Working Capital Management -Policies and Practices at Sabmiller India

Page | 1Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Case Study “A study of Working Capital Management -Policies and Practices at SABMiller India”Page | 2Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Page | 3Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Author - Dr Anubha srivastava Sr. lecturer (Finance) Amity Business School Noida Co-Author Page | 4Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Pankaj Ishpujani Management trainee HCL B Serve Noida SummaryPage | 5Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Indian beer market is valued at INR 41 billion for the year ending 31st march 2010 and it is expected to grow at 17.2% for the next year. Indian growth rates compare favorably with the global beer industry. Foreign brewers are eyeing the Indian beer market which is largely untapped and has growth potential. Apart from providing strong growth, India also provides attractive profit margins due to the consolidated nature of the industry. The effect of this consolidation can be seen in the fact that beer prices in India rarely go down with the competitive pressures of new product or brand launches. In the past, whenever beer prices have gone down, it has been due to either the lowering of duties by thePage | 6Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India government or the deregulation of distribution (leading to lower margins for the distribution channel partners). The Indian beer market has been growing rapidly over the last 10 years, due to the positive impact of demographic trends and expected changes, like: Rising income levels Changing age profile Changing lifestyles Page | 7Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India The case study attempts to calculate various ratios and working capital requirement of SABMiller India and compare it with the market leader (UBL), Since More than 80% of the Indian Beer market is controlled by two major players’ united breweries limited (48%) and SABMiller (37%). The project is completed at PALS Unit of SABMiller India which is situated in Aurangabad. This study includes secondary data analysis for which data is being collected through the annual reports of both the companies. The information gathered is thoroughly discussed with the concerned employees and experts. Page | 8Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India .Page | 9Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Introduction -Globally, over 133 billion litres of beer is sold each year. In comparison, the Indian beer Industry contributes a meagre 1.28% of the global sales. The industry has been witnessing on an average, a steady growth of about 10% per year over the last ten years with volumes crossing 172 million cases in 2008-2009 from 70 million cases in 2002. With a relatively younger population andPage | 10Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India income levels on the rise, India is seeing an increase in the popularity of beer. Consumption of beer in India is also constrained by lack of adequate market infrastructure. In China for instance, there is one outlet for every 300 persons. In contrast, India has one outlet for every 21,000 persons hampering free availability of beer. Total consumption of beer in China grew by 33.56% between the years 2000 and 2006 to reach a total market volume of 30.47 billion litres. With a per capita consumption of 25 litres, China is one of the largest beer consuming nations in the world. Though beer is a milder form of alcohol, it is taxed by most states on the same basis as Spirits. The charge is on absolute alcohol basis.Page | 11Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Globally on per unit of alcohol basis, beer bears approximately 50% of levies imposed on Spirits whereas in India taxation is regressive on beer. India is predominantly a hard liquor market and beer has a minority preference amongst those who consume alcohol. Typically the size of beer volumes in most countries is 7 to 10 times larger than spirits, whereas in India, spirits is larger. The alcoholic beverage industry in India operates under a very complex regulatory environment which is the biggest challenge. In addition to restrictions on advertising, distribution infrastructure and retailing, varied taxPage | 12Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India structures, controlled pricing and licensing make operations more complex, consequently leading to higher costs, though providing entry barriers for new entrants as well.. . Company Snapshot: SABMiller India, Business Highlights  Brands: Hayward’s 5000, foster’s , Royal challenge, Knock out, Hayward’s Black, Peroni SABMiller India is a subsidiary of SABMiller PLC and registered in India as SKOL breweriesPage | 13Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India  Business strategy – SABMiller has ten owned and one contract brewery located strategically to serve the beer market efficiently The company has 37% market share and stands in the second position. The company has invested about INR 1250 mn in the past two years for upgrading its breweries to global standards. This case study has been divided into following sections Page | 14Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Section I Company profile Section II Nature of ProblemSection III Objectives of the study Section IV Area of consideration Section V Some key leanings Section VI Conclusion & RecommendationPage | 15Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Section I -Company profileSABMiller PLC is a Public ltd which was founded in the year 1895 in Johannesburg, South African Republic. It is one of the world’s largest brewing companies with distribution interests in six continents. The headquarters of the company is in city of west minster, London, United Kingdom. The CEO is Graham Mackay and Chairman is J. Meyer Kahn. Company has more than 200 brands of beer with the total employee strength of 70000. SABMiller is listed on London and Johannesburg stock exchanges with a market value of 21 billion Pounds. Page | 16Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India The Company is widely spread across the six continents  Latin America- In Latin America Company has 17 breweries and 16 bottling plants with approximately 25000 employees. Europe- In Europe Company has 23 breweries with approximately 16000 employees.Page | 17Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India  North America- In North America Company has 8 major breweries with approximately 8600 employees Africa and Asia – In Africa and Asia Company has 41 breweries and 14 bottling plants with an approximately 14000 employees. South Africa – In South Africa Company has 7 Breweries and 7 bottling plants with approximately 130000 employees. Page | 18Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Historical Background -This company entered in the Indian market by acquiring Narang breweries and has since acquired several breweries and brands , the most notable being its acquisition in June 2001 , of Mysore breweries (with Knock out Brand ) and in May 2003 of Shaw Wallace ‘s Beer brands (Royal Challenge and Hayward’s SABMiller India which is registered with the name SKOL Breweries ltd in India was incorporated on 18th November 1988 as a public limited company under the companies Act 1956; it is a subsidiary of SABMiller Plc and is primarily engaged in the business of brewing, packaging, distribution, marketing Page | 19Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India and sale of beer. SKOL Breweries is one of the largest manufacturers of variety of beer brands in India. The company has approximately 37 %( 2009) market share and its biggest competitor is United breweries limited with a 48% (2009) market share.Core Brands of Skol BreweriesHayward’s 5000 -Launched in 1983, Hayward’s 5000 is synonymous with strong beer and is one of the largest Selling beers in India. The hallmark of an original and authentic strong beer, it perfectly Page | 20Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India combines strength and quality to meet the high expectation of today’s demanding consumers. The Brand has signed up Bollywood superstars Mr. Sanjay Dutt and Mr. Sunil Shetty as brand ambassadors. The macho image of the stars goes well with the strong image of the Brand. The alcohol content in Hayward’s 5000 beer is approximately 7.5%. Royal Challenge-Launched in the year 1983, Royal Challenge Premium lager is the second largest selling mild beer in India. The brand positioning is that this is the beer for the discerning consumerPage | 21Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India who has the confidence to make choice based on superior taste and knowledge and stand apart rather than be part of a crowd. It offers a difference with an edge besides its international class packaging, premium image and path breaking advertising, what sets the brand apart is a distinctly smooth and easy flowing taste.Page | 22Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Knock out-Launched in 1984, knock out has clearly carved for itself a distinctive segment- “The Stro ngest Beer” and is the 3rd largest selling strong beer brand in the country. It has continued to perf orm well. The brand has strong presence in most southern and central states in India. The brand has Kannada action hero Mr. Darshan as its ambassador. Foster’s-SABMiller acquired Foster’s brand in 2006-07. The brand had not been performing up to its potential before it was taken up by the SABMiller on account of production and distribution Page | 23Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India constraints. The brand has not only stemmed but the brand has grown over 45%. The Brand is now available all over India. Foster’s is a clear leader in the premium segment both in volume and image terms. It leads the development of what we call the worth more segment in India. Foster’s market share YTD March 09 was 11.9% of the mainstream mild beer industry which was a 2.8% market share gain over the previous year.Indus Pride-The brand was launched in the year 2008 – 09 it has performed very well in Rajasthan. In its very first year it has captured 20% of the market. It has also been well received in Karnataka, where Page | 24Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India it was launched in March 2009. Indus pride is a mild segment beer and it is India’s first 100% malt- based beer along with a 100% malt- based beverage. This beer has been specially developed in accordance with research findings to suit the Indian tastes.Page | 25Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Peroni -Company introduced its global brand Peroni in Mumbai in 2008. Peroni Nastro Azzurro is an i ntensely crisp, dry and refreshing lager, with a clean character and clarity. It is expertly brewed i n Italy to the original recipe in Italy since 1963 and has an unmistakable touch of Italian style. T his premium beer uses the finest variety of spring- planted barley and the highest quality maize, malts and hop. It has been very well received in the market. In Mumbai it already has 35% mark et share of the imported beer market. The brand in India has become the symbol of Italian style iPage | 26Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India n the beer market. It is now available in the cities of Mumbai, Pune, Delhi and Bangalore. Peroni is the most premium beer in the Indian beer Industry.BREWING PROCESS AT PALSBrewing: The process of producing beer from malted grains is called brewing. Brewery: - The place where beer is produced, processed and packaged is called a brewery. Brew houses at PALS: -Page | 27Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India There are two Brew houses at PALS, one is ALFA LAVAL Brew house (old) and the other is BRIGG S Brew house (new). The old Brew house has an adjunct cooker, a MCV, a lauter tun, a wort kettle an d a whirlpool. The brew length is of 110 HL. High Gravity brew can produce up to 145 HL of beer. Th e new Brew house has a MCV, a lauter tun and two wort kettles cum whirlpools. The brew length is of 440 Hl. High gravity brew can produce up to 500 HL of beer. The new Brew house is operated through PLC (Programmable Logical Control). The set points of various parameters such as time, temperature, pressure, flow etc are given to the PLC according toPage | 28Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India which the operation is carried out and the whole process is monitored through SCADA (Supervisory Control and Data Acquisition) by the brewer.Section II-Nature of ProblemIn this case study an effort has been made to find out the practices and process adopted by SAB Miller India for working capital management. The inventory, cash and debtor management along with creditors management has been analyzed and compared to evaluates the and compare the liquidity andPage | 29Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India efficiency of the company with its rivals Initially the entire brewing process and the financial position of the company were observed. After that the various problems faced by the units are discussed in this case , Further it is a descriptive and analytical case in nature.“More business fails for lack of cash than for want of profit”. Efficient management of working capital is one of the most important conditions for the success of an enterprise. Better management of working capital means management of working capital in such a way that an adequate amount of working capital is maintained for the smooth functioning of a firm and for the fulfillment of the two Page | 30Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India most important objectives of any firm and these are profitability and liquidity. While inadequate amount of working capital impairs the firm’s liquidity and holding of excess working capital results in the reduction of the profitability. But the proper estimation of working capital actually required, is a difficult task for the management because the amount of working capital varies across firms over the periods depending upon the nature of the business, production cycle, credit policy, availability of raw material etc.Section III-Objectives of the study Page | 31Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Objectives -The objectives of the project are- To study the financial position of SABMiller India and compare it with market leader (UBL) To comparative analysis between SAB Miller and UBL  To calculate the gross and Net working capital requirement of both the companies  To study the trend of current assets and current liabilities over the last three years and do a comparative analysis Page | 32Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Section IV -Area of considerationNeed for working capital- The basic objective of financial management is to maximize shareholders wealth. For this it is necessary to generate sufficient profits. The extent to it, which the profit can be earned, largely depends on the magnitude of sales. However sales do not convert into cash. There is invariable the time gap between the sales of goods and receipts of cash. There is, therefore, a need for working capital in the form of current assets to deal with the problem arising. Out of the lack ofPage | 33Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India immediate realization of cash again goods sold. Therefore sufficient working capital is necessary to sustain sales activity. Working capital is needed for the following purpose: For the purchase of raw material, components and spares To incur day to day expenses and overhead costs such as fuel, power and office expenses, etc. To meet selling costs as packing, advertisement etcPage | 34Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India  To provide credit facilities to the customers. To maintain the inventories of raw material, work in progress, stores and spares and finished goods. To pay wages and salariesRATIO’S ASSOCIATED WITH WORKING CAPITAL MANAGEMENTPage | 35Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India SABMiller India (Rs)S.NO PARTICULARS 2008-09 2007-08 2006-07 1 OPENING STOCK 1,183,482,865 774,519,494 539,306,4052 CLOSING STOCK 1,650,081,511 1,183,482,865 774,519,494Page | 36Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India 3 AVERAGE STOCK 1,416,782,188 9,790,011,80 656,912,9504 NET SALES 13,160,176,239 10,365,641,037 8,644,700,3835 NET PROFIT (648,759,941) 344,777,187 401,891,802Page | 37Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India 6 SUNDRY DEBTORS 3,390,344,214 2,536,219,383 1,484,582,2307 SUNDRY CREDITORS 1,763,037,875 744,667,154 920,907,4728 NET CREDIT PURCHASES 7,306,498,230 5,830,587,436 4,128,183,757Page | 38Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India 9 COST OF GOODS SOLD 6,839,899,584 3,059,852,296 2,197,111,99010 NET WORKING CAPITAL 1,242,611,005 683,245,298 3,647,457,93211 CURRENT ASSETS 6,104,394,695 4,741,406,233 7,091,443,760Page | 39Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India 12 CURRENT LIABILITIES 4,861,783,690 4,058,160,935 3,443,985,828S.NO SABMILLER RATIO’S 2009 2008 2007 1 Current Ratio 1.26 1.17 2.06Page | 40Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India 2 Liquidity Ratio 0.79 0.74 1.743 Inventory turnover Ratio 9.28 10.59 13.164 Debtor turnover ratio 4.44 5.16 5.83Page | 41Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India 5 Creditor Turnover ratio 5.82 7 5.536 Average collection period 81 days 70 days 62 days7 Average payment period 62 days 51 days 65 daysPage | 42Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India 9 Working capital turnover ratio 10.59 15.17 2.3710 Current asset turnover ratio 2.16 2.19 1.2211 Stock working capital ratio 1.33 1.73 0.21Page | 43Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India UNITED BREWERIES LIMITED (Rs)S.NO PARTICULARS 2008-09 2007-08 2006-07Page | 44Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India 1 Opening stock 1,169,167,000 1,123,634,300 735,963,0002 Closing stock 1,630,376,000 1,169,167,000 1,123,634,3003 Average stock 1,399,771,500 1,146,400,650 929,798,650Page | 45Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India 4 Net Sales 16,982,709,000 13,690,611,000 9,984,247,0005 Net profit 624,940,000 624,725,000 650,918,0006 Sundry debtors 4,699,634,000 3,244,040,000 2,148,312,000Page | 46Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India 7 Sundry creditors 1,208,637,000 1,205,662,000 898,379,0008 Net purchases 8,640,762,000 6,450,325,700 4,892,839,3009 Current assets 7,710,487,000 5,257,330,000 5,520,310,00010 Current liabilities 2,065,734,000 2,285,431,000 2,026,424,000Page | 47Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India 11 Net Working capital 5,644,753,000 2,971,899,000 3,493,886,000Page | 48Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India UNITED BREWERIES LIMITED RATIO’S S.NO RATIO’S 2009 2008 2007Page | 49Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India 1 Current Ratio 3.73 2.30 2.722 Liquidity Ratio 3.18 1.61 2.093 Inventory turnover Ratio 12.13 11.94 9.79Page | 50Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India 4 Debtor turnover ratio 4.28 5.07 5.795 Creditor Turnover ratio 7.16 6.13 5.456 Average collection period 84 days 71days 62 daysPage | 51Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India 7 Average payment period 50 days 59days 66 days8 Working capital turnover 3.00 4.60 2.85 ratio9 Current asset turnover 2.20 2.60 1.81 ratioPage | 52Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India 10 Stock working capital 0.29 0.39 0.32 ratioWORKING NOTES1. Net sales include sale of traded goods and excludes excise duty and discounts.Page | 53Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India 2. For the purpose of calculating current assets, in loans and advances only advances recoverable in cash or in kind or for value to be received, prepaid expenses, rental deposit and other deposit have been taken as short term advances.3. The formula used to calculate net purchases is Closing stock – opening stock + Cost of goods sold = Net purchases4. Here net purchases is assumed to be net credit purchases Page | 54Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India 5. In case of SABMiller’s COGS the cost of container’s is include which is given only for 2008-09. Henceforth the same proportion of containers has been taken for the year 2007-08 and 2006-07.6. All the purchases and sales are assumed to be on credit basesNET SALESPage | 55Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Page | 56Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India The above graph explains the Net Sales pattern of SABMiller, UBL, the Market size from 2007 till 2009 and also the Estimated Market size for 2010 and 2011. For the years 2010 and 2011 the estimated Market size is Rs. 4100 crores and 4800 crores respectively which means a continuous growth of 17%. For Year Ending 2007- Total market size was Rs. 2350 crores. SABMiller’s Net Sales were Rs 864 Crores (36.7%) and UBL’s Net Sales were Rs. 998 Crores (42.4%).Clearly Both UBL and SABMiller dominated Indian Beer market. For Year Ending 2008- Market Size grew to Rs 3000 crores from Rs 2350 making it a 36% growth in Net sales over the previous year. During this period Sales ofPage | 57Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India SABMiller crossed Rs. 1000 crores (1036) leading to a 20% growth over the previous year. At this point SABMiller’s Market share was 34.5% declining from 36.7%. UBL’s Net Sales increased from Rs. 998 to Rs. 1369 crores leading to 37% growth of Sales over previous year making a total of 45% of their share in the market. Clearly UBL’s growth during the year was better then the industry growth hence their market share improved and on the other hand SABMiller’s growth was less than the industry growth. Hence their market share declined. For Year Ending 2009 - Total market size increased to Rs. 3500 crores from Rs. 3000 crores which made an approximately 17% increase over thePage | 58Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India previous year. SABMiller’s Net Sales increased to Rs.1316 crores from Rs. 1036 crores leading to a 27% growth over the previous year. Hence SABMiller’s market share improved to 37.5% from 34.5%.Similarly UBL’s Net Sales Increased to Rs. 1698 crores from 1369 crores leading to a 24% growth. UBL’s market share rose to 48.5% from 45%.Clearly both companies’ Share increased more than the industry growth therefore market share also improved. NET PROFITPage | 59Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Page | 60Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India The above graph explains the Net profit pattern for both the companies for the years ending 2007, 2008, 2009. This is a widely used measure of performance and comparable across companies in similar industries. For the year 2006-07 – SABMiller made a Net profit of 40.18 crores which was around 4.65% of Net sales and UBL’S Net profit was 65.09 crores which made around 6.52% of Net sales. For the year 2007-08 – SABMiller made a Net Profit 34.47 crores which was around 3.32% of Net sales and UBL’s Net profit was 62.47 crores which made around 4.56% of Net sales. For the year 2008-09 – SABMiller’s Net Loss was 64.87 crores which made around 4.92% of Net sales and UBL’sPage | 61Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Net profit was 62.49 crores which made around 3.68% of Net sales. Clearly For both the companies the percentage of Net profit is decreasing however UBL has been outperforming and making a good amount of Net profit. UBL has managed to squeeze in profits in the tough time which holds the key for them and Similarly SABMiller’s Net profit also declined however for 2008-09 it was worst where the company made a Net loss of 64 crores.CURRENT ASSETS OR GROSS WORKING CAPITALPage | 62Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Page | 63Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India The above graph shows the pattern of Current assets or gross working capital for SABMiller and UBL for the year ending 2007, 2008, and 2009. For the year ending 2007 Current assets were 709 crores for SABMiller as compared to 552 crores for UBL. The reason for such high Currents assets for SABMiller is the huge amount of cash and bank balances maintained by the company. Then next year for SABMiller it came down to 474 crores and 526 crores for UBL. During this year companies made huge investments in existing plant and machinery upgrading their capacity due to this the cash reserves came down completely However again the investments in current assets came up for the year 2008-09Page | 64Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India for both the companies it was because of increase in the debtors which were consistently increasing for UBL. Sufficient working capital helps the company to avoid stoppage of work and effects on profitability. CURRENT LIABILITIESPage | 65Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Page | 66Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India The above graph explains the current liabilities pattern for SABMiller and UBL for the year ending 2007, 2008, and 2009. The current liabilities pattern shows that for SABMiller there has been a continuous increase in the three years from 344 crores in 2007 it went to 486 crores in the year 2009.The reason for such an increase is because of the continuous increase in the sundry creditors of the company. This shows that purchases are done heavily on credit basis. On the other hand Current liabilities pattern of UBL has been same in those three years which means that their short term liabilities are less as compared to SABMiller.Page | 67Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India NET WORKING CAPITALPage | 68Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Page | 69Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India The above graph explains the Net working capital pattern for SABMiller and UBL for the years 2007, 2008, and 2009. It is clear that the pattern of Net working capital is fluctuating from high to low and then again high. The trend has been same for both the companies and it is an uneven trend. The year 2007- 08 has the lowest Net working for the both the companies compared to all the three years. The Net working capital measures the liquidity of the firm. The greater the margins better the liquidity of the firm. For the year 2008-09 UBL’S Net working capital was 564 crores which were the highest. Page | 70Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India This is due to the continuous increase in the sundry debtors of UBL. There should be an appropriate amount of Net working capital maintained for the smooth functioning of the business. CASH & BANK BALANCESPage | 71Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Page | 72Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India The above graph explains the pattern of cash and bank balances for SABMiller and UBL for the years 2007, 2008, and 2009. It is clear that there has been a huge declined in the cash and bank balances from the year 2007 for both the companies. In 2007 where SABMiller had 405 crores as bank balance, UBL had 139 crores as bank balance. Thereafter the balances reduced drastically for both the companies. The lowest bank balance for SABMiller was 31 crores in the year 2008 and for UBL it was 8 crores in 2008. Hence it is ascertained that both the company’s Cash balances came down hugely in the year 2008 Page | 73Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India AVERAGE COLLECTION PERIODPage | 74Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Page | 75Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India The above graph shows the pattern of Average collection period for SABMiller and UBL for the years ending 2007, 2008, and 2009. There is an increasing pattern of Average collection period for both the companies. It was the lowest in the year 2007 for both the companies. However after that it kept on increasing. In the year 2009 the Average collection period was 81 for SABMiller and for UBL it was 84 Overall the Average collection period is increasing for both the companies year after year which is not a good sign.Page | 76Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India AVERAGE PAYMENT PERIODPage | 77Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Page | 78Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India The above graph explains the pattern of Average payment period for SABMiller and UBL for the years ending 2007, 2008, and 2009. It is the relationship between the no. of working days and the creditor turnover ratio. There is a decreasing pattern of Average payment period for both the companies. In the year 2007 where it was highest for both the companies and thereafter decreasing every year. It is noticed that for SABMiller the trend is uneven that is from 65 in 2007 to 51 in 2008 and again increasing 62 in 2009. The above analysis explains that for the year 2009 the Creditors management has been better for SABMiller than UBL. Page | 79Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India CURRENT RATIOPage | 80Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Page | 81Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India The above graph explains the pattern of current ratio for SABMiller and UBL for the years 2007, 2008, and 2009. In 2007 both the companies had current ratio better than the ideal ratio however SABMiller’s current ratio for that period was very close to the ideal ratio. In 2008 SABMiller’s Current ratio came down from 2.03 to 1.17 which was very low from the ideal ratio comparatively UBL’s Current ratio 2.3 was still above the ideal ratio. Hence for 2008 current ratio’s position was favorable for UBL as compared to SABMiller. In 2009 again the current ratio of SABMiller is quite low than the ideal ratio and comparatively UBL’s Current ratio has gone up very high to 3.73 this isPage | 82Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India very much above than the ideal ratio. For SABMiller it is essential to reduce their liability otherwise this ratio shows the insolvency of the company.LIQUIDITY RATIOPage | 83Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Page | 84Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India The above graph explains the pattern of Liquidity ratio for SABMiller and UBL for the years 2007, 2008, and 2009. The pattern for Liquidity ratio is fluctuating for the past three years. In 2006-07 liquidity ratio for SABMiller was 1.74 and for UBL was 2.09 this is clearly above the ideal ratio which shows their ability of both the companies to cover their short term liabilities. For the year 2007-08 the ratio falls for both the companies and for SABMiller it was 0.74 which was less than the ideal ratio this shows that the liquidity position was not good for that year. And for UBL it was 1.61 which was above the ideal ratio and shows a good liquidity position for the company for the year 2008-09 the ratio increased for bothPage | 85Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India the companies however the increase for SABMiller was marginal leading it to 0.79 from 0.74 and for UBL the increase was heavy which led the ratio to 3.18 from 1.61.Clearly UBL has better liquidity position than SABMiller.STOCK OR INVENTORY TURNOVER RATIOPage | 86Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Page | 87Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India The above graph shows the pattern of Inventory turnover ratio for SABMiller and UBL for the years 2007, 2008, and 2009 Stock turnover ratio- Net Sales/Average inventory In 2006-07 the Stock turnover ratio For SABMiller was 13.16 and for UBL it was 9.79 In 2007-08 the Stock turnover ratio For SABMiller it was 10.59 and for UBL it was 11.94. In 2008-09 the Stock turnover ratio For SABMiller it was 9.28 and for UBL it was 12.13. It is said that a high turnover ratio indicates the efficient management of inventory more frequently stocks are sold there is an opposite pattern for Inventory turnover ratio for both the companies, clearly only for 2006-07 SABMiller has outperformedPage | 88Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India its competitor and thereafter the ratio has been declining for SABMiller and increasing for UBL for the next two yearWORKING CAPITAL TURNOVER RATIOPage | 89Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Page | 90Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India The above graph explains the pattern of Working capital turnover ratio for SABMiller and UBL for the year ending 2007, 2008, and 2009. The working capital ratio has been the lowest for the year 2006-07 for both the companies, more the ratio, better it is for the company. In the year 2007-08 where the ratio has been highest for SABMiller (15.17), comparatively it was 4.6 for UBL. In the year 2008-09 again the ratio was significant for SABMiller as it was 10.59 as compared to 3 for UBL. The above analysis signifies that working capital is better utilized in SABMiller as compared to UBL.CURRENT ASSET TURNOVER RATIO Page | 91Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Page | 92Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India The above graph explains the current assets turnover ratio for SABMiller and UBL for the years ending 2007, 2008, 2009. There is an uneven trend which is followed by both the companies however current assets turnover has been lowest in 2006-07 for both the companies and maximum in 2007-08. It is to be noted that in all the years UBL’s ratio is more than SABMiller’s. Hence it shows that current assets are more efficiently used in UBL than SABMiller.STOCK WORKING CAPITAL RATIOPage | 93Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Page | 94Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India The above graph explains the pattern of Stock working capital ratio for SABMiller and UBL for the years ending 2007, 2008, and 2009. The analysis explains that stock working ratio has been good for UBL as compared to SABMiller for the past three years. It is noticed that the performance has been consistent for UBL and for SABMiller there was an uneven trend. In the year 2007 SABMiller’s STR was better than UBL and in the year 2009 it increased to 1.33 which is way above the ideal ratio.Page | 95Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Total & Net Operating Cycle Period for SABMiller & UBL (2009) Cycle Calculation SABMiller UBL  RMCP RMCP Average Raw material stock X 360 491730522 X 360 336039000 X 360 RAW Total Raw material consumption 6651961523 2141148000 MATERIAL CONVERSION = 27 DAYS = 24 DAYS PERIODPage | 96Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India  WPCP WPCP Average Work-in-progress X 360 153874210 X 360 ASSUMED WORK IN Total cost of production 4256201006 PROGRESS CONVERSION PERIOD = 13 DAYS = 13 DAYSPage | 97Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India  FGCP FGCPFINISHED Average Finished Goods X 360 679832914 X 360 603385500 X 360 GOODS Total Cost of goods sold 6839899584 6092195000 CONVERSION PERIOD = 36 DAYS = 36 DAYSPage | 98Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India  RCP RCPRECEIVEBLE Average Receivable X 360 2963281799 X 360 3971837000 x 360 CONVERSION Total Credit sales 13,160,176,239 16982709000 PERIOD = 81 DAYS = 84 DAYS TOCP (RMCP+WPCP+FGCP+RCP) 157 DAYS 157 DAYSPage | 99Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India  DP DPDEFFERED Average Creditors X 360 62 DAYS 50 DAYS PERIOD Total Credit purchase NOCP TOCP LESS DP = 95 DAYS = 107 DAYS NET OPERATING CYCLE PERIODPage | 100Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India OPERATING CYCLE PERIODPage | 101Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Page | 102Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India The above Line graph shows the Total & Net Operating Cycle period for SABMiller & UBL for the year 2009. Working capital majorly depends on the length of operating cycle and shorter the cycle net operating cycle period, better it is for the company. For the year 2009 the Raw material conversion period was 27 days for SABMiller and 24 days for UBL. Work in progress conversion period (13 Days) and finished goods conversion period (36 Days) was same for both the companies. Receivables conversion period for SABMiller was 81 days and for UBL it was 84 days.Page | 103Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India After adding all the Total operating cycle period for SABMiller and UBL comes up to 157 days. Deferred payment period for SABMiller was 62 days and for UBL it was 50 days. Hence Net operating cycle period for SABMiller was 95 days and for UBL it was 107 days. The cycle period was less for SABMiller as compared to UBL. Section V -Some key leaningsPage | 104Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India From the first analysis of Net Sales it is concluded that in order to compete with UBL and improve market share. SABMiller has to make sure that every year the growth in the Net Sales is more than the Industry growth otherwise there are greater chances that market share of SABMiller may decline in the coming years. This is because there is a huge potential for beer market in coming years. For example – From the analysis and Interpretations it is found that In the year 2007-08 the Net Sales growth in Beer market was 36% and SABMiller’s growth was only 20% hence their share decreased to 34.5% from 36.7%. Keeping this in mind and looking at the estimated growth in beer market for 2010 and 2011Page | 105Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India which is 17%. It is very important for SABMiller to grow with minimum of 17%.The Net sales of SABMiller for the year ending 2008-09 were Rs. 1316 crores and their market share was 37.5%. For the company to maintain the same market share the Net sales for the year ending 2010 and 2011 should be-1. For the year ending 2010 – ( 1316+ 17% 0f 1316) =Rs 1539 crores2. For the year ending 2011- (1539 + 17% of 1539) = Rs 1800 crores Page | 106Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India This is the minimum amount of Net sales that the company should have in order to maintain the existing market share of 37.5%. However this is the minimum level of Net Sales and Beer market is set to flourish in the coming years where major foreign players are ready to enter this untapped Indian beer market and there are greater chances that market may grow more than 17%. It is recommended that company should look to improve beyond these figures and try best to improve the market share. It is also found that this can be possible as the company has a diversified portfolio. Hence SABMiller’s Net Sales should be more than Rs1539 crores for the year ending 2010 and Rs 1800 crores for the yearPage | 107Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India ending 2011. This will lead to company’s consistent growth just like UBL and help them to compete in the market. The analysis of net profit concludes that the performance of SABMiller was poor in the year 2008-09 and that is why the company went into losses and on the other hand UBL was consistent with the profit even though there were so many fluctuations in the Market.The reasons for Net Loss in the year 2008-09- The company justified two reasons for losses in the year 2008 -09 and these are-Page | 108Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India 1. One time Charge of Rs 34 crores during the year due to change in the accounting policy to align accounting as per income tax for treatment of containers.2. The temporary suspension of Charminar Brewery for 38 days in peak season.3. Cost analysis – The cost analysis explains the reason why company went into losses. It is found that for the year 2008-09 cost for various segments were more for SABMiller than UBL.COST DISTRIBUTION Page | 109Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Page | 110Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India The pie chart shows the cost distribution for both the companies for the year ending 2008-09. This will explain the difference in the occurrence of cost in different departments. The comparison is done keeping Net Sales for the year as the base for both the companies.1. Cost of material which include (Cost of traded goods sold, raw material and packing material, Malt processing charges) were 51.8% of Net sales for SABMiller and for UBL they were 48.2%.Page | 111Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India 2. Other Expenses which include (Sales scheme expenses, Commission on sales, Freight outward, Advertisement and publicity, Management fees, Travel and conveyance, Rent, Repairs, Telephone and other communication, Training and development, Printing and stationary etc) were approximately 37.3% of Net sales for SABMiller and for UBL they were just 29% approximately. Page | 112Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India 3. Personnel expenses which include (Salaries, Bonus, Wages, Contributions to provident funds and other funds, Staff welfare expenses etc.) were 7.5% of Net sales for SABMiller and for UBL they were 5.1%.4. Borrowing cost which include (Interest, Bank charges, foreign exchange loss) were just 3.4% of Net Sales for SABMiller and for UBL they were 5.2% of Net Sales.Page | 113Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India 5. Miscellaneous segment in UBL’s Pie diagram include (deprecation, provision and also the Net profit) and on the other hand this segment doesn’t exist for SABMiller because the first four costs account for 100% of Net salesThe amount of current assets is also insignificant for SABMiller as compared to UBL clearly because of which the current ratio of the company is way below than the ideal ratio of 2:1. Another reason for that cause can be continuous increase in the current liabilities of the company for the last three years. For the year ending 2009 the current ratio of SABMiller was 1.26 which was way below the Ideal ratio Page | 114Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India of 2:1. Another finding is that the current ratio of UBL for the year ending 2009 was 3.73:1, which is way above the ideal ratio. It shows that there was more than required blockage in the current assets because of which the working capital required was more and henceforth the Borrowing cost of UBL was more than SABMiller. Hence it is important for the SABMiller to increase the current ratio and maintain a minimum of 2:1. So that it maintains a good liquidity in order to meet its short term liabilities. Current Ratio can be improved only if there is an increase in current assets of the company and decrease in the current liabilities. It is to be noted that the current liabilities of company arePage | 115Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India continuously increasing. Net working capital was very less for SABMiller as compared to UBL for the year ending 2009. A higher working capital always shows a better a liquidity position for the company. The reason for decline in the Net working capital is the reduction in the cash & bank balances and certainly because of which the liquidity ratio (.79:1) was also below the ideal 1:1. Hence there is a greater need for the company to maintain a bit higher cash balances so that the liquidity ratio reaches to 1:1 from 0.79:1. The Stock turnover ratio of SABMiller is also decreasing every year. In 2007 where it was 13.16 it came down to 9.28 in the year 2009. The conversion period of stockPage | 116Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India through sales is increasing year after year. From the working capital turnover ratio it can be concluded that there is a better utilization of working capital as compared to UBL. However it is also found that the average collection period for the companies is increasing over the years and for SABMiller from 62 days in 2007 it has gone to 81 in 2009. For 2009 the average collection period for UBL was 84 days which means SABMiller’s average collection from debtors was better than UBL. The average payment period has an uneven trend for SABMiller and for UBL it has a decreasing trend in the year 2009 where Average payment period was 62 days for SABMiller it was 50 days for UBL.Page | 117Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India .Section VI -Conclusion and RecommendationIt can be concluded that UBL follows a liberal strategy towards its debtors and creditors in order to maintain better relationship. The above analysis shows that the trend followed by both the companies in past three years has been more or less the same and both have made efforts to increase plant size inPage | 118Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India order to produce more. However the following are the major areas that SABMiller should focus in the near future in order to improve its market share and earn a sustainable profit. Increase the amount of cash and bank reserve so that a better liquidity ratio is maintained. Company has to reduce its Raw material conversion period from 27 days as it is too high. Company’s stock turnover ratio is quite poor it should focus on improving it.Page | 119Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India  Current liabilities of SABMiller are increasing every year as compared to UBL’s consistent current liabilities. So SABMiller should focus on reducing the amount of current liabilities. Another major area of concern for the company is the amount of bottle loss that it is bearing. In bottling Industry the most critical factor is the acquisition and handling of bottles. Since Bottle market is always fluctuating so it is very difficult to control the cost however the factor that can be controlled is the bottle breakage loss. Page | 120Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Recommendations-The following are the ways in which the Sales of the company can be increased. Tamil Nadu is one of the biggest beer markets in India and No brand of SABMiller is sold in that region just because of the governments Policy. This market can certainly be targeted with contract brewing in Tamil Nadu. This way the policy of Tamil Nadu government will be followed and a major market can also be captured.Page | 121Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India  Not only just Tamil Nadu rather company should target more on the following five major states of Beer consumption in India to improve its sales figure  As strong beer has 74% market share in India. Company should focus on developing new strong beer brands as Indian consumers drink beer as an alternative to spirits. This can enhance the sales. Concept of Dumping can help SABMiller to Improve Sales-Page | 122Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Other Recommendations- It is recommended that SABMiller should focus on giving more discounts for on spot payment. This way buyer would be attracted and hence cash balances would increase because it is important for company to increase its current cash balances.Page | 123Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India  Company should also focus on increasing the Average collection period because currently the period is 81 days which is less than UBL’s period. Hence by increasing the Average collection period the sales of the company will increase because more buyers would be attracted.Discussion Questions-Q. What selling techniques can be used by SABMiller to enhance there sales in order to increase their market share?Page | 124Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Q. What is the appropriate level of Working capital ratio that should be maintained by the brewing companies in order to have an optimum level liquidity?Q .How the current ratio of SABMiller is being affected by the continuous increase of current liabilities over the past three years?Q. What plan should be adopted by SABMiller in order to maximize their production so that wastage can be prevented and demands can be met during season time?Page | 125Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Page | 126Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Page | 127Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Page | 128Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India ANNEXURESSABMILLER INDIA BALANCE SHEETSPage | 129Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India SOURCES OF As at 31st March 2009 As at 31st March 2008 As at 31st March 2007 FUNDSShareholder's FundsShare Capital 2,311,837,450 2,311,837,450 1,979,158,880Reserves and surplus 6,140,637,748 6,406,852,856 4,610,316,326Share application 1,863,000,000Page | 130Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India money pending allotment of sharesLoan FundsUnsecured Loans 6,170,031,896 3,774,422,006 4,652,648,467Deferred tax liability, 63,744,046 net Page | 131Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India TOTAL 14,622,507,094 12,556,856,348 13,105,123,673APPLICATION OF FUNDSFixed assetsGross Block 13,556,110,406 10,973,596,079 8,795,466,503Page | 132Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Less; Accumulated [2,397,970,441] [2,074,943,657] [1,525,150,636] depreciation Less; Provision for [143,814,725] [156,563,671] [52,523,898] impairment of fixed assets Capital work-in 506,703,130 1,491,630,978 756,309,965 -progressPage | 133Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India 11,521,028,370 10,233,719,729 7,974,101,934Investments 11,359,225 11,359,225 2,178,050 Current Assets, loans and advancesInventories 1,650,081,511 1,183,482,865 774,519,494Sundry debtors 3,390,344,214 2,536,219,383 1,484,582,230Page | 134Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Cash and bank 317,395,443 311,251,107 4,047,462,855 balances Loans and advances 1,176,231,356 1,242,942,582 1,202,005,3776,534,052,524 5,273,895,937 7,508,569,956Actual current assets 6,104,394,695 4,741,406,233 7,091,443,760Page | 135Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Current liabilities and provisionsCurrent liabilities 4,861,783,690 4,058,160,935 3,443,985,828Provisions 421,930,244 361,193,684 457,868,3265,283,713,934 4,419,354,619 3,901,854,154Net current assets 1,250,338,590 854,541,318 3,606,715,802Page | 136Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Amalgamation 1,457,236,076 1,457,236,076 1,457,236,076 adjustment reserve account Debit balance in 1,600,944,149 1,296,961,395 Profit and loss account Less; Balance in [1,218,399,316] [1,232,069,584] general reserve Page | 137Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India account 382,544,833 64,891,811TOTAL 14,622,507,094 12,556,856,348 13,105,123,673SABMILLER INDIA PROFIT AND LOSS ACCOUNTS Page | 138Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India PROFIT AND LOSS For the year ended For the year ended For the year ended ACCOUNT 31st march 2009 31st march 2008 31st March 2007INCOME Sale of manufactured 21,622,215,155 17,120,144,115 13,384,952,487 goods, grossSale of traded goods, 96,894,530 296,758,472 100,449,130 grossPage | 139Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India 21,719,109,685 17,416,902,587 13,485,401,617Less; Excise duty [7,518,279,022] [6,307,912,578] [4,840,701,234]Less; Discounts [1,040,654,424] [743,348,972]Sales, Net 13,160,176,239 10,365,641,037 8,644,700,383 Income from contract 143,573,120 bottling Page | 140Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Other income 185,950,917 281,767,214 179,188,724 Income from marketing 219,335,661 331,222,390 operationsTOTAL 13,489,700,276 10,866,743,912 9,155,111,497EXPENDITURECost of material 6,839,899,584 3,059,852,296 2,197,111,990Page | 141Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Personnel cost 974,679,780 804,928,296 603,282,581Other expenses 4,982,476,471 5,469,854,808 5,064,541,864Depreciation 651,299,955 858,090,043 625,247,195Provision for [7,066,845] 117,306,243 [101,662,427] impairment of fixed assets Page | 142Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Opening adjustment for 340,493,099 returnable containersBorrowing cost 433,651,970 148,166,541 313,366,314[LOSS]/ PROFIT [725,733,738] 408,545,685 453,223,980 BEFORE TAXProvision for taxPage | 143Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India -Current tax [375,737,24]-Pertaining to earlier [48,582,678] [37,573,724] years [reversal]-fringe benefit tax 35,160,648 30,320,522 [13,758,454]-deferred tax [63,744,036] 70,783,158 [credit/charge]Page | 144Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India -wealth tax 192,269 238,542[LOSS]/PROFIT [648,759,941] 344,777,187 401,891,802 AFTER TAXDebit balance in profit [952,184,208] [1,296,961,395] [1,698,853,197] and loss account brought forward Debit balance in profit [1,600,944,149] [952,184,208] [1,296,961,395] and loss account carried Page | 145Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India over to balance sheet EARNINGS PER SHARE Basic earnings per share [2.81] 1.52 2.14Diluted earnings per [2.81] 1.49 2.13 share Page | 146Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India UNITED BEWERIES LIMITED BALANCE SHEETSSOURCES OF As at 31st march 2009 As at 31st march 2008 As at 31st March 2007 FUNDSShareholder's FundsPage | 147Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Share Capital 2,709,048,000 2,685,043,000 2,685,043,000Reserves and surplus 8,106,431,000 3,427,554,000 2,891,310,000 Share application money pending allotment of sharesLoan FundsSecured loans 4,410,559,000 4,538,387,000 4,340,644,000Page | 148Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Unsecured Loans 1,753,006,000 809,985,000 416,988,000Deferred tax liability, 173,122,000 90,302,000 60,715,000 net Deferred credit 4,044,000Total Sources 17,152,166,000 11,551,271,000 10,398,744,000Page | 149Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India APPLICATION OF FUNDSFixed assetsGross Block 9,272,547,000 7,149,646,000 5,090,062,000Less; Accumulated [2,294,917,000] [1,547,755,000] 955,018,000 depreciation Page | 150Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Less; Provision for impairment of fixed assets Net block 6,977,630,000 5,601,891,000 4,135,044,000Capital work-in 865,308,000 1,576,089,000 1,127,308,000 progressInvestments 1,940,957,000 1,040,709,000 590,699,000Page | 151Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Current Assets, loans and advancesInventories 1,630,376,000 1,169,167,000 1,123,643,000Sundry debtors 4,699,634,000 3,224,040,000 2,148,312,000Cash and bank 417,733,000 78855000 1,392,732,000 balances Other current assets 140,769,000 2,282,000 10,202,000Page | 152Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Loans and advances 2,728,788,000 1,171,620,000 1,972,175,0009,617,300,000 5,645,964,000 6,647,064,000Current liabilities and provisionsCurrent liabilities 2,065,734,000 2,291,592,000 2,026,424,000Page | 153Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Provisions 183,295,000 124,143,000 74,947,0002,249,029,000 2,415,735,000 2,101,371,000Net current assets 7,368,271,000 3,332,582,000 4,545,693,000 Amalgamation adjustment reserve account Page | 154Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Debit balance in Profit and loss account Less; Balance in general reserve account Total applications 17,152,166,000 11,551,271,000 10,398,744,000Page | 155Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India UNITED BREWERIES LIMITED PROFIT AND LOSS ACCOUNTSPROFIT AND LOSS For the year ended For the year ended For the year ended ACCOUNT 31st march 2009 31st march 2008 31st March 2007INCOME Sale of manufactured goods, 24,604,481,000 19,802,844,000 14,264,437,000 grossPage | 156Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Less; Excise duty 7,621,772,000 6,112,233,000 4,280,190,000Sales, Net 16,982,709,000 13,690,611,000 9,984,247,000Other income 492,991,000 257,948,000 764,491,000TOTAL INCOME 17,475,700,000 13,948,559,000 10,748,738,000EXPENDITURECost of Sales 10,472,894,000 8,672,344,000 6,596,961,000Page | 157Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Other expenses 4,327,570,000 3,303,517,000 2,536,711,000Interest and finance charges 896,377,000 428,282,000 279,788,000Depriciation and 762,150,000 612,276,000 385,352,000 AmortizationPROFIT BEFORE TAX 1,016,709,000 932,140,000 949,926,000Provison for taxPage | 158Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India -Current tax {294,549,000} {264,889,000} {294,129,000}- fringe benefit tax {14,400,000} {12,000,000} {19,880,000}- deferred tax {82,820,000} {30,526,000} {15,001,000} [ credit]/charge PROFIT AFTER TAX 624,940,000 624,725,000 650,918,000Dividend {170,912,000} {86,658,000} {146,689,000}Page | 159Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India 538,067,000Transfer to General Reserve {65,000,000} {70,000,000}Profit carried to balance 389,028,000 sheet Profit brought from previous 489,385,000 55,156,000 year Page | 160Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Profit carried forward to the 1,027,452,000 489,385,000 balance sheet EARNINGS PER SHARE 2.29 2.49 2.62 Basic/Dilluted)Page | 161Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India Page | 162Case Study “A study of Working capital management of Hisar Project”- Reliance Infrastructure Limited India Author –Dr. Anubha Srivastava Sr. Lecturer (Finance) Amity Business school Noida- 201301, U.P. India

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