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    1. COMPANY BACKGROUND

    Spritzer Berhad (Spritzer) is an investment holding company operates in the

    manufacturing of natural mineral water, carbonated flavored water, distilled water, drinkingwater and non-carbonated flavored water. t is engaged in the sale of bottled water and other 

    consumer products. !he company classifies its business operations into three reportable

    segments namely, manufacturing, trading and others. Spritzer also provides water dispenser and

    water issues services to its customers. !he company operates through its si" wholly-owned

    subsidiaries namely, #huan Sin Sdn. Bhd., $olden %&! ndustries Sdn. Bhd., #huan Sin #actus

    Sdn. Bhd., %&! 'aster Sdn. Bhd., ngenet Sdn. Bhd., and idro*inamik Sdn. Bhd (S%+!&+ 

    B&+*, /0).

    Spritzer is the largest bottled water producer in 'alaysia. Spritzer Berhad was founded

     by *atuk 1im 2ok Boon in /343. e started to bottle mineral water in a small set-up in !aiping,

    %erak. 5n 6 'ay /337, Spritzer was incorporated as a private limited company as Spritzer Sdn

    Bhd before the #ompany was converted into a public limited company on // 8uly /339 as

    Spritzer Bhd. Spritzer Bhd was listed on the nd Board of the 2uala 1umpur Stock &"change. t

    is also an investment holding company and on / September , Spritzer was listed on Bursa

    'alaysia. Spritzer Bhd $roup also consists of si" wholly-owned subsidiary companies which are

    #huan Sin Sdn Bhd, $olden %&! ndustries Sdn Bhd, #huan Sin #actus Sdn Bhd, %&! 'aster 

    Sdn Bhd, ngenet Sdn Bhd and idro *inamik Sdn Bhd as at 7/ 'ay /9

    !he brand, S%+!&+, 'alaysia bestselling natural mineral water is produced and

     bottled out of a vast 7 acre site with plentiful natural mineral water resources in an

    environmentally friendly site surrounded by lush tropical rainforests greenery, away from

     pollution. !heir production lines are completely automated and e:uipped with the state-of-the-art

     bottling technologies. !he plant is manned by highly :ualified professionals such as food

    technologists, chemists, microbiologists and engineers (Sidel, /0)

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    /./.  ndustry Background

    Bottled water beverage is a part of everyday life for millions of mericans. %er capita

    consumption in the ;nited States now tops fifteen gallons per year with sales over Brown, n.d.)

    !he bottling and commercialization of natural mineral waters first began in &urope in the

    mid-/6th century, with mineral water from Spa in Belgium, from ?ichy in =rance, from

    =errarelle in taly and pollinaris in $ermany. t is said that the first mechanical corking

    machine was invented in =rance in /49 and bottling plants emerged throughout the continent by

    the late /3th century. s such, other &uropean countries also adopted the trend of bottling waters

    from the source, including 'alvern, &ngland@s first bottled water in /40/, $ermany@s

    ppolinaris in /43 and the talian mineral water, San %ellegrino in /433. Bottled waters were

    sold as medicinal treatment in pharmacies until the th century (&=BA, /6)

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    /..  ssue the company face

    n this section, it will be discussed about aspects of issues relating to Spritzer Berhad,

    which is financial and non-financial issues.

    1.2.1. Financial issue

    a. Wealth and Pr!it Ma"i#i$atin

    !he profitability ratio from the table / indicates the inability of Spritzer to meet

    the average local value and also show the decreasing pattern for the net profit percentage

    within /7-/0 although it still above the local average in the industry of bottle water 

    industry or beverage industry. Business that always did a profit and provide more benefit

    to shareholders than make a loss become the first priority in the shareholders heart

    (ddae et al., /7). !he first issue related with this company is how to portray the

    wealth and profit making for owners of Spritzer #ompany normally known as

    shareholders. ddae and his friends, (/7) also stated through their study that the term

    terms firm@s value@, shareholders@ value@, shareholders@ wealth@ and profitability@

     because these terms establish the methods that paint wealth construction for shareholders.

    !hapa, (/7) stated on his study that the food and beverage industry has

    recorded growth even during the economic strike in comparison to other industries. nd,

    due to large populations and rising per capita income, the industry is e"pected to grow in

    future as well. ;nfortunately the ability of Spritzer #ompany to pay its short term

    obligations in full and on time are lower than most others 'alaysia companies in the

    same industry as stated on table /. f the short term responsibilities they cannot perform

    how they afford to meet shareholders re:uirement by create and provide more profit and

     benefit known as profit and wealth ma"imization.

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    !his inability might be due to problem of rising fuel price in local and global.

    !herefore this cluster of problem need to be solved one by one then probability to solve

    the problem of inability to ma"imize the wealth and profit to shareholders become the

    reality rather than become fantasy. !his already forecasted by !hapa, (/7) in his

     previous study that the industry may face problems due to price hikes of fuel and recent

    droughts in some countries.

    %. Di&idend

    ccording to the Spritzer annual report, a first and final dividend of 4C or 9. sen

     per share, under the single tier system, declared in respect of the previous financial year 

    and dealt with in the previous directors@ report was paid by the #ompany during the

    current financial year. !he directors have proposed a first and final dividend of /C or 

    0. sen per share, under the single tier system, in respect of the current financial year.

    !his dividend is subDect to approval by the shareholders at the forthcoming. !his

    statement shows that Spritzer need to comply with the in:uiring increment dividend from

    their investor in order to keep them tightly in the organization. Aith the ($oods and

    Services !a" ($S!) implementation and competition from rivals, this company should

    take a better strategy to secure their market.

    c. Mar'etin( strate()

    Spritzer do not intensively promote their product at the moment because of the

    thinking where they are already established in the 'alaysia bottles industry. !his

    company seem to have a strong competition with the similar product offer such as Bleu

    drinking water, #actus, Sea 'aster and so on despite these competitor are not listed in the

    main board.

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    2. F*NANC*A+ ANA+Y,*,

    Year *ndustr)

    A&era(e

    *ndustr

    )

    A&era(e

    -&aluatin

    21/

    210

    21

    21+cal3

    21Gl%al3

    CRO,,,-C4*ONA

    +

    4*M-,-R*-

    ,

    O5-RA++

    +*6U*D*4Y

    #urrent +atio /.

    /

    /.

    9

    /.9

    9

    /.E /./ Spritzer F

    ndustry

    %oor %oor

    Guick +atio .3

    /.

    7

    /./

    /. .06 Spritzer Hndustry

    %oor %oor  

    AC4*5*4Y

    nventory

    !urnover 

    9.9

    0

    9.4

    3

    0.E

    9

    0.90 6.60 Spritzer H

    ndustry

    52 52  

    verage#ollection

    %eriod (days)

    /4 / 47 6 9/ Spritzer Hndustry

    %oor %oor  

    !otal sset

    !urnover 

    .E

    /

    .E

    4

    .4

    /

    /./ .60 Spritzer H

    ndustry

    $ood $ood

    +-5-RAG-

    *ebt +atio

    (C)

    9/ 9/ 7/ 70 90 Spritzer F

    ndustry

    $ood $ood

    !ime nterest

    &arned

    9.0

    3

    E.

    4

    /.

    63

    /6./ /0.E SpritzerF

    ndustry

    %oor %oor  

    PROF*4AB*+*4Y

    $ross %rofit

    'argin (C)

    //.

    /.

    73

    //.

    0

    /.0 09.E SpritzerF

    ndustry

    %oor %oor  

     Iet %rofit

    'argin (C)

    3.0

    3.

    3

    4.3

    3

    E.3 //.7 SpritzerH

    ndustry

    52 52  

    +eturn on

    sset (+5)

    C

    6.4 E.

    /

    E.7

    4.7 E./0 SpritzerH

    ndustry

    52 52  

    +eturn on

    &:uity (+5&)

    C

    //.

    0

    //.

    94

    /.

    04

    /.E9 9.7E SpritzerF

    ndustry

    %oor %oor  

    MARK-4

    %rice &arnings

    +atio

    ./ ./

    /

    ./

    /

    .// E.E9 SpritzerF

    ndustry

    %oor %oor  

    'arketJBook

    +atio

    .E

    4

    /.

    3

    /.

    E

    9./ 9.63 SpritzerF

    ndustry

    %oor %oor  

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    !able /K #ross Sectional in !ime Series nalysis for Spritzer 'anufacturing #ompany

    !able K verage +atio nalysis for Bottle Beverages ndustry

    Year 21 *ndustr) A&era(eCOCA7

    CO+A

    Y-O, F8N ,PR*49-R 21 +cal3

    +*6U*D*4Y

    #urrent +atio /./6 7.7 /.36 /.99 /.E

    Guick +atio /.E .7E /.6 /./ /.

    AC4*5*4Y

    nventory !urnover /.0E 7.9 0./6 0.E9 0.90

    verage #ollection

    %eriod (days)

    .49 7.4 E. 9.74 0.4

    !otal sset !urnover ./ .0 /.79 .4/ /./

    +-5-RAG-

    *ebt +atio (C) 7/ 74 70

    !ime nterest &arned /.00 /.63 /6./

    PROF*4AB*+*4Y

    $ross %rofit 'argin

    (C)

    6 9 7.34 //.0 /.0

     Iet %rofit 'argin

    (C)

    /.64 6.93 6.3 4.33 E.3

    +eturn on sset

    (+5) C

    /.06 7.7 3.E E.7 4.7

    +eturn on &:uity

    (+5&) C

    0.0 7.39 /9.3 /.04 /.E9

    MARK-4

    %rice &arnings +atio .E0 .97 .7 .// ./E

    'arketJBook +atio .0 /.E/ 7.0E /.E 9./

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    Dupont Analysis

     The DuPont system of analysis is used to dissect the rm’s nancial statement and

    to assess its nancial condition. DuPont analysis in turn, provides a means ofdisaggregating ROA into asset turnover and prot margin components to gain

    insight into the underlying drivers of operating protability !auman, "#$%&.

    ROA' (et Prot )argin * Total asset turnover

    +priter substituted into the DuPont -ormula

    ROA' /.01 * #./$' 2.3#1

     This value same as calculated earlier. +priter have a lo4 prot margin 4hich is/.01 but high total asset turnover. This result reasonably good return on total asset.

    )odied DuPont -ormula

    RO5' ROA * -6)

    RO5' 2.3#1 * -6)

    7hich -6) refer to Total asset 8 common stoc9holder e:uity&' 3$$,23/8"$;;%

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    ./. =inancial nalysis &"planation

    2.1.1. Liquidity

    #urrent ratio for Spritzer is /.99 t is less than current ratio for average industry which

    is only /.Et. f compare to global. #ompare to $lobal ndustry average which is /./t,

    Spritzer is better. owever in the :uick ratio which is e"clude inventory show that Spritzer 

    are poor if compare to industry average but better compare to global average. 7C from

    Spritzer current asset come from inventories while 06C come from receivables, which is all

    debt, unpaid transactions, or other monetary obligation owed, by its debtors or customer.

    E3C from total asset are come from receivables, inventories +eceivable account can@t

    convert to cash easily, and inventories are low li:uidity because it will take a time to convert

    from inventories to sales. 5nly /C from total asset can use to fulfill their short term of 

    obligation. t@s important for Spritzer to have enough li:uidity for day to day operation.

    2.1.2. Acti&it)

    Spritzer inventory appears to be in good condition. ts inventory management seems

    to have improved, and in /0 it performed decreasingly from /7 and above industry

    average even though less than global average. s mention before, the firm may be have some

     problems with accounts receivables. verage collection period seems to have crept up above

    industry average which is 6 days and global average 9/ days. *espite li:uidity appears in

    good, receivables account should be investigated. Spritzer total asset turnover increase from

    /7 to /9, however is less than industry average and global average.

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    2.1./. +e&era(e

    Spritzer@s indebtness decrease from /7 to /0 and is currently lower than industry

    average and global average. Spritzer decrease their debtness because in /0 and /6

    growth in economy e"pected to be lower rate. t economic crisis, it better for this company

    to reduce their debt. Spritzer also increase their times interest earned from /7 to /0 but

    still lower than average industry and global industry.

    2.1.0. Pr!ita%ilit)

    Spritzer@s profitability show increasing pattern in gross profit margin but still below

    industry average and global average. owever, it seems Spritzer@s net profit margin decrease

    from /7 to /0 but are better than average industry and global. Spritzer@s +5 and +5&

    increase show is performing is :uite well.

    2.1.. Mar'et

    nvestors@ confidence level was stagnant from /7 to /0. !his ratio also below

    average industry and global average. !he %J& ratio suggest that the firm risk has constant and

    unchanged but the risk is more than ndustry average and global. !he market per book was

    increased over /7 to /0 reflects the firms profitability .t@s show investors e"pect to earn

    high future return as compensation is stable.

    2.1.:. Cnclusin

     

    s e"pected in current economic condition that is economy will be in recession is better for Spritzer to less their financial leverage. Spritzer should also e"amined their 

    receivables account, which is more than 0C from their total asset. s prove by *u%ont

    analysis that +5& is low due to slow collection of accounts receivable but high in total asset

    turnover. Spritzer should consider to decline their time interest earned to has get more debt

    for e"p

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    3.!heories related to the Spritzer Berhad.

    3.1.   Dividend Policy Theory

     Shareholders, which is owner of the company, should be given earning pay out by the firm

     based on dividend policy. %revious studies suggest that investors are not worried with a firm@s

    dividend policy since they can release a portion of their e:uities or portfolio if they do not want

    cash. !his attitude refer to dividend irrelevancy policy. t means any issuance of dividends

    should have little or no impact on firm@s stock price. owever, previous study find that dividends

    affect shareholder wealth as reflected in the intrinsic value of a firm stock has e"isted for many

    decades ( Baker, /0). !hey are three approach to dividend such as residual, stability or 

    ybrid.

    =irms practicing the residual dividend policy choose to rely on internally e:uity to

    finance any new proDects. fter all proDect capital re:uirements are fulfill, dividend payment can

     be paid out of the residual e:uity. !he decision in dividend will consider balance in firm@s debt or 

    e:uity ratio before making any dividends companies usually attempt to maintain balance in their 

    debtJe:uity ratios before making any dividend distributions, deciding on dividends only if there

    is enough money left over after all operating and e"pansion e"penses. &"ample if the Spritzer 

    e"pand their products to bicarbonate drinking water and the proDect achievable so the dividend

    should pay based on the proDect profit.

     !he superior of the dividend-residual model is that with capital-proDects budgeting, the residual-

    dividend model is useful in setting longer-term dividend policy. %erhaps, the disadvantage is that

    dividends may be unstable. &arnings from year to year can change determine by business

    achievements. t is hard to maintain stable earnings and thus a stable dividend. +esidual-

    dividend model is useful if the company have long-term planning, despite many company do not

    use the model.

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    *ividend stability policy depend on fluctuations on business conditions significant with

    residual policy. !he most determinants of dividend involve earning which is stability as well as

    the level of current and e"pected future earning and the pattern of past dividends ( Baker >

    SaDuta , /0) Aith this policy, :uarterly dividends are set at a fraction of yearly earnings.

    nvestors can reduce uncertainty and provide them income if the firm use this policy. =or 

    e"ample, Spritzer will adDust yearly earning for every :uarter. !his policy are always attempting

    to share earnings with shareholder rather than searching for proDect to invest e"cess cash.

    !he last approach is a merger between the stable and residual dividend policy. !his

     practicing need companies to view the debtJe:uity ratio as a long-term rather than a short-term

    goal. n 'alaysia markets, companies that pay dividends usually use this approach. s a firm

    e"perience in business cycle fluctuations, they will set a dividend, which is set as a relatively

    small portion of yearly income and can be easily maintained. Spritzer use this approach on given

    dividend to their shareholder. f income e"ceeds than their target, companies who offered this

    approach will offer another e"tra dividend.

    /.2. A(enc) 4her)

    gency theory defined as the relationship between the principal, who are delegate their 

    authority and responsibility to the agent to take the decision on their behalf (Bendickson et al,

    /6). +eferring to the case study, there is a relationship between shareholders who are the

     principals and managers who are the agent will decide on behalf the shareholders for all the

    responsibility and authority given to them.

    Spritzer had an obligation to meet their investor in:uiring in deciding the dividends

     percentage, positive perception towards the company performance in the market and so on. !his

    should be the elements for the Spitzer managerial level focus on as the agents towards their 

     principle which is the investors. !his agency theory actually had been used in wide application

    such in accounting, economic, finance, marketing, political science, organizational behavior and

    sociology (ngwin, /0).

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    /./. Mar'etin( Mi" 4her) 0 P;s Mdel3

    9 %@s 'odel in the 'arketing !heory used to help improve the profitability of the

    company rather than other theory especially related with the financing matters. !his theory

    actually help in increasing the profit and wealth in order to satisfy all the needs and re:uirementof shareholders in the company as Spritzer #ompany. 'arketing not only advertise and sell the

     products but it is actually is a process develop strong relationship between business firm with

     business stakeholders especially customers to create the value to customer and capture it from

    them as the return for both parties (mstrong and 2otler, //).

    n order to provide high value to customers and receive high return there some

    strategies need to apply by the firm. mstrong and 2otler (//), defined the strategy in

    marketing is logical matters in the marking that can create a good relationship between company

    and customers to achieve a profit. !he company should include marketing mix made up of four 

    factors under its control- product, price, place and promotion. Both of them defined marketing

    mi" is the set of controllable tactical marketing tools that the firms blends it to produce the

    response it wants in the target market.

    7.7./.  %roduct

    %roduct is categorize under tangible like a mobile phone, and intangible like a service

    like health treatment. 'ost of the researchers identified product must be positioned based on

    :uality, design, brand name, functionality, features, benefits and price conscious (hmed, S., >

    +ahman, '.,/0). ccording to Spritzer #ompany its product is tangible because it touchable

    in physically then it is distinguished by the classifications position as mentioned by hmed >

    +ahman, (/6).

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    7.7..  %rice

    Based on the economics principle, price is a Lvalue of e"changeM while according to

    marketing principles, it defined as amount of money charged for a product for the benefit of 

    having or using the product (hmed, S., > +ahman, '.,/0). Spritzer #ompany allocate some

    amount value for their products as the e"change with money of customers.

    7.7.7.  %romotion

    %romotion means activities that communicate the merits of the product and persuade

    target customer to buy it (mstrong and 2otler, //). Spritzer also involved in various activities

    to influence their potential customers to buy all their products. !he promotional tools like

    advertising, public relations, sales promotion, direct marketing, and personal selling use to

    communicate effectively the benefit of its products or services to its customers ( Ahmed, S., &

    Rahman, M.,2015).

    7.7.9.  %lace (*istribution)

    !he suitable distribution channel is very important to suit with culture of target

    customer. !his is due to create positive relationship between sales and consumer primarily

    through face to face meeting and products distribution channel (2e > 1i, /0). hmed >

    +ahman, (/0) states place or distribution channel is the way to distribute the product to the

    customer such as using any types of vehicles as a way of transporting the product. !his is same

    with the Spritzer #ompany they provide lorry as the vehicle of transporting to deliver all their 

     products to their potential buyers.

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    0. R-COMM-NDA4*ON

    0.1. *ncreasin( c#

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    Scandals happen in global companies like &nron, !yco nternational, delphia,

    Aorldcom because lack of corporate governance control. 1ack of corporate governance will

    lead to conflicts interest among the actor of corporation. #orporate governance is the process

    and mechanism how corporation control and direction. !hough much is made of the fact that

    the first duty of directors is to ma"imize shareholder value the re:uirement in law is at best

    indeterminate and at worst unenforceable (!udway, 6). owever in the real business

    situation the directors always seek for their interest.

    $overnance mechanism use by board of directors can help bridge the value added in

    economy and and market values will lead to increase shareholder value ('ir> Seboui, 4).

    Spritzer@s shareholder should implement corporate governance to enhance economic valueadded and increase shareholder value. *irection and controlling method to Spritzer such as

    auditing, Board 'eeting will lead to transparency in Spritzer financial position.

    dditionally, management as agent to shareholder should disclose any matter or 

     problem facing by them to Spritzer@s shareholder. $overnance problem arise because

    shareholder ask to get more earnings from their investment. owever, the shareholder should

    realize that invest in consumer good is less risky. !he management should let their 

    shareholder known well about this matter. ny increasing in dividend will reflect Spritzer@s profit margin since the net profit margin in decreasing trend.

    0.0. ,tren(then the #ar'etin( strate(ies

    Some of the way to strengthen the marketing strategies in Spritzer #ompany is by

    applied the marketing theory in integrated all the main 9 factors (9 p@s model) in the

    marketing activities as the solution to the issues of inefficiency of the company and other 

    issues related. Spritzer advisable to produce variety of product to compete with otherscompetitors in the market by launch new product rather than only focus on the mineral water 

     bottle. hmed > +ahman, (/0) stated that customer more satisfy through product

    differentiation, :uality and follow the slamic  shariah laws (free harmful and unethical

     practices). By doing all these normally could influence the customer to buy and repeat the

    same product.

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    Spritzer product categorized under perfect competition market because there are no

    differentiation then other competitors (hmed > +ahman, /0).!hen we also suggested to the

    Spritzer #ompany to create brand positioning  to attract the mind of their customer to know and

    remember the company through their uni:ue identity. !his already did by Aong 1o 2at

    #ompany in positioning their product by introduce herbal tea drink (Shanshan, /0). Besides

    that, last time in 6 %epsi#@s #&5 already mention that Lnd we have to modify our product

    and refocus to #ola soft drinks to gain their market (#hong > Iik ashim, /6). !hese two

    e"ample literally show that position in product brand become the key player to improve the

     performance of the company.

    0.. -nhancin( the c#

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    R-F-R-NC-,

    Ali 5l )ir, +. +. "##/&. =orporate >overnance and Relationship bet44en 5?A and=reate +haholder ?alue. International Journal of Business In Society , %

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