COMPANY PROFILE

Cadbury India is a fully owned subsidy of Kraft Foods Inc. The combination of Kraft Foods and Cadbury creates a global powerhouse in snacks, confectionery and quick meals.

With annual revenues of approximately $50 billion, the combined company is the world's second largest food company, making delicious products for billions of consumers in more than 160 countries. We employ approximately 140,000 people and have operations in more than 70 countries.

In India, Cadbury began its operations in 1948 by importing chocolates. After 60 years of existence, it today has five company-owned manufacturing facilities at Thane, Induri (Pune) and Malanpur (Gwalior), Bangalore and Baddi (Himachal Pradesh) and 4 sales offices (New Delhi, Mumbai, Kolkota and Chennai). The corporate office is in Mumbai.

Our core purpose "make today delicious" captures the spirit of what we are trying to achieve as a business. We make delicious foods you can feel good about. Whether watching your weight or preparing to celebrate, grabbing a quick bite or sitting down to family night, we pour our hearts into creating foods that are wholesome and delicious.

Currently, Cadbury India operates in four categories viz. Chocolate Confectionery, Milk Food Drinks, Candy and Gum category. In the Chocolate Confectionery business, Cadbury has 1

maintained its undisputed leadership over the years. Some of the key brands in India are Cadbury Dairy Milk, 5 Star, Perk, clairs and Celebrations.

Cadbury enjoys a value market share of over 70% - the highest Cadbury brand share in the world! Our billion-dollar brand Cadbury Dairy Milk is considered the "gold standard" for chocolates in India. The pure taste of CDM defines the chocolate taste for the Indian consumer.

In the Milk Food drinks segment our main product is Bournvita - the leading Malted Food Drink (MFD) in the country. Similarly in the medicated candy category Halls is the undisputed leader. We recently entered the gums category with the launch of our worldwide dominant bubble gum brand Bubbaloo. Bubbaloo is sold in 25 countries worldwide.

Since 1965 Cadbury has also pioneered the development of cocoa cultivation in India. For over two decades, we have worked with the Kerala Agriculture University to undertake cocoa research and released clones, hybrids that improve the cocoa yield. Our Cocoa team visits farmers and advise them on the cultivation aspects from planting to harvesting. We also conduct farmers meetings & seminars to educate them on Cocoa cultivation aspects. Our efforts have increased cocoa productivity and touched the lives of thousands of farmers. Hardly surprising then that the Cocoa tree is called the Cadbury tree!

Today, as a combined company with an unmatched portfolio in confectionery, snacking and quick meals, we are poised in our leap towards quantum growth. We are the world's No.1 Confectionery Company. And we will continue to make today delicious!

Cadbury Fun Facts:-

The total weight of Dairy Milk produced worldwide in one year is equivalent to 7230 elephants!

CADBURY WORLDWIDE:-

Cadbury India is a fully owned subsidy of Kraft Foods Inc. The combination of Kraft Foods and Cadbury creates a global powerhouse in snacks, confectionery and quick meals. We are currently the world's No.1 confectionery and biscuit company. We are also the worlds second-largest food company with sales in approximately 160 countries. We employ approximately 140,000 people.

With an incredible brand portfolio, we contrive to make a delicious difference, today and everyday.

Heritage: We have come a long way since J.L Kraft started selling cheese from a horse drawn wagon in 1903. Hard work, imagination and commitment to bring the world its favorite foods has helped us grow into a company that touches more than a billion people in 160 countries. Everyday. One at a time.

Some fast facts on the combined company:

Our Global Reach

rkets

Our Brand Portfolio

AWARDS:-

Asian Marketing Effectiveness Awards 08 Asian Marketing Effectiveness Awards 2008 for Bournvita Folk/Fusion campaign - GOLD award for the "Best Insights and Strategic Thinking" and SILVER award for the 'Most Effective Use of Advertising'. The Asian Marketing Effectiveness Awards are the region's most prestigious awards that celebrate resourceful Asian marketing. They are designed to set the standard for effective marketing within the region, and aim to uncover the campaigns that show results through innovative spirit and combining creativity with effectiveness to build world class brands.

Cadbury India ranked 7th Great Place to Work in India No. 1 FMCG Company Cadbury India has been ranked as the 7th Great Place to Work and the No. 1 FMCG company in India in 2008, by the Great Place to Work Institute. This study, in its fifth year in India , has a presence in 30 countries and is the oldest, most comprehensive and respected workplace study worldwide. Over two hundred companies throughout India participated in the survey, which measured the degree of satisfaction of employees with their place of work and picked out the best working environments. This is the fourth time we have featured amongst the Great Places to Work in India . We were ranked 10th in 2003, and were among the top 25 in 2004 and 2005. Great Place to Work 2007 'Cadbury India' has been awarded the "Bronze Award for Excellence in People Management" in the 'Great Place to Work 2007' survey conducted by Grow Talent Company Limited and Businessworld. The award recognizes Cadbury India as a national leader in the area of Human Resource Management.

Business World along with Grow Talent has been carrying out the 'Great Place to Work' survey for the past 4 years. This award is based on the ranks received in top 25 list of the Great Place to Work India studies conducted in the last four years 4

ABBY Award wins for India. The prestigious ABBY awards, held in March, recognise creative excellence in the Indian Advertising Industry. The Ulta Perk campaign won four Silver Awards in total and the Cadbury Dairy Milk Campaign, Miss Palampur, also won a Silver Award. This year Cadbury also sponsored the new 'Young ABBY' Award.

Bournvita won the Emmvie Gold for the Best Media Innovation - TV.

Cadbury Dairy Milk & Bournvita crowned as Consumer Superbrands

Cadbury Dairy Milk & Bournvita have done it again. For the second time running, Cadbury Dairy Milk & Bournvita have been declared a `Consumer Superbrand' for 2006-7 by Superbrands India

ry won the Emmvie Gold for the Best Media Innovation - TV, for brand Bournvita, for the entry Physical symbol of Confidence.

Cadbury- Ranked among India's most respected companies

Cadbury survey on

India has been ranked 5th in the FMCG sector, in a India's most respected companies by sector

conducted by Business World magazine in 2007

Cadbury wins the Effies 2006 Pappu does it again! 5

At the recent Effie 2006 awards organized by The Advertising Club of Mumbai, our 'Pappu Pass Ho Gaya' advertising campaign bagged two more awards - Gold in the Consumer Products category and Silver in the Integrated advertising campaign category

Cadbury India roars at Cannes Cadbury India received a bronze award at the Cannes Lions International Advertising Festival for partnering with a mobile phone operator in 2005 to provide exam results via SMS to school children.

Company Address: Cadbury India Ltd Plot No 25 Malanpur Industrial Area Village Gurikha, Tehsil Gohad Gwalior - 477 116 Madhya Pradesh India

THEORETICAL ASPECT
MEANING OF WORKING CAPITAL

Working capital refers to the management of current assets. Working capital refer to that part of total capital which is used for carrying out the routine or regular business operation. In other words, it is the amount of funds used for financing the day-to day operation. In short, it is the capital with which the business is worked over. Thus, the capital invested and locked up in various current assets , such as stocks of raw material, work in progress , stocks of finished goods account receivable and cash and bank balances constitutes the working capital. Working capital may be regarded as life blood of a business. Its effective provision can do much to ensure the success of a business while its in provision can do much to ensure the success of a business while its in efficient management can lead not only to loss of profits but also to the ultimate downfall of what otherwise might be considered as a promising concerns. > According to shoo-in, Working Capital is the amount of funds necessary to cover the cost of operating the enterprise. Working Capital is also known as Revolving or Circulating Capital. > According to Genesterberg, Circulating Capital means current assets of a company that are changed in the ordinary cause of business from one to another form. Example: From cash to inventory, inventories to bills receivable and bills receivable to cash.

Concept of working capital There are five concepts of working capital :o Gross Working Capital o Net Working Capital o Negative working capital o Permanent working capital o Variable working capital On the basis of the components or items comprised in working capital, working capital can be classified into the following types: 7

Gross Working capital: Simply called as working capital, refers to the firms investment in current assets. Current assets which can be converted in to cash with in the accounting year (or operating cycle) and includes cash, short term securities, debtors, Bills receivable and stock (inventory) .

Net Working Capital: Refers to the difference between current assets and current liabilities. Current liabilities are those claims of outsiders, which are expected to mature for payment with in a year and include creditors, Bills payable and outsiders expenses.

Negative working capital or working capital deficit: means the excess of current liabilities over the current assets. It accurse when the current liabilities exceed the current assets

Permanent working capital or fixed working capital: refer to the minimum amount of investment in current assets required throughout the year for carrying out the business. In other words , it is the amount of working capital which remains in the business permanently in one form or other.

Variable working capital or fluctuating working capital: refer to the amount of working capital which goes on fluctuating or changing from time to time with the change in the volume of business activities.

Ratios : The term ratio simply means one number expressed in terms of another. It describes in mathematical terms the quantitative relationship that exists between two numbers.

NEED FOR WORKING CAPITAL Every business undertaking requires funds for two purposes, investments in fixed assets & investment in current assets.

Funds required for investing in inventory, debtors & other current assets keep changing in shape & volume. Company has some cash in the beginning; this cash may be the source of raw 8

material, keeping the labor cost & other overheads. These three combined would generate work in progress, which will be converted into finished goods on the completion of the production process into debtors & when the debtor pay, the firm may generate cash. Working capital is needed for sustaining (i.e., maintaining) the sales activities. If adequate working capital is not maintain for this period ,the firm will not be able to sustain or maintain the sales , since it may not be in a position to purchase raw material and pay wages and other expenses ands produce the goods required for the sales.

NATURE OF WORKING CAPITAL In ordinary parlance, Working Capital is taken to be the fund available for meeting day-to-day requirements of enterprises. It cannot be denied that a part of the fixed or permanent capital is invested in assets, which are kept in the business or for a long period for the purpose of earning profit. These are usually known as fixed assets viz. Land & buildings, plant & machinery, furniture & fitting & intangibles like goodwill, patents, trademarks & long-term investment. Another part of permanent capital left in the business for supporting the day-to-day normal operation is known as the Working Capital. This Working Capital generates the important element of cost viz. Material, wages & expenses. These cost usually lead to production & sales in case of manufacturing concerns & sales alone in others. These costs occur gradually in a flow & do not come into being abruptly at a given moment. Hence the initial investment of cash as working capital for this specific purpose has to be continued until the sales revenue commences flowing in substantially & in a regular way. From this stage the business is found to acquire a momentum of its own. The flow of revenue is expected to continue to replace the cost lost in its day-to-day out flow for the generation of the revenue mentioned above.

SOURCE OF WORKING CAPITAL The financial manager is always interested in obtaining the working capital at the right time, at a reasonable cost and at the best possible favorable terms. A part of the working capital investment are permanent investments is fixed assets. The following is snapshot of various source of working capital.

Sources of working capital divided into two Long term Short term

Sources of long term working capital Issue of shares Floating of debentures Ploughing back of profit Loans Public deposit

Sources of short-term working capital

Internal sources Depreciation Taxation Accured expenses

External sources Trade credit Credit papers Bank credit Customers credit Govt. Assistances Loans from director Security of employees

10

WORKING CAPITAL CYCLE:-

The working capital of a concern goes on changing in shape and volume. For Instance, a concern may have some cash in the beginning. The cash may be used by the concern for the purpose of purchase of raw material, payment of wages and other expenses. These elements of cost or items of expenses, raw material , wages and overheads , will result in work- in-progress during the process of manufacture. On the in compilation of the production process, the work- in progress becomes finished goods.

Meaning The length of time involved in this cycle of conversion of cash into raw material, raw material into work-in progress, work-in-progress into finished goods, finished goods into debtors and debtors into cash again is called the operating cycle or working capital cycle of the firm, in other words, it is period between the date raw material are purchased and the date the sale proceeds of finished goods are realized by concern.

INTER-DEPENDENCE OPERATING CYCLE :

AMOUNG

COMPONENTS

OF

WORKING

CAPITAL

A company starting with cash purchase raw materials, components etc., on a cash or credit basis. These materials will be converted into finished goods after undergoing various stages of workin-process. For this purpose the company has to make payments towards wages, salaries and manufacturing costs. Payments to suppliers have to be made on purchases in the case of cash purchases and on the expiry of the credit purchases. Further, the company has to meet other operating costs such as selling and distribution costs, general administration costs and nonoperating costs described as financial costs (interest on borrowed capital). In case the company sells its finished goods on cash basis, it will pass through one more stage, viz, accounts receivable and gets back cash along with profit on expiry of credit period. Once again the cash will be used for the purchase of materials and / or payments to suppliers and the whole cycle is termed as working capital or operating cycle repeats itself. This process indicates the dependents of each stage or components of working capital on its previous stage or component. 11

WORKING CAPITAL MANAGEMENT

Introduction Working capital management is one of the most important aspects of financial management. It forms a major function of the finance manager.

Meaning

Working capital management means management or administrating of all aspect of working capital, i.e., currents assets and currents liabilities. In other words of Smith, working capital management is concerned with the problems that arise in attempting to manage the current assets, the current liabilities and the inter-relationship that exists between them.

BASIC OBJECTIVE OF WORKING CAPITAL MANAGEMENT : The basic objective of working capital management is to manage the firms working capital (i.e., currents assets and currents liabilities) in such a way that a satisfactory level of working capital (i.e., neither excessive nor inadequate working capital) is maintained. This is necessary because, if the working capital is excessive or large, the liquidity position of the firm would, no doubt, improve, but its profitability would be adversely affected, as funds would remain idle. Conversely, if the working capital is too small, the, profitability of the firm may improve, but the liquidity position of the firm would be adversely affected.

Advantages of working capital: It helps the business concern in maintaining the goodwill. It can arrange loans from banks and others on easy and favorable terms. It enables a concern to face business crisis in emergencies such as depression. It creates an environment of security, confidence, and over all efficiency in a business. It helps in maintaining solvency of the business.

12

Disadvantages of working capital: Rate of return on investments also fall with the shortage of working capital. Excess working capital may result into over all inefficiency in organization. Excess working capital means idle funds which earn no profits. Inadequate working capital can not pay its short term liabilities in time.

OBJECTIVES OF THE PROJECT 1) To identify the financial strengths & weakness of the company. 2) Through the net profit ratio & other profitability ratio, understand the profitability of the company. 3) Evaluating company s performance relating to financial statement analysis. 4) To know the liquidity position of the company with the help of current ratio. 5) To find out the utility of financial ratio in credit analysis & determinig the financial capacity of the firm.

13

PRACTICAL ASPECT

1. CURRENT RATIO : The relationship of current assets to current liabilities is known as current ratio. It is also known as bankers ratio or working capital ratio. It is relationship between firms current assets and current liability.

Current assets Current ratio = _______________________________ Current liability

STATEMENT SHOWING CURRENT RATIO Rs in lakhs YEAR CURRENT ASSETS CURRENT LIABILITIES CURRENT RATIO 1.58 1.46 1.38 1.30 1.32 2005-06 1633078 1032002 2006-2007 2106400 1442000 2007-2008 2770400 2002230 2008-09 3690107 2833290 2009-10 4293481 3244172

14

2. QUICK RATIO It is relationship between liquid assets and current liabilities. Liquid assets Quick ratio = _________________________ Liquid Liabilities

STATEMENT SHOWING QUICK RATIO Rs in lakhs YEAR LIQUID ASSETS LIQUID LIABILITIES LIQUID RATIO 1.22 1.17 1.10 1.03 1.04 1032002 1442000 2002230 2833290 3244172 2005 -2006 1258640 2006-2007 1684600 2007-2008 2216978 2008-09 2906405 2009-10 3369935

15

3. Cash Management in CADBURY PVT. LTD.: The cash management is carried out in seaways by CTM (Corporate Treasury Management). CTM is a commonly followed procedure in most of the companies.

Now we see the cash ratio / quick ratio in CADBURY PVT. LTD. CASH RATIO It is relationship between cash and current liabilities. Cash Cash ratio = _______________________ Current liabilities

Rs in lakhs YEAR CASH CURRENT LIABILITIES CASH RATIO 0.40 0.40 0.42 0.36 0.30 2005 -2006 413398 1032002 2006-2007 580900 1442000 2007-2008 838600 2002230 2008-2009 1031467 2833290 2009-2010 979008 3244172

16

4. DEBTORS TURNOVER RATIO: Debtors constitute an important constituent of current assets and therefore the quality of the debtors to a great extent determines a firms liquidity. It shows how quickly receivables or debtors are converted into cash. In other words, the DTR is a test of the liquidity of the debtors of a firm. The liquidity of firms receivables can be examined in two ways they are DTR and Average Collection Period. It indicates the number time debtors turned over each year. Generally the higher value of debtors turnover shows high efficiency to manage the credit management. Total sales Debtors turnover ratio = ______________________________ Debtors

STATEMENT SHOWING DEBTORS TURNOVER RATIO Rs in lakhs YEAR TOTAL SALES DEBTORS DEBTOR TURNOVER RATIO 1.87 1.78 1.61 1.64 1.59 716806 969582 1197487 1597550 2068875 2005 -2006 1337403 2006-2007 1723753 2007-2008 1930464 2008-2009 2621233 2009-2010 3286144

17

5. CREDITORS TURNOVER RATIO

The ratio shows on an average the number of times creditors turned over during the year. Credit purchase Creditors turnover ratio = ________________________ Average creditors

Rs in lakhs

YEAR DAYS DEBT RATIO DEBT PERIOD COLLECTION TURNOVER

2005 -2006 365 1.87

2006-2007 365 1.78

2007-2008 365 1.61

2008-2009 365 1.64

2009-2010 365 1.59

195

205

227

223

230

18

6. DEBT COLLECTION PERIOD Debtors collection period is nothing but the period required to collect the money from the customers after the credit sales. A speed collection reduces the length of operating cycle and vice versa. The more quickly the customers pay, the less risk from bad debts, the lower the expenses of collection and more liquid the nature of of this asset.

It indicates the speed with which debts are collected. Days/months in a year Debt collection period = _______________________________ Debtors turnover ratio

Rs in lakhs

YEAR CREDIT PURCHASE SUPPLIERS / CREDITORS CREDITORS TURNOVER RATIO

2005 -2006 709940

2006-2007 1018186

2007-2008 1182087

2008-2009 1762005

2009-2010 2067232

280409

353895

442400

585285

757980

2.53

2.88

2.67

3.01

2.73

19

7. WORKING CAPITAL TURNOVER RATIO

The working capital turnover ratio is also referred to as net sales to working capital. It indicates a companys effectiveness in using its working capital. The working capital turnover ratio is calculated as follows: net annual sales divided by the average amount of working capital during the same 12 month period.

Working Capital Turnover Ratio =

Cost of Sales Net Working Capital Rs in lakhs

YEAR CURRENT ASSETS CURRENT LIABILITIES WORKING CAPITAL

2005 -2006 1633078

2006-2007 2106297

2007-2008 2770472

2008-2009 3690107

2009-2010 4293481

1032002

1442011

1982084

2833290

3244172

601076

664286

788388

856817

1049309

20

RESEARCH METHODOLOGY
Research methodology is a way to systematically solve the research problem. It deals with the objective of a research study, the method of defining the research problem, the type of hypothesis formulated, the type of data collected, method used for data collecting and analyzing the data etc. The methodology includes collection of primary and secondary data.

TYPE OF RESEARCH

DESCRIPTIVE RESEARCH The study follows descriptive research method. Descriptive studies aims at portraying accurately the characteristics of a particular group or situation. Descriptive research is concerned with describing the characteristics of a particular individual or a group. Here the researcher attempts to present the existing facts by collecting data. 5.2 RESEARCH DESIGN A research design is a basis of framework, which provides guidelines for the rest of research process. It is the map of blueprint according to which, the research is to be conducted. The research design specifies the method of study. Research design is prepared after formulating the research problem. 5.3 SOURCES OF DATA Data are the raw materials in which marketing research works. The task of data collection begins after research problem has been defined and research design chalked out. Data collected are classified into primary data and secondary data PRIMARY DATA Questionnaires were used for collecting primary data SECONDARY DATA Secondary data were collected from the companys annual publications, memorandums of settlements, newspapers, journals, websites, and from library books Sample Size : Nil 21

DATA ANALYSIS, PRESENTATION AND INTERPRETATION

TABLE 1 STATEMENT SHOWING CURRENT RATIO Rs in lakhs YEAR CURRENT ASSETS CURRENT LIABILITIES CURRENT RATIO 1.58 1.46 1.38 1.30 1.32 2005-06 1633078 1032002 2006-2007 2106400 1442000 2007-2008 2770400 2002230 2008-09 3690107 2833290 2009-10 4293481 3244172

SOURCE: SECONDARY DATA FROM CADBURY PVT. LTD. ANNUAL REPORTS CHART 1

current ratio

1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2005-06 2006-07 2007-08 2008-09 2009-10 YEARS

INTERPRETATION The current ratio is a test of the short term solvency of the business enterprise since this ratio assumes current assets could be converted into cash to meet current liabilities.

PERCENTAGE

22

QUICK RATIO: TABLE 2 STATEMENT SHOWING QUICK RATIO YEAR LIQUID ASSETS LIQUID LIABILITIES LIQUID RATIO SOURCE: SECONDARY DATA FROM CADBURY PVT. LTD. ANNUAL REPORTS CHART 2 1.22 1.17 1.10 1.03 1.04 1032002 1442000 2002230 2833290 3244172 2005 -2006 1258640 2006-2007 1684600 2007-2008 2216978 Rs in lakhs 2008-09 2009-10 2906405 3369935

1.25 1.2 1.15 1.1 1.05 1 0.95 0.9 2005- 2006- 2007- 2008- 200906 07 08 09 10
YEARS

PERCENTAGE

Liqui

INTERPRETATION It is in fact the measure of the Instant debt paying ability of the business enterprise. The quick ratio in the year 2005-2006 was 1.22 and its decreased 0.04% at 2006 and 2007 (1.17) and in 2007-2008 get decreased 0.06% (1.10) and 2008-2009 get decreased 0.063% (1.03) and its get increase in slightly on 2009-2010 at 0.001%(1.04). The standard norm for this ratio is 1:1, means for every 1 rupee of current liability, company must have 1 rupee of quick assets. 23

YEAR CASH CURRENT LIABILITIES CASH RATIO

STATEMENT SHOWING CASH RATIO TABLE 3 Rs in lakhs 2005 -2006 2006-2007 2007-2008 2008-2009 413398 1032002 580900 1442000 838600 2002230 1031467 2833290

2009-2010 979008 3244172

0.40

0.40

0.42

0.36

0.30

SOURCE: SECONDARY DATA FROM CADBURY PVT. LTD. ANNUAL REPORTS CHART- 3 CASH RATIO

0.6 PERCENTAGE 0.4 0.2 2005 - 2006 - 2007 2008 - 2009 2006 2007 -2008 2009 2010 YEARS CASH 0
CASH

INTERPRETATION The Cash ratio of CADBURY PVT. LTD. in the 2005-2010 was fluctuation in 20092010 it was 0.30 times and in 2005-2006 it was 0.40 times and 2007-2008 it was reduced to 0.42. The standard norms of absolute quick ratio are 0.5:1. From the above table the firms not maintain the sufficient level of quick assets because of the day-to-day expenses .It is fluctuating between the standard norms for this ratio is 1:2 means for every 2 rupees of current Liabilities,

24

RECEIVABLES MANAGEMENT

Introduction: Receivables constitute a significant portion of the total assets of the business. When a firm seller goods or services on credit, the payments are postponed to future dates and receivables are created. If they sell for cash no receivables created. Meaning:

Receivable are asset accounts representing amounts owed to the firm as a result of sale of goods or services in the ordinary course of business.

Purpose of receivables: Accounts receivables are created because of credit sales. The purpose of receivables is directly connected with the objectives of making credit sales. The objectives of credit sales are as follows

Achieving growth in sales. Increasing profits. Meeting competition.

Factors affecting the size of Receivables: The main factors that affect the size of the receivables are Level of sales. Credit period. Cash discount.

Costs of maintaining receivables: The costs with respect to maintenance of receivables are as follows-

25

Capital costs: This is because there is a time lag between the sale of goods to customers and the payment by them. The firm has, therefore to arrange for additional funds to meet its obligations.

Administrative costs: Firm incur this cost for manufacturing accounts receivables in the form of salaries to the staff kept for maintaining accounting records relating to customers.

Collection costs: The firm has to incur costs for collecting the payments from its credit customers.

Defaulting costs: The firm may not able to recover the over dues because of the inability of customers. Such debts treated as bad debts.

Receivables management: Receivables are direct result of credit sale. The main objective of receivables management is to promote sales and profits until that point is reached where the ROI in further funding of receivables is less than the cost of funds raised to finance that additional credit (i.e.; cost of capital). Increase in receivables also increases chances of bad debts. Thus, creation of receivables is beneficial as well as dangerous. Finally management of accounts receivable means as the process of making decisions relating to investment of funds in this asset which result in maximizing the overall return on the investment of the firm.

Receivables management and Ratio Analysis:

Ratio Analysis is one of the important techniques that can be used to check the efficiency with which receivables management is being managed by a firm. The most important ratios for receivables management are as follows-

26

TABLE 4 STATEMENT SHOWING DEBTORS TURNOVER RATIO Rs in lakhs YEAR TOTAL SALES DEBTORS DEBTOR RATIO TURNOVER 1.87 1.78 1.61 1.64 1.59 2005 -2006 1337403 716806 2006-2007 1723753 969582 2007-2008 1930464 1197487 2008-2009 2621233 1597550 2009-2010 3286144 2068875

SOURCE: SECONDARY DATA FROM CADBURY PVT. LTD. ANNUAL REPORTS

CHART- 4
DEBTOR TURNOVER RATIO

2
PERCENTAGE

1.5 1 2005 2006 2007 2008

YEARS

2009 2010

INTERPRETATION Debtors constitute an important constituent of current assets and therefore the quality of the debtors to a great extent determines a firms liquidity. It shows how quickly receivables or debtors are converted into cash. In other words, the DTR is a test of the liquidity of the debtors of a firm. The liquidity of firms receivables can be examined in two ways they are DTR and Average Collection Period. .The higher the ratio, the better it is, since it would indicate that debts are being collected promptly. In the year 2009 - 2010 the debt is 1.59 comparing to the previous year came downwards.

27

DEBTO

TABLE 5
Rs in lakhs

YEAR DAYS DEBT RATIO DEBT PERIOD COLLECTION TURNOVER

2005 -2006 365 1.87

2006-2007 365 1.78

2007-2008 365 1.61

2008-2009 365 1.64

2009-2010 365 1.59

195

205

227

223

230

SOURCE: SECONDARY DATA FROM CADBURY PVT. LTD. ANNUAL REPORTS CHART 5 DEBT COLLECTION PERIOD

2005 2006

2007 2008
YEARS

2009 2010

INTERPRETATION The debt collection period of CADBURY PVT. LTD. in the 2005-2006 was 195 days and in goes to 2009 - 2010 it was increased in (0.18%) 230 days. Standard Debt Collection Period of a firm is less than 90 days. But, above tables consists of increased of DCP in rapidly.

28

DTCP

240 220 No. of Days 200 180 160

DTCP

TABLE 6 Rs in lakhs YEAR CREDIT PURCHASE SUPPLIERS / CREDITORS CREDITORS TURNOVER RATIO SOURCE: SECONDARY DATA FROM CADBURY PVT. LTD. ANNUAL REPORTS CHART -6 CREDITORS TURNOVER RATIO 2.53 2.88 2.67 3.01 2.73 2005 -2006 709940 2006-2007 1018186 2007-2008 1182087 2008-2009 1762005 2009-2010 2067232

280409

353895

442400

585285

757980

PERCENTAGE

3.2 3 2.8 2.6 2.4 2.2 2005- 2006 2006 - 2007 2007 - 2008 2008 - 2009 2009 - 2010

CTR

YEARS

INTERPRETATION: The Creditors turnover ratio of CADBURY PVT. LTD. was fluctuating during the year 2005 2010. It was upward in (2008 2009) was 3.01 times and it was downward in 2009 2010 is 2.73 times. Greater the CTR the more time firm has to pay to their creditors.

29

WORKING CAPITAL TURNOVER RATIO Table - 7 Rs in lakhs

YEAR CURRENT ASSETS CURRENT LIABILITIES WORKING CAPITAL 601076 664286 788388 856817 1049309 2005 -2006 1633078 2006-2007 2106297 2007-2008 2770472 2008-2009 3690107 2009-2010 4293481

1032002

1442011

1982084

2833290

3244172

SOURCE: SECONDARY DATA FROM CADBURY PVT. LTD. ANNUAL REPORTS

VALUES

5000000 4500000 4000000 3500000 3000000 2500000 2000000 1500000 1000000 500000 0 2005- 2006- 2007- 2008- 200906 07 08 09 10
YEARS

CA WC

CL

INTERPRETATION
In this current asset is increasing during the period of study. Current liability is also increased during the period of study. And working capital is also increasing.. 30

FINDINGS
1) Standard current ratio is 2:1 and for industry it is 1.33:1. CADBURY PVT. LTD. ratio satisfactory.

2) Acid test ratio is more than one but it does not mean that company has excessive liquidity & firm quick ratio is declining from 2005-06 to 2009-10

3) Debtors of the company were high; they were increasing year by year, so more funds were blocked in debtors. But now recovery is becoming faster.

4) Debtors turnover ratio is fluctuating from 2005-06 to 2009-10, which means inventory is not utilized in better way so it is not a good sign for the company.

5) Inventory turnover ratio is improving from 2001-02 to 2005-06.increase in ratio is beneficial for the company because as ratio increases the number of days of collection for debtors decreases.

6) Working capital turnover ratio is continuously increasing that shows increasing needs of working capital.

7) Production capacity is not utilized to the full extent

31

CONCLUSION
The study is basically done to have a deep knowledge about WORKING CAPITAL of the CADBURY PVT. LTD. is having an appropriate working capital management of the

organizations. NET PROFIT growth rate is 13.10% in 2009-10, it is showing a nominal increase in net profit as compared to last year. The GROSS PROFIT of CADBURY PVT. LTD. more or less is maintaining same margin of profit. The firm DCP is rising every year which is major concern for firm as larger the DCP greater the chances of bad debts. DTR is also decreasing in 2005-06 it was 1.87times now it has drop down to 1.59times.

Current ratio is also below the standard norm. in the financial year 2005-06 it was 1.58 now it has decreased upto 1.32.The firm should maintain the adequate level of current assets in order to discharge its current liabilities.

As far as cash ratio is concerned the firms not maintain the sufficient level of quick assets because of the day-to-day expenses . It is fluctuating between the standard norms for this ratio is 1:2 means for every 2 rupees of current Liabilities.

Company must have 1 rupee of cash and bank balance and marketable securities.

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SUGGESTIONS
1)It can be said that overall financial position of the company is normal but it is required to be improved from the point of view of profitability.

2) Net operating cycle is increasing that means there is a need to make Improvements in receivables/debtors management.

3) Company should stretch the credit period given by the suppliers.

4) Company should not rely on Long-term debts.

5) Company should try to increase Volume based sales so as to stand in the competition.

Since the CADBURY PVT. LTD. is a profit making company and the interests of the investors are also safe so for making more profit and for increasing the net profit as well as gross profit the organization should curtail its operating, administrative & non productive expense. Company is having good marketability, profitability and liquidity so the company can raise its fund. Company should not forget its Quality Policy i.e. we at CADBURY PVT. LTD., should aim to achieve and sustain excellence in all our activities. We are committed to total customer satisfaction by providing producers and services which meet or exceed the customer expectation.

Modernization of the manufacturing facilities, stress on technological innovation and training of employees at all levels shall be continuous process in CADBURY PVT. LTD..

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BIBLIOGRAPHY
Reports Books Basic corporate accounting CA Dr. Girish Ahuja, Page No. 110 Financial Management R.P Rustagi, Page No. 56 Annual Report (2005-2010) Bonus issue bulletin 2005

Websites www.Cadbury.com

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