Fra G6 Tatacoffee

8/10/2019 Fra G6 Tatacoffee

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INDEX


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Acknowledgement ..................................................................................... 3

1. Company Introduction: .................................................................... 4

2. SWOT snapshot: ............................................................................... 5

3. SWOT - Analysis ............................................................................... 5

a. Strengths ........................................................................................ 5

b. Weakness ....................................................................................... 6

c. Opportunity ................................................................................... 6

d. Threats ........................................................................................... 7

4. Financial Statements ....................................................................... 8

i. Balance Sheet ................................................................................ 8

ii. Profit And Loss Statement ........................................................... 85. Ratio Analysis ................................................................................... 9

a. Profitability ratio ......................................................................... 10

i. Net Profit Ratio: .......................................................................... 10

ii. Operating profit ratio: ................................................................. 10

iii. Return on equity ......................................................................... 10

b. Liquidity Ratio .............................................................................. 11

ii. Liquid ratio .................................................................................. 11

c. Solvency Ratio ............................................................................. 12

i. Debt Equity ratio ......................................................................... 12

ii. Operating coverage ..................................................................... 12

d. Turnover Ratio ............................................................................. 12

i. Inventory turnover ratio .............................................................. 12

ii. Inventory holding period ............................................................. 12iii. Debtor turnover ratio ................................................................... 13

iv. Average collection period............................................................. 13

v. Credit turnover ratio .................................................................... 13

vi. Average payment period .............................................................. 14

i. Dividend yield ratio ...................................................................... 14


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ii. Dividend payout ratio .................................................................. 14

iii. Price earnings ratio ...................................................................... 15

6. Vertical Analysis ............................................................................. 15

i. Balance Sheet ............................................................................... 15

ii. Profit And Loss Statement ........................................................... 17

j. Horizontal Analysis ........................................................................ 18

i. Balance Sheet ................................................................................ 18

ii. Profit And Loss Statement ............................................................ 19

AcknowledgementWe would like to take this opportunity to express our sincere thanks and

regards to our Professor, Puja Aggarwal, for her exceptional guidance

throughout the project as well during the course of the subject Financial


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Reporting and Analysis(FRA). Her teachings shall remain deeply rooted

within us and will help us in all our endeavors.

We would like to thank all the department point of contacts and students

who took precious time out of their busy schedules and helped us in this

project by providing relevant information.

Last but not the least, we would like to thank friends and family of all ofus who directly or indirectly helped us to complete this project report.

It goes without saying that we do not mean lack of gratitude for those,

whom we may have omitted in this brief acknowledgement.

1. Company Introduction:The company was officially formed in 2000, but its operations date back

to 1922. With 19 coffee estates in southern India, the company is

Sl. Roll No. Name

1 140102065 Krishna Ravi Shankar Karanam

2 140101026 Ankush Kunzru3 140103066 Harneet Singh Bahri

4 140101139 Saiyam Arora

5 140101144 Sanchita Krishna

6 140103166 Sudheshna Sampathkumar

7 140103169 Suneet Raj Gantayat


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arguably one of the largest manufacturers and is the second exporter ofcoffee. The company has won several awards for its social initiatives.

Quick Facts

Revenue INR 650.92

Profit(PAT) - INR 106 crores

Production - 145.7 million bags

Cultivated land - 8037 hectares

2.SWOT snapshot:

Strengths

Brand value Strong presence

Exclusive partnerships

Largest integrated coffee

business in the world

Opportunities

New markets exploration

Market competition

consolidation

No significant competitor

in India

Potential for growth with

introduction of state of the

art machinery

Rain water harvesting

Weakness

Weather dependence

Major environmentalchallenges in Brazil

Price-demand fluctuations

Fall in harvested crop

Threats

Dumping in international

market

ForEx loss

Workforce issues

Crop diseases

3. SWOT - Analysis

a. Strengths


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Tata Coffee enjoys a good brand value which is boosted by several

international standardizations for quality and its processes

Strong presence across multiple geographies makes the demand

resistant to local downturns (as witnessed recently in the Russian

markets)

Recent tie up with Starbucks India has been helpful in promoting

products via the use of Tata coffee beans in the products sold by

Starbucks India

Tata coffee is the largest integrated coffee business in the world.

They stretch across growing, curing, to manufacture and marketing

of value added coffee products.

Better business prospects, after consolidation in Japan.

Starbucks India is also helping Tata Coffee with process know-how

b. Weakness

Significant dependence on Indian temperature conditions and

rainfall for growing the product. The product quality gets affected

and becomes prone to diseases with a variance in temperature Significant environmental challenges in Brazil has lead to a

degradation of the soil quality leading to significant fall in current

and potential future production levels

Reduction in output in the last financial year lead to a deficit

situation in the Closing stock value(buffer stock) across the market

in Brazil. This lead to a significant rise in the prices of the Arabica

beans, adversely affecting demand

Poorer production levels due to poor rainfalls in the past year in

India to the tune of 30%

c. Opportunity

Expansion into new markets like the middle east will lead to better

business prospects, revenue and eventually profits


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With a significant increase in the price in the coffee beans in Brazil

there has been a reduction in competition in instant coffee

business due to their lack of ability to stay afloat

Potential for growth with the introduction of state of the art

machinery at Kushalnagar plant for coffee curing which has

brought about better efficiency

The company has started rain water harvesting projects to help

bridge the gap between water available vs water required.

d. Threats

Dumping from Ecuadorian players leading to market loss in

certain countries

As Tata Coffee works across several geographies and its

transactions Dependency on dollar valuation for profitability(INR

31 Lakhs)

The company faces a ever rising challenge of lack of skilled

workers. To the add to the aging of the existing labour is a concern

point for future operations

Threat to output with rising White stem borer incidents in

Arabica crop due to changing weather in the Coorg district, which

is one of the largest plantations for Tata Coffee


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4. Financial Statements

i. Balance Sheet

Particulars31-Mar-13 (In

lakhs)31-Mar-12(In lakhs)

LiabilitiesEquity And Liabilities

Share Capital 1867.7 1867.7

Reserves And Surplus 50577.64 43858.02

52445.34 45725.72

Non Current Liabilities

Long Term Borrowings 4411.87 2416.8

Deferred Tax liability 721.79 1056

Other Long Term Borrowings 168.2 149.02

Long Term Provisions 2390.48 1521.1

7692.34 5142.92Current Liabilities

Short Term Borrowings 5530.66 1662.27

Trade Payables 2913.73 1237.8

Other Current Liabilities 6814.42 6811.41

Short Term Provisions 4431.62 5086.13

19690.43 14797.61

Total Liability 79828.11 65666.25

Assets

Non Current Assets

Fixed Assets 24211.9 22912.36

Capital Work In Progress 5384.29 228.67

Non Current Investments 14563.44 14564.09

Long Term Loans And Advances 1999.76 4180.77

Other Non Current Asset 8.49 19.03

46168.5 41904.94

Current Assets

Inventories 15920.44 12395.28

Trade Receivables 4959.95 4434.72Cash And Bank Balances 2655.33 1407.05

Short Term Loans And Advances 10189.22 5416.91

Other Non Current Assets 234.67 107.35

33659.61 23761.31

Total Asset 79828.11 65666.25

ii. Profit And Loss Statement


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ParticularsFY2013-14(in lakhs)

FY2012-13(in lakhs)

Income

Revenue from Operations 65,091.63 59,807.96

Other Income 3,518.07 2,220.68

Total Revenue 68,609.70 62,028.64

Expenses

Cost of Material Consumed 20,936.80 18,968.94

Purchase of Stock-in-Trade 3,396.10 3,137.25

Change in Inventories of Finished

Goods/Work-in-progress/ stock-in-

trade -3,054.62 -1,584.39

Employee Benefits Expense 13,823.92 12,022.99Finance Costs 491.31 454.96

Depreciaton and amortization

expense 2,050.74 1,477.76

Other Expenses 16,142.28 13,477.45

Total Expenses 53,786.53 47,954.96

Profit before exceptional items and

taxes 14,823.17 14,073.68

Exceptional items 0 -958.78

Profit before tax 14,823.17 13,114.90

Tax expenses

Current tax 3,860.12 4,188.00

Excess Tax provision written back -669.8 -108.15

Deferred tax 975.84 -334.21

Total 4,166.16 3,745.64

Net Profit for the Year 10,657.01 9,369.26

5. Ratio Analysis

Ratio analysis is a tool which helps in making comparisons anddraw relationships between components of financial statements.


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a. Profitability ratio

i. Net Profit Ratio:

It measures the amount of net profit earned per each rupee of revenue.

An increased net profit ratio indicates a greater overall efficiency of the

business. The ratio has increased even though the net sales has gone up,implying the Net profit has increased more than the revenue.

ii. Operating profit ratio:

Operating profit ratio indicates operational efficiency of the business.

This could be on the account of increased profits or reduced costs. A

greater OPR shows that the company has greater operational efficiency.

iii. Return on equity

RoE indicates the profits generated as a result of the shareholders fundsthat have been invested. The increase in this ratio indicates betterreturns for the shareholders of the business on their capital invested.

Ratio Formula 2013 2012

Net Profit ratio PAT/Netrevenue fromOps

16.37% 15.67%


Operating profitratio

EBIT/Netrevenue fromOperations

23.53% 22.68%


Return onequity

PAT/Shareholdersfund

17.65% 17.87%

Ratio Formula 2013 2012Return on EBIT/Shareholders 24.01% 23.87%


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iv. Return on capital employed

ROCE ratio shows the firms profitability as a proportion of the funds

that have been invested. The funds invested have increased by almost

17% during the period. However the profitability has gone up by 24%

showing better returns on the capital.

v. Return total assets

This ratio shows the utilization of the assets as a function of the

profits earned by the company. Then increase in the ratio on an

increased base shows a better utilization. This has been helped by an

almost 20% increase in profits YoY.

b. Liquidity Ratio

i. Current ratio

The current ratio indicates the liquidity available in the company. The

CR of the company has improved however this has been on the account

of greater Stock levels and an increase in short term advances. Which

may not be a desirable position for the firm.

ii. Liquid ratio

This test helps in assessing the companys ability to pay its current debts

as they are due. There has been a marginal increase in this as a result ofbetter cash balance.

capitalemployed

fund + Long termborrowings


Return on total

assets

PAT/Total

Assets

12.06% 11.74%


Current ratio CurrentAssets/CurrentLiabilities

2.01:1 1.71:1


Return on totalassets

PAT/TotalAssets

1.03:1 0.9:1


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c. Solvency Ratio

i. Debt Equity ratio

This ratio has improved as firm has a larger equity reserves and surplusbase in comparison to the previous year.

ii. Operating coverage

This ratio indicates the company ability to pay its interest obligations. A

very high ratio is a favourable position to be in implying that the firm can

take more debt.

d. Turnover Ratio

i. Inventory turnover ratio

This measure helps in assessing the number of times the inventory is

being sold during a period. This ratio is better than several competitors.

ii. Inventory holding period

Ratio Formula 2013 2012Return on totalassets

PAT/OwnersEquity

5.58:1 8.41:1

Ratio Formula 2013 2012Interestcoverage ratio

EBIT/Interestobligation

31.17:1 29.82:1


Inventoryturnover ratio

COGS/Avg.Inventory

1.08:1 1.29:1


Inventoryholding period

365/ITR 338.2 days 283.1days


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vi. Average payment period

It is the time period taken to pay back the suppliers of goods.A lower

value indicates that it is paying off its debts faster. This may be due to the

fact that it has strong financials or it might be unable to get long termcredit from suppliers.

The average payment period decreased from 48.109 days to 35.711 days

.Looking at the financial statement company looks in a strong position to

pay off its debt and this is why there is a decrease in the number of daysfor payment period.

e. Investment valuation ratios

i. Dividend yield ratio

*Market prices as on 14 Aug. 2013 and 14

It represents the current cash return to shareholders. The dividend yield

increased from 1.25% to 1.45 % this year making the stock moreattractive for investment purpose.

ii. Dividend payout ratio

The ratio tells how much company is paying its shareholders out of the

earnings made by it. The ratio has decreased from previous year

indicating the company is sharing fewer amounts of earnings as dividendas it did in the previous year.


Averagepayment period

365/creditturnover ratio

35.71114 48.10922


Dividend yield

ratio

Dividend per

share/Marketprice per share

1.45 1.25

Ratio Formula 2013 2012Dividend payoutratio

Dividend pershare/Earningsper share

22.783 24.9203


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iii. Price earnings ratio

*Market prices as on 14 Aug. 2013 and 14

The PE ratio tells how much an investor is willing to pay per rupee for

companys earnings. A lower value of PE would make a share more

attractive to invest in as higher returns and less of risk is assumed.PE

ratio of the company decreased from 20.175 to 16.018 in FY13-14indicating that stock is more attractively priced to invest in.

6. Vertical Analysis

i. Balance Sheet

Particulars31-Mar-13(in lakhs) Percentage

31-Mar-12(in lakhs) Percentage

Liabilities

Equity And Liabilities

Share Capital 1867.7 2.34% 1867.7 2.84%Reserves And Surplus 50577.64 63.36% 43858.02 66.79%

52445.34 65.70% 45725.72 69.63%


Long Term Borrowings 4411.87 5.53% 2416.8 3.68%

Deferred Tax liability 721.79 0.90% 1056 1.61%

Other Long Term Borrowings 168.2 0.21% 149.02 0.23%

Long Term Provisions 2390.48 2.99% 1521.1 2.32%

7692.34 9.64% 5142.92 7.83%

Current LiabilitiesShort Term Borrowings 5530.66 6.93% 1662.27 2.53%

Trade Payabales 2913.73 3.65% 1237.8 1.88%

Other Current Liab 6814.42 8.54% 6811.41 10.37%

Short Term Provisions 4431.62 5.55% 5086.13 7.75%

19690.43 24.67% 14797.61 22.53%

Total Liabilities 79828.11 100.00% 65666.25 100.00%

Assets

Non Current Assets

Fixed Assets 24211.9 30.33% 22912.36 34.89%Capital Work In Progress 5384.29 6.74% 228.67 0.35%


Price earningsratio

Market price ofshare/Earnings

per share

16.01823 20.17544


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ParticularsFY2013-14(in lakhs) Percentage

FY2012-13(in lakhs) Percentage

IncomeRevenue from Operations 65,091.63 94.87 59,807.96 96.41991

Other Income 3,518.07 5.13 2,220.68 3.580088

Total Revenue 68,609.70 100.00 62,028.64 100.00

Expenses

Cost of Material Consumed 20,936.80 30.52 18,968.94 30.58094

Purchase of Stock-in-Trade 3,396.10 4.95 3,137.25 5.057744

Change in Inventories of

Finished Goods/Work-in-

progress/ stock-in-trade -3,054.62 -4.45 -1,584.39 -2.55429

Employee Benefits Expense 13,823.92 20.15 12,022.99 19.38297

Finance Costs 491.31 0.72 454.96 0.733468

Depreciaton and amortization

expense 2,050.74 2.99 1,477.76 2.382383

Other Expenses 16,142.28 23.52769 13,477.45 21.72779

Total Expenses 53,786.53 78.39 47,954.96 77.31

Profit before exceptional

items and taxes 14,823.17 21.61 14,073.68 22.689

Exceptional items 0 0 -958.78 -1.54571

Profit before tax 14,823.17 21.61 13,114.90 21.1433

Tax expenses

Current tax 3,860.12 5.63 4,188.00 6.75172

Excess Tax provision written

back -669.8 -0.97625 -108.15 -0.17435

Deferred tax 975.84 1.422306 -334.21 -0.5388

Total 4,166.16 6.07 3,745.64 6.038565

Net Profit for the Year 10,657.01 15.53 9,369.26 15.10473

Total expenses were 77.3%of revenues in fy12 wheras, they were 78.39%

of the revenues in fy13 indicating expenses increased more in

comparison to the revenues. Purchases in comparison with revenue


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remained almost at same levels. Profit before tax in comparison to the

revenues has also remained at same levels. This happened due to the fact

that there was an exceptional item in fy12 which brought down the profit

ratio to 21.5%.The current taxes as compared with revenues declined this

year from 6.75% to 5.63%.However the overall tax level remained the

same as there was an increase in deferred tax payments from -.5%of

revenues to 1.4% of revenues.Net profit also remained as compared torevenues was in line with previous year.

j. Horizontal Analysis

i. Balance Sheet

Particulars

31-Mar-13

(in lakhs)

31-Mar-12

(in lakhs)

Change

YoY

% change

YoYLiabilities

Equity And Liabilities

Share Capital 1867.7 1867.7 0 0.00%

Reserves And Surplus 50577.64 43858.02 6719.62 15.32%

52445.34 45725.72 6719.62 14.70%


Long Term Borrowings 4411.87 2416.8 1995.07 82.55%

Deferred Tax liability 721.79 1056 -334.21 -31.65%

Other Long Term Borrowings 168.2 149.02 19.18 12.87%

Long Term Provisions 2390.48 1521.1 869.38 57.15%7692.34 5142.92 2549.42 49.57%

Current Liabilities

Short Term Borrowings 5530.66 1662.27 3868.39 232.72%

Trade Payables 2913.73 1237.8 1675.93 135.40%

Other Current Liabilities 6814.42 6811.41 3.01 0.04%

Short Term Provisions 4431.62 5086.13 -654.51 -12.87%

19690.43 14797.61 4892.82 33.06%

Total Liability 79828.11 65666.25 14161.86 21.57%

Assets

Non Current Assets

Fixed Assets 24211.9 22912.36 1299.54 5.67%

Capital Work In Progress 5384.29 228.67 5155.62 2254.61%

Non Current Investments 14563.44 14564.09 -0.65 0.00%

Long Term Loans AndAdvances 1999.76 4180.77 -2181.01 -52.17%

Other Non Current Asset 8.49 19.03 -10.54 -55.39%

46168.5 41904.94 4263.56 10.17%

Current Assets

Inventories 15920.44 12395.28 3525.16 28.44%


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Trade Receivables 4959.95 4434.72 525.23 11.84%

Cash And Bank Balances 2655.33 1407.05 1248.28 88.72%

Short Term Loans AndAdvances 10189.22 5416.91 4772.31 88.10%

Other Non Current Assets 234.67 107.35 127.32 118.60%

33659.61 23761.31 9898.3 41.66%Total Asset 79828.11 65666.25 14161.86 21.57%

j.

There has been an increase in reserves and surplus by 15.32% leading to

increase in equity and liabilities section.Non current liabilities have

increased by 49.57%.The reason for this is long term borrowings have

gone up by 82.55% and also long term provisions have increased by57.15%.However there is a decrease of deferred tax liabilities by 31.65%.

Current liabilities have gone up by 33.06%.The reason being short termborrowings have increased significantly by 232.7%.This shows that

company is increasing its liabilities in a great way by taking loans.Also

trade payables are up by 132%.As a result of rise in both non current and

current liabilities there has been a significant increase of 21.57% inliabilities.

Non current assets have gone up by 10.17%.This is due to increase in

capital work in progress which has gone up by 2254%(from 228 to 5384

lakhs).But there is a significant decrease in long term loans and advancesand other non current assets.

Current assets have gone up by 41.6%.Almost all the sub section have

shown a good increase .Inventories have increased by 28% and cash

balances have increased by 88% indicating the strong financial positionof company.As a result of this total assets have increased by 21.57%.


Particulars FY2013-14 FY2012-13 Change %Change

Income

Revenue from Operations 65,091.63 59,807.96 5,283.67 8.834393

Other Income 3,518.07 2,220.68 1,297.39 58.4231

Total Revenue 68,609.70 62,028.64 6,581.06 10.60971

Expenses


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Cost of Material Consumed 20,936.80 18,968.94 1,967.86 10.37412

Purchase of Stock-in-Trade 3,396.10 3,137.25 258.85 8.250857

Change in Inventories of FinishedGoods/Work-in-progress/ stock-in-trade -3,054.62 -1,584.39 -1,470.23 92.7947

Employee Benefits Expense 13,823.92 12,022.99 1,800.93 14.97905Finance Costs 491.31 454.96 36.35 7.989713

Depreciaton and amortizationexpense 2,050.74 1,477.76 572.98 38.77355

Other Expenses 16,142.28 13,477.45 2,664.83 19.77251

Total Expenses 53,786.53 47,954.96 5,831.57 12.16051

Profit before exceptional itemsand taxes 14,823.17 14,073.68 749.49 5.325473

Exceptional items 0 -958.78 958.78 -100

Profit before tax 14,823.17 13,114.90 1,708.27 13.02541

Tax expenses

Current tax 3,860.12 4,188.00 -327.88 -7.82904

Excess Tax provision writtenback -669.8 -108.15 -561.65 519.325

Deferred tax 975.84 -334.21 1,310.05 391.984

Total 4,166.16 3,745.64 420.52 11.22692

Net Profit for the Year 10,657.01 9,369.26 1,287.75 13.74442

The revenue from operations increased by 8.8% and total revenue

increased by 10.6% indicating that sales are increasing and company is at

a stable position as far as sales is concerned. Cost of purchase of raw

materials went up by 10.37 % which is in line with the growth in sales.

Stock in trade grew by 8.25%.This was mostly due to purchase was coffee

this year which was missing last year.Depreciation went up by 38.77%

adding to the expenses. Other expenses went up by 19.77% . Fuel and

power ,repair of machinery and foreign exchange fluctuations led to thisrise.Overall the expenses increased by 12.16% indicating the companies

costs have gone up as well. There is a 5.3% increase in profit before tax

and exceptional items . Even though revenue increased by 10.6% the

profit before tax and exceptional items has increased just by 5.3%indicating the increase in expenses of the company.

This year there is no exceptional item .However, last year there was aprovision for Contractual Obligations for retired and continuingdirectors. As a result 958 lakhs were deducted from previous yearsprofit. As a result profit before tax increased by 13.02%.


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Current tax expenses decreased by 7.8% .However,deffered tax paymentsincreased by 391.8% .As a result tax payments increased by 11.22%.As aresult the net profit for the year increased by 13.74%


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Fra G6 Tatacoffee