Britannia Industries Ltd Case Study

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- Inventory valuation

Inventoriesare valued at the lower of cost (including prime cost, excise duty and other overheads incurred in bringing the inventories to their present location and condition) and estimated net realisable value, after providing for obsolescence, where appropriate. Raw materials, packing materials and other supplies held for use in production of inventories are not written-down below cost except in cases where material prices have declined, and it is estimated that the cost of the finished products will exceed their net realisable value. Work-in-progress is valued at input material cost plus conversion cost as applicable. Finished goods are valued at lower of net realisable value and prime cost, excise duty and other overheads incurred in bringing the inventories to their present location and condition.

- Basis for Preparation of Accounts

The financial statements are prepared under the historical cost convention, on the accrual basis of accounting to comply in all material aspects with the applicable accounting principles in India, the mandatory Accounting Standards (‘AS’) prescribed by the Companies (Accounting Standard) Rules, 2006, the relevant provisions of the Companies Act, 1956 (‘the Act’) and the guidelines issued by the Securities and Exchange Board of India (‘SEBI’).

- Cash Flow Activities

Cash flows

2012-13 (in crores)

2013-14 (in crores)

2014-15 (in crores)

Cash flow generated from operating activity

351.45

796.45

809.72

Cash flow generated from investing activity

53.89

(227.34)

(384.29)

Cash flow generated from financing activity

(359.11)

(325.46)

(168.11)

Cash and cash equivalents at the beginning of the year

26.19

(7.02)

54.69

Net cash increase/ (decrease)

(33.21)

61.71

(37.07)

Cash at the end of the year

(7.02)

54.69

17.62

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Cash flows of Britannia Industries Pvt. Ltd. Can be easily analysed from the graphs. Company has maintained highest cash balance in the year 2013-14 and negative cash balance (credit/loan) in 2012-13. This is due to fact that cash inflow from operating activity in 2012-13 is the lowest and cash outflow from financing activity in the same year is the highest (repayment of loan is highest i.e. 400.58 crores), although cash inflow from investing activity is the highest. Though cash flow from operating activity in the year 2014-15 is the highest, but cash at the end is highest in the year 2013-14 because comparatively there is less outflow of cash in investing activity from 2014-15. Cash inflow from investing activity is only in 2013-14, this is a positive growth factor for the company i.e. it is generating all its revenue from operating activity.

From comparing cash flow statements of three consecutive years it can be concluded that company is growing with stable grounds, it is generating all of its revenue from the operating activity. Stakeholders/Shareholders are getting benefit by greater dividends/profits.

- Section-4

Particulars

2012-2013

2013-2014

2014-2015

Profit After Tax

233.87

369.8

622.41

Net Operating Revenue

272.01

614.51

515.33

Total Revenue

5,670.96

6,946.30

7,946.38

Operating Profit

351.45

796.38

809.72

Total Non-Current Liabilities

171.77

28.27

20.35

Share-holders fund

636.41

853.46

1,235.62

Total Current Assets

715.38

860.06

1,429.31

Total Current Liabilities

867.74

958.43

1,202.45

Total Non-Current fixed Tangible Assets

437.76

529.81

513.24

Total Assets

1,683.03

1,844.44

2,461.99

Total