INDIVIDUAL ASSIGNMENT
SEMESTER TWO
FINANCIAL MANAGEMENT
SUBMITTED TO
Dr. Anu Antony
SUBMITTED BY
Devi Nandana R
B3220
MBA-B
KELLOGG’S INDIA PVT. LTD.
Kellogg's India Pvt. Ltd. is a subsidiary of the global food giant, Kellogg
Company. Since 1994, they have been in India and have developed a
brand that is much sought for their dedication to nutrition and quality as
well. Having a variety of breakfast cereal and snack categories, the firm
is among the most well-known brands in the Indianfood market.
Kellogg's India is dedicated to be in India for the long run and is learning
to adjust in consumer tastes and competitiveness in India.
Key Business Areas:
Cereals: Kellogg's India mostly specializes on morning items including
cereals. They provide many choices made from grains including rice,
corn, and wheat. These ready-made meals range from children to adults
and are meant to provide the nourishment required for every age group
of human beings.
Snacks : Apart from cereals, Kellogg's India has added snacks to its
range to meet the increasing need for quick and simple eating choices.
Export: Products Kellogg's India produces for export to nearby South
Asian nations including Sri Lanka, Nepal, Bangladesh, and Maldives are:
Key Products:
• Kellogg's Corn Flakes: The company's main offering is corn flakes,
which many Indian homes now include into breakfast rituals.
Kellogg’s Chocos: Targeting small children, Kellogg's Chocos is a
chocolate-flavored cereal. It's well-known for being both nutritious and
quite entertaining to eat.
Kellogg's Muesli : It is essentially a combination of oats, fruits, and nuts
meant for those extremely health-conscious consumers.
• Kellogg's Oats: Various items including instant oatmeal and ordinary
rolled oats.
• Pringles: Renowned brand of potato chips with a variety of flavors and
forms.
Industry Analysis
Kellogg's India Pvt Lt falls into the processed food sector. India's fast
changing processed food market is important for both its economy and
food security since it influences both of these aspects. It entails a broad
spectrum of activities turning unprocessed agricultural output into valueadded consumption goods.
From basic operations like milling and packaging to sophisticated
technologies like ready-to-eat meals, fortified foods, and nutraceuticals,
the industry is rather varied. Some among its sections are vegetables
and fruits, cereals, dairy, meat and poultry, seafood, and packaged
items. Because of its large agricultural basis, changing customer tastes,
rising affluence, and growing urbanization, processed food companies
find great success in India by means of several programs, projects, and
incentives including "Make in India," production-linked incentive (PLI)
schemes, and infrastructure development projects. The Indian
government actively promotes the expansion of the sector and
recognizes its importance. India's strategic position and great agricultural
diversity enable it to become a significant export hub for processed food
products.
Key Highlights
 Rich Resources: India's abundance of agricultural products drives
processed food.
 Less Wastage : Processing increases value, extends shelf life,
and reduces food waste, therefore helping to conserve resources.
 Employment: The sector creates jobs all across the food supply
network.
 Technology : Modern technology makes food preparation more
effective and of high quality tech-savvy.
 Healthy Options : Consumers want healthy, sensible products
more and more.
 Convenience: Instant and ready-to-eat foods are becoming rather
popular due of convenience.
 Online buying Boom: Food sales and distribution are being
transformed online.
Capital Structure:
The capital structed for Kellogg India Pvt. Ltd.is almost all funded by equity
with negligible portion of the assets financed by borrowings and
provisions. From the following data we can see that from year 2020 to
2024, the share of equity has declines from 99% to 93%, where the share
of borrowing and provisions has grown from 1% to almost 7% during the
same time.
Amounts in Crore
Rupees
Total Borrowings and
Provisions
2020
2021
2022
2023
2024
6.22
7.16
7.44
12.29
22.18
Share Capital
Reserves & Surplus
Total Equity
No of Shares (Crores)
76.95
613.73
690.68
7.69
153.91
454.45
608.36
15.391
153.91
342.83
496.74
15.391
150.75
246.32
397.07
15.07
148.78
150.23
299.01
14.87
Total Liabilities +
Equity
696.90
615.52
504.18
409.36
321.19
Total Liabilities
Equity
CAPITAL STRUCTURE
0.89% 1.16% 1.48% 3.00% 6.91%
99.11% 98.84% 98.52% 97.00% 93.09%
 In the year 2021, company issues 100% bonus share, which
doubles the numbers of share in the mentioned year.
 From the year 2023 onwards, the company is buying back share
slowly, that is why there is decrease in number of shares.
The company is repaying the shareholders dividend more than the
profit earned since 2022, thus decreasing the value of total equity
Sources of Financing
Equity Capital:
Kellogg’s India Pvt Ltd is primary financing through its equity capital.
Reserves and Retained Earnings:
A significant portion of the company's financing comes from accumulated
reserves and retained earnings. These have consistently grown prior to
year 2022, from there onwards the company is repaying the shareholders
thus the amount or surplus and reserves showing a decline.
Borrowings:
The management does not believe in financing the assets through
borrowing; thus, the company has not taken short term or long-term
borrowing in the past 5 years, however, there are short term and longterm provisions, which we have considered to be sources of financing
assets. The share of provisions has increased from 1% in the year 2020
to almost 7% in the year 2024.
EBIT-EPS Analysis:
Amount in Crore
Rupees
Sales
Change in stock
Total income
Mar-20 Mar-21 Mar-22 Mar-23 Mar-24
975.7 1,167.18 1,332.00 1,530.44 1,595.50
5.72
9.16
14.41
0.11
-2.49
1,001.35 1,184.55 1,352.25 1,553.36 1,610.98
Operating expenses
Non-cash charges
Total expenses
893.76
72.49
968.98
1,009.94 1,161.14 1,324.48 1,408.42
70.29
67.8
65.99
63.38
1084.46 1231.6 1392.68 1478.26
EBIT
40.82
113.48
137.72
163.00
136.69
Financial services
expenses
Profit Before Tax
2.73
38.09
4.23
109.25
2.66
135.06
2.21
160.79
6.46
130.23
Provision for direct
tax
Profit after tax
15.64
22.33
37.47
71.71
32.55
102.51
40.21
119.48
33.52
96.6
No of shares (Crores)
EPS (Rupees)
7.69
2.90
15.391
4.66
15.391
6.66
15.07
7.93
14.87
6.50
 The data above shows that EBIT (Earnings before interest and
taxes) has been growing consistently from Rs 4082 crore in the year
2020 to Rs. 163 crore in the year 2023.
 The EBIT witnessed a decline in the year 2024 due to relatively
faster increase in the expense as compared to income. The income
increased by 3.71% from 2023 to 2024, whereas the expensed
increased by 6.14% during same period.
 The same trend has been observed in the Net profit and EPS as
well. EPS increased from Rs. 2.90 in the year 2020 to Rs. 7.93 in
2023 before declining to Rs 6.50 in the year 2024.
Leverage Analysis
Leverage analysis helps assess how Kelloggs India Pvt Ltd is
utilizing financial and operating leverage to generate profits.
1. Operating Leverage Analysis
Particulars
Revenue
EBIT
Particulars
Revenue
EBIT
FY 2022-23
(₹ Cr.)
1,553.36
163.00
FY 2021-22
%
(₹ Cr.)
Change
1,352.25
14.87%
137.72
18.36%
Operating
leverage
FY 2023-24
(₹ Cr.)
1,610.98
FY 2022-23
%
(₹ Cr.)
Change
1,553.36
3.71%
163.00
16.14%
Operating
leverage
136.69
1.23
(4.35)
 The operating leverage calculated using data from years 2022
and 2023 turned out to be 1.23, which means that with 1%
change in Revenue, EBIT changes by 1.23%, which means
company is utilizing the resources efficiently.
 However, during the period 2023 to 2024, the operating
leverage has turned negative, this may be an exception, as in
the year expenses grew more rapidly than revenue, thus
resulting in decline in EBIT.
2. Financial Leverage Analysis
Particulars
EBIT
Net Income
Particulars
EBIT
Net Income
FY 2022-23
(₹ Cr.)
163.00
119.48
FY 2021-22
(₹ Cr.)
137.72
102.51
%
Change
18.36%
16.55%
Financial
leverage
FY 2023-24
(₹ Cr.)
FY 2022-23
(₹ Cr.)
Financial
leverage
136.69
163.00
%
Change
16.14%
19.15%
96.60
119.48
0.90
1.19
 On financial leverage front, the situation is worse that
operating leverage. Here, increase of 1% in EBIT results in
only 0.90% increase in Net Income (based on the numbers
from year 2022 and 2023). A decrease in EBIT of 1% results
in decrease in Net income of 1.19% (based on numbers from
years 2023 and 2024).
3. Total Leverage Analysis
Years
2022 to 2023
2023 to 2024
Operating
leverage
1.23
(4.35)
Operating
leverage
0.90
1.19
Total
Leverage
1.11
(5.16)
 Total leverage analysis shows that when the operating
leverage is positive it has relative lower positive effect on Net
Income, whereas a negative operating leverage amplifies the
effect on Total leverage.
Conclusion: Kelloggs India Pvt Ltd operates with low
financial risk, and profitability depends more on
operational efficiency.
Working Capital:
Gross working capital is total current assets and net working capital is Total
current assets – total current liabilities. For the year 2023 and 2024, gross and
net working capital for the firm are as follows:
(₹ Cr.)
Current Assets
Current Liabilities
2024
465.12
478.10
2023
554.17
472.72
Gross working capital for the year 2024 is: ₹ 465.12 Cr.
Net working capital is: ₹465.12 - 478.10 = -12.98 Cr
The decrease in current assets is mainly due to change in cash balances,
which decreased from 327.78 Cr in 2023 to 244.74 Cr in 2024. The reason
for this decrease was share buyback and dividend payment. During the
year 2024, the company paid 113.06 Cr in dividend and spent 70.21 Cr
on share buyback.
Operating Cycle:
Operating cycle is calculated using inventory period and receivable
period.
Inventory period is calculated as follows:
Inventory period = 365/inventory turnover
Inventory turnover = Cost of goods sold/average inventory
(₹ Cr.)
Cost of material consumed
Purchase of stock-in-trade
Changes in inventories of finished goods, work-inprogress and stock in trade
2024
385.75
197.81
Cost of goods sold
586.06
Inventory
2024
92.99
2023
98.89
Average inventory = (92.99+98.89)/2 = 95.94 Cr.
Inventory turnover = 586.06/95.94 = 6.11 times.
Inventory period = 365/6.11 = 59.73 days.
Receivable period is calculated as follows:
Receivable period = 365/ Receivable turnover
Receivable turnover = Sales/average Receivable
Sales for 2024 = 1,595.50 Cr
Trade Receivables
2024
71.42
2023
71.16
Average receivable = (71.42 + 71.16)/2 = 71.29
Receivable turnover = 1,595.50/71.29 = 22.38
Receivable period = 365/22.38 = 16.31 days
2.5091
Operating cycle = Inventory period + Receivable period
Operating cycle = 59.73 + 16.31 = 76.04 days