CHAPTER – 01

1. INDUSTRY PROFILE

E-commerce has revolutionised how businesses operate in India. By 2025, the Indian e-
commerce market is projected to increase from US$ 46.2 billion to US$ 111.40 billion. It is
anticipated to reach US$ 350 billion by 2030. From the US$ 52.57 billion reported in 2020,
overall e-commerce revenues are projected to reach US$ 67-84 billion by 2021. India's e-
commerce sector is anticipated to grow to 111 billion and 200 billion US dollars by 2024 and
2026, respectively.

An increase in internet and smartphone usage is largely to blame for the industry's expansion.
Due in large part to the "Digital India" campaign, there were 784.59 million internet
connections in India as of July 2021. Out of all the connections to the internet, of which 97%
connections were wireless.

1.1.1. OVERVIEW OF INDUSTRY

E-commerce is the most interesting and rapidly expanding way to do business in India. It is
predicted that the Indian e-commerce market will grow from $48.5 billion in 2018 to US$200
billion in 2026. This surge is a result of more people using cellphones and the internet. By
2021, India's total number of internet users is projected to increase from 560.01 million in
September 2018 to 829 million as a result of the country's ongoing digital transformation.
India's e-commerce-driven internet economy is expected to grow from US$125 billion in April
2017 to US$250 billion by 2020. From US$ 39 billion in 2017 to US$ 120 billion in 2020,
India's e-commerce revenue is expected to grow at the highest annual pace of 51%.

At bigbasket.com, we strive to make your life as relaxing as possible by being shrewd, swift,
and efficient. Time is always a premium in this fast-paced world, therefore we recognise the
importance of making your grocery shopping quick and simple to save time wastage. There is
no need to deal with long lines at the grocery store or for billing, etc. Bigbasket.com offers a
wide selection of products that you may explore, order, and have delivered at a time that suits
you.

1
1.1.2. NATURE OF INDUSTRY
The exchange of goods and services over an electronic network, principally the internet, as
well as the transmission of money or data are all included in the electronic commerce process.
The different sorts business-to-business (B2B), business-to-consumer (B2C), consumer-to-
consumer (C2C), and consumer-to-business interactions.

It is a broad term that encompasses a variety of businesses, but the underlying principle is that
commerce is done online. Various products and services are promoted, purchased and sold
through online media by the organization. In addition to procuring goods and services, dealing
with customers, and selling products, this might also include other tasks.

In addition to e-commerce, e-business also includes internal activities such as manufacturing,

inventory management, product development, risk management, finance, knowledge
management, and human resource management. Business-to-business (like Shopify), business-
to-consumer (like Amazon), and consumer-to-consumer are the three fundamental types of e-
commerce (such as eBay).

1.1.3. GROWTH POTENTIAL

The Indian e-commerce business is the ninth fastest growing international market in the world,
according to a study. By 2025, it is predicted that Indian e-commerce will increase from its
current 4 percent share of the nation's overall retail trade in food and grocery, clothing, and
consumer electronics to 8 percent. India's e-commerce orders volume increased by 36% in the
fourth quarter of 2020, with the PCB&W (personal care, beauty, and wellness) market
benefiting the most.

Only a 7-8% growth in e-commerce sales was expected in India in 2020. But the country's
organised retail sector's strong rise is expected to help the e-commerce industry surpass the
US$ 84 billion milestone in 2021.

1.1.4. ECONOMIC FACTOR

Revenues at Big Basket Wholesale Market have significantly increased. Their earnings
increased by 35% to reach Rs. 1606 crore. Additionally, the corporation saw a 53 percent drop
in losses to Rs. 310 crore. Additionally, Chinese conglomerate Alibaba contributed $300
million to the company's funding. Additionally, the business has a division called Delyver
Retail Network, which experienced erosion in 2018. BigBasket bought the business in 2015,
however its profitability was degraded as a result of the business's ongoing activities. With an
estimated return of 6300 crore in 2020—a big increase from 3200 crore in 2019—future growth
returns for the company appear to be highly promising.

2
1.1.5. MARKET SHARE
India's online grocery market, which in 2020 accounted for 0.3 percent of the $603 billion food
and beverage market there, grew by 73 percent from the previous year. The gross merchandise
value (GMV) of the e-grocery market increased from $1.9 billion in 2019 to $3.3 billion in
2020. Basics, fruits, and vegetables saw the greatest shift from offline to online sales in 2020,
increasing their GMV share in the e-grocery industry from 39% to 47%. Customers prioritised
purchasing necessities online, which was followed by a switch from eating out to preparing
meals at home.
The sale of a 68% share in Big Basket to Tata Group for about $1.2-1.3 billion is currently in
the advanced stages of negotiation. Big Basket would be worth between $1.8 billion and $1.9
billion after the stake sale to Tata, according to persons with knowledge of the situation.

1.1.6. GOVERNMENT REGULATION

Revisions to the rules have been made by the Food Safety and Standards Authority of India
(FSSAI), and they directly affect companies who sell groceries and food online, including Big
Basket.

• The 2013 Registration of E-Commerce Companies Act. the registration of an online store as
a corporation, firm, limited liability partnership (LLP), or sole proprietorship.
• The only cyber law in India is the IT Act 2000, which also somewhat regulates online
concerns related to e-commerce in India.

• According to the new regulations, parties and affiliated businesses that are connected to a
certain e-commerce company are not permitted to be listed as sellers on that platform.

3
 1.2. COMPANY PROFILE

1.2.1.BACKGROUND OF THE COMPANY

The biggest online grocery Bigbasket is a retailer in India. It was released in 2011, just as the
country's e-commerce industry was getting started. Vipul Parekhand, Hari Menon, VS
Sudhakar, and V S Ramesh Founded by Abhinay Choudhari, Bigbasket. Bigbasket's
headquarters are in Bengaluru, which is also near the city borders of Hyderabad, Mumbai,
Pune, Chennai, Delhi, Noida, Mysore, Coimbatore, Vijayawada-Guntur, Kolkata, Ahmedabad-
Gandhinagar, Lucknow-Kanpur, Gurgaon, Vadodara, Visakhapatnam, Surat, Nagpur, Patna,
Indore, and Chandigarh Tricity.

Although Bigbasket was introduced in 2011, its journey actually started much earlier. A group
of individuals, In 1999, a group of individuals, including V S Sudhakar, Hari Menon, Vipul
Parekh, Abhinay Choudhari, and V S Ramesh, created the online retailer Fabmart. The business
fared reasonably successfully, and Fabmall genuine shopping centres were later established in
several South Indian cities. The business is now more famously known as the "More" retail
chain after being later acquired by the Aditya Birla Group. Bigbasket was introduced in 2011
by the founders, who had experience in the retail sector and were eager to start something fresh.
Currently, Bigbasket has 4,000 employees and generates roughly $3.2 million in sales.

Bigbasket was established when it was challenging for India's urban workforce to find time to
acquire groceries and household necessities. They have the freedom to order from Bigbasket
at any time and have the items delivered at their convenience. Fruits, vegetables, cereals, oils,
masalas, bakery goods, beverages, branded foods, toiletries, home goods, personal care items,
eggs, meat, and seafood are just a few of the grocery and food products that Bigbasket offers.
At the moment, Bigbasket offers more than 18,000 products across numerous categories, and
its inventory consists of more than 1000 brands.Lowest prices and timely delivery services are
promises made by Bigbasket.

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1.2.2.PROMOTERS INFORMATION
BOARD OF DIRECTOR

Chief Executive Officer Hari Menon

Founder VS Ramesh, Abhinay Choudhari
Vice President Engineering Amit Verma
Director Ravindra Bhagwantrao K
Director Of Engineering Amit Verma
Director Of Products Tejas Vyas
Chief Financial Officer Vipul Parekh
Chief Operating Officer T K Balakumar
Chief Innovation Officer Praful Thachery
Head Of Marketing Arun Jayaraman
Head Of Operations Rakesh Soni

1.2.3.VISION & MISSION

Vision

• To be the finest destination for our partners and customers, we consistently innovate.

“Our vision is to be earth's most customer centric company; to build a place where people can
come to find and discover anything they might want to buy online”.

Mission

For mobility products and solutions that enhance our customers' quality of life, we offer
distinctive service.

1.2.4.COMPETITORS

 Grofers
 Jio mart
 Flipkart Supermart
 Fresh to home
 Supr Daily
 Amazon Fresh
 Swiggy Instamart

5
1.2.5. PRODUCTS & SERVICES

 Beverages
 Fruits & Vegetables
 Food grains, Oil, Masala
 Baby care Products
 Beauty & Hygiene
 Household Products
 Healthcare Products

1.2.6. FUTURE GROWTH

The Bengaluru-based company is currently expanding its private labels category with a
number of new products as it works to boost monthly sales from Rs 250 crore today to Rs
400 crore by March 2022. Private labels currently account for about 38% of the company's
income. Our private labels are managed similarly to FMCG brands. According to Seshu
Kumar Tirumala, national head, buying and merchandising, Big Basket, these are a crucial
component of our differentiation strategy that we have meticulously constructed across
categories.
The business will increase its capacity for private label product storage, cleaning, and
packing. It intends to build controlled atmosphere chambers for apples in Himachal Pradesh
as well as ripening rooms for mangoes and bananas. At all its facilities, it would construct
packaging rooms for fruits and vegetables. Big Basket will also expand its food grain
cleaning and repackaging facility in Indore for the market in North India. The business,
which sells meat and poultry under the brand Fresh, will open its own butcher shops at every
market.

6
 CHAPTER – 02

MC KINSEY’s 7S MODEL

INTRODUCTION

The McKinsey 7s model is a strategic tool and framework that helps managers and businesses
assess their performance. The McKinsey 7s model identifies seven crucial organisational
elements that must be coordinated and focused on in order to implement successful change
management procedures and continuous performance enhancements.

Hard Elements Soft Elements

Shared Values
Strategy Skills
Structure Style
Systems Staff

The McKinsey 7s model is used by Big Basket com to consistently improve company
performance and put in place effective change management procedures. To maintain and
increase its performance levels for the offers, Big Basket com concentrates on the seven
components listed in the model.

1. HARD ELEMENTS

Strategy, structure, and systems make up the McKinsey 7s model's hard components. The
hard parts of the model are easier to identify, have more definite characteristics, and are
directly influenced and controlled by the management and leadership of the business.
7
 STRATEGY
1. Clearly defined
Big Basket.com's employees and other stakeholders are fully informed of the company's overall
business plan and strategic direction. Because of this, the organisation is better equipped to
manage performance, guide activities, and create different plans that are consistent with the
objectives of the business. Furthermore, Big Basket com operates more transparently and in
accordance with its commitments as a result of properly establishing and presenting the
business plan.
2.Guiding behavior for goal attainment

Big Basket.com's strategic direction is essential in helping the business direct stakeholder,
employee, and staff behaviour toward the pursuit and achievement of goals. SMART Goals are
developed with short- and long-term deadlines in accordance with the organisation plan. To
advance the performance of the organisation, employees make decisions about the approaches
and actions to take in order to achieve the predetermined goals and targets.

3. Competitive pressures
Big Basket.com's strategy takes into account both the demands of rivalry and competitor action.
The strategy reacts to these competitive issues by offering recommendations and taking
competitive action through strategic tactics and actions that ensure Big Basket com's
sustainability by adapting to market developments and shifting consumer preferences..

4. Changing consumer demands

The fact that Big Basket's approach always takes into account the shifting consumer trends and
wants, as well as the shifting consumer market patterns and consumption behaviour, is a crucial
component of the plan. This is a crucial component of Big Basket com's strategic strategy since
it enables the company to maintain its competitiveness and relevance to its target customer
groups as well as to spot demand gaps in the consumer market.

5. Flexibility and adaptability

The approach used by Big Basket com is adaptable and flexible. This is important to the
strategic direction and strategy-setting of Big Basket. Rigidity in strategy often results in a
company or organisation being stagnant as it stops it from evolving along with the changing
consumer markets.

Big Basket's versatility and flexibility allow it to localise its products to meet the demands of
numerous countries and regions, which allows it to react quickly to evolving consumer trends
on a global scale. The company frequently has the insight to foresee changes in the consumer
market and create strategic alterations in line with such trends.

8
  STRUCTURE

1. Organizational Hierarchy
Big Basket.com provides a more flat organisational structure that is supported by progressive,
ever-growing organisations. When there are fewer managerial levels between them and more
access to senior management and leadership, the employees feel more at ease, more confident,
and have better access to information. Additionally, BigBasket.com's flatter hierarchy
expedites decision-making and fosters employee commitment to the business.

2. Inter-Departmental coordination
High levels of departmental coordination exist at BigBasket.com. When working on projects
or tasks that call for a variety of The company's departments routinely create cross-
departmental teams to pool their abilities. Every cross-departmental coordination effort is
effective and well-thought out. To guarantee effective job procedures, techniques, and
objective accomplishment, BigBasket.com has a methodical methodology for starting and
overseeing departmental collaboration.

3. Internal team dynamics [department specific]

BigBasket.com encourages teamwork and cooperative projects. When jobs necessitate
individualised focus and scope, the organisation also assigns specific tasks and work
assignments. However, it is expected of every BigBasket.com employee to be a team player
who can work well with others and get along with people.

The BigBasket.com teams work together to achieve the wider team goals and objectives in line
with the company's strategy and guiding values. They are supportive of each member.

4. Centralization vs. decentralization

The organisational structure of BigBasket.com is a hybrid of decentralisation and
centralization. BigBasket.com promotes decentralised decision-making to a considerable
extent, like many progressive organisations. At BigBasket.com, job responsibilities are
intended to be carried out responsibly, and employees frequently set their goals in mutual
cooperation and understanding with the managers.
To guarantee that all staff initiatives and strategies are in line with the organization's strategy
and values, BigBasket.com also centralises the process of supervisor oversight and approval.

5. Communication
BigBasket.com has an elaborate system for maintaining communication between managers at
all levels and between staff. The whole organisational structure at BigBasket.com is improved
by the communication systems. The methodical, defined, and structured communication
encourages easy information flow and makes sure that organisational duties and goals are not
compromised by poor or absent communication.

9
 SYSTEMS
1. Defined controls for systems
At BigBasket.com, Controls that were developed particularly to evaluate performance and
objective attainment are present in each clearly defined system. These controls and measures
have been created based on the particular tasks and obligations of each department.
Additionally, each department has distinct controls for both internal and external
interdepartmental tasks and obligations, as well as for staff performance evaluations..

2. Organizational systems in place

 To guarantee that business operations are managed successfully and that there are no
conflicts or problems, BigBasket.com has established clear-cut methods. Most of
BigBasket.com's systems are departmental in structure, and they include,
• Strategic leadership
• Human resource management
• Finance
• Marketing
• Operations
• Sales
• Supply chain management

3. Monitoring and evaluating controls

Through the controls that were created, BigBasket.com continuously evaluates its system. It is
done to continuously and continuously monitor performance. Most of this is done through
unobtrusive talks and observation. Employees and department supervisors generally receive
informal feedback as needed. Every two years or every three months, depending on the urgency
of the projects and responsibilities that have been assigned to the staff, formal performance
reviews are also conducted. This formal method is used by managers and supervisors to ensure
that performance gaps are identified and suggested corrective action plans are provided.

4. Internal processes for organizational alignment

Additionally, BigBasket.com has To ensure that all organisational divisions and systems are
coordinated and helping the organisation achieve its overall goals, certain procedures and
approaches are used. This is made possible by ensuring that all systems are developing and
working toward goals that are specific to their areas of expertise and are part of the bigger
business vision and strategy. The strategic leadership at BigBasket.com also develops specific
goals to achieve comparable business objectives in every time frame and ensures that resources
are provided to all systems.

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2. SOFT ELEMENTS
The soft components of the McKinsey 7s model are people, shared values, skills, and
strategy. These variables have less concrete bases and are more influenced by
organisational culture. The management therefore has no actual control or authority over
them. Despite the fact that they are more challenging to describe and quickly recognise,
these aspects are just as important for an organization's success and improved performance.

 SHARED VALUES
1. Core values

 To promote a flexible and encouraging organisational structure that will enable employees
to perform at their best as well as increase their motivation and organisational commitment,
BigBasket.com has defined and articulated its core principles. BigBasket.com's core values
include, but are not limited to:
 Creativity
 Honesty
 Transparency
 Accountability
 Trust
 Quality
 Heritage
BigBasket.com's basic principles are outlined and communicated to all employees. The
BigBasket.com company also makes sure that all of its activities and operations are carried out
in accordance with strict moral and ethical principles that have been redefined and measured
against global standards.

2. Corporate culture
BigBasket.com encourages a friendly atmosphere that respects diversity. Due to its global
presence and production facilities that are distributed across several countries, BigBasket.com
ensures that its organisational culture is tolerant of diversity and has internal policies to reduce
incidences of bias. The corporate culture of BigBasket.com also encourages creativity and
innovation by allowing teams and individuals the ability to grow independently, fostering both
professional and personal growth. In order to increase employee motivation and job
satisfaction, BigBasket.com's corporate culture includes a supportive leadership that
encourages visibility and accessibility.

3. Task alignment with values

BigBasket.com ensures that all of its job responsibilities and positions are in line with the core
values that the company promotes. This means that BigBasket.com will always reflect its basic
beliefs and will not stray from them in any of its operations, strategies, or strategic manoeuvres.
This will guarantee an honest company culture as well as a consistent and trustworthy brand

11
image.To ensure that the organisational culture is consistently upheld and, if necessary,
systematically transformed, the company will continue to make sure that all change
management techniques and procedures reflect the core principles.

 STYLE
1. Management/leadership style
At BigBasket.com, a participative leadership style is employed. By employing a participative
leadership style, BigBasket.com is able to involve and involve its employees in managerial
decisions and decision-making processes. This makes it possible for the leadership to interact
often with the workforce and other managerial groups in order to spot potential conflicts and
get input on daily operations and strategic plans. Through its participative leadership,
BigBasket.com is able to increase organisational commitment and ownership among
employees and other stakeholders while also improving employee engagement.

2. Effectiveness of leadership style

In terms of fulfilling the organization's commercial objectives and vision, the participative
leadership style performs exceptionally well. Employees believe they are valuable contributors
to the company who are valued for their ideas, viewpoints, and contributions. Additionally,
leaders and managers are better able to identify current and potential problems within the
BigBasket.com organisation and take fast action to address them when they are handled
through participative leadership.

3. Cooperation vs competition – Internally

BigBasket.com's friendly and supportive organisational culture promotes internal collaboration
and cooperation across employees, systems, teams, and departments. BigBasket.com places a
high priority on collaboration and teamwork due to the company's international operations and
the regular requirement for cross-departmental feedback and input on tasks and responsibilities.
Due to increased expansion and synergy, the company also frequently forms project teams.
These teams flourish thanks to the cooperative and collaborative culture that permeates the
BigBasket com group.

4. Team vs groups
Internally, BigBasket.com collaborates with its efficient and productive teams to accomplish
its numerous company aims and objectives. The leadership of the organisation provides a
compelling and achievable vision for what could be achieved, and the management is
supportive and uplifting. The organisational training and the human resource management
system support all employees in their progress on an equal and transparent basis.. Effective
teams are formed as a result, rather than ineffective groups, within the organisation for various
initiatives as well as for department-specific duties and responsibilities.

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 STAFF
1. Number of employees
A sizable workforce was hired by BigBasket.com. Depending on the demands and needs of the
activities, the number of personnel varies from nation to nation. The BigBasket.com worldwide
team is an inclusive one that embraces and promotes diversity and collaborates with members
to ensure the achievement of corporate objectives. For BigBasket.com, team members and
employees are crucial to business success.

2. Gaps in required capabilities and capacities

BigBasket.com has a framework in place for determining prospective organisational needs for
competencies and capacities. In order to identify possible vacancies or skill gaps, the company'
human resource function coordinates with all other departments using a methodical procedure.
Depending on the nature of the need, the human resources department prepares hires that may
be temporary or permanent. The department also arranges training sessions as necessary for
the current personnel.

3. Employee skill level vs business goals

BigBasket.com has a sufficient workforce for its international operations. Employees are hired
both inside and externally for a variety of job duties and roles depending on the urgency and
skill levels necessary. This shows that BigBasket.com employs people with the abilities
required for their professions and job duties.. All staff members receive internal training to help
them become acquainted with the business and its core principles. For the purpose of raising
skill levels, external training is offered in addition to internal training.

The staff skill level at BigBasket.com is sufficient to fulfil the business goals of the
organisation because all job functions and positions are created to enable the attainment of
business goals.

 SKILLS
1. Employee abilities
BigBasket.com employs a respectable crew that possesses outstanding capacities and talents.
All hires are made in accordance with their credentials and merit. Big Basket com takes pride
in selecting and developing the best professionals to support growth and development.

2. Worker abilities and work needs

BigBasket.com has defined tasks and job roles, and employees are hired and taught for their
skill levels in compliance with those. The company ensures that all job requirements are met
and that employees have the knowledge and abilities to complete their specialised jobs in
accordance with the Big Basket com business objectives and strategy.

13
3. Skill management
Big Basket com places a high priority on developing the abilities and talents of its workforce.
For its employees' professional development, it regularly organises internal and externally
managed training sessions and workshops. Big Basket com collaborates with its employees and
places a strong emphasis on their personal and professional development.

4. Competitive advantage of the company

The company's human resources are one of its key competitive advantages. Employee
education and development is tailored specifically to job roles and requirements. at Big Basket
com, giving the organisation a competitive advantage over rival businesses. This gives Big
Basket com a certain competency that cannot be replaced.

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 2.2. SWOT ANALYSIS

1. STRENGTHS

 A company's strength is an asset to plan its expansion since it is a crucial part of SWOT
analysis. Big Basket is one of the biggest online grocery delivery platforms in India because
to a number of their advantages.
 Wide Selection Of Products
On its platform, Big Basket has a wide variety of products available, numbering
approximately 18,000 in total.
 Exotic Products
Big Basket also offers exotic fruits, vegetables, and foreign foods that are not readily
available in local supermarkets. This gives them the advantage of appealing to consumers
who want to buy such products.
• Targeted Clientele
They have chosen their target customers very carefully and have established themselves in
major cities and some Tier I cities. They are operating in Bangalore, Hyderabad, Mumbai,
Pune, Chennai, Delhi, Mysore, Vadodara, Patna, Indore, Vijaywada, etc. At present they
are operating in about 25 cities.
 Convenience
Big Basket saves you the hassle of waiting in mall lines or going to department stores. The
company delivers the goods directly to your doorstep and offers various payment options.
The promise of timely delivery makes it a profitable choice. Customers can shop at any
time of the day, especially in big cities where life is very fast and it is difficult to meet
customers.

15
 Discounts offers
BigBasket provides enticing savings on a variety of products. They continue to provide a
merchandise bundling strategy designed to boost sales and give customers full savings.
Because of this, buyers can profitably choose to purchase them.
 Cost-Effective Business Model
The majority of the products Big Basket sells are perishable, thus the company must obtain
them from the retail establishments it partners with. This guarantees that companies have
low inventory expenses and improves the effectiveness of their company plan.
 Marketing
Leading Bollywood star Shahrukh Khan supports Big Basket. Big Basket uses Google Ads,
Facebook Ads, and Instagram Ads to advertise its items online.

2. WEAKNESS

Everybody has a good and a bad side, and Big Basket is not without flaws. Even while Big
Basket continues to dominate India's grocery e-commerce market, there are a number of
flaws that might seriously hamper the company's expansion.

 Home Delivery
When Big Basket wants to deliver, the customer needs to be at home. Customers must
therefore make plans in accordance with the delivery time. Customers will be irate and
unhappy with the service if there is any delay in processing the order. Additionally, they must
pay an additional fee for home delivery.
• Delivery Schedule
The following day, Big Basket delivers groceries. The option of home delivery has been
made available by many retailers to local businesses and customers in only a few minutes
or hours. Customers prefer this as a result to having to wait for 24 hours.
 Variable Cost
The organisation has high variable expenses due to the cost of managing several
distributors, providing vehicles, handling perishable commodities, and transportation
mishaps. They are required to invest more money and could take longer to close the deal.
 Minimum Purchase Rule
Big Basket does not provide home delivery for orders that fall below a particular pricing
barrier. Customers would thus be compelled to add one or more products in order to utilise
the service. They consequently lose a client.
• Order Cancellation
Big Basket depends on the retailers with whom they have collaborated for goods delivery.
Additionally, they must cancel the order if the store does not have the item they ordered.
Big Basket's increased rate of cancellations due to low inventory makes customers upset.
 Data Privacy
In 2020, Big Basket was allegedly the target of data threats. On the dark web, 2 crore
clients' personal information was listed for sale.

16
3. OPPORTUNITIES

 Market Share
More than $550 million is spent on groceries alone in the Indian retail market, which
accounts for 60% of the total. Therefore, it is a vast market with a lot of businesses and
customers to fulfil.
 Growth in Grocery E-Commerce
India has the sixth-largest global food market. E-commerce for groceries is growing at
a 19 percent annual rate.
 Market Expansion
Big Basket should focus on these cities and capitalise on early adopters because some
of them are still underserved by these firms. They can increase their market by
expanding to cities with two levels.
 Cross-Selling
Given that the Big Basket will provide numerous things through commodity bundling,
cross-selling is a significant advantage.

4. THREATS

 Competition
It faces stiff competition from other startups like Grofers, PepperTap, Nature's Basket,
Zop Now, Aaram Store, Mera Grocer, etc. because it has a limited geographic reach.

 Big Players
Larger companies are devoting a growing amount of time and resources to this
attractive sector. Among the companies that have entered this industry are Google,
Amazon, and Flipkart. This poses a threat to trade with for smaller players like Big
Basket.

 Customer Retention
Customer retention is really difficult. Customers will gravitate toward the service
provider offering the greatest discounts and quickest delivery.

17
 FINANCIAL STATEMENT

Statements are Official records of a person's, a company's, or another entity's financial position
and actions are called financial statements. The presentation of relevant financial data is done
in a methodical manner and in an easy-to-understand format. Financial statements are a
collection of information summaries about an organization's cash flows, financial position, and
financial results. Among these are the income statement and the balance sheet.

Balance Sheet

Equities / Liabilities March 2022 March 2021 March 2020

Share Capital 92 92 92

Reserves / Surplus 15,049 14,442 13,722

Current Liabilities 3,172 3,094 1,978

Other Liabilities 2,803 2,626 2,709

Total Liabilities 21,117 20,255 18,502

Assets

Fixed Assets 5,092 4,539 4,417

Current Assets 5708 5638 4546

Inventory 1427 1410 1136

Other Assets 8,889 8,667 8,402

Total Assets 21,117 20,255 18,502

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INCOME STATEMENT

The income statement is yet another financial statement. It displays the outcomes summarises
the business and financial activities of an entity for the same period. With the option to
incorporate extra time periods for comparison, it often contains the outcomes from the prior
month or year.It is generally organised so that all revenues are first, followed by all selling,
general, and administrative expenses, from which the cost of items sold is deducted. After
deducting income taxes, the outcome is either a profit or a loss.

Annual Mar 2022 Mar 2021 Mar 2020

Sales 12,425 11,602 9,637

Other Income 140 121 111

Total Income 12,565 11,723 9,749

Total Expenditure 11,036 10,343 8,861

EBIT 1,528 1,379 887

Interest 72 68 77

Tax 377 317 274

Net Profit 1,078 993 535

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RATIO ANALYSIS

Ratio analysis is a statistical method for examining the balance sheet and income statement of
a firm in order to learn more about its liquidity, efficiency, and profitability. Ratio analysis
serves as the foundation for basic equity research.

1. CURRENT RATIO

CURRENT RATIO = Current Assets / Current Liabilities

Year Current Assets Current Liabilities Ratio

2020 4546 1978 2.29
2021 5638 3094 1.82
2022 5708 3172 1.78

Interpretation:
If the calculation of the current ratio yields a number greater than 1, it signifies that the
business's present assets are sufficient to cover its current liabilities. the present assets of the
business in the aforementioned scenario are more than its current liabilities by 2.29, 1.82, and
1.78. In other words, the corporation has 1.78 current assets available to satisfy liabilities for
every current liability it has.

2. QUICK RATIO

QUICK RATIO = Current Assets- Inventory / Current Liabilities

Year Current Assets Current Liabilities Ratio

2020 3410 1978 1.72
2021 4228 3094 1.36
2022 4281 3172 1.34

Interpretation:
The above table shows that the company's quick ratios were 1.72 in 2020 and 1.36 in 2021.
The quick ratio is typically 1:1. However, the fact that the company's quick ratios are all greater
than one shows that it can satisfy its short-term obligations by using its liquid assets.

20
3. Proprietary Ratio

PROPRIETARY RATIO = Shareholders Fund/ Total Assets

Year Shareholders Fund Total Assets Ratio

2020 13814 18502 0.75%
2021 14534 20255 0.72%
2022 15141 21117 0.72%

Interpretation:
The proprietary ratios of the company in the year 2020, 2021 & 2022 are 0.75%, 0.72% &
0.72% In the year 2020 the ratio was 0.75% then it Decreases to0.72 % in 2021 & then it is
same to 0.72%. It indicates company’s proprietaryratios Increased by 0.003%.

4. Return on Assets Ratio

ROA Ratio = Net Profits / Total Assets * 100

Year Net Total Assets Ratio

Profits
2020 535 18502 2.89
2021 993 20255 4.90
2022 1078 21117 5.10

Interpretation:

The return on assets of the organization in the year, 2020, 2021 & 2022are 2.89, 4.90 & 5.10.
It shows Increases in the return on assets as on 2022 year is 5.10

21
 5. Net Profit Margin Ratio

NPM RATIO = Net profit/ Revenue

Year Net Reven Ratio

Profits ue
2020 535 13722 0.03

2021 993 14442 0.06

2022 1078 15042 0.07

Interpretation: The net profit margin of the company in the year, 2020, 2021 & 2022 are like
o.03, 0.06, 0.07. It tells the results as decreases in the net profits as on the year 2022 march by
0.001

22
 CHAPTER – 03

Introduction to Inventory Management

INVENTORY MANAGEMENT

Customers are forced to resort to competitors when products are out of stock, which decreases
sales. However, having too much inventory results in high inventory carrying costs, which
include the price of storage and transportation. The goal of inventory management is to keep a
small enough inventory balance to allow for a respectable return on investment while still
having enough products on hand to prevent running out. This project intends to look into how
financial decision-making is affected by inventory..

Inventory is one of a company's most important assets. The core of an organization's activities
in sectors with substantial inventories, such as retail, manufacturing, food services, and others,
is its raw materials and completed items. A shortage can be quite damaging depending on
when and where merchandise is required. Inventory might sometimes be viewed as a liability
(if not in an accounting sense). When there is a large inventory, there is a greater risk of
spoilage, theft, damage, or shifts in demand. Inventory needs to be insured, and if it isn't sold
quickly enough, it might need to be destroyed or sold for less.

Recognizing Inventory
Inventory is a current asset for a business because it often expects to sell its finished items in
less than a year. Inventory must be physically counted or measured before it can be recorded
on a balance sheet. Modern inventory management systems that can track inventory levels in
real time are routinely used by businesses.
Inventory Management Methods
A corporation will employ a variety of inventory management techniques depending on the
kind of business or product being examined. Among these management techniques are things
like

1. Just -in-time (JIT)

2. Economic Order Quantity (EOQ)

3. Days sales of Inventory (DSI)

1. Just-in-Time Management (JIT)

This manufacturing model first appeared in Japan in the 1960s and 1970s. Toyota Motor made
the most contribution to its creation (TM). Businesses can dramatically reduce waste and
expenses by simply keeping the inventory required to create and sell products. Storage,
insurance, and liquidating or getting rid of excess inventory are all less expensive when using
this technique. Inventory management with JIT entails considerable risk. The company might
not be able to find the inventory it needs to meet an unexpected rise in demand, which would
damage its reputation with customers and drive business to competitors.

23
2. Economic Order Quantity (EOQ)

This model is used in inventory management to determine the number of units a business
should add to its inventory with each batch order to reduce the overall expenses of its inventory
while assuming constant consumer demand. The costs of inventory in the model include
holding and setup expenses. The goal of the EOQ model is to guarantee that the right amount
of inventory is ordered per batch so that a business does not need to place orders too frequently
or have an excess of inventory on hand. It is assumed that there is a trade-off between
inventory setup and holding costs, and that when both setup and holding costs are decreased,
overall inventory costs are minimised.

3. Days sales of inventory (DSI)

This financial ratio illustrates the typical time it takes for a company to turn finished goods in
its inventory into sales. The term "days sales in inventory" (DSI), also known as the "average
age of inventory," "days inventory," "days inventory outstanding," "days in inventory," and
"days inventory," can all be used to refer to DSI. The figure represents the liquidity of the
inventory and the remaining shelf life of the current stock in an organization's inventory.
Although average DSI varies by industry, it is generally preferred to have a lower DSI because
it means the inventory will be sold off more quickly.

There are several techniques for inventory analysis. It is possible that a company's
management is attempting to present a more positive picture of its business than is actually
the case if it repeatedly changes its method of inventory accounting without a valid cause.
The SEC mandates that publicly traded corporations disclose any LIFO reserve that could
raise the cost of inventories under LIFO costing to that of FIFO costing.

HOW BIGBASKET WORKS

There are more than 18000 illustrated products and 1,000+ represented brands in the
BigBasket.com catalogue. As a result, it is regarded as India's largest online food and grocery
store market. There are many options available for every product to supply high-quality goods
at affordable prices. These options include spices and seasonings, fresh fruits and vegetables,
personal care items, a class of packaged foods, beverages, even meats, and much more.
24
Inventory-led and hyperlocal delivery make up BigBasket's two business models for the online
grocery sector. Sources claim that BigBasket, an online grocer based in Bangalore, has
advanced by combining the two methods. With its marketplace operation, it seeks to meet all
of the customer's grocery needs. According to some accounts, BigBasket uses an inventory
model. They purchase goods from reputable vendors like P&G, HUL, mills, farmers, etc. and
keep them in enormous warehouses or modest go-downs. From there, it fulfils customer orders,
which means that for all preserved goods, manufacturers are directly purchased as stocks.

In contrast, they use a "just-in-time model" (purchase-to-order) for unpreserved food to prevent
loss and lower inventory costs by collaborating with local farmers and suppliers. This company
likewise uses a "hyper-local approach," partnering with more than 2000 grocery stores across
India to deliver goods within an hour of a customer's address. BigBasket's business model
depends on its private-label goods to boost sales and become profitable. The entire working
paradigm of BigBasket is based on a multi-city, multi-vendor architecture.

Inventory Costs

1. Ordering Cost

The ordering cost is also called as the setup cost which are happened at the period of placing an
order. It includes the cost of detecting the providers or the suppliers and the order in advance,
transportation, receiving cost, Edi cost and etc.

2. Carrying Cost

The carrying cost are also know as holding cost which are incurred at the of keeping or
maintaining before selling them. It includes costs of storage, cost of Inventory utilities,
Inventory risks cost, Opportunity cost.

3. Financial Cost

Financial Cost are the costs which are at the time or period of making investment in inventory.
Financial Cost may also become complex depending on the business carried. It also involves
the investments returns, Interest on working capital and Etc.

4. Shortage Costs

The Shortage cost are also known as stock-out-costs or hidden costs which are happened at the
time when the firm or business does not have stocks or when they become out of stocks when
there is a demand from its customer. It includes disrupted production, Emergency shipment,
customer loyalty and reputation.

25
 Research Methodology

Topic Chosen for the Study

“A Study on Inventory Management and its impact on Financial Performance with

special reference to Big Basket”

Need of the Study

The study helps in knowing how a proper inventory management system helps in increasing
the profits of the company and how a company as to maintain proper stock levels in order to
avoid stock outs and have a continuous production in place. It also helps the company to have
a track on various cost related to producing the products and services which in helps in
controlling the inventory levels and improve the profits of the organization. It also helps in the
understanding the to attain the maximum returns & analyse the financial performance of the
company.

Review of Literature
1. Gaur and Bhattacharya (2011)

Investigated the link between the financial success of Indian companies and the performance
of inventory items such raw materials, work in progress, and finished goods. The results of the
study showed that finished goods inventory was inversely connected to business performance,
whereas raw material inventory and work-in-progress had minimal effect. They emphasised
that in order to manage inventory properly, one should try to focus on certain inventory
components rather than the overall inventory.

.
2. Sudarsana Reddy (2003)

The study's primary goals are to assess finance strategies and practises, examine investment
patterns and fixed asset utilisation, determine the working capital situation, assess profitability
performance, and provide strategies to boost profitability. Ratios, trends, common sizes,
comparative financial statement analysis, and statistical tests have all been used in the right
context to the data collection. For this industry to operate more effectively, new funding must
be introduced together with financial reorganisation and technological modernisation.

3. Panigrahi (2013)

A research looked closely at how FMCG companies manage their inventories and how it affects
how efficiently they use their working capital. The study also looked into the connection
between inventory conversion days and profitability. The study came to the conclusion that
inventory conversion time and profitability had a significant inverse linear connection.

26
4. Eneje et al (2012)

A Study analysed cross-sectional data from 1989 to 2008 taken from the annual reports of the
sampled organisations to assess how managing raw material inventories affects corporate
profitability. Profitability metrics were examined and linked to substitutes for raw materials
inventory management. The Ordinary Least Squares (OLS) in the A multiple regression model
was employed in the analysis. The study discovered that the local variable raw materials
inventory management, which was developed to capture the impact of a company's successful
management, has a significant impact on the profitability. Its raw material inventory. They
came to the conclusion that the company must effectively manage its inventory of raw
materials.

5. S. Singh (2006)

A study that examines the inventory management procedures used by the IFFCO fertiliser firm.
He statistically studied the inventory system together with growth trends for consumption,
sales, and other variables, as well as inventory patterns. He came to the conclusion that as
inventory component numbers rose, so did the inventory's share of current assets. To determine
excessive purchases that resulted in a loss of profit, a special emphasis was placed on stores
and spares.
6. Jagan Mohan Rao (1993)
An investigation into the industry's financial state—including its strengths and weaknesses—
was planned. In order to do this, a modest effort has been made to gauge and assess the financial
performance over a certain time period using an inter-company and inter-sectoral analysis. The
primary conclusions are that inventory was managed rather efficiently and that fixed asset
utilisation in many of the ventures was not as productive as predicted. The total profit
performance was ineffective and inconsistent.
7. Soni (2012)
A thorough analysis of the inventory management procedures used in the engineering goods
sector was conducted. The investigation was conducted utilising a panel data set and an 11-
company sample over the course of five years, from 2004 to 2009. The right and rapid flow of
inventories is what determines the success of an industry. They concluded that while the
quantity of the inventory only slightly expanded during the period, current assets and net
working capital did. As a result of insufficient inventory turnover, inventories, which made up
half of working capital, were overstocked, particularly for completed items and raw materials.
Increased sales and favourable market conditions cause inventory levels to increase. Inferences
were made that sales increases more as compared to Stocks.
8. Capkun, Hameri and Weiss (2009)
To ascertain the relationship between inventory performance and financial performance in service
organisations, a statistical study was performed on a large sample of financial data. They came to the
conclusion that profitability and the performance of the inventory and its component elements were
closely related. Operating and gross profits had a direct impact on how well the raw material inventory

27
performed. Work-in-progress inventory performance was not significantly correlated with gross profit
indicators, whereas finished goods inventory performance was.

9. Kallu Rao (1993)

A study of prospect financial analysis amongst companies. In order to assist policymakers in making
informed decisions, an effort has been made in this study to analyse key industry characteristics and
forecasted future patterns affecting sales and profit for the next 10 years. For the purpose of
evaluating the financial health of the sector, various financial ratios have been calculated.

10. Rosemary Carlson(2021)

A business that orders inventory only when it is required means that it has very little safety
stock on hand and runs constantly with low inventory levels. The strategy aids businesses in
lowering carrying costs, increasing productivity, and reducing waste. Producers must predict
consumer demand for their goods with extreme accuracy. JIT Management is a pro-cost-
saving inventory management strategy since it can result in stock outs.

Objectives of the Study

1. To Study about the Service & its Funds Collection
2. To Examine about the Cash Collection Model and its Risk Involvement.
3. To Analysis about overstocking & under-stocking of Stocks to minimize the Flow of Funds.
4. To Identify the Short term and Long Term Plans and its Funds Allocation of Big Basket

How Cash Collection Model is go generate funds to operation

Cash Collection model

In the accounts receivable department of a company, cash collection seeks to deal with payment
concerns before accounts become past due or delinquent. Negotiating payment terms and
making sure that money is paid in advance of the agreed-upon period are typical aspects of
cash collection. To this purpose, it is crucial for businesses or people generating invoices to
provide specific payment conditions and instructions.
Invalidating potential allegations that the debtor was unaware of the payment process
considerably speeds up the cash collection process. An invoice is deemed late when payment
is not received for a longer length of time than allowed by the terms of the invoice. In order to
re-contact the debtor and attempt further negotiation when dealing with past-due bills,
businesses commonly try sending letters and making repeated phone calls. If they are unable
to do this, they might consider sending out a pre-collect notice.

28
 CHAPTER – 04

DATA ANALYSIS AND INTERPRETATION

A manufacturing workflow paradigm called Just-In-Time (JIT) aims to cut costs and flow times
in production systems and material distribution. The early 1970s productivity of Japanese
industry within the Toyota production facilities, which would satisfy consumer needs with the
fewest possible delays by utilising a methodology focused on people, plants, and systems,
helped to promote the idea.

Zero inventory throughout the firm and its supply chain is the main objective of JIT. This
maximises ROI and fully exploits organisational capabilities. Numerous American businesses,
including Hewlett-Packard, imitated the technique since it was so successful in Japan. The
development of a business-wide effort, fostering employee participation, and developing a
mobilizable policy and strategy are all necessary for successful implementation.

JIT stands for just-in-time, which is a demand pull system based on client orders. Since it's a
pull system, individual Kanbans are placed to create minimal levels of work in progress and
finished items inventories. Every kanban location receives an equivalent cascaded pick for
every customer demand pull. Only the quantity needed to complete the kanban is refilled by
the workstation as the product is pulled from it.

Advantage

 By reducing production waste, IT can produce goods of higher quality.

 The JIT methodology can lower the price of stocks and inventory needs.
 Lowering in capital that got engage in Stocks
 Reducing Products Defects
 Helps in prevention of Excess Production.

29
Analysis of Turnover Ratio

Turnover Ratio refer to those ratio where it aims at measuring how efficiently and effectively
the corporate makes use of its assets during the actual period. The Business with higher
turnover ratio is claimed to be doing well within the market and it’s a good sign for the
companies, where the corporate may produce and sell the products to its customer with a given
period of time. It is also called as Performance ratio, Efficiency ratio or Activity ratio

The Following were the Turnover Ratios

Assets Turnover Ratio

Inventory Turnover Ratio

Working Capital Turnover Ratio

1. Ratio of Inventory Turnover

Inventory Turnover ratio is determining speed at which inventory are often transformed into
sales. The greater the ratio the regulation of the stock or inventory management are going to be
high and if the ratio is lower it indicates the build of the stocks. It is also called as referred to
as the stock turnover ratio. The stock turnover ratio is computed for the raw material, work in
progress, finished goods Individually.

Inventory or Stock Turnover ratio = Cost of Sales / Average Inventory

Particular 2020 2021 2022

Cost of Sales 9637 11602 12425

Average Stocks 568 705 714

Inventory TO Ratio 16.96 16.45 11.40

18 16.96 16.45
16
14
11.4
12
10
8
6
4
2
0
Inventory TO Ratio

2020 2021 2022

30
Interpretation

The above table providers the information regarding the inventory where during the year 2020
& 2021 the Inventory Stock is decreases and in the year 2022 it was 2021 to 2022 the was stocks
was Decreases from 16.45 to 11.40 which indicates that the company inventory turnover had
decreases and they have flow in sales and efficiently Utilise and manage its inventories.

2. Assets Turnover Ratio

Assets Turnover Ratio helps in measuring the assets efficiency used and its expresses that
usually the Net tangible assets are turnover during the particular period or the year.

Assets Turnover ratio= Sales / Net Assets

Particulars 2020 2021 2022

Sales 9637 11602 12425

Net Assets 13815 14535 15142

Assets TO ratio 0.698 0.799 0.821

Assets TO ratio

0.821
0.799

0.698

2020 2021 2022

Interpretation

The Above table providers the information regarding the usage of assets in the company where
during the year 2020the Assets turnover ratio is 0.698 and then its has Increases to 0.799 and
later 2022 it has been increases to 0.821 respectively where the year with high asset turnover
ratio shows that the company has effectively and efficiently utilised is assets and thus results
in good sales and turnover of company.

31
3. Fixed Asset Turnover Ratio

Fixed-asset turnover is the proportion of sales to the cost of fixed assets. It demonstrates how
efficiently the business is using its fixed assets to generate sales.

Fixed Asser Turnover Ratio= Sales / Net Fixed Assets

Particular 2020 2021 2022

Sales 9637 11602 12425

Net Fixed Assets

4,417 4,539 5,092
Fixed assets TO ratio 2.18 2.55 2.44

Fixed assets TO ratio

2.6 2.55

2.5 2.44
2.4

2.3
2.18
2.2

2.1

1.9
2020 2021 2022

Interpretation

The Above table providers the information regarding the utilisation of Fixed asset where
during the year 2020 and 2021 Fixed assets turnover ratio was 2.18 and 2.55and respectively
higher in 2021 and it has decreased to 2.44 in the year 2022 respectively which indicates that
how well the company has utilised its fixed assets and low ratio indicates inefficient usage of
fixed assets.

32
4. Working Capital Turnover ratio

It Assists in knowing how repeatedly that the working capital is moved to a certain time or
during a particular period. If the ratio is higher it results in low transaction in the working capital
and greater is the sales revenue and profits. If the ratio is lower it suggest that the working capital
is not effectively utilised. The working capital is divided based on the concept and time period,
Based on the approach or Idea it is grouped into the gross working capital and the NWC. Based
on the period it is categorised into the permanent Working Capital and Temporary.

Working Capital Turnover ratio= Sales / Working Capital

Particular 2020 2021 2022

Sales 9637 11602 12425

Working Capital ( CA-CL) 3704 3954 3963

WC TR ratio 2.60 2.93 3.135

WC TR ratio
3.5 3.315
2.93
3 2.6
2.5
2
1.5
1
0.5
0
2020 2021 2022

Interpretation

The above table providers the information about how the company is able to meet its dayto
day Expenses in the graph it was shows in the year 2020 and 2021 the working capital ratios
were 2.60 and increases to 2.93. the company working capital turnover ratio has again
increased to 3.135. From this analysis we can understand that the higher turnover proposes
that the company is being efficiently using its short term assets in order to meets its company
expenses.

33
5. Inventory to Working capital Ratio

It is the way to show as to how much portion of a business Inventories funded from cash that
is available in the company.

Inventory to working capital ratio is the major indicator of the operational efficiency. Low
value of 1 or less than 1 ratio means a business has high liquidity of current assets but it might
also indicate inadequate inventory levels. A higher value of this ratio means that a business is
carrying much of inventory. More of inventory. More inventory can place a heavy burden in
cash resources and its not favourable for management of company.

Particular 2020 2021 2022

Inventory
1136 1410 1427
Working capital 3704 3954 3963

Inventory to WC ratio 0.306 0.356 0.3600

Inventory to WC ratio
0.37 0.36
0.356
0.36
0.35
0.34
0.33
0.32
0.306
0.31
0.3
0.29
0.28
0.27
2020 2021 2022

Interpretation

From the above calculation it is found that in the year 2020and 2021 the ratio of the company
was quite high but in the year 2022 the ratio is 0.3600. which indicates high liquidity in that
year compared to other years and again in the succeeding year the ratio is high which indicates
that there is High liquidity for inventory operations.

34
 EOQ ANALYSIS

The EOQ is that degree of inventory, which lowers the overall cost of ordering and carrying.
The question is: How much should be ordered when the inventory is refilled? If a company
needs to plan a manufacturing run, it must decide how much production to schedule and how
much of each substitute raw material to purchase. It might be resolved with EOQ.EOQ Involves
Two Types of Costs

Carrying Cost: Carrying cost means the cost of keeping the materials which involves capital
cost, cost of storage and cost of deterioration and redundancy Greater the size of inventory, more
will be its inventory carrying cost and vice versa.

Ordering Cost: Ordering cost means the cost of placing an order and securing the supplies.
Ordering cost is dependent on the no. of orders positioned and also the no. of items placed at
the same time. The ordering cost will be more when there the orders are placed frequently.
Similarly, lesser the ordered quantity, higher the cost of ordering.

Formula

EOQ= 2x ARX OC

CC

Where,

AR = Annual demand (quantity)

OC = Ordering cost

CC = Cost of carrying one unit/yea

Annual Consumption of inventory 2019-2020

SL No. Particular Quantity Rate Consumption

01 48700 83.45 4064015
Food grains, Oil, Masala
02 23783 64.5 1534004
Fruits & Vegetables
03 15678 48.5 760383
Household Products
04 Beverages 20788 76 1579888

05 10940 35 382900
Healthcare Products
06 Beauty & Hygiene 78650 39.7 3122405

35
 Consumption
4500000
4064015
4000000
3500000 3122405
3000000
2500000
2000000 1579888
1534004
1500000
1000000 760383
382900
500000
0
Food grains, Fruits & Household Beverages Healthcare Beauty &
Oil, Masala Vegetables Products Products Hygiene

Annual Consumption of inventory 2020-2021

SL No. Particular Quantity Rate Consumption

01 51785 105.45 5460728.25
Food grains, Oil, Masala
02 35783 42.67 1526861
Fruits & Vegetables
03 13678 61.25 837778
Household Products
04 Beverages 22788 48.8 1112054

05 15940 85.77 1367173.8

Healthcare Products
06 Beauty & Hygiene 35650 69.7 2484805

Consumption
6000000 5460728.25

5000000

4000000

3000000 2484805

2000000 1526861 1367173.8

1112054
837778
1000000

0
Food grains, Oil, Fruits & Household Beverages Healthcare Beauty &
Masala Vegetables Products Products Hygiene

36
Annual Consumption for 2020-2021

SL No. Particular 2020 2021

01 4064015 5460728.25
Food grains, Oil, Masala
02 1534004 1526861
Fruits & Vegetables

03 760383 837778
Household Products

04 Beverages 1579888 1112054

05 382900 1367173.8
Healthcare Products
06 Beauty & Hygiene 3122405 2484805

Table showing Ordering Cost of inventory - 5.4%

SL No. Particular Ordering 2020 2021

Cost %
01 5.4 219457 294879
Food grains, Oil, Masala
02 5.4 82836 82450
Fruits & Vegetables
03 5.4 41061 45240
Household Products
04 Beverages 5.4 85314 60051
05 5.4 20677 73827
Healthcare Products
06 Beauty & Hygiene 5.4 168670 134179

Ordering Cost
500000

400000

300000

200000

100000

0
Food grains, Fruits & Household Beverages Healthcare Beauty &
Oil, Masala Vegetables Products Products Hygiene

2020 2021

37
Table showing Carrying Cost of inventory – 8%

SL No. Particular Carrying 2020 2021

Cost %
01 8 325121 436858
Food grains, Oil, Masala
02 8 122720 122149
Fruits & Vegetables
03 8 60831 67022
Household Products
04 Beverages 8 126391 88964

05 8 30632 109374
Healthcare Products
06 Beauty & Hygiene 8 249792 198784

Carrying Cost
500000
450000
400000
350000
300000
250000
200000
150000
100000
50000
0
Food grains, Fruits & Household Beverages Healthcare Beauty &
Oil, Masala Vegetables Products Products Hygiene

2020 2021

38
Economic Order Quantity for the year 2019-2020

SL Particular AR OC CC EOQ
No.
01 48700 219457 325121 256.40
Food grains, Oil, Masala
02 23783 82836 122720 179.18
Fruits & Vegetables
03 15678 41061 60831 145.48
Household Products
04 Beverages 20788 85314 126391 167.52

05 10940 20677 30632 121.52

Healthcare Products
06 Beauty & Hygiene 78650 168670 249792 325.90

EOQ

256.4
325.9

179.18
121.52

167.52 145.48

Food grains, Oil, Masala Fruits & Vegetables Household Products

Beverages Healthcare Products Beauty & Hygiene

Interpretation:

From the above calculation it is found that the company has maintained optimal quantity of its
Inventory items like raw materials like Food grains, Fruits and Vegetables, Beverages, etc to
see to that there are no shortage (stock out) and wastage(over stock) of the inventory which is
the ultimate aim of the Economic order quantity to meet the demand Maintaining optimal order
will help in balancing both ordering cost as well as carrying/ holding cost. It is also evident that
the EOQ is high for Food grains and Beauty & Hygiene are 256.40 and 325.90 respectively
which means that the company consumes more of maintain the inventory at cptimal level and
meet the demand as per customer requirements

39
Economic Order Quantity for the year 2020-2021

SL Particular AR OC CC EOQ
No.
01 51785 294879 436858 264.40
Food grains, Oil, Masala
02 35783 82450 122149 219.78
Fruits & Vegetables
03 13678 45240 67022 135.88
Household Products
04 Beverages 22788 60051 88964 175.39

05 15940 73827 109374 146.69

Healthcare Products
06 Beauty & Hygiene 35650 134179 198784 219.37

EOQ

219.37 264.4

146.69
219.78
175.39
135.88

Food grains, Oil, Masala Fruits & Vegetables Household Products

Beverages Healthcare Products Beauty & Hygiene

Interpretation:

From the above calculation it is found that the company has maintained optimal quantity of its
inventory like Food grains, fruits and vegetables, etc to see to that there are no shortages (stock
out) and wastage (over stock) of the inventory which is the ultimate aim of the Economic order
quantity to meet the demand. It is also evident that the EOQ is high for food grains, fruits and
Vegetables and Beauty is values are like 264.40, 219.78,and 219 respectively of importance
based upon their intakes. The items with maximum value at more controlled and then the items
of low-value are considered.

40
Comparing EOQ and JIT:

1. Economic Order Quantity is the preferred method when there are high level of demand.

2. Just in Time is also preferred methods but when there is Low Level of demand.

3. Economic order Quantity involves Ordering cost and Holding cost to maintenances of
Inventory stocks but where as in Just in time the company did not maintenance any carrying
cost or Holding cost because they holds ready inventory at warehouses and storages homes to
meet demand as per customer requirement

4. EOQ is a manufacturing technique that seeks to keep the amount of materials at a desired
level while incurring the least amount of expense.

5. JIT seeks to supply clients with the proper kind and quantity of stocks at the proper
moment.

6. To prevent shortages and additional expenditures, EOQ has a fixed amount of material in its
inventory and has a reorder level where it needs to be renewed.

7. The goal of JIT is to meet customer demand as quickly as possible while wasting the
fewest amount of resources, time, and materials possible.

8. This above techniques are used to lower expenses and boost business profitability.

Finally this company can adopted this EOQ method in maintaining of Inventory in order to
reduce risk and maintenances of inventory at certain level and met the customer needs and
wants since it is an continuous process instead of going with just in time method of inventory.

41
 DATA ANALYSIS
1. There is a associate between Sales and Revenue

Variables Pearson Correlation Sig.(2 tails) N

Sales and Revenue .954 .012 5

The 0.05 level of significance for correlation (2-tailed).

Interpretation

The relationship between sales and revenue is 0.954, as shown in the previous table. The
correlation significant level was 0.05 and the significant level for this sales and revenue was
0.012, showing a positive correlation between the two variables.

2. There is a associate between sales and Inventory

Variables Pearson Correlation Sig.(2 tails) N

Sales and Inventory .992 .001 5

Interpretation

According to the following table, there is a 0.992 correlation between sales and inventories. This
shows that there is a positive connection between sales and inventory, with a correlation
significant level of 0.05 and a significant level of 0.01 for these sales and inventory, respectively.

There is a associate between Sales, Revenue and Inventory

Control Variables revenue inventory

Correlation 1.000 -.327

revenue Significance (2-tailed) . .673

df 0 2
sales
Correlation -.327 1.000

inventory Significance (2-tailed) .673 .

df 2 0

From the above table we found that correlation between sales and revenue is 1.00. This indicates
that there is a Perfect Positive Correlation between two variables between sales and revenue and
significant level for this sales and revenue was .673 and in same way they is there Negative
correlation between sales and Inventory is -0.327 and at significant level at 0.673 at level of
0.05.
42
 REGRESSION ANALYSIS

1. Inventory

Years Period Inventory

2018 1 907
2019 2 909.4
2020 3 1136.4
2021 4 1409.6
2022 5 1427

Below table shows the maintenance of Inventory and Funds to spent in the future year

2023 6 1619.94
2024 7 1773.96
2025 8 1927.98

Inventory y = 154.02x + 695.82

R² = 0.9768
2500
2000
1500
1000
500
0
1 2 3 4 5 6 7 8

Interpretation

From the above table and graph it shows the Inventory maintainces and funds to spend on
further year with the help of trendline and r-square we predict the future three year inventory
funds like in the year 2023- 1619.94 cr , 2024- 1773.96 cr. 2025- 1927.98 cr. It shows there is
a constantly increases and funds allocation or cashinflows from business activity are regular
or efficient

2. Current Assets

Years Period Current Assets

2018 1 3628
2019 2 3637.6
2020 3 4545.6
2021 4 5638.4
2022 5 5708
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 Below table shows the Flow of Current Assets and Funds to spent in the future year

2023 6 6479.78
2024 7 7095.86
2025 8 7711.94

Current Assets y = 616.08x + 2783.3

R² = 0.9768
10000
8000
6000
4000
2000
0
1 2 3 4 5 6 7 8

Interpretation

From the above table and graph it shows the Curent Assets and funds to spend on further year
with the help of trendline and r-square. we predict that future three year Current assets funds
like in the year 2023- 6479.78 cr , 2024- 7095.86 cr. 2025- 7711.94 cr. It shows there is a
constantly increases and funds allocation or cashinflows from business activity are regular or
efficient.

3. Fixed Assets

Years Period Fixed Assets

2018 1 1209
2019 2 1552
2020 3 4417
2021 4 4539
2022 5 5092

Below table shows the Flow of Fixed Assets and Funds to spent in the future year

2023 6 6587.7
2024 7 7663
2025 8 8738.3

44
 Fixed Assets y = 1075.3x + 135.9
R² = 0.9635
10000

8000

6000

4000

2000

0
1 2 3 4 5 6 7 8

Interpretation

From the above table and graph it shows the Fixed Assets and funds to spend on further year
with the help of trendline and r-square. we predict that future three year Fixed assets funds like
in the year 2023- 6587.7 cr , 2024- 7663 cr. 2025- 8738.3 cr. It shows there is a constantly
increases and funds allocation or cashinflows from business activity are regular or efficient.

4. Sales

Years Period Sales

2018 1 6815
2019 2 7251
2020 3 9637
2021 4 11602
2022 5 12425

Below table shows the Flow of Fixed Assets and Funds to spent in the future year

2023 6 14217.3
2024 7 15774.4
2025 8 17331.5

45
 Sales y = 1557.1x + 4874.7
R² = 0.9902
20000

15000

10000

5000

0
1 2 3 4 5 6 7 8

Interpretation

From the above table and graph it shows the Sales for further year with the help of trendline
and r-square. we predict that future three year Sales like in the year 2023- 14217.3 , 2024-
15774.4. 2025- 17331.5 . It shows there is a constantly increases in sales.

46
 CHAPTER – 05

Findings, Suggestions and Conclusion

Summary of Findings:

1. During the project period in Big Basket company, I came to know about the company and
how they going to manage inventory by using Just in time inventory technique and effectively
provide service to customer end by meeting the demand as timely.

2. The company is going to store the inventory more on FMCG products like Food grains, Oil,
Masala, Household Products, Healthcare Product, Beauty & Hygiene, Beverages things.

3. The company using Just in time methods in inventory control because it results in providing
quality products and eliminates the waste.

4. The inventory turnover ratio during the year 2020 was high that is 16.45 times and during the
year 2021 was low that is 11.40times due to more number of average inventories maintained by
the company.

5. The Assets Turnover Ratio during the year 2021 was high that is 0.821 times and during the
year 2020 the company had efficiently utilised the available assets was low to 0.799 times.

6. The Working Capital Turnover Ratio in the year 2021 is 3.135 times where it is high in
expenses, company could meet its day-to-day expenses but during the year 2020 it is 2.93 times
which shows that the company was able to meet its day-to-day expenses and its providing
service process.

7. It is found that if the company implements EOQ method then it can meet the demand even at
high levels by calculating the optimal order or quantities of each item of inventory that are to be
maintained to give service according to the demand.

8. If company uses This Economic order Quantity method then they have to maintenance with
ordering cost and holding cost

9. Even the Big basket company is using CCM Model Cash Collection Model. In that model
they were going to collect cash from Hub members by CST (Customer service Team) and they
were going to deposit respective bank ( KMB Bank)

10. At the end they were collect cash records with the help CS Team and Bank Transaction post
ledgers to Revenue accounts.

47
Suggestions:

1. The inventory management Technique should be highly focused than profit making motives
by the company.

2. The company has to maintain consistency with regard to inventory Management and Storage
of Goods.

3. The company should be able to tackle the problems regarding the investment made on the
inventory, Regular follow up procedure helps to control the delivery lead time with regard to
the purchase orders placed.

4. This company can implement both the methods (EOQ and JIT) to manage its costs and meet
the demands at various levels.

5. They need to take decision on operational activity.

6. They can extends due date for suppliers payment.

7. To increase their sale they have to increase their network.

8. Company should reduce delivery charge, so that customer are more attracted toward website.

9. They can implement the first in first out method to control inventory and provide service to
customer as for certain demanded products.

48
Conclusion:

The Inventory Management in Big Basket Company they plays an important or vital role in the
company where it can provide the quality products and meet the customer requirements. The
company uses Just In Time method for meeting its demand where it starts give service only
when the actual order is received which will help in eliminating the costs like carrying cost and
also helps in eliminating the wastage that occurs due to over stocking and it increases the
customer value with the decreased inventory and lowering the cost of production.

Efficient and effective inventory or stock management is essential for any business where it
enables to operate in a systematic manner. Therefore, I would like to conclude that the company
has adopted suitable inventory technique with procurement analysis and as been providing good
quality products to customer at door step and they have good back end team in the form of
collecting cash and deposit same day and post to revenue reports. They have adopted electronic
data interchange in order to analysis the future storage of inventory as per customer needs and
want s.

49
Bibliography

 https://www.bigbasket.com/
 https://www.zaubacorp.com/
 http://economictimes.indiatimes.com/topic/BigBasket
 https://www.linkedin.com/company/bigbasket-com/?originalSubdomain=in/
 https://www.siasat.com/do-fresh-to-home-licious-foods-big-basket-sell-halal-certified-
meat-2310534/
 https://www.marketing91.com/swot-analysis-big-basket/
 https://economictimes.indiatimes.com/tech/funding/bigbasket-gets-rs-1000-crore-
investment/articleshow/90806356.cms?from=mdr/
 https://newspatrolling.com/bigbasket-company-profile/

50
ANNEXURE

51