Capital budgeting sumer internship project.pptx

It's my sip ppt about capital budgeting at Ramdev Food Products Pvt ltd

1. SUMMER INTERNSHIP ON ‘ A STUDY ON CAPITAL BUDGETING AT RAMDEV FOOD PRODUCTS PVT. LTD. ’ PRESENTED BY: Riddhi DESAI ENROLMENT NUMBER : 23MG1110021 GUIDED BY: DR. Richa pandit BATCH 2023-25 Chimanbhai Patel Institute of Management & Research 1

2. Flow of presentation Introduction Literature review Research Methodology Objectives Research plan Data analysis and interpretation Findings Recommendations Conclusion Learnings from SIP 2

3. Introduction to FMCG FMCG : Fast Moving Consumer Goods , are the every day essential that fill our selves. There are the items we use regularly and prompting frequent repurchases. FMCG is all about Food and beverages , personal care and household care. FMCGs have a short shelf life because of high consumer demand or because they are perishable. products has low cost and sell quickly. Ramdev is major manufacturer and exporter of spices, instant mixes, snacks etc. but their main business is related to spices. The spice market was valued at 86000 CR in 2023 and expected to grow at 1,91,945 CR by year 2032. the spice market is segmented by organized(branded) and unorganized(spice vendors)which has major share of the market. based on product type market is segmented by pure spices and blended spices. Ramdev is a key player in Gujarat under pure spice segment. 3 Source : https://www.thehindubusinessline.com/news/variety/emamis-new-mantra-is-to-take-the-spice-route/article65663246.ece

4. Introduction to Ramdev food products Pvt. Ltd. Ramdev Foods: A Spicy Success Story Founded in 1965 in Ahmedabad, India, Ramdev Foods started with a vision to "Spice Up Lives" by meeting the needs for legumes and spices. Founded by the late Shri Rambhai Chhaganbhai Patel, the company later became a private limited company under his son, Mr. Hasmukhbhai R. Patel, in 1989. ● Affordable Options: Launched Rs. 2 and Rs. 5 packs in 2000, increasing accessibility and selling millions of units in the first year. ● National Expansion: Expanded beyond Gujarat to Maharashtra, Chhattisgarh, Orissa, Rajasthan, Delhi, Madhya Pradesh, Punjab, and more. ● Global Presence: Exports to the US, UK, and other countries through distribution channels. ● Trendsetter: Plays a role in shaping spice prices and promotional schemes. ● Recipe Innovation: Developed popular pickle masala recipes based on market knowledge. ● Employee Focus: Employs over 1000 people and offers benefits like scholarships and vehicle services. ● Environmental Responsibility: Maintains eco-friendly practices. 4 https://ramdevfoods.com

5. Introduction to Capital budgeting Capital Budgeting Techniques uses for Capital Expenditure Decision. Capital Budgeting is about allocation of Firm’s capital which reflects the Business Strategy . Capital Budgeting Techniques are helpful in identifying valuable investment opportunity from numerous opportunities. Capital expenditure = Capital investment in Project = Difficult or Expensive to Reverse them = Long-term decisions Examples of Capital Expenditure decisions = Purchase of Fixed Assets decisions, Installation of new technological software at firm, Investment in any property or Project 5 Source :https:// www.canva.com /design/DAGHuIJtUs4/sqjcv65j57-cIbdZK8OMPQ/ view?utm_content =DAGHuIJtUs4&utm_campaign= designshare&utm_medium = link&utm_source =editor

6. Methods of capital budgeting 1.  NPV = PV of Expected Cash Inflows - Initial Investment 2. Benefit cost ratio or PI = PV of Expected Cash Inflows / Initial Investment 3. IRR = LR + (HR - LR) * {HV – Initial Investment} / HV – LV 4. Payback period = the length of time required to recover the I.I. on the project 5. ARR =  Average profit after tax / Average Investment   * 100                                  6 Calculation of cash flow CF before interest, tax, depreciation [EBIT or CFBT] Less: Interest CF before Depreciation and Tax Less: Depreciation Profit or Cash flow before tax [EBT] Less: Tax Profit or Cash flow after Tax [PAT OR CFAT] Add : Depreciation Cash Flow. Used for the cal. of ARR Used for NPV, PI, PB, IRR

7. Advantages and Limitations of capital budgeting Advantages : Helps in maximizing returns Ensures effective utilization of resources Provides a long-term perspective Reduces risk Facilitates decision-making   Limitations : Inaccurate estimates Ignores qualitative factors   High degree of complexity Limited scope 7 methods Accepted Rejected Payback period < TARGETED PERIOD > TARGETED PERIOD ARR > TARGETED RATE <TARGETED RATE NPV >0 <0 IRR >COST OF CAPITAL <COST OF CAPITAL PI >1 <1 Criteria table :

8. Literature review (Reviewed 20 LR ) Author Name And Year Title Of The Paper Key Findings Hita Nath , et al., (2024) , A Study on the Capital Budgeting Practices: Evidences from Bhutan The results revealed that PI is the most preferred capital budgeting method, followed closely by NPV and PB Nagesh h. G. , krupa nair , chandrakala , sowmya c. U. (2023) Impact of Capital Budgeting Decision on Profitability of Firm – Selected Listed Automobile Companies in India The study found that positive impact of capital budgeting on profitability of the firms under the study. Considered 10 companies and used Correlation and paired T test Nivesh kumar ( 2022) Capital budgeting decision of small entrepreneurs in Haryana Result show that all the bigger company use the IRR technique and all the small scale enterprises use NPV. Considered 22 companies. 8 Sources : 1. https://njmc.site/index.php/journal/article/view/4/23 2. https://www.researchgate.net/publication/372503820_Impact_of_Capital_Budgeting_Decision_on_Profitability_of_Firm_-_Selected_Listed_Automobile_Companies_in_India 3. https://www.irjweb.com/Capital%20budgeting%20decision%20of%20small%20entrepreneurs%20in%20Haryana.pdf

9. Literature review Author Name And Year Title Of The Paper Key Findings Akhileshwari asamani ( 2020) Capital Budgeting in Local Government Bodies in India The government uses only the tried and true techniques for the capital budgeting. The methods NPV, IRR and payback period are the best capital budgeting practices made by the public sector. Divya gupta , Bibhuti pradhan (2017) Capital Budgeting Decisions in India: Manufacturing Sector Versus Non-Manufacturing Sector this study finds that out of four factors—Size, Risk, Social Cost Benefit Analysis (SCBA) and Trait—Size and SCBA are significant and influence the decision of acceptance of the Type of Capital Budgeting Technique (TCBT) used by the companies in manufacturing and non-manufacturing sectors in India 9 Sources : 4. https://www.ijtsrd.com/papers/ijtsrd30189.pdf 5. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3161832

10. Objectives of the Study To analyzed the financial performance and position of Ramdev food products Pvt. Ltd. 10

11. Research Plan Components Particulars Research Design Descriptive Research design Sampling frame Data retrieve from P&L and Balance sheet of the Ramdev food products PVT. Ltd. Sample size collected past 7 years of data of the Ramdev food products PVT. Ltd. Sampling method Non – probability convenience sampling Data source Secondary data source Secondary Data Research papers, website, articles, journals, books Beneficiaries Ramdev food products PVT. LTD. – finance department 11

12. Data Analysis and Interpretation SR. NO. PROJECT NAME NPV PI IRR PAYBACK PERIOD ARR 1 Twin hopper with vibrator feeder 81,41,89,192 593.87 0.596434 1 29030.53 2 SS 304 oil silo tank capacity 50 kl 81,29,08,006 292.50 0.59566 1 14292.16 3 Bagging machines 125SX 81,31,15,000 318.62 0.595785 1 15569.54 12 Comparative analysis of all the 3 projects

13. 1. NPV ( NER PRESENT VALUE ) : Project NO. NPV 1 81,41,89,192 2 81,29,08,006 3 81,31,15,000 13

14. 2. BCR OR PI ( BENEFIT COST RATIO OR PROFITIBILTY INDEX ) : Project NO. BCR OR PI 1 593.8705977 2 292.5035239 3 318.6230467 14

15. 3. IRR (INTERNAL RATE OF RETURN): Project NO. IRR 1 0.596434 2 0.59566 3 0.595785 15

16. 4. PAYBACK PERIOD : Project NO. Payback Period 1 1 2 1 3 1 16

17. 5. ARR (AVERAGE RATE OF RETURN): Project NO. ARR 1 29030.53946 2 14292.16402 3 15569.54091 17

18. Findings of the Study Three projects were evaluated over a seven-year period and initial investment varies among projects, with project two requiring the highest capital outlay. Cash flow for all projects were uneven over the seven years. Payback period for all projects was exceptionally short, at one year indicating quick returns on investment. Discounted cash flow methods NPV , IRR and profitability index indicated positive returns for all projects, suggesting financial viability. Traditional profitability measures ARR varied significantly between projects, with two projects showing exceptionally high returns. Profitability index was exceptionally high for all projects, indicating potentially strong returns relative to investments and significant value creation. 18

19. Conclusion This study examined a capital budgeting process in the Ramdev food products PVT. Ltd. Shows the calculation of all budgeting techniques of their investment project and analysed the results, company follows discounting methods because it considered time value of money and after review some of the literatures we can assume that most of the organization use the Discounting criteria methods conclude that capital budgeting is essential For every organization. When organization is setting up a capital budgeting for the business they are planning for the outcome of the months . When making the capital budgeting decisions, the financial manager effectively analyzed the long term investment programmes, so that it will improve the business over all.     19

20. Recommendations In 1 st project accounting profit is much higher , NPV, IRR, and PI are also positive. This is risky project as its returns are also high. But it will ensures a steady flow of material and prevent material from sticking within the hopper as we see the features and returns from the project this project should be first priority of the company The second project is also profitable in all contexts. As it returns are positive but in compare to other it is less . The third project bagging machines has also higher returns and remaining all techniques are positive, in compare to 2 nd it has higher return and as company is expanding bagging machines are required for the plant there for the project should be accepted. 20

21. Learnings from SIP In The first week for internship I learn about personal finance and corporate finance on the theory basis Then I learn about accounting entry in the ERP system of the company and learn how to read bills and TDS. I also learn how to make balance sheet and P&L , provisions and depreciation methods. I learn about costing and their process Also visited export department of the company and learn process of export and finance related actions. Learn about banking transaction in the company and borrowing or loan process. 21

22. References Hita Nath , Dr Rajnish , Raj, Ankit, Subba , & Ugyen . (2024). A Study on the Capital Budgeting Practices: Evidences from Bhutan. Narayan Journal of Management & Commerce , Vol 1 (01) , 10-25. nair , k. B., G, n. H., G, c. V., U, s. C., & P, n. (2023). Impact of Capital Budgeting Decision on Profitability of Firm – Selected Listed Automobile Companies in India. International Journal of Professional Business Review, 8(7):e02706 , 01-12. Kumar, N. (2022). Capital budgeting decision of small entrepreneurs in Haryana. international research journal of education and technology, 4 (9), 1-9. Asamani , A. (2020). Capital Budgeting in Local Government Bodies in India". International Journal of Trend in Scientific Research and Development ( ijtsrd ), 4 (2), 950-953. gupta , d., & bibhuti , p. (2017, january ). Capital Budgeting Decisions in India: Manufacturing Sector Versus Non-Manufacturing Sector . The IUP Journal of Applied Finance, 23 (1), 69-93 22

23. 23 Thank you