Inventory Management at Pepsi Co India Holding Pvt Ltd

“A STUDY ON INVENTORY MANAGEMENT AT PEPSICO INDIA
HOLDING PRIVATE LIMITED”
A Project Report Submitted for the Partial fulfilment of the Award of the
Degree of
MASTER OF BUSINESS ADMINISTRATION
By
RASHMI GOWDA KM
(ISY17MBA45)
Under The Guidance of
Internal Guide External Guide
Ms Shreya Chakraborty Mr Manjanna
Assistant Professor Finance Executive
SIT, PGDMS&RC, PepsiCo India Holding
Tumkur Pvt Ltd, Nelamangala.
TO
SIDDAGANGA INSTITUTE OF TECHNOLOGY
POST GRADUATE DEPARTMENT OF MANAGEMENT STUDIES AND
RESEARCH CENTER, TUMKUR-572103
January 2019

DECLARATION
I, Rashmi Gowda KM (1SY17MBA45) of Siddaganga Institute of Technology,
Tumkur, hereby declare that the dissertation report entitled “A STUDY ON
INVENTORY MANAGEMENT AT PEPSICO INDIA HOLDING PRIVATE LIMITED”
is submitted in the partial fulfilment of the requirements for the award of degree of
Master of Business Administration, and it is a record of an original report done by me
under the guidance of Ms Shreya Chakraborty, Assistant professor at PGDMS &
RC, SIT, Tumkur and Mr. Manjanna, Finance executive, PepsiCo India Holding
Private Limited, T-Begur, Nelamangala.
I further declare that the work or any part of this has not been submitted by me for
the award of any other degree/diploma in this institution/university or any other
university.
Place: Tumkur Rashmi Gowda KM
Date: USN: 1SY17MBA45

January-2019
ACKNOWLEDGEMENT
First it is my privilege to thank our honourable president of Shree Siddaganga
Education Society, DR. SHREE SHREE SHREE SHIVAKUMARA SWAMIGALU for
his lovable blessings.
At the outset, I feel a deep sense of gratitude to our beloved institute Post Graduate
Department of Management Studies & Research center, Sri Siddaganga Institute of
Technology, Tumkur for having provided me with such an opportunity to undergo
project work.
I would like to express my heart-felt gratitude to thank Dr. M.R. SHOLLAPUR
Director PGDMS & RC at SIDDGANGA INSTITUTE OF TECHNOLOGY for his
valuable suggestions and moral support throughout the course of my project work. I
express my sincere thanks to my beloved professor and guide Ms Shreya
Chakraborty, Assistant professor at PGDMS & RC, SIT for their valuable guidance
and support during the project
I express my deep sense of gratitude to PEPSICO INDIA HOLDING PVT LTD and
its management board for believing me and kindly furnishing me with information that
I required for the successful completion of this project.
Last but not the least, I would also like to take this opportunity to thank all my family
members and my friends who stood by me in all odds and supported in successful
completion of the project.

TABLE OF CONTENTS
PART-A
CHAPTER 1
Industry Profile ........................................................................................................... 1
CHAPTER 2
Company Profile....................................................................................................... 15
CHAPTER 3
Mc Kinsey’s 7s Framework ...................................................................................... 30
CHAPTER 4
SWOT Analysis ........................................................................................................ 36
PART-B
CHAPTER 5
Literature Review ..................................................................................................... 38
CHAPTER 6
Research Design...................................................................................................... 41
CHAPTER 7
Theoritical Background............................................................................................. 44
CHAPTER 8
Data Analysis And Interpretation.............................................................................. 58
CHAPTER 9
Findings And Suggestions........................................................................................ 90
CHAPTER 10
Conclusion And Learning Outcomes........................................................................ 92
BIBLOGRAPHY
ANNEXURES

LIST OF TABLES
CHAPTER 5
Table 5. 1 Summary of literature .............................................................................. 39
CHAPTER 8
Table 8. 1 Showing Current Ratio ......................................................................... 58
Table 8. 2 Showing Quick Ratio ............................................................................ 60
Table 8. 3 Showing Working Capital Ratio............................................................ 62
Table 8. 4 Showing Fixed Asset Turnover Ratio ................................................... 64
Table 8. 5 Showing Debtors Turnover Ratio ......................................................... 66
Table 8. 6 Showing Debt Collection Period ........................................................... 68
Table 8. 7 Showing Inventory To Total Assets Ratio............................................. 70
Table 8. 8 Showing Inventory Turnover Ratio ....................................................... 72
Table 8. 9 Showing Inventory Holding Period ....................................................... 74
Table 8. 10 Showing Inventory To Working Capital Ratio ....................................... 76
Table 8. 11 Showing Net Profit Ratio ...................................................................... 78
Table 8. 12 First In First Out.................................................................................... 82
Table 8. 13 Last In First Out.................................................................................... 85
Table 8. 14 Weighted Average Cost Method........................................................... 87
Table 8. 15 Summary Of Inventory Valuation.......................................................... 89

LIST OF GRAPHS
PART-B
CHAPTER 8
Graph 8. 1 Showing Current Ratio ........................................................................ 59
Graph 8. 2 Showing Quick Ratio ........................................................................... 61
Graph 8. 3 Showing Working Capital Ratio ........................................................... 63
Graph 8. 4 Showing Fixed Asset Turnover Ratio .................................................. 65
Graph 8. 5 Showing Debtors Turnover Ratio ........................................................ 67
Graph 8. 6 Showing Debt Collection Period .......................................................... 69
Graph 8. 7 Showing Inventory To Total Assets Ratio............................................ 71
Graph 8. 8 Showing Inventory Turnover Ratio ...................................................... 73
Graph 8. 9 Showing Inventory Holding Period ...................................................... 75
Graph 8. 10 Showing Inventory To Working Capital Ratio ...................................... 77
Graph 8. 11 Showing Net Profit Ratio ..................................................................... 79
Graph 8. 12 ABC Analysis........................................................................................ 81

Executive Summary
The study was done in PepsiCo India Holding Pvt Ltd, T-Begur, Nelamangala,
Bangalore Rural district, with the objective of finding out the efficiency of inventory
management in the organization. As inventory management plays a major role in
reducing the cost of production and helps the company in increasing its profit.
The primary objective of the study is to measure the efficiency of inventory
management in the company, comparing current year data with the previous years
and suggesting the measures to be taken to improve the efficiency of inventory
management. The study is done on the basis of secondary data. The secondary data
is collected from the sources like balance sheet, P&L account, purchases and issue
ledger etc, during the period of internship done in the company. The data analysis
and interpretation is done using various ratios.
From the data analysis it’s found that inventory management is quite good in the
organization, the average inventory turnover ratio of the company is 9.46 indicating
that the company has turned its inventory nearly 9 times a year. The average
inventory holding period is 39 days. And the average inventory to working capital
ratio is 0.18 indicating good liquidity position of the firm.
The financial position of the company is also analysed using ratios. The average
current ratio of the company is found to be 7.32 which is very much higher than the
standard ratio. The average quick ratio is 6.24, which is above the industry average.
And even the fixed asset ratio, working capital ratio, net profit ratios are analysed
and the financial position is found to be satisfactory
The company is following ABC classification of items to control inventory in the
company which is very suitable for the company as it contains a huge number of
engineering spares of different values supporting the production activities every day.
It helps in applying the control over high valued items that are very essential for the
company.

In this study the total closing balances and total cost of issues are calculated under
different methods of inventory valuation. It is found that the prices of the spare items
are decreasing with time, hence the closing balances will be more in LIFO (last in,
first out) method of inventory valuation when compared to other methods i.e. FIFO
(first in, first out) and WAC (weighted average cost) (LIFO>WAC>FIFO). And
similarly, the total cost of issues will be more in FIFO method of inventory valuation
when compared to other methods of inventory valuation (FIFO>WAC>LIFO). Hence
it is suggested to use LIFO, which increases the profitability of the company.

A Study on Inventory Management at PepsiCo India Holding
Private Limited
SIT, PGDMS & Research Center, Tumkur Page 1
CHAPTER-1
INDUSTRY PROFILE
1.1 Beverage Industry
Beverage industry is the industry that produces drinks, in particular ready to drink
beverages. Beverages almost always largely consist of water. The beverage industry
consists of two major categories namely, non-alcoholic and alcoholic. The non-
alcoholic category is comprised of soft drink syrup manufacture, soft drink and water
bottling and canning; fruit juices bottling, canning and boxing; the coffee industry and
the tea industry. Alcoholic beverage categories include distilled spirits, wine and
brewing.
--
This industry has a turnover of around USD 230 million. With the entry of major
international players the market has evolved and has grown big. The emergence of
various brands has given boost to this category over the last couple of years. Now
consumers can choose beverages of almost all flavours, colours, health and nutritional
values. Pepsi, Nestle and Coca cola are the leading brands that are ruling the Indian
beverage market. Among all the beverages, tea and coffee are manufactured as well
as exported heavily in the international markets around the world. Half of the tea and
coffee products are available in unpacked form.
Beverage
Non-alcoholic
Beverages
Alcoholic Beverages
Fruit juice,
Coffee and
tea,
Packaged
water
Colas,
Soda,
Tonic water
Wine,
Brandy
Bear,
Whisky
Non-
carbonated
Carbonated Fruit based Grain

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1.2Growth opportunities for beverage market
India has a population of more than 1.150 billion which is just behind China. According
to the estimates, by 2030 India population will be around 1.450 billion and will take
over china to become world’s largest in terms of population. Beverage Industry which
is directly related to the population is expected to maintain a robust growth rate. The
price stability throughout the year has contributed to the increase in domestic
beverages sale.
The global beverage industry is expected to reach as estimated USD 1.9 trillion by
2021 and is forecast to grow at a CAGR of 3% from 2016 to 2021.1The major drivers
for the growth of this market are growing urbanization, and disposable income.
The global beverage market is good with opportunities for both alcoholic and non-
alcoholic sectors of the beverage industry. Emerging trends which have a direct
impact on the industry include the use of natural flavours and sweeteners to meet the
consumer health concerns.
India offers the greatest potential for the beverage industry. The country accounts for
almost 10% of global market
1.3Market Share
The Indian beverage industry has come very far from the days when tea was the ‘holy’
beverage of the commoners, coffee was the ‘sophisticated’ beverage of the upper
class, Cola was the ‘cool’ beverage of the youngsters and hard drinks were the man’s
thing. Today, right from whiskey, wine and cocktails to health drinks and powdered
juices, the Indian beverage market is flooded with a sea of options and variants for
alcoholic as well as non-alcoholic lovers with all kinds of tastes and preference.
Currently revenue in the Non-Alcoholic Drinks market amounts to USD 10370 million.
The market is expected to grow annually by 12.8 %( CAGR 2018-21)
Revenue in the alcoholic Drinks market amounts to USD 67661 million and the market
is expected to grow annually by 7.9 %( CAGR 2018-21)2
1 Research and Markets(www.reseachandmarkets.com) , Growth opportunities in the
Global Beverage Market
2 Statista Market Forecast

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Alcohol Beverages Market
The alcohol market in India is divided into 3 broad categories- IMFL (Indian
manufactured foreign liquor which includes whiskey, rum, brandy, vodka & amp; gin),
Beer and Country Liquor (cheaper, spiced liquor). In terms of volume the market is
nearly 250 million cases and is nearly equally split between the three segments
almost, however, in terms of value IMFL comprises 70% of the market.
A global study revealed that alcohol consumption has risen by 55% over a period of
20 years in India. In fact, India is the 3rd largest growing liquor markets in the world.
The rise has been mainly owing to the growing influence of the pub culture, changing
demographics (53% of the Indian population are above the age of 25 years), increase
in disposable income and rapid urbanization.
However, the growth journey of the alcohol market has met with a roadblock after the
recent ban on the liquor sales within 500m of state and national highways upheld by
the Supreme Court in India. While the ban has been made in the ‘good spirit’ to curb
high drunk driving deaths, it will not only affect the liquor producers and shops, but
also the hospitality industry. The loss of state revenue is estimated at Rs 50,000
crores, while high end hotels such as Taj, Oberoi, Hyatt and Accor may lose revenue
to the tune of Rs65,000 crores collectively. Even the pubs and restaurants will lose up
to Rs 15, 000 crores. The ban will also cost 100,000 people their jobs.3
Non-alcoholic Beverages Market
According to a report, the beverage category contributes 8-9% of the Indian FMCG
market. The market is growing at 20-23% and is expected become three times the
current size by 2020. The recent liquor ban could turn the game in the favor of non-
alcohol beverages and can fuel further growth than the estimated projection.
3 The Indian Beverage Market Story, www.linkedin.com

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The non-alcohol market is divided into three main categories:
• Hot beverages
• Carbonated drinks
• Powdered drinks, health drinks and juices
• Mineral and flavored water
Hot Beverages
The coffee & tea industry is expected to reach Rs41,800 crores by the end of 2017 as
the domestic consumption is rising swiftly. There is no denying the fact that the
Indians love their tea and coffee when it comes to something garam. India is the
largest tea producing and consuming country and still rules over coffee. However, the
coffee has gradually evolved into a lifestyle beverage with the mushrooming of
branded coffee outlets as a popular hangout with friends or colleagues.
Carbonated Drinks
Coca Cola introduced Indians to the taste of cola in 1970, before exiting the country in
1977 due to changes in the government policies. Parle which was facing stiff
competition from Coca Cola then took over the reins by launching new carbonated
drinks such as Thumbs Up, Gold Spot and Limca. However, Parle’s supremacy lasted
only until 1990 when Coca Cola and Pepsi forayed into the Indian market. Today,
Coca Cola and Pepsi together contribute to more than 60% of the carbonated drinks
market. The rest is controlled by Parle, Dabur, Bisleri and other local brands.
However, over the past few years, non-cola aerated drinks, especially those with fruit
content has gained traction.
Powdered drinks, energy drinks and juices
Remember Rasna, the soft drink that every home served in the 80s? Rasna has
evolved over the years, but has lost its market share to other non-alcoholic beverages

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and its only competitor Tang. There isn’t much product innovation in this category, so
its growth potential is not very optimistic.
It is the juice market, which are flourishing extremely well in India. It is valued at Rs
1,100 crore ($200 million) and is projected to grow at a CAGR of 15 per cent over the
next three years. The key drivers of growth of juices market are rise in the disposable
income, people adopting Western culture, health awareness and import of fruits to
India.
In fact, juice and juice based drinks are growing 2.5 times faster than aerated drinks.
As per the sales figure of 2016, juices and juice drinks such as Real, Slice, Tropicana,
Rooh Afza, and Tang toppled Pepsi and Coca-Cola out of the top 5 highest sold
brands across modern retail chains.4
Mineral and flavoured water
This particular category has created its unique place in the beverage market because
it is growing much faster than carbonated drinks. This market is expected to grow at a
CAGR of 22 percent, to reach Rs160 billion in 2018. Nearly 67 per cent market share
of the sector is held by the top five players such as Bisleri, PepsiCo, Coca-Cola, Parle
and Dhariwal. Mineral and packaged water bottles which were considered a luxury
and that too, only during
travelling are now
commonly available at
every nook and corner of
the country. The rise in the
consumption of mineral
water has been mainly due
to increasing awareness
about health, increase in
tourism and easy
availability of bottled
4
The Indian Beverage Market Story, www.linkedin.com

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water. There is a new variant called flavoured water that has taken over the luxury tag
from mineral water bottles. The target market is the people who prefer healthy lifestyle
on the go and love to drink water infused with vitamins, natural flavours or nature
identical flavouring substances such as basil, lemon, mint, orange, hibiscus, fruits, etc.
O’cean, Blue and Qua are some brands in this category.
With so many players in the beverage market, it is definitely a war of the brands worth
watching.
Distribution of the beverages market across India in 2017 by type
Source: www.statista.com
This statistic represents the Indian beverages market in 2016, distributed by type.
Canned or Bottled drinks and juices, for instance, accounted for about eleven percent
of the country’s beverage market during the measured time period.
1%
5%
11%
83%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Pakaged or flavoured
water
Other non-alcoholic
drinks
Bottled /canned drinks
and juices
Tea and Coffee

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1.4Regulatory Authorities governing beverage industry
The Food Safety and Standards Authority of India (FSSAI)
FSSAI has been
created for laying down
science based
standards for articles of
food and to regulate
their manufacture,
storage, distribution, sale and import to ensure availability of safe and wholesome food
for human consumption.
Ministry of Health & Family Welfare, Government of India is the Administrative Ministry
for the implementation of FSSAI. The Chairperson and Chief Executive Officer of Food
Safety and Standards Authority of India (FSSAI) have already been appointed by
Government of India. The Chairperson is in the rank of Secretary to Government of
India.
FSSAI has been mandated by the FSS Act, 2006 for performing the following
functions:
 Framing of Regulations to lay down the Standards and guidelines in relation to
articles of food and specifying appropriate system of enforcing various
standards thus notified.
 Laying down mechanisms and guidelines for accreditation of certification
bodies engaged in certification of food safety management system for food
businesses.
 Laying down procedure and guidelines for accreditation of laboratories and
notification of the accredited laboratories.
 To provide scientific advice and technical support to Central Government and
State Governments in the matters of framing the policy and rules in areas which
have a direct or indirect bearing of food safety and nutrition.

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 Collect and collate data regarding food consumption, incidence and prevalence
of biological risk, contaminants in food, residues of various, and contaminants
in foods products, identification of emerging risks and introduction of rapid alert
system.
 Creating an information network across the country so that the public,
consumers, Panchayats etc receive rapid, reliable and objective information
about food safety and issues of concern.
 Provide training programmes for persons who are involved or intend to get
involved in food businesses.
 Contribute to the development of international technical standards for food,
sanitary and phyto-sanitary standards.
 Promote general awareness about food safety and food standards.
Different laws govern the food & beverage sector in India. The prevailing laws and
standards adopted by the government to verify the quality is one of the best in the
world. Multiple laws/regulations prescribe varied standards regarding food additives,
contaminants, food colours, preservatives and labelling. In order to rationalize the
multiplicity of food laws, a group of Ministers (herein after referred as GoM) was
recently set up to suggest legislative and other changes to formulate a modern,
integrated food law, which will be a single reference point in relation to the regulation
of food products. The food laws in India are enforced by the director general of health
services, Ministry of Health and Family Welfare, Government of India (GOI).
These are various food laws applicable to food and related products in India
1. Prevention of Food Adulteration Act (PFA), 1954 and Rules (Ministry of Health
&Family Welfare).
2. The standards of Weights and Measurements Act, 1976, and Standards of
Weights and Measures (Packaged commodities) Rules, 1977.
3. Agriculture Produce (Grading & Marketing) Act (Ministry of Rural Development).
4. Essential Commodities Act, 1955 (Ministry of food &Consumer Affairs).
5. Fruit Products Order (FPO), 1995.
6. Meat Food Products Order, 1973 (MFPO)
7. Milk and Milk Products Order, 1992.

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8. The Infant Milk Substitutes, Feeding Bottles and Infants Foods (Regulation of
Production, Supply and Distribution) Act, 1992 and Rules 1993.
9. The Insecticide Act, 1968.
10.Export (Quality control and Inspection) Act, 1963.
11.Environmental Protection Act, 1986.
12.Pollution Control (Ministry of Environmental and Forests).
13.Industrial Licenses.
14.BIS Act, 1986.
Indian Beverage Association (IBA)
Leading Indian companies with direct and allied interests in the non-alcoholic
beverage industry have come together to form the Indian Beverage Association (IBA).
These companies include Dabur India Ltd, Red Bull India Pvt. Ltd, Tetra Pak India
Pvt. Ltd, Pearl Drinks Ltd, Bengal Beverages Ltd, Jain Irrigation Systems Ltd,
Coca-Cola India and PepsiCo India Holdings Pvt. Ltd. The Indian Soft Drinks
Manufacturers Association (ISDMA) is also a member of the IBA. IBA aims to bring
together all stakeholders to a common platform to promote growth of the non-alcoholic
industry.
1.5PEST Analysis of Beverage Industry
PEST analysis looks at the external business environment and is an appropriate
strategic tool for understanding the "big picture" of the environment in which business
operates, enabling the company to take advantage of the opportunities and minimize
the threats faced by their business activities. It also act as guide in strategic decision-
making. When strategic planning is done correctly, it provides a solid plan for a
company to grow into the future.
With a PEST analysis, the company can see a longer horizon of time, and be able to
clarify strategic opportunities and threats that the organisation faces. By looking to the
outside environment to see the potential forces of change looming on the horizon,
firms can take the strategic planning process out of the arena of today and into the
horizon of tomorrow.

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1. Political/Legal Factors
It is the influence of government policies and initiatives on the food and beverage
business such as tax policy, labour law, environmental law etc. and political stability.
For instance:
Food and Drug Administration (FDA) Regulation
All the food products manufacturers and producers are under the control of FDA. For
instance, the food and drug administration certifies and tests new ingredients such as
high concentration sweeteners prior to they are permitted to be used in beverages and
soft drink production.
Human Rights Issue
Multinational corporations are facing different human rights issues, rules, regulations,
laws and policies of different governments in operating countries.
Waste management and public concerns
Increasing environmental consciousness is most important to growing legislation. The
firm’s operation is exaggerated by federal legislative applications that concentrate on
the four objectives.
 Decrease the quantity of packaging material inflowing the nation’s solid waste
management system
 Diminish the consumption of natural scarce resources
 Increase the reuse and recycling packaging materials
To shelter the natural environment and human health from undesirable effects related
with the dumping of packaging materials. For instance, Connecticut has now passed a
law that controls packaging to enlarge its recyclability.

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2. Economic Factors
The main factors taken into deliberation are the market risks, which a Pepsi company
is bared to commodity prices, foreign exchange rate and interest rate. These elements
are described as follows.
Commodity prices
Commodity prices distress the raw material cost, Company is opened to market risk
due to the commodities prices, because in competitive environment where company is
operating, would limit its capability from improving costs during higher pricing.
Foreign exchange & global economic conditions
Operating in global environment is not as easy as operating in local market, because it
involve the exposure to currency exchange rates variations. This generally affects the
interest rate, economic growth, government actions inflation and other economic
factors. These changes could affect the Pepsi and Coke to adjust their operating and
financing strategies. Variations in global currency exchanging rates and macro-
economic conditions could affect the international operating profits and business of the
Pepsi and Coke.
Interest rate
Pepsi and Coca Cola could control their general financing in term of harmonizing risks
and investment opportunities. To minimize overall borrowing costs firms in beverage
industry are using currency swaps and interest rate to significantly adapt the rates in
order to minimize the borrowing cost.
3. Socio-cultural factors
Now-a-days consumers are not brand loyal as they were previously, now they can
easily switch to another product. Consumer choice for beverages and soft drinks is
affected by factors such as health consciousness, population growth, age of the
population, career attitudes etc.

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Due to health reason, age factor plays very important role when choosing a soft drink
or beverage. Some studies have been conducted and found that soft drinks and cola
products in general may result health problems specially, kidney stones. In compare to
adults, younger consumers specially teens and twenties have fewer interest spans for
products and have a preference of products that seems different and to be fun. Now
players in beverages industry changes to non-cola products for instance bottled water,
sports drinks, tea etc.
4. Technological factors
Technological advancement in manufacturing and new quality improvement concepts
such JIT, Six Sigma, MRP-II etc are the significant providers to improve efficiency of
bottling operations and quality of products. Advancement in technology also helps to
introduce new product lines for example new flavours, sugar-free or diet sweeteners,
caffeine free goods facilitates and to launch brands that meet changing customer
style, preferences and taste.
In beverage industry distribution process is a big challenge because process can be
able to place the right products at right time. In soft drink industry technology can
provide a competitive advantage, if it is applied in area such as logistic products into
stores less extravagantly and costs beyond the distribution pipeline while increasing
sales information availability.
1.6Major Players and their Market share
Having a soft drink or a healthy juice is something Indians crave for. They die for a
drink that refreshes, energizes and offers happiness of every kind. Here are the major
players of Beverage Industry in India:

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Coca Cola
It is an American multinational beverage company that offers 500 brands in over 200
countries in the world. It was established in the year 1886 and is the leader of all the
beverages globally. When we speak of any cold drinks or any beverage, Coca Cola is
the one company which has got a very rich history. It is one the pioneer in the sector
and Coke is still one of the favourite for all. Coke is a product which has a very loyal
following over the years globally and even in India. Much of the advertising for this
mega brand revolves around the festivities and traditions. So be it Diwali, Christmas or
Durga Puja Coke is a big part of all the celebrations. On the huge beverage market in
India, Coca Cola is a brand which is undoubtedly one of the leaders which many other
brands try to emulate. Along with
Coke, Sprite is one of its top
selling brands. In keeping with the
health concerns of high calorie
intake the company also has Diet
Coke and Coca Cola Zero.
Pepsi
If you were to ask which brand is
more popular Coca Cola or Pepsi
you might not have a clear
answer. This rivalry between these giant companies in the beverage sector is not only
globally but also in India. Ever since its launch in India in 1990, Pepsi as would know
is enjoyed by millions across the country and much like its arch rival Coca Cola has a
very loyal following. They have been a large part of many sporting events and had
many successful advertising campaigns like the one which had the tag line “Yeh Dil
Mange More”. It is an American multinational food and beverage company that was
established in the year 1965. It is headquartered in New York and offers wide range of
products. It is even ranked as the largest food and beverage business corporation by
revenue.

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Nestle India
It is one of the leading beverage company in India that is involved in the
manufacturing of high quality of Hot and cold water soluble black and Green tea
powders. Nestle India is a subsidiary of Nestle Switzerland and produces wide range
of products like infant foods, beverages, milk products, prepared dishes & cooking
aids, and chocolates and confectionery. Nescafe Ice café is a delicious creamy cold
coffee offered by the company. Instant tea, pure instant coffee, coffee blends, tea
bags, vending mixes, Nestle slim milk, Nestea are some of the popular products
offered by the company.
Tata Tea
It is the second largest manufacturer of tea in India. It produces 30 million kg of black
tea annually and exports globally. It holds its presence in more than 40 countries
across the world and owns 27 tea estates in the Indian states of Assam, West Bengal
and Kerala. it is regarded as a “super brand” in India. It is the leading manufacturer of
tea and tea products and owns 5 major brands in India that include Tata Tea, Tetley,
Kanan Devan, Chakra Gold, Gemini.
Hindustan Unilever Limited (HUL)
HUL is a consumer goods company based in Mumbai, Maharashtra. It is a subsidiary
of Unilever, a British-Dutch company. Though when we think of HUL we usually think
it to be a Company mainly in terms of core FMCG products like detergents and
personal care products, but HUL also has its presence in the beverage sector through
some of its top selling beverage brands like the famous and popular Brooke Bond Red
Label tea. Apart from this you would often come across the very famous tea ad with
Ustad Zakir Hussain, the Tabla Maestro saying “Wah Taj Bolie!”. This is done for the
Taj Mahal Tea brand, which is also owned by HUL.

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CHAPTER-2
COMPANY PROFILE
PepsiCo, Inc. is an American multinational food, snack, and beverage corporation
headquartered in Purchase, New York. PepsiCo has interests in the manufacturing,
marketing, and distribution of grain-based snack foods, beverages, and other
products. PepsiCo was formed in 1965 with the merger of the Pepsi-Cola Company
and Frito-Lay, Inc.
PepsiCo ia a world leader in convenient foods and beverages, with 2015 revenues of
more than $63 billion dollars and 274,000 employees. PepsiCo has since expanded
from its namesake product Pepsi to a broader range of food and beverage brands, the
largest of which included an acquisition of Tropicana Products in 1998 and the Quaker
Oats Company in 2001, which added the Gatorade brand to its portfolio. PepsiCo's
product portfolio includes a wide range of enjoyable foods and beverages, including
22 brands that generate more than US $1 billion dollars each in estimated annual
retail sales.
Based on net revenue, PepsiCo is the second largest food and beverage business in
the world. Within North America, PepsiCo is the largest food and beverage business
by net revenue. In India distribution and bottling is conducted by PepsiCo as well as
by licensed bottlers in certain regions.
2.1Origin
It was first introduced in North Carolina in 1898 by Caleb Bradham, who made it at his
pharmacy. Known back then as “Brad’s Drink”, it was later named Cola possibly due
to the digestive enzyme pepsin and kola nuts used in the recipe. That year, Bradham
sold 7,968 gallons of syrup. The next year, Pepsi was sold in six-ounce bottles, and
sales increased to 19,848 gallons. The Pepsi-Cola Company was first incorporated in
the state of Delaware in 1919. In 1926, Pepsi received its first logo redesign since the
original design of 1905. In 1929, the logo was changed again. In 1929 automobile race

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pioneer Barney Oldfield endorsed Pepsi-Cola in newspaper ads as “A bully
drink….refreshing, invigorating, a fine bracer before a race”.
In 1931, the Pepsi-Cola Company went bankrupt during the Great Depression- in
large part due to financial losses incurred by speculating on widely fluctuating sugar
prices as a result of World war 1. Assets were sold and Roy C. Megargel bought the
Pepsi trademark. Eight years later, the company went bankrupt again. Pepsi’s assets
were then purchased by Charles Guth, the President of Loft Inc. Loft was a candy
manufacturer with retail stores that contained soda fountains. In 1965, the Pepsi-Cola
Company merged with Frito-Lay, Inc. to become PepsiCo, Inc. At the time of its
foundation, PepsiCo was incorporated in the state of Delaware and headquartered in
Manhattan, New York. The company's headquarters were relocated to their present
location of Purchase, New York in 1970
2.2Rise
During the Great depression, Pepsi gained popularity following the introduction in
1936 of a 12- ounce bottle. Initially priced at 10 cents, sales were slow, but when the
price were slashed to 5 cents, sales increased substantially. With a radio advertising
campaign featuring the jingle “Pepsi-Cola hits the spot/ Twelve full ounces, that’s a lot/
Twice as much for a nickel too/ Pepsi-Cola is the drink for you,” arranged in such a
way that the jingle never ends. Pepsi encouraged price-watching consumers to switch,
obliquely referring to the Coca-cola standard of six ounces per bottle for the price of
five cents (a nickel), instead of the 12 ounces Pepsi sold at the same price. Coming at
a time of economic crisis, the campaign succeeded in boosting Pepsi’s status. In 1936
500,000,000 bottles of Pepsi were consumed. From 1936 to 1938, Pepsi-Cola profits
doubled.
Between the late-1970s and the mid-1990s, PepsiCo expanded via acquisition of
businesses outside of its core focus of packaged food and beverage brands. PepsiCo
also previously owned several other brands that it later sold so it could focus on its
primary snack food and beverage lines, according to investment analysts reporting on
the divestments in 1997. Brands formerly owned by PepsiCo include: Pizza Hut, Taco
Bell, KFC, Hot 'n Now, East Side Mario's, D'Angelo Sandwich Shops, Chevys

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Fresh Mex, California Pizza Kitchen, Stolichnaya (via licensed agreement), Wilson
Sporting Goods, and North American Van Lines.
The divestments concluding in 1997 were followed by multiple large-scale
acquisitions, as PepsiCo began to extend its operations beyond soft drinks and snack
foods into other lines of foods and beverages. PepsiCo purchased the orange juice
company Tropicana Products in 1998, and merged with Quaker Oats Company in
2001, adding with it the Gatorade sports drink line and other Quaker Oats brands such
as Chewy Granola Bars and Aunt Jemima, among others.
In August 2009, PepsiCo made a $7 billion offer to acquire the two largest bottlers of
its products in North America: Pepsi Bottling Group and PepsiAmericas. In 2010 this
acquisition was completed, resulting in the formation of a new wholly owned
subsidiary of PepsiCo, Pepsi Beverages Company. In February 2011, the company
made its largest international acquisition by purchasing a two-thirds (majority) stake in
Wimm-Bill-Dann Foods, a Russian food company that produces milk, yogurt, fruit
juices, and dairy products.[ When it acquired the remaining 23% stake of Wimm-Bill-
Dann Foods in October 2011, PepsiCo became the largest food and beverage
company in Russia.
In July 2012, PepsiCo announced a joint venture with the Theo Muller Group which
was named Muller Quaker Dairy. This marked PepsiCo's first entry into the dairy
space in the U.S. The joint venture was dissolved in December 2015.
On May 25, 2018, PepsiCo announced that it would acquire fruit and veggie snack
maker Bare Foods. They will also quarter-own allMotti in late November 2018 and it
will be PepsiCo's first owned Tech and Computer Service Company.
2.3Nature of Business
The PepsiCo manufacturing and distributing the soft drinks, snacks and other food
items in different brand names

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Company Logo
2.4Vision and Mission
Vision
"PepsiCo's responsibility is to continually improve all aspects of the world in which we
operate - environment, social, economic - creating a better tomorrow than today."
Its vision is put into action through programs and a focus on environmental
stewardship, activities to benefit society, and a commitment to build shareholder value
by making PepsiCo a truly sustainable company.
Mission
PepsiCo’s mission is to be the world's premier consumer Products Company focused
on convenient foods and beverages. We seek to produce financial rewards to
investors as we provide opportunities for growth and enrichment to our employees,
our business partners and the communities in which we operate. And in everything we
do, we strive for honesty, fairness and integrity.
2.5Product Portfolio
PepsiCo India’s expansive portfolio includes iconic refreshment beverages Pepsi,
7UP, Mirinda and Mountain Dew, in addition to low calorie options such as Diet Pepsi,
hydrating and nutritional beverages such as Aquafina drinking water, isotonic sports
drinks- Gatorade, Tropicana 100% fruit juices, and juice based drinks – Tropicana

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Nectars, Tropicana Twister and Slice, non-carbonated beverage and a new innovation
Nimbooz by 7UP.
The group has built an expansive beverage and foods business. To support its
operations, PepsiCo has 36 bottling plants in India, of which 13 are company owned
and 23 are franchisee owned. In addition to this, PepsiCo’s Frito Lay foods division
has 3 state-of-the art plants. PepsiCo’s business is based on its sustainability vision of
making tomorrow better than today. PepsiCo’s commitment to living by this vision
every day is visible in it’s contribution to the country, consumers and farmers.
Brands
Foods
PepsiCo’s food division, Frito-lay, is the leader in the branded salty snack market and
all Frito-Lay products are free of
trans-fat and MSG. It manufactures
Lay’s Potato Chips, Cheetos
extruded snacks, Uncle Chipps
and traditional snacks under the
Kurkure and Lehar brands. The
company’s high fibre breakfast
cereal, Quaker Oats, and low fat
and roasted snack options
enhance the healthful choices
available to consumers. Frito Lay’s
core products, Lay’s, Kurkure,
Uncle Chipps and Cheetos are cooked in Rice Bran Oil to significantly reduce
saturated fats and all of its products contain voluntary nutritional labelling on their
packets.

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Beverages
PepsiCo India’s expansive portfolio includes
iconic refreshment beverages Pepsi, 7UP,
Nimbooz, Mirinda and Mountain Dew, in
addition to low calorie options such as Diet
Pepsi, hydrating and nutritional beverages
such as Aquafina drinking water, isotonic
sports drinks- Gatorade, Tropicana 100% fruit
juices, and juice based drinks- Tropicana
Nectars, Tropicana Twister and Slice. Local
brands – Lehar Evervess Soda, Dukes
Lemonade and Mangola add to the diverse range of brands.
Pepsi
Pepsi is a hundred year old brand loved by over 200 million
people worldwide. The largest single selling soft drink brand in
India is the ubiquitous ‘socialiser’ at every occasion.
Youngistaan loves it. 200 million people worldwide love it. But
what has made Pepsi the single largest selling soft drink brand
in India is actually a formula concocted a century ago in a
faraway continent
7UP
7UP, the refreshing clear drink with natural lemon and lime
flavour was created in 1929. 7UP was launched in India in 1990
and its international mascot Fido Dido was used for advertising
in 1992 to position the brand as a cool drink for youngsters.
7UP’s brand communication is premised on the product’s natural
lemon flavour, guaranteed to provide uplifting lemon refreshment
that raises one’s spirits.

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Aquafina
In India, Aquafina’s journey began with the Bombay
launch in 1999 and it was rolled out nationally by the
year 2000. On the strength of its brand appeal and
distribution, Aquafina has become India’s one of the
leading brands of battled water in a relatively short
span. Bottled across India in 19 plants, Aquafina
ensures its availability across more than half a million outlets. To cater to varied
consumer needs and occasions, it is available and in bulk water jars of 25lts.
Gatorade
Gatorade, worlds no 1 Sports Drink, was indeed born on the
field of sports! Gatorade was launched in India in 2004 and
over the years, has become an integral part of kitbags of
many top sports people. Top sports stars and professionals
have tried and endorsed Gatorade in India including Sachin
Tendular, Irfan Pathan, Md. Kaif, S. Sreeshanth Ramji Srinivasan and Javagal Srinath.
Mountain Dew
It is a soft drink that exhilarated like no other because of its daring, high-energy,
active, extreme citrus taste. Challenge, a can do
attitude, adventure and exhilaration is deeply
entrenched in its brand DNA and the brand has
always celebrated the bold and adventurous spirit
of the youth. This exhilaration and excitement of
Mountain Dew has always been reflected in the
high-adrenaline advertising of the brand that connected it to the outdoor adventure. In
2007, the brand was re-launched with a completely new, punchier formulation with
communication that aimed at forging a strong emotional connect with our audience.

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Nimbooz
Nimbooz was launched in India on 28th February 2009 and its folio
expanded with the introduction of its variant, 7UP Nimbooz Masala
Soda. With real lemon juice, 7UP Nimbooz adds to the lemon
credentials of the 7UP portfolio and firmly established it as a
dominant player of the juice based drinks category.
Slice
Slice was launched in India in 1993 as a refreshing mango
drink and quickly went on to become a leading player in the
category. In 2008, Slice was re-launched with a ‘winning’
product formulation which made the consumers fall in love with
its taste. With refreshed pack graphics and clutter breaking
advertising, Slice has driven strong appeal within the category.
Tropicana
Tropicana Premium Gold was re-launched as
Tropicana 100% in year 2008. It continues to
select the best in fruit to craft high-quality
juices, create original products, pioneer
innovative processes and explore new
markets for its products. It is devoted towards
a healthful lifestyle by ensuring that the
products are naturally nutritious and provide the daily benefits that one needs.
Categories in India, Tropicana comes in 2 varieties: 100% Juices (sold as Tropicana
100%) and Juice beverages and nectars (sold as Tropicana).
17 Oranges = 1L Tropicana 100% Orange juice
11 Apples = 1L Tropicana 100% Apple juice
1.14 Kg grapes = 1L Tropicana 100% Grape juice

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1.22 Kg Mixed fruits = 1L Tropicana 100% Mixed fruit juices
Mirinda
Mirinda is an international soft drink brand from Spain that
was launched in India in 1991. In 2008, the brand decided to
up the ante on the brand from a being led by physical attribute
taste, to deliver a brand philosophy that resonates with the
audience. Now, Mirinda’s bold and vibrant colour, great
orangey taste and sparkling bubbles encourages one to be
more carefree, spontaneous and playful.
2.6Company Leadership
Leadership is the
ability of a company's
management to set
and achieve
challenging goals,
take swift and
decisive action,
outperform the
competition, and
inspire others to
perform well. It is
tough to place a value
on leadership or other
qualitative aspects of
a company,
compared to quantitative metrics that are commonly tracked and much easier to
compare between companies. Individuals with strong leadership skills in the business
world often rise to executive positions such as CEO (Chief executive officer), COO
(Chief operating officer), CFO (Chief financial officer), president and chairman

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PepsiCo's strength is its people
Ramon Laguarta
Chief Executive Officer (from October 8th 2018)
Other top leaders who lead the company and their designations are:
Indra K. Nooyi
Jim Andrew
Chairperson
Executive Vice President, Chief Strategy and Transformation
Officer
Jon Banner Executive Vice President, Global Communications and
President, PepsiCo Foundation
Umran Beba Global Diversity, Engagement and Talent Officer
Albert P. Carey Chief Executive Officer, PepsiCo North America
Jody Davids Senior Vice President and Chief Information Officer
Ruth Fattori Executive Vice President and Chief Human Resources
Officer
Anne Fink President, Global Foodservice
Marie Gallagher Senior Vice President and Controller
Hugh F. Johnston Vice Chairman and Chief Financial Officer
Seth Kaufman President, North America Nutrition
Dr. Mehmood Khan Vice Chairman and Chief Scientific Officer, Global Research
and Development
Ram Krishnan President, Greater China Region
Simon Lowden President, Global Snacks Group
Luis Montoya President, Latin America Beverages
Laxman
Narasimhan
Chief Executive Officer, Latin America and Europe Sub-
Saharan Africa
Brian Newman Executive Vice President, Finance & Operations, Latin
America
Pedro Padierna Chairman, PepsiCo Mexico
Silviu Popovici President, Europe Sub-Saharan Africa
Grace Puma Executive Vice President, Global Operations
Vivek Sankaran President and Chief Operating Officer, Frito-Lay North
America
Paula Santilli President, PepsiCo Mexico Foods

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2.7Recent developments in the Company
Falling sales, rising competition, and changing customer preferences...You name it.
Squeezed from all sides, American food and beverage giant PepsiCo Inc. is struggling
to find its feet in India, 28 years after it first stepped into the country.
PepsiCo India Holdings Pvt. Ltd, maker of a range of foods and beverages including
Kurkure, Quaker Oats, Pepsi and Gatorade, ended fiscal year 2017 (FY17) with a
revenue of Rs6,540 crores, its filings with Registrar of Companies (RoC) show, less
than its 2012-13 figure of Rs6,994.8 crores. The decline also shows up on market
share data provided by independent research agencies, confirming PepsiCo has been
losing fizz in India. Source: Registrar of companies
6994.8 7216.7
8130
6626 6540
0
2000
4000
6000
8000
10000
FY13 FY14 FY15 FY16 FY17
Revenue(in crores)
Revenue(in crores)
17.6
-280
-177
-538
-150
-600 -500 -400 -300 -200 -100 0 100
FY13
FY14
FY15
FY16
FY17
Profit/Loss (in crores)
Profit/Loss (in crores)

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Declining sales
For FY14, PepsiCo India reported a loss of Rs280 crores, against a profit of Rs17.6
crores in the previous year, its RoC filings show. Revenue growth too fell to 3.1% in
FY14 from 14.8% a year ago.
In FY15 it managed to reduce the loss to Rs177 crores but just a year later it jumped
to Rs538 crores after it restructured bottling operations in India.
Not just this. After many years, PepsiCo India reported a decline in revenue that year,
down 18% to Rs6,626 crores from Rs8,130 crores in FY15.
In the year ended 31 March 2017, the company reported revenue of Rs6,540 crores,
majority of which came from non-carbonated beverages and packaged food.
While it is yet to file detailed results with RoC, it is estimated that the company
managed to lower its loss to around Rs150 crores in FY17.
The key reason behind this loss reduction is severe cost-cutting.
2.8PepsiCo in India
PepsiCo entered India in 1989 by creating a joint venture with the Punjab government-
owned Punjab Agro Industrial Corporation (PAIC) and Voltas India Limited. And has
grown to become one of the largest food and beverage businesses in India. PepsiCo
India has been consistently investing in the country and has built an expansive
beverage and snack food business supported by 38 beverage bottling plants and 3
food plants.
PepsiCo India is driven by its global commitment to sustainable growth, Performance
with Purpose, which works on four planks of replenishing water, partnering with
farmers, waste to wealth and healthy kids. In 2009, PepsiCo India achieved a
significant milestone, by becoming the first business to achieve ‘Positive Water
Balance’ in the beverage world, a fact verified by Deloitte Touché Tohmatsu India Pvt.
Ltd. The company has been Water Positive since then.

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Commitment to Sustainable Growth
PepsiCo India’s employees are driven by the company’s global commitment to
sustainable growth, Performance with Purpose (PWP), which works on four planks:
replenishing water, partnering with farmers, converting waste to wealth and nurturing
healthy kids. In 2009, PepsiCo India achieved a significant milestone, by becoming the
first business in the PepsiCo global system to achieve ‘Positive Water Balance’
(PWB).
Indian headquarters:
Level 3-6, Pioneer Square, Sector 62,
Near Golf Course Extension Road
Gurgaon – 122001, Haryana, India.
Board Line: (91) 124 7190000
Employment opportunities: Presently employs 6400 people and provides
indirect employment to almost 200,000 people
Facilities:
 38 bottling plants
 3 food plants.
2.9PepsiCo Holding Pvt Ltd, Nelamangala Plant
Having begun in the year 1997, with an initial investment of Rs 40 crores, which over a
period of time has reached close to Rs150 crores, Nelamangala plant PepsiCo
Holding Pvt Ltd, is a fairly young and dynamic one. However it has come a long way in
more ways than one.
Nelamangala plant owns bottling operation plant. It services the entire Bangalore unit
and up country markets covering most of Karnataka.

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The Nelamangala Plant has 4 different lines namely-
1. Aquafina line
2. Pet line
3. Ketner line
4. Slice line
The plant produces products like Pepsi, 7UP, Slice, Mountain Dew, Mirinda and
Aquafina.
Plant Address:
34th KM stone, NH4 Road,
Tumkur road, T.Begur,
Nelamangala, Bangalore,
Karnataka 562123
Nelamangala PepsiCo’s Plant Achievement
a) Nelamangala Plant under the umbrella of Pepsi India business unit is one of the
biggest plants in South Asia business operations.
b) The plant acts as capacity building centre for new joiners in the system.
c) The plant has been awarded with “Nehru Rastriya Parisara Premi” by
Karnataka State Pollution Control board in 2004.
d) The plant has been rated the 4th best plant in line productivity across the
PepsiCo beverages international.
e) The plant stands at the No.1 position in Line productivity across Pepsi India
business unit.
f) The plant has been awarded as “Silver standard for its system quality in the
international quality awards 2003.”
Infrastructure facility
The PepsiCo India holdings limited Nelamangala has five production lines to produce
beverages which are fully automated and systematized. The company is located in 43
acres plot of which 14 acres is occupied for production of beverages. Remaining
space is used for company related activities like workshops, engineering works etc.

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Production Lines
There are five production lines:
1. OPT production line established in 1998 which produce 220 bottles per minute
(BPM).
2. Slice production line established in 1999 which produces 270 BPM.
3. Aquafina production line started in 2001 which produces 196 BPM.
4. New pet production line started in 2013 which produces 400 BPM (includes 300
ML & 250ML small bottles).
5. CSD ketneer, a recently established production line produces 220 BPM.
Facilities provided to staff
1. PepsiCo runs canteen for the sake of its employees.
2. Medical facilities are provided to employees which is absolutely free of cost.
3. Company products are given to employees at reduced costs.
4. Uniform, safety shoes and hand gloves are provided to the employees for their
safety.
Welfare facilities
1. Statutory
 Rest rooms
 Hospitality
2. Non-statutory
 Recreational facilities
 General Holidays
3. Training facilities
 On the job training

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CHAPTER-3
MC KINSEY’S 7S FRAMEWORK
The McKinsey 7-S framework was developed in the early 1980s by Tom Peters and
Robert Waterman, two consultants working at the McKinsey & Company consulting
firm, the basic premise of the model is that there are seven internal aspects of an
organization that need to be aligned to be successful.
PepsiCo McKinsey 7s framework explains how important elements of business can
be aligned to increase the overall effectiveness. According to McKinsey 7S framework,
strategy, structure, and systems are hard elements, whereas shared values, skills,
style and staff represent soft elements of businesses. The way the model is presented
below depicts the interdependency of the elements and indicates how a change in one
affects all the others. Shared values are positioned at the core of PepsiCo McKinsey
7S framework, since shared values guide employee behaviour with implications in
their performance.

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"Hard" elements are easier to define or identify and management can directly
influence them. "Soft" elements, on the other hand, can be more difficult to describe,
and are less tangible and more influenced by culture.
1. Strategy: the plan devised to maintain and build competitive advantage over
the competition.
2. Structure: the way the organization is structured and who reports to whom.
3. Systems: the daily activities and procedures that staff members engage in to
get the job done.
4. Shared Values: called "superordinate goals" when the model was first
developed, these are the core values of the company that are evidenced in the
corporate culture and the general work ethic.
5. Style: the style of leadership adopted.
6. Staff: the employees and their general capabilities.
7. Skills: the actual skills and competencies of the employees working for the
company.
3.1 Strategy
PepsiCo business strategy integrates the following six principles:
1. Achieving growth through mergers and acquisitions (M&A)
2. Forming strategic alliances in global scale
3. Focusing on emerging markets
4. Focusing on organizational culture
5. Developing and promoting the idea of One PepsiCo
6. Innovation in marketing initiatives
PepsiCo had focused on a growth strategy and market leadership in all snack food
and beverage categories through merger and acquisition, for example, In 1965
PepsiCo was formed with the merger of the Pepsi-Cola Company and Frito-Lay, Inc.
In 1988, Tropicana Juice Company was acquired, soon in 2001 company merged with
Quaker oats

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3.2 Structure
PepsiCo’s structure is based upon products and geography. The recent restructuring
will help to coordinate improvements in its international business. It mainly focus on
improving revenue and decrease operating cost. PepsiCo has a divisional
organizational structure and the business is divided into six divisions. Each division
is led by a divisional CEO, who report to PepsiCo CEO Ramon Laguarta. The
company comprises the following divisions:
1. Frito-Lay North America (FLNA)
2. Quaker Foods North America (QFNA)
3. Latin America
4. Asia, Middle East & North America (AMENA)
5. Europe & Sub-Saharian Africa (ESSA)
6. North America Beverages (NAB)
Organizational structure of “PEPSICO INDIA HOLDINGS PVT LTD”
Nelamangala plant
HR
Executive
Production
Coordinato
r
cooerdinat
or
Stores
Executiv
e
F coordinator
Shipping
Executive
Production executive Finance executive
Purchase
coordinator
QC
Coordinator
QC executive
Maintenance
Coordinator
Maintenance
executive
Plant Manager
Plant
Secretary
HR Manager Production
Manager
Finance
Manager
Quality
Manager
Maintenanc
e Manager
Shipping
coordinator

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3.3 Systems
PepsiCo business operations rely on a wide range of systems such as
1. Employee recruitment and selection system,
2. Performance appraisal system,
3. Quality control system,
4. Complaint handling system and others
The most noteworthy systems employed by the company also include Smart Spending
policies to rein in expenses and Lean Six Sigma training to cut waste and boost
efficiency.
Quality Control System
a) The global nature of the business requires that the PepsiCo system has the
highest standards and processes to ensure consistent quality
b) PepsiCo has detailed internal programs and procedures for food safety.
c) Company stringently test and measure the quality attributes of its beverages in
modern laboratories at every step of production and even at the time of material
arrival.
d) PepsiCo’s Food Safety and Regulatory Affairs department and their suppliers
work closely together to assure the safety, integrity and authorised use of
ingredients.
3.4 Skills
The company knows that success of the company depends on the work of skilled,
talented and dedicate people who are committed to making an impact every day.
Global trends such as urbanization, demographic changes, and technology
developments are changing the talent landscape.
As we know the success of an organization depends on the competency and the
skills of workforce, and to get competent workforce, Organization needs to focus on
employee training and development. Employee training and development not only
enhance employee behaviour, the training and development enhances job
satisfaction, which translates to the organizational growth. One of the biggest

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challenges facing corporations today is attracting, developing and retaining skilled and
talented workforce.
Let’s get to know the level of skill sets required at various levels in PepsiCo
Skill Matrix
1-Low, 2-Somewhat, 3-High level of respective skills
Technical Skills Human Skills Conceptual Skills
Top Level 1 2 3
Middle Level 3 3 3
Operational Level 3 3 1
Where: Top level includes Plant Manager, Plant Secretary, Middle Level Includes
Managers and Head of different departments and Operational Level includes
Executives and Coordinates.
3.5 Shared Values:
These are the core values of the company that are evidenced in the corporate culture
and the general work ethic.
 Care for our customers and the world we live in.
 Sell only products we can be proud of.
 Speak with diversity and inclusion.
 Balance short-term and long-term.
 Respect others and succeed together

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3.6 Staff:
In Nelamangala plant they are over all 51 staff members including Plant Manager
and Plant Secretary & 205 associative employees.
Department No of Staffs
Production 6
Quality 20
Maintenance 4
2HR 2
LDT(shipping) 11
Finance 3
Safety 1
Purchase 1
Facilities provided for staff:
 The company has the transportation facilities for their employees.
 Company provides proper canteen & hygienic facilities to its employees.
 Medical facilities provided to the employees are free of cost.
 Company provide uniform, shoes, net cap, and hand gloves to their employees.
Welfare facilities:
 Rest rooms
 Hospitality
 General holidays
3.7 Style
The type of leadership style followed by the company helps in maintaining a good
relationship with employees.
PepsiCo follows the democratic, socialized, charismatic leadership. The company
encourages employees to participate in the process of decision making i.e. it listen to
opinions from employees and takes them into consideration but still the important and
final decisions are made by the responsible executives.

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CHAPTER-4
SWOT ANALYSIS
4.1 Strength
1. Strong Product diversification strategy
2. High-Profile Global presence
3. Product Innovation
4. Decentralized Operation
5. Aggressive marketing Strategies
6. Access to global employees base
7. Brand equity: it is one of the most prominent and famous brands in the world
in the food and beverage sector. It is also known as the brand recognition and
reputation. It has a brand valuation of $19.4 billion and it is ranked 29 in the
Forbes most valuable brands list.
8. Strong Leadership: Under the leadership of Indra Nooyi PepsiCo has been
doing really well. It has managed to stay at number two position in the complete
food and beverage sector only behind Nestle in that field.
9. Customer Loyalty: PepsiCo has an extremely loyal customer base. In its
beverage category all its soft drinks have an iconic taste and that’s why their
customers do not prefer to shift brands. They have emerged as a very strong
brand when it comes to juices and bottled water category
10.Strong distribution: Pepsi has a global presence in more than 200 countries
providing them with a very good distribution network.
4.2 Weakness
1. Targeting only youth population
2. High spending on promotional activities
3. It becomes difficult to adopt to changes due to its large size
4. Failed Products: Failed products such as ‘Crystal Pepsi’ hurts the brand
image of the PepsiCo and thereby giving chance to the competitors to grow.

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5. Product Dependence: PepsiCo is present in only food and beverage industry
which may be harmful in the longer run. They need to diversify their business to
other product segments to become a global leader.
4.3 Opportunities
1. Changing consumer preferences (healthy style)
2. Low barriers to entry.
3. Diversification: Business diversification into different market segments is a
huge opportunity. They have the talent, resources and financial strength to do
the same. Diversification can also be done through acquisitions.
4.4 Threats
1. Technological Innovation.
2. Economic and Political instability of the country of operation.
3. Competitors: It has heavy competition from Coca-Cola in their soft drinks
category. This competition thereby provides a room for not so loyal customer
base to switch brands quickly. PepsiCo’s main competitors are Coca-Cola,
Kraft foods, Nestle, Dr Peppers Snapple Group etc.
4. Health Factor: The unhealthy factor associated with its products can take a toll
on the health conscious customers and might lose them. This can be clearly
seen by the fall of soft drinks sale.
5. Government Norms: Different norms of different countries might prove difficult
to handle and compliance with it as well.

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CHAPTER-5
LITERATURE REVIEW
Lakshminarayanan Latha (2017)
Inventory valuation Methods in Indian Manufacturing Sector is the study which was
published in Abhinav National Monthly Refereed Journal of Research in Commerce &
Management. Adopting the well-structured and appropriate practices in their
operations will help in achieving sustained growth and profitability. An efficient
inventory valuation is one of that practices. Inventory consumed in the production
process amounts to greater than 50% of the total cost of the product. Hence inventory
valuation is very important in manufacturing sector. Being an important parameter in
cost management, the incorrect valuation method will lead to incorrect profit reporting.
It is also said that the use of incorrect inventory values for decision will lead to high
risks in terms of sale plan, pricing decisions and future profits.
Darya Plinere, Arkady Borisov (2015)
In this paper on ‘Inventory management improvement’, it is discussed about the usage
of inventory management which aims at decreasing company’s inventory level and
holding costs by avoiding overstocks and to apply the agent system in order to
automate the inventory management process
G. Sekeroglu, M. Altan (2014)
In the research paper “The Relationship between Inventory Management and
Profitability” it is said that inventories which are one of the working capital elements
are very important among current assets for firms. Because, profitability is an indicator
for firm’s financial success is provided with minimum cost and optimum inventory
quality. And hence at the end of the research it is found that there exist a positive
relation between them and efficiency in inventory management is also reflected in the
profitability ratios.
Dinesh Dhoka, Dr. Y. Lokeswara Choudary (2013)
In the research paper “ABC Classification for Inventory optimization”, the author
discussed about the inventory classification which is very important to manage
inventory efficiently. Importance and Exception is employed to ensure that efficiency is

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maximized with least effort. Here the most common classification i.e Pareto Analysis is
the main focus.
Table 5. 1 Summary of literature
Year Author Paper/Book Findings
2017 Lakshminar
ayanan
Latha
“Inventory
valuation
Methods in
Indian
Manufacturin
g Sector”
Inventory valuation is important parameter in
the cost management function of the firm.
Wrong inventory valuation may lead to wrong
profit reporting and managers will also find
difficulty in taking optimal decisions relating to
their operations like purchase planning, sales
planning and production planning. Thus
inventory valuation method as its effect on the
profit of the firm.
2015 Darya
Plinere,
Arkady
Borisov
‘Inventory
management
improvement’
Inventory management is essential to every
company. Here two points i.e. decreased
inventory cost as well as agent system is
proposed for the improvement in the inventory
management.
2014 G.
Sekeroglu,
M. Altan
“The
Relationship
between
Inventory
Management
and
Profitability”-
Eatables
industry
The inventory turnover ratio, which indicates
the company’s efficiency in inventory
management. It should be positively
associated with returns on assets, profit
margins and ROE. The study also found that
there exists a positive relation between the
efficient inventory management and the
profitability of the firm. But it is also found that
in some other industries like weaving and
wholesale industry there exists no relation thus
inventory management policies adopted by
firms according to industry specific condition
can take them to different levels of profitability

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2013 Dinesh
Dhoka,
Dr. Y.
Lokeswara
Choudary
“ABC
Classification
for Inventory
optimization”
Inventory classification which is very important
to manage inventory efficiently. If ABC Analysis
is not done properly, it may lead to serious
inventory management issues.
Research Gap: In all the above research the authors have discussed about the
inventories of raw materials or the final finished products but here I am trying it with
the inventories of engineering spares which aid production activities and its impact on
the profitability or performance of the firm, it is also to be noted that these form the
major part of the current assets than the raw materials in the PepsiCo.

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CHAPTER-6
RESEARCH DESIGN
Research design is a conceptual framework within which research is to be
conducted. It acts as the blue print for the collection, measurement and analysis of
data.
INTRODUCTION TO THE TOPIC
Inventory or Stock is the goods or materials which the business holds with the
ultimate goal of resale. It forms the major part of current assets category. Inventory
management includes aspects such as controlling inventory, storage of inventory and
controlling the amount of product for sale. Simply put, inventory management is all
about all about having the right inventory at the right place, at the right time, and at the
right cost. But the actual challenge lies at implementing the best inventory
management techniques to ensure the best result.
STATEMENT OF THE PROBLEM
Inventory is an asset, if not properly utilized it will become liability for the company.
Therefore it is absolutely very important and necessary to manage inventories
efficiently in order to overcome unnecessary investment. It is very necessary for
management to give proper attention to inventory as they form the major part of
current assets. A proper planning of purchasing, handling, storing and accounting
should form a part of inventory management.
Neither too high nor too low level of inventory should be maintained. A high level of
inventory indicates the higher carrying costs and higher risk of stocks becoming
obsolete whereas on the other hand too low level of inventory may mean the loss of
business. Hence this study is undertaken to evaluate inventory levels and to give
suggestions for attaining optimum inventory levels at PepsiCo India Holding Pvt Ltd.

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OBJECTIVES
1. To analyse the performance of inventory management.
2. To study the financial position of the company using the past 5 years data.
3. To study the various inventory management and controlling techniques used in
the company.
SCOPE OF THE STUDY
The study is limited to inventory management of PepsiCo India Holding Pvt Ltd.
Nelamangala Plant and not to other units across India. And the study covers 5
financial years.
RESEARCH METHODOLOGY
The present study is the analytical study and it was based on the secondary data
Secondary Data
Secondary data is the data obtained from published sources or any primary data
being used for the second time to serve the purpose. The sources of this study are:
 Organizational literature,
 Financial statements (balance sheet, Annual Reports)
 Records like purchase ledger and stores ledger relating to Inventory
LOCATION OF THE STUDY
Present study was done at PepsiCo India Holding Pvt Ltd. In T-Begur, Nelamangala,
Bangalore Rural District-562123. It was started in the year 1997, with an initial
investment of Rs 40 crores, which over a period of time has reached close to Rs150
crores, Nelamangala plant PepsiCo Holding Pvt Ltd, is a fairly young and dynamic
one.

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LIMITATIONS OF THE STUDY
 PepsiCo India Holding Pvt Ltd is a very big organization and its very difficult to
study the entire system.
 All the information was not disclosed to maintain confidentiality.
 The study was limited only to 5 financial years so it become difficult to draw the
conclusion on the performance of the company
 The Project was done within a limited period of 8 weeks
 Level of accuracy of the research is restricted.

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CHAPTER- 7
THEORITICAL BACKGROUND
7.1 INTRODUCTION TO THE TOPIC
Inventory control is one of natural occupation, which everyone does knowingly or
unknowingly, and some are really very good inventory managers. For an instance, be
it your mother, it is very evident that she is a very good inventory controller at home.
She keeps food items, clothes, and many other things required. And she may also
regularly throw some of the items because they change their characters with time.
7.2What is an Inventory?
It the value materials or goods which is held by an organization to support production
(raw materials and work in process etc.), for supporting activities (repairs and
maintenance), or for the sale or customer service (finished goods, spare parts) which
is the aim of any organization
Inventory is actually the major part of current assets category, and must be accurately
valued at end of every financial year to compute the profitability and to measure the
performance of the company. Organizations carrying inventory whose value is very
high should have accurate and on-going control.
(OR)
Inventory is an accounting term that refers to goods that are in various stages of
production process, getting ready for sale, including:
 Finished goods (those are the items or goods which are available or ready for
sale)
 Work-in-progress (includes those items which are in the process of being
made)
 Raw materials (includes those items which go into the process of
manufacturing)

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Inventory is one of the important assets of an organization. It is very essential that
the inventory management of the company should be very effective. Holding either too
much or too little of inventory will affect both productivity and profitability, and it is very
essential that the company holds the sufficient amount of inventory at all-time which
ensure its smooth running
The most important or the main objective of holding inventory is to make sure that
the customer needs are met without compromising or going out of stock. When
customers do not get what they need, in time, they often cease to be customers. Thus
as a result of customers shifting to other competitors, and/or increased holding costs
due to unsold inventories that is no longer in demand pushes the business into losses.
7.2.1Objectives of Holding Inventories
 To avoid the losses of sales: The demand of the customers can’t be met, if
sufficient amount of finished goods or items are not held by the company. As a
result, the customers who are in need of immediate supply of goods will move
towards or shift to the competitors, which leads to loss of revenue.
 To Gain Quantity Discounts: We know that suppliers will usually provide
quantity discount on bulk purchase of materials. Therefore, a firm can maintain
relatively larger investment in inventories to profit from these quantity discounts,
permitted the holding cost of inventories is less.
 To Reduce Order Costs: If a firm's ordering cost is higher for each order
placed, of purchasing in small quantity is not economical. Therefore, the costs
associated with ordering of material can be reduced by placing less number of
orders in relatively large quantities.
 To ensure smooth production

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7.3What is Inventory Management?
Inventory Management is the collection of tools, techniques and strategies for storing,
tracking, delivering and ordering inventory or stock.
Inventory Management is the process of tracking and controlling the inventory orders,
its usage and storage along with the management of finished goods that are ready to
move out. If the inventory in not managed properly, it would increase the holding cost,
tying up of working capital, wastage of human resources, disturbance in the supply
chain, increase in idle time etc. All this would result in decreased sales and customer
dissatisfaction. Hence, inventory management is a very important aspect of the
business which should not be ignored.
7.3.1Objectives of Inventory Management:
Maximization of the shareholder’s wealth is the primary objective of the inventory
management. For this purpose, a firm should have efficient inventory management i.e.
the firm should neither hold excessive inventories nor hold inadequate inventories but
adequate. Thus in other words, there should not be over investment or under
investment in inventories.
The consequences of over investment in inventories are:
a) Blocking of funds of the company which could be used elsewhere,
b) Loss of profits of the company,
c) Increased storage or holding costs
d) Increased risk (physical deterioration of the inventories may occur while in
storage)
Similarly, inadequate level of inventories is not also free from drawbacks.
The dangers would be:
a) Stoppage in the production activities of the company,
b) Meeting of delivery schedules may not be possible due to inadequacy,

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c) Frequent production interruption due to inadequate raw materials and work-in-
progress inventories,
d) Customers may shift to competitors, if their needs are not met in time.
Thus, the primary objective of inventory management is to maintain optimum or
sufficient level of inventories, all-time.
7.4Cost of Holding Inventory:
Maintaining the optimal level of inventory depends on the following cost
a) Ordering Costs, and
b) Carrying Costs.
a) Ordering or Acquisition or Set-Up Cost
These are the variable costs associated in placing order by the firm with suppliers to
replenish inventory of raw materials. Ordering costs include the cost of requesting,
purchasing, transporting, receiving and inspecting. The ordering costs increases as
the number of orders placed increase.
They also include clerical costs and stationery costs (Hence called a set-up cost). The
more frequent the acquisition of inventory made, the higher are such costs. Similarly,
the fewer the frequency of orders, the lower the order cost will be for the firm. Thus,
the ordering /acquisition /set-up costs are inversely related to the level of inventory.
b) Carrying Cost:
It is the expenses involved in carrying inventory. The cost of holding inventory may be
divided into: of orders, the lower the order cost will be for the firm. Thus, the
i. Cost involved in Storing the Inventory and
ii. Opportunity Cost of funds
i. Cost involved in Storing the Inventory: Includes
a. Storage Cost (i.e. insurance, tax, depreciation, maintenance of building etc.)

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b. General Insurance (Against fire and theft)
c. Damage or Theft
d. Obsolescence and Spoilage of inventories stored
ii. Opportunity Cost of Funds:
This includes the expenses involved in raising funds (i.e. Interest) which are used in
acquisition of inventory.
The level of inventory and the carrying costs are directly proportionate i.e., if
inventory level decreases, the carrying costs also decrease and vice-versa.
7.5Selective Inventory Control Methods
I. A-B-C Analysis (Always Better Control ) (OR) Pareto’s Analysis
One of the most widely used techniques of control of inventories is ABC analysis. It is
an inventory categorization method which consists in dividing items into three
categories A, B and C: A being most valuable items, C being the least valuable ones.
Class A or Group A- these items forms 20% of the stock quantity but commands 70%
of the annual usage value.
Class B or Group B- these items forms 30%of the stock quantity but commands 20%
of the annual usage value.
Class C or Group C- these items forms 50% of the stock in terms of quantity but
commands only 10% of the annual usage value
Thus, class A items forms the minor portion of the physical units and they are very
valuable in terms of the revenue it brings to the company. Since it involves highest or
largest-investment in such items, they would require the tightest control. In any cases
of not having them in stock, the company would suffer from loss of revenue which
would have brought by them.

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Class B is mid-range stock items, they form the slightly high portion of the quantity but
their value is less compared to group A items. Business should closely monitor them
as there exist a chance, for these items to join group A or their popularity may just
further drop and join the group C.
And finally, Class C items are a large collection of small items whose values is less
but they are very essential for smooth running the business. Here the holding cost
(space rentals, salaries of staff, insurance charges etc.) must be reduced as these
items forms the 50% of the inventory
II. X-Y-Z Analysis
This classification is based on the value of inventory of materials actually held in
stores at a given time. X-items are usually 10% of the number of items stored, but
accounting for 70% of the total inventory value. On the other hand Y- items are 20% of
the items stored and accounts for about 20% of the total inventory value. The
remaining 70% of the items accounts for 10% of the inventory value are Z-items. X-Y-
Z analysis is similar to A-B-C analysis, but the only difference between them is the
actual inventory value instead of annual consumption value.
III. V-E-D Analysis
In V-E-D analysis, ‘V’ stands for vital, ‘E’ stands for essential, ‘D’ stands for desirable.
This classification is used mainly for spare parts that should be stocked for
maintenance of machines and equipment’s based on the criticality. The vital spare
parts are those items whose non-availability would cause the stoppage in production
activities. When their availability is limited (i.e., supplied from foreign country) at least
one of such vital spare should be stocked irrespective of its value. Essential spare
parts are those whose non-availability may not adversely affect production. However
low level of such spares should be held by the company. The desirable spare parts
are those which if not available can be manufactured within or can be procured from
local suppliers and hence no stock is held usually.

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IV. F-S-N Analysis
It stands for Fast-moving, Slow-moving and Non-moving items. The classification is
based on past consumption pattern. Items which are drawn frequently are classified
as fast-moving items, items which are drawn once or twice a year is classified as slow-
moving, while items which are not drawn at all in two years are classified under non-
moving items. F-S-N analysis is useful in controlling obsolescence of raw materials,
components, tools and spares.
V. S-D-E Analysis
This stands for scarce items, difficult to procure items and easy to procure items. A
scarce item is one which is not easily available in the market and reliable source have
to be developed. For e.g. imported items may have to be stocked because it is difficult
to procure and will have long lead time.
VI. Just in Time (J-I-T)
It is one of the modern technique of inventory control, in which the company keeps no
excess inventory in hand but maintains only as much inventory as it needs for the
production process. It simply means making what is needed, when it’s needed, in the
amount needed.
JIT is also known as “zero inventory” system. In this system company manufactures
goods to order. It generally operates on a “pull” system (i.e., when an order comes
through, it initiates the necessary activities to manufacture them).
Benefits of just-in-time:
 Decreased Cost (i.e. rent and insurance by reducing the level of inventory)
 Decreased ordering cost by ordering stock only when necessary,
 Reduction in wastage and increase in efficiency,
 Reduced chances for obsoleteness, outdated, and spoilage of inventory

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Apart from all these benefits, it is risky because any delay in ordering inventory can
lead to stock out situation which leads to loss. Hence this method requires proper
planning which results in increased profitability and customer satisfaction.
7.5.1Advantages of Inventory Control
Scientific inventory control provides the following advantages
a. It reduces unnecessary blocking of capital in excess inventories which
improves the liquidity position of the company.
b. It helps in meeting up customers demand through adequate stocks of finished
products.
c. By maintaining adequate amount of raw materials it ensures smooth
production.
d. Protection against variations in raw materials delivery time.
e. Avoids shortage materials and duplicate ordering and facilitates production
scheduling
f. Helps in minimizing the loss due to deterioration, obsolescence, damage etc
g. When prices are low and when it is brought in lots, it ensures the company in
taking advantage of price fluctuations.
7.6Methods of Inventory valuation
Specific Identification
This method can be applied only in those situations where different purchases are
identified separately. Under this method, each item which is sold and remaining in the
inventory is identified. The cost of specific items that are sold during a period is
included in the cost of goods sold for that period and the cost of specific items
remaining on hand at the end of a period is included in the ending inventory of that
period.
FIFO and LIFO
FIFO and LIFO are accounting methods which are very popular in valuing inventory
and reporting profitability. FIFO (first in, first out) is an inventory valuation method

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which says that those items which enter first to the inventory are the first to leave (i.e.
to get rid of oldest inventory first). Usually business with perishable items follow this
method of inventory valuation.
LIFO (last in, first out) is an inventory valuation method according to which the last
items that enter the inventory leaves first (i.e. to get rid of the newest inventory first). It
is used in those business which deals with non-perishable items.
Weighted average cost (WAC)
The WAC method of valuation assumes that the goods available for sale are
homogeneous. Average cost is calculated by dividing the cost of goods available for
sale, which consists of the cost of the beginning inventory and all purchases, by the
number of units available for sale.

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7.7RATIO ANALYSIS:
Introduction
Ratio analysis is a major, important and powerful tools of the financial analysis. Ratio
is the relationship between two numbers or figures. It acts as a yardstick in evaluating
and measuring the performance and financial position of the company, because the
absolute data will not help us in understanding and interpretation. Thus ratio analysis
is the process which helps in determining and presenting the relationship between
items or group of items. Ratio Analysis aids in making quantitative judgement
regarding company’s financial position and performance.
7.7.1Importance of Ratio Analysis
 Helps in analysing financial position of the organization
 Useful in simplifying accounting figures
 Helps in assessing the operational efficiency
 Serves the forecasting purposes of the company
 Aids in comparison of performance
 Helps in identifying the weak and strong areas of the business.
7.7.2Important Ratios:
Current ratio
The current ratio helps in measuring company’s short-term liquidity position and
provides a quantitative relationship between current assets (CA) and current liabilities
(CL). It shows whether the company is in position to pay off or meet its current
obligations or liabilities with its current assets
𝐂𝐮𝐫𝐫𝐞𝐧𝐭 (𝐨𝐫) 𝐖𝐨𝐫𝐤𝐢𝐧𝐠 𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐑𝐚𝐭𝐢𝐨 =
𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐀𝐬𝐬𝐞𝐭𝐬
𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐋𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐢𝐞𝐬
If Current Assets > Current Liabilities, then CR>1.0, which is good for the company
to be in. If Current Assets = Current Liabilities, then CR>1.0, then Current Assets are
adequate to meet its current liabilities. And if Current Assets < Current Liabilities, then

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CR<1.0, it means company does not have adequate current assets to pay for its short
term obligations.
Quick ratio (or) Acid test ratio
Quick ratio is a liquidity ratio which helps in measuring the ability of the company to
meet its current obligation. It helps in finding out whether the business has sufficient
assets that can be easily translated into cash which can be used to pay its bills or
meet current obligations.
𝐐𝐮𝐢𝐜𝐤 𝐑𝐚𝐭𝐢𝐨 =
(𝐓𝐨𝐭𝐚𝐥 𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐀𝐬𝐬𝐞𝐭𝐬 − 𝐈𝐧𝐯𝐞𝐧𝐭𝐨𝐫𝐲 + 𝐏𝐫𝐞𝐩𝐚𝐢𝐝 𝐄𝐱𝐩𝐞𝐧𝐬𝐞𝐬)
𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐋𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐢𝐞𝐬
It helps the management to find out if they are maintaining optimal or adequate levels
of quick assets that helps in taking care of its short term obligations.
Working capital turnover ratio
It is the ratio of net sales and working capital. It indicates how efficiently the company
is utilizing or using its working capital. It is calculated using the below formula
𝐖𝐨𝐫𝐤𝐢𝐧𝐠 𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐭𝐮𝐫𝐧𝐨𝐯𝐞𝐫 𝐫𝐚𝐭𝐢𝐨 =
𝐒𝐚𝐥𝐞𝐬
𝐖𝐨𝐫𝐤𝐢𝐧𝐠 𝐜𝐚𝐩𝐢𝐭𝐚𝐥
A higher working capital turnover ratio indicates that the company is having sufficient
working capital that aids in smooth running and there is no need for any additional
funds in carrying out its smooth run. The business will be provided with flexibility due
to regular inflow and outflow of money. And it is to be noted that this ratio should not
be extremely very high, which indicates that the business doesn’t have sufficient
working capital to support its growth in operations.
Fixed Assets Turnover ratio
Fixed Asset Turnover (FAT) is an efficiency ratio which helps the management in
knowing how well or efficiently the company is using its fixed assets to generate sales.

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𝐅𝐢𝐱𝐞𝐝 𝐚𝐬𝐬𝐞𝐭𝐬 𝐭𝐮𝐫𝐧𝐨𝐯𝐞𝐫 𝐫𝐚𝐭𝐢𝐨 =
𝐍𝐞𝐭 𝐒𝐚𝐥𝐞𝐬
𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐟𝐢𝐱𝐞𝐝 𝐚𝐬𝐬𝐞𝐭𝐬
The high fixed asset turnover ratio that more efficient the company is in utilizing its
fixed assets. On the other side, a decreasing fixed asset turnover ratio indicates that a
company has over-invested in fixed assets. Thus it is very helpful for both investors
and company management in to knowing how efficient the company is in utilizing its
fixed assets by comparing with historical records or industry average.
Debtors’ turnover ratio
Accounts Receivables turnover ratio is also known as debtor’s turnover ratio. It is an
efficiency ratio. It is used to see how many times accounts receivables have been
collected during a fiscal year.
𝐃𝐞𝐛𝐭𝐨𝐫𝐬 𝐓𝐮𝐫𝐧𝐨𝐯𝐞𝐫 𝐑𝐚𝐭𝐢𝐨 =
𝐍𝐞𝐭 𝐂𝐫𝐞𝐝𝐢𝐭 𝐒𝐚𝐥𝐞𝐬
𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐀𝐜𝐜𝐨𝐮𝐧𝐭𝐬 𝐑𝐞𝐜𝐞𝐢𝐯𝐚𝐛𝐥𝐞𝐬
A higher debtor’s turnover is desirable for a company. It indicates the time gap
between the credit sales and the money collected is less and it also indicates that the
firm is quite efficient in collecting the accounts receivables.
Debtor’s collection Period
Collection period may differ from company to company. It represents the time given by
the company to its debtors to pay back the debts.
𝐴𝐯𝐞𝐫𝐚𝐠𝐞 𝐂𝐨𝐥𝐥𝐞𝐜𝐭𝐢𝐨𝐧 𝐏𝐞𝐫𝐢𝐨𝐝 =
𝟑𝟔𝟓 𝐝𝐚𝐲𝐬
𝐃𝐞𝐛𝐭𝐨𝐫𝐬 𝐓𝐮𝐫𝐧𝐨𝐯𝐞𝐫 𝐑𝐚𝐭𝐢𝐨
Inventory to Total Assets Ratio
The portion of assets which is tied up in inventory is indicated by inventory to total
assets ratio. In general, good performance and profitability is indicated by the low
inventory to total assets ratio. It is calculated using

Inventory Management at Pepsi Co India Holding Pvt Ltd

Inventory Management at Pepsi Co India Holding Pvt Ltd

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