ANALYSIS OF VARUN
BEVERAGES LTD.
SUBMITTED TO
DR. NEERAJ SANGHI
SUBMITTED BY
ABHINEET MISHRA
(BM-015009)
In 1960 Firmly ventured in beverage bottling with its first plant in Agra
In 1991 Exclusive bottling agreement with PepsiCo through existing plant
Agra
In 1995 Devyani Beverages Ltd (DBL) started its operations through its
first plant at Greater Noida
In 1996 New plant under Varun Beverages Ltd (VBL) started its
operations at Jaipur
In 2000 Acquired Goa territory under Goa Bottling Co. Ltd (GBCL)
In 2004 Devyani Beverages Limited got merged with Varun
Beverages Limited
Products Manufactured by
Varun Beverages
Carbonated
Drinks
Non
carbonated
Drinks
Juice Based
Drink
Packaged
Manufacturing
Units
India-16
Overseas-2
Upcomin
g Plants
1.
2.
3.
4.
5.
6.
7.
Uttarakhand- Bazpur
Haryana-Panipat, Nuh
Uttar Pradesh- Greater Noida-Unit 1 & Unit 2,Sathariya, Jainpur,Kosi
Rajasthan- Jaipur, Jodhpur, Alwar, Bhiwadi
West Bengal- Kolkata
Assam- Guwahati
Goa- Madgaon, Sanguem
Greater Noida Unit 2
was acquired from
Overseas
Pearl Drinks Ltd. in
Nepal- Kathmandu
February 2013
Sri Lanka- Colombo
Uttar PradeshFaizabad
Punjab- Phillor,
PET Packs
1.25 litres, 2 litres, 2.25 litres
PET Packs
600 ml
PET Packs
750 ml
Objective of project
General objective
The key objective of the report is to analyze the financial performance of VARUN
BEVERAGES Limited.
Specific objectives
To calculate the different financial ratios to know about the performance of the
company.
To identify the findings and raise possible recommendations for VARUN BEVERAGES Ltd.
Research Methodology
Sources of data
Primary sources-Conversations
with the different officials of
VARUN BEVERAGES Ltd
Secondary source
Direct Observation.
Informal Discussion.
Ratio analysis
Trend Analysis
Horizontal analysis
Comparative balance sheet analysis
Comparative income statement analysis
Vertical analysis
Common size balance sheet analysis
Common size income statement analysis
Other instruments
Analysis
HORIZONTAL ANALYSIS
(COMPARATIVE BALANCE SHEET ANALYSIS)
Changes over years in balace sheet
40000
35000
30000
25000
20000
15000
10000
5000
0
2015
2014
2013
2012
Particulars
2015
2014
2013
2012
Current assets
-17%
83%
-13%
11%
Fixed assets
63%
3%
22%
100%
Total assets
44%
15%
15%
73%
Current liabilities
17%
27%
0%
45%
45%
0%
19%
93%
Total liabilities
36%
8%
13%
74%
90%
110%
22%
61%
44%
15%
15%
73%
35000
Interpretation: Hereinthisgraphitcan
30000
25000
20000
15000
10000
5000
-5000
2011
2012
2013
2014
2015
VERTICAL ANALYSIS
(Common size balance sheet
analysis)
80%
70%
60%
50%
40%
30%
20%
10%
0%
2011
2012
2013
2014
2015
100%
80%
60%
40%
20%
0%
-20%
2011
2012
2013
2014
2015
RATIO ANALYSIS
Paid up capital and reserve and surplus
Paid up Capital
7000
5837.66
6000
5000
4000
3337.66
2766.55
3000
2000
1509.5
1022.57
1000
0
80
2011
1337.66
823.02
1199.17
267.53
2012
2013
2014
2015
ThePaidupCapitalandReserve&surplusissufficientlyincreaseperyearthatisapositivesignforVARUNBEVERAGES
LTD. From 2011 to 2015 it increase approximately eleven times and it can be increase more by proper increasing paid up
capital.
Current ratio
0.9
0.84
0.8
0.81
0.7
0.65
0.6
0.57
0.56
0.5
0.4
0.3
0.2
0.1
0
3
Current ratio
Liquid ratio
0.6
0.55
0.5
0.47
Iftheacid-testratioismuchlowerthanthe
currentratio,itmeanscurrentassetsarehighly
dependentoninventory.
0.4
0.37
0.3
0.28
0.21
0.2
0.1
0
2011
2012
2013
Liquid ratio
2014
2015
1.19
1.16
1.01
0.98
0.8
0.6
0.4
0.2
0
2011
2012
2013
Fixed assets turnover
2014
2015
0.67
0.69
0.7
0.69
2012
2013
2014
2015
0.6
0.5
0.4
0.3
0.2
0.1
0
2011
5.68
5.92
5.27
4.89
4.14
4
3
2
1
0
3
Stock turnover ratio
DTR,DCP
CTR,APP
70
65.17
65.71
30
26.28
25
60
50
48.27
27.14
25.25
40
30
25.82
22.12
22.02
16.5
16.58
20
15
13.89
27.39
14.45
13.45
10
20
14.13
10
0
2011
13.32
5
7.56
2012
2013
DTR
DCP
5.6
5.55
2014
2015
0
2011
2012
2013
CTR
2014
APP
2015
2012
2013
-6.97
-6.82
2014
2015
-4
-6
-8
-8.07
-10
-12
-14
-14.84
-16
-17.78
-18
-20
Working capital turnover
0.74
0.6
0.59
0.4
0.2
0
2011
2012
2013
Capital turnover ratio
2014
2015
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Inthisdiagramtheorangecolorareaindicates
the portion of total assets contributed by
owners and pink color area indicates the
portion of total assets contributed by
creditors. From that graph it appeared that
maximum area is covered by debt ration
that means VBLs lion share of total assets
is contributed by creditors.VBLsdebtratio
was91%andequitywas1%in2011andin
2015debtratiocameto79%andequityratio
came to 3%. The trend of debts and equity
ratio tells that the debt ratio is in decreasing
trend and equity ratio is in increasing trend
whichisagoodsignforacompany.
6.82
6.89
6
5.09
5
4
3.29
3
2
1.75
1
0
2011
2012
2013
2014
2015
Debt-Equity Ratio
Creditorsusuallylikealowdebttoequityratiobecausealowratio(lessthan1)istheindicationofgreaterprotectiontotheir
money.Butstockholdersliketogetbenefitfromthefundsprovidedbythecreditorsthereforetheywouldlikeahighdebtto
equityratio.Debtequityratiovaryfromindustrytoindustry.Forthepointofviewofplathighdebtequityratioisnotgood.
Butaccordingtotrendcompanyisdoingwellbecausedebtequityratioisdecreasingperyear.
0.5
0.17
0
2011
0.46
2012
0.34
2013
-0.17
-0.5
Time interest earning ratio
2014
2015
VBLearns0.17timesin2011,0.45timesin
2012, -0.16 times in 2013, 0.33 times in
2014and1.69timesin2015.Theseratiosare
notgoodforthecompanyexceptfortheyear
2015.ThetrendtimeinterestearnedofVBL
has started upward from 2013.It indicates
VBLis efficiently payingits fixedexpenses
ascomparetopastyears
ANALYZING PROFITABILITY
RATIO:
5%
4%
3%
2%
2%
2%
1%
1%
0%
2011
2012
2013
0%
-1%
Net profit Margin
2014
2015
ANALYZING PROFITABILITY
RATIO:
ROI
4%
4%
4%
3%
3%
2%
2%
2%
1%
1%
1%
1%
0%
2011
-1%
2012
2013
0%
-1%
ROI
2014
2015
ANALYZING PROFITABILITY
RATIO:
ROCE
7%
6%
6%
5%
4%
3%
3%
3%
2%
1%
1%
0%
2011
-1%
2012
2013
-1%
ROCE
2014
2015
ANALYZING PROFITABILITY
RATIO:
ROE
20%
18%
17%
15%
10%
10%
7%
5%
0%
2011
-5%
2012
2013
-4%
-10%
ROE
2014
2015
ANALYZING PROFITABILITY
RATIO:
EPS
14
12
11.34
11.18
10
9.72
8
6
4
3.24
2
0
2011
2012
-0.64
2013
-2
EPS
2014
2015
ANALYZING PROFITABILITY
RATIO:
Operating ratio
86%
85%
84%
85%
85%
82%
81%
80%
78%
77%
76%
74%
72%
2011
2012
2013
2014
2015
Thisratioindicatedthatin2011,85%ofthe
net sales have been consumed by cost of
goods sold, administrative expenses and
selling and distribution expenses. The
remaining. 25% indicatesafirm's abilityto
cover the interest charges, income tax
payableanddividendpayable.Sameforthe
years2012and2013.Butin20114,2015it
isregularlydecreasingwhichisagoodsign
for the company. This trend in VBL is
showingthatcompanysabilitytocoverthe
interestcharges,Incometaxanddividendis
regularlyincreasingfrom2013.
ANALYZING PROFITABILITY
RATIO:
15%
15%
19%
15%
15%
2012
2013
10%
5%
0%
2011
2014
2015
300
200
100
-100
-200
-300
2011
2012
2013
2014
2015
Inthisgraphithasbeenseenthat
the total cash is increased over
fiveyearsbutthenetcashflowis
fluctuating over the five years. In
2011and2014thenetcashflowis
dropped badly. In 2012 the VBL
has generated enough cash from
theprofitandlossaccountrelated
operating activities. In 2012 and
2015 both net cash and total cash
flow increased.in 2013 net cash
decreased but total cash flow
increasedthenpreviousyear.
25%
20%
15%
10%
8%
5%
0%
2011
In2011itisshowingthat approx.11(in
Debt settlement period(in years)
12
11.1
10
9.48
8
6
6.05
6.49
6.43
2014
2015
4
2
0
2011
2012
2013
1.5
1.16
1
0.5
0
2011
-0.5
2012
2013
-0.79
-1
-1.5
-2
-2.5
-2.76
-3
2014
-1.3
-1.26
2015
10
8.49
7.61
7.27
5
2.33
0
2011
2012
2013
-5
-10
-15
-9.67
2014
2015
The net working capital (NWC) of VBL is not at the satisfactory position all the
last five years from 2011 to 2015, because it showed a negative networking
capital which indicates a less liquidity reserve of the company.
VBL is in the better condition regarding the operating efficiency during the
last five years as it has produced the acceptable operating profit margin.
VBL has not achieved an enough return on investment, which indicates the
bad management in generating profits with its available assets.
VBL has a low return on capital employed which indicates the less effective
management in generating profits with its total capital employed during
2011-2015
RECOMMENDATIONS
VBL can increase its current assets more by enhancing the accounts
receivable and can decrease its current liabilities by reducing its short
term loan
The Company can try to increase its quick assets like-cash, accounts
receivable and marketable securities.
RECOMMENDATIONS
It should aim to achieve optimum capital structure by reducing debt capital as well as by
increasing equity capital to finance its total assets.
The Company ought to enhance its earnings by accelerating its sales as well as by
minimizing its operating costs in order to get adequate earnings.
VBL should make an effort to increase its sales and manage its cost of goods sold efficiently.
The Company can enhance its sales by managing the operating cost efficiently.
It should amplify its managements ability to operate the business by enhancing sales with
the cost price effectiveness of the operation.
The Company should try hard to intensify its efficiency in utilizing the firms assets to
generate adequate profitability.
LIMITATIONS
Personal bias
Incomparable:
Time frame of this report was very limited. It was really tough to know details about a
giant company like- VARUN BEVERAGES Ltd within a short span of time.
CONCLUSION?
THANK
YOU