FINANCIAL MANAGEMENT

PROJECT REPORT Submitted in partial fulfilment of the requirement for the award of Two year full time, Masters in Business Administration. By Sudhir Kumar

DEPARTMENT OF MANAGEMENT LOVELY PROFESSIONAL UNIVERSITY PHAGWARA (2011-2010)

Acknowledgement

Whatever we do and whatever we achieve during the course of our limited life is just not done only by our own efforts, but by efforts contributed by other people associated with us indirectly or directly. I thank all those people who contributed to this from the very beginning till its successful end. I sincerely thank Mr. Ashutosh Aggarwal (Account Executive, Coco Cola, Phillaur), person of amiable personality, for assigning such a challenging project work which has enriched my work experience and getting me acclimatized in a fit and final working ambience in the premises of COCO COLA. I acknowledge my gratitude to Ms. Harjeet Kaur (Lovely Professional University), for her extended guidance, encouragement, support and reviews without whom this project would not have been a success. Last but not the least I would like to extend my thanks to all the employees at COCO COLA (Aradhna Drinks & Beverages Pvt. Ltd) and my friends for their cooperation, valuable information and feedback during my project.

TABLE OF CONTENTS 1. 2. 3. a. b. c. d. e. f. 4. a. b. c. d. e. 5. 6. a. b. c. 7. 8. 9. a. b. c. d. e. f. 10. a. b. c. d. e. f. 11. 12. 13. 14. 15. 16. 17. EXECUTIVE SUMMARY LITERATURE REVIEW ABOUT THE COMPANY Company profile Mission & Vision Company Leadership Company Brands Milestones Company Profile in India FINANCIAL MANAGEMENT Introduction Financial Management Analysis Nature & importance of Financial Management The importance of Good Financial Management Financial Management Cycle 5-6 7-12 13-29 14 18 19 20 24 26 30-37 31 33 33 34 36 38-43 40 44 45-46 47-65 48-56 48 50 52 54 56 57-65 58 59 61 62 64 64 66 67 69 70 73 76 78

ANALYSIS OF FINANCIAL MANAGEMENT MANAGE MENT Schedule of changes In Financial Management 38 Percentage change in Financial Management Assessment of Financial Management 42 OBJECTIVE OF THE STUDY RESEACH METHODOLOGY ANALYSIS OF THE STUDY Analysis of various components Inventory Sundry Debtors Cash & Bank Balance Current Liability Provision Analysis FINANCIAL MANAGEMENT RATIO Receivable Ratio Payable Ratio Inventory Ratio Current Ratio Quick Ratio Financial Management Ratio PROFIT & LOSS ACCOUNT INCOME STATEMENT ANALYSIS MAJOR FINDINGS CONCLUSION RECOMMENDATION BIBLIOGRAPHY & REFRENCES ANNEXTURE

Topics covered: Introduction of Soft Drink Industry Competitive Situation Brand Competition Introdution of Coca Cola Company Important Landmarks of Company History of Coca- Cola in India Organization Structure Introduction of Organization Structure of Amrit Bottlers Pvt. Ltd. Organizational Structure Chart Sales & Distribution Process of A.B.P.L. Distribution Channel of Saket Sales & Services Pvt. Ltd. Products of the Company Brand in Indian Market Description of the Product Popular Punchlines of Coca Cola Product

INDUSTRIAL PROFILE Present soft drink boon in India was attributed to the legacy of Coca Cola, which was there in INDIA till 1977. In todays market the Coca-Cola (Coke, Thumps Up, Fanta, Limca, Sprite, Vanilla Coke, etc.) hold a 62% market share that appears to bear concentrated rush to beg a big share in the soft drink market. Various national & multinational firms are engaged in soft drink market due to increase in its demand day by day. As far as INDIA soft drink market is concerned there are major companys engaged having a big completion to capture the soft drink market are namely Coca-Cola & Pepsi. While Campa Cola & many local colas still notice in the Indian Market. Pepsi Cola attacked Coca-Cola before World War II. Coca Cola dominated the American soft drink industry, Pepsi cola was a drink less to manufactures & with a less satisfactory taste then Coke. Where as Coca-Cola major selling point was more drink for the same price and Pepsi emphasized on advertising. During World War II Pepsi & Coke both enjoyed increased sale. After the war Pepsi sale was started to fall relatively to Coke, resulting the Coca-Cola had starting to click the Market share. A number of factory contributed to Pepsi problem were poor image, poor taskforce, poor quality control etc. At that point Alfred.N.Steeler came to the presidency of Pepsi cola with a great reputation for merchandising. He and his staff recognized that the main hope lay transforming Pepsi from a cheap imitator of Coke into a class on soft drink manufacturer. By 1955 all Pepsis major weakness had been overcome, resulting sales had climbed substantially. These actions from 1955 to 1960 led to a considerable sales growth for Pepsi. In India another company engaged in soft drink market is Coca-Cola. It is one of the most widely known, accepted and admired trademarks of the world. Coca-Cola was their in India till 1977, when the Indian Government banned it due to strong resentment against multinational companys Coca-Cola was re-launched again in India in September 1993 at HATHRAS near Agra. The India people welcomed the come back of their most loved Cola in the country with great enthusiasm and vigor.
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Coca-Cola marked its re-launching with acquiring five Parley drinks viz. Thumps Up, Gold Spot, Limca, Citra, Maaza, Soda. Soft drink industry is one of the fastest growing industries in India. The basic idea behind the rapid growth of this industry is due to following reasons: 1. The great corporate war between Coke & Pepsi, who left no stone unturned, for monopolizing the India Soft Drink market. 2. The basic ideology of these two giants is to promote soft drinks as a food item in India hold. 3. The long hot summers in India have increased the consumption of soft drinks.

SOFT DRINK

Carbonated or Aerated Drink

Non-Carbonated or Non-Aerated Drink

Mixture

Branded Product

Commodit y Product

Ready to serve

Diluted before serve

Sod a

Minera l water

Cola Drink

Non-Cola Drink

Having Preservati on

Having no Preservati on Pure Mineral Water

Squashes Artificial Flavors Flavored Mineral Water

Fun Drink

Health Drink

Fruit Juice
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Gelatin based Drink

CARBONATED OR

Branded Product

Commodity Product

Cola Drinks e.g. Coke, Pepsi, ThumpsUp

Non-Cola Drinks

New Flavors e.g. Canada

Orange Flavor e.g. Mirinda, Gold Spot, Fanta

Mango Flavor e.g. Maaza, Slice

Lemon Flavor e.g. Limca, Teem, Mirinda

CARBONATED SOFT DRINK (CSD) INDUSTRY Industry Structure There are three major participants in the production-carbonated soft drinks. They are concentrate producers for example roughly one half if Pepsi colas sale are through company owned bottles ; the remaining volume is sold through franchises bottles line of soft drink in a defined territory , and not allowed to market to market a directly competitive major brand. The principal retail channel for channels for carbonate soft drink are supermarkets, convenience store, vending machines fountain service, and thousand of small outlet. Soft drinks are typically sold in glass bottle and in plastic and cans except for fountain services. In fountain service syrup is sold to a retail outlet. Which mixes the syrup with carbonated water for immediate sales.

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SOFT DRINK MARKET INDIA SCENARIO India soft drink industry is witnessing a boom time. Its growth rate is around 20% with which such growth rate, volume could reach billion crates with in 10 years. Three major multinational companies are fighting to grab a major chunk of business from Indian markets. These three coca-cola, Pepsi, Cadbury. All of these companies have seen an enormous potential in this country. Consequently, by world standard, Indian per capita consumption of soft drinks is still very low. There fore these soft drinks grants feel that fire capita consumption can only grow up. Soft drink industries has already seen and estimated sale of around 240 Cr crates higher then last years sale of 204 Cr in 1998. The Main reason for such a high growth rate heightened competition between coca-cola and Pepsi, Cadbury, bring a new entrant is for behind. India is actually more vivid in taste and preference then any other country market. Delhi jar instance, account for about 20% of total soft consumption in term of sales. There are about 4, 80,000 soft drinks retailers in India and their numbers are increasing day to day. This actually means that there is just one soft drink retailer on a population of 37,600, which is far below the international standard. Where as Philippines has one soft drink retail counter over a population of 150 people i.e. 4, 00,000 outlet on a population of 60 Cr.

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COMPANY PROFILE
Keeping in view of tapping the Indian soft drink market and also developing soft drinks as a drinking product among Indians. The Coca-Cola in India has setup an independent organizations which is H.C.C & B.C.C with a capital of 350 U.S.Rs each by virtue of sellout decision of the passed managing director Sh. S. C. Aggarwal. Hindustan Coca-Cola bottling (N-W) Pvt. Ltd. Najibabad took the complete possession of this plant, land, machinery, & intellectuals on February 14 1998 and since then H.C.C, looking after all its affairs under company owned bottling plant to establish integrated marketing system in the area. In 1999 the company opened up the new bottling plant at DASNA in Ghaziabad Distt. This plant has more sophisticated equipments, then the plant at Najibabad.

HISTORY OF COCA-COLA

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Fig 2 John Syth

Pemberton Jon Styth Pemberton first introduced the refreshing taste of Coca-Cola in Atlanta, Georgia it was May 1861 when the pharmacist concocted a caramel colored syrup in threelegged brass kettle in his backyard. He first distributed the new product by carrying Coca-Cola in a jug cown enjoys in a glass of Coca-Cola at the soda fountain. Whether by design or accident, carbonated water was teamed with the new syrup, producing a drink that was proclaimed Delicious and Refreshing. Dr. Pembertons Partner and bookkeeper, Mr. Frank Robinson, suggested the name and penned as Coca-Cola in the unique flowing script that is still famous worldwide today. Dr. Pembertons sold 25 gallons of syrup, shipped in bright Red wooden kegs. Red has been a distinctive color associated with the No.1 soft drink brand ever since. For his efforts, Dr. Pemberton grossed Rs 50 and spent Rs 73.96 on advertising, by 1891, Atlanta chemist as a G.Canler had acquired complete ownership of the Coca-Cola business. He purchases it from the Dr.Pemberton family for Rs 2300. With in 4 year his merchandising flair helped to expand the consumption of Coca-Cola to over Rs25 Cr. Robert W. woodruff become the president of the Coca-Cola company in 1923 and his more than six decades of leadership took the business of commercial success making Coca-Cola an institution the world over. Coca-Cola begins as a never tonic, but candy merchant Joseph A. Biedenharn of Mississippi was looking for awry to serve refreshing beverages. He responded to this demand began offering bottle Coca-Cola using syrup shipped from Atlanta, during a hot summer in 1894.

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FABULOUS FACTS ABOUT COCA-COLA 1. The worlds largest spherical coca-cola sign is in Nagoya, Japan a top the dial Nagoya building in front of the Nagoya railway station. The sing is a double sphere constructed from more then 46 tone of steel, more 940meter of neon tubing, and more then, 879 light bulbs. The outer shape features the coca-cola logo and contour bottle, while the inner sphere portrays a comic scene with twinkling planets and stars. 2. One of the worlds largest signs for coca-cola is located on a hill called ELHACHA in America, Chile. It is 400 feet wide and 131 feet high and is made from 70,000, 26 ounce bottles. 3. The first out door paint sign advertising coca-cola still exists. It was painted in 1894 in Cartersville, Georgia. 4. Coca-cola is one of the worlds most recognizable trademarks recognized in countries that account for 98 percent of the worlds population. 5. If all the coca-cola ever produced were in 8- ounce bottles. And these bottles were distributed to each person in the world. There would be 678 bottles or over 42 gallons for each person. 6. If all the coca-cola ever produced were in 8 ounce bottles, placed side by side and end to end to from a lane highway, it would wrap around the earth 82 times. 7. If all the coca-cola ever produced were flowing over Niagara fall at its normal rate of 105 Cr gallons per second instead of water, the falls would flow for about a day and a half 38 hours and 46 minutes. The largest representation of the worlds best known package 100 foot tall glass contour bottle is located at world of coca-cola LOS VEGAQS

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COCA-COLA HISTORY IN INDIA

The coca-cola company reintroduced coca-cola in India on October 23, 1993, after an absence of 16 years. The coca-cola company received approval from the government in July 1996 to set up a holding company to invest US Rs 700 Cr in downstream operation of beverages In July 1997 the holding company was permitted by the government to operationally its bottling subsidiaries. The bottling subsidiary currently owns and operates twenty-six bottling plants and sixty distribution centers across India. In addition, it uses 20 contract packers to augment its production capacity and cater to the increasing demand for its wide portfolio of beverage. India is home to one of the most ancient cultures in the world dating back over 5000 years. At the beginning of the twenty-first century, twenty-six different languages were spoken across India, 30% of the population knew English, and greater than 40% were illiterate. At this time, the nation was in the midst of great transition and the dichotomy between the old India and the new was stark. Remnants of the caste system existed alongside the worlds top engineering schools and growing metropolises as the historically agricultural economy shifted into the services sector. In the process, India had created the worlds largest middle class, second only to China. A British colony since 1769 when the East India Company gained control of all European trade in the nation, India gained its independence in 1947 under Mahatma Ghandi and his principles of non-violence and self-reliance. In the decades that followed, self-reliance was taken to the extreme as many Indians believed that economic independence was necessary to be truly independent. As a result, the economy was increasingly regulated and many sectors were restricted to the public sector. This movement reached its peak in 1977 when the Janta party government came to power and Coca-Cola was thrown out of the country. In 1991, the first generation of economic reforms was introduced and liberalization began. Coca-Cola come back in the year 1993 after liberalization and was launched at Agra with the slogan "Old wave have come to Indian again". At the time parle was the leader in the soft drink market and had more than 60% of the total shore in soft drink. Coca-Cola

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joined hands with parle and to enter India after 17 years. By striking a 40 Cr deal with Parle. Coke almost made a clear sweep and made its good as To become all time all occasion drink not a special treat beverage." Coca-Cola was the leading soft drink brand in India until 1977 when it left rather than reveal its formula to the government and reduce its equity stake as required under the Foreign Exchange Regulation Act (FERA) which governed the operations of foreign companies in India. After a 16-year absence, Coca-Cola returned to India in 1993, cementing its presence with a deal that gave Coca-Cola ownership of the nation's top soft-drink brands and bottling network. Cokes acquisition of local popular Indian brands including Thums Up (the most trusted brand in India Limca, Maaza, Citra and Gold Spot provided not only physical manufacturing, bottling, and distribution assets but also strong consumer preference. This combination of local and global brands enabled Coca-Cola to exploit the benefits of global branding and global trends in tastes while also tapping into traditional domestic markets. Leading Indian brands joined the Company's international family of brands, including CocaCola, diet Coke, Sprite and Fanta, plus the Schweppes product range. In 2000, the company launched the Kinley water brand and in 2001, Shock energy drink and the powdered concentrate Sunfill hit the market. From 1993 to 2003, Coca-Cola invested more than USRs1 billion in India, making it one of the countrys top international investors By 2003, Coca-Cola India had won the prestigious Woodruf Cup from among 22 divisions of the Company based on three broad parameters of volume, profitability, and quality. CocaCola India achieved 39% volume growth in 2002 while the industry grew 23% nationally and the Company reached breakeven profitability in the region for the first time. Encouraged by its 2002 performance, Coca-Cola India announced plans to double its capacity at an investment of Rs125 Cr (Rs. 750 crore) between September 2002 and March 2003. Coca-Cola India produced its beverages with 7,000 local employees at its twenty-seven wholly-owned bottling operations supplemented by seventeen franchisee-owned bottling operations and a network of twenty-nine contract-packers to manufacture a range of products for the company. The complete manufacturing process had a documented quality control and
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assurance program including over 400 tests performed throughout the process . The complexity of the consumer soft drink market demanded a distribution process to support 700,000 retail outlets serviced by a fleet that includes 10-ton trucks, open-bay three wheelers, and trademarked tricycles and pushcarts that were used to navigate the narrow alleyways of the cities. In addition to its own employees, Coke indirectly created employment for another 125,000 Indians through its procurement, supply, and distribution networks. Sanjiv Gupta, President and CEO of Coca-Cola India, joined Coke in 1997 as Vice President, Marketing and was instrumental to the companys success in developing a brand Coca-Cola India. The Indian consumer and in tapping Indias vast rural market potential. Following his marketing responsibilities, Gupta served as Head of Operations for Company-owned bottling operations and then as Deputy President. Seen as the driving force behind recent successful forays into packaged drinking water, powdered drinks, and ready-to-serve tea and coffee, Gupta and his marketing prowess were critical to the continued growth of the Company. Indias one billion people, growing middle class, and low per capita consumption of soft rinks made it a highly contested prize in the global CSD market in the early twenty-first century. Ten percent of the countrys population lived in urban areas or large cities and drank ten bottles of soda per year while the vast remainder lived in rural areas, villages, and small towns where annual per capita consumption was less than four bottles. Coke and Pepsi dominated the market and together had a consolidated market share above 95%. While soft drinks were once considered products only for the affluent, by 2003 91% of sales were made to the lower, middle and upper middle classes. Soft drink sales in India grew 76% between 1998 and 2002, from 5,670 Cr bottles to over 10,000 Cr and were expected to grow at least 10% per year through 2012. In spite of this growth, annual per capita consumption was only 6 bottles versus 17 in Pakistan, 73 in Thailand, 173 in the Philippines and 800 in the United States.

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With its large population and low consumption, the rural market represented a significant opportunity for penetration and a critical battleground for market dominance. In 2001, CocaCola recognized that to compete with traditional refreshments including lemon water, green coconut water, fruit juices, tea, and lassi, competitive pricing was essential. In response, Coke launched a smaller bottle priced at almost 50% of the traditional package.

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IMPORTANT LANDMARKS OF COMPANY

1876 Johan Stees Pberston discovered the formula of Coke, name given seven- X of its secret formula.

1882

Coca-cola company established in Atlanta.

1915

Alexgender Samulsus and Earl R.Peassia of "Indian Rout Glass Company designed the present bottle of Coke and also it was the first patent bottle.

1950

Coca-Cola started the operation in India.

1977

Coca-cola closed operations in India.

1991

Coca-cola came back in India and opened Britco Foods Company.

1992

Coca-cola opened its first bottling plant in Pune.

1993

Coca-cola bought all the Parle Products Thumps up, Limca, Citra, Gold-spot, Maaza at, Rs40 Cr.

1994

First time cokes introduce Coca -Cola in Agra.

AWARDS Hindustan Coca-Cola Beverages Private Limited,

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Dasna unit, bags the Golden Peacock Environment Management Award 2004 The Dasna unit near Delhi in Ghaziabad has been awarded the prestigious Golden Peacock Environment Management Award 2004 (GPEMA- 2004) for excellent environment practices and effective control of environmental impact.

The Dasna unit won this award in the Food & Beverage Industry category for its environment practices among hundreds of entries received from across the country. The annual award winner is decided on the basis of a rigorous assessment procedure, which includes a visit to the facility by a team of experts.

Speaking on the occasion, Mr. Sanjiv Gupta, Division President and CEO, Coca-Cola India said, We are proud to win this coveted award. At Coca-Cola we are committed to preserve, protect and enhance the environment and this simple belief guides us in everything that we do. We will continue to further improve our systems and are confident of making a significant positive impact on our environment in times to come.

The award will be formally presented to the company shortly by Institute of Directors, an independent body that recognizes the achievements of manufacturing units under the categories of Environment, Quality and Corporate Governance, in association with World Environment Foundation (WEF), at an official function during the 6th World Congress on Environment Management.

The Dasna plant achieved this distinction by adhering to The Coca-Cola Companys internal global quality program called The Coca-Cola Quality System (TCCQS). TCCQS not only covers environment management, but also takes into consideration other business aspects such as safety and loss Prevention (SLP), product quality, packaging quality, process capability improvement and customer satisfaction. Strict compliance with TCCQS, often rated as a programmed equivalent to the internationally reputed ISO 14001 System, has also enabled all the company-owned bottling plants in the country to successfully get the coveted ISO 14001 Certification from Det Norske Veritas (DNV).

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The award has been granted after a thorough evaluation of Dasna plants compliance with a WEF prescribed program assessment format over a period of 1 year from 1st April 2003 to 31st Mach 2004 during which several environmental performance indicators were monitored and evaluated according to WEFs stringent parameters: energy use, water use, wastewater discharge, compliance with Government regulations and resource utilization.

GPEMA has been instituted by the Institute of Directors in association with World Environment Foundation (WEF) and is designed to encourage and recognize effective implementation of environment management system. The award is given both in manufacturing and service sectors.

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THE COCA-COLA PROMISE The coca-cola company exists to benefits and refresh every one it touches. The basic proposition of our business is simple , solid and timeless . when we bring refreshment , value , joy and fun to our stakeholders then we successfully nurture and protect our brand , particularly coca-cola . that is the key to fulfilling our ultimate obligation to provide consistently attractive to the owner so four business. More then a billion times every day , thirsty people around the world reach for coca-cola products for refreshment. They deserve the highest Quality every time . our promise to deliver that quality is the most important promise we make . and it involves a world-wide , yet distinctively local , network of bottling partner , supplier , distributor and retailers whose success is paramount to our own. Our investment in local communities in over 200 countries totals billions of dollars in jobs, facilities , marketing, the purchase of local good and services, and local business partnership. Always and every where , we pursue continuous innovation in the products we offer the processes we use to make them, the package we develop and the way we bring them to market .

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POLICY

The Coca-Cola Company exists to benefit and refresh everyone it touches. For us, Quality is more than just something we taste or see or measure. It shows in our every action. We relentlessly strive to exceed the world's ever-changing expectations because keeping our Quality promise in the marketplace is our highest business objective and our enduring obligation. More than a billion times every day, consumers choose our brand of refreshment because Coca-Cola is... The Symbol of Quality Customer and Consumer Satisfaction A Responsible Citizen of the World

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STRATEGY ADOPTED BY COCA-COLA TO INCREASE THE NUMBER OF CONSUMERS The 3 A's is the underlying strategy for meeting company goals to increase no. of consumers. The 3 A's are: Availability:

To increase the availability of Coca-Cola products in an improved or innovative new Packaging, dispensing systems, distribution systems, marketing programs and training and development programs. Affordability:

The consumer can afford the Coca-Cola products at a very reasonable price. Acceptability:

Making Coca-Cola brand is the beverage choice for any occasion depends on the likings, taste and preferences of the target audience. Acceptability can also be increased through advertising, sponsorships, promotions; youth market activities, community programs and other activities.

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COMPETITIVE SITUATION The cola wars had become a part of global folklore - something all of us took for granted. However, for the companies involved, it was a matter of fight or succumb.'Both print and electronic media served as battlefields, with the most bitter of the cola wars often seen in form of the comparative advertisements. In the early 1970s, the US soft-drinks market was on the verge of maturity, and as the major players, Coke and Pepsi offered products that looked the same and tasted the same,'substantial market share growth seemed unlikely. However, Coke and Pepsi kept rejuvenating the market through product modifications and pricing/promotion/distribution tactics. This modus operand was followed in the Indian markets as well with Coke and Pepsi resorting to more innovative tactics to generate consumer interest. In essence, the companies were trying to increase the whole market pie, as the market-shares war seemed to get nowhere. This was because both the companies came out with contradictory market share figures as per surveys conducted by their respective agencies - ORG (Coke) and IMRB (Pepsi). For instance, in August 2000, Pepsi claimed to have increased its market share for the first five months of calendar year 2000 to 49% from 47.3%, while Coke claimed to have increased its share in the market to 57%, in the same period, from 55%. Coke had entered the Indian soft drinks market way back in the 1970s. The company was the market leader till 1977, when it had to exit the country following policy changes regarding MNCs operating in India. Over the next few years, a host of local brands emerged such as Campa Cola, Thumps Up, Gold Spot and Limca etc. However, with the entry of Pepsi and Coke in the 1990s, almost the entire market went under their control. Making billions from selling carbonated/colored/sweetened water for over 100 years, Coke and Pepsi had emerged as truly global brands. Coke was born 11 years before Pepsi in 1887 and, a century later it still maintained its lead in the global cola market. Pepsi, having always been number two, kept trying harder and harder to beat Coke at its own game.

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In this never-ending duel, there was always a new battlefront opening up somewhere. In India the battle was more intense, as India was one of the very few areas where Pepsi was the leader in the cola segment Coke re-entered India in 1993 and soon entered into a deal with Parle, which had a 60% market share in the soft drinks segment with its brands Limca, Thums Up and Gold Spot. Following this, Coke turned into the absolute market leader overnight. The company also acquired Cadbury Schweppes'soft drink brands Crush, Canada Dry and Sport Cola in early 1999. Bottling was the biggest area of conflict between Pepsi and Coke. This was because, bottling operations held the key to distribution, an extremely important feature for soft-drink marketing. As the wars intensified, both companies took pains to maintain good relationships with bottlers, in order to avoid defections to the other camp... When Coke re-entered India, it found Pepsi had already established itself in the soft drinks market. The global advertisement wars between the cola giants quickly spread to India as well. Internationally, Pepsi had always been seen as the more aggressive and offensive of the two, and its advertisements the world over were believed to be more popular than Coke's. It was rumored that at any given point of time, both the companies had their spies in the other camp. The advertising agencies of both the companies (Chaitra Leo Burnett for Coke and HTA for Pepsi) were also reported to have insiders in each other's offices who reported to their respective heads on a daily basis... Pepsi and Coca-Cola both are American company. Pepsi earn more profit from its native country where as Coca-Cola get most part of its profit from overseas. In India, Coca-Cola capture 58% share market and Pepsi has only 42% of share market of soft drink. Coca-cola is far head in carbonated soft drink competition where as Pepsi performing well in snack segment in comparison of Coca-Cola. There are number of brands of soft drink in the market of various companies. Various brand competitors of COCA-COLA & PEPSI are as under in the following table-

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SI. No. 1.

Brand of COCA-COLA Coca Cola Thums-up Coke diet Thums Up Sprite Limca Fanta Mazza Kinley (water mineral)

Brand of PEPSI Pepsi Pepsi diet

2. 3. 4. 5. 6. 7.

7 Up Mountain Dew Mirinda lime Miranda Slice Aquafina (water mineral)

The purpose of the conventional revenue statement and balance sheet are to show, first, the result of operations for the period under review, and second, the assets and liability of the firm at the relevant date. But it is difficult to deduce any inference from the mass of figures included in the usual annual financial statement. So, in order to accurately gauge the financial health of the firm, it is generally necessary to regroup and analysis the figure as disclosed by these conventional statements to measure business performance. The analysis of financial statement consists in breaking down a complex set of factors or figures into simple elements. The analysis may generally be of two types: Analysis of financial statements over a number of years in such a case the trend is Analysis of financial position of the concern as a particular date- here the detailed

important; position as disclosed by one set of financial statements is sought to be examined.

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LIMITATION OF FINANCIAL STATEMENT

The financial position of a business concern is affected by several factors- economic, social and financial, but only financial factors are being recorded in these financial statements. Economic and social factors are felt out. Thus the financial position disclosed by this statement is not correct and accurate. The profit revealed by the profit and loss account and financial position disclosed by the balanced sheet cannot be exact: they are essentially interim reports. Exact position can be known when the business is liquidated. Facts which have not been recorded in the financial books are not depicted in the financial statement. Only quantitative factors are taken into account. But qualitative factors such as reputation and prestige of the business with the public, the efficiency and loyalty of its employees, integrity of management etc. which are equally important for the business success, are not capable of being translated in terms of money, and as such, they do not appear in the financial statement. Money items are left to the personal judgment of the accountant. For instance, provision of depreciation, stock valuation, bad debts provision etc. depends on the personal judgment of accountant. On the account of convention of conservations the income statement may not disclose true income of the business since problem losses are considered while problem incomes are ignored. The fixed assets are shown at cost less depreciation on the basis of going concern concept. But the value placed on the fixed assets may not be the same which may be realized on their sale. The data contained in the financial statement are dumb; they do not speak themselves. It is also worth while to note that human judgment is always involved in the

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interpretation of statement. It rarely happens that the users of financial statements may have the same opinion and meaning in respect of a particular accounting figure. Information conveyed by these statements mat not be comparable on account of difference between dates of preparation of these statements. Different methods of accounting followed by different concerns or difference in the nature of business of different concern etc. may render the financial statements of two concerns impossible or difficult for the purpose of comparison.

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TOOLS OF FINANCIAL ANALYSES

Financial analyses adopt the following tools for analysis of the financial statements. These are termed as method of financial analysis: Ratio analysis Comparative financial statements Common size statements Trend analysis.

RATIO ANALYSIS A ratio is only a comparison of the numerator with the denominator. The term ratio refers to the numerical or quantitative relationship between two figures. A ratio is the relationship between two figures, and obtained by dividing the former by the latter. Ratio are design to show how one number is another. Ratio analysis is important and age old technique of financial analysis. The data given in financial statements, in absolute from, are dump and are unable to communicate anything. Ratios are relative form of financial data and very useful technique to check upon the efficiency of a firm. Some ratios indicate the trend or progress or downfall of the firm. related to another. It is worked out by dividing one number by

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 IMPORTANCE OF RATIO ANALYSIS: The importances of ratio analysis are as follow: Aid to measure general efficiency: Ratios enable the mass of accounting data to be summarized and simplified. They act as an index of the efficiency of the enterprise. As such they served as instrument of management control. Aid to measure financial solvency: Ratio are useful tools in the hands of management and other concerned to evaluate the firms performance over a period of time by comparing the present ratio with the past ones. They point out firms liquidity position to meet its short term obligations and long term solvency. Aid in forecasting and planning: Ratio analysis is an invaluable aid to management in the discharge of its basic function such as planning, forecasting, control etc. the ratio that are derived after analyzing and scrutinizing the past result, helps the management to prepared budgets to formulate policies and to prepared the future plan of action etc. Facilitate decision making: Effective tool: It shows light on the degree of efficiency of the management and utilization of the assets and that is why it is called surveyor of efficiency. They help management in decision making.

Ratio analysis is help in making effective control of the businessmen. Ratio ensures secrecy.

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LIMITATION OF RATIO ANALYSIS: Ratio analysis is, as already mentioned, a widely- used tool of financial analysis. It is because ratio is simple and easy to understand. But they must be used very carefully. They suffer from various limitations. If due care is not taken, they might confuse than clarity the situation. Different firms may use these terms in different senses or the same firm may use them to mean different things at different times. Some of the limitations of the ratio analysis are given below: Limitation of accounting records: Ratio analysis is based on financial statements which are themselves subject to limitations. Thus, ratios calculated on the figures given in the financial statements, also suffers from similar limitation. No allowances for price level changes: Due to change in price level of various years, comparison of ratio of such years cannot give correct conclusion. A change in the price level can seriously affect the validity of comparison of ratio computed for different time periods. For instance, a firm which has purchased an assets at a lower price, will show a higher return, then the firm which has purchased the at an assets at a higher price. Changes in accounting procedure: Comparison between two variables proves worth provided their basis of valuation is identical. But in reality, it is not possible, such as methods of valuation of stick or charging different firms for their valuation, and then comparison will practically be of no use.

Limited used of single ratio: A single ratio would not be able to convey anything. Ratio can be useful only when they are computed in a sufficient large number. If too many ratios are calculated, they are likely to instead of revealing meaningful conclusion.
32

Background is overlooked: When inter- firm comparison is made, they differ substantially in age, size, nature of product etc. when an inter firm comparison is made, these factors are not considered. Therefore, ratio analysis cannot give satisfactory result.

Changing policies: Ratio is computed on the basis of past result. Past is not an indicator of future. Ratios computed from historical data are used for predicting and projecting the likely events in the future. Such ratio may provide a glimpse of firms past performance. But forecast for nature may not be correct as several other factors like management policies, market condition etc. may induce future operations.

33

 COMMON SIZE STATEMENTS Ratio analysis apart, another useful way of analyzing financial statement is to convert them into common size statement by expressing absolute rupee amount into percentages. When this method is pursued the income statement exhibits each expense item or group of expense items as a percentage of net sales and net sales are taken as 100 percent Common Size Financial Statements Common size ratios are used to compare financial statements of different-size companies, or of the same company over different periods. By expressing the items in proportion to some size-related measure, standardized financial statements can be created, revealing trends and providing insight into how the different companies compare. The common size ratio for each line on the financial statement is calculated as follows: Item of Interest Common Size Ratio = Reference Item For example, if the item of interest is inventory and it is referenced to total assets (as it normally would be), the common size ratio would be: Inventory Common Size Ratio for Inventory = Total Assets The ratios often are expressed as percentages of the reference amount. Common size statements usually are prepared for the income statement and balance sheet, expressing information as follows:

Income statement items - expressed as a percentage of total revenue Balance sheet items - expressed as a percentage of total assets

The following example income statement shows both the dollar amounts and the common size ratios:

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COMMON SIZE INCOME STATEMENT Income Statement Revenue Cost of 70,134 Goods 44,221 25,913 13,531 12,382 2,862 3,766 5,754 Common-Size Income Statement 100% 63.1% 36.9% 19.3% 17.7% 4.1% 5.4% 8.2%

Sold Gross Profit SG&A Expense Operating Income Interest Expense Provision for Taxes Net Income

For the balance sheet, the common size percentages are referenced to the total assets. The following sample balance sheet shows both the dollar amounts and the common size ratios: Common Size Balance Sheet Balance Sheet ASSETS Cash & Marketable Securities Accounts Receivable Inventory Total Current Assets Property, Plant, & Equipment Total Assets 6,029 14,378 17,136 37,543 2,442 39,985 Common-Size Balance Sheet 15.1% 36.0% 42.9% 93.9% 6.1% 100%

LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities 14,251 35.6% Long-Term Debt 12,624 31.6% Total Liabilities 26,875 67.2% Shareholders' Equity 13,110 32.8% Total Liabilities & Equity 39,985 100% The above common size statements are prepared in a vertical analysis, referencing each line on the financial statement to a total value on the statement in a given period. The ratios in common size statements tend to have less variation than the absolute values themselves, and trends in the ratios can reveal important changes in the business. Historical comparisons can be made in a time-series analysis to identify such trends. Common size statements also can be used to compare the firm to other firms.

35

Comparisons Between Companies (Cross-Sectional Analysis) Common size financial statements can be used to compare multiple companies at the same point in time. A common-size analysis is especially useful when comparing companies of different sizes. It often is insightful to compare a firm to the best performing firm in its industry (benchmarking). A firm also can be compared to its industry as a whole. To compare to the industry, the ratios are calculated for each firm in the industry and an average for the industry is calculated. Comparative statements then may be constructed with the company of interest in one column and the industry averages in another. The result is a quick overview of where the firm stands in the industry with respect to key items on the financial statements. Limitations As with financial statements in general, the interpretation of common size statements is subject to many of the limitations in the accounting data used to construct them. For example:

Different accounting policies may be used by different firms or within the same firm Different firms may use different accounting calendars, so the accounting periods may

at different points in time. Adjustments should be made for such differences.

not be directly comparable.

36

COMPARATIVE STATEMENT

The benefits of a comparative statement are varied for a corporation. Because of the uniform format of the statement, it is a simple process to compare the gross sales of a given product or all products of the company with the gross sales generated in a previous month, quarter, or year. Comparing generated revenue from one period to a different period can add another dimension to analyzing the effectiveness of the sales effort, as the process makes it possible to identify trends such as a drop in revenue in spite of an increase in units sold. Along with being an excellent way to broaden the understanding of the success of the sales effort, a comparative statement can also help address changes in production costs. By comparing line items that catalog the expense for raw materials in one quarter with another quarter where the number of units produced is similar can make it possible to spot trends in expense increases, and thus help isolate the origin of those increases. This type of data can prove helpful to allowing the company to find raw materials from another source before the increased price for materials cuts into the overall profitability of the company. A comparative statement can be helpful for just about any organization that has to deal with finances in some manner. Even non-profit organizations can use the comparative statement method to ascertain trends in annual fund raising efforts. By making use of the comparative statement for the most recent effort and comparing the figures with those of the previous years event, it is possible to determine where expenses increased or decreased, and provide some insight in how to plan the following years event.

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SCHEDULE OF CHANGES IN FINANCIAL MANAGEMENT FINANCIAL MANAGEMENT FOR 2009 TO 2011 2009 A CURRENT ASSET Rs CR Cash & Equilvalnts Accounts Receivable Inventory Other current Asset Total Current asset B CURRENT LIABILITY Accounts Payable Short term debt Accrued Liability Total current liability 1677 374 0 2051 1968 247 0 2215 1675 1408 0 3083 629 1332 533 255 2749 647 1520 577 342 3086 966 1371 528 276 3141 2010 2011

NET

FINANCIAL 698 871 58

MANAGEMENT(A-B)

CHART ANALYSIS

38

1000 500 0 2006 2007 2008 691 871 58

PERCENTAGE CHANGE IN CURRENT ASSET & CURRENT LIABILITY FROM 2009 TO 2011

A CURRENT ASSET Cash & Equilvalants Accounts Receivable Inventory Other current Asset Total Current asset B CURRENT LIABILITY Accounts Receivable Short term debt Accrued Liability Total current liability CHART ANALYSIS

2009

2010

2011

5.3 11.2 4.5 2.1 23.1

4.9 11.6 4.4 2.6 23.5

7.4 10.6 4.1 2.1 24.2

14.1 3.1 0 17.2

15 1.9 0 16.9

12.9 10.8 0 23.7

39

25 20 15 10 5 0 2009 2010 17.2 16.9

23.7

2011

ASSESMENT OF FINANCIAL MANAGEMENT REQUIREMENT (MAXIMUM PERMISSIBLE BANK FINANCE)

2009 1 2 3 4 5 6 7 8 Total Current Assets current Liabilities (Other than Bank Borrowings) working capital gap(1-2) Min. stipulated Net working capital( 25% of Total C.A) Actual/ projected Net W.C. item 3 minus item 4 item 3 minus item 5 Max. Permissible Bank Finance (item 6 or 7, Whichever is less) 2749 629 2120 687.25 698 1432.75 1422 1422

2010 3086 647 2439 771.5 871 1667.5 1568 1568

2011 3141 966 2175 785.25 58 1389.75 2117 1389.75

ANALYSIS Financial Management ensures a company has sufficient cash flow in order to meet its short-term debt obligations and operating expenses. In 2009 the company have Rs.691CrRs. Its shows good

40

financial position of the company. In 2010 it increases to 871 Cr Rs. In this year company have take less short term debt from previous year. This year company uses his own funds. Its shows the efficient Financial Management by Coco Cola. In 2011 the company have only 58 Cr Rs Financial Management because in this year company have takes much more short term loans for its expansion and pay for his day to day expenses. Its shows the company have not utilise efficiently the fixed assets. In this year world economy faces downturns. Recession has also affected on Coco Cola. This year. For this company has take Rs1408 Cr. Short term loans. Its increases the current liability of the company. Company pay its quickly in his payable time. Its shows the good liquidity position of the company in 2011. This year company have more cash & bank balance in hand from the previous year. Its 50% more than from the previous year. This year company have Rs1675 Cr. Accounts payable it is less from the previous year. It is good for the company.

Objective of the study To observe the systems, process, interactions in the organization. To study and analyze the Financial Management of Coco Cola. To study that how they use Financial Management to solve day to day problems.

41

To study about their Operating Cycle, cash conversion cycle, processing period.

42

Research Methodology Research in common parlance refers to search for knowledge The term research refers to the systematic method consisting of enunciating the problem , formulating a hypothesis collecting the data , analyzing the facts and reaching the certain conclusions either in the form of solution towards the concern problem or in certain generalization for some theoretical formulation . Research Methodology is a way to systematically solve the research problem .It may be understood as a science of studying how research is done scientifically. For completing the project work, data inputs were collected from the following sources: Primary Data: Collected data through discussion with the Finance manager in Coco Cola. Collected data during working in Coco Cola.

Secondary Data: Collected data from personnel manual of Coco Cola. Collected data from different magazines, journals, News papers and Internet.

For this project Ive used the secondary data in the form of Annual report 2009, Annual report 2010, and Annual report 2011.

TOOLS Ive used analysis tools that are mention below Ratio Analysis Charts & Graphs

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ANALYSIS OF VARIOUS COMPONENTS OF FINANCIAL MANAGEMENT

44

INVENTORY ANALYSIS

Inventory is total amount of goods and materials content in a store of factory at any given time. Inventory means stock of three things :1. Raw materials 2. Semi finished goods. 3. Finished goods.

Position of inventory in Coco Cola

Rs. IN CR.Rs

Inventories Raw Material & Supply Finished goods Total

2009 175 358 533

2010 195 382 577

2011 185 343 528

CHART ANALYSIS

45

100% 80% 60% 40% 20% 0% 2009 2010 2011 533 577 528

INTERPRETATION By analyzing the 3 years data we see that the inventories are increased in year 2010 by 577. We are looking approximate same pattern in inventories. We can see that inventories are grown by 4.1% and 4.1% in 06 and 07 respectively from previous year. By this growth we can say that the company is growing very smoothly in soft drink sector. A company uses inventory when they have demand in market and Coco Cola is having a great demand in beverages sector. From other point of view we can say that the liquidity of firm is blocked in inventories but to stock is very good due to uncertainty of availability of raw material in time.

SUNDRY DEBTORS ANALYSIS

46

Debtors or an account receivable is an important component of Financial Management and fall under current assets. Debtors will arise only when credit sales are made.

POSITION OF SUNDRY DEBTORS IN COCO COLA CO

RS. IN CR Rs 2009 Debtors Net Trade accounts receivable Allowances for doubtful accounts Accounts receivable Other receivable 1026 52 198 56 1332 1319 54 188 67 1628 1208 71 154 80 1513 2010 2011

47

CHART ANALYSIS

1800 1600 1400 1200 1000 800 600 400 200 0 2009 1332

1628

1513

2010

2011

INTERPRETATION In the table and figure we see that there is rise in the debtors in Coco Cola Limited in the successive years. A simple logic is that debtors increase only when sales increase and if sales increases it is good sign for growth. We can say that it is a good sign as well as negative also. Company policy of debtors is very good but a risk of bad debts is always present in high debtors. When sales is increasing with a great speed the profit also increases. If company decreases the Debtors they can use the money in many investment plans.

48

CASH AND BANK BALANCE ANALYSIS Cash is called the most liquid asset and vital current assets. It is an important component of Financial Management. In a narrow sense, cash includes notes, bank draft, cheque etc while in a broader sense it includes near cash assets such as marketable securities and time deposits with bank.

POSITION OF CASH & BANK BALANCE IN COCO COLA

RS.IN CR. Rs 2009 CASH in hand& BANKBALANCE & EQUILANTS 629 2010 647 2011 966

CHART ANALYSIS
49

1000 800 600 400 200 0 2006 2007 629 647

966

2008

INTERPRETATION If we analyze the above table and chart we find that it follows a increasing trend. In the year 2009 it had maintained a 629 Cr Rs amount of cash and bank balance which has increase in the year 2010 up to 647 Cr Rs but there is huge increase between the year 2010 and 2011. Although companys cash is increasing this is very good sign for company. Holding more cash is not good it means company not using the cash for better projects. The analysis shows that the fix deposits of company are rapidly increase in last year as 49% respectively from previous year. Company is utilizing the fixed cash for exploding the projects that is good for growth.

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POSITION OF CURRENT LIABILITIES IN COCO COLA IN CR. Rs

CURRENT LIABILITIES Accounts payable and Other Current Liabilities Short term liabilities Current Maturities Total 1677 374 0 2051 1968 240 7 2215 1675 103 1305 3083

CHART ANALYSIS

51

4000 3000 2000 1000 0 2009 2010 2051 3083 2215

2011

INTERPRETATION we analyze the above table then we can see that it follow an uneven trend. The important component of current liabilities is sundry creditors and other liabilities. In 06-07 it increased by 17% and in 07-08 it increased by 16.9%. In 07-08 it was increased because of growth in short term debt by 39%.This is liability for company so this should be less. When company have minimum liabilities it creates a better goodwill in market. High current liabilities indicate that company is using credit facility. PROVISION ANALYSIS

2009 Deferred taxes Proposed Dividend Income tax 61 90 159 310

2010 42 113 177 332

2011 47 135 112 294

CHART ANALYSIS

52

340 330 320 310 300 290 280 270 2009 310

332

294

2010

2011

INTERPRETATION From the above table we can see that provision shows an approximate same trend and the huge amount is being kept in these provisions. Though the profits of the company are increased income tax is also increased which is good that company is creating goodwill in market by paying income tax in time. Other provisions are also for the benefit of employees and public. This is good sign for Company growth.

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54

POSITION OF RECEIVABLE RATIO IN COCO COLA CO DEBTORS RECEIVABLE RATIO = ___________ SALES * 365

YEARS RECEIVABLE RATIO

2009 10.1

2010 9.5

2011 9.5

CHART ANALYSIS

10.2 10 9.8 9.6 9.4 9.2

10.1

9.5

9.5

2006

2007

2008

INTERPRETATION Generally a low debtors turnover ratio implies that it considered congenial for the business as it implies better cash flow. The ratio indicates the time at which the debts are collected on an average during the year. Needless to say that a high Debtors Turnover Ratio implies a shorter collection period which indicates prompt payment made by the customer. Now if we analyze the three year data we can say that it holds a good position while receiving its money from its debtors. The ratios are same in last two year, which implies that recovery position is good and company should maintain these positions.

POSITION OF PAYABLE RATIO IN COCO COLA CO

55

CREDITORS PAYABLE RATIO = _______________ COST OF SALES *365

YEARS PAYABLE RATIO (IN DAYS) CHART ANALYSIS

Series 1 Series 2 2006 87.4 2007 90.3 2008 87.6

2009

2010

2011

87.4

90.3

87.6

Series 3

To resize chart data range, drag lower right corner of range.

INTERPRETATION Actually this ratio reveals the ability of the firm to avail the credit facility from the suppliers throughout the year. Generally a low creditors turnover ratio implies favourable since the firm enjoys lengthy credit period. Now if we analyze the three years data we find that in these year the ratio was approximately same high which means that its position of creditors is good, but in the 2010 it increases to 90 days. In next year it is seen that it has followed a decreasing trend which is very good sign for the company. So we can say it enjoys a very good credit facility from the from the suppliers. POSITION OF INVENTORY RATIO IN COCO COLA CO Average stock

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INVENTORY TURNOVER RATIO.

______________ Cost of goods sold

* 365

YEARS I.T.R. RATIO CHART ANALYSIS

13.8 13.7 13.6 13.5 13.4 13.3 13.2 13.1 2009 2010 13.3 13.7

2009 13.7

2010 13.3

2011 13.7

13.7

2011

INTERPRETATION This ratio tells the story by which stock is converted into sales. A high stock turnover ratio reveals the liquidity of the inventory i.e., how many times on an average, inventory is turned over or sold during the year. If a firm maintains a minimum stock level in order to maximize sales by quick rotation of inventory and the holding cost of inventory will be minimum. A low stock turnover ratio reveals undesirable accumulation of obsolete stock. By analyzing the three year data it seen that it follows an approximately same trend. We see that from the year 2009 to 2011 it is more or less double which has been rectified in the year 2011. But it is needless to say that ratio the company maintains is very high and the company is required to take measures to lower down this ratio as it affects the Financial Management cycle of company and the flow of cash in the company. POSITION OF CURRENT RATIO IN COCO COLA CO TOTAL CURRENT ASSET CURRENT RATIO = ________________________ TOTAL CURRENT LIABILITY YEARS 2009
57

2010

2011

CURRENT RATIO

1.34

1.39

1.02

CHART ANALYSIS
1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2009 2010 2011 1.34 1.39 1.02

INTERPRETATION This ratio reflects the financial stability of the enterprise. The standard of the normal ratio is 2:1 but in most of companies standard is taken according to Tandon Committee which is taken as 1.33:1. Now if we analyze the three years data it can be predicted that it holds a stable position all throughout period but it is seen that it holds a low position than the standard one and the company is required to improve its position.

POSITION OF QUICK RATIO IN COCO COLA CO TOTAL LIQUID ASSET QUICK RATIO = ________________________ TOTAL CURRENT LIABILITY

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YEARS QUICK RATIO

2009 1.08

2010 1.13

2011 0.84

CHART ANALYSIS
1.2 1 0.8 0.6 0.4 0.2 0 2009 2010 2011 1.08 1.13 0.84

INTERPRETATION It is the ratio between quick liquid assets and quick liabilities. The normal value for such ratio is taken to be 1:1. It is used as an assessment tool for testing the liquidity position of the firm. It indicates the relationship between strictly liquid assets whose realizable value is almost certain on one hand and strictly liquid liabilities on the other hand. Liquid assets comprise all current assets minus stock. By analyzing the three years data it can be said that its position was good in the year 2009 and 2010 but its decrease in the next year. But it is to be said that it is higher than the standard in the year 2009 & 2010. Its shows the higher liquidity position of the company.

FINANCIAL MANAGEMENT TURNOVER RATIO COST OF SALE FINANCIAL MANAGEMENT RATIO = __________________ NET FINANCIAL MANAGEMENT

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YEARS Financial Management ratio CHART ANALYSIS

2009

2010

2011

9.88

8.46

130.79

140 120 100 80 60 40 20 0 9.88 2009 8.46 2010 2011 130.79

INTERPRETATION This ratio indicates whether the investments in current assets or net current assets (i.e., Financial Management) have been properly utilized. In order words it shows the relationship between sales and Financial Management. Higher the ratio lower is the investment in Financial Management and higher is the profitability. But too high ratio indicates over trading. This ratio is an important indicator about the Financial Management position. Now if we analyze the three years data, we find that it follows an increasing trend which means that its investment in Financial Management is lower and the company is utilizing more of its profit. But we find that in2011 the ratio was increasing up to 130. In this year company takes much more short term loans for its short time requirement which is not a good sign for the company and the company is required to look into these matters closely. PROFITABILITY ANALYSIS

Particulars 2009 Net Sale

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RS.IN CR. Rs 2010 13591 2011 13,796

12730

Cost of goods sold Operating Profit before Interest Operating Profit after Interest Profit/Loss before Tax Profit/Loss after Tax Dividend Payout/Drawing

6900 5830 5830 681 522 0.41

7370 6221 1071 709 532 0.53

7586 6210 649 274 162 0.65

FINDINGS Coco Cola bottling group has once again, demonstrated the power of our operating capabilities and unique assets in 2011. Comparable diluted earnings per share growth of 3% to Rs2.27

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Worldwide revenue growth of 2% Comparable operating income growth of 2% Returned Rs624 Cr in cash to shareholder This year company takes Rs1400Cr short term loans because of macro downturns in economy. In 2011 company gives .65Rs dividend to his share holder. This year company have 2% growth in EPS this is very low from the previous year because company has paid many interest on short term loans. economics

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Measures to Improve Financial Management at COCO COLA: The essence of effective Financial Management is proper cash flow forecasting. This should take into account the impact of unforeseen events, market cycles, loss of a prime customer and actions by competitors. So the effect of unforeseen demands of Financial Management should be factored by company. This was one of its reasons for the variation of its revised Financial Management projection from the earlier projection. It pays to have contingency plans to tide over unexpected events. While marketleaders can manage uncertainty better, even other companies must have riskmanagement procedures. These must be based on objective and realistic view of the role of Financial Management. Addressing the issue of Financial Management on a corporate-wide basis has certain advantages. Cash generated at one location can well be utilized at another. For this to happen, information access, efficient banking channels, good linkages between production and billing, internal systems to move cash and good treasury practices should be in place. An innovative approach, combining operational and financial skills and an allencompassing view of the companys operations will help in identifying and implementing strategies that generate short-term cash. This can be achieved by having the right set of executives who are responsible for setting targets and performance levels. They could be then held accountable for delivering, encouraged to be enterprising and to act as change agents. Effective dispute management procedures in relation to customers will go along way in freeing up cash otherwise locked in due to disputes. It will also improve customer service and free up time for legitimate activities like sales, order entry and cash collection. Overall, efficiency will increase due to reduced operating costs.

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Financial Management is an important yardstick to measure a company operational and financial efficiency. This aspect must form part of the strategic and operational thinking. Efforts should constantly be made to improve the Financial Management position. This will yield greater efficiencies and improve customer satisfaction.

Inventories should be managed on a line-by-line basis using the 80/20 rule.

Placing the responsibility for collecting the debt upon the centre that made the sale. i.e., cold rolled, hot rolled, galvanized etc.

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Coco Cola bottling group has once again, demonstrated the power of our operating capabilities and unique assets in 2011. While facing unprecedented macroeconomics challenges throughout the world, PBG showed flexibility and discipline to advance our business priorities and become a stronger, more focused organisation. The overall performance of Coco Cola is getting on a good track. The total turnover of the company has registered a growth of 205 Cr where as the operating profits for the year were lower by 422 Cr mainly on the accounts of increase in the volume or sales, higher realization and effective cost control measures taken by the company. The profit before tax is 709 Cr at against 681 Crs in the previous year. The cash earning of the company improved substantially to 1437 Cr as against 1228 Cr in the last financial year. With the increase in capacity on account of expansion projects being undertaken by the company, it is expected that the company would be in a position to maintain the growth in future years. Company has parked its surplus fund in the various debt schemes of mutual fund. There is an Investment in non controlled affiliates of 619 Cr in current year. Company is cash rich but as there are expansion and diversification plans under the pipeline, company is not utilizing these funds. For meeting the Financial Management needs and capacity expansion needs it has borrowed from banks. During the year company has embarked upon expansion projects which would effectively enhance the capacity of the company. With the capacitive power plants already in operation and expansion projects under implementation, it is expected that the beverages division of the company will do well in the foreseeable future. They achieved these results by adapting quickly to the economic environment and by focusing on several business drivers to grow our top line, improve cost and productivity, and strengthen our people and culture.

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www.Coco Cola.com www.yahoofinance.com http://www.rediff.com/money/2003/aug/21Coco Cola.htm http://www.stjohns.edu/media/3/80dc682a41f44209b5da9de5f8ac8bec.pdf http://quicktake.morningstar.com/stocknet/cashflow10.aspx?Country=USA&Symbol=PBG http://quicktake.morningstar.com/stocknet/EfficiencyRatios10.aspx? Country=USA&Symbol=PBG http://www.sirCoco Cola.com/Coco Cola11.htm

REFRENCE Shashi k. Gupta (2011) Financial Management, kalyani Publications

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68

BALANCE SHEET OF COCO COLA CO PERIOD ENDING Assets Current Assets Cash And Cash Equivalents Short Term Investments Net Receivables Inventory Other Current Assets Total Current Assets Long Term Investments Property Plant and Equipment Goodwill Intangible Assets Accumulated Amortization Other Assets Deferred Long Term Asset Charges Total Assets Liabilities Current Liabilities Accounts Payable Short/Current Long Term Debt Other Current Liabilities Total Current Liabilities Long Term Debt Other Liabilities Deferred Long Term Liability Charges Minority Interest Negative Goodwill Total Liabilities Stockholders' Equity 27-Dec-08 29-Dec-07 30-Dec-06

2,064,000 213,000 4,683,000 2,522,000 1,324,000 10,806,000 3,998,000 11,663,000 5,124,000 1,860,000 2,324,000 219,000 35,994,000

910,000 1,571,000 4,389,000 2,290,000 991,000 10,151,000 4,475,000 11,228,000 5,169,000 2,044,000 1,356,000 205,000 34,628,000

1,651,000 1,171,000 3,725,000 1,926,000 657,000 9,130,000 3,839,000 9,687,000 4,594,000 1,849,000 599,000 232,000 29,930,000

6,494,000 369,000 1,924,000 8,787,000 7,858,000 7,017,000 226,000 23,888,000

6,209,000 1,544,000 7,753,000 4,203,000 4,792,000 646,000 17,394,000

5,271,000 274,000 1,315,000 6,860,000 2,550,000 4,624,000 528,000 14,483,000

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Misc Stocks Options Warrants Redeemable Preferred Stock Preferred Stock Common Stock Retained Earnings Treasury Stock Capital Surplus Other Stockholder Equity Total Stockholder Equity Net Tangible Assets

(97,000) 30,000 30,638,000 (14,122,000) 351,000 (4,694,000) 12,203,000 Rs5,219,000

41,000 30,000 28,184,000 (10,519,000) 450,000 (952,000) 17,234,000 Rs10,021,000

(79,000) 30,000 24,837,000 (7,758,000) 584,000 (2,246,000) 15,447,000 Rs9,004,000

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INCOME STATEMENT OF COCO COLA CO

PERIOD ENDING Total Revenue Cost of Revenue

27-Dec-08 13,796,000 7,586,000

29-Dec-07 13,591,000 7,370,000

30-Dec-06 12,730,000 6,810,000

Gross Profit

6,210,000

6,221,000

5,920,000

Operating Expenses Research Development Selling General and Administrative Non Recurring Others Total Operating Expenses 5,149,000 412,000 5,150,000 4,903,000 -

Operating Income or Loss Income from Continuing Operations Total Other Income/Expenses Net Earnings Before Interest And Taxes Interest Expense Income Before Tax Income Tax Expense Minority Interest Net Income From Continuing Ops Non-recurring Events Discontinued Operations Extraordinary Items Effect Of Accounting Changes
71

649,000

1,071,000

1,017,000

(25,000) 564,000 290,000 274,000 112,000 (60,000) 162,000

6,000 983,000 274,000 709,000 177,000 (94,000) 532,000

(11,000) 947,000 266,000 681,000 159,000 (59,000) 522,000

Other Items

Net Income Preferred Stock And Other Adjustments Net Income Applicable To Common Shares

162,000 Rs162,000

532,000 Rs532,000

522,000 Rs522,000

72