A

PROJECT REPORT
ON

“A comparative study on financial analysis of PEPSICO and COCA-COLA”

Submitted by Submitted to
Nandini Swami Dr. Rashmi Sharma
Student ID: 16BBAN059 Assistant Professor

Faculty Of Management

JECRC UNIVERSITY, JAIPUR

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 DECLRARATION

I, Nandini swami (16bban059), student of JECRC university perusing bachelor of business

administration. Hereby, declare that the project report entitled “A comparative study on
financial analysis of PEPSICO and COCA-COLA” submitted is my original work and the
project report has not formed the basis for the award of any diploma, degree, associate ship,
fellowship or similar other titles. It has not submitted to any other university or institution for the
award of any degree or diploma.

NAME: Nandini swami

B.B.A- 3 RD year
16BBAN059

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 ACKNOWLEDGEMENT

I am thankful to professor Rajeev Jain sir Dean, director of School of Management JECRC
University for providing us the necessary facilities for the completion of my project and for giving
us the opportunity to do this project. I would like to take opportunity to express my gratitude
towards all of them who have contributed directly or indirectly in my project work.

I am thankful to Dr. Rashmi Sharma Ma’am Assistant Professor, JECRC University for her
valuable inspiration and guidance provided me throughout the course of this project. She has
patience and critically gone through the subject matter.

At last I would like to extend my deep sense of gratitude to my friends, colleagues and each
individual who directly or indirectly help me during the project work.

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 TABLE OF CONTENTS

S. NO. PARTICULARS PAGE NO.

1. Beverage Industry - Overview 5-9

2. Company profile 10-15

2.1 About Pepsico Company
2.2 Vision of the Company
2.3 SWOT Analysis Of PEPSICO
3. Company Profile 16-22
3.1 About Coca Cola Company
3.2 Vision of the Company
3.3 SWOT Analysis of Coca Cola

4 Strategies adopted by Coca Cola and 22-27

PepsiCO

5. Introduction to the Concept 28-32

5.1 Ratio Analysis
5.2 Importance of Ratio Analysis
5.3 Classification of Ratios
6. Research Methodology 33-36
Objective of the study
Need for the study
Research Design
Sources of data collection
Limitations

7. Data Analysis & Observation 37-48

8. Suggestions & Conclusions 49

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9. Recommendations 50-52

10 Bibliography 53

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1. BEVERAGE INDUSTRY- OVERVIEW

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 The beverage industry refers to the industry that produces drinks. Beverage production can vary
greatly depending on which beverage is being made. The website ManufacturingDrinks.com
explains that, "bottling facilities differ in the types of bottling lines they operate and the types of
products they can run".
Other bits of required information include the knowledge of if said beverage is canned or
bottled, hot-fill or cold-fill, and natural or conventional. Innovations in the beverage industry,
catalyzed by requests for non-alcoholic beverages, include beverage plants, beverage
processing, and beverage packing.

The beverage industry is a major driver of economic growth. A National Council of Applied
Economic Research (NCAER) study on the carbonated soft-drink industry indicates that this
industry has an output multiplier effect.

This means that if one unit of output of beverage is increased, the direct and indirect effect on
the economy will be twice of that. In terms of employment, the NCAER study notes that "an
extra production of 1000 cases generates an extra employment of 410 man days."

Now, at present as there are three major players coke, Pepsi and Cadbury and there is stiff competition
between first two, both Pepsi and coke have started, sponsoring local events and staging frequent consumer
promotion campaigns. As the mega event of this century has started, and the marketers are using this event –
world cup football, cricket events and many more other events.
Like Pepsi, coke is picking up equity in its bottles to guarantee their financial support; one side coke is trying
to increase its popularity through.
Eat Food, enjoy Food. Drink only coca cola. Eat cricket, sleep cricket. Drink only coca cola. Eat movies,
sleep movies. Drink only coca cola.

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 On the other side of coin Pepsi has introduced AMITABH BACHHAN for capturing the lemon market
through MIRINDA – Lemon with “zor ka jhatka dhere se lage”.

But no doubt’ that UK based Cadbury is also recognizing its presence. So there is a real crush in the soft drink
market. with launch of the carbonated organize drink Crush, few year ago in Banaras ., the first in a series of a
launches , Cadbury Schweppes beverage India (CSBI) HAS PLANNED:- The world third largest soft drink
marketers all over the country.CSBI o wholly owned subsidiary of the London based $ 6.52billion. Cadbury
Schweppes is hoping that crush is going well and well not suffer the same fate as the Rs. 175 crore Cadbury
India’s apple drink Apella. CSBI is now with orange (crush), and Schweppes soda in the market.

As orange drinks are the smallest of non-cola categories that is Rs. 1100 crore markets with 10% market share
and cola heaving 50% is followed by Lemon segment with 25%. The success of soft drink industry depends
upon 4 major factors viz.
 Availability
 Visibility
 Cooling
 Range

AVAILABILITY
Availability means the presence of a particular brand at any outlet. If a product is now available at any outlet and
the competitor brand is available, the consumer will go for it because generally the consumption of any soft drink is
an impulse decision and not predetermined one.

VISIBILITY
Visibility is the presence felt, if any outlet has a particular brand of soft drink say- Pepsi cola and this brand is not
displayed in the outlet, then its availability is of no use. The soft drink must be shown off properly and attractively
so as to catch the attention of the consumer immediately Pepsi achieves visibility by providing glow signboards,
hoarding, calendars etc. to the outlets. It also includes various stands to display Pepsi and other flavors of the
company.

COOLING
As the soft drinks are consumed chilled so cooling them plays a vital role in boosting up the sales. The brand,
which is available chilled, gets more sales then the one which is not, even if it is more preferred one.

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RANGE
This is the last but not the least factor, which affects the sale of the products of a particular company.

Range availability means the availability of all flavors in all sizes.

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2.COMPANY’S PROFILE

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2.1 PEPSICO

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 PepsiCo, Inc. is an American multinational food, snack, and beverage corporation headquartered
in Harrison, New York, in the hamlet of Purchase. PepsiCo has interests in the manufacturing,
marketing, and distribution of grain-based snack foods, beverages, and other products. PepsiCo
was formed in 1965 with the merger of the Pepsi-Cola Company and Frito-Lay, Inc. PepsiCo has
since expanded from its namesake product Pepsi to a broader range of food and beverage brands,
the largest of which included an acquisition of Tropicana Products in 1998 and the Quaker Oats
Company in 2001, which added the Gatoradebrand to its portfolio.As of January 26, 2012, 22 of
PepsiCo’s brands generated retail sales of more than $1 billion,and the company’s products were
distributed across more than 200 countries, resulting in annual net revenues of $43.3 billion.
Based on net revenue, PepsiCo is the second largest food and beverage business in the world.
Within North America, PepsiCo is the largest food and beverage business by net revenue. Ramon
Laguarta has been the chief executive of PepsiCo since 2018. The company’s beverage
distribution and bottling is conducted by PepsiCo as well as by licensed bottlers in certain
regions.
In 2019 PepsiCo sued four small farmers in India US$142,000 each for growing a type of potato
it says it owns. Pepsi said they would end the suit if the farmers grew potatoes for them. A
number of Farmers’ associations are requesting that the government get involved in the case
stating that Pepsi is attempting to intimidate people.After pressure from the public as well as
state and national governments, PepsiCo withdrew the lawsuit on 2 nd of May, 2019.

2.2 Vision of PEPSICO

PepsiCo’s vision statement is “to deliver top-tier financial performance over the long term by
integrating sustainability into our business strategy, leaving a positive imprint on society and the
environment.” PepsiCo adds that this vision statement is built on the idea of “Performance with
Purpose.” Based on these considerations, PepsiCo’s vision statement has the following main
points:

1. Top financial performance

2. Sustainability
3. Corporate social responsibility

PepsiCo emphasizes high financial performance as one of the aims included in its vision
statement. This factor is a basic business expectation. In addition, the vision statement indicates
that PepsiCo integrates sustainability in business activities. Sustainability enhances corporate and
brand image. Also, PepsiCo’s vision statement includes corporate social responsibility. This
factor is a major influence on the company’s policies and strategies on organizational
development, especially with regard to its impact on stakeholders. All of these points of the
vision statement motivate PepsiCo to achieve high performance.

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 2.3 SWOT ANALYSIS OF PEPSICO

 Strengths :
 Brand equity: it is one of the most prominent and famous brands in the world in the food
and beverage sector. It is also known as the brand of youth. It has a high brand recognition
and reputation. It has a brand valuation of $19.4 billion and it is ranked 29 in the Forbesmost
valuable brands list.
 Product portfolio performance: 2015 saw a decrease in the sale of soft drinks. India as a
country is evolving and becoming more health conscious. This can be noted from the 2015
analysis of top selling brands (in India) that the top 5 beverages are only juices and sweet
syrups. There is no soft drink in the top 5.Pepsi has two products in the top 5 beverages sold
in the country.The top 5 beverages are in order:

 Weaknesses :

 Competition: It has heavy competition from Coca-Cola in their soft drinks category. They are
always neck to neck with each other. This competition thereby provides a room for not so
loyal customer base to switch brands quickly.
 Products perceived as unhealthy: Most of the soft drinks of the PepsiCo is perceived as
unhealthy.
 Product Dependence: They are only present in the food and beverage industry which may be
harmful in the longer run. They need to diversify their business to other product segments
to become a global leader.

 Opportunities :

 Healthy Options: It should work more on improving the health implications of their products
and make the customer aware of the same. Diet Pepsi is a positive move towards that
direction.
 Diversification: Business diversification into different market segments is a
huge opportunity. They have the talent, resources and financial backing to do the same. This
can also be done by acquisitions.
 CSR: They can do more CSR activities to tackle the negative remarks that hurt the brand
image of the organisation and benefit the local people.

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  Threats :

 Competitors: PepsiCo’s main competitors are Coca-Cola, Kraft foods, Nestle, Dr Peppers
Snapple Group and Mondelez.
 Health Factor: The unhealthy factor associated with its products can take a toll on the health
conscious customers and might lose them. This can be clearly seen by the fall of soft drinks
sale.
 Economic Slowdown: With the recent reforms in the country PepsiCo might see a drop in
its sales due to a cash crunch in the economy. Other factors such as recession and inflation
may also impact sales of the company.
 Government Norms: Different norms of different countries might prove difficult to handle
and compliance with it as well.

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PEPSICO PRODUCTS IN INDIA

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3. COMPANY’S PROFILE

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 3.1WAVE BEVERAGES --- COCA COLA

In India, the Coca-Cola system comprises of a wholly owned subsidiary of The Coca-Cola
Company namely Coca-Cola India Pvt Ltd which manufactures and sells concentrate and
beverage bases and powdered beverage mixes, a Company- owned bottling entity, namely,
Hindustan Coca-Cola Beverages Pvt Ltd; thirteen authorized bottling partners of The Coca-Cola
Company, who are authorized to prepare, package, sell and distribute beverages under certain
specified trademarks of the Coca-Cola Company; and an extensive distribution system
comprising of our customers, distributors and retailers.

These authorized bottlers independently develop local markets and distribute beverages to
grocers, small retailers, supermarkets, restaurants and numerous other businesses. In turn, these
customers make our beverages available to consumers across India.

The Coca-Cola Company's brands in India include Coca-Cola, Fanta Orange, Limca, Sprite,
Thumps Up, Burn, Kinley, Maaza, Minute Maid Pulpy Orange, Minute Maid Nimbu Fresh and
the Georgia Gold range of teas and coffees and Vitingo (a beverage fortified with micro-
nutrients).

3.2VISION OF THE COMPANY

The vision of the company serves as the framework for Road map and guides every aspect of the
business by describing what we need to accomplish in order to continue achieving sustainable,
quality growth.
 People: Be a great place to work where people are inspired to be the best they
can be.
 Portfolio: Bring to the world a portfolio of quality beverage brands that
anticipate and satisfy people’s desires and needs.
 Partners: Nurture a winning network of customers and suppliers, together we
create mutual, enduring value.
 Planet: Be a responsible citizen that makes a difference by helping build
and support sustainable communities

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 Profit: Maximize long-term return to share owners while being mindful of our overall
responsibilities
 Productivity: Be a highly effective, lean and fast-moving organization.

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 3.3 SWOT ANALYSIS OF COCA COLA

 Strengths:
 Cooler Experience
 Personnel Relations
 Knowledge Regarding Adversary
 Accomplished Staff & Benefactor
 Added Bazaar Allotment in Textile Sector
 Humans Assurance on Above of our Artifact and Cast
 Merchandising and All-around Score Rating (Gives Backbone to brainwash bazaar about convalescent sales)

 Weaknesses:

 Weaknesses for any business charge to be both minimized and monitored in adjustment to finer accomplish
abundance and ability in their business's activities, Coke is no exception.
 Although calm business as able-bodied as abounding all-embracing markets are advancing (volumes in Latin
America were up 12%), Coca-Cola has afresh appear some "declines in assemblage case volumes in
Indonesia and Thailand due to bargain customer purchasing power."
 According to an commodity in Fortune magazine, "In Japan, assemblage case sales fell 3% in the additional
division .scary because while Japan generates about 5% of common volume, it contributes three times as
abundant to profits.
 Latin America, Southeast Asia, and Japan annual for about 35% of Coke's aggregate and none of these
markets are assuming to expectation.

 Opportunities:
 Cast acceptance is the cogent agency affecting Coke's aggressive position.
 Coca-Cola's cast name is accepted able-bodied throughout 94% of the apple today.
 The primary affair over the accomplished few years has been to get this name cast to be even bigger known.
Packaging changes accept as well afflicted sales and industry positioning, but in general, the accessible has
tended not to be afflicted by new products.
 Coca-Cola's bottling arrangement as well allows the aggregation to yield advantage of absolute advance
opportunities about the world. This action gives Coke the befalling to annual a ample geographic, assorted
area.
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 Threats:
 Currently, the blackmail of new applicable competitors in the carbonated bendable alcohol industry is not
actual substantial.
 The blackmail of substitutes, however, is a actual absolute threat. The bendable alcohol industry is actual
strong, but consumers are not necessarily affiliated to it. Possible substitutes that continuously put burden on
both Pepsi and Coke cover tea, coffee, juices, milk, and hot chocolate.
 Even admitting Coca-Cola and Pepsi ascendancy about 40% of the absolute cooler market, the alteration
health-consciousness of the bazaar could accept a austere affect.
 Of course, both Coke and Pepsi accept already adapted into these markets, acceptance them to accept added
cogent bazaar shares and account any losses incurred due to fluctuations in the market.

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 CORPORATE GOVERNANCE AT COCA COLA

Coca-Cola India operations are fully integrated into the governance structure of The Coca-
Cola Company, including two important codes:

(a) The Code of Business Conduct outlines expectations for employees to comply with
the law and act ethically in all matters. The Code remains applicable to all
employees of The Coca-Cola Company and its majority- owned subsidiaries.

Anti-Bribery Policy: The Coca-Cola Company and its subsidiaries are committed to doing
business with integrity. This means avoiding corruption of all kinds, including bribery of
government officials. We will abide by all applicable anti- bribery laws, including the U.S.
Foreign Corrupt Practices Act, and local laws in every country in which it does business. The
Company is a signatory to the United Nations Global Compact, by which it is committed to work
against corruption and bribery around the world. The Company also has incorporated a
prohibition against bribery into its Code of Business Conduct. This anti-bribery policy provides
compliance requirements to prevent improper payments and to ensure accurate reporting of
permissible payments under all applicable anti-bribery laws.

(b) The Code of Business Conduct for Suppliers seeks to extend and clarify similar ethical
expectations to our suppliers. The Supplier Code became effective in February 2008. Both the
Code of Business Conduct and the Supplier Code highlight the Ethics Line reporting service,
through which individuals can confidentially ask questions or report concerns to an independent
administering party.

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 BRANDS IN INDIA

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 4 STRATEGIES ADOPTED

BY COCA COLA AND PEPSICO

The Pepsi Process: Despite being a global brand, Pepsi has built its success on meeting the
Indian consumer’s needs, particularly in terms of making the brand synchronize with localized
events and traditions. Instead of harping on its global lineage, ergo, it tries to plug into ethnic
festivals, use the vernacular indifferent part of the country, and blend into the local fabric. Pepsi
is using both national campaigns-such as the Drink Pepsi, Get Stuff scheme, which offers large
discounts on other products to Pepsi-buyers as well as local.

The Coke Copy: Instead of creating a bond with the customers through small but high-impact
events, Coca-Cola chose to associate itself with national and international mega events like the
World Cup Cricket, 1996, and world cup football 1998. But now coke is also entering into local
actions. Coke is also trying to make their brand synchronize with localized events traditions and
festivals. Coca-Cola new tag line in this advertisement is “Real shopping, real refresher”. In this
way Coke is copy Pepsi.

Empowerment
The Pepsi Process: Once of the strongest weapons in Pepsi’s armory is the flexibility it has
empowered its people with. Every manager and salesperson has the authority to take whatever
steps he, or she, feels will make consumers aware of the brand and increase its consumption.
The Coke Copy: Flexibility is the weapon that Coca-Cola, fettered as it is by the need for
approvals from Atlanta for almost everything. In the past, this has shown up in its stubborn
insistence on junking the franchisee network it had acquired from Parle; in its dependence on its
own feedback mechanism over that of its bottlers;’ and on its headquarters-led approach.

Price
The Pepsi process: Pepsi has consistently wielded its pricing strategy as in invitation to sample,
aiming to turn trial into addiction.

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It launched the 500 ml bottle in 1994 at Rs. 8 versus Thumps Up’s Rs. 9, in April, 1996, its 1.5
liters bottle followed Coke into the marketplace at Rs. 30 – Rs 5 less than Coke’s .But it couldn’t
continue the lower price positioning for long.

The Coke Copy: Initially, coke carbon-copied the strategy by introducing its 330ml cans in
January 1996, at an invitation price of Rs. 15 before raising it to Rs. 18. By this time, it had
realized that the Coca-Cola brand did not hold enough attraction for customers to fork out a
premium. The 200ml Coke, launched so far in parts of eastern, western, and northernIndia, is
priced at Rs. 5, lowering the entry-barriers. Too really drive the market, as Coke wants to you
must go down to Rs. 3’.

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 PEPSICO VS. COKE

Competitive Comparisons
• Advertising

• Coca Cola : $34.4 million (2015) to $211.5 million

(2019)

• Pepsico : $25.3 million (2015) to $147.3

Million (2019)

 During 2018, the two companies turned in a remarkable similar set of financial results.

 Pepsico Company generated $20.4 millions throughout India, whereas Coke Company
generated $20.5 millions. Here Coke Company earned more money when compared to
Pepsi in India. So Coke dominated Pepsi in terms of the revenue generation.

 Pepsico Company earned $2.2milion in net profit and Coke Company earned $2.2million
net profit. Here the two companies are earning profits equally. So we can understand that
these two companies are competing with each other in an equal position. For this they are
adopting new strategies for the growth of their revenue and the profits.

 Pepsico Company generated free cash flow of $2.9 billion, whereas Coke Company also

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 generated the same amount of $2.9 million of free cash flows.

 Criteria Pepsico Company Coco cola Company

 Sales Growth 12.8 % 12.0 %
 Gross Margin 69.6 % 61.1 %
 Net Margin 10.7 % 10.6 %
 Cash-to-Debit ration 0.55 % 0.33 %

 Thus, Pepsico Company is either tied or has the edge over Coke in ever category except
Gross Margins. The sales growth rate of Pepsi is growing faster than Coke Company.
This is because of the strategies adopted by the Pepsi Company. Even though 92% of the
people through out the world know the brand name of Coke, they are not able to capture
the highest market share when compared to Pepsi. Pepsi has a better ration of cash versus
debt. Pepsi Company is the leader of the snacks producer in the world having 46% of the
total market share and more than seven times the size of its next largest competitor,
whereas Coke has not at all entered in to this field. In this way also Pepsi dominated
Coke in the field of snacks production.

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PEPSICO AND COCA COLA MARKET SHARE IN INDIA

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5 INTRODUCTION TO THE CONCEPT OF RATIO ANALYSIS

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Meaning of Ratio: - A ratio is simple arithmetical expression of the relationship of one number
to another. It may be defined as the indicated quotient of two mathematical expressions.
According to Accountant’s Handbook by Wixon, Kell and Bedford, “a ratio is an expression of
the quantitative relationship between two numbers”.

5.1Ratio Analysis: -

Ratio analysis is the process of determining and presenting the relationship of items and group
of items in the statements. According to Batty J. Management Accounting “Ratio can assist
management in its basic functions of forecasting, planning coordination, control and
communication”.

It is helpful to know about the liquidity, solvency, capital structure and profitability of an
organization. It is helpful tool to aid in applying judgment, otherwise complex situations.

Ratio analysis can represent following three methods.

Pure Ratio or Simple Ratio: - It is expressed by the simple division of one number by another.
For example, if the current assets of a business are Rs. 200000 and its current liabilities are Rs.
100000, the ratio of ‘Current assets to current liabilities’ will be 2:1.

‘Rate’ or ‘so Many Times’: - In this type, it is calculated how many times a figure is, in
comparison to another figure. For example , if a firm’s credit sales during the year are Rs.
200000 and its debtors at the end of the year are Rs. 40000 , its Debtors Turnover Ratio is
200000/40000 = 5 times. It shows that the credit sales are 5 times in comparison to debtors.

Percentage: - In this type, the relation between two figures is expressed in hundredth. For
example, if a firm’s capital is Rs.1000000 and its profit is Rs. 200000 the ratio of profit capital,
in term of percentage, is 200000/1000000*100
= 20%.

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 5.2 IMPORTANCE OF RATIO ANALYSIS

Ratios are useful for the following reasons:

1) Helpful in Forecasting: - The ratio can be used by financial managers for future financial
planning. Ratio calculated for a number of years work as a guide for the future.

2) Useful in Co-ordination:- Ratios are useful in co-ordination, which is very much needed in
business. The efficiency and weakness of an enterprise if communicated properly will
establish a better co-ordination among areas of appreciation and control.

3) Helpful in Control: - the most important aspect of ration analysis is that it is very useful
in controlling the areas of inefficiencies and weakness. It can be done by the management
as a technique of correction.

4) Helpful in Efficiency Appraisal: - ratios are the scale of comparison; here the variations
in financial statement, if they need appreciation, are brought to limelight.

5) Helpful in Evaluation of Financial Position: - The ratio analysis is useful for financial
diagnosis of an enterprise. The under mentioned ratios will make the above clear:

Current Ratio: - It speaks about the working capital the company is having and the funds to
pay off its short term commitments.

Solvency Ratio: - Profitability ratio, Capital gearing ratio are all such ratio that can evaluate
the financial soundless or weakness of the company.

6) Helpful to investors, Financial Institutions and Employees: - the ratios are economic
barometer useful to the investors, financial institutions and employees as they can know
the good and bad position of the company by making a comparative study of financial
statement.

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5.3CLASSIFICATION OF RATIOS

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Ratio may be classified into the four categories as follows:

A. Liquidity Ratio
a. Current Ratio
b. Quick Ratio or Acid Test Ratio

B. Leverage or Capital Structure Ratio

a. Debt Equity Ratio
b. Debt to Total Fund Ratio
c. Proprietary Ratio
d. Fixed Assets to Proprietor’s Fund Ratio

Capital Gearing Ratio

e. Interest Coverage Ratio
C. Activity Ratio or Turnover Ratio
a. Stock Turnover Ratio
b. Debtors or Receivables Turnover Ratio
c. Average Collection Period
d. Creditors or Payables Turnover Ratio
e. Average Payment Period
f. Fixed Assets Turnover Ratio
g. Working Capital Turnover Ratio

D. Profitability Ratio or Income Ratio

I. Profitability Ratio based on Sales
a. Gross Profit Ratio
b. Net Profit Ratio
c. Operating Ratio
d. Expenses Ratio
II. Profitability Ratio Based on Investment
I. Return on Capital Employed

II. Return on Shareholder’s Funds

a. Return on Total Shareholder’s Funds
b. Return on Equity Shareholder’s Funds
c. Earning Per Share
d. Dividend per Share
e. Dividend Payout Ratio
f. Earnings and Dividend Yield
g. Price Earning Ratio

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6 RESEARCH METHODOLOGY

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Research Methodology is a way to systematically solve the problems. It may be understood to
study how research is done scientifically. In this, we study various steps that are generally
adopted by the researcher in studying research problems along with the logic behind them, to
understand why we are using particular method or technique so that the research results are
capable of being evaluated. During my project, I have used a lot of data to understand concept
of Ratio analysis. The data collected was interpreted and then used as information in project.

OBJECTIVES OF THE STUDY

 To identify the comparative financial strengths of Pepsi and Coca Cola India Ltd.
 Through the Net Profit Ratio and other profitability ratio, understand the financial
position of the company.
 To know the liquidity position of the company, with the help of Current ratio.
 To find out the utility of financial ratio in credit analysis and determining the financial
capability of the firm.

NEED FOR THE STUDY

In the present scenario the competition between the soft drinks increased very high. The
companies are struggling a lot to keep up their market share in the industry and to improve the
sales of their products i.e. the turnover of the company. For this the company has to know their
position in the market and the opinion and the loyalty of the customers and the retailers when
compared to their competitor. Because of this reason the comparative analysis is very important
and useful to the Company.

By the use of comparative analysis the companies can understand the position of the company
and the strength of the company in the market. Through the comparative analysis we can
understand that what strategies the competitors are using for the increase their sales volume.
From the study we can gather the information regarding the opinion of the retailers on the
companies

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comparatively and this will help to plans for the future to increase the performance of the
company and to gain the loyalty of the retailers when compared to the competitors.

RESEARCH DESIGN

Research design is used to describe the state of affairs, as it exists at present. The research design
adopted for this study is exploratory research design. Descriptive research includes fact finding
enquiries of different kinds.

SAMPLING METHOD

This refers to the technique or procedure the research would adopt in selecting the sample.
Convenience sampling method will be chosen to conduct the survey.

SOURCES OF DATA COLLECTION

Data for this project is collected through Secondary sources. Secondary data is collected with
the help of following—

1. Annual report
Majority of information gathered from data exhibited in the annual reports of the
company.

2. Reference Books
Theory relating to the subject matter and various concepts taken from various
financial reference books.

The study contains secondary data i.e. data from books, authenticated websites and journals for
the latest updates just to gain an insight for the views of various experts.

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LIMITATIONS

Though the every researcher tries his / her best to fulfill the objectives of his / her study but still
there are some limitations.

 The authority and genuinely of the data received cannot be tested as every company does
not disclose all of its records on interest.

 False result
Accounting ratio is based on data drawn from accounting records. In this case if
data is correct, then only the ratio will be correct. The data therefore must be absolutely correct.

 Effect of price level changes

Price level changes often make the comparison of figures difficult over a period of time.
Changes in price effect the cost of production, sales and also the value of the assets.

 The comparison is rendered difficult because of differences in situations of one company as

compared to another.

 Ratios are tool of quantitative analysis only. Normally qualitative factors are needed to
draw conclusions.

 Ratio analysis is only the beginning as it gives only a little information for the purpose of
decision making.

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7 DATA ANALYSIS & OBSERVATION

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 COMPARATIVE ANALYSIS OF COCA-COLA AND PEPSI PVT. LTD.

LIQUIDITY RATIOS

1) CURRENT RATIO

Current Ratio= Current Assets

Current Liabilities

Coca Cola, Co.

Years 2018 2017 2016 2015

Current Assets $6,620,000,000 $6,480,000,000 $6,280,000,000 $6,000,000,000

Current $9,321,000,000 $9,623,000,000 $9,221,000,000 $9,121,000,000

Liabilities

Current 0.71 0.67 0.68 0.65

Ratio

Pepsi, Co.

Years 2018 2017 2016 2015

Current Assets $6,220,000,000 $6,000,000,000 $6,180,000,000 $6,220,000,000

Current $9,000,000,000 $9,323,000,000 $9,211,000,000 $9,112,000,000

Liabilities

Current 0.69 0.64 0.67 0.68

Ratio

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 COCA COLA
PEPS

INTERPRETATION

The above chart shows that in Pepsi, Current ratio is decreasing in year 2016 as compared to
year 2005. In year 2011 also the Current ratio is decreasing as compared to year 2010. In 2018
only the Current ratio is increased. This is due to increase in current assets in year 2018 as
compared to year 2017. In coca cola India Ltd, current ratio is higher than Pepsi in 2012 due to
the more current assets than Pepsi.

2) QUICK RATIO

Quick Ratio= Current Assets- Investment

Current Liabilities

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 Coca Cola, Co.

Years 2018 2017 2016 2015

Current Assets $6,620,000,000 $6,000,000,000 $6,180,000,000 $6,220,000,000

Investments $1,066,000,000 $1,076,000,000 $1,043,000,000 $1,055,000,000

Current $9,000,000,000 $9,323,000,000 $9,211,000,000 $9,112,000,000

Liabilities

Quick Ratio 0.617 0.528 0.557 0.566

Pepsi, Co.

Years 2018 2017 2016 2015

Current Assets $6,220,000,000 $6,480,000,000 $6,280,000,000 $6,000,000,000

Investments $1,000,000,000 $1,056,000,000 $1,043,000,000 $1,045,000,000

Current $9,321,000,000 $9,623,000,000 $9,221,000,000 $9,121,000,000

Liabilities

Quick 0.56 0.56 0.57 0.54

Ratio

40
 COCA PEPS
COLA I

INTERPRETATION

The above chart shows that in Pepsi, Quick ratio is increasing in the year 2016 because of more
current assets and investments but in year 2017 it again decreases. In year 2018 it remains the
same as that of 2017. In coca cola India Ltd, quick ratio is higher than Pepsi in 2018 & 2015 due
to the lesser liabilities than Pepsi. In year 2016& 2015 Pepsi has higher quick ratio than coca
cola due to the more current assets.

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ACTIVITY RATIOS

1) Account Receivable Turnover

Account Receivable Turnover Net Sales

=
Accounts
Receivable

Coca Cola, Co.

Years 2018 2017 2016 2015

Net Sales $30,990 $31,944 $28,857 $24,088

Account $3,758 $3,090 $3,317 $2,587

Receivable

Account 8.25 10.34 8.70 9.31

Receivable
Turnover Ratio

Pepsi, Co.

Years 2018 2017 2016 2015

Net Sales $43,232 $43,251 $39,474 $35,137

Account $4,624 $4,683 $4,389 $3,725

Receivable

Account
9.35 9.24 8.99 9.43
Receivable
Turnover Ratio

42
 COCA PEPS
COLA I

INTERPRETATION

The above chart shows that in Pepsi, account receivable turnover ratio is steadily increasing
from the year 2015 till 2018. In case of coca cola India Ltd, account receivable turnover ratio is
higher than Pepsi in 2016 & 2017 only. In year 2015 & 2018 Pepsi has higher ratio than coca
cola due to the more net sales.

2) Inventory Turnover Ratio

Inventory Turnover Ratio = Cost of Goods Sold

Inventory

Coca Cola, Co.

Years 2018 2017 2016 2015

Cost of Goods $2,545,715,000 $2,347,530,000 $2,447,890,000 $2,343,815,000
Sold
Inventory $1,066,000,000 $1,076,000,000 $1,505,000,000 $1,080,000,000

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 Inventory
2.38 2.18 1.62 2.17
Turnover
Ratio

Pepsi, Co.

Years 2018 2017 2016 2015

Cost of Goods $2,445,615,000 $2,237,430,000 $2,427,890,000 $2,243,810,000
Sold
Inventory $1,066,000,000 $1,056,000,000 $1,405,000,000 $1,080,000,000

Inventory
2.29 2.12 1.72 2.08
Turnover
Ratio

COCA PEPS
COLA I

INTERPRETATION

The above chart shows that in Pepsi, inventory turnover ratio is increasing in all the
succeeding years except the year 2016. In case of coca cola India Ltd, overall

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inventory turnover ratio of coca cola is higher than Pepsi. In year 2016 only Pepsi has higher
inventory turnover ratio than coca cola.

PROFITABILITY RATIOS

1) GROSS PROFIT RATIO

Coca Cola, Co.

Years 2018 2017 2016 2015

Gross Profit $152,710,500 $113,901,200 $92,447,890 $96,343,815

Net Sales $2,545,715,000 $2,347,530,000 $2,505,000,000 $2,080,000,000

Gross Profit
5.99 4.85 3.69 4.63
Ratio

Pepsi, Co.

Years 2018 2017 2016 2015

Gross Profit $111,545,715 $95,347,530 $93,447,890 $95,333,416

Net Sales $2,000,005,000 $2,076,097,000 $2,544,000,000 $2,444,000,000

Gross Profit
5.57 4.59 3.67 3.90
Ratio

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 COCA PEPS
COLA I

Norm: Higher the ratio shows higher efficiency and vice versa

INTERPRETATION

The above chart shows that in Pepsi Gross profit ratio is decreasing in year 2010 as compared
to year 2015 but in year 2017 & 2018 gross profit ratio is gradually increasing this is due to
increase in cost of sales and in coca cola India Pvt. Ltd, gross profit is increasing gradually in
year 2018 as compared to previous years.

2) NET PROFIT RATIO

Net Profit Ratio = NPAT * 100

SALE
S

Coca Cola, Co.

Years 2018 2017 2016 2015

Net Profit after $151,997,100 $113,176,100 $91,857,490 $95,772,615
Taxes

46
 Net Sales $2,545,715,000 $2,347,530,000 $2,505,000,000 $2,080,000,000

Net Profit Ratio

5.97 4.82 3.66 4.60

Pepsi, Co.

Years 2018 2017 2016 2015

Net Profit after $110,935,315 $94,636,030 $92,937,490 $94,892,116
Taxes
Net Sales $2,000,005,000 $2,076,097,000 $2,544,000,000 $2,444,000,000

Net Profit Ratio

5.54 4.55 3.65 3.88

COCA COLA
PEPS
7

2018 2017 2016 2015

Norm: Higher the ratio shows higher efficiency and vice versa

INTERPRETATION

The above chart shows that in Pepsi, Net profit is increasing year by year from 2016 to 2018
like in 2016, it was 3.65 and it moves up to 5.54 in 2018 whereas in

47
coca cola India Pvt. Ltd, net profit ratio is increasing from 2010 to 2012 but the increase in
value is more than the Pepsi.

Return on Assets and Equity comparison of

coca cola and Pepsi with industry average

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 8 SUGGESTIONS AND CONCLUSIONS

 The in-depth analysis of key financial ratios in this project helps in measuring the financial
strength, liquidity conditions and operating efficiency of the company. It also provides
valuable interpretation separately for each ratio that helps organization implementing the
findings that would help the organization to increase its efficiency.

 Ratios are only post mortem analysis of what has happened between two balance sheet
dates. For one thing the position of the company in the interim period not related by
analysis, moreover they gain no clue about the future. Ratio analysis in view of its several
limitations should be considered only as a toll for analysis rather than as an end itself.

 From the analysis it is evident that the gross profit ratio is good, whereas operating ratio is
around optimum level to the industry standards. As a whole the liquidity position of the
company is good.

 Thus finally the company must try to improve its profit margins as they are below
industry levels. This improvement may also bring up its return on investment and
overall efficiency to the company.

 The business environment of both the company is reasonably good. The company’s track
record is always oriented towards profitable growth and with strong fundamentals.

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 RECOMMENDATIONS

Soft drinks are an impulse product. When a person is thirsty, he would first think of water or
tea. Some even would prefer “Nimbooz”

The Indian population is the largest in the world today, there can be no other country in the
world, which provides so much of an opportunity for the soft-drink manufacturers. The
Indian soft drink market is at 140 million cases per year, this is very low. Thus the
consumption of soft drink can go up.

Since the entry of Coca-Cola into the country the industry is growing at a rate of 20% annually.
If this rate is maintained, then by the year 2005 the market of soft drink would be 1 billion
cases annually.

However Coca-Cola wants to accomplish this feat by them. To do this the industry has to take
certain steps. All the companies are fighting to get a major share of this growing market. They
should all try to increase the total market along with their individual shares.

On the basis of all the field work and table work done, some suggestions can be made, which
may help the company in increasing the total market as well as the sale of the companies.
The various suggestions that can be made are as follows:-

Soft drinks retail at prices between Rs. 6 and Rs. 10. These are expensive when measured
against purchasing power.

According to one study, it takes Indian 50 minutes of work to be able to buy a bottle in other
countries, the norm is five minutes. Thus to increase the total market of soft drinks,
manufactures should try and decrease the prices, so as to increase sales.

Availability is a major factor, which makes the consumer buy a soft drink. Soft drinks should
be made available more readily than present. There are only 300, 000 retailers stocking soft
drinks in India. Thus retailing outlets should be increased. Also related to this point, is vending
machines. In developed machines, vending machines are kept in all consumer areas, like super
markets, schools, amusement parks, local markets, etc. These

50
Tempt a person into buying the soft drink. So if vending machines are put in strategic areas, it
would definitely increase consumption of soft drinks.

Soft drink cans which are very convenient, as the consumer can take them anywhere, unlike a
bottle, are very expensive retailing from Rs. 15-Rs. 18. To increase sale of cans, this price
should be brought down.

Innovations increase sales of company. For e.g. fountain Pepsi increased sales of Pepsi Cans
increased sales of Coca-Cola. Thus the companies hav constantly come out with innovative
ideas.Example-300 ml plastic bottles, which the consumer can take with him, unlike the glass
bottles, which he has to return. Plastic bottles can even be used again by households for various
purposes.

The companies should conduct studies to get to know about consumer habits. For e.g. Coke
knows that Americans see 69 of its commercials every years , put 5.2 ice cubes in a glass and
prefer cans to pop out of vending machines at a temperature of 35 degrees.

If the companies know all this and more about Indian consumer behavior, it could tell them
how to sell their drinks, so as to increase sales.

It is seen In India, that people prefer having their drinks with or after food. Companies could
have commercials which show people enjoying their drink with a good meal, so that consumers
associate drinking soft drinks while having food.

Companies should try to educate the consumer about the health related subject. For e.g.:-

a) Limca is recommended to patients by doctors.

b) Cola drinks are known to be very fattening ,

But in fact cola drinks contain no calories from fat they contain calories from sugar which can
be easily burned off. The soft drink cans and plastic bottles should mention the calories and
other related information on the packing.

Companies should try to build high brand equity. This provides a number of advantages to the
company.
a) The company enjoys reduced marketing costs because of high level of consumer brand
awareness and loyalty.
b) The company will have more trade leverage in bargaining with distributors and retailers
since the customer expects them to carry the brand.

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c) The company can change a higher price than its competitors because the brand has higher
perceived quality.
d) The company can more easily launch brand extension.
e) Above all, the brand offers the company some defense against fierce price competition.

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 9 BIBLIOGRAPHY

Following books are referred for carrying out the project:-

1. Financial management by N.M. Venchalekar

2. Annual reports of Pepsi and Coca Cola

Following websites are referred:-

1. www.money.rediff.com
2. www.wikipedia.com
3. www.cocacolaindia.com

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