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Program & Batch:

PGDM 2014-2016

Term:

Course Name:

Financial Reporting and Analysis

Name of the faculty:

Dr. Puja Aggarwal

Topic/ Title :

Tata Coffee Pvt. Ltd

Original or Revised Write-up: Original


Group Number:

Six(6) from Section G

Contact No. and email of


Group Coordinator:
Group Members:

9873201218/Ankush Kunzru
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Roll No.
140102065
140101026
140103066
140101139
140101144
140103166
140103169

Name
Krishna Ravi Shankar Karanam
Ankush Kunzru
Harneet Singh Bahri
Saiyam Arora
Sanchita Krishna
Sudheshna Sampathkumar
Suneet Raj Gantayat

INDEX
Acknowledgement .................................................................................................................................. 3
1.

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

2.

SWOT snapshot:............................................................................................................................ 4

3.

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

a.

Strengths ........................................................................................ 5

b.

Weakness ....................................................................................... 5

c.

Opportunity ................................................................................... 6

d.

Threats ........................................................................................... 6

4.

Ratio Analysis ................................................................................................................................ 7

a.

Profitability ratio ........................................................................... 7

i. Net Profit Ratio:................................................................................ 7


ii.

Operating profit ratio: ................................................................. 7

iii.

Return on equity ...................................................................... 7

b.

Liquidity Ratio .............................................................................. 8

i. Current ratio .................................................................................... 8


ii.
c.

Liquid ratio ................................................................................ 8


Solvency Ratio .............................................................................. 8

i. Debt Equity ratio ............................................................................. 8


ii.
d.

Operating coverage .................................................................... 8


Turnover Ratio .............................................................................. 8

i. Inventory turnover ratio .................................................................. 8


ii.
5.

Inventory holding period ........................................................... 8

Vertical Analysis ............................................................................................................................ 9

i. Balance Sheet .................................................................................... 9


6.

Horizontal Analysis...................................................................................................................... 10

i. Balance Sheet .................................................................................. 10

Acknowledgement
We 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
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 of
us 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.
Sl.
1
2
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4
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Roll No.
140102065
140101026
140103066
140101139
140101144
140103166
140103169

Name
Krishna Ravi Shankar Karanam
Ankush Kunzru
Harneet Singh Bahri
Saiyam Arora
Sanchita Krishna
Sudheshna Sampathkumar
Suneet Raj Gantayat

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
arguably one of the largest manufacturers and is the second exporter of
coffee. 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

Weakness

Brand value

Weather dependence

Strong presence

Major environmental
challenges in Brazil

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

Price-demand fluctuations
Fall in harvested crop

Threats
Dumping in international
market
ForEx loss
Workforce issues
Crop diseases

3.
a.

SWOT - Analysis
Strengths
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
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

4.

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

a.

Profitability ratio
i. Net Profit Ratio:
Measures the amount of net profit earned per each rupee of
revenue
Ratio

Formula

Net Profit ratio

ii.

Formula

Operating profit
ratio

EBIT/Net
revenue from
Operations

2013

23.53%

Formula

Return on
equity

2013

PAT/Shareholders 17.65%
fund

2012

22.68%

2012

17.87%

Return on capital employed

Ratio

Formula

Return on
capital
employed

v.

15.67%

Return on equity

Ratio

iv.

16.37%

2012

Operating profit ratio:

Ratio

iii.

PAT/Net
revenue from
Ops

2013

2013

EBIT/Shareholders 24.01%
fund + Long term
borrowings

2012

23.87%

Return total assets

Ratio

Return on total
assets

Formula

PAT/Total
Assets

2013

12.06%

2012

11.74%

b.

Liquidity Ratio
i.

Current ratio

Ratio

Formula

Current ratio

ii.

Current
Assets/Current
Liabilities

Formula

Return on total
assets

1.71:1

PAT/Total
Assets

2013

1.03:1

2012

0.9:1

Solvency Ratio
i.

Debt Equity ratio

Ratio

Formula

Return on total
assets

ii.

PAT/Total
Assets

2013

1.03:1

2012

0.9:1

Operating coverage

Ratio

Formula

Interest
coverage ratio

d.

2.01:1

2012

Liquid ratio

Ratio

c.

2013

EBIT/Interest
obligation

2013

31.17:1

2012

29.82:1

Turnover Ratio
i.

Inventory turnover ratio

Ratio

Formula

Inventory
turnover ratio
ii.

COGS/Avg.
Inventory

2013

1.08:1

2012

1.29:1

Inventory holding period

Ratio

Inventory
holding period

Formula

365/ITR

2013

2012

338.2 days

283.1 days

5.

Vertical Analysis
i.

Balance Sheet
Particulars

Equity And Liabilities


Share Capital
Reserves And Surplus
Non Current Liabilities
Long Term Borrowings
Deferred Tax liability
Other Long Term Borrowings
Long Term Provisions
Current Liabilities
Short Term Borrowings
Trade Payabales
Other Current Liab
Short Term Provisions
Total Liabilities

31-Mar-13 Percentage
Liabilities

31-Mar-12

Percentage

1867.7
50577.64
52445.34

2.34%
63.36%
65.70%

1867.7
43858.02
45725.72

2.84%
66.79%
69.63%

4411.87
721.79

5.53%
0.90%

2416.8
1056

3.68%
1.61%

168.2
2390.48
7692.34

0.21%
2.99%
9.64%

149.02
1521.1
5142.92

0.23%
2.32%
7.83%

5530.66
2913.73
6814.42
4431.62
19690.43
79828.11

6.93%
3.65%
8.54%
5.55%
24.67%
100.00%

1662.27
1237.8
6811.41
5086.13
14797.61
65666.25

2.53%
1.88%
10.37%
7.75%
22.53%
100.00%

24211.9
5384.29
14563.44

30.33%
6.74%
18.24%

22912.36
228.67
14564.09

34.89%
0.35%
22.18%

1999.76
8.49
46168.5

2.51%
0.01%
57.83%

4180.77
19.03
41904.94

6.37%
0.03%
63.82%

15920.44
4959.95
2655.33

19.94%
6.21%
3.33%

12395.28
4434.72
1407.05

18.88%
6.75%
2.14%

10189.22
234.67
33659.61
79828.11

12.76%
0.29%
42.17%
100.00%

5416.91
107.35
23761.31
65666.25

8.25%
0.16%
36.18%
100.00%

Assets
Non Current Assets
Fixed Assets
Capital Work In Progress
Non Current Investments
Long Term Loans And
Advances
Other Non Current Asset
Current Assets
Inventories
Trade Receivables
Cash And Bank Balances
Short Term Loans And
Advances
Other Non Current Assets
Total Asset

6.

Horizontal Analysis
i. Balance Sheet
Particulars

Equity And Liabilities


Share Capital
Reserves And Surplus
Non Current Liabilities
Long Term Borrowings
Deferred Tax liability
Other Long Term Borrowings
Long Term Provisions
Current Liabilities
Short Term Borrowings
Trade Payables
Other Current Liabilities
Short Term Provisions
Total Liability

31-Mar-13
Liabilities

31-Mar-12

Change
YoY

% change
YoY

1867.7
50577.64
52445.34

1867.7
43858.02
45725.72

0
6719.62
6719.62

0.00%
15.32%
14.70%

4411.87
721.79
168.2
2390.48
7692.34

2416.8
1056
149.02
1521.1
5142.92

1995.07
-334.21
19.18
869.38
2549.42

82.55%
-31.65%
12.87%
57.15%
49.57%

5530.66
2913.73
6814.42
4431.62
19690.43
79828.11

1662.27
1237.8
6811.41
5086.13
14797.61
65666.25

3868.39
1675.93
3.01
-654.51
4892.82
14161.86

232.72%
135.40%
0.04%
-12.87%
33.06%
21.57%

24211.9
5384.29
14563.44

22912.36
228.67
14564.09

1299.54
5155.62
-0.65

5.67%
2254.61%
0.00%

1999.76
8.49
46168.5

4180.77
19.03
41904.94

-2181.01
-10.54
4263.56

-52.17%
-55.39%
10.17%

15920.44
4959.95
2655.33

12395.28
4434.72
1407.05

3525.16
525.23
1248.28

28.44%
11.84%
88.72%

10189.22
234.67
33659.61
79828.11

5416.91
107.35
23761.31
65666.25

4772.31
127.32
9898.3
14161.86

88.10%
118.60%
41.66%
21.57%

Assets
Non Current Assets
Fixed Assets
Capital Work In Progress
Non Current Investments
Long Term Loans And
Advances
Other Non Current Asset
Current Assets
Inventories
Trade Receivables
Cash And Bank Balances
Short Term Loans And
Advances
Other Non Current Assets
Total Asset