A STUDY ON FINANCIAL PERFORMANCE USING RATIO ANALYSIS AT EMAMI LTD

  • View
    248

  • Download
    1

Embed Size (px)

Text of A STUDY ON FINANCIAL PERFORMANCE USING RATIO ANALYSIS AT EMAMI LTD

VIVEK COLLEGE OF COMMERCE

CHAPTER - 1 INTRODUCTION1.1 COMPANY PROFILE Emami Ltd. (EL) is the flagship company of the Kolkata based Emami Group, which is engaged in the business of manufacturing personal care and health care products for over 3 decades and has diversified in the field of real estate, paper, biofuel, cement etc. Some of the major brands of the company are Boroplus Antiseptic Cream, Boroplus Prickly Heat Powder, Fair and Handsome Fairness Cream for men, Navratna Oil, Himani Fast Relief, Mentho Plus balm, Sona Chandi Chyawanprash and Amritprash, amongst others. 1.2 HISTORY OF THE COMPANY

Emami, which started as a cosmetics manufacturing company in the year 1974, advancing with increased momentum has expanded into Emami Group of Companies of today. Even though cosmetics and toiletries continue to be the main thrust area, the other companies in the Emami Group are performing equally brilliantly. From health care institution to medicines, from real estate to retailing and, from paper to writing instruments, Hospital, Emami is creating one success story after another.

1.3 VISION AND MISSIONVision A company, which with the help of nature, caters to the consumers needs and their inner cravings for dreams of better life, in the fields of personal and health care, both in India and throughout the world.

A STUDY ON FINANCIAL PERFORMANCE USING RATIO ANALYSIS AT EMAMI LTD 1

Page

VIVEK COLLEGE OF COMMERCE

Mission

To sharpen consumer insights to understand and meet their needs with valueadded differentiated products which are safe, effective & fast.

To integrate our dealers, distributors, retailers and suppliers into the Emami family, thereby strengthening their ties with the company. To recruit, develop and motivate the best talents in the country and provide them with an environment which is demanding and challenging. To strengthen and foster in the employees, strong emotive feelings of oneness with the company. To uphold the principals of corporate governance and move towards

decentralization to generate long term maximum returns for all stake owners. To contribute whole heartedly towards the environment and society and to emerge as a model corporate citizen.

1.4 BOARD OF DIRECTORSThe efficient functioning of this reputed company rests with the following personalities.

Shri R S Agarwal, Executive Chairman Shri Sushil Kr. Goenka, Managing Director Shri Mr K N Memani, Shri Mr Mohan Goenka,Wholetime Director Shri Mr Harsh V Agarwal Shri Mr Amit Kiran Deb Shri Mr Y. P. Trivedi

Shri R S Goenka, Director Shri Mr Viren J Shah, Director Shri Vaidya S Chaturvedi, Shri Mr Aditya V Agarwal Ms. Priti Sureka Shri Mr S. B. Ganguly Shri Sajjan Bhajanka

1.5 PROFILE OF THE ORGANIZATION

A STUDY ON FINANCIAL PERFORMANCE USING RATIO ANALYSIS AT EMAMI LTD 2

Page

VIVEK COLLEGE OF COMMERCE

Emami Limited is in the business of manufacturing personal, beauty and health care products. The company manufactures herbal and Ayurvedic products through the use of modern scientific laboratory practices. This blend enables the company to manufacture products that are mild, safe and effective. The company's product basket comprises over 20 products, the major being Boroplus Antiseptic Cream, Navratna Oil, Boroplus Prickly Heat Powder, Sona Chandi Chyawanprash and Amritprash, Mentho Plus Pain Balm, Fast Relief, Golden Beauty Talc, Madhuri Range of Products and others. The products are sold across all states in India and in countries like Nepal, Sri Lanka, and the Gulf countries, Europe, Africa and the Middle East, among others. Manufacturing: Emamis products are manufactured in Kolkata, Puducherry, Guwahati and Mumbai. The company commenced operations at its fully automated manufacturing unit in Amingaon, Guwahati in 2003-04. Network: The company's dispersed manufacturing facilities are complemented with a strong product throughput, facilitated by a robust distribution network of over 2100 direct distributors and 3.9 lakhs retail outlets. With a view to reach its products deeper into the country, direct selling has been extended to rural villages. As a result, rural sales increased substantially in 2003-04 compared to the previous year. Emami is headquartered in Kolkata. The company's branch offices are located across 27 cities in India. Promoters: Emami is promoted by Shri R.S.Agarwal and Shri R.S.Goenka, Kolkata based industrialists. Emamis shares are listed on the Calcutta Stock Exchange, Bombay Stock Exchange and National Stock Exchange.

1.6 IT BACKBONEA STUDY ON FINANCIAL PERFORMANCE USING RATIO ANALYSIS AT EMAMI LTD 3 Page

VIVEK COLLEGE OF COMMERCE

Integrated Information Technology An efficient information technology network is necessary for a dynamic FMCG company where the market demands change faster than perhaps in any other industry. At Emami, the integration of information technology transpires on a continuous basis. This ensures that the company responds to changing market place realities faster than its competitors and that its products reach retail shelves just when they are required. In turn, this enhances brand loyalty and retains customers. A successful implementation of the ERP in the offices, factories and depots increased the companys overall efficiency. It enabled single-point data entry and multi-point information access. The status of raw materials, packing materials, finished goods, indents and sales information gets constantly updated through ERP. This has become possible due to the Point to Point Leased Line connections. As Emami is growing rapidly, the augmented business requirement calls for a Standard ERP system. This would provide Real-Time information to the Management, which would facilitate to take quick decision. The information could also be available through email and Mobile phones. So Emami would be implementing a Standard ERP system very shortly. Sales Forecasting, Demand Planning, Process Management, Supply Chain Management, Primary and Secondary Sales, I-Supplier, I-Expenses, ISales will be an integral part of the Standard ERP system. Emami adopts the latest Technology for IT and communication system.

1.7 SALES AND DISTRIBUTION NETWORKOur Marketing and Distribution Network: Wide, penetrative and all encompassing. That is how Emami has planned its distribution network. The success of Emami has been largely due to its superior products that have reached the consumers even in the remotest regions of the country and abroad. Current Distribution Infrastructure:A STUDY ON FINANCIAL PERFORMANCE USING RATIO ANALYSIS AT EMAMI LTD 4 Page

VIVEK COLLEGE OF COMMERCE

5 Regions 25 Depots / C&F Agents 2,182 Direct Distributors 899 Distributors for Rural Coverage Over 3,86,940 Retail outlets

Distribution Network Four Mother depots Kolkata Vijayawada Delhi Nagpur

1.8 INTERNATIONAL MARKETING DIVISIONVision: To contribute profitably to the growth of the company, representing it with pride across the globe, with a single-minded focus and dedication to establishing and building global brands. Global Presence of Emami: Over the last 7 years, Emamis presence has increased from merely few countries in CIS to over 50 countries spanning across SAARC, Gulf, CIS, North America, Europe and Africa. The company now is shifting its focus from broad basing (entering new markets) to increasing the number of successful products in existing markets to improve upon its operational efficiency.

Product Portfolio: The Product Portfolio can be broadly divided into three Umbrellas.A STUDY ON FINANCIAL PERFORMANCE USING RATIO ANALYSIS AT EMAMI LTD 5 Page

VIVEK COLLEGE OF COMMERCE

Emami The products under this Umbrella Brand promise care for the skin. The range consists of Skin care, Hair care, Dental care & Mens care products. Himani Products under this Umbrella Brand promise cure. The range consists of OTC medicines. Ayucare A range of new Life style enhancing products comprising of Single ingredient herbs, food supplements, Neem & Aloe Vera range, Ayurvedic tea, Massage oil, Essential oils & blends.

Emma This range comprises of customized products as per the specific needs put-up by the consumer. Typically these are all mass marketed products sold to price conscious buyers. The range presently consists of Creams, Lotions & Shampoos.

Future Strategy: Companys business plan for International market comprises of the following key factors.

Investment in potential markets for key Brands leading to Higher Possibility of Returns in terms of Turnover and Market Development in the long run. Adding new products for various key markets. Customization of product offerings under the same brand clubbing of familiar products under the same brand. Manufacturing facilities in High Tariff markets to make prices more consumerfriendly. Acquisition In certain markets, company may consider buying existing brands instead of trying to build one.

Brand Building Activities: Company spends on Media (TV and/or Press) Advertising in select countries in CIS, SAARC, Indo-China and USA, Australia & UK. All the markets are supported with POPs, Displays and other promotional material as per the requirement.

1.9 INTRODUCTION TO THE STUDY

A STUDY ON FINANCIAL PERFORMANCE USING RATIO ANALYSIS AT EMAMI LTD 6

Page

VIVEK COLLEGE OF COMMERCE

Financial Management is that managerial activity which is concerned with the planning and controlling of the firms financial resources. Though it was a branch of economics till 1890 as a separate or discipline it is of recent origin. Financial Management is concerned with the duties of the finance manager in a business firm. He performs such varied tasks as budgeting, financial forecasting, cash management,