Maan food limited

Introduction to Industry

India is fervently poised for the Food Revolution .India is fervently poised for the Food
Revolution This will ensure agricultural diversification and large investments This will ensure
agricultural diversification and large investments in food processing. The concept of food
security has two dimensions – availability of The concept of food security has two dimensions –
availability of food and access to food and access to food.
30% of the food produced in the country is wasted.
There is a need to increase the range of foods available to improve overall nutrition.
Special foods for patients suffering from hypertension, diabetes
gives health benefits. Packaging of food products has become important to ensure safety &
hygiene.

A comprehensive view
The Indian food market is approximately Rs 2,50,000 crore ($69.4 billion) Value-added food
products comprise Rs 80,000 crore ($22.2 billion). The food processing industry is witnessing a
20% annual growth rate. Post-Green Revolution, it is essential that agricultural research
reoriented to address new challenges. Application of biotechnology, RNA use, and molecular
biology. Nutritional research and improved cost-effective vaccine programmes
Target Segment Profile
Higher growth during 2005-06 in almost all the products belonging to Food and
Beverage segment The overall industry has achieved a growth rate of about 8 in
terms of value during 2004-05 terms of value during 2004-05 Government’s high priority for
development of food processing industry to encourage commercialization and value addition to
agricultural produce. Agro based l00 percent export oriented units allowed sale up to 50 per cent
in Domestic tariff area. India’s middle class segment continues to hold the key to success of the
processed food market in India. Indian food and beverage companies are making a beeline for
regional overseas markets like Bangladesh, Pakistan, Nepal, Middle East The market is seeing
players like Heinz, Mars, Marico, Pepsi, ITC, MANN FOOD PVT LTD, Britannia, Cadbury,
HLL, Pillsbury, Nestle and Amul. MANN FOOD PVT LTD, Britannia, Cadbury, HLL,
Pillsbury, Nestle and Amul. Both public and private players operate in the market, e.g.,
Hindustan Lever, Nestle and NDDB, NAFED.
The price stability throughout the year has contributed to the increase in
domestic liquor sales.
Branded products are preferred in the Edible oil segment as the urban consumers are increasingly
becoming health conscious and looking out for low cholesterol cooking medium

Basic Issues & Constraints

Lack of adequate infrastructure. Absence of a strong and dependable cold chain system which is
very vital There is a need for a review of the Agricultural Produce and Marketing Act to ensure
freedom to farmers Some commodities in one segment are used as inputs in another segment of
the food processing industry Excise Duty on all Value Added food products like Nutritional and
health foods.Ice –creams and Non-alcoholic beverages dispensed by vending machines are
exempt from excise duty Packaging material for match sticks is exempted from excise duty.
The higher railway freight has pushed up cost of raw materials and inputs such as sugar, edible
oil and all these add to cost of production. FICCI has highlighted some areas of concern

impacting the overall Food and Beverage Industry.

The Industry survey

India is among the world's major producer of food and produces over 600 million tonnes of food
products every year products every year India’s food consumption market is expanding rapidly
to attract global food and drink giants India is the second largest producer of rice and wheat and
the largest producer of pulses. Indian food processing industry is poised for further growth in

view of the liberal policy measures and government’scommitment for reforms and development
of food and agro- processing industries.
Company Profile

Incorporated in 1962 with an objective to carry on the business of miller, spice and flour exports and processing of

Besan, Maida, Sooji, Atta Cereals etc.

Mann Flour & Food Pvt. Ltd. has emerged as an leading exporters and processors of Indian
spices, Flours, Pickles & papad. We also have an expertise in delivering bulk and prepackaged
Instant mixes, Pulses, General groceries, whole spices and mukhwas based on the end to end
solution. 

Mann Flour & Food Pvt. Ltd. was founded to export flour and Indian spices into the global
market by improving efficiency and assured quality. Since day one we have grown, evolved and
gained valuable industry knowledge and experience adding to our credibility and product
enhancement. 

Mann Flour & Food Pvt. Ltd. is one of the first few Indian flour exporters and Indian Spices
Exporter Company to recognize the need for authentic Indian Food Products. 

Due to demand of Indian made foodstuff growing day by day with increasing awareness of
Indian culture & cuisine across the world.

Along with Indians spreading across the different parts of the world like U.S.A. , U.K. , Canada,
Australia, New Zealand & African countries, the consumption of Indian Made Foodstuff has
grown up to great extent.

Mann Flour & Food Pvt. Ltd. are proud to establish their clients across the world satisfying
their need for Indian spices and Indian Flours and let world enjoy the taste of Indian spices.

GAAY Wheat Flour goes through a fully automated, scientific, multi-stage cleaning process at
our state-of-the-art plant, which features the latest machinery in the field for cleaning and
milling of wheat.
Products:
 Bajra Flour

 Corn Flour [Coarse]

Corn Flour [Fine]
 Cracked Wheat
 Gram Flour [Besan]

 Jowar Flour

Ajwain Seeds Fenugreek Leaves

Anistar Powder Fenugreek Powder
Anardana Fenugreek
Asafoetida
Badiyan (Anistar) Powder
Bay Leaves Powder
Black Pepper Powder
Black Pepper Whole
Cardamom Powder [Black]
 Cardamom Powder [Green]
Chilli Crushed
Chilli Powder Extra Hot
Chilli Powder Fine
Chilli Powder Kashmiri
Chilli Powder Reshampatti
Chilli Powder White
Chilli Whole Red
Cinnamon Powder
Cloves Powder
Coriander Crushed
Coriander Cumin Powder
Coriander Powder
Coriander Seeds
Cumin Black
Cumin Powder
Cumin Seeds
Curry Leaves
Curry Powder
Dagar Phool Powder
Dill Seeds
Extra Hot Chilli Powder
Fennel Powder
Fennel Seeds-Green
Fennel Seeds-Lucknowi

Chapter – 2

Research Methodology
RESEARCH METHODOLOGY

SOURCES OF DATA:
1. Primary Data: Primary data for constructing the research instrument was collected through a
customer survey.
2. Secondary data: Resources like Business magazines, Internet and Prowess database were utilized for
gathering secondary information. The study was based on data collected from secondary sources. These
data comprises of the financial reports of MANN FOOD PVT LTD India Ltd., NESTLE Pharma Works
and ITC Ltd Ltd. of last three years.

These data were obtained from annual reports as well as from the website.Secondary sources
consist of: -

 Company’s balance sheets of the last three years.

 Company’s income statements of last three years.

The methodologies adopted for calculating different ratios are as per the standard suggested by
different cost as well as financial management book.

3. Research methodology

The objective of my research is to analyze of financial statements focusing on ratios in MANN FOOD
PVT LTD India Ltd. as well as to analyze comparison of financial ratios w.r.t. its competitors for three
years. The nature of my research is EXPLORATORY. Its goal is to shed light on the real nature of
process.

It involves a number of steps: -

Define the process and research objective.

Develop the research plan: - The second stage of research calls for developing the most efficient plan for
gathering the needed information. Designing the research plan calls for decision on data sources and
research approach

Data source:

Collection of data from the annual reports of and by the portals and magazines.

Research approach:

Data can be collected in many ways and I have used the following steps to analyze the data .
Collection of information:

After the above steps, I have collected all informations from different sources i.e. Annual reports and
from the other sources provided by MANN FOOD PVT LTD India Ltd., NESTLE Pharma Works and
ITC Ltd Ltd. Some of the information was collected from internet of the MANN FOOD PVT LTD India
Ltd., NESTLE Pharma Works and ITC Ltd Ltd.

4. Analysis of Information:

This step involves the extractions of findings from the collected data. I drew some facts after analyzing
the information.

5. Conclusion and suggestion:

As the last step I have mentioned the conclusion and suggestions that are relevant to make the financial
statements of MANN FOOD PVT LTD India Ltd.

SAMPLING
Sample Size: 200
I have tried to get a representative sample of NCR population, so the survey was done at following places:
Ghaziabad, Mayur Vihar –III, Trilokpuri and Shipra mall. Each of these places consist somewhat
different socio-economic class of consumers.
During the survey we took care to include each of the following five categories of consumers:
1. Housewives
2. Salaried persons
3. Businessmen
4. Students
5. Others
Data Analysis: - I have used tool i.e. MDS test of SPSS to analyze the data and draw relevant inferences.
CONCEPTS

FINANCIAL ANALYSIS is a fascinating topic to study because it can teach us so much about accounts
and businesses. The ratio analysis is based on the premise that a single accounting figure by itself may not
communicate any meaningful information but then expressed as a relative to other figure, it may
definitely give some significant information. The relationship between two or more accounting
figures/groups is called financial ratio.

When we use ratio analysis we can work out how profitable a business is, we can tell if it has enough
money to pay its bills and we can even tell whether its shareholders should be happy. Ratio analysis can
also help us to check whether a business is doing better this year; and it can tell us if our business is doing
better or worse than other business doing and selling the same things.

Ratio analysis has a very broad scope. One aspects looks at the general (qualitative) factors of a
company. The other side considers tangible and measurable factors (quantities). This means crunching
and analyzing numbers from the financial statements. If used in conjunction with other methods,
quantities analysis can produce excellent results.

Infact, ratio analysis is not just comparing different numbers from the balance sheet, income
statement ,and cash flow statement , its comparing the number against previous years, other companies ,
the industry or even the economy in general. Ratios look at the relationships between individual values
and relate them to how a company has performed in the past, and might perform in the future.

TYPES OF COMPARSIONS

The ratio can be compared in following different ways:

Time series analysis:

When financial ratios over a period of time are compared. It is known as the time series analysis. It gives
an indication of the direction of change and reflects whether the firm’s financial performance has
improved, deteriorated or remained constant over time. The analyst should not simply determine the
change, but more importantly, he/she should understand why ratios have changed.

Cross –sectional analysis:

Another way of comparison is to compare ratios of one firm with some selected firms in the same
industry at the same point in time. This kind of comparison is known as the cross -sectional analysis or
inter firm analysis. This kind of a comparison indicates the relative financial position and performance of
the firm.
Industry analysis:

To determine the financial condition and performance of a firm, its ratios may be compared with average
ratios of the industry of which the firm is a member. This sort of analysis known as the “industry
analysis” helps to ascertain the financial standing and capacity of the firm vis –a –vis other firms in the
industry. Industry ratios will prove to be very useful in evaluating the relative financial condition and
performance of a firm.

Pro forma analysis:

Sometimes future ratios are used as the standard of comparison. Future ratios can be developed from the
projected or Pro forma financial statements. The comparison of current or past ratios with future ratios
shows weaknesses in the past and the future. If the future ratios indicate weak financial position,
corrective actions should be initiated.

Chapter –3
OBJECTIVE - 1

Ratio Analysis of MANN FOOD PVT LTD India Ltd.

OBJECTIVE:
To study and evaluate the financial health, Liquidity, Profitability and operational efficiency of MANN
FOOD PVT LTD India Ltd in relation to its own performance in the past three years and in relation to its
competitors in the FLOURSegment which are NESTLE and ITC Ltd (Himani Sona-Chandi).

METHODOLOGY:
To find the various data and figures required for this purpose, I have taken the Annual Reports of MANN
FOOD PVT LTD India Limited of the past years and also the balance sheets of NESTLE and ITC Ltd for
comparative financial analysis. The information was studied and analyzed to compute the relevant ratios.
Then these ratios were compared with those of the main competitors. I have computed:

1.Liquidity ratios - Ability of the business to meet its short-term obligations.

2.Solvency ratios - Ability of the firm to meet its long-term obligations and assess their capital structure.

3.Profitability Ratios - To access the profitability of the firm with regard to its Sales, Profitability and
Efficiency.

4.Activity or Turnover Ratios - To access the operational efficiency of the company.

1. LIQUIDITY RATIOS
Liquidity ratios test the ability of the firm to meet its short-term obligation. The level of liquidity is
determined by the amount of liquid assets that are readily convertible into cash. It’s the responsibility of
the treasury manager to maintain the right balance between investments and liabilities to get the optimum
liquidity. It involves constant monitoring of cash flow position. We will analyze the two popular
measures of the liquidity of the company.

• Current Ratio: This is the ratio of current assets to current liability, represents the ability of the
business to meet all its short-term money requirements through its current assets.

Current ratio = current assets ÷current liabilities

• Quick Ratio/ Acid Test Ratio: This is the ratio of the assets that can be readily converted to cash at a
very short notice (cash, bank deposits, short term investments, other cash equivalents). It shows the
relationship between cash convertibles and current liabilities.
 Quick ratio = (current assets-inventories)÷current liabilities

MANN FOOD PRIVATE LTD

Year Current Ratio Quick Ratio
2007-08 0.91 0.58

2006-07 0.97 0.63

2005-06 0.82 0.52

1.2

0.8

0.6 Current Ratio

Quick Ratio
0.4

0.2

0
2007-08 2006-07 2005-06

Analysis
Current Ratio:
MANN FOOD PVT LTD has a low current ratio of 0.91 in the current year, which suggests that company
does not have sufficient current assets to pay of its short-term liabilities while in 2007 its current ratio was
0.97. In order to stay solvent, the firm must have a current ratio of at least 1, which means it can exactly
met its current debt obligations. It has decreased over the years i.e. 0.82 in 2006. This suggests that the
company is following an aggressive Working capital policy and also tells that the working capital of the
company is negative. This means that the company is saving on costs required to finance the current
assets but it may become risky if the company fails to meet its short-term obligations.
Quick Ratio:
The same pattern is also shown in the quick ratios. This means that the firm cannot meet its current
(short-term) debt obligations without selling inventory because the quick ratio is 0.58 in 2007-08, which
is less than 1. In order to stay solvent and pay its short-term debt without selling inventory, the quick ratio
must be at least 1, which it is not. In this case, however, the firm will have to sell inventory to pay its
short-term debt. If we observe the quick ratio for 2006-07, we will see that it was 0.63. So, the firm was
in a better condition in this year than 2008. So its liquidity condition is not improved by 2008, which, in
this case, is not good since it is not operating with relatively low liquidity. So, a quick ratio great than 1 is
better than a quick ratio of less than 1 with regard to maintaining liquidity and not being forced into the
position of having to sell inventory.

2. SOLVENCY RATIOS:
They indicate the company’s ability to meet its long-term liability. Also called the capital structure ratios,
they influence most of the major financing decisions of the company. A proper mix of equity and debt is
said to be always beneficial for the company rather than pure equity. Existence of debts disciplines
management to some extent.

• Debt to Equity Ratio: This ratio represents the relationship between total debt and equity and the debt
is shown as a percentage of the Equity capital of the company.
DE Ratio= Total Debt/Net Worth

• Interest Coverage Ratio: This ratio measures the debt servicing capacity of a firm insofar as fixed
interest on long-term loan is considered
IC Ratio=EBIT/Interest

MANN FOOD PVT LTD India Ltd

Year Debt-Equity Ratio Interest Coverage Ratio

2007-08 0.03 44.38

2006-07 0.05 66.63
2005-06 0.05 39.25
Table No.2
 Interest Coverage Ratio
70 66.63

60

50 44.38
39.25 Interest Coverage Ratio
40

30

20

10

0
2007-08 2006-07 2005-06

Analysis:
• The Debt to Equity ratio and total debt ratio of the company are almost negligible implies that most of
the liabilities of the company are short term (as should be in a case of FMCG) and company is in fairly
good position to meet its long-term liabilities. This means that the creditors of the company face very low
risk of losing their money.

• The Company was also very comfortable in terms of its interest coverage through its profits till 2006-
07. It was constantly rising every year. But due to Global recession MANN FOOD PVT LTD is facing
problem in current year, which is easily visible by current interest coverage ratio i.e. 44.38 while it was
39.25 in 2005-06. The lower the ratio, the more the company is burdened by debt expense. This shows
that in current year the rate of interest is higher as compared to immediate previous year. For bond
holders, the interest coverage ratio is supposed to act as a safety gauge. It gives you a sense of how far a
company’s earnings can fall before it will start defaulting on its bond payments. For stockholders, the
interest coverage ratio is important because it gives a clear picture of the short-term financial health of a
business. So this ratio has been reduced from last year.
3. PROFITABILITY RATIOS

Profitability Ratios show how successful a company is in terms of generating returns or profits on the
Investment that it has made in the business i.e. the Profitability ratios speak about the profitability of the
company. There are two types of profitability ratios:

• Profit Margin ratios

1. Operating Profit Margin ratio (Operating profit/net sales)
2. Net Profit Margin ratio (Net profit/net sales)

• Rate of Return ratios

1. Return on Equity (operating profit/ Total assets)

2. Return on Capital Employed (operating profit/capital employed)
3. Earnings per Share (EPS)
4. Price Earnings Ratio (PE Ratio)

3.1) PROFIT MARGIN RATIOS measure how much a company earns relative to its sales. The Profit
Margin of a company determines its ability to withstand competition and adverse conditions like rising
costs, falling prices or declining sales in the future. The ratio measures the percentage of profits earned
per rupee of sales and is thus a measure of efficiency of the company.

• Operating Profit Margin ratio: This ratio gives a relationship between the operating profit and sales.
Operating profit Margin Ratio=EBIT/Net Sales

• Net Profit Margin Ratio: It measures the earnings after interest and tax; it reflects the interest payment
made by the company and its effect on profit margin.
Net Profit Margin = Profit after tax/Net Sales
MANN FOOD PVT LTD India Ltd.
Year Operating Profit Margin (%) Net Profit Margin (%)
2007-08 18.59 15.07
2006-07 17.45 14.41
2005-06 17.90 14.04
Table No. 3
Analysis:
The operating profit margin and net profit margin are constantly rising over the period of 3 years, which
means that the company is becoming more and more efficient in terms of its operations: -
For every Re 1 of sales of MANN FOOD PVT LTD India Ltd, the company earns an operating profit of
18.59 paisa and net profit of 15.07 paisa in 2007-08, and the difference in the amount goes towards the
tax and the interest payments. Similarly, in 2007 and 2006 for every sales of Re.1 the company earns an
operating profit of 17.45 and 17.90 paisa and net profit of 14.41 and 14.4 paisa respectively. This trend
shows that company is earning more profit

3.2) RATE OF RETURN RATIOS

• Return On Equity: This ratio reveals how profitably the firm has utilized the owner’s funds.
ROE= Profit after tax (PAT)/ Net Worth

• Return on Capital Employed: Capital employed means the long-term funds employed in the business
and include the shareholder’s fund, debentures and long-term loans. This ratio explains the overall
utilization of funds by a business enterprise. Profit before Interest and Tax is considered for computation
of this ratio to make numerator and denominator consistent.
ROCE= Profit before Interest and Tax (PBIT) / Capital Employed

• Earnings per Share: It measures the profit available to the equity shareholders on a per share basis. But
all the profit per share may not be distributed to the shareholders. The company generally retains a part of
the earnings to enable its growth.
EPS= profit after tax/ number of common shares outstanding

• Price Earnings Ratio: This ratio gives the ratio of market price per share to the earnings per share.
P/E=Market Price Per share/ EPS

MANN FOOD PVT LTD India Ltd.

Year Return on Equity Return on EPS PE Ratio
(%) Capital
Employed (%)
 2007-08 59.95 69.61 3.67 20.11
2006-07 62.52 69.81 2.92 33.62
2005-06 42.21 48.01 3.30 38.82
Table No. 4

Analysis:
• Return on capital employed has increased significantly form about 48% in 2005-06 to more than 69% in
2007-08. It is the post –tax version of earning of earning power. It considers the effect of taxation, but not
the capital structure. It is internally consistent. In Table No. 4 we can see that the ratio of MANN FOOD
PVT LTD was low in the earlier years of study but then it starts increasing. It has considerably increased
due to higher profit margins.

• The impact of higher returns on Capital Employed is reflected in the Return on Equity that has increased
from about 42% in 2005-06 to about 63% in 2006-07 but there is a light decrement in ROE i.e. around
60% in 2007-08. It revels that the company has not utilized its own resources very well in the current year
as it has done in the earlier year.

• The EPS of the firm has also risen in the last two years. It has risen from Rs. 2.92 per share in 2006-07
to Rs. 3.67 in 2007-08.Here we see that the EPS of MANN FOOD PVT LTD was good enough in 2006 but
it declines after that and then again shows uptrend in 2008 due to high profits gained by the company.
The performance of the company was very good in the year 2005 and now in 2008 having the highest
position during the last three years.

• But the PE ratio is showing the reverse trend. All the fluctuation found in P/E ratio of Bajaj during last
three years are mainly due to both change in EPS and price per share of the company. The highest P/E of
the company was in the year 2006.

4. ACTIVITY OR TURNOVER RATIOS

This ratio is concerned with measuring the efficiency in asset management with respect to the sales. The
efficiency with which the assets are used would be reflected in the speed and the rapidity with which they
are used. The greater the rate of return the better it is. Depending on the various types of assets, there are
the following types of activities ratios:
• Total Assets Turnover ratio: This is the ratio of Net Sales to the Total Assets in a given year. It
reflects the level of utilization of Assets.
Total Assets turnover=Net Sales /Total assets

• Inventory turnover ratio: This is the ratio of Cost of Goods Sold to Average Inventory.

Inventory turnover = Net Sales /closing Inventory

• Inventory held Period: (No. of days in a year (365)/ Inventory turnover ratio). This period indicates,
how fast the inventory is sold out, the lesser the number of days , the better for a firm, it is represented in
number of days.
Inv Held Period=365/Inventory Ratio

• Debtor’s turnover ratio: This Ratio indicates the ratio of Sales and the average debtors. This ratio
shows the no. of times a debtor completes a full cycle which involves sales and realization of sale
proceeds.
Net Sales /Debtors

MANN FOOD PVT LTD India Ltd.

Year Total Asset Inventory Inventory Debtors Avg
Turnover Turnover Held Period Turnover Collection
Ratio Ratio Ratio Period

2007-08 3.98 12.52 28.43 20.84 17.51

2006-07 4.30 11.11 32.04 28.62 12.75
2005-06 2.94 11.65 30.55 49.83 7.30
Table No. 5

Analysis:
• The company has a fairly consistent Total Asset turnover ratio over the period and sales is 3.98 times of
the total assets
• Inventory turnover ratio is 12.52 times and it is held for a period of 28 days for current year i.e. 2007-08.
• Debtors are presently making their payments in a slow mode as compared to previous years i.e. 2006-07
and 2005-06.

Chapter – 4
OBJECTIVE - 2

COMPARTIVE FINANCIAL ANALYSIS WITH RESPECT TO

COMPETITORS

. LIQUIDITY RATIOS

Year 2007-08
Company Current Ratio Quick Ratio

MANN 0.91 0.58

NESTLE 1.77 1.18

ITC Limited 2.25 1.84

Table No. 1.1

Year 2006-07
Company Current Ratio Quick Ratio
MANN 0.97 0.63
NESTLE 2.15 1.31
ITC LIMITED 1.71 1.72
Table No. 1.2

Year 2005-06
Company Current Ratio Quick Ratio
MANN 0.82 0.52
NESTLE 2.26 1.37
ITC Limited 1.87 1.89
Table No. 1.3

2.5 2.25 2.26

2.15
1.87
2 1.77 1.71

1.5
0.91 0.97
0.82
1

0.5

0
2007-08 2006-07 2005-06

Current Ratio Graph No. 1

 1.84 1.89
2 1.72
1.31 1.37
1.5 1.18

1 0.58 0.63
0.52
0.5

0
8 7 6
7 -0 6 -0 5 -0
0 0 0
20 20 20

Quick Ratio Graph No. 2

Analysis:
It measures the firm’s ability to meet its current liabilities-current assets get converted into cash during
the operating cycle of the firm and provide the funds needed to pay current liabilities. Apparently, the
higher the ratio the greater the short term solvency. In order to stay solvent, the firm must have a current
ratio of at least 1, which means it can exactly met its current debt obligations.
No two companies are nearer to MANN FOOD PVT LTD. In the year 2008 there was increase in the
assets but the liabilities also increases because the company has raised its long-term source of finance by
which the interest burden increases and it leads to decrease in cash balance. Although the ratio is o.91 in
the year 2008 but in this year the proportion of inventory is more as compared to previous years 2007 and
2006, also the burden of interest and expenses of finance lead to decrease in cash balance.

We see that the liquidity ratios of MANN FOOD PVT LTD are very significantly lower than those of its
competitors. This means that MANN FOOD PVT LTD is following a very aggressive working capital
policy that means that it is saving on the cost of Current Assets but it may also fall in danger in case it
fails to meet its short-term liabilities.
We also see that NESTLE and ITC Ltd follow the traditional approach of maintaining working capital
and current assets.

3. SOLVENCY RATIOS:

Year 2007-08
Company Debt Equity Ratio Interest Coverage
 Ratio
MANN 0.03 44.38
NESTLE Not Available 60.65
ITC Limited 0.12 20.32
Table No. 2.1
Year 2006-07
Company Debt Equity Ratio Interest Coverage
Ratio
MANN 0.05 69.81
NESTLE Not Available 66.63
ITC Limited 0.10 69.96
Table No. 2.2
Year 2005-06
Company Debt Equity Ratio Interest Coverage
Ratio
MANN 0.05 48.01
NESTLE 0.01 39.25
ITC Limited 0.08 36.61
Table No. 2.3

2.5 2.26

1.5
Dabur
1 Zandu
Emami
0.33
0.5
0.03 0.12 0.05 0.1 0.05
0
2007-08 2006-07 2005-06

Debt Equity Ratio Graph No. 3

Analysis:
The Debt Equity ratio shows the relative contribution of creditors and owners. The debt consists of all
debts, short term as well as long term and equity means net worth. The lower the ratio, the higher the
degree of protection enjoyed by the creditors.
In Annex Table 2.10 we can see the all the companies except NESTLE study are highly levered,
MANN FOOD PVT LTD is also having a high Debt equity ratio, which shows that the company
is highly dependent on borrowings from outside instead of using its own funds.

We see that MANN FOOD PVT LTD is far better than NESTLE and ITC Ltd in case interest coverage
ratio in all the three financial years i.e. 2007-08, 2006-07 and 2005-06.

3. PROFITABILITY RATIOS:
3.1 Profit Margin Ratios

Year 2007-08
Company Operating Profit Margin Net Profit Margin
MANN FOOD PVT LTD 18.59 15.07
NESTLE 17.27 11.80
ITC Ltd 16.44 15.35
Table No. 3.1

Year 2006-07
Company Operating Profit Margin Net Profit Margin
MANN FOOD PVT LTD 17.45 14.41
NESTLE 15.29 11.03
ITC Ltd 12.85 12.43
Table No. 3.2

Year 2005-06
Company Operating Profit Margin Net Profit Margin
MANN FOOD PVT LTD 17.90 14.04
NESTLE 15.40 10.32
ITC Ltd 17.51 16.14
Table No. 3.3
 18 16.14
15.07 15.35
16 14.41 14.04
14 12.43
11.8
11.03
12 10.32
10 Dabur
8 Zandu
6 Emami

4
2
0
2007-08 2006-07 2005-06

Operating Profit Margin Graph No. 4

20 18.59
17.27 17.45 17.9 17.51
18 16.44
15.29 15.4
16
12.85
14
12
Dabur
10
Zandu
8
Emami
6
4
2
0
2007-08 2006-07 2005-06

Net Profit Margin Graph No. 5

Analysis:
• The Profit margin is very useful when comparing companies in similar industries. A higher profit
margin indicates a more profitable company that has better control over its costs compared to its
competitors. Profit margin is displayed as a percentage. Also known as Net Profit Margin.
Merely observing the earnings of a company often doesn't tell the entire story. Increased earnings are
good, but an increase does not mean that the profit margin of a company is improving. For instance, if a
company has costs that have increased at a greater rate than sales, it leads to a lower profit margin. This
indicates that costs need to be under better control.
The higher the Operating Profit Margin, the better. This is because a higher Operating Profit Margin
shows the company can keep its costs under control. A higher Operating Profit Margin can also mean
sales are increasing faster than costs, and the firm is in a relatively liquid position. The Operating Profit
Margin accounts for both Cost of Goods sold and Administration/Selling expenses.

• We see that MANN FOOD PVT LTD has the upper hand with respect to both the Profit Margin Ratios
when compared with its competitors. It has a significantly higher Operating ratio than NESTLE and ITC
Ltd respectively in 2007-08. Similarly, MANN FOOD PVT LTD is also very efficient with respect to the
other ratios. In the same way MANN FOOD PVT LTD is showing this trend in 2006-07 and 2005-06.

3. RATE OF RETURN RATIOS:

Year 2007-08
Company Return on Equity Return on Capital EPS PE Ratio
Employed (%)
MANN 59.95 69.61 3.67 20.11

NESTLE 21.13 31.18 203.47 33.82

ITC Limited 32.10 34.05 14.92 16.25

Table No. 4.1

Year 2006-07
Company Return on Equity Return on Capital EPS PE Ratio
(%) Employed (%)
MANN 62.52 69.81 2.92 33.62

NESTLE 21.32 29.86 181.01 33.48

ITC Limited 28.82 29.98 10.78 25.18

Table No. 4.2

Year 2005-06
Company Return on Equity Return on Capital EPS PE Ratio
(%) Employed (%)
MANN 42.21 48.01 3.30 33.82

NESTLE 19.50 28.13 200.50 17.85

ITC Limited 14.74 14.07 8.07 31.74

Table No. 4.3

70 62.52
59.95
60

50
42.21

40 Dabur
32.1 Zandu
28.82
30 Emami
21.13 21.32 19.5
20 14.74

10

ROE Graph No. 6

 69.61 69.81
70

60
48.01
50

40 34.05 Dabur
31.18 29.8629.98 28.13 Zandu
30 Emami

20 14.07

10

0
2007-08 2006-07 2005-06

ROCE Graph No.7

250
203.47 200.5
181.01
200

150
Dabur
100 Zandu
Emami
50 14.92
3.67 2.92 10.78 3.3 8.07
0
2007-08 2006-07 2005-06

EPS Graph No.8

 33.82 33.48 33.82
31.74
35
30 25.18 25.18
25 20.11
17.85
20 16.25
15
10
Dabur
5
Zandu
0
Emami
08 07 06
0 7- 0 6- 0 5-
20 20 20

P/E Ratio Graph No. 9

Analysis:

ROE measures the profitability of equity funds invested in the firm. It reflects the productivity of the
ownership fund in the firm. It is influenced by several factors like earning power, debt equity ratio etc.
The impact of higher returns on Capital Employed is reflected in the Return on Equity

We see that MANN FOOD PVT LTD & ITC have high return on Capital Employed and Equity and that
the same ratios are lower for NESTLE. ROCE it is the post –tax version of earning of earning power. It
considers the effect of taxation, but not the capital structure. It is internally consistent. If we see MANN
FOOD PVT LTD has recorded very good return as compared to NESTLE and ITC Ltd. The ratio of
MANN FOOD PVT LTD has performed far better than its competitors.

Still we see that the EPS of NESTLE is very high when compared with the others and the reason behind
this is that they have a very small equity base when compared with the others.

The relationship between market price of common stock and earning per share is so widely recognized
that it is expressed as a separate ratio, called price-earning ratio. The P/E Ratio is determined by dividing
the market price per share by the annual earning per share. All the fluctuation found in P/E ratio of all
three companies during last three years are mainly due to both change in EPS and price per share of the
company. Also MANN FOOD PVT LTD has higher PE ratio than its competitors.
4. ACTIVITY RATIOS:

Year 2007-08
Total Assets Inventory Inventory Debtors Avg
Company Turnover Turnover Held Period Turnover Collection
Ratio Ratio Ratio Period

MANN 3.98 12.52 28.43 20.84 17.51

NESTLE 1.79 11.07 32.97 40.54 9.01

ITC Limited 1.81 14.81 24.64 15.91 22.9

Table No. 5.1

Year 2006-07
 Total Assets Inventory Inventory Debtors Avg
Company Turnover Turnover Held Period Turnover Collection
Ratio Ratio Ratio Period

MANN 4.30 11.11 32.04 28.62 12.75

NESTLE 1.93 7.19 50.76 40.55 9.01
ITC Limited 2.06 12.86 28.38 11.26 32.91
Table No. 5.2

Year 2005-06
Total Assets Inventory Inventory Debtors Avg
Company Turnover Turnover Held Period Turnover Collection
Ratio Ratio Ratio Period

MANN 2.94 11.65 30.55 49.83 7.30

NESTLE 1.88 6.26 58.30 20.18 18.08
ITC Limited 0.80 8.35 43.71 8.86 41.19
Table No. 5.3

70 59.95 62.52
60
50 42.21
2007-08
40 32.1
28.82 2006-07
30 21.13 21.32 19.5 2005-06
14.74
20
10
0

Total Assets Turnover Ratio Graph No.10

 16 14.81

14 12.52 12.86
11.65
11.07
12
10 8.35
7.19 Dabur
8 6.26
Zandu
6 Emami
4 1.93
2
0
2007-08 2006-07 2005-06

Inventory Turnover Ratio Graph No. 11

39.79 39.7
40 35.3
35
28.19
30 25.94
25 20.95
Dabur
20 14.63
12.51 Zandu
15
8.37 Emami
10
5
0
2007-08 2006-07 2005-06

Debtors Turnover Ratio Graph No. 12

Analysis:

Inventory turnover is an activity ratio that measures the company’s effectiveness by dividing cost of
goods sold (an income statement item) by the average inventory balance (a balance sheet item.) Since cost
of goods sold represents the inventory that leaves the firm, the ratio allows the investor to see how
frequently the company needs to replenish its existing inventory.
For MANN FOOD PVT LTD. Inventory held period is 30.55 for current year. In this case, a lower ratio
would represent more effective inventory management, all else being equal. While for NESTLE this
period is less i.e.24.64 as compared to other two companies.

Debtors turnover ratio measures the liquidity of debtors of a firm and average collection period indicates
the average time lag (in days) between sales and collection thereof. The debtor’s velocity also indicates
receivables management efficiency rate. Higher turnover and lower collection period of receivables
reflect the firm's ability in transacting a larger business without corresponding increase in receivables.
The reverse is the case with lower turnover and higher collection period.

Average Collection Period (days) = (365 / Debtors Turnover Ratio)

We see that has the upper hand with respect to all the Activity or Turnover Ratios when compared with its
competitors. It has a significantly higher Total Assets T.O. ratio of 3.98, which is higher than 1.79 and
1.81 of NESTLE and ITC Ltd respectively in 2007-08. Similarly, MANN FOOD PVT LTD is also very
efficient with respect to the other ratios. In the same way MANN FOOD PVT LTD is showing this trend
in 2006-07 and 2005-06.
Chapter – 5

OBJECTIVE - 3
BRIEF INTRODUCTION OF MAIN COMPETITORS OF MANN FOOD
PVT LTD
ITC Ltd:

ITC is one of India's foremost private sector companies with a market

capitalisation of over US $ 22 billion and a turnover of US $ 6 billion.* ITC
is rated among the World's Best Big Companies, Asia's 'Fab 50' and the
World's Most Reputable Companies by Forbes magazine, among India's
Most Respected Companies by BusinessWorld and among India's Most
Valuable Companies by Business Today. ITC ranks among India's `10
Most Valuable (Company) Brands', in a study conducted by Brand
Finance and published by the Economic Times. ITC also ranks among
Asia's 50 best performing companies compiled by Business Week.

ITC has a diversified presence in Cigarettes, Hotels, Paperboards &

Specialty Papers, Packaging, Agri-Business, Packaged Foods &
Confectionery, Information Technology, Branded Apparel, Personal Care,
Stationery, Safety Matches and other FMCG products. While ITC is an
outstanding market leader in its traditional businesses of Cigarettes,
Hotels, Paperboards, Packaging and Agri-Exports, it is rapidly gaining
market share even in its nascent businesses of Packaged Foods &
Confectionery, Branded Apparel, Personal Care and Stationery.

As one of India's most valuable and respected corporations, ITC is widely

perceived to be dedicatedly nation-oriented. Chairman Y C Deveshwar
calls this source of inspiration "a commitment beyond the market". In his
own words: "ITC believes that its aspiration to create enduring value for
the nation provides the motive force to sustain growing shareholder
value. ITC practices this philosophy by not only driving each of its
businesses towards international competitiveness but by also consciously
contributing to enhancing the competitiveness of the larger value chain of
which it is a part."

ITC's diversified status originates from its corporate strategy aimed at

creating multiple drivers of growth anchored on its time-tested core
competencies: unmatched distribution reach, superior brand-building
capabilities, effective supply chain management and acknowledged
service skills in hoteliering. Over time, the strategic forays into new
businesses are expected to garner a significant share of these emerging
high-growth markets in India.

ITC's Agri-Business is one of India's largest exporters of agricultural

products. ITC is one of the country's biggest foreign exchange earners
(US $ 3.2 billion in the last decade). The Company's 'e-Choupal' initiative
is enabling Indian agriculture significantly enhance its competitiveness by
empowering Indian farmers through the power of the Internet. This
transformational strategy, which has already become the subject matter
of a case study at Harvard Business School, is expected to progressively
create for ITC a huge rural distribution infrastructure, significantly
enhancing the Company's marketing reach.

ITC's wholly owned Information Technology subsidiary, ITC Infotech India

Ltd, provides IT services and solutions to leading global customers. ITC
Infotech has carved a niche for itself by addressing customer challenges
through innovative IT solutions.

ITC's production facilities and hotels have won numerous national and
international awards for quality, productivity, safety and environment
management systems. ITC was the first company in India to voluntarily
seek a corporate governance rating.

ITC employs over 26,000 people at more than 60 locations across India.
The Company continuously endeavors to enhance its wealth generating
capabilities in a globalising environment to consistently reward more than
3,73,000 shareholders, fulfill the aspirations of its stakeholders and meet
societal expectations. This over-arching vision of the company is
expressively captured in its corporate positioning statement: "Enduring
Value. For the nation. For the Shareholder."
 
NESTLE:

Nestlé India is a subsidiary of  Nestlé S.A. of Switzerland. With seven factories and a large number of co-
packers, Nestlé India is a vibrant Company that provides consumers in India with products of global
standards and is committed to long-term sustainable growth and shareholder satisfaction.

The Company insists on honesty, integrity and fairness in all aspects of its business and expects the
same in its relationships. This has earned it the trust and respect of every strata of society that it comes in
contact with and is acknowledged amongst India's 'Most Respected Companies' and amongst the 'Top
Wealth Creators of India'.

the Company has played a pioneering role in re-establishing ancient knowledge with modern research
and manufacturing techniques. Shree Baidyanath Ayurved Bhawan (p) Ltd. was founded in 1917 by
Late Pt. R. D. Joshi. Its registered office is in Kolkata.
Baidyanath is manufacturing over 700 Ayurvedic Products the largest range of Ayurvedic Products in the
world at its10 manufacturing Centers spread all over India.
It has over 10,000 distributors and over 3,500 exclusive showrooms manned by qualified medical
practitioners.

CURRENT TRENDS IN FLOURIN INDIA

Presently the old guard of MANN FOOD PVT LTD, NESTLE and Baidyanath (which account for over
80 per cent of this market) are now facing a spirited fight from new kids-on- the-block such as Himani,
Himalaya and Sivananda. The major strategies adopted by different companies in FLOURmarket are as
follows:

1.PRODUCT DIFFERENTIATION:
ITC Ltd group is pushing FLOURas `all season' health supplement. The idea is to avoid sales dips in
summer months.
Mayar India Group in Orissa has introduced three variants of its BAKERY & FLOUR

 CELEBRITY ENDORSEMENT:

ITC Ltd started the trend of celebrity endorsement of chyawanprash. The signing of a celebrity as the
brand ambassador of its helped ITC Ltd improve its market share. MANN FOOD PVT LTD is also trying
to endorse its product in a better way.

 FOCUS ON ATTRACTIVE PACKAGING:

MANN FOOD PVT LTD had been using a constant unattractive plastic bags to package its FLOUR till
2003. It changed its packaging then calling it as ‘Swarna Jayanti’ pack. However it had to change its
packaging again as it also generated complaints. The shape of the jar provided very little space for
display. Moreover, rats could easily climb and damage its contents.

CONSUMER SURVEY FINDINGS

1. Packaging Most Bought for MANN FOOD PVT LTD
Of the various packaging sizes made available in the market by MANN FOOD PVT LTD, the 500 grams
packaging seems to be doing very well with the Customers. However, the company can
look at working out schemes whereby the customer is encouraged to move onto biggers quantity
packages.
Quantity Purchased Numbers
250 gms 30
500 gms 91
1000 gms 79

Sales
30

79

91

Graph No.1

2. MANN FOOD PVT LTD FLOURusage

From the survey findings we can easily interprete that MANN FOOD PVT LTD FLOURis very popular
as a family product rather than as kids or adults product. Hence MANN FOOD PVT LTD can look at
working out promotions for making FLOURpopular as Kids product also.
 Chyawanprash usage

37

Kids
105

58

Graph
No.2

3. Brand Loyalty towards MANN FOOD PVT LTD

The questionnaire tried to query the customers of MANN FOOD PVT LTD FLOURabout their response
if they were to not get MANN FOOD PVT LTD FLOURat their Shop of purchase. The options were
helpful in giving us a better insight to the brand loyalty among the customers.
The first option of buying another brand was to see if the customer was indifferent between the various
brands available in the market. The second option of Going to another shop to purchase the MANN
FOOD PVT LTD product showed a high level of brand loyalty but low level of shop loyalty. If the
customer chose to postpone his/her purchase of the product to a later date, it showed a higher level of
brand as well as shop loyalty.
MANN FOOD PVT LTD has a high brand loyalty among its consumers. Only 6% of its customers
responded with the option which showed low brand loyalty.

Action Taken if Response

product not found Frequency

Buy Another Brand 170

Go to another Shop 18

Postpone Purchase 12

Response frequency
9% 6%

85%
Graph No.
3
4. Factors Influencing Choice of Product (MDS test):

The Customer survey included a question, which inquired about the Factors, that influenced the consumer
to make a decision on which brand of FLOURthey wished to buy. This reflects the pre-purchase decision
making of the consumer before the actual point of purchase. The trends reflected are summarized in the
following chart:

Kruskal stress

It is measure of extent of misfit of MDS solution. Value of k-stress varies from 0-1. Value closed to 1
shows highest stressed solution, values close to 0 shows good solution. For an acceptable solution k-stress
should be less than 0.15.

Procedure: -

Analyze

Scale

MDS

CTRLA

Model

Select interval
Dimension

Min. =1,max=(2n<= no. Of brands)

Continue

Options

Display group plots model&summaryoption continue ok

SPSS Output

Alscal Procedure Options

Data Options-

Number of Rows  (Observations/Matrix).    8
Number of Columns (Variables).  .  .    8
Number of Matrices   .  .  .  .  .  .    1
Measurement Level .  .  .  .  .  .  .    Interval
Data Matrix Shape .  .  .  .  .  .  .    Symmetric
Type  .  .  .  .  .  .  .  .  .  .  .    Dissimilarity
Approach to Ties  .  .  .  .  .  .  .    Leave Tied
Conditionality .  .  .  .  .  .  .  .    Matrix
Data Cutoff at .  .  .  .  .  .  .  .     .000000

Model Options-
Model .  .  .  .  .  .  .  .  .  .  .    Euclid
Maximum Dimensionality  .  .  .  .  .    2
Minimum Dimensionality  .  .  .  .  .    1
Negative Weights  .  .  .  .  .  .  .    Not Permitted

Iteration history for the 2 dimensional solution (in squared distances)

Young's S-stress formula 1 is used.

Iteration S-stress Improvement

1 .00307

Iterations stopped because

S-stress is less than .005000

Stress and squared correlation (RSQ) in distances

RSQ values are the proportion of variance of the scaled data (disparities)
in the partition (row, matrix, or entire data) which
is accounted for by their corresponding distances.
Stress values are Kruskal's stress formula 1.

For matrix
 Stress = .00890 RSQ = .99983

Configuration derived in 2 dimensions

Stimulus Coordinates

Dimension

Stimulus Stimulus 1 2
Number Name

1 NESTLE 2.6014 -.2824

2 himani .1023 .0690
3 MANN FOOD PVT LTD 1.9586 .2750
4 baidyana -.7376 -.1302
5 himalya -1.0431 .0201
6 surya -.7113 .0088
7 vedic -.5038 .1602
8 locals -1.6664 -.1206
Abbreviated Extended
Name Name

baidyana baidyanath
 Derived Stimulus Configuration

Euclidean distance model

0.3 dabur

0.2
vedic

0.1 himani
Dimension 2

himalyasurya

0.0

-0.1 locals baidyanath

-0.2

zandu
-0.3

-2 -1 0 1 2 3
Dimension 1

Dimension 1: Price. Main ingredient, Packaging, Product Quality

Dimension2: Taste, Easy Availability, Advertisement, Celebrity Endorsement

Graph No. 4

The above 8 brands has been rated on 1-5 scale against 8 parameters viz., price, packaging, product
quality, taste, easy availability, advertisements, celebrity endorsement and schemes. Now the Multi
Dimensional Scaling test has given the above Euclidean Distance graph which shows that MANN
FOOD PVT LTD is itself a bigger player in FLOURthat has no significant competitor in the market.
But ITC Ltd can become its great competitor in future according to above graph.
CONCLUSION

 After analyzing the financial statements of the MANN FOOD PVT LTD by the help of various
ratios, I observed that the trend of growth is positive.

 MANN FOOD PVT LTD has strong performance with robust top line growth and high quality
earnings in all business segments. The performance is more satisfying when viewed in the light of
the challenging business environment of the Ayurvedic industry, Pharma, FMCG, Food in the
export and domestic markets.

 Current ratio has continuously increased but the company needs to raise more of its current assets
and quick assets so that it can fulfill all its obligations and can raise the amount of working
capital for short- term investment. Earnings per share have increased which would surely help the
organization in expanding its market share.

 Gross income also show the positive trend of growth, net turnover has also increased and return
on net worth has also grown. All these ratios show that the trends of profit are growing at a rapid
rate and thus it helps the company to meet the latent demands of customer too.

 Moreover, after analyzing and comparing the financial statements of MANN FOOD PVT LTD
w.r.t. its competitors I observed that MANN FOOD PVT LTD is itself a big player in FLOUR as
most of its ratios are far better than NESTLE and ITC Ltd.

RECOMMENDATIONS

• The Company already had a 65.8% market share in India. It would be difficult to increase the market
share substantially. Hence the company should focus on increasing the market size.
• The company should promote FLOURas an all season product and try to remove the misconception that
it is only to be consumed during the winters to strengthen the immune system against Winter Infections
and Allergies.

• It should occupy the shelf space next to the Health drinks in retail stores so that they can remind the
consumer of its claim of a comprehensive health supplement.

• Now that the company is successfully shedding its image of being associated with middle and old age
people it could also target younger generation to expand its market.

• Since MANN FOOD PVT LTD FLOURis perceived to be a Health supplement that aids in the
enhancement of the Immunity against winter related health problems , hence it should be promoted
strongly in areas where winters have traditionally been harsh and long.

LIMITATIONS

1. The time duration was less for the project as this project includes both financial and marketing
(survey) portions.
 2. Some databases were not available due to the policy of company. So some part of analysis would
have been better if this limitation was not there.

3. Some sorts of problems were involved during marketing survey.

Annexure

QUESTIONNAIRE

Q1. Name ______________________________

Q2. Gender____________
Q3. I have purchased MANN FOOD PVT LTD FLOURin last 3 years (if your answer is option (a), then
only proceed the questionnaire).

(a) Yes (b) No (c) Can’t Say

Q4. Marital Status

(a) Married (b) Single

Q5. Occupation

(a) Housewife (b) Service (c) Business

(d) Student (e) Others

Q6. I like to prefer MANN FOOD PVT LTD FLOURof

(a) 250 gms (b) 500 gms (c) 1000 gms

Q7. Members of my family taking MANN FOOD PVT LTD Chyawanprash

(a) Kids (b) Adults (c) Elders

(d) Both a and c (e) Whole family

Q8. If I do not get MANN FOOD PVT LTD FLOURthen

(a) Buy another brand

(b) Go to another Shop to buy MANN FOOD PVT LTD FLOUR

(c) Postpone my purchase
Q9. Rank the following brands in 1-5 scale (1-Very Good, 2-Good, 3-Neither Good Nor Bad, 4-Bad, 5-
Very Bad).
Brands MANN NESTLE Himani Baidyana Himalya Surya Vedic Local
FOOD th Brands
PVT
Paramete LTD
rs

Price

Main
ingredien
ts

Packagin
g

Product
Quality

Taste

Easy
Availabil
ity

Advertise
ment

CelbrityE
ndorsme
nt

Special
Offers
REFRENCES & BIBLIOGRAPHY

 Annual report of DIL.

 Organizations magazines

 Financial Management: I.M.Pandey, M.Y.Khan &P.K.Jain

http://www.moneycontrol.com/

http://www.MANN FOOD PVT LTD.com/

http://www.NESTLE.com/

http://www.ITC Ltd.com/

http://www.baidyanath.com/

http://www.equitymaster.com/detail.asp?date=5/19/2000&story=6

http://www.oppapers.com/essays/Marketing-Report-MANN FOOD PVT LTD-Chyawanprash/167474

http://www.antya.com/detail/MANN FOOD PVT LTD-Chyawanprash/17246

http://MANN FOOD PVT LTD.com/en/products/Health_Care/Health_Supplements/Chyawanprash/

http://www.business-standard.com/india/news/

http://marketingpractice.blogspot.com/2008/01/MANN FOOD PVT LTD-chyawanprash-zaroorat-

hai.html

http://businesstoday.intoday.in/index.php?option=com_content&task=view&id=9077