Financial Analysis Of Nestle India And Britannia

Topics: Financial ratio, Financial ratios, Income statement Pages: 19 (3912 words) Published: April 14, 2015


Executive Summary
The food processing industry is one of the most important sectors in India considering its linkage to agriculture and food consumption in an economy of a billion plus population. The food processing industry is also significant in terms of its socio-economic bearing on the economy. It employs 13 million people directly and about 35 million people indirectly. The worth of the Indian processed foods sector stood at US$ 157 billion in 2012 and is expected to touch USD 255 billion by FY2016 with 13% growth rate per annum. This sector has all the basic attributes (like abundance of raw-material, basic skill sets etc.) to contribute highly in India's manufacturing output. To better understand the sector, analysis of two biggest players in food processing industry in India- Nestle India and Britannia was done. The financial analysis of the two players was done with the objective of understanding the reasons behind the competitive edge of the market leader in the sector as well as understanding the steps or initiatives that can be taken by the rival to challenge the market leader.

Food Processing Industry in India

India is the 2nd largest food producer in the world only falling behind China and has a potential to become one of the largest producer of food and agriculture in the world. Food Processing Industry in India is one of the sunrise sectors which has gained importance in the recent times. It forms a synergy between agriculture and manufacturing sectors there by helping in addressing one of the very critical problems our country is facing that is reducing the wastage of agricultural produce. India is one of the largest exporters of food products with the average growth rate of FPI for the last five years being 8.6% which is higher than the growth rates of agriculture (3.8%) and manufacturing (7.7%). It is also expected that the total production is going to double in the next 10years. There are several sectors in FPI based on the raw materials used which are: 1. Fruits and Vegetables

2. Fisheries
3. Meat and Poultry
4. Dairy
5. Grains and Cereals
6. Consumer Foods
In our project we are going to study two major players in the FPI sector which are Nestle India ltd and Britannia Industries ltd. Britannia Industries ltd
Britannia Industries ltd is a leading manufacturer of processed foods in India. Its product range includes a total of 25 products which include 15 products in range of biscuits and 9 dairy range products. The company was incorporated on 21st March 1918, as a public limited company under the Indian Companies Act, VII of 1913. The company manufactured bakery and soya bean products, exported cashew kernels, marine products, general merchandise items and computer software. And in 1921 the company obtained a priority of certificate and imported new machinery thereby becoming the first biscuit company in India to install and run a gas oven plant. The company issued shares to the Indian public in 1978 when 1800000 equity shares were issued at a premium of Rs 5 per share.

Shares of the company stand at 2200.35INR on the Bombay Stock Exchange and 2196.65INR on the National Stock Exchange as on 12-03-15. Nestle India ltd
Nestle India ltd is another leading player in the food processing sector in India with more than 40 products in its range which include products in dairy and nutrition, beverages, prepared dishes and cooking aids, chocolates and confectionaries. The company was incorporated on 8th March 1959 at New Delhi.It was promoted by Nestle Alimentana S.A. through a wholly owned subsidiary, Nestle Holdings Ltd., Nassau, Bahamas Islands. In November 1968 company issued 3,00,000 shares at par. With 22,000 shares reserved for directors, etc. and 2,78,000 shares offered to the Public. In 1978 4,00,114 equity shares and 382,751 existing equity shares held by Nestle's...

References: e-ISSN: 2278-487X, p-ISSN: 2319-7668. Volume 9, Issue 4 (Mar. - Apr. 2013), PP 45-52
Working Capital Trends and Liquidity Analysis of Fmcg Sector
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