the company had launched Britannia Milkman Butter, a product under the Milkman brand. BIL made its fund in-principle agreement to acquire 49 per cent of Kwality Biscuits in the year 2001 through internal accruals. During the year 2002, the company had entered into a joint venture with the Fonterra Cooperative Group, New Zealand's biggest company and one of the leading diary co-operative groups in the world and the Britannia New Zealand Foods Pvt. Ltd was born. Pure Magic, the company's product was winner of the Worldstar, Asiastar and Indiastar award for packaging in the same year 2002.

After a year, in 2003, BIL had launched 'Treat Duet', most successful of the year and Britannia Khao World Cup Jao rocks the consumer lives yet again. During the year 2004, Britannia

accorded the status of being a 'Superbrand' and the brand Good Day added a new variant Choconut in its range. Reviewed marketing alliance with the Kolkata-based Thacker Dairy Products Pvt Ltd.

In the year 2005, Britannia New Zealand had launched health drink for adult. The new plant in Uttaranchal, commissioned during the year 2005, it was ahead of schedule. In the same year, launched yet another exciting snacking option the Britannia 50-50 Pepper Chakkar. BIL had forged a strategic alliance with CCD Daily Bread Pvt Ltd in the year 2006, a Bangalore based Company engaged in manufacturing and retailing of premium breads, cakes snacks and high end ready to eat foods.

Overview

123 years ago, in a small house in central Calcutta (now Kolkata) an intrepid baker made a batch of delicious, golden brown biscuits. These were meant for officers of the British Raj and their families, people used to the exacting standards of English tea-time snacking. From the paeans of ecstasy for that first batch of aromatic, flavour-some biscuits was born a long tradition of delectable baking - and its Indian custodian, Britannia.

Over the last century and a quarter, Britannia has been serving the Indian consumer with a range of fresh, nutritious and flavour-rich products. We take pride in our food making traditions and in our innovations, in equal measure. We demand the best of ingredients and package their natural goodness in our products, without compromise. We deliver a complete sensory experience, in every product, every time.

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. Our core emphasis across portfolios is on healthy, fresh and delicious food and we are the First Zero Trans-fat Company in India. 50% of our product portfolio is enriched with micro-nutrients. Our products are also delivered through the Britannia Nutrition Foundation to combat malnutrition among underprivileged children.

Britannia Dairy had its beginnings in 1997. Britannia was one of the first companies in India to pioneer category defining innovations like Cream Cheese and introducing a host of international flavors for its cubes & spreads in India. Today Britannia Dairy products contribute close to 10% of the company’s revenue. Britannia markets its dairy portfolio on the back of a well integrated cold chain logistics network and reaches 3 million outlets across the length & breadth of this country.

Our relentless focus on quality and freshness has won us prestigious accolades including the Golden Peacock National Quality Award and the Ramakrishna Bajaj National Quality Award. However, the award that we cherish the most is the one given by our consumers.

PRODUCTS

GOOD DAY NUTRICHOICE

MARIE GOLD TIGER MILK BIKIS JIM JAM + TREAT BOURBON LITTLE HEARTS PURE MAGIC NICE TIME

BREADS

100% WHOLE WHEAT BREAD MULTI-GRAIN BREAD HONEY OATS BREAD MULTI FIBER BREAD BROWN BREAD VITAMIN ENRICHED BREAD HEALTHY SLICE BREAD FRUIT BREAD FRUIT BUN BURGER BUN PAV

DAIRY

CHEESE FRESH DAIRY ACCOMPANIMENTS

CAKES

BAR CAKES CHUNK CAKE NUT & RAISIN ROMANCE MUFFILLS

RUSK

PREMIUM BAKE MASKA RUSK

Growth and profitability

Between 1998 and 2001, the company's sales grew at a compound annual rate of 16% against the market, and operating profits reached 18% More recently, the company has been growing at 27% a year, compared to the industry's growth rate of 20%. At present, 90% of Britannia’s annual revenue of Rs22 billion comes from biscuits.

Britannia is one of India's 100 Most Trusted brands listed in The Brand Trust Report.

BRANCHES

1. Kolkata2. Mumbai3. Chennai4. Utharakand

VISION

To determine the food and beverage market in india with a distinctive ranged “tasty but healthy”

MISSION

We believe in quality and service every third customer must be a britania customerThe colour of red , green and white represents asRed - symbolizing energy and vitalityGreen - nutrition and freshnessWhite - purity

Leadership

Britannians exhibit the following leadership behaviors (we fondly call BULBs – Britannia Universal Leadership Behaviors) :

Integrity Team Orientation People Development Learning Orientation Customer Orientation Quality Orientation Drive for Results Entrepreneurial Spirit System and Process Orientation Communication

Oppurtunities

Summer Internships at Britannia last for about 8 weeks. Interns are selected from the best B Schools around the country and are given the opportunity to work on Live Projects in our different functions. At the end of the internship, project plans and recommendations are made to the company’s Management Committee and the best Summer Interns are offered a Pre-Placement Interview or a Pre-placement Offer. There is also a ‘Best Summer Project’ award

that is given to one deserving intern, along with a sizeable cash award.

Britannia gives you a great learning experience in varied roles enabling adaptability in an ever changing business environment. Our work culture can be characterized by strong performed. However Britannia is incomplete without an essential ingredient…FUN!!! Every new joinee finds a friend and a mentor in every Britannian he or she encounters during his/her tenure in this organization. The Family like culture of this 100 year young organization fuels the life-blood of every Britannian and has helped strengthened bonds manifold across almost a century.

Core values

”It's not hard to make decisions when you know what your values are”. Those words capture, in a nutshell, what we believe in. Our foundation is built on the core values that we stand by and demonstrate through our actions every single day.

Careers

Not many companies can boast a 100-year distinguished history, and fewer still can be linked with stakeholders and markets across continents. This superlative trajectory notwithstanding, at Britannia it's always been recognized that none of it would have been possible without the people. Over the years, Britannia has been associated with many brilliant careers, and evidence of the success of its strategic-yet-friendly people policies is to be seen in the current crop of management and staff and indeed the performance of the company.Today, with the extraordinarily dynamic and adaptive people we attract, Britannia is fully geared for the new-age business paradigm. If you feel you are in sync with the Britannia vision, do call us to explore opportunities in your sphere of work.

Strengths

Widely accepted in all Generations

Provide good Instant Remedy for hunger in the form of readymade food

Preserves the non seasonal food and makes it available all throughout the year

There is no labour union in this organization

Using manpower on large scale

Company has much experienced, qualified and competent employees in each department.

WEAKNESSES

Increases the cost of food product.

Industry and technology requires high investment.

Company is using manpower on large scale so, expenses are high.

No separate colony for employees so, they have to travel a lot on daily basis.

Marketing Strategies

A strong quality of the product and customer satisfaction.

A growing relationship with customer and customer retention.

Focus on competitor’s activity.

A growing emphasis on global thinking and local marketing planning

OBJECTIVE

Short Term Long Term

To improve image to

To be the lowest-cost shareholders producer in the market

To improve internal

To become largest processes and controls volume player in the bakery industry

Goal

To improve profitability

To provide better customer service

To reduce carbon emissions

AWARDS AND AXHIEVEMENTS

1. Bronze award winner for Best Brand Campaign (Britannia Tiger) at Times of India, Big Bang Awards 2013

2. The Platinum Award (Packaged Foods category) in the Reader's Digest Trusted Brand Awards 2014

3. Britannia features in the Top 10 of the ET Brand Equity - India's Most Trusted Brands/Most Trusted Food Brands consistently since 2003

4. The Most Attractive Brand 2013 (F & B- Diversified Category) in the TRA- India’s Most Attractive Brands Survey 2013

5. Ltd was awarded the Global Performance Excellence Award by Asia Pacific Quality Organization in Chicago on June 18. It won the "Best In Class" award, an international recognition for its manufacturing units and the overall processes of performance excellence adopted by the company.

6. The John Schlesinger Britannia Award for Excellence in Directing is awarded to a director whose work is distinguished by ingenuity. Past recipients have included Anthony Minghella, Christopher Nolan, Quentin Tarantino, Danny Boyle, Jim Sheridan, David Yates and Peter Weir.

7. The Albert R. Brocolli Britannia Award for Worldwide Contribution to Filmed Entertainment is reserved for the few extraordinary luminaries whose careers have had a truly global impact including Dame Elizabeth Taylor, Kirk Douglas, John Lasseter and Sidney Poitier. In 2012, video games pioneer Will Wright became the first ever Britannia Award recipient from the world of Games.

8. In 2006, the Britannia Award for British Artist of the Year was added to honor outstanding contemporary British talent such as Kate Winslett, Emily Blunt, Rachel Weisz, Tilda Swinton, Michael Sheen, Helena Bonham Carter, Daniel Craig and Benedict Cumberbatch.

9. The Britannia Humanitarian Award was created to honor those who have used the moving image to promote charitable causes such as Don Cheadle for his dedication to Rwanda and Darfur and to Richard Curtis who co-created Comic Relief and led the efforts of “Idol Gives Back.”

10. Most recently, the award was presented to Idris Elba for his work with The Prince's Trust.

11. Through a special arrangement with the Chaplin family, in 2010 BAFTA Los Angeles introduced the Charlie Chaplin Britannia Award for Excellence in Comedy with Betty White honored for her career spanning over 60 years.

12. In 2011 the award was presented to Ben Stiller and in 2012, South Park team Matt Stone and Trey Parker were honored. In 2013

13. The award was presented to Sacha Baron Cohen, who's acceptance speech broke many online viewing records.

14. Vinita Bali, Managing Director of Britannia Industries, accepted the award on behalf of the company and said “I am delighted to receive this award.

15. In Britannia we are focusing on children and malnutrition because we believe that a healthy child will go on to become a responsible and fit adult.”

16. In order that the award serves as a catalyst for a lasting service initiative, the Club launched the “Rotary Club of Madras-Britannia Nutrition Initiative” on the occation.

Milestones of the Company

1892- The Genesis – Britannia

1921- Imported machinery introduced

1975- Britannia Biscuit Company takes over biscuit distribution from Parrys

1997- Re-birth - new corporate identity Eat Healthy, Think Better

2001- No.1 food brand of the country

2003- Treat Duet

2005- Re-birth of Tiger

2009- Britannia Launches Active Mind. ‟Eat Healthy, Think Better to „Drink Healthy, Think Better as well!!

RATIO ANALYSIS OF BRITANNIA COMPANY

Liquidity ratios

Current ratio:

Def:

Current ratio means it measures the ability of a firm to meet its short term obligations. The current ratio is calculated by dividing current assets by current liabilities. A relatively high current ratio compared with those of other firms in the same business and although it may tend to result in reduced profitability.

Formula:

Current ratio = current assets/current liabilities

YEARS CURRENT ASSETS CURRENT LIABILITIES

CURRENT RATIO

2014 486.33 660.98 0.87

2013 473.09 576.90 0.82

2012 465.36 882.53 0.52

2011 395.72 406.63 0.97

2010 325.94 345.04 0.94

INTERPRETATION:

In these company ratios, the liquidity position of the company is not good in all the years. According to this ratio standard is 2:1.

QUICK RATIO:

Def:

Quick ratio is also known as Acid Test Ratio. It shows the ratio of cash and other liquid resources of an organisation in comparison of its current liabilities.

Quick ratio shows the extent of cash and other current assets that are readily convertible into cash in comparison to short term obligations.

Formula:

Quick ratio = quick assets / current liabilities

Years Quick assets Current liabilities Quick ratio

2014 119.47 660.98 0.18

2013 141.6 576.90 0.24

2012 89.08 882.53 0.09

2011 84.52 406.63 0.20

2010 57.6 345.04 0.16

INTERPRETATION:

In these company ratios, the liquidity position of the company is not good in all the years. According to this ratio standard is 1:1.

DEBT EQUITY RATIO:

Def:

Debt equity ratio is equal to long –term debt divided by common share holders’ equity. It is a measure of the relative contribution of the creditors and shareholders’ or owners in the capital employed in business. It indicates what proportion of equity and debt the company is using to finance its assets.

Formula:

Debt equity ratio = debt/equity

years debt equity Debt equity ratio

2014 462 853.46 0.54

2013 194.47 638.70 0.30

2012 28.15 520.04 0.05

2011 431.44 451.30 0.95

2010 429.61 396.25 1.08

INTERPRETATION:

In these company ratios, the liquidity position of the company is not good in all the years. According to this ratio standard is 2:1.

PROPRIETORY RATIO:

DEFINITION:

Proprietary ratio is also known also Equity ratio or net worth to total assets or shareholder equity to total equity. It establishes the relationship between proprietor’s funds to total resources of the unit. Where proprietor’s fund refers to equity share capital and reserves, surplus and total resources refers to total assets.

Formula:

Proprietary ratio = Net worth / total assets

years Net worth Total assets Proprietary ratio

2014 853.43 858.46 1.00

2013 638.70 853.17 0.74

2012 520.04 848.19 0.61

2011 454.30 882.76 0.51

2010 396.25 825.87 0.47

INTERPRETATION:

In these company ratios, the ratio is good in the year of 2014 compare to remaining 4 years. So, the position of the company is good.

RETURN ON CAPITAL EMPLOYED:

Def:

The ratio of EBIT to shareholder’s equity plus long term liabilities, expressed as a percentage. A measure of how well a company uses all its sources of long term financing to generate a profit (before tax and interest). And also called as return on investment

Formula:

Return on capital employed = net operating profit/capital employed * 100

Years Net operating profit Capital employed Return on capital employed

2014 548.06 853.46 64.20

2013 369.92 638.70 50.00

2012 2904.44 52.04 50.00

2011 233.54 451.30 51.70

2010 122.33 396.25 30.80

INTERPRETATION:

In this company the profitability ratio is very good in the year of 2014 compare to the remaining 4 years. And it is go on increasing, so the position of the company is very good.

TOTAL ASSETS TURNOVER RATIO:

Def:

Assets turnover ratio is a financial ratio that measures the efficiency of a company’s use of its assets in generating sales revenue or sales income to the company.

Companies with low profit margins tend to have high asset turnover, while those with high profit margins have low asset turnover. Companies in the retail industry tend to have a very high turnover ratio due mainly to cutthroat and competitive pricing.

Formula:

Asset turnover ratio= Net sales revenue / Average total assets

Years Net sales revenue Average total assets

Asset turnover ratio

2014 6307.39 858.08 7.35

2013 5615.49 833.17 6.58

2012 4974.19 848.19 5.86

2011 4217.59 882.76 4.77

2010 3404.70 825.87 4.12

INTERPRETATION:

In this company the ratio is very good in the year of 2014 compare to remaining 4 years. And there is a better improvement in the company .so, the position of a company is very good.

PARLE COMPANY

HISTORY

Parle Products company was founded in 1929 in British India. It was owned by the Chauhan family of Vile Parle, Mumbai. Parle began manufacturing biscuits in 1939. In 1947, when India became independent, the company launched an ad campaign, showcasing its Gluco biscuits as an Indian alternative to the British biscuits. The Parle brand became well known in India following the success of products such as the Parle-G biscuits and the Thums Up soft drink.

The original Parle company was split into three separate companies, owned by the different factions of the original Chauhan family.

Parle Products, led by Vijay, Sharad and Raj Chauhan (owner of the brands Parle-G, Melody, Mango Bite, Poppins, Kismi toffee bar, Monaco and KrackJack).

Parle Agro, led by Prakash Chauhan and his daughters Schauna, Alisha and Nadia (owner of the brands such as Frooti and Appy)

Parle Bisleri, led by Ramesh Chauhan

Since 1929, Parle Products, with its wide platter of biscuits and sweets is also actively engaged in changing and uplifting the social face of India. As part of its Corporate Social Responsibility Policy, Parle is keenly involved in the overall development of the younger generation, with a focused endeavor to build the New Face of India and spread happiness and joy all over.

All three companies continue to use the family trademark name "Parle". The original Parle group was amicably segregated into three non-competing businesses. But a dispute over the use of "Parle" brand arose, when Parle Agro diversified into the confectionary business, thus becoming a competitor to Parle Products. In February 2008, Parle Products sued Parle Agro for using the brand Parle for competing confectionary products. Later, Parle Agro launched its confectionery products under a new design which did not include the Parle brand name. [4] In 2009, the Bombay High Court ruled that Parle Agro can sell its confectionery brands under the brand name "Parle" or "Parle Confi" on condition that it clearly specifies that its products belong to a separate company, which has no relationship with Parle Products.

Primarily eaten as a tea-time snack, Parle-G is one of the oldest brand names in India. For decades, the product was instantly recognized by its iconic white and yellow wax paper wrapper. The wrapper features a young girl (an illustration by Everest creative Maganlal Daiya back in the 1960s).

Now, it is available in plastic wrapping. Design of packaging is the same as earlier. When the company changed the packaging of Parle-G from wax paper to plastic, they made an ad of putting Parle-G in fish tank.

As of January 2013, Parle-G's strong distribution network covered over 6 million retail stores in India. The Brand Trust Report ranked Parle-G as the 42nd most trusted brand of India in 2014.

The low price is another important factor in Parle-G's popularity. Outside India, it is sold for 99 cents for a 418 gram pack as of 2012. A more common 80 gram "snack pack" is sold for as low as 15 cents at Indian grocers, and 40 cents at major retailers.

Available Anywhere

Today, the great strength of Parle Products is the extremely widespread distribution network. Even at the remotest places, you can buy Parle biscuits and sweets from the local grocer. It has taken years to create this extensive network. Parle’s sales force started with one salesman in

Bombay and some agents in few other cities. Gradually, Parle Products expanded. Soon sweets and biscuits were being sent by rail to Calcutta, Delhi, Karachi, Madras and other major cities. As production increased, distribution was amplified. Full time salesmen were appointed in different areas. Currently, Parle Products has over 33, 00,000 distribution outlets.

Green planetImagine a world that's clean and fresh as the way we inherited it. Imagine a world full of trees, birds and animals. The fact that we have to imagine it, speaks volumes about the state of our planet.

The world is a home not just to human beings but also to a wide variety of animals and plants. All of them are dependent on each other for survival. When we take these natural resources for granted or disturb the natural harmony of things, we face consequences like global warming.

Parle's products have been trusted by mothers and children across age groups as a nutritious snack that has helped them grow healthy and strong. It is but natural that Parle Products would like to return the favour to a generation that has helped it grow. Parle Products feels this is the best gift that we can give our kids. A cleaner, greener planet that they can treasure for generations to come.

My Green Planet is an initiative that takes definitive steps towards conserving our eco-system. Parle Products is contributing in its own way by taking up various initiatives like planting more trees around India, conserving water, power and recycling waste. My Green Planet works across levels – from school students to environmentalists to media professionals and through them educate and empower everyone about the cause of environment conservation.

We believe that we haven't inherited the earth, but merely borrowed it from our children.

The Distribution Channel Network: Parley

The Parley G Distribution Network Intensive Distribution Parley uses Intensive Distribution for Parley G. This is the ideal strategy for the market leader as intensive distribution has the following increases product. Increases coverage and sale.

Advantages: Encourages retailers to compete aggressive. Higher availability competition leads to narrower margins for the retails hence, increases the ultimate margin for the manufacturer. The Channel Members of the Distribution Network of Parley. The Parley distribution network for biscuits.

Parley Depots has essentially four levels as enlisted below:

Carry Forward Agents (if required), Wholesalers and Distributers Retailers

The Channel Members and Logistics Parley has nearly 1500 wholesalers, catering to 425000 retail outlets directly or in directly. A two hundred strong dedicated field force services these wholesalers and retailers. Additionally, there are 31 depots and Carry and Forward agents supplying goods to the wide distribution network.

Parley has level 1, level 2, level 3 distribution channels levels.

Level 1: Availability of Parley G biscuits at all departmental stores across the length and breadth of the country.

Level 2: Since it is an FMCG product this channel exists for customers scattered throughout the country.

Level 3: Mass consumption and suitable for National and International coverage. For e.g. Parley international operations consist of serving markets in the Middle East, Africa, South America, Sri Lanka, Australia and North America for which the3 level distribution channel exists.

Parley is able to provide products at the Distribution Channel and Parley the least price in the industry, and is able to give least channel margins as the channel members earn through volumes and not through. The company has been able to push its new products into high margins. The market by hooking them onto the fast moving products like Parley, because of the strong relationship that Parley shares with butter bite. The constituent channel members, it forces the channel members to carry all its new products.

Quality

Hygiene is the precursor to every process at Parle. From husking the wheat and melting the sugar to delivering the final products to supermarkets and store shelves nationwide, care is taken at every step to ensure the best product of long-lasting freshness. Every batch of biscuits, confectioneries & snacks are thoroughly checked by expert staff, using the most modern equipment. This ensures consistent and perfect quality across the nation and abroad.

Concentrating on consumer tastes and preferences, the Parle brand has grown from strength to strength ever since its inception. The factories at Bahadurgarh, Haryana and Neemrana, Rajasthan are the largest biscuit and confectionery plants in the country. The factory in Mumbai was the first to be set up, followed soon by the one in Bangalore, Karnataka. Parley also has 10 manufacturing units for biscuits and 75 manufacturing units for confectioneries on contract.

Core values

An in-depth understanding of the Indian consumer psyche has helped Parley develop a marketing philosophy that reflects the needs of the Indian masses. With products created bearing in mind both health and taste, Parle products equally appeal to fun loving kids & youth. Even today, the great tradition of taste and nutrition is consistent in every pack on the store

shelves. The value-for-money positioning allows people from all classes and age groups to enjoy Parle products to the fullest.

BRANDS

Palettes, there' something for everyone. And the tantalizing array of sweetmeats is just the cherry on top. Know a little more about all the delicious Parley products. From yummy biscuits to lip-smacking sweetmeats, the Parley product range is a genuine treat for every snack lover. The biscuits alone have such variety, catering to diverse

parley G Monaco 20_20 cookies Hide and seek Nimkin Happy happy Gold star Milano Cream biscuits Krack jack Parley g gold

Snacks

Parley’s wafers Full toss Nankeen

SOCIAL RESPONSIBILITY

Parley Products with its wide platter of offering of biscuits and sweets like Parley-G, Krackjack, Monaco, Melody, Mango bite and many others since 1929 is also actively engaged to change & uplift the social face of India. As a part of Corporate Social Responsibility Policy Parley is keenly involved in the overall development of younger generation with focused endeavour to built New Face of India and spread happiness & joy all over.

PRICING STRATEGY

• Market Penetration strategy with low price.

• Value for money positioning • Appeals to all income groups • Profit margin for distributors is 4% and for retailers is 10-12%

STRENGHTS

• Low Price

• Sizable market share

• Variety of products

• Deep & Effective Coverage

• Largest distribution system

• Better Understanding of consumer psyche

WEAKNESS

• Depends on Parley G

• Lacking schemes

• Replacement of Damaged stock

• Improper & irregular supply

• Packing of Biscuits

THREATS

• Hike in cost of production

• Competition from MNC’s

• Emerging substitutes like toast, wafers.

• Entry of various new entrant, ITC etc

OPPORTUNITIES

• Demand for innovative packing

• Improving supply for brands

• Information through television

• Retaining loyal retailers

VISION

The main vision of Parley-G to concentrate on consumer tastes and preferences, the Parle brand has grown from strength to strength ever since its inception. For fulfilling its vision they do every batch of biscuits and confectioneries are thoroughly checked by expert staff, using the most modern equipment hence ensuring the same perfect quality across the nation and abroad.

Mission

For over 65 years, Parle G has been a part of the lives of every Indian. From the snow capped mountains in the north to the sultry towns in the south, from frenetic cities to laid back villages, Parley G has nourished strengthened and delighted millions. Various people have various reasons to consume it, some consume it for the value it offers while others consume it for sheer taste, for some it is a meal substitute for others it is a tasty healthy nourishing snack. Patronised by millions for all this qualities, it is much more than just a biscuit brand. Little wonder than why is it the Largest selling Biscuit brand in the World.

It is to produce and provide quality & innovative healthcare relief for people, maintain stringently ethical standard in business operation also ensuring benefit to the shareholders, stakeholders and the society

BUSINESS STRATEGIES

An in-depth understanding of the in mind, Parley appeals to both health conscious mothers and fun loving kids. The great tradition of taste and nutrition is consistent in every pack on the store shelves, even today. The value-for-money positioning allows people from all classes and age groups to enjoy Parley products to the fullest. Indian consumer psyche has helped Parley evolve a marketing philosophy that reflects the needs of the Indian masses. With products designed keeping both health and taste.

Milestones - The Decades of Progress

1929:

The first year of operation. Our only assets were hard work and hope.

1939:

Ten years of determined effort brought results. Things began to take shape. And we tried even harder.

1949:

The formative years were over. We had come of age.

1974:

Here was the first evidence of Parley as it is today.

Awards

It has been extremely delighted that we have been Ranked 7th in the Brand Equity's Most Trusted Brand 2012.

Being ranked 7th amongst the top ten most trusted brands by Economic Times is definitely an honor.

And we are grateful to consumers for trusting us with our products and quality and we shall continue to deliver best value to our consumers.

Parle products have been shining with the golds and silvers consistently at the Monde Selection ever since they were first entered in 1971.

Mondi Selection is an international institute for assessing the quality of foods and is currently the oldest and most representative organization in the field of selecting quality foods worldwide.

ACHIEVEMENTS

• Amongst the top best brands

• Winning awards at Mondi selection. Since 1971

• 111 gold, 26 silver and 4 bronze

• Parley G as the proudest product

• Gaining popularity in international market

• World’s largest selling biscuit.

RATIO ANALYSIS OF PARLE COMPANY

Liquidity ratios

Current ratio

Current ratio means it measures the ability of a firm to meet its short term obligations. The current ratio is calculated by dividing current assets by current liabilities. A relatively high current ratio compared with those of other firms in the same business and although it may tend to result in reduced profitability.

Formula:

Current ratio = current assets/current liabilities

YEARS CURRENT ASSETS CURRENT LIABILITIES

CURRENT RATIO

2014 12814.27 6921.52 1.85

2013 11378.54 6404.43 1.77

2012 9442.78 5684.35 1.66

2011 8397.51 5285.75 1.58

2010 5528.03 4619.54 1.19

INTERPRETATION:

In these company ratios, the liquidity position of the company is not good in all the years. According to this ratio standard is 2:1. So, the company position is not good.

QUICK RATIO

Quick ratio is also known as Acid Test Ratio. It shows the ratio of cash and other liquid resources of an organisation in comparison of its current liabilities.

Quick ratio shows the extent of cash and other current assets that are readily convertible into cash in comparison to short term obligations.

Formula:

Quick ratio = Quick assets / current liabilities

Years Quick assets Current liabilities Quick ratio

2014 5454.73 6921.52 0.78

2013 4019.00 6404.43 0.62

2012 2083.24 5684.35 0.36

2011 1037.97 5285.75 0.19

2010 ---------- ------------ ------------

INTERPRETATION:

In these company ratios, the liquidity position of the company is not good in all the years. According to this ratio standard is 1:1.

DEBT EQUITY RATIO:

Debt equity ratio is equal to long –term debt divided by common share holders’ equity. It is a measure of the relative contribution of the creditors and shareholders’ or owners in the capital employed in business. It indicates what proportion of equity and debt the company is using to finance its assets.

Formula:

Debt equity ratio = debt/equity

Years debt equity Debt equity ratio

2014 51.14 26209.61 0.00

2013 66.40 22235.10 0.00

2012 79.09 18738.84 0.00

2011 88.52 15899.93 0.01

2010 107.71 14009.99 0.01

INTERPRETATION:

In these company ratios, the liquidity position of the company is not good in all the years. According to this ratio standard is 2:1.

PROPRIETORY RATIO:

DEFINITION:

Proprietary ratio is also known also Equity ratio or net worth to total assets or shareholder equity to total equity. It establishes the relationship between proprietor’s funds to total resources of the unit. Where proprietor’s fund refers to equity share capital and reserves, surplus and total resources refers to total assets.

Formula:

Proprietary ratio = Net worth / total assets

Years Net worth Total assets Proprietary ratio

2014 26209.61 26260.75 1.00

2013 22235.10 22301.50 1.00

2012 18738.84 18817.93 1.00

2011 15899.93 15988.45 1.00

2010 14009.99 14117.70 1.00

INTERPRETATION:

In these company ratios, the liquidity position of the company is not good in all the years. Among all the years the company is having the same ratios.

RETURN ON CAPITAL EMPLOYED:

Def:

The ratio of EBIT to shareholder’s equity plus long term liabilities, expressed as a percentage. A measure of how well a company uses all its sources of long term financing to generate a profit (before tax and interest). And also called as return on investment

Formula:

Return on capital employed = net operating profit/capital employed * 100

Years Net operating profit Capital employed Return on capital employed

2014 12662.06 26209.61 48.310

2013 10830.65 22235.10 48.709

2012 8975.45 18738.84 47.8975

2011 7336.54 15899.93 46.1419

2010 6068.66 14009.99 43.3166

INTERPRETATION:

In this company the profitability ratio is very good in the year of 2014 compare to the remaining 4 years. And it is go on increasing, so the position of the company is very good.

TOTAL ASSETS TURNOVER RATIO:

Def:

Assets turnover ratio is a financial ratio that measures the efficiency of a company’s use of its assets in generating sales revenue or sales income to the company.

Companies with low profit margins tend to have high asset turnover, while those with high profit margins have low asset turnover. Companies in the retail industry tend to have a very high turnover ratio due mainly to cutthroat and competitive pricing.

Formula:

Asset turnover ratio= Net sales revenue / Average total assets

Years Net sales revenue Average total assets

Asset turnover ratio

2014 332378.60 26260.75 1.26

2013 29901.27 22301.50 1.34

2012 25173.82 18817.93 1.33

2011 21458.98 15988.45 1.34

2010 18567.45 14117.70 1.35

INTERPRETATION:

In this company, the ratios of all the years are being same. So, the position of the company is not good.

COMPARISION OF BRITANNIA AND PARLE COMPANIES

1. CR = CA / CL

YEARS BRITANNIA PARLE

2010 0.94 1.19

2011 0.97 1.58

2012 0.52 1.66

2013 0.82 1.77

2014 0.87 1.85

2010 2011 2012 2013 20140

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

britanniaparleColumn1

INTERPRETATION:

By comparing two ratio, company 2 is increasing every year. Therefore we can

prefer parle company.

2. QR= QA / CL

YEARS BRITANNIA PARLE

2010 0.16 0

2011 0.20 0.19

2012 0.09 0.36

2013 0.24 0.62

2014 0.18 0.78

2010 2011 2012 2013 20140

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

britanniaparleColumn1

INTERPRETATION:

By comparing two ratio, company 2 is increasing every year. Therefore we can prefer parle company.

3. DEBT EQUITY RATIO= DEBT / EQUITY

YEARS BRITANNIA PARLE

2010 1.08 0.01

2011 0.95 0.01

2012 0.05 0.00

2013 0.30 0.00

2014 0.54 0.00

2010 2011 2012 2013 20140

0.2

0.4

0.6

0.8

1

1.2

britanniaparleColumn1

INTERPRETATION:

By comparing two ratio, company 1 is increasing every year. Therefore we can prefer Britannia company.

4. PR= Net worth/total assets

YEARS BRITANNIA PARLE

2010 0.47 1.00

2011 0.51 1.00

2012 0.61 1.00

2013 0.74 1.00

2014 1.00 1.00

2010 2011 2012 2013 20140

0.2

0.4

0.6

0.8

1

1.2

britanniaparleColumn1

INTERPRETATION:

By comparing the two companies ratio, the company 1 is increasing every year and company 2 is having the same ratio.so, both the companies are in a good position.

5.Return on capital employed = net operating profit/capital employed*100

YEARS BRITANNIA PARLE

2010 30.80 43.31

2011 51.70 46.14

2012 50.00 47.89

2013 50.00 48.70

2014 64.20 48.31

2010 2011 2012 2013 20140

10

20

30

40

50

60

70

britanniaparleColumn1

INTERPRETATION:

By comparing two ratio, company 1 is increasing every year. Therefore we can prefer Britannia company.

6. Asset turnover ratio= Net sales revenue / Average total assets

YEARS BRITANNIA PARLE

2010 4.12 1.35

2011 4.77 1.34

2012 5.86 1.33

2013 6.58 1.34

2014 7.35 1.26

2010 2011 2012 2013 20140

1

2

3

4

5

6

7

8

britanniaparleColumn1

INTERPRETATION:

By comparing two ratio, company 1 is increasing every year. Therefore we can prefer Britannia company.