DECLARATION It is here by declare that the summer training project report entitled “Working Capital Management” has been prepared as the part of the completion of the degree of Bachelor of Business Administration from B.V.M college of management & education and it is based on original work and will be used only for academic purpose.
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DECLARATION
It is here by declare that the summer training project report entitled “Working
Capital Management” has been prepared as the part of the completion of the degree
of Bachelor of Business Administration from B.V.M college of management &
education and it is based on original work and will be used only for academic
purpose.
Date: - VIKAS SHARMA
Place:- B.B.A V Sem
CERTIFICATE
This is to certify that Vikas Sharma student of B.B.A VSem programmed has completed his/her
summer training project report entitled topic under my guidance
Date :-
Place:- Ms. Huma khan
ACKNOWLEDGEMENT
I undertook this training in partial fulfillment of my BBA Curriculum. I am glad that I got
wonderful opportunity do my Research Report at CADBURY INDIA LTD. in MALANPUR,
Dist. BHIND
To express my deep appreciation to Mrs. SAVITA SINGH (Chairperson) Mr.MANOJ SINGH
KUSHWAH (Director Administration) PROF. A K SAXENA (Director Academic) PROF. R.K
GUPTA (principal) Mr. VIKAS GUPTA (HOD Management Department) and Ms.HUMA
KHAN (Faculty guide) and all faculty members of management department of B.V.M college of
management for there guidance
I am very grateful to Mr. SAIBAL GANGULY. My project guide who was not only supportive
and co-operative but also managed to keep my work focused and on schedule in spite of their
busy schedule was ready to help me with their valuable guidance and support which made this of
high worth.
Last but not least, I am also thankful to all those who have directly or indirectly help me during
this project.
VIKAS SHARMA PREFACE
It is said that without theory, practice is blind and without practice theory is meaningless. Hence
practical training has been made integral part of the management education in India.
Training is useful and important device of solving the problem. Training is the corner stone of
sound education program, it make trainees (future employees) more effective and product-vice.
The training gives, as excellent opportunity to a student to apply and prove his ability, intellect,
knowledge, reasoning by giving a solution to the assigned problem that reflect caliber. Apart
from theoretical knowledge, training provides students an expose to market. It provides an all-
round knowledge about the organization, the problem it faces, the decision making, risks and
uncertainties etc.
On the other hand it gives an opportunity to work with highly experienced people of their field.
Training changes the behavior of trainee. I got the privilege to serve such training in CADBURY
INDIA LTD. (MALANPUR).
This project report in a sense is an outgrowth of my study and research at CADBURY INDIA
LTD. (MALANPUR). This project report in away represent an “Working Capital Management”
in CADBURY INDIA LTD. (MALANPUR).
CONTENTS
CHAPTER –1
1.1 Introduction of Cadbury 1.2 Overview of company 1.3 History of organization 1.4 Core purpose & vision of Company 1.5 Financial performance 1.6 Personnel policies 1.7 Production and operation 1.8 Strength and weakness
The Cadbury India Brand Strategy has received consistent support through simple but
imaginative extensions to product categories and distribution. A good example of this is the
development of Bytes. Crispy wafers filled with coca cream in the form of a bagged snack, Bytes
is positioned as "The new concept of sweet snacking". It delivers the taste of chocolate in the
form of a light snack, and thus heralds the entry of Cadbury India into the growing bagged Snack
Market, which has been dominated until now by Salted Bagged Snack Brands. Bytes was first
launched in South India in 2003.
Since 1965 Cadbury has also pioneered the development of cocoa cultivation in India. For over
two decades, we have worked with the Kerala Agriculture University to undertake cocoa
research and released clones, hybrids that improve the cocoa yield. Our Cocoa team visits
farmers and advises them on the cultivation aspects from planting to harvesting. We also conduct
farmers meetings & seminars to educate them on Cocoa cultivation aspects. Our efforts have
increased cocoa productivity and touched the lives of thousands of farmers. Hardly surprising
then that the Cocoa tree is called the Cadbury tree!
Today, we are poised in our leap towards quantum growth and new categories of business, namely gums, mints, snacking and gifting. We are we are a part of the Cadbury Schweppes Group, world's No.1 Confectionery Company. Yes, like we said we will continue to spread happiness!
HISTORY OF ORGANIZATION
1993 - During January-February, the Company issued 16, 80,000 equity shares of Rs 10 each for
cash at a premium of Rs 90 per share on Rights basis in the proportion 1:5 (all were taken up).
Allotment of 105 shares of these was kept in abeyance based on Court orders.
- 16, 80,000 rights shares allotted (prem. Rs 90 per share prop. 1:5). Another 28,000 shares
allotted to employees, etc. (prem. Rs 90 per share) in 1992-93. 22, 92,000 shares allotted to
CSOL (prem. Rs 90 per share). 105 shares kept in abeyance were allotted.
1994 - The Company undertook a modernization and rationalization programmed at its Malanpur
factory at a cost of Rs 40 corers.
1995 - `Perk' was launched from its Malanpur plant. Towards the end of 1996, the Company has
launched a new range of sugar confectionery, `Googly', a trangy, fizzy fruit flavored candy in
Chennai under the brand name `Trebor'.
1997 - Cadbury India Ltd has announced rights issue of equity shares at a price of Rs.150 each in
the ratio of one equity share for every five shares held. The company has fixed book closure for
the purpose of determining rights entitlement between May 6 and June 2.
- Cadbury India is launching its well-known beverage Bourn vita in sachets.
1999 - During 1994-95, Cadbury's entire range of products was introduced in Bangladesh. Its
new wafer product, Perk, was launched in Sep.'95, in Mumbai, Delhi, Calcutta, Pune and Goa.
The company launched a new range of sugar confectionery, Googly a tangy, fizzy, fruit flavored
candy in Tamil Nadu under the "Trebor"umbrella brand name.
2001 - Mathew Cadbury will take over as the new managing Director of the Rs 511-crore
Chocolate confectionery major, Cadbury India Ltd. with effect from February 5.
- The Company has launched Sweet Nothings range of gift packs for Valentine Day.
2002 -Cadbury Schweppes Plc acquires 39.34% stake in its Indian subsidiary Cadbury India Ltd.
2003 --Adams will now be a part of the mass markets division of Cadbury India.
-Cadbury has roped in advertising firm called Lemon to handle creative for its products
temptation and milt treat.
-Cadbury India relaunched its flagship brand 'Cadbury Dairy Milk'.
2004 -Amitabh Bachchan new brand ambassador for Cadbury Dairy Milk
2005 -Cadbury Schweppes Asia-Pacific has announced that Mr Bharat Puri, Managing Director
of the Indian sub-continent, has been appointed Commercial Strategy Director for Asia-Pacific
and will be based in Singapore
CORE PURPOSE
At Cadbury Schweppes, our core purpose is "Working together to create brands people love". The core purpose captures the spirit of what we are trying to achieve as a business.We collaborate and work as teams to convert products into brands.
VISION
To align with our core purpose, Cadbury India has defined its Vision as "Life Full Of Cadbury and Cadbury Full of Life". Cadbury India will participate in many spaces of consumer life through a cache of product offerings - be it chocolates or snacks or gum.We believe that work and fun can co-exist beautifully. Therefore at Cadbury India, it's all about work hard, play harder!. We bring moments of delight to our consumers everyday and every time.
Therefore, we strongly believe that the people who create these products should also have fun while doing so.
The cocoa-bean -- the heart of the sweetest delicacy in the world -- is bitter! This is why, up to the 18th century some native tribes ate only the sweetish flesh of the cocoa fruit. They regarded the precious bean as waste or used it, as was the case among the Aztecs, as a form of currency.
The VarietiesThere are two quite different basic classifications of cocoa, under which practically all varieties can be categorized: Carrillo and Forastero cocoas. The pure variety of the Carrillo tree is found mainly in its native Equador and Venezuela. The seeds are of finer quality than those of the Forastero variety.
They have a particularly fine, mild aroma and are, therefore, used only in the production of high-quality chocolate and for blending. However, Carrillo cocoa accounts for only 10% of the world crop. The remaining 90% is harvested from trees of the Forastero family, with its many hybrids and varieties. The main growing area is West Africa. The cocoa tree can flourish only in the hottest regions of the world.
The HarvestImmediately after harvesting, the fruit is treated to prevent it from rotting. At fermentation sites either in the plantation or at, collecting points, the fruit is opened.
FermentationThe fermentation process is decisive in the production of high quality raw cocoa. The technique varies depending on the growing region.
DryingAfter fermentation, the raw cocoa still contains far too much water; in fact about 60%. Most of this has to be removed.
What could be more natural than to spread the beans out to dry on the sun-soaked ground or on mats? After a week or so, all but a small percentage of the water has evaporated.
CleaningBefore the real processing begins, the raw cocoa is thoroughly cleaned by passing through sieves, and by brushing. Finally, the last vestiges of wood, jute fibres, sand and even the finest dust are extracted by powerful vacuum equipment.
RoastingThe subsequent roasting process is primarily designed to develop the aroma. The entire roasting process, during which the air in the nearly 10 feet high furnaces reaches a temperature of 130 °C, is carried out automatically.
Crushing and shellingThe roasted beans are now broken into medium sized pieces in the crushing machine.
BlendingBefore grinding, the crushed beans are weighed and blended according to special recipes. The secret of every chocolate factory lies in the special mixing ratios which it has developed for different types of cocoa.
GrindingThe crushed cocoa beans, which are still fairly coarse are now pre-ground by special milling equipment and then fed on to rollers where they are ground into a fine paste. The heat generated by the resulting pressure and friction causes the cocoa butter (approximately 50% of the bean) contained in the beans to melt, producing a thick, liquid mixture.
This is dark brown in colour with a characteristic, strong odour. During cooling it gradually sets: this is the cocoa paste.
At this point the production process divides into two paths, but which soon join again. A part of the cocoa paste is taken to large presses, which extract the cocoa butter. The other part passes through various blending and refining processes, during which some of the cocoa butter is added to it. The two paths have rejoined.
Cocoa ButterThe cocoa butter has important functions. It not only forms part of every recipe, but it also later gives the chocolate its fine structure, beautiful lustre and delicate, attractive glaze.
Cocoa PowderAfter the cocoa butter has left the press, cocoa cakes are left which still contain a 10 to 20% proportion of fat depending on the intensity of compression.
These cakes are crushed again, ground to powder and finely sifted in several stages and we obtain a dark, strongly aromatic powder which is excellent for the preparation of delicious drinks - cocoa. Cocoa paste, cocoa butter, sugar and milk are the four basic ingredients for making chocolate. By blending them in accordance with specific recipes the three types of chocolate are obtained which form the basis of ever product assortment, namely:
KneadingIn the case of milk chocolate for example, the cocoa paste, cocoa butter, powdered or condensed milk, sugar and flavoring - maybe vanilla - go into the mixer, where they are pulverized and kneaded.
RollingDepending on the design of the rolling mills, three or five vertically mounted steel rollers rotate in opposite directions. Under heavy pressure they pulverise the
tiny particles of cocoa and sugar down to a size of approx. 30 microns. (One micron is a thousandth part of a millimeter.)
ConchingBut still the chocolate paste is not smooth enough to satisfy our palates. But within two or three days all that will have been put right. For during this period the chocolate paste will be refined to such an extent in the conches that it will flatter even the most discriminating palate.
Conches (from the Spanish word "concha", meaning a shell) is the name given to the troughs in which 100 to 1000 kilograms of chocolate paste at a time can be heated up to 80 °C and, while being constantly stirred, is given a velvet smoothness by the addition of certain amounts of cocoa butter. A kind of aeration of the liquid chocolate paste then takes place in the conches: its bitter taste gradually disappears and the flavour is fully developed. The chocolate no longer seems sandy, but dissolves meltingly on the tongue. It has attained the outstanding purity which gives it its reputation.
STRENGTHS
Strong parentage
High brand awareness with key brands in portfolio
Strong marketing and distribution
Excellent technology giving consistent products
Strong and innovative human resource base backed by excellent information technology
Strong financial position
Major CAPEX in place.
Excise duty on chocolates, the main item has come down from 18% to 16%.
MODVAT credit has again been reinstated at 100%.
WEAKNESSES
While customs duty on cocoa beans has gone up, the same on cocoa butter has come down.
Also there is now corporate surcharge. Out of total saving of Rs. 8 crores arising due to duty changes, Rs. 3 crores
has already been passed on to the consumers. Royalty payment is reasonably low considering the kind of technical and
other support the co. gets from the parent. 1998 royalty payment looks higher in relation to 1997 as the same is provisional unlike in 1997 where it was on actual basis.
Land development agreement entered into in 1993 for surplus land at thane was intensively reviewed during the year.
Because the developer was unable to honor his commitment on account of fall in the property prices.
Pursuant to this, the effective area release has now been reduced with a proportionate reduction in sale value also. Hence an extraordinary adjustment has been made in 1998 results.
Nearly 50% of the cocoa requirements which is the key input is imported.
Despite growing competition, the co. has maintained its market share at about 70% for chocolates.
There has been sustainable good volume growth over the past few years and expected to still grow.
Brands’ value is better explained by the current market cap. Of Rs. 1500 crores.
CHAPTER-2
CASH MANAGEMENT
Cash has been described as the oil to lubricate the ever turning wheels of business without it the
process grinds to a stop. Cash is the important factor in financial management it is also the most
important current asset for the operation of the business. Every activity in an enterprise revolves
around the cash because cash is limited in an enterprise and it cannot be raised as and when one
likes it. It is therefore desirable that available cash must be managed properly Cash management
involves the management of the cash in such a way so that it is sufficient always to meet the
obligations of the company. It should neither be short nor would surplus otherwise company lose its
credit in the market or minimize its profit.
What is the goal of cash management ?
To meet above objectives, especially to have cash for transactions, yet not
have any excess cash.
To minimize transactions balances in particular and also need for cash to
meet other objectives.
HOW BAD DEBTS COULD BE WORKED INTO THE CASH BUDGET
Collection would be reduced by the amount of the bad debts losses.
For example, if the firm had 3%bad debts losses, collection would total only 97%of
sales.
Lower collection would lead to higher borrowing requirement.
WAY TO MINIMIZE CASH HOLDING
Use the lockbox
Insist on wire transfers from customers.
Synchronize inflows & outflows.
Increase forecast accuracy to reduce need for “safety stock” of cash.
Hold marketable securities (also reduces need for “safety stock”).
Negative a line of credit (also reduces need for “safety stock”).
Cash Conversion Cycle
The case conversion cycle is one of several measures of management effectiveness. It measures
how fast a company can convert cash on hand into even more cash on hand. The CCC does this
by following the cash as it is first converted into inventory and accounts payable (AP), through
sales and account receivable (AR), and then back into cash. Generally, the lower this number is,
the better for the company. Although it should be combined with other metrics (such as return on
equity and return on assets) it can be especially useful for comparing close competitors because
the company with the lowest cash conversion cycle is often the one with better management. In
this article, we’ll explain how case conversion cycle works and show you how to use it to
evaluate potential investments.
What is it?
The cash conversion cycle is a combination of several activity ratios involving accounts
receivable, accounts payable and inventory turnover. AR and inventory are short-term assets,
while AP is a liability; all of these ratios are found on the balance sheet. In essence, the ratios
indicate how efficiently management is using short-term assets and liabilities to generate cash.
This allows an investor to gauge the overall health of the company. (For further reading, see
Reading The Balance Sheet and Introduction To Fundamental Analysis: The Balance Sheet.)
How do these ratios relate to business? If the company sells what people want to buy, cash cycles
through the business quickly. If management cannot figure out what sells, the
cash conversion cycle slows down. For instance, if too much inventory builds up, cash is tied up
in goods that cannot be sold – this is not good news for company. In order to move out this
inventory quickly, management might have to slash prices, possibly selling its product at a loss.
If AR is handled poorly, it means that the company is having difficulty colleting payment from
customers. This is because AR is essentially a loan to the customer, so the company loses out
whenever customers delay payment. The longer a company has to wait to be paid, the longer that
money is unavailable for investment elsewhere. On the other hand the company benefits by
slowing down payment of AP to its suppliers, because that allows the company to make use of
the money for longer.
Cash conversion cycle
The cash conversion model focuses on the length of time between when a company
makes payments to its creditors and when a company receives payments from its