CHAPTER 1

INTRODUCTION
1.1 Concept of Profit
1.2 Importance of Profit
1.3 Meaning and Introduction of Profitability
1.4 Concept of Profitability
1.4.1 Accounting Profitability
1.4.2 Social Profitability
1.4.3 Value Added Profitability
1.5 Reasons for Computing Profitability
1.6 Importance of Profitability

1 INTRODUCTION
Business is conducted primarily to earn profits. The amount of profit earned
measures the efficiency of a business. The greater the volume of profit, the higher
is the efficiency of the concern. The profit of a business may be measured and
analyzed by studying the profitability of investments attained by the business.
1.1CONCEPT OF PROFIT
In general, the term profit stands for the difference between revenue and costs.
However, for one and the same activity, profit does not necessarily have to be the
same number under different points of view. Different accounting standards (like
US GAAP and IAS) or special regulations for taxation make organizations display
different profits in financial statements for different purposes.
On top of that, profit from the accountants point of view is not equal to profit from
the economists point of view. This difference is not based in different principles
on what to evaluate how, but in fundamentally different understandings of costs
and profits.
This article will describe the differences of profit in accounting and economics
without discussing details of cost theory.
1.2 IMPORTANCE OF PROFIT
The importance of profit can be understood by the following points:
It helps in development of the company positions in the market
It judge the position of their management, working involvement of worker,
proper accounting.
It acts as risk factor of company.

Increases the volume of business.

1.3 MEANING AND INTRODUCTION OF PROFITABILITY

Profitability is the ability of a business to earn a profit. A profit is what is left of the
revenue a business generates after it pays all expenses directly related to the
generation of the revenue, such as producing a product, and other expenses related
to the conduct of the business' activities.
Profitability analysis is a component of enterprise resource planning (ERP) that
allows administrators to forecast the profitability of a proposal or optimize the
profitability of an existing project. Profitability analysis can anticipate sales and
profit potential specific to aspects of the market such as customer age groups,
geographic regions, or product types.
1.4 CONCEPT OF PROFITABILITY
1.4.1 Accounting Profitability
Profitability is a measure of evaluating the overall efficiency of the business. The
best possible course for evaluation of business efficiency may be input-output
analysis. Profitability can be measured by relating output as a proportion of input
or matching it with the results of other firms of the same industry or results
attained in the different periods of operations. Profitability of a firm can be
evaluated by comparing the amount of capital employed i.e. the input with income
earned i.e. the output. This is popularly known as return on investment or return on
capital employed. It is regarded as the overall profitability ratio and has two
components; net profit ratio and turnover ratio. That is:
Return on Investment = Net Profit Ratio x Turnover Ratio
Or, Return on Investment = Operating Profit x Sales
Sales

Capital Employed

Or, Return on Investment = Operating Profit

Capital Employed
This method is increasingly accepted as an indicator of performance and capability.
This is the reason for viewing operational and financial performance in relation to
the scale of resources of funds required in production. That is, "a given amount of
profit return should be evaluated in terms of the percentage profit return on the
investment of funds." Moreover, "the return on capital used depicts the

effectiveness of all the operating decisions from the routine to the critical, made by
the management at all levels of the organization from shop foreman to President.
1.4.2. Social Profitability
Along with the economic objective of earning profits, a business is also required to
perform a large number of social objectives. Besides providing better quality of
goods and services, it provides big employment opportunities to the people, better
condition of work, fulfill community needs, conserves resources etc. C. Mean
Cardiner rightly observed, "The darkness of avarice has been dispelled by the light
of a new kind of social responsibility."7 Social objectives may prove profitable as
well as expensive lo a concern. As some objectives aids in enhancing profitability
by attracting customers like in case of providing quality goods. Whilst other may
be counteractive such as elimination of pollution may cost the company and reduce
its profitability,
but it creates social profitability. In other words of Earnest Dale, these social
objectives "appear lo urge the executive to assume an infinitely broad-gauge
burden of responsibilities to all the various public with whom he clears."8That
makes it an obligation on the part of the company to disclose its financial,
marketing, personnel and social objectives in a simple and concise form to all the
members of the concern so that they can judge the influence of these objectives on
their jobs.
1.4.3 Value Added Profitability
Wealth generation is essential for every enterprise. Value added profitability
indicates the wealth generated (net value earned) as a result of manufacturing
process during a specified period. Wealth generation is the very essence for
survival or growth of a business. An enterprise may survive without making profit
but would cease to do so without adding value. "The enterprise, not making profit,
is bound to become sick but not adding value may cause its death over a period of
lime."
Profit forms a part of value added. Thus, value added is a broader concept. "Value
added at particular level of operating capacity and claims should be determined as
value added can expose the efficiency and inefficiency of a business." The

concept of value added can be related to the concept of social profitability of an

enterprise. The investment of an enterprise comprises of the investment of
shareholders, debenture holders, creditors, financial institutions etc. If an enterprise
fails to generate growth or add anything as value added, it would simply mean that
the enterprise is misusing public funds. This concept represents the wealth
distribution in a proper manner besides suggesting how productivity can be
increased when reducing the consumption of resources produces same or better
outputs.
1.5 REASONS FOR COMPUTING PROFITABILITY
Whether you are recording profitability for the past period or projecting
profitability for the coming period, measuring profitability is the most important
measure of the success of the business. A business that is not profitable cannot
survive. Conversely, a business that is highly profitable has the ability to reward its
owners with a large return on their investment.
Increasing profitability is one of the most important tasks of the business
managers. Managers constantly look for ways to change the business to improve
profitability. These potential changes can be analyzed with a pro forma income
statement or a Partial Budget. Partial budgeting allows you to assess the impact on
profitability of a small or incremental change in the business before it is
implemented.
A variety of Profitability Ratios (Decision Tool) can be used to assess the financial
health of a business. These ratios, created from the income statement, can be
compared with industry benchmarks. Also, Income Statement Trends (Decision
Tool) can be tracked over a period of years to identify emerging problems.

1.6 IMPORTANCE OF PROFITABILITY

Profit is a very good indicator of business performance, but the real standard of
performance of a business firm cannot be judged by the absolute size of the
periodic profit. For that profitability is a good device, which represent the earning
of a business firm. Modern management is engaged in the task of maximizing the
profit and wealth. The efficiency of management is measured by the profitability of
the business; the greater is the profitability of the business, the more will be the
efficiency.

The purpose of all aquaculture enterprises is to produce aquatic animals or plants at

a profit. All operational processes and management decisions are therefore directed
to that end. If there are disruptions in production, through accidents, poor
management decisions, or for any reason, then profitability is in jeopardy. The
welfare of the saleable aquatic animals or plants produced on the farm is therefore
the most important activity of all individual aquaculture enterprises, and the focal
point of all attention by the farmer and his employees.
However, as in other agricultural industries, profitability is not only influenced by
activities on the farm. Food producers as a whole recognize two additional
processes which influence profitability of their enterprise. These are (i) postharvest handling and marketing activities, and (ii) the preparation of the product by
the consumer. Thus, in addition to their own personal responsibility for growing a
healthy animal or plant on the farm, producers have a continuing vested interest in
the responsibility of others to market quality fresh products and prepare popular
dishes for the final consumers. Unfortunately both of these activities are also
potentially vulnerable to risks which prevent their final objectives being achieved,
and thus reduce potential profitability for the middlemen and the producers.
In summary, the economic survival and strength of the aquaculture industry as a
whole is entirely dependent and subordinate to the principal tasks of producing,
marketing, and preparing quality aquatic products profitably and without risk.
Fortunately, good farmers and industrial "middlemen" know the likelihood of these
risks occurring. Through their experience they select the appropriate management
technique to avoid or minimize these risks, and to keep all three activities on the
most profitable course. This is the essence of risk management.

CHAPTER 2
COMPANY PROFILE
2.1 History
Products
CSR
2.2 Mission and Vision
2.3

COMPANY PROFILE

The story of one of India's favorite brands reads almost like a fairy tale. Once upon
a time, in 1892 to be precise, a biscuit company was started in a nondescript house
in Calcutta (now Kolkata) with an initial investment of Rs. 295. The company we
all
know
as
Britannia
today.
The beginnings might have been humble-the dreams were anything but. By 1910,
with the advent of electricity, Britannia mechanized its operations, and in 1921, it
became the first company east of the Suez Canal to use imported gas ovens.
Britannia's business was flourishing. But, more importantly, Britannia was
acquiring a reputation for quality and value. As a result, during the tragic World
War II, the Government reposed its trust in Britannia by contracting it to supply
large quantities of "service biscuits" to the armed forces.
As time moved on, the biscuit market continued to grow and Britannia grew
along with it. In 1975, the Britannia Biscuit Company took over the distribution of
biscuits from Parry's who till now distributed Britannia biscuits in India. In the
subsequent public issue of 1978, Indian shareholding crossed 60%, firmly
establishing the Indianans of the firm. The following year, Britannia Biscuit
Company was re-christened Britannia Industries Limited (BIL). Four years later in
1983,
it
crossed
the
Rs.100
crores
revenue
mark.
On the operations front, the company was making equally dynamic strides. In
1992, it celebrated its Platinum Jubilee. In 1997, the company unveiled its new

corporate identity - "Eat Healthy, Think Better" - and made its first foray into the
dairy products market. In 1999, the "Britannia Khao, World Cup Jao" promotion
further fortified the affinity consumers had with 'Brand Britannia'.
Britannia strode into the 21st Century as one of India's biggest brands and the preeminent food brand of the country. It was equally recognized for its innovative
approach to products and marketing: the Lagaan Match was voted India's most
successful promotional activity of the year 2001 while the delicious Britannia 5050 Maska-Chaska became India's most successful product launch. In 2002,
Britannia's New Business Division formed a joint venture with Fonterra, the
world's second largest Dairy Company, and Britannia New Zealand Foods Pvt. Ltd.
was born. In recognition of its vision and accelerating graph, Forbes Global rated
Britannia 'One amongst the Top 200 Small Companies of the World', and The
Economic Times pegged Britannia India's 2nd Most Trusted Brand.
Today, more than a century after those tentative first steps, Britannia's fairy tale is
not only going strong but blazing new standards, and that miniscule initial
investment has grown by leaps and bounds to crores of rupees in wealth for
Britannia's shareholders. The company's offerings are spread across the spectrum
with products ranging from the healthy and economical Tiger biscuits to the more
lifestyle-oriented Milkman Cheese. Having succeeded in garnering the trust of
almost one-third of India's one billion population and a strong management at the
helm means Britannia will continue to dream big on its path of innovation and
quality. And millions of consumers will savour the results, happily ever after.
PRODUCTS

Biscuits

Britannia is facing stiff competition from both organised and organised players in
all its categories. In biscuits, besides the presence of unorganised players, the
company is facing competition from companies like ITC (Sunfeast), Glaxo
Smithkline Consumer (Horlicks) in the premium segment & unlisted players like
Parle Agro (Parle), Surya Foods & Agro (Priya Gold) & Kraft (Oreo) etc in the
organised biscuits market.
Dairy & Bakery Products

In the dairy business, Britannia faces competition from listed player like Nestle and
unlisted companies like Amul & Mother Dairy, the two large national players. In
other Bakery products (Bread, Rusks, Cakes), the competition is largely from the

unorganised players. With the recent foray in Indian Breakfast & Savory market,
the company is likely to face competition from Marico (Saffola Oats) and Kelloggs
(Cornflakes). Currently, ready-to-cook breakfast options comprise offerings such
as idlis and dosa from players such as MTR and Gits. Britannia is likely to face
competition from these players as well, as and when it scales up its ready to cook
breakfast business. Further Britannias presence in biscuits, which is a highly
elastic, price sensitive and low margin business. However, it should be noted that
Britannia has gradually been reducing its dependence on the biscuits business over
the last two to three years. Earlier, the category contributed around 90% to the total
revenues, which has now reduced to around 80%.
Breads

In the breads segment Britannia competes with national players like Modern and
regional players like Harvest Gold in Delhi, Wibbs and Kwality in Mumbai,
Cremica and Bonn in Chandigarh. So every market has 1-2 national players and
rest being accounted for by local and regional players as shelf life of the product is
only a few days. Britannia has moved onto selling value-added Atta breads and
those with Multi-grains, oats etc. We note that realization in value added
variants is higher than base refined wheat flour variant. Britannia is ahead of
competition in innovation in bread segment.

Cake and Rusk

Britannia is the only national brand selling Rusks in India. In addition, there are
several local brands like Monginis, Toasty and Baker Street in Mumbai and several
local brands across cities. Britannia has taken upon itself the onus of developing
this category. This includes advertising and launch of small packs at `5 for
increasing out-of-home consumption and positioning the product as a snacking
option. Britannia is the only national brand in fruit cakes. It competes with regional
players who are usually present in Rusk and even in bread. We believe that these
segments offer huge growth potential which can be encashed by value-added
variants, product availability and awareness. We believe that margins at EBITDA
level for these products are 20-25% higher than the margins in the biscuits
business.

VISION AND MISSION

VISION

To dominate the food and beverage market in India with a distinctive range of
Tasty yet Healthy Britannia Brands.
MISSION

To dominate the food and beverage market in India through a profitable range of
Tasty yet Healthy products by making every Indian a Britannia Consumers. We
want to be part of consumer-at home, out of home, a natural part of his life.

In 1824, John Cadbury opened a shop in Birmingham. This one-man business,

trading mainly in Tea & Coffee was to be the foundation of Cadbury Limited. For
over 100 years Cadbury was a family business. In 1943 non family directors were
appointed. In 1847, the enterprise had prospered to a large factory in Bridge Street,
Birmingham. John Cadbury took his brother Benjamin into partnership and the
family business became Cadbury Brothers Birmingham. The business moved to
Bourneville after outgrowing the Bridge Street Factory. The Workforce had risen
up to 200 after 32 years at Bridge Street. After the death of two brothers in 1899,
the company was privatized. It entered the era of scientific management; it
introduced new ideas for their department like: Advertisement& Cost Analytical
Laboratories Sales Department Offices Education & Training for Works
Committee Medical Department employees on 2nd February, Kraft Foods took
over 71% shares of Cadbury. They acquired it totally. But still Cadbury was on top
in the market. This acquisition did not changed peoples mind and their craze for
Cadbury Dairy Milk.
Cadbury began its operation in 1948 by importing chocolates and then re-packing
them before distributing it in the Indian market. After 62 years, it is having five
companies at Thane, Induri (The companys main purpose is Working together to
create brands people love" capture the spirit of what we are trying to achieve as a
business. We collaborate and work as team to convert products into brand. Simply,
we spread happiness!

Currently Cadbury India operates in three sectors viz. Chocolate Confectionery,

Milk Food Drinks and in the Candy category.
In the Chocolate Confectionery business, Cadbury has maintained its undisputed
leadership over the years. Some of the key brands 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! Cadbury is 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 Bourn vita - the leading
Malted Food Drink (MFD) in the country. Similarly in the medicated candy
category Halls is the undisputed leader.
Pune), Malanpur (Gwalior),Bangalore, Baddi (Himachal Pradesh)and 4 sales offices in (New
Delhi ,Mumbai, Kolkata and Chennai). The corporate office is in Mumbai.

The Cadbury India Brand Strategy has received consistent support through simple
but imaginative extensions to product categories and distribution. A good example
of this is the development of Bytes. Crispy wafers filled with coca cream in the
form of a bagged snack, Bytes is positioned as "The new concept of sweet
snacking". It delivers the taste of chocolate in the form of a light snack, and thus
heralds the entry of Cadbury India into the growing bagged Snack Market, which
has been dominated until now by Salted Bagged Snack Brands. Byte was first
launched in South India in 2003.
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 advises 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.
PRODUCTS

1. CHOCOLATES
a) Cadbury Dairy Milk

The story of Cadbury Dairy Milk started way back in 1905 at Bourneville, U.K.,
but the journey with chocolate lovers in India began in 1948.

The pure taste of Cadbury Dairy Milk is the taste most Indians crave for when they
think of Cadbury dairy milk.
The variants Fruit & Nut, Crackle and Roast Almond, Carmelo, double deck, silk,
shots combine the classic taste of Cadbury Dairy Milk with a variety of
ingredients and are very popular among teens & adults.
Recently, Cadbury Dairy Milk dessert was launched, specifically to cater to the
urge for something sweet after meal.
Cadbury Dairy Milk has exciting products on offer- Cadbury Dairy Milk Wowie,
CHOCOLATE With Disney characters embossed in it, and Cadbury Dairy Milk 2
in 1, a delightful combination of milk chocolate and white chocolate. Giving
consumers an exciting reason to keep coming back into the fun filled world of
Cadbury.
b) Cadbury Celebrations

Cadbury Celebrations was aimed at replacing traditional gifting options like Mithai
and dry-fruits during festive seasons. Cadbury celebration is available in several
assortments: An
Assortments of chocolates like 5 Star, Perk, Gems, Dairy Milk and Nutties and rich
dry fruits enrobed in Cadbury Dairy Milk chocolate in 5 variants, Almond magic,
raisin magic, cashew magic, nut butterscotch and caramels.
The super premium Celebrations Rich Dry Fruits collection which is a festive
offering is an exotic range of chocolate covered dry fruits and nuts in various
flavors.
Cadbury Celebrations has become a popular brand on occasion such as Diwali,
Rakhi, and Dussera puja. It is also a major success as a corporate gifting brand.
The communication is based on the emotional route and the tag line says rishte
pakne do which fits with brand purpose.
2) SNACKS
a) CADBURY BYTES:

Cadbury bytes was launched in 2004-05 as Cadburys foray into the rapidly
growing packaged snack market.

Cadbury Bytes is a one of a kind snack, in that it is sweet and not salty, as
compared to most of the other snacks. Its a byte sized snack with a crunchy wafer
and rich Choco filling. There are three variants of Bytes available in the marketRegular, Coffee and Strawberry, at two price points Rs 5 and Rs 10.
Cadbury Bytes is positioned as the only sweet snack in the world of salty snacks.
The proposition we arrived at is Snacking ka meetha funda, where we take a potshot at other snacks, by saying Har snack namkeen nahi hota.
3) BEVERAGES
a) CADBURY BOURNVITA:

The brand has been an enduring symbol of mental and physical health ever since it
was launched in 1948. It is hardly surprising then, that Bournvita enjoys a major
presence in the Malt food market. Given its market share of 17%, Cadbury
Bournvita reaches across hundreds of cities, towns and villages through 3,50,000
outlets in India. Cadbury now offers two options to capture this appeal: Cadbury
Bournvita, with its popular chocolate taste and its latest offering, Cadbury
Bournvita 5 star Magic, leveraging the rich chocolate and caramel flavor of
Cadbury 5 star.

CHAPTER 3
RESEARCH METHODOLOGY
3.1 Concept of Research
3.2 Objective of the study
3.3 Review of Literature
3.4 Hypothesis

3.1 CONCEPT OF RESEARCH

Research in the social sciences is a diverse topic. In part, this is because the social
sciences represent a wide variety of disciplines, including (but not limited to)
psychology, sociology, political science, anthropology, communication, education,
management, and economics. Further, within each discipline, researchers can use a
number of different methods to conduct research. These methods can include
unobtrusive observation, participant observation, case studies, interviews, focus
groups, surveys, ex post facto studies, laboratory experiments, and field
experiments.
Despite this diversity in methods used and topics investigated, most social science
research still shares a number of common characteristics. Regardless of field, most
research involves an investigator gathering data and performing analyses to
determine what the data mean. In addition, most social scientists use a common
language in conducting and reporting their research: researchers in psychology and
management speak of testing null hypotheses and obtaining significant p
values.
The purpose of this chapter is to review some of the fundamental concepts and
terms thatare shared across the social sciences. You should familiarize (or
refamiliarize) yourself with this material before proceeding to the subsequent
chapters, as most of the terms introduced here will be referred to again and again
throughout the text. If you are currently taking your first course in statistics, this
chapter provides an elementary introduction. If you have already completed a
course in statistics, it provides a quick review.
Steps to Follow When Conducting Research
The specific steps to follow when conducting research depend, in part, on the topic
of investigation, where the researchers are in their overall program of research, and
other factors. Nonetheless, it is accurate to say that much research in the social
sciences follows a systematic course of action that begins with the statement of a
research question and ends with the researcher drawing conclusions about a null

hypothesis. This section describes the research process as a planned sequence that
consists of the following six steps:
1. Developing a statement of the research question
2. Developing a statement of the research hypothesis
3. Defining the instrument (questionnaire, unobtrusive measures)
4. Gathering the data
5. Analyzing the data
6. Drawing conclusions regarding the hypothesis.
The preceding steps reference a fictitious research problem. Imagine that you have
been hired by a large insurance company to find ways of improving the
productivity of its insurance agents. Specifically, the company would like you to
find ways to increase the dollar amount of insurance policies sold by the average
agent. You begin a program of research to identify the determinants of agent
productivity.

3.2 OBJECTIVES OF THE STUDY

To conduct SWOT analysis of Britannia Industries Ltd and Cadbury India Ltd.
To know the profitability position of the company, with the help of net profit
ratio.
To know the liquidity position of the company, with the help of Current ratio.
3.3 REVIEW OF LITERATURE
Dr. S.K. khartik titto Varghese, (2011) they found the profitability more or less
depends upon the better utilization of resources and to manpower. It is worthwhile
to increase production capacity and use advance technology to cut down cost of
production and wage cost in order to increase profitability, not only against the
investment, but also for investors return points of view.
Asha Sharma and R.B. Sharma (2011), these attempts identify and study the
movement of key financial parameters and their relationship with profitability of
textile industry. It is an attempt to and the study whether the key identified
parameters move in a synchronous way going up and coming down with basic
profitability parameters. All three comparably profit-making companies have been
taken as the sample for the study for the period of 2006 to 2010.

Aubry lyimo, Dr.Reubenj.L mwamakimbullah kiko F.S.Hamza, (2010) they

found costs resulting from poles being rejected, reworked or down-graded were the
highest at the study mill. The cost of quality were so high and as a result they
negatively affect the financial performance of the mill.-cost of quality and its effect
on companys profitability, the amount accrued from costs of quality was too high
to reject the null hypothesis which claimed that costs of quality impacts negatively
the profitability of the company.
Eljelly (2004) elucidate, that efficient liquidity management involves planning and
controlling current assets and current liabilities in such a manner that eliminates
the risk of inability to meet due short-term obligations and avoids excessive
investment in these assets. The study found that the cash conversion cycle was of
more importance as a measure of liquidity than the current ratio that affects
profitability.
Vijayakumar and Venkatachalan (2003) In their study indicated a moderate
trend in the financial position and the utilization of working capital, variations in
working capital size should be avoided attempts should also be made to use funds
more effectively, by keeping an optimum level of working capital. Because,
keeping more current assets cause a reduction in profitability. Hence, efforts should
be made to ensure a positive trend in the estimation and maintenance of the
working capital.
Marc Deloof (2003) stated that the companies have large amount of cash invested
in working capital. It can therefore be expected that the way in which working
capital is managed will have a significant impact on the profitability of companies.
This a significant negative relation between gross operating income and the
number of days accounts receivable, inventories and accounts payable of Belgian
firm.
Saravanan (2001) made a study on working capital management in ten selected
non-banking financial companies. For this study the employed several statistical
tools on different ratio is to examine the effective management of working capital.
Shine and Soemen (1998) found that there is a strong negative relation between
the cash conversion cycle and corporate profitability for a large sample of listed
American companies for the 1975-1994 periods.

Asha (1987) of reserve bank of India had worked out the required norms and
techniques for evaluating the performance of public sectors banks. She has
reinvaded the different techniques adopted by different agencies and criteria for
evaluating the banking performance. The empirical findings of her study shows a
positive trend in terms of opening new branches deposits mobilization and
advances over a period.
NULL HYPOTHESIS
There is no significant difference in Profitability positions of the company for the
period of study.
ALTERNATIVE HYPOTHESIS
There is significant difference between Profitability positions of the company for
the period of study.