DECLARATION

I hereby declare that summer training report on FINANCIAL ANALYSIS OF RAMPUR DISTILLIARY, (A UNIT OF RADICO KHAITAN Ltd) is factual report to my own research work undertaken towards practical fulfillment of the degree of management. The fact and figures presented here is correct and true to best of my knowledge and belief.

PRITI AGARWAL

ACKNOWLEDGEMENT

I take this opportunity to express my sincere gratitude to Radico Khaitan Ltd., Rampur. For offering me a valuable chance to undergo summer training in their prestigious organization.

I would like to express my sincere and deep sense of gratitude to Mr.AJAY KUMAR AGARWAL, Executive Vice President (Finance & Accounts) Rampur Distillery (a unit of Radico Khaitan Ltd.), Rampur. For his innovative approach of looking at things as they come, his inspiring guidance, untiring supervision and providing me with a helpful hand in a best possible manner as he can throughout my project.

I wish to my heartily thanks to MR. ANURAG AGRAWAL, MANAGER (ACCOUNTS) who help me in every best possible manner and constantly encouraged through out my project. In last I would pay to thanks to my friends and to other who are directly and indirectly helpful me in providing information and sharing with me their precious time to complete the project report.

Ankush Agarwal

PEREFACE
Present business environment is very complex & dynamic. Business conditions are changing at a very fast speed. Company should be more alert &informed now days. They should continuously check their financial details to remain in competition. The summer training report is the FINANCIAL ANALYSIS of RAMPUR DISTILLERY,

(A UNIT OF RADICO KHAITAN Ltd). The merit of this report is that readers a fairly complete idea about the corporation.

Technology developments & constant change for changes give birth to new Production Techniques. A new techniques and a proper production process should be manage. So that it penetrates deeply its target market. By this a product will be more efficient Reasonable to the customers and will contain more quality. That is why a good company should check the production process & its financial Statement so that it can improve its capacity utilization& its product in the Market.

Because so many products fail in markets, companies are anxious to learn how to improve their production process for a new efficient product .A company has to know exact profitability and financial situation of the concern and accordingly develop its marketing strategy. The product of Radico khaitan, like Magic moments, 8pm whiskies are popular in many parts of India.

CONTENTS
1. Introduction : Rampur Distillery : Liquor Industry 2. Financial Statement of distillery 3. Objective of Research 4. Importance of Study 5. Research Methodology 6. Ratio Analysis And Interpretation 7. Findings 8. Limitations 9. Conclusion 10. Recommendation 11. Bibliography 12. Appendix 7 25 46 62 64 66 70 84 86 88 90 92 94

KHAITAN LTD.

INTRODUCTION TO RAMPUR DISTILLERY

Rampur distillery owned by Sri L.K. Khaitan who is the Chairman of the company & it was established in 1943. It was only in 1999, that Radico decided to launch and market its own brands, thereby embarking on a period of phenomenal growth. To further boost its production capacity of bottled and branded products, the company has tied up with bottling units in various parts of the country. Rampur distillery is a molasses based distillery & producer of rectified spirit (RS), extra neutral alcohol (ENA), country liquor & high quality liquor. It is also one of the largest distilleries in INDIA with production close to 75 million liters spirit per annum. In 1992, Rampur distillery was selected for Distillery of the year award on the basis of overall performance. Rampur distillery also holds the Limca book of records for selling one million cases of 8 PM in the very first year of its launching. Rampur distillery also holding A1+ rating from ICRA for best safety of funds & prospects of timely payment of debt/ obligation being the best.

DISTILLATION PLANT

KHAITAN LTD. CAPACITY Molasses Distillery 60 million liters per annum. Grain Distillery 30 million liters per annum. Malt Distillery 720 thousand liters per annum.

EFFLUENT TREATMENT PLANT The effluent Treatment Facility in Rampur Distillery is unique in nature when compared among and in the Industry. The Distillery complies with Zero Discharge concept set up by CPCB. The treatment has varied by products, which not only improves operational stability of the plants but also adds on to company's profitability. Primary Treatment of the Effluent yields Bio Gas, which is used as fuel in Cogen Boiler to generate steam and then Power through a backpressure Turbine. The backpressure steam is used again in the Distillation Plant to produce Extra Neutral Alcohol and Rectified Spirit. ENVIRONMENTALLY FRIENDLY Meeting out 100% Pollution Control norms, the Treated Effluent is not discharged outside and in turn is mixed and cured with organic mass like Press Mud of Sugar Mills and suitable organic manures to manufacture Bio Manure or Bio Compost, a bio fertilizer used successfully in growing the crop of sugar canes etc.

KHAITAN LTD. CO-GENERATION PLANT The cogeneration plant of Rampur Distillery consist of 26 MT capacity India's first stand alone Bio Gas fired steam boiler and 2 MW Turbine Generator in tandem to make Radico Khaitan self reliant on its requirement for power for its normal operation. BACKWARD INTEGRATION The very first backward integration project has come in the form of setting up a fully automatic 750 ml Kidney shape PET bottle manufacturing plant in low cost and tax benefited area like Uttranchal. The unit started with production rate of 85 lacs bottle per year in October 2004 and is now geared up to produce 255 lacs PET bottles to cater Radico's own captive consumption of approx. 150 lacs bottle per year and rest is being sold to outside clients in similar businesses. The unit has not only eliminated the pressure of PET bottle suppliers but has also provided a kind of diversified manufacturing base for future business exploration. OWN BOTTLING UNITS Rampur Distillery has 14 state-of-the-art bottling lines, including those imported from Italy, equipped with tunnel bottle washing, filling, sealing and labeling machines with a capacity to produce 1500 cases (1 case = 12 bottles of 750 ml each) of liquor in a single shift of operation. Line capacities vary from 750 cases to 3,000 cases in a shift. To keep pace with the growing demand, Radico Khaitan has significantly increased its bottling capacity by acquiring/setting up bottling plants in the states of Rajasthan, Uttranchal and Andhra Pradesh. Rampur Distillery, Rampur (Uttar Pradesh) Whytehall (India) Ltd., Rampur (Uttar Pradesh)

10

Radico Khaitan Ltd., (Uttaranchal) Radico Khaitan Ltd., Reengus (Rajasthan) Radico Khaitan Ltd., Hyderabad (Andhra Pradesh)

STRATEGIC BOTTLING UNITS Radico Khaitan Ltd is working continuously towards increasing its reach through the strategic bottling units across the country. The focus underlines comprehensive quality control and enhanced market penetration. Strategic Bottling Units through out India.

NORTH
N V Distilleries & Breweries Ltd., (Punjab)

Gwalior Distillers, Gwalior (Madhya Pradesh)

Patiala Distillers & Manufacturers Ltd., Baddi (Himachal Pradesh)

Oakland Bottlers (P) Ltd. (Jammu & Kashmir)

11

KHAITAN LTD.

EAST

Goodhost Liquors (P) Ltd., Patna, (Bihar)

IFP Agro Industries Ltd., Kolkatta, (West Bengal)

Seven Sisters Trade & Distilleries (P) Ltd.,Guwahati.(Assam)

Bacchus Bottling (P) Ltd., (Orissa)

United Brothers Distilleries (P) Ltd.,

(Arunachal Pradesh)

12

KHAITAN LTD.

SOUTH

Kamal Wineries, Hyderabad (Andhra Pradesh)

Ravikumar Distilleries (Pondicherry) United Distillery, Calicut, (Kerala)

Sri Venkateswara Distilleries, Bangalore, (Karnataka)

13

KHAITAN LTD.

WEST

Tilaknagar Industries Ltd, Tilaknagar, (Maharashtra)

Gemini Distilleries (P) Ltd. (Goa)

Ajantha Distilleries Ltd, Nagpur. (Maharashtra)

Welcome Distilleries, Bilaspur. (Chattisgarh)

KHAITAN LTD.

14

CORPORATE SERVICES HUMAN RESOURCES Radico Khaitan believes that the growth of a company depends on the collective efforts of its employees. The Human Resources Department seeks to create an environment that fosters the emergence of empowered leaders. They hire people who have the fire to grow, the potential to lead and the zeal to excel. All new hires undergo a 7-day induction and familiarization program. MARKETING In the short span of time, Radico Khaitan has been able to make the transition from being a manufacturer of Extra Neutral Alcohol to being a company with a portfolio of hugely successful brands. Their understanding of market demands and ability to satisfy consumer needs has been responsible for this. Consistently superior quality, a wide range of products, innovative packaging, pricing to suit all pockets, a nation-wide distribution network that covers 95% of retail points, clubs and bars in the country, effective advertising, and popular events and promotions. All these elements go to making up Radico Khaitan's winning marketing mix.

KHAITAN LTD. SALES

15

Radico Khaitans young and enthusiastic sales force services retail outlets across the country, understanding requirements and fulfilling them, thereby developing enduring relationships. The Sales team comprises professionals with vast domain expertise, years of experience in the liquor industry and a deep understanding of varied markets. ACCOUNTS- FINANCE Radico Khaitan Ltd has been continuously showing growth over previous years and registering healthy profits. This has been made possible through the steps taken by the Finance department like bringing down the cost of borrowings substantially. The Efforts of the finance department has made Radico one of the best prospects for timely repayment of debts and providing the highest safety of funds for lenders. The department also has excellent financial management with strong fundamentals in the short and medium term. RODUCTION The Production Department is responsible for operations in Radico Khaitan's bottling units. It works towards the smooth production and delivery of all the Radico Khaitan brands as per market needs.

BRANDS

16

Radico made its foray into the International Market a few years back and today Radico's brands are present in more than 30 countries. Radico has been consistently providing excellent quality in terms of both product and packaging along with outstanding service. Two of our brands 8 PM Whisky and Old Admiral brandy featured in Drinks International Magazine as the fastest growing brands in the world in the regional category. Three of its brands, Contessa XXX Rum, 8 PM Bermuda White Rum and Old Admiral brandy have won Silver Medal in prestigious Monde Selection for overall quality their brands have already attained the leadership position in many countries. Radico Khaitan is now breaking into newer and sophisticated markets with liquor brands developed to appeal to a wider palate.

KHAITAN LTD. WHISKY The base for Indian whisky is ENA. The other ingredients used are matured Indian malt sprit, Scotch whisky concentrate, added flavors, and caramel & dm water. All these ingredients are not added at a time but different stages. 1. Special appointment whisky

17

2. 8pm oryale whisky 3. Whitefield whisky 4. 8pm whisky 5. Radico gold supreme whisky 6. Radico gold whisky 7. Contessa deluxe whisky 8. Rampur no.1 whisky BRANDY Brandy is a Dutch word means (Brunt Wine). In India they make brandy by blending with ENA, matured grape spirit, added flavoring. 1. Contessa Brandy 2. Old Admiral Brandy 3. White Field Brandy 4. 8pm Excellency Brandy

KHAITAN LTD. RUM Rum is distilled liquor made from sugarcane products, cane juice spirit along with base ENA and flavoring. 1. Contessa rum 2. Largest Rum 3. 8pm Bermuda 4. Black Cat Rum

18

5. Rampur No.1 6. Big Hit Rum 7. Contessa White Rum GIN Gin is alcoholic liquor obtained by distilling grain mash or redistilling sprit with botanicals such as juniper berries, angelica, lemon and orange peels, cassia bark, coriander and cardamom.

1. Contessa Gene 2. Big Hit Gene 3. Magic Moment Gene

RAW MATERIAL For the production of alcohol, materials containing sustaining amount of glucose Content can be used as a raw material. But for commercial production, common raw materials used are as follows:

KHAITAN LTD. 1. Molasses 2. Cane Juice 3. Sweet Potato 4. Sugar Beet 5. Grain (Barley, Rice)

19

FUNCTIONS Purchasing of packing materials, engineering goods, and logistics etc. function is done here. The packing materials include carton, monochrome, bottles, and caps label etc. The procurement of packing materials is done on the basis of

1. Forecast from marketing department for the month. 2. Tentative planning based on last month. 3. Production schedule.

Packing material accounts for 80% of all other. Material and it is the main requirement for distillery. Hence it is essential to have a proper stock of the material as per the requirement. Label is the most critical packing material as it involves different labels for the different states as the rules and regulations are different in different states. For finalization the vendor for packing material purchase committee where vendor is introduced .There are number of suppliers for packing material and purchasing is done by share of business.

KHAITAN LTD. For the engineering material indenter raise the indent and the quotations are called for the same. Then comparative is done and after that finalizing the terms and conditions purchase order is released. Logistics of country liquor is taken care of here. The procedure for dispatch of country liquor is that the marketing department sends indent according to the demand.

20

 For the country liquor it is the policy of state govt. that distillers should have their own depots and this depots will sell to retail vendors who will sell called as CL2A. Transportation annual rate contract is done and the documents that are to be carried along with the CL includes excise pass PD25, invoice and challenge..

Management Dr. LALIT KHAITAN

CHAIRMAN & MANAGING DIRECTOR RADICO KHAITAN LTD.

21

A veteran of the Indian liquor industry (over 45 years), Dr. Khaitan oversees the entire business of Radico Khaitan. He has been instrumental in improving quality standards and seeking and achieving customer satisfaction, leading to substantial growth in sales and revenues, and increased market shares. In the process, he has succeeded in transforming Radico Khaitan from a small, behind-. Dr. Khaitan has been widely recognized for his contribution to the liquor industry. He has been associated the-scenes player to a Rs. 995 crore company, the most profitable in its sector, and a sought-after partner by leading international liquor brands seeking to enter the Indian market. His unique management style has helped maintain Radico as an open, ethical and transparent organization with a number of developmental projects, has represented India with several international delegations, and is involved in social & educational activities across India. He is currently: Chairman, U.P. Committee of PHD Chamber of Commerce and Industry Member, Managing Committee, ASSOCHAM Member, Managing Committee, All India Distillers Association Member, Managing Committee, U.P. Distillers Association Trustee, Khaitan Public School, Noida

Mr. ABHISHEK KHAITAN

MANAGING DIRECTOR RADICO KHAITAN LTD

22

Mr. Abhishek Khaitan is a Bachelor of Engineering (Industrial Production) from Bangalore, and has done a Managerial Finance & Managerial accounting course at Harvard, USA. He joined Radico Khaitan in 1997, and supervised the establishment of the company's Marketing Division in the same year. The first brand to be launched by the division, 8 PM Whisky, was a runaway success. In the first year alone, it sold one million cases - a record for any Indian or foreign brand operating in India. This also made it the first brand in the liquor industry to make it to the Limca Book of Records. Under Abhishek Khaitan's leadership, Radico Khaitan's brand portfolio is wide and deep, with brands that straddle almost every market segment, taste preference and price category.

To recognize Mr. Abhishek Khaitan's contribution to Indian Industry, Economic Development & Research Association bestowed the Bhartiya Udyog Ratan Award on him. The World Economic Progress Society has honored him with the National Industrial Excellence Award.

KHAITAN LTD.

DIVISION OF THE COMPANY

Mr. RK Mehrotra (President - Finance)

23

Mr. KP Singh Mr. Raju Vazir Mr. KS Raju Mr. Sanjay Lamba Mr. KS Raju

(President - Operations) (President - Sales & Marketing) (Executive Vice President - Manufacturing & Operations) (Executive- Vice President- Exports & IBD) (Executive Vice President - Manufacturing & Operations)

KHAITAN LTD.

INTRODUCTION OF LIQUOR INDUSTRY

Historical records that mention the use of beer and wine date back some 5,000 years. The distillation of liquor began about 2,000 years ago. Most types of liquor known today were developing between the 12th and 19th centuries. Modern glass packaging and brand names began to emerge around the middle of the 19th century.

24

Early methods for testing the strength of liquor involved mixing a sample with an equal amount of gunpowder. If the mixture burned with a steady blue flame, it was considered proved- the origin of todays term proof. Later, when more sophisticated measurement techniques were available, it was shown that proved liquor was actually about 50 percent alcohol, or 100 proofs. Distilled spirits, more simply known as liquor, reflect the customs, tastes, and even agriculture of many lands and peoples. Despite great variations in the natural fruits and grains used for raw materials and in production techniques, the liquor of the world are all based on the discovery of distillation more than 2,000 years ago.

CURRENT SIZE AND STRUCTURE OF THE INDIAN LIQUOR INDUSTRY

There are two major segments for liquor in India: branded and unbranded. Total branded sales are 85 million cases while country liquor (unbranded, low-priced alcohol) sales are 200 million cases. The branded segment has grown at around 7-8% annually for the past three years. The country liquor segment has distinct characteristics of its own and forms largest component of the industry. This is often sold through separate distribution channels. However, even at such a size it stills results in a per capita consumption of 2.5 liters. The Indian IMFLmarket is dominated by low-priced whisky. The whisky segment constitutes almost 60%of the total IMFL market. 17% & 18% is brandy and Rum and the rest 5% is white spirits. The growth of international trade has made a great variety of distilled spirits available in most nations, but localized production techniques and a taste prefence persists. Label information and other government requirements vary considerably from nation to nation.

25

CLASSIFICATION OF LIQUOR
NEUTRAL SPIRITS Known simply as alcohol, neutral spirits can be made from any fermentable material but must be 190 or more proof. This results in virtually, pure alcohol. Usually used as a blending agent in other products, neutral spirits may be diluted with water, bottled, and sold directly as long as a minimum strength no of 80 proofs is maintained.

VODKA Vodka is neutral spirits distilled or treated with charcoal or other materials after Distilling to make it free of distinctive color, aroma, taste, or character. Although Vodka can be made from potatoes or other materials; most is now made from grain, particularly corn. Vodka originated in Russia in the 14th century. The word itself means little water.

KHAITAN LTD. WHISKY Whisky is a broad class of products distilled from grain at alcohol concentrations than vodka or neutral spirits. Most whiskeys are aged for a time, usually two to 12 Years, in oak barrels that add further taste and color to the product. To be sold in the United States as whiskey, the product must be bottled at strengths of at least 80 Proofs.

26

GIN First produced in Holland in the 17th century, gin derived its name from the French wood for juniper berries, jenievre. Gin is basically grain neutral spirits flavored with juniper berries. It may be aged to give it extra smoothness and color, but in the United States distillers may not mention age bon the label.

BRANDY Broad class of spirit products distilled from fruit rather than grain, brandy was probably the first liquor to be made in western society. Most brandy is still made from grape wine.

RUM Rum is distilled from sugar by-products, most often blackstrap molasses. Caramel may be added to darken the colour.

KHAITAN LTD. CORDIALS AND LIQUERS Combining any basic liquor with one or more natural flavorings such as cream Juices, plants, or seeds can produce many varieties of cordials and liqueurs. Some of the earliest cordials and liqueurs. Some of the earliest cordials were made in European monasteries during the middle ages. Chartreuse is still made in France by the religious order that develop it in 1605.

27

Local specialties Many other types of liquor are made according to local tradition in various regions of the world. Some of these include: Ouzo is produced in Greece bin a manner similar to gin and is liquor heavily flavored with aniseed. Shochu is made in Japan primarily from sweet potatoes, rice or other grains, and molasses. Aquavit is popular in much of northern Europe.

KHAITAN LTD.

THE BRAND STORY

Radico Khaitan Ltd today has three millionaire brands in its portfolio. Radico's flagship brand, 8 PM Whisky, launched in 1999, was a runaway success. In the first year alone, it sold one million cases - a

28

record for any Indian or foreign brand operating in India. This also made it the first brand in the liquor industry to make it to the Limca Book of Records. Drinks International, the acclaimed international liquor magazine has rated 8 PM whisky as the fastest growing whisky in the world in the regional category (2004-05). The other millionaire brands are: Contessa Rum has won the prestigious Monde Selection award for its overall quality for the past three executive years. It has a large market share in the defense market... Old Admiral Brandy has also been rated by Drinks International as the fastest growing Brandy in the world in the regional category (2004-05 and 200506) also it has won the Monde Selection award for its overall quality in 2004-05. Today, Radico Khaitan has brands that straddle almost every market segment - whisky, rum, brandy, vodka & gin - and price category. Its fine blends, consistent quality, distinctive packaging and superior value have resonated with customers.

KHAITAN LTD.

THE INTERNATIONAL LINK

In a significant move aimed at catapulting the Indian liquor industry to international standards, Radico Khaitan set up its international division - Radico International - to distribute and market some of the 29

world's best-known liquor brands, including Wines from Ernest & Julio Gallo (makers of the world's largest-selling wine, Carlo Rossi), Famous Grouse Whisky (from Highland Distillers).

STRONG FINANCIALS
Radico Khaitan is not just a company of great brands; it is a company of great financials. The equity shares of the company are quoted on the Mumbai and National Stock Exchanges, and the company has more than 35,000 shareholders. It is the most profitable company in the domestic liquor industry.

RADICO'S CORE VALUES

Radico's Core Values are aimed at developing a customer-focused, high-performance organization, which creates value for all its stakeholders. FOCUS ON CUSTOMER Radico Khaitan believes that customer focus is very important. They give importance to deliver both value & quality to the customer. EXCELLENCE Radico will strive for excellence in whatever we do. Radico will take the right path to do whatever we do and excel in the same.

KHAITAN LTD.

30

RESPECT FOR PEOPLE Radico will value differences in individual perspectives. Radico want individuals to dream, create and experiment in pursuit of opportunities and achieve leadership through teamwork. INNOVATION Radico will constantly innovate and strive to better our processes, products, services and management practices. CORPORATE GOVERNANCE Corporate Governance at Radico means the framework to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. The aim is to align as

nearly as possible the interests of individuals, corporations and society.

Ernst & Young are the internal auditors and strategic advisors and help to improve its operational efficiencies and control procedures. Board of Directors consisting of eminent independent professionals. Strict adherence to the accounting standards lay down by the Institute of Chartered Accountants of India. Special attention being paid to the investors relations. Regular communication to the investors about the business developments and important vents impacting the operations. Strict compliance with the requirement of Stock Exchanges, Securities and Exchange Board of India and other statutory authorities. Liberal disclosures in the balance sheet over and above those required by the regulatory authorities.

SOME BRAND OF COMPANY

31

32

33

34

KHAITAN LTD. 8 PM Royal whisky 8 PM Royal whisky, which extends the 8PM brand franchise to the prestige semipremium whisky segment, is made with international quality spirit and imported scotch with matured malt spirits. The mellow taste comes from years of being matured in wooden casks in meticulously guarded environs.

35

KHAITAN LTD. Whytehall whisky Whytehall whisky was rewarded with silver medal at the international wine and spirit competition 2007 held at U.K. it is a distinguished blends of aged scotch malts and the finest Indian spirits, skillfully blended to give a rich, warm, full bodied whisky with a grace full after note that lingers.

36

KHAITAN LTD. Contessa Rum Contessa rum was rewarded with bronze medal at the inter national wine & spirit competition 2007 held at U.K. Leading brand contests rum enjoys a 25% Market shares in the defense segment and has won the prestigious gold medal at the monde collection in Brussels for its overall quality. It is in the regular segment.

37

KHAITAN LTD. Old admiral brandy The phenomenally successful old admiral brandy is our third million case Brand. In spite of India being a predominantly whisky- drinking country, old admiral brandy has received an overwhelming response from trade channel and consumers a like, to record exponential growth, year-on-year.

38

KHAITAN LTD. 8 PM Bermuda White Rum Golden sands, calypso beats, cheerful people, that is the spirit of the Caribbean, reflected In 8 PM Bermuda white rum first entry in the white spirit segment .its size available at domestic is 750 ml, 375ml, and 180ml.and at the international is same.

39

KHAITAN LTD. 8PM WHISKY

8PM WHISKY, Radico flagship brand, is a perfect balance of strength and smoothness; it is one of the finest whiskies in the regular segment. The strong positioning of A TIME FOR FRIEND has ensured a distinctive identity for the brand. Since its launch in 1999, backed by fine product quality, superior packaging it has been a runaway success.

40

41

42

VISION OF THE COMPANY

43

44

MISSION OF THE COMPANY

45

KHAITAN LTD.

CORPORATE SOCIAL RESPONSIBILITY PROGRAMME

HUNAR In accordance with Radico's mission to work towards the up-liftment of local artisans and to promote the UP handicraft, Zardozi and Chikan work it had launched 'Radico- Chikankari Aur Zardozi Pratiyogita' in association with the Indian Academy of Art & Culture, U.P. The competition was organized to bring out the creativity of the artisans and to look for young talent in the field of Chikankari & Zardozi. The event was promoted through mobile vans, pamphlet distribution in the areas where the artisans live. There were two levels of judging eminent personalities from Lucknow judged the first level and in the second level Mrs. Jaya Prada, Mrs. Kiran Khaitan, Mrs. Sucheta Merh & Mr. Swapan both designers from Kolkata judged the first three winners. The artisans were awarded with cash prizes. The artisans have been empanelled by Radico Khaitan Ltd to form a group called "HUNAR. To get employment for the artisans is the cause towards which the group Hunar is working.

46

47

BALANCE SHEET AS AT 31ST MARCH, 2012

DESCRIPTION SOURCES OF FUND Share holders Fund Share Capital Reserves and surplus Revaluation Reserve Other Reserves Loan Funds Secured

AMOUNTS

As at 31.03.2012

AMOUNTS

As at 31.03.2011

265,408

265,116

92,194 6,594,992 6,687,186

92,830 6,156,136 6,248,936

6,160,600

3,397,700

Unsecured Deferred Tax Balance

0.00

6,160,600 451,000

1,514,100

4,911,800 367,000

48

Total

10,864,709

9,707,534

49

APPLICATION OF FUNDS Fixed Assets 5,070,656 Gross Block Less: Depreciation to Date Net Block Capital W.I.P. Investment Translation Difference A/C Current Assets 48,438 1,113,400 (268,465) 10,749,78 1 1,774,456 3,477,921 210,385 0.000 4,944,700 1,268,729 3,190,950 88,943 278 3,539,200
50

4,407,587 6,628,825 1,606,607 5,022,218 4,188,995 218,592 708,700 0.000 5,727,875 1,538,880

Inventories Sundry Debtors Cash & Bank Balance Fixed Deposit Loan & Advance

Less: Current Liabilities and Provisions Current Liabilities Provisions Net Current Assets Total 3,285,00 0 193,000

3,478,00 0

2,285,500

1,687,30 0 598,200

10,86

51

52

PROFIT AND LOSS A/C AS ON 31ST MARCH, 2010

Rs. In000 INCOME Current Year (2010) 19,813,854 8,375,187 11,438 ,667 Other Income Accretion/Direction to Stock 44,115 169,600 11,652,382 9,464,229 8 8,509 22,700 9,575,438 Previous Year (2009) 16,922,787 7,458,558

Sales & Income from Operations Less: Excise Duty

53

EXPENDITURE Purchase and Materials Consumed Salaries, Allowances and Benefits Other Expenses Interest

10,499,055 5,914,000 706,355 3,267,500 611,200

8,892,955 4,617,100 615,455 3,290,300 370,100

54

Profit before depreciation and Taxation Depreciation for the year Less: Transfer from Revaluation Reserve Profit before Taxation Less: Tax Expenses Current Tax (MAT) Deferred Benefit Tax Less: MAT Credit available for set off Profit after Taxation 176,000 70,000 13,000 328,200 0.00

1,197,855 183,04 9 328,200 869,600 92,800

1,270,355

275,849 994,506

210,00 0 56,500 233,000 636,600 0.000 266.500 728,006

55

Add: Surplus brought forward from last year Profit Available For Appropriation Less: Appropriations Transfer to G.R. Proposed Dividend Income tax on Proposed Dividend Balance Carried to B/S

536,474 636,600

236,298

301,661

300,000 106,163 17,231 749,680

500,000 92,802 15,055 536,474

56

CASH FLOW FOR THE YEAR ENDED 31ST MARCH, 20112

57

PARTICULARS A. Cash Flow From Operating Activities Net Profit Before Provision For Tax Add: Depreciation Interest On Borrowings Employees Compensation Loss On Sale Of Assets Loss On Sale Of Shares Provision For Diminution in value of Investment Provision For Non Moving Stock Provision for Doubtful debtors & advances 328,394 611,209 -1,703 9,303 124,989 1,173 11,362 4,790

2011-12

2010-11

869,600

994,506

271,464 352,581 4,319 45,280 0 1,466

5,622 5,408 1,959,11 7 1,680,646

58

Less: Interest Income Dividend On Investment Profit On Sale Of Assets Profit On Sale Of Investment Operating Profit Before Working Capital Changes 206,496 57 558 0.000 59,745 15 23,782 19,562

1,752,00 6

1,577,542

59

Adjustment For Working Capital Changes: (Increase) / Decrease In Inventories (Increase) / Decrease In Trade Receivables (Increase) / Decrease In Other Receivables (Increase) / Decrease In Loans And Advances (Decrease)/ Increase In Trade And Other Payables (517,089) (289,516) (44,223) (840,957)

(133,215)

(60,474)

(439,220)

(276,083)

1,227,096 1,600,06 2

101,513 549,270

Less: Direct Tax & FBT Payments During The Year Net Cash Flow From Operating Activities

(176,642) 1,423,42 0

(141,682) 407,588

60

B. Cash Flow From Investing Activities Addition To: - Fixed Assets (Including WIP) Purchase Of Investments Application Money For Investments (Increase)/ Decrease In Loans Given Sales Of Fixed Assets Sale Of Investments Interest Income Dividend Income Net Cash Flow From Investing Activities (580,000) 6,067 9,034 206,496 57 (1,278,452) (878,732) (41,374) 0 100,000 87,292 243,562 59,745 15 (705,509) (657,123) (539,000) )

61

C. Cash Flow From Financing Activities Increase/ (Decrease) In 9,169 Share Capital With Premium 128,406 Secured Loans 956,695 Unsecured Loans Investment in Non-Current Fixed Deposits with Banks Effect Of Foreign Exchange Rate Change Adjustment To Fixed Assets 611,209 Interest On Borrowings 107,857 Dividend On Equity Shares (23,526) Net Cash Flow From Financing Activities 121,442 Net Increase/ (Decrease) In Cash (238,458) 59,463 92,471 352,581 (2,135) 396,595 0.000 1,172 (352,070) 0 798,757 60,000

62

KHAITAN LTD.

63

OBJECTIVE OF RESEARCH
The objective of research is to discover answer to the questions through the application of financial analysis. The main aim of research is to find out the truth which is hidden and which has not discovered as yet.

Main objectives Analysis of financial details of RADICO KHAITANS.

Sub objective

To know the financial position of the Rampur Distillery To check the profitability of the business concern To know about the different products of the company

64

65

KHAITAN LTD.

IMPORTANTS OF STUDY
Liquor industrys behavior is not governed by brand loyalty so the availability of the right brand, at the right place, at the right time, at the right price is the key for Winning consumer in liquor industry. Success is limited to only those who continuously. Analyze their marketing strategy and beyond that they should also be concerned about their financial details so that all the investors and persons concerned with their organization are satisfied which leads to overall success of the organization with customer satisfaction.

In this report the financial details of the Radico Khaitan ltd. (Rampur Distillery) are analyses with the help of ratio analysis.

The study can be helpful in finding out overall financial position of an organization which can be very helpful for the investors and managers for taking right decision at right it.

66

67

KHAITAN LTD.

RESEARCH METHODOLOGY
Research in common parlance refers to a search of knowledge. One can also define Research as a scientific and systematic research for pertinent information on a specific Topic. In fact, research is an art of scientific investigation. Research can be defined as logical and systematized application of the fundamental Science to the general and overall questions of a study, and scientific techniques which Provide precise tool, scientific procedures and technical, rather than philosophical Means for getting and ordering the data prior to their logical and manipulation. Research methodology may be treated as the heart of projects. Without a proper and wellOrganized research process it is impossible to complete the project and draw conclusion and prepare result. Research process consists of a no. of closely related activities. But such activities overlaps continuously and do not follow a strictly prescribed sequence. They do not necessarily follow each other in any specific order and the researchers have to be constantly anticipating at each step in the research process the requirement of the subsequent steps. However the following step provides useful procedural guidelines regarding the research process.

68

KHAITAN LTD. SOURCE OF DATA Here in my study of process of recruitment and selection convenience sampling is used as a sample design as to have the ease of access, because the managers or the executives have not much time so, who so ever is founded by me I take them into my sample for the study. PRIMARY DATA This data can be collected either through experiment or through survey. If the experiment is conducted then there would be quantitative measurements, in the case of a survey, any one or more of the following can collect data; 1. By observation 2. Through personal interview 3. Through telephone interview

SECONDARY DATA Secondary data is related to already publish by the company. To analyze the financial position to take data from the published annual report of the company. The current assets, Fixed assets, Net profit, Gross profit, Share holder funds, the data relating to the Current asset, Current liabilities, Gross profit, Net sales, Operating profit, Selling expenses, Cost of good sold, Shareholder fund, Capital employed, Total assets, Debt were collected from the annual report of the company.

69

KHAITAN LTD. Sampling The data was collected from the companys generals, web site, respondents. Analysis was prepared with the help of my previous study, and management helps because it was not possible to go through the topic in depth in such a short span of time. Sample unit In my report sample unit is balance of the company on which whole analysis is based. Size of sample The project that I have made is based on secondary data collected from the firm itself and conducted of the balance sheet from 2008 to 2010. I have collected their financial details and overall history and performance of the organization and then after with the help of ratio analysis I have made my interpretation.

TOOLS AND TECHNIQUE

Ratio analysis Chi-Square Test

70

71

KHAITAN LTD.

RATIO ANALYSIS
Ratios are useful indicators of a firm's performance and financial situation. Most ratios can be calculated from information provided by the financial statements. Ratios analysis can be used to analyze trends and to compare the firm's financials to those of other firms. In some cases, ratio analysis can predict future bankruptcy. Ratios can be classified according to the information they provide.

The following types of ratios frequently are used:

A) Profitability Ratio
B) Financial Ratio C) Activity Ratio

72

KHAITAN LTD.

(A) PROFITABILTY RATIO (1) Gross profit ratio: The gross profit indicates the average spread between the cost of goods
sold and the sales revenue. A high gross profit margin ratio is a sign of good management. A high gross profit margin relative to the industry average implies that the firm is able to produce at relatively lower cost.

Formula: Gross profit ratio = Gross profit*100 Net Sales End of the year (2009) = 354,882/6,960,291 =5.09% End of the year (2010) = 755,441*100/8,355,507 = 9.04%

Interpretation: From the analysis there is a fluctuating trend. In the year 2009 the gross profit of the company was 5.09%, and latter shows the increasing trend of profit by 5%. The ratio should be adequate to cover the administrative and marketing expenses and to provide for the fixed charges, dividing and building up the reserve. The company has healthy gross profit to cover the administrative and other expenses.

73

(2) Net profit

KHAITAN LTD. ratio: Net profit ratio establishes a relationship between net profit and sales and

indicates managements efficiency in manufacturing, administering and selling the products.

Formulae: Net Profit Ratio = Net Profit *100 Net Sales

End of the year (2009) = 65,363*100/6,960,291 = 5.09%

End of the year (2010) = 499,395*100/8,355,507 = 5.97%

Interpretation: From the analysis there is a fluctuating trend. In the year 2009 & 2010 the net profit of the company is 5.09% & 5.97 and latter shows the increasing trend of profit. This shows that the company net profit is fine. Net profit is called PAT (Profit after Tax)

74

(3) Operating ratio:

KHAITAN LTD. The operating expenses ratio is a yardstick of operating efficiency. The

operating expense ratio explains the changes in the profit margin (EBIT to sales) ratio.

Formulae: Operating ratio = Total Operating *100 Net Sales End of the year (2009) = 812,196*100/6,960,291 = 11.67% End of the year (2010) = 1,374,601*100/8,355,507 = 16.45%

Interpretation: From the analysis, its clear that the operating ratio varies to a very small extent. During 2009 the ratio was 11.67% and in 2010 the ratio is 16.45%. The operating profit of the company is increasing and higher the ratio, the better is the profitability of the business. This ratio serves the operating efficiency and cost control of the business.

75

KHAITAN LTD.

(B) FINANCIAL POSITION RATIO (1) Current Ratio: This ratio is obtained by dividing the 'Total Current Assets' of a company
by its 'Total Current Liabilities'. The ratio is regarded as a test of liquidity for a company. It expresses the 'working capital' relationship of current assets available to meet the company's current obligations. Formula: Current Ratio = Current Assets Current Liabilities Ideal Ratio = 2:1 End of the year (2009) = 5,718,375/866,177 =0.066:1

End of the year (2010) = 6,769,816/975,851 =0.069:1

Interpretation: In the above analysis there is fluctuating trend in current ratio. It varies from 0.066 to 0.069. This is because due to increase in current assets. In the year 2009 the total current assets were Rs. 5,718,375 which increases to Rs. 6,769,816 in the year 2010 thus increasing the current ratio. On other hand the current liabilities is in increasing trend, in the year 2009 current liabilities was 866,177 which increased to Rs. 975,851. Due to the collection of advance payment in respect of electricity sales. The company should make policy to reduce current liabilities.

76

KHAITAN LTD.

(2) Liquid Ratio: This ratio is obtained by dividing the 'Total Quick Assets' of a company by
its 'Total Current Liabilities'. Sometimes a company could be carrying heavy inventory as part of its current assets, which might be obsolete or slow moving. Thus eliminating inventory from current assets and then doing the liquidity test is measured by this ratio. The ratio is regarded as an acid test of liquidity for a company. It expresses the true 'working capital' relationship of its cash, accounts receivables, prepaid and notes receivables available to meet the company's current obligations. Formula: Liquid Ratio = Liquid Assets Current Liabilities Ideal Ratio= 1:1 End of the year (2009) = 4,634,024/866177 = 0.053:1:1

End of the year (2010) = 5,539,337/975,851 = 0.056:1:1 Interpretation: From the above analysis there is fluctuating trend in liquidity ratio of Rampur Distillery. It varies between 0.053 to 0.056 in the year 2009 to 2010. This is due to increase in stock due to introduction in the Rampur Distillery, which lead to increase in the need of stock to carry out generation of electricity and quick assets at lower.

77

(3) Debt Equity Ratio:

KHAITAN LTD. This relationship describing the lenders contribution for each rupee

of the owners contribution is called debt equity ratio. Debt equity ratio is directly computed by dividing total debts by net worth.

Formula: Debt Equity Ratio = Out Side Liabilities Share Holder Fund Ideal Ratio = 2:1 End of the year (2009) = 7,003,638/204,924 = 34.18:1:1

End of the year (2010) = 4,461,427/263,661 = 16.92:1:1

Interpretation: From the above analysis there is fluctuating trend in Dept equity ratio of Rampur Distillery. It varies between 34.18 to 16.92 in the year 2009 to 2010.It indicates the margin of safety to long term creditors. Liabilities should be decreases then company profile will be better.

78

KHAITAN LTD.

(C) ACTIVITY RATIO (1) Debtor Collection Period: Debtors collection period indicates the average time taken to
collect trade debts. In other words, a reducing period of time is an indicator of increasing efficiency. It enables the enterprise to compare the real collection period with the granted/theoretical credit period.

Formula: Debtors Collection Period = Debtors + B/R * 365 Net Credit Sales End of the year (2009) = 1,700,268*365/487,518 = 1272.97 days End of the year (2010) = 2,355,536*365/8,355,507 = 102.90 days

Interpretation: In the above analysis there is fluctuating trend in this period. It varies from 1272 days to 102 days. This is because due to increase in sales. In the year 2009 the sales were Rs. 487,518, which increases to Rs. 8,355,507 in the year 2010 thus decreasing the period. On other hand the debtors is in increasing trend, in the year 2009 debtors was 1,700,268 which increased to Rs655,268.

79

(2) Creditors Payment Period:

KHAITAN LTD. A Popular variant of the creditor turnover ratio is to

convert it an average payment period in terms of days/month/week in a year. The average payment period is used to indicate the speed with, which payment for credit purchases are made to creditors.

Formula: Creditors Payment Period = Creditors +B/P *365 Net Payment Period End of the year (2009) = 774,289*365/56,687 = 4985 days End of the year (2010) = 862,568*365/319,499 = 985.41 days

Interpretation: From the analysis there is fluctuating trend in this period. It varies from 4985 days to 985 days. This is because due to increase in payment period. In the year 2009 the payment period were Rs. 56,687, which increases to Rs. 319,499 in the year 2010 thus increasing the period. On other hand the creditors is in increasing trend, in the year 2009 debtors was 774,289 which increased to Rs.88,279.

KHAITAN LTD.

80

(3) Current Assets Turnover Ratio:

This ratio establishes are relationship between

average current assets and sales. This ratio indicates how efficiently current assets are being utilized by the concern. This ratio indicates the effective use of current assets.

Formula: Current Assets Turnover Ratio = Cost Of Sales Current Assets End of the year (2009) = 6,894,928/5,718,375 = 1.21:1 End of the year (2010) = 7,856,112/1,157,415 = 1.16:1

Interpretation: From the analysis current assets turnover is decreases. In 2009 the ratio was 1.21 and in 2010 the ratio is1.16. It is decreases by 0.05. Because current assets is decreases. In the 2009 current assets was Rs. 5,718,375 and in the 2010 current assets is Rs.1,157,415. But in this ratio cost of sales is increases to Rs.961,184 from 2009 to 1010.

KHAITAN LTD.

81

(4) Creditors Turnover Ratio:

It establishes the relationships between the net annual

credit purchases to the average creditors. It is calculated by dividing the net purchase by average creditors.

Formula: Creditors Turnover Ratio = Net Purchase Average creditors

End of the year (2009) = 56,687/753,781 = 0.075:1

End of the year (2010) = 319,499/818,429 = 0.39:1 Interpretation: From the analysis there is a fluctuating trend. It varies from 0.075 to 0.39. High creditors turnover ratio reflect shorter the day to pay the credit purchase to the supplier. It is risky to have the high creditor turnover ratio and Rampur Distillery has the lowest ratio of it that means the outsider is often paid and company minimizes their liabilities in proper way.

82

KHAITAN LTD.

(5) Inventory Turnover ratio:

This ratio is obtained by dividing the 'Total Sales' of a

company by its 'Total Inventory'. The ratio is regarded as a test of Efficiency and indicates the rapidity with which the company is able to move its merchandise.

Formula: Inventory Turnover Ratio = Cost Of Sales Average Stock

End of the year (2009) = 6,894,928/926,100 = 7.45:1 End of the year (2010) = 7,856,112/1,157,415 = 6.79:1

Interpretation: From the analysis there is a fluctuating trend, it varies from 7.45 to 6.79. In the year 2009 the ratio was 7.45:1 and latter on decreases trend has started and during the year 2010 the ratio decrease to 0.66%. This implies that the company is utilizing their stock at minimum and better way.

83

(6) Debtors Turnover:

KHAITAN LTD. Debtors turnover indicates the number of times debtors turnover,

each year. Generally, the higher value of debtors turnover, the more efficient is the management of credit.

Formula: Debtors Turnover = Net Credit Sales Average Debtors + B/R

End of the year (2009) = 6,960,291/1,218,820 = 5.71

End of the year (2010) = 8,355,507/2,027,902 = 4.12

Interpretation: From the analysis there is a fluctuating trend. It varies from 5.71% to 4.12%. Debtor turnover ratio is in fluctuating trend. Debtor turnover ratio in the year 2009 was 5.71% its reflect that company policy with the customer are bad and customer can not enjoy better availability of power if paid in time. In the year 2010 it is lowest percentage its reflect the decrease in the annual sales against the average trade debtor.

84

85

KHAITAN LTD.

FINDINGS
1. PROFITABILITY The Net Profit has increased from 5.09% to 5.97% in 2009 to 2010. The Operating Profit has increased from 11.67 % to 16.45% in 2009 to 2010. The Gross profit has increased from 5.09% to 9.04% in 2009 to 2010. 2. TURNOVER RATIO Inventory turnover ratio is reduced by 0.66% in 2010. It indicates that stock does not sell quickly and remain lying in warehouse for a long period. This result in heavy investment of funds in stock, increase carrying cost losses on account of inventory becoming obsolete. The first year Debtor turnover ratio is 1.59% high indicating that the collection from debtors is not so quick and efficient. The high debtors turnover has more chances for bed debts. The turnover position fair creditors turnover ratio is 30% high in 2010 the payment period is not high. 3. LIQUIDITY POSITION Current ratio is less than the ideal level. The idle level is 2:1 in Rampur Distillery. It implies that the company invested fewer amounts in current assets. 4. LEVERAGE RATIO The debt equity is decreases by 17.26% because outside liabilities have decrease by Rs. 2,542,211.

86

87

KHAITAN LTD.

LIMITATIONS

Time duration for this project report was not sufficient. Budget and finance are always been constraints in doing any project. Respondents gave incomplete and incorrect answers. Geographical area was very small for any conclusion. Lack of computer softwares by which we can do the work easily. It was highly expensive and time consuming.

88

89

KHAITAN LTD.

CONCLUSION
1. It should be borne in mind that the tool applied in the study to analysis the efficiency and effectiveness in financial management is most appropriate ones. 2. The firm RADICO KHAITAN Liquidity position in terms of short term and long term is not so good. It will be risky for the company. 3. The return on investment is not sufficient. 4. Stock is not sold quickly and remain lying in warehouse for a long period. 5. The Debtor turnover ratio is reducing by 1.59% in current year indicating that the collection from debtors is not so quick and efficient. 6. The above analysis enables the company to understand the financial position and financial soundness of RADICO KHAITAN. Today the liquor industry has become very competitive with many liquor brands. 7. Masterstroke, McDowell, Royal stag, imperial blue and ACP Black serving in the same market at the same time so it become very difficult to maintain the pioneer leading. 8. Radico Khaitan is progressing day by day; their production techniques have been improved to a great extent. They are converting their techniques in to more automated and specialized way. 9. Not only in production but also their profits have been increased, they have good and a satisfied relation with their investors. They have a good image in the market.

90

91

KHAITAN LTD.

RECOMMENDATION
1. To see that the company inventories is at optimum level in order to increase the inventory turnover. 2. Creditor turnover should be improved to set a high period. 3. The Debtors turnover is decreasing and we should make efforts to increase it upto an extent so that we can collect the amount as early as possible. 4. Liquidity ratio is less then standard norms; the company should make plan to increase the current assets and reduced liabilities investment. So that company will be capable to meet its obligations. 5. Operating expenses should be reduced to increase the operating profit of the company. 6. Return on investment is in declining trend and hence care must be taken while investing in projects. 7. Capita should be raised through such sources which incurred less cost of capital.

92

93

KHAITAN LTD.

BIBLIOGRAPHY
In this project while finalizing and for analyzing quality problem in detail the following books and websites have been referred.

ANNUAL REPORTS OF RAMPUR DISTELLIARY FINANCIAL DATA OF RAMPUR DISTELLIARY WITH THE HELP OF NEWS PAPERS

INTERNET: http://www.radico khaitan.com

94

http://www.rum.cz/galery/sas/in/rampur http://www.moneycontrol.com/financials/rampurdistillerychemicalscompany/balance-sheet/RDC http://www.moneycontrol.com/india/stockpricequote/breweriesdistilleries http://www.radicokhaitan.com/brands.html http://www.radicokhaitan.com/distilleriesandunits.html http://www.radicokhaitan.com/aboutus.html http://www.radicokhaitan.com/international-business.html http://www.radicokhaitan.com/corporate.html

95

SOME NEWS RELATED WITH RADICO

96

97

98

99

100