WORKING CAPITAL OF BISLERI PVT (Ltd).

WORKING CAPITAL OF BISLERI PVT (Ltd)

BY S.J.JAYA KUMAR (REGISTER NO: 310611631031) OF

EASWARI ENGINEERING COLLEGE

A PROJECT REPORT Submitted to: FACULTY OF MANAGEMENT STUDIES In partial fulfillment of the requirements For the award of the degree Of MASTER OF BUSINESS ADMINISTRATION

ANNA UNIVERSITY AUG 2012

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WORKING CAPITAL OF BISLERI PVT (Ltd).

EASWARI ENGINEERING COLLEGE DEPARTMENT OF MANAGEMENT STUDIES

BONAFIDE CERIFICATE
Certified that this project report titled (WORKING CAPITAL OF BISLERI PVT (Ltd)) is the bonafide work of Ms. S.J.JAYAKUMAR Registration number 310611631031.who carried out the research under my supervision. Certified further , that to the best of my knowledge the work reported herein does not form part of any other project report or dissertation on the basis of which a degree or award was conferred on an earlier occasion on this or any other candidate.

INTERNAL GUIDE

HEAD OF DEPARTMENT

INTERNAL EXAMINER

EXTERNAL EXAMINER

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DECLARATION

I hereby declare that this project entitled WORKING CAPITAL OF BISLERI PVT (Ltd) was sincerely done, during the period from June 2012. The study has been undertaken in partial fulfillment for the Degree of Master of Business Administration at Eawari Engineering College, Chennai affiliated to Anna University.

I also declare that this project has not been submitted to any other institutions or university, for the award of any Degree or Diploma.

Place: Chennai

S.J.JAYAKUMAR

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ACKNOWLEDGEMENT

In first instance, I oblige to the Honorable Chairman, Dr. Shivakumar, the principal Dr. Jothi Mohan Balasubramanian, for their support and encouragement for completion of the project.

I take this opportunity to convey my sincere thanks to the Head of the Department Dr.Mr.Subramaniyan, for the co-operation and support given during the course of the project.

I take the privilege to extend my hearty thanks to my Internal Project Guide Dr.S.Meenakumari for her valuable and invariable suggestion and encouragement in carrying out this project successfully.

I take this opportunity to express my deep sense of gratitude and sincere thanks to Mr._______________(Finance Manager ) and to the management of who spent their valuable time in helping me to finish the project.

Last but not the least; I would like to thank my parents and friends for providing all necessary support throughout the study without which this study would be an unaccomplished task.
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WORKING CAPITAL OF BISLERI PVT (Ltd).

CHAPTER-1 INTRODUCTION

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WORKING CAPITAL OF BISLERI PVT (Ltd). CHAPTER-I GENERAL INTRODUCTION

INTRODUCTION: In short, working capital is the money a business has available to sustain its operations. It's the capital available to purchase inventory, pay employees, keep the lights on, and finance other short term expenditures. This makes managing working capital a critical business skill. If there is no working capital, there is no business. Thousands of companies fail each year due to poor working capital management practices. Entrepreneurs often don't account for short term disruptions to cash flow and are forced to close their operations. Many of these companies have viable business models, and would have otherwise succeeded had they better managed their working capital. MEANING: It is part of the firms capital which is required for financing short term or current assets such as cash, marketable securities, debtors etc. Also called as Revolving or Circulating or Fluctuating Capital or Short-term Capital.

DEFINITION:
Circulating capital means current assets of a company that are changed in the ordinary course of business from one form to another, as for example, from case to inventories, inventories to receivables, receivable into cashGerestenberg

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CONCEPTS OF WORKING CAPITAL: There are two definitions of working capital Gross working capital Net working capital

GROSS WORKING CAPITAL: Gross working capital refers to working capital as the total of current assets, whereas the net working capital refers to working capital as excess of current assets over current liabilities. In other words net working capital refers to current assets financed by long term funds.

Accordingly, GROSS WORKING CAPITAL = TOTAL ASSETS

NET WORKING CAPITAL = CURRENT ASSET- CURRENT LIABILITES

NET WORKING CAPITAL: The net working capital position of the firm is an important consideration, as this will determine the firms profitability and risk. Here the profitability refers to profits after expenses and risk refers to the probability that a firm will become technically insolvent where it will be unable to meet obligations when they become due for payment.

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CURRENT ASSETS: IT INCLUDES: Cash and Bank balances, Bills receivables, Sundry Debtors (Less provision for bad debts) Short-term loans and advances Inventories: Raw materials Work-in-progress Finished goods Stores and spares Prepaid expenses Accrued Incomes Current Liabilities: The liabilities which are intended to be paid in the ordinary course of business within a short period of normally one accounting year.

CURRENT LIABILITIES: IT INCLUDES: Bills payables Sundry creditors (Accounts Payables) Short term loans. Advances and deposits. Dividend payables Bank overdrafts
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Provisions for taxation

CLASSIFICATION OF WORKING CAPITAL

WORKING CAPITAL

ON THE BASIS OF CONCEPT

ON THE BASIS OF TIME

NET WORKING CAPITAL

GROSS WORKING CAPITAL

PERMANENT WORKING CAPITAL

VARIABLE WORKING CAPITAL

SEASONAL WORKING CAPITAL

SPECIAL WORKING CAPITAL

INITAIL WORKING CAPITAL

REGULAR WORKING CAPITAL

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WORKING CAPITAL OF BISLERI PVT (Ltd). WORKING CAPITAL MANAGEMENT:

Working capital management refers to management of current assets and current liabilities. The major thrust of course is on the management of current assets. This is understandable because current liabilities arise in the context of current assets. Working Capital Management is a significant fact of financial management. Its importance stems from two reasons: Investment in current assets represents a substantial portion of total investment. Investment in current assets and the level of current liabilities have to be geared quickly to change in sales. To be sure, fixed asset investment and long term financing are responsive to variation in sales. However, this relationship is not as close and direct as it is in the case of working capital components.

I.

ON THE BASIS OF CONCEPT

A.NET WORKING CAPITAL: This is the difference between current assets and current liabilities. Current liabilities are those that are expected to mature within an accounting year and include creditor, bills payable and outstanding expenses.

Working capital management is no doubt significant for all firms, but its significance enhanced in cases of small firms. A small firm has more investment in current asset than fixed assets and therefore current assets should be efficiently managed.

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The working capital needs increase as the firm grows. As sales grow, the firm needs to invest more in debtors inventories. The finance manager should be aware of such needs and finance them quickly. B.GROSS WORKING CAPITAL: Gross working capital is the amount of funds invested in various components of current assets. Current assets are those assets which are easily/immediately converted into cash within short period of time say, an accounting year. A current asset includes cash in hand and cash at bank, Inventories, Bills receivables, Sundry debtors, Short term loans and Advance.

II.

ON THE BASIS OF TIME CONCEPT

A. Permanent / Fixed Working Capital Permanent or fixed working capital is minimum amount which

is required to ensure effective utilization of fixed facilities and for maintaining the circulation of current assets. Every firm has to maintain a minimum level of raw material, work- in-process, finished goods and cash balance. This minimum level of current assets is called permanent or fixed working capital as this part of working is permanently blocked in current assets. As the business grow the requirements of working capital also increases due to increase in current assets. a) Initial working capital At its inception and during the formative period of its operations a company must have enough cash fund to meet its obligations. The need for initial working capital is for every company to consolidate its position. b) Regular working capital

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Regular working capital refers to the minimum amount of liquid capital required to keep up the circulation of the capital from the cash inventories to accounts receivable and from account receivables to back again cash. It consists of adequate cash balance on hand and at bank, adequate stock of raw materials and finished goods and amount of receivables. B. Temporary / Fluctuating Working Capital Temporary / Fluctuating working capital is the working capital needed to meet seasonal as well as unforeseen requirements. It may be divided into two types. a) Seasonal Working Capital There are many lines of business where the volume of operations is different and hence the amounts of working capital vary with the seasons. The capital required to meet the seasonal needs of the enterprise is known as seasonal Working capital. b) Special Working Capital The Capital required meeting any special operations such as experiments with new products or new techniques of production and making interior advertising campaign etc, are also known as special Working Capital.

FACTORS DETERMINING THE WORKING CAPITAL REQUIREMENTS 1. NATURE OF BUSINESS: Public utility undertakings (Electricity, water supply, railways etc. need very limited working capital because they offer cash sales only and supply services, not products. Trading and financial firms require less investment in
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fixed assets and large amount in current assets. Manufacturing firms require sizable working capital along with fixed investments. 2. SIZE OF BUSINESS: Greater the size of a business unit, generally larger will be the requirements of working capital. 3. LENGTH OF PRODUCTION CYCLE: Longer the process period of manufacture, larger is the amount of working capital required. The longer the manufacturing time, the raw materials and other supplies have to be carried for a longer period in the process. 4. SEASONAL VARIATIONS: In some industries, raw materials are required to buy in bulk during the season to ensure an uninterrupted flow and process them during the entire year (more WC). In case of non-seasonal firms no need of stocking the materials (less WC). 5. BUSINESS CYCLE: During boom period: There is a need for larger amount of WC due to increase in sales, rise in prices etc. 6. EARNING CAPACITY: The firms with high earning capacity may generate cash profits and contribute to their working capital. 7. RATE OF STOCK TURNOVER: A firm having a high rate of stock turnover need lower amount of working capital as compared to a firm having a low rate of turnover.

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In case of precious stone dealer, the turnover is very slow. They have to maintain a large variety of stock. Earl credit policy to their customers requires large working capital. Credit terms 8. CREDIT POLICY: A firm following lib given by the supplier influences the working capital requirements (liberal and illiberal). 9. RULE OF GROWTH OF BUSINESS: The working capital requirements of a concern increase with the growth and expansion of its business activities. 10.DIVIDED POLICY: A firm that maintains a steady high rate of cash dividend irrespective of its generation of profits needs more working capital. 11.PRICE LEVEL CHANGES: Generally, the rising prices will require the firm to maintain larger amount of working capital as more funds will be required to maintain the same current assets. ADEQUACY OF WORKING CAPITAL: Working capital should be adequate so as to protect a business from the adverse effects of shrinkage in the values of current assets. It ensures to a greater extent the maintenance of a companys credit standing and provides for such emergencies as strikes, floods, fire etc. It permits the carrying of inventories at a level that would enable a business to serve satisfactorily the needs of its customers. It enables a company to operate its business more efficiently because there is no delay in obtaining materials etc; because of credit difficulties.
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INADEQUATE OF WORKING CAPITAL: When working capital is inadequate, a company faces many problems. It stagnates the growth and it becomes difficult for the firm to undertake profitable projects for non-availability of working capital funds. Difficulty in implementing operating plans and achieving the firms profit targets. Operating inefficiencies creep in when it becomes difficult even to meet day-to-day commitments. Fixed assets are not utilized efficiently thus the firms profitability would deteriorate. Paucity of working capital funds renders the firm unable to avail attractive credit opportunities. The firm loses its reputation when it is not in a position to honor it short-term obligations thereby leading to tight credit terms. SOURCES OF WORKING CAPITAL: Sources of working capital can be broadly divided into two types: 1. Internal sources 2. External sources INTERNAL SOURCES: a. Shares b. Debentures c. Retained earnings d. Long term loans e. Sales of fixed assets f. Depreciation fund g. Using the resource meant for taxation

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EXTERNAL SOURCES: a. Band credit b. Customer advances c. Short term public deposits

d. Installment credit e. factoring f. Commercial papers g. Indigenous, bankers h. Trade credit i. Outstanding expenses

WORKING CAPITAL FINANCING MIX:

i. Conservative Approach ii. Aggressive Approach iii. Matching Approach (Hedging Approach)

CONSERVATIVE APPROACH: Entire estimated investment in current assets should be financed from longterm sources and the short-term sources should be used only for emergency requirements.

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AGGRESSIVE APPROACH: Entire estimated requirements of current asset should be financed from short-term sources and even a part of fixed assets investments be financed from short-term sources. It makes finance-mix more risky, less costly and more profitable.

OPERATING CYCLE OF WORKING CAPITAL: The working capital cycle reserves to the length of time between the firm paying cash for materials etc., this working capital also known as operating cycle. Working capital cycle or operating cycle indicates the length of time between companies paying for materials entering into stock and receiving the cash from sales of finished goods. The operating cycle (Working Capital) consists of the following events. Which continues throughout the life of business? Conversion of cash into raw materials. Conversion of raw materials into work in progress. Conversion of work in progress into finished stock. Conversion of finished stock into accounts receivables(Debtors)through sale and Conversion of account receivables into cash.

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OPERATING CYCLE

CASH

DEBTORS

RAW MATERIALS

FINISHED STOCK

WORK IN PROGRESS

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FORMAT OF THE WOKING CAPITAL: S.NO A PARTICULAR
ESTIMATION OF CURRENT ASSETS 1. Minimum desired cash and
Bank balances xxxxx

AMOUNT

2. Inventories: Raw materials Work in progress Finished goods 3. Debtor xxxxx xxxxx xxxxx xxxxx

TOTAL CURRENT ASSET B

ESTIMATION OF CURRENT LIABILITIES 1. Creditor 2. Wages 3. Over heads xxxxx xxxxx xxxxx

XXXXX

TOTAL CURRENT LIABILITIES NET WORKING CAPITAL (Total current assets total current liabilities) (A-B) ADD: Margin for contingency net

XXXXX XXXXX

XXXX

WORKING CAPITAL REQUIREMENT

XXXXX

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BISLERI COMPANY PROFILE OF BISLERI:

In 1967, Bisleri an Italian company, started by Singer Felicebisleri, first brought the idea of selling bottled water in India. It started a company called Bisleri India. In 1969, Ramesh Chauhan, the Chairman of Parle Exports, bought over the brand. In those days, Bisleri packaged drinking water was available in glass bottles. Being a returnable package owing to various other problems such as breakage and weight, in 1972-73, Bisleri was made available in PVC (Poly Vinyl Chloride) bottles. After this plastic packaging was introduced, things started to change, and sales increased rapidly. The upsurge in the sales of Bisleri started in 1993 as Ramesh Chauhan sold off the Parle stable of brands, including Thums up, Limca and Gold Spot. Recognizing the potential of the drinking water market, he then went on to concern trade on marketing Bisleri a top selling brand in India.

THE PRESENT
It was around the year 1995, when Parle Export took charge of the brand operations and the business took off in the market. With factories across India and a strong distribution network, Bisleri established itself a force a reckon with in the domestic packaged drinking water. Earlier the packaged drinking water market consisted of five star hotels, tourists and foreigners. As a marketing strategy, a conscious decision was taken by the company that only 40% of the sales should come from these outlets and 60% from general market, i.e. pannwalla, street shop, general stores and even non-tourists.
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This brought about a sea change n the perception in the customers mind about consumption of Bisleri. Earlier, drinking bottled water was considered to be of a status symbol. That thinking has slowly changed to the point where today, not drinking Bisleri is considered as being behind in the bottled water very economical for the customer. FUTURE PLANS Bisleri was the first to market bottled water in a totally virgin market and naturally people associate the brand with bottled water. Now Bisleri is perhaps already ten steps ahead of its competitors and will endeavor to widen its gap in the times to come. Bisleris brand positioning stresses on pure, clean and safe drinking water. Some of the future plans to maintain the top spot that Bisleri commands in the Indian market are: New pack sizes in bottles and cups Increase the distribution network with an investment of over 200 cr. Strengthen presence in traditionally weak areas by setting up 12 new bottling facilities at a cost of rs.150 cr. TECHNOLOGY DEVELOPMENTS To make sure that the product that reaches the customers is always of highest standard and also meets international standards, Bisleri has always been involved in improving its product packaging. One such recent development is the tamper proof break away seal. Bisleri also recognizes the need to produce environment friendly products and is working on the PET project.
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The breakaway seal

Keeping in mind customers need to recognize a genuine product that cannot be tampered with, Bisleri developed the breakaway seal. The unique cap has been patented and cannot be duplicated or tampered with. This technology development in the product ensures that the customer will only get a highly safe product when they consume Bisleri packaged drinking water.

Product packaging
To ensure purity of the bottle water, the bottles that are used are blown and filled at the factory itself, to avoid contamination.

Purification process
At BISLERI plants, water undergoes multi-stage purification process to ensure proper blend of minerals and complete of microorganisms and toxic substance. So a habit of drinking PURE and SAFE BISLERI will ensure a healthy life. What advantage Bisleri purification process has over purification done by other methods? Traditional process of boiling water for purification has its limitations. It is time consuming. For boiling, water has to be heated to 100 deg. Celsius. Also, to kill microbes water should be boiled continuously for a minimum of 20 minutes. Boiling may kill the microbes but cannot remove other physical impurities and toxic substances.

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Many home appliances are available in market for water purification. These gadgets use either filtration technique or Ultra Violet rays or a combination of the two techniques. These techniques do not guarantee 100% purity of water. Filtration removes only the visible suspended particles and not the minute, invisible particles, toxic substances or microorganisms. The filters are cleaned rarely and all the muck accumulates inside leading to more contamination. Ideally such filters need to be cleaned every day which is cumbersome. Ultra violate rays kill the microbes but cannot ensure removal of toxics substances and physical impurities. This purification equipment is incomplete and need continuous monitoring and maintenance. At BISLERI, through our multi-stage purification process we ensure removal of toxic substance as well as physical and microbiological impurities. In our stage-ofthe-art processing plants we follow rigorous Good Manufacturing Practices and strict Quality Assurance norms so each and every bottle of BISLERI is made tasty, pure and safe for the customer.

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WORKING CAPITAL OF BISLERI PVT (Ltd). PROTECT YOUR HEALTH WITH BISLERI WHICH USES 6 STAGES OF PURIFICATION
CHLORINATION: Kills micro organisms. Remove organic matter. ARKAL FILTER: Removes suspended matter and turbidity. CARBON FILTER: Remove residual chlorine & odors. REVERSE OSMOSIS: Remove organic material. Control total dissolved solids in the water. MICRON FILTRATION: Additional safety measures of filtration. OZONATION: Ensure water remains bacteria free for longer shelf life. Product & Packaging Bisleri is available in a range of sizes. The Bisleri bottled water range comprises the conventional 500ml, one liter, 1.2 liter and 2 liter bottles; 5 liter and 20 liter jars for the home segment, and smaller packs sizes of 250ml and 330ml bottles, though in very limited numbers for now.

VISION: A major, diversified, transitional, integrated consumer product manufacturing company, with National Leadership and a strong environment conscience, playing a national role in safe water and Agro based drinks.

MISSION: To provide the highest quality product, keeping in mind all aspects including freshness, purity and safety, and making it easily available to the consumer at a very affordable price. To achieve international standard of excellence in all aspects of energy and diversified business with focus on consumer delight through value and service of product and cost reduction.
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To enhance capital and fixed assets of the group to withstand challenges and tough market trends. To attain leadership in developing, adopting and assimilating state or art technology for competitive advantage. To provide better quality of product and services through sustained market research and product and development. To foster a culture of participation and innovation for employee growth and contribution. To cultivate high standard of business ethics, and total quality management for a strong corporate identity and brand equity with continuous and positive growth. To help enrich the quality of life of all the communities specially the neglected ones and preserve ecological balance and heritage through a strong environment conscience. WHY BISLERI? Bisleri is totally safe and protects you from all water home disease. Bisleri is trusted by 50Lac household across the country. Bisleri is the brand leader in bottled water category. The water is purified through six stages of purification process that includes reverse osmosis and Ozona ion.

WHERE CAN WE USE BISLERI? Drinking Making tea, coffee, lassie, cold drinks, mixing with drinks Kneading the dough Cooking Mixing with baby foods Mixing with medicines

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THE JOURNEY TILL NOW: 1969: Buys Bisleris bottled water from Italian company, Felice Bisleri. It was bottled in glass bottles then. Early-1980s: Shifts to PVC bottles sale surge. Mid-1980s: Switches to PET bottles, which meant more transparency and life for water. 1993: Sells carbonated drink brand like Thums up, Gold Spot and Limca to CocaCola for Rs.400 cr. 1995: Bisleri launches a 500ml bottle and sales shoot up by 400 per cent. 1998: Introduces a tamper-proof and tamper-evident seal. 2000: Introduces the 20 liter containers to bring prices down from Rs.10 a liter to Rs.2 a liter. 2002: Kinley overtakes Bisleri. The national retail stores audit by ORG-MARG show Kinleys market share at 35.1% compared to Bisleri 34.4%. 2003: Bisleri says it plan to venture out into Europe and America to sell bottled water. 2004: Water king Mr.Ramesh set to take brand Bisleri across the globe. 2005: Bisleri has announced its plan to foray into the domestic fruit juice market and earmarked an investment of Rs.100cr for up gradation of its Chittor plant and setting up of a new facility. 2006: Bisleri Natural mountain water will be available in aqua green packaging against the blue packaging of old and will be available in six sizes. 2007: Parle Bisleri changed the look introduced a new variant (natural mountain water) and announced its plan to launch the brand in US- a huge market for designer waters. 2008: Bisleri International has decided to register the mango drink brand Mazza-in eastern European countries, and launch the brand through a franchisee operation.

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2009: Company plans to concentrate on markets such a Jammu and Kashmir, Kerala, Southern part of Tamil Nadu and Punjab, which are its weaker links to steer a 40% annual growth in sales. 2010: Launch a limited edition and celebrate cricket labels in 250ml and 500ml packs. Also launched Vedic a-Natural mountain water from Himalayas. 2011: Bisleri launches stay protected campaign with Bissi spreading the message of protects the ones you love. Introducing Home pack (15 liter) - An ideal pack size for home use.

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