Navarro’s Foods |1

Holy Angel University

Angeles City

BUSINESS PROPOSAL FOR NAVARRO’S FOOD INTERNATIONAL, INC.

A Business Plan presented to

Navarro’s Food International, Inc.
and the
School of Business and Accountancy

Junior Consultants:

Regina S. Calara
Minnie Carmelita A. Salunga
Norberto M. Suarez III
Daniella M. Villareal

Adviser:

August 2017

1|Page
 Navarro’s Foods |2

ACKNOWLEDGEMENT

The researchers would like to extend their sincerest appreciation and gratitude to the

following people who made this research paper possible through their contribution.

To the group’s family, especially their parents, teachers, friends, and all the people

who supported them in accomplishing this work, sincerest thanks and appreciation to

you.

It is also with learning that we realize that criticisms will be good if given and taken

positively. To our proposal panelists, Ma’am Celia L. Cinco, and Edna T. Canlas, thank

you for the inputs back in our first oral defense. Improvements on this paper were drawn

from your straight to the point and constructive insights. This paper will not be

completed without our final defense panel: Ms. Tayag, Ms. Corpuz and Mr. Dizon.

The group would like to thank Navarro’s Food International Inc. for giving us the

opportunity to be a part of this wonderful project. This experience taught us to cope-up

with the pressures laid down by the real world outside the campus. We’ve also learned

how to deal with other people better. This opportunity simply posted a great impact in

molding the character of each one of us.

Lastly, to each member, it has been a great time of thesis sessions. There were only

few nights, but they were memorable, productive, and visionary nights. To success,

cheers!

Laus Deo Semper!

2|Page
 Navarro’s Foods |3

Table of Contents
I. Executive Summary
1.0 Executive Summary
1.1 Objectives
1.2 Vision Statement
1.3 Mission
1.4 Key to Success
II. Company Overview
2.0 Company Overview
2.1 Past Performance
III. Industry Analysis
3.0 Industry Analysis
3.1 Industry Participants
IV. Market Analysis
4.0 Market Analysis
4.1Market Segmentation
IV.1.1 Target Market Segment
IV.1.2 Market Growth
4.2 Marketing Mix (4Ps)
4.2.0 Products
4.2.1 Future Products
4.3 Pricing Strategy
4.4 Distribution Patterns
4.5 Promotion Strategy
4.6 Competitive Comparison
4.6.0 Competition and Buying Patterns
4.6.1 Competition and Buying Patterns
4.7 Strategy and Implementation Summary
4.7.0 Sales Strategy
4.7.1 Sales Forecast
4.7.2 Sales Programs
4.7.3 Strategic Alliances
V. Production
V.I Production Plan
3|Page
 Navarro’s Foods |4

V.2 Sourcing of Raw Materials

V.3 Facility size and Location
V.4 Production Capacity
V.5 Milestones (Activities)
VI. Finance
VI.1 Financial Plan
VI.2 Important Assumptions
VI.3 Key Financial Indicators
VI.4 Break Even Analysis
VI.5 Projected Pofit and Loss Statement
VI.6 Projected Cash Flow Statement
VI.7 Projected Balance Sheet
VI.8 Business Ratios
VII. Human Resources
VII.1 Human Resources
VII.2 Production Process Task
VII.3 Organizational Structure
VII.4 Management Team and Gaps
VII.5 Personnel Plan
VIII. Strengths, Weaknesses, Opportunities, and Threats (TOWS Matrix)
IX. Problem Identified
X. Recommendations
XI. Appendices
XII. References

I. Executive Summary

4|Page
 Navarro’s Foods |5

The food preservation industry of the Philippines continues to be an aid in safeguarding the

supply of food in the country. Pampanga, being the home of processed meat like tocino,

hotdogs, ham, longganisa, and etc., still upholds this identity with the rest of the food

preservation economies present in the province. This business plan explores the strategies of

one of the producers of crab pastes and other local “sawsawan” in Pampanga and in the

country, the Navarro’s Food International Inc. The purpose of this study is to evaluate current

strategies and propose a strategic business plan in reference to the many indicators that may

have an impact to the comprehensive environment the company participates in.

Navarro’s Food International Inc. is an authentic Kapampangan manufacturer of crab

paste (taba ng talangka), fermented shrimp in rice (burong hipon), fermented mudfish in ice

(burog dalag), sautéed shrimp paste (bagoong alamang), papaya pickles (acharang papaya),

and other sweet delicacies. Their products are positioned at the middle and high end of the

market in terms of both quality and price.

This business plan has identified the most pressing problems of Navarro’s Food ranging

from the lack of proper internal management of its owner to tracking of records especially in

their export activities, up until its marketing initiatives and branding.

The researchers have provided in their recommendation the necessary strategies, plan of

action, and innovation that would help Navarro’s Food achieve its short-term and long-term

goals.

Key words: business plan, food preservation, crab paste, Pampanga, home-grown, local

I.2 Objectives
5|Page
 Navarro’s Foods |6

1. to create a production plan that would reduce the backlog of supply during lean seasons of

crab availability

2. to create a marketing plan that will further efforts to promote brand image

3. to help in the penetration of a wider market through more retail outlets in malls, public

markets, and commercial areas

4. to forge tie-ups with more restaurants, cafeterias, and the likes that may be supplied with the

company’s products

5. to increase sales by 15% after the first 6 months of the implementation of the new strategies,

and 25% after the first year

I.3 Vision Statement

To become the largest producer and exporter of exotic foods and delicacies in the

Philippines.

I.4 Mission

To produce quality and safe Pampanga’s exotic foods and delicacies for Filipino consumers

everywhere in the country.

I.5 Key to Success

1. Delivering high quality product that set themselves apart from the others in taste and

value.

2. Provide a support, service and a better than average margin to our dealers.

3. Bring new products into recycling the shell of crab.

4. Utilized latest mixing and fermenting to maintain consistency and quality of products.

II. Company Overview

6|Page
 Navarro’s Foods |7

II.1 Company Overview

Navarro's Food International Inc. is now in its 47th year of operation, and during its early

years, sales started to increase and continued in succeeding years. The owner, Gil Navarro,

started to produce 50 kilos of crab paste, then sold them to the nearby public markets in their

places. Gil Navarro’s efforts paid off when he already began supplying small wholesalers and

small restaurants near in their place. A big opportunity came when the owner became the

manufacturer of other leading brands in the market.

As the years pass by, Navarro's already started to produce 100 kilos of crab paste in order

to meet market demand. Navarro's now has other products like burong dalag (fermented

mudfish in rice), burong hipon (fermented shrimp in rice), Acharang papaya (papaya pickles),

bagoong alamang (sautéed shrimp paste) and sweet delicacies. When they started to gain more

profit they already set up a production area near to the house of the owner and starts to hire

people.

Recently, they already changed their company name into Navarro Foods International Inc. in

order to be align in their mission to provide the people or consumers with quality products not

only in the Philippines but in other country as well.

What was once a business which started only in cooking crab paste in order to sustain

the financial needs of the family, targeting solely the ordinary consumers like their neighbors,

friends in the public market, and workmates, grew into a company with a wider product mix and

is now targeting international market.

7|Page
 Navarro’s Foods |8

II.2 Past Performance

Navarro’s Food had a 26.78% gross profit margin in 2015. It has also shown 7-10%

margin in sales from 2014-2016. This much figure translates to a stable growth in the company’s

sales and revenue, allowing it to competitively claim a huge market share.

Over the years, it has also received numerous awards, accreditations and certifications

from different quality assurance, manufacturing, and trade agencies. Among these are:

1. HACCP Aligned Manufacturing Process

2. Halal Certified

3. Outstanding “One Town, One Product” Program SME, 2007

4. ISO22000: 2005 Food Safety Management System

5. Most Outstanding Pampanga Food &Delicacies Brand, 2008

6. Gold Brand Awardee, Brand Image Appeal, Trust & Market Acceptance, 2012

7. Regional Outstanding Agricultural Entrepreneur

8. Gawad Saka Award, 2012-13

9. Most Outstanding Kapampangan, 2013

III. Industry Analysis

The Philippines is currently the world’s second largest producer of mud crabs, but it needs to

quadruple the number of its hatcheries to sustain growth, according to an official of the

Southeast Asian Fisheries Development Center/Aquaculture Department, that is according to a

report by Ruby Gonzales in Hatchery International, 2016.

“Dr. Emilia Quinitio, Scientist and Program Leader, National Mud Crab S&T Program,

SEAFDEC/AQD, said that at least 50 mud crab hatcheries with a total capacity of 80 tons of

8|Page
 Navarro’s Foods |9

larval rearing tanks are needed. Currently the country has 13 established crab hatcheries and

nine nurseries.” (Gonzales, 2016)

Navarro’s Foods International Incorporation has built strong image over the past years by

providing quality products to their customers. When people want to buy crab paste, it is more

probable that Navarro’s Foods International Inc. is one of their top choices.

However, the industry for crab paste does not narrow down. Instead, it continues to grow

with the accessibility of raw materials. In fact, the demand for raw crabs has exceeded the

supply, according to recent studies.

The production of blue swimming crabs has been steadily declining due to overexploitation

and habitat losses. There is limited crab farming and culture activity due to lack of appropriate

culture technology and seed supply. (The Philippine Star, 2017)

The “taba ng talangka” is what Navarro’s Foods is known for. Besides Navarro’s, local

restaurants and pasalubong centers like Nathaniel’s and Susies’ Cuisine are also known in the

regional scenery. This business plan also presents a comparison among Navarro’s competitors.

As the industry grows from household production to a small site production, and later on to

the expansion and acquisition of a new site, Navarro’s and other crab paste manufacturers shall

also consider the production and harvesting of raw materials.

The Philippine government through the Bureau of Fisheries and Aquatic Resources (BFAR),

Department of Science and Technology (DOST), and the Southeast Asian Fisheries

9|Page
 N a v a r r o ’ s F o o d s | 10

Development Center (SEAFDEC) are continuously looking for and are implementing possible

solutions to increase crab reproduction and halt illegal fishing and exportation.

Crab paste is regularly consumed by people in the coastal area of China. The fermentation

time plays a key role on the quality of crab paste. Here, we investigated the dynamic evolution

of metabolite profile of crab paste during fermentation by combined use of NMR spectroscopy

and multivariate data analysis. Our results showed that crab paste quality was significantly

affected by fermentation. The quality change was manifested in the decline of lactate, betaine,

taurine, trimethylamine-N-oxide, trigonelline, inosine, adenosine diphosphate, and 2-

pyridinemethanol, and in the fluctuation of a range of amino acids as well as in the accumulation

of glutamate, sucrose, formate, acetate, trimethylamine, and hypoxanthine. Trimethylamine

production and its increased level with fermentation could be considered as a freshness index of

crab paste. These results contribute to quality assessment of crab paste and confirm the

metabolomics technique as a useful tool to provide important information on the crab paste

quality (Elsevier Ltd., 2015).

Preservation methods start with the complete analysis and understanding of the whole food

chain, including growing, harvesting, processing, packaging, and distribution; thus an integrated

approach needs to be applied. It lies at the heart of food science and technology, and it is the

main purpose of food processing. First it is important to identify the properties or characteristics

that need to be preserved. One property may be important for one product, but detrimental for

others. (Taylor and Francis group, 2007) Navarro’s products are all preserved but this company

is producing a quality safe products in order for them to satisfy their loyal customers and they

make sure that the expiration date is right and will be disposed if they are already expired.

10 | P a g e
 N a v a r r o ’ s F o o d s | 11

Navarro Foods International Inc. is known for its Kapampangan delicacies such as Taba Ng

Talangka. These products is a traditional specialty of Masantol, Pampanga made from crab

meat and fat use as side dish or ingredient to seafood and pasta dishes such as pancit

palabok, crab paste pasta, spaghetti and crab paste pasta that have served in the plates of

Kapampangan for years.

III.1 Industry Participants

While there are many vendors selling the same products in the market, Navarro's started to

think of a way to stand out among their competitors. The company was a member of Sweets

and Delicacies Association of Pampanga (SnDAP), PhilExport, PhilFoodEx and Pampanga

Chamber of Commerce and Industry, which became their advantage against others because

they assure the consumer that their products are of quality standard and are safe. Their direct

competitors include Susie's Cuisine which is also known not only for their pancit and

pasalubongs but also for having good crab paste. Second, Navarro’s is also directly competing

with homemade crab paste producers in Masantol, Pampanga who sells their crab paste in

lower prices because of having poor production and for not being well-known. Their indirect

competitors are those who sells talangka or crab in public markets and those which sell crab

pastes as sides including restaurants like Downtown Cafe located in Nepo Quad.

IV. Market Analysis

4.0 Market Analysis

Navarro's Food International Inc. started as a small business until it became bigger

and has been selling to local households, small grocery stores, supermarkets, and

some small restaurants. Navarro's now targeting other countries like China, UAE,

Hong Kong, Singapore, and etc., to supply their main product which is crab paste as

11 | P a g e
 N a v a r r o ’ s F o o d s | 12

stated in their vision to become the largest exporter and producer of exotic foods and

delicacies everywhere in the country.

IV.1 Market Segmentation

Navarro’s market segment includes 55% female and 45% male with income of at

least 18,000 monthly, living in cities, and are mostly heads of the family. This

market is the market of the middle-income earners who are likely to spend on

extra luxuries or wants, not necessarily needs of the family.

Navarro’s market also includes the international community through the

Overseas Filipino Workers who bring products back to the countries where they

work in.

Based on psychographics, Navarro’s is also targeting those who are

Kapampangan or local food enthusiasts who make sure that crab paste or any of

its kind is readily present in the dining table.

IV.1.1 Target Market Segment

Navarro's Food International is focusing on the customer first through supplying to

their partner supermarket and then impacting them through supplying to the

restaurants who prepares a food using a crab paste.

These marketing intermediaries will be able to have more access to individuals

who appreciate the product and who are capable of providing a wide assortment

of product offerings. The market will serve indirectly promoters of the product.

12 | P a g e
 N a v a r r o ’ s F o o d s | 13

IV.1.2 Market Growth

Navarro’s is operating in a highly competitive market. Masantol, Pampanga,

where its factory is located, is surrounded by smaller market payers. However,

Navarro’s has differentiated itself from smaller industry players by positioning itself

in more visible locations and where the population density is higher. These

locations include markets and malls. Its exportation practices also claimed a

larger market share for the company, allowing it to continuously grow in the past

three years as shown in its financial statements.

Its 2014 and 2015 account showed an almost 2-Million increase in net sales.

4.2 Marketing Mix (4Ps)

4.2.0 Products

Navarro Foods International Inc. is known for its Kapampangan delicacies and here are the

list of products that available in the company:

1. Crab Paste - A traditional specialty of Masantol, Pampanga made from crab meat and

fat. Use as side dish or ingredient to seafood and pasta dishes.

Available Packing:

227g./bottle

360g./bottle

227g./can

13 | P a g e
 N a v a r r o ’ s F o o d s | 14

2. Burong Hipon - Prepared from fresh water shrimp (suabe) and precisely fermented to

achieve perfect sourness. Traditionally served with fish and vegetables.

Available Packing:

227g./bottle

360g./bottle

550g./can

3. Burong Dalag - Prepared from fresh young mudfish and precisely fermented to achieve

perfect sourness. Traditionally served with fish and vegetables.

Available Packing:

227g./bottle

360g./bottle

550g./can

4. Bagoong Alamang - Prepared from fresh water shrimp and precisely fermented to

achieve perfect sourness and flavored with mild spicy. Traditionally served with fish and

vegetables.

Available Packing:

227g./bottle

360g./bottle

5. Acharang Papaya - blend of papaya, carrots, spices and pickle syrup that gives you a

sweet, sour and spicy taste that comes along with a soft crunchy mouthfeel.

Available Packing:

227g./bottle

360g./bottle

14 | P a g e
 N a v a r r o ’ s F o o d s | 15

4.2.1 Future Products

Navarro's Food International Inc. is currently researching on the addition of producing a

fermented tilapia in rice in order to increase their profit and sales, as of now they have already

fermented mudfish and shrimp in rice.

More so, Navarro’s is looking into adding flavors in its crab paste products. The flavors

would include spicy, mild, sweet, and others which are yet to be developed and tested.

IV.2 Pricing Strategy

Navarro’s will be using cost-based plus mark-up pricing. This way, the total manufacturing

costs of the products plus their overhead costs will be computed. After getting the total

production costs, a desired and reasonable mark-up which is determined based on the industry

and the expected return on investment will be imposed.

Product Prices
Product Size Price (in Philippine Peso)
Papaya Pickles 240g bottle 75
Fermented Shrimp in Rice 227g bottle 80
360g bottle 100
Fermented Mudfish in Rice 227g bottle 80
360g bottle 100 4.4
Regular Crab Paste 210g canned 145
227g bottle 140
Premium Crab paste 210g canned 310
Distribution Patterns

Navarro’s Food International Inc. has targeted not only the consumers in the Philippines but

also in other countries. Navarro’s has seen the potential of supermarket tie-ups and has

partnered with different grocery chains in and out of the country since then. This distribution

15 | P a g e
 N a v a r r o ’ s F o o d s | 16

scheme has been proven effective for Navarro’s since the supermarket is a one-stop shop for

consumers of its target market.

Also, Navarro’s distribute through food expos or trade fairs in malls and other locations like

SM Supermarket & Hypermarket, CVC Supermarket, The Landmark Trinoma, Rustan &

Shopwise Supercenter, Metro Angeles & Metro Market Market, Sta. Lucia Supermarket, Cherry

Fooderama, Johnny’s Supermarket, and Robinsons Supermarket & South Supermarket.

Its export markets include Dubai, USA, Australia, Guam, Hongkong, China, & Singapore.

Direct Selling

Navarro’s direct distribution includes the presence of its physical stores in its main

production facility, malls, markets, and kiosks. It also includes direct partnership with restaurants

that use the product as part of their dishes.

Indirect Selling

The indirect selling activities of Navarro’s include its exportation, distribution through

supermarkets, third party sellers, retailers, and etc. The mechanism works on a middle party

selling Navarro’s products on their behalf.

4.5 Promotion Strategy

Navarro’s Food shall continue its trade exhibition practices—that is going to food fairs and

expos. Brand image and industry presence is being built there, thus allowing the target market

know that the company is existing and it has a wide product mix to offer.

With enough capital for paid advertising, Navarro’s may also enter social media advertising,

radio, and television.

16 | P a g e
 N a v a r r o ’ s F o o d s | 17

Another strong tool for this kind of business is tie-ups. Navarro’s may look into proposing

partnership with local restaurants that currently serve or have plans to serve dishes that use

crab paste as a primary or secondary ingredient. This way, Navarro’s would be able to generate

stable sales from the partners.

4.6 Competitive Comparison

4.6.0 Competition and Buying Patterns

While there are many competitors at the low price point, both Philippines and international,

there are many direct competitors at Navarro’s Food International Inc. mid and high price point.

This is quite a disadvantage for Navarro’s Food International Inc. because of the number of crab

paste sellers. But at some point, they standout for their advantages such as they provide quality,

safe, and standard products because Navarro’s Food International Inc. is one of the companies

in Pampanga given the privileges and authority to use the official seal of quality and excellence

after Navarro’s has complied with quality requirements on products and processes for the

adaptation and use of the provincial brand. It is also one of the member of Sweets and

Delicacies Association of Pampanga (SnDAP), PhilExport, PhilFeedEx and Pampanga

Chamber of Commerce and Industry.

Navarro’s competitive position is not on its promotional activities like paid advertising, but on

its continuous aim to be certified and accredited by food processing agencies, proving its

standards and product quality. It also has an advantage when it comes to market penetration as

it continually acquires presence both in local and international markets.

4.7 Strategy and Implementation Summary

Table 1. Strategy and implementation summary

17 | P a g e
 N a v a r r o ’ s F o o d s | 18

Strategy Implementation Deadline

1. Restructure production to cater during As soon as possible; deadline

lean season shall be at the start of 2018

2. Forge strategic partnerships September 1, 2017
3. Restructure office documentation on
September 1, 2017
export activities; assign person in-charge
4. Heighten marketing efforts (PR
September 1, 2017
Campaign and social media)

4.7.0 Sales Strategy

4.7.1 Sales Forecast

Six months after the implementation of the recommended strategies and programs which

will be tackled in the succeeding pages of this business plan, Navarro’s is projected to increase

sales by as much as 15%, and a total of 25% increase after the first year of strategy

implementation.

This happens while Navarro’s is maintaining its number of factory and office employees,

without the sudden hiring of additional employees. The production is seen to keep its current

system while adding more produce. Since Navarro’s has the proper machines, the extra

production will not greatly harm the maximum working hours of the workers and employees.

4.7.2 Sales Programs

Currently, Navarro’s is distributing products in supermarkets and kiosks in malls. These

strategies allow the basic brand awareness needed by the company to service its market niche.

Aside from distribution in markets and other stores, Navarro’s is joining trade expo and fairs that

both promote the brand and translate promotion into actual sales.

4.7.3 Strategic Alliances

18 | P a g e
 N a v a r r o ’ s F o o d s | 19

Since more local restaurants are sprouting like wild mushrooms, the need for local

ingredients that showcase Filipino taste is growing. While it is true that the physical store is

needed in the selling and marketing, strategic alliances help in the no-expense dissemination of

information about the company and its products.

Alliances that may be forged:

1. Restaurants - Navarro’s may look into proposing partnership with local restaurants that

currently serve or have plans to serve dishes that use crab paste as a primary or

secondary ingredient. This way, Navarro’s would be able to generate stable sales from

the partners.

2. Food fairs and trade expo – this will provide free marketing venue for Navarro’s and a

selling opportunity since the expos and fairs are strategically located in population-dense

areas

3. Culinary schools – products may be used by culinary students in their cooking

exhibitions and studies.

V. Production
C
ia
r
t
s
D
d
n
o
p
x
e
k
c
P m
fS
w
ti
u
lb
g

19 | P a g e
 N a v a r r o ’ s F o o d s | 20

Figure 1. Production Plan

Pertinent Note:

The production plan above is simplified according to Navarro’s staff’s description of the

entire process flow. The proposed restructuring however would entail a season-based planning

of raw ingredients acquisition and production. This means that during seasons when crabs are

in bulk supply, production shall be doubled in order to compensate for the times of high demand

and no production.

The process starts in determining the demand for the coming week based on previous

weeks’ sales and pre-orders. According to the person in-charged of sales and production,

Navarro’s usually get more orders for their Premium Crab Pastes packed in 210-gram cans. In a

week, they are producing at least 800 cans of the product.

Navarro’s also maintain a pre-order system with the supermarkets they supply to and with

their other partners. This way, demand and the need for sufficient raw ingredients and other

materials are met.

After determining demand, the people in-charged in production now request for the approval

of the orders of raw ingredients and materials like labels and bottles.

After production, packaged products will now be delivered to their constant distributors,

partners, and new customers. The collection of receivables takes place after and the cycle goes

on.

V.1 Sourcing of Raw Materials

20 | P a g e
 N a v a r r o ’ s F o o d s | 21

Masantol, Pampanga is a municipality known for breeding shrimps, tilapia, and

crabs in hectares of man-made private lagoons. The “talangka” is mostly

harvested in town, and in nearby provinces like Bulacan, Tarlac, and Bataan, and

Zambales.

The bottles used in packaging are also bought in Pampanga, while the labels are

produced in Metro Manila.

V.2 Facility size and Location

Navarro’s plant and manufacturing facility is located in # 278 Panducena St.

Bebe Anac, Masantol, Pampanga, Philippines. It is a 250sqm lot of modern-

designed building that looks like home.

Navarro’s is also adding a new facility to increase its production and sees the

gradual addition of employees and workers, but the company will not hire

suddenly in a month’s time.

V.3 Production capacity

When Navarro’s first started to expand due to increased demand, it produced an

average of 100kg of crab paste. Today, Navarro’s is able to store and sell 2,000

pails of its various products, where 1 pail contains 20kg of cooked produce.

5.4 Milestones (activities)

EXHIBIT:

· One town one product exhibit in Megamall 2009

· Sikat Pinoy 2013 Exhibit @ Mega Trade Hall

· National Trade Fair in Megamall

21 | P a g e
 N a v a r r o ’ s F o o d s | 22

· IFEX Exhibit

· 10 Pilot Companies Aligned in ISO22000, Tour in Germany year 2007

· All Asia Food Expo at Convention Center in New York City year 2016

· The 5th China International Small & Medium Enterprises Fair in Guanzhou China year

2008

· HACCP Aligned Manufacturing Process

· Working towards ISO 22000 – Food Safety Management System accreditation

· Hala Certified – January 15, 2008

AWARDS:

· 1st Pampanga OTOP Conference November 8, 2007

· Central Luzon OTOP Recognition & Awarding Ceremonies November 14, 2007

· Plaque of Recognition May 16, 2008 ISO22000:2205 Food Safety Management System

· Most Outstanding Pampanga Food & Delicacies Brand

· One of the most admired God Brand in the Philippines June 12,2012

· Gawad Saka Award Year 2012

· Most Outstanding Kapampangan 2013

VI. Financial Plan

NAVARRO FOODS INTERNATIONAL INC.

STATEMENT OF COMPREHENSIVE INCOME AND RETAINED EARNINGS
For the year ended December 31, 2015
(with comparative financial information for the year ended December 31, 2014)

Notes 2015 2014

Sales 14 27,860,860.00 23,926,910.00

Less: Costs of Goods Sold 15,17 20,400,839.00 17,197,457.00

Gross Profit 7,460,021.00 6,729,453.00

Less: Operating Expenses

General and Administrative Expenses 16,17 4,493,289.00 4,992,664.00

22 | P a g e
 N a v a r r o ’ s F o o d s | 23

Income from Operations 2,966,732.00 1,736,789.00

Less: Income Tax Expense 10 890,020.00 521,037.00

Net Income After Income Tax 2,076,712.00 1,215,752.00

Add: Cumulative Earning January 1 13 4,102,642.00 2,886,890.00

Cumulative Earnings December 31 13 6,179,354.00 4,102,642.00

The increase in net income from 2014 to 2015 is caused by the increase in production. As

seen in the table, the cost of goods sold increased from 17-million in 2014 to 20-million in 2015.

The gross income and income from operations also increased, while other expenses remained

constant. Since more was produced, more was also returned to the company at a marginal

difference in production costs.

6.0 Financial plan

A successful company has a profitable financial statement. This corresponds to a continuing

positive net income for the company wherein cost of goods sold and other expenses do not

exceed revenues or total sales. The researchers determined how profitable the company is

through comparative study of profit ratio and gross income ratio from 2014 up to 2015 financial

statements.

In 2018, the total sales will be ₱23,926,910.00 with a ₱17,197,457.00 cost of goods sold in

the same year, causing a ₱4,102,642.00 net cumulative earnings. In 2019, Navarro’s attained

net earnings will be ₱6,179,354.00 with ₱27,860,860.00 sales and ₱20,400,839 cost of goods

sold.

23 | P a g e
 N a v a r r o ’ s F o o d s | 24

For the coming years 2018-19, the group presented n increased cost of goods sold and

administrative and operating expenses due to heightened marketing activities and a restructure

in the production process.

6.1 Important Assumptions

Table 3. Important Assumptions

 The Projected Profit for Breakeven Analysis is P24,000,000

 The sales are expected to increase by 14.30%

 The Cost of Goods Sold increase by 9.54%

 The Gross Profit increase by 23.63%

 BEP units = 120,000 units

 Increase 10,000 products every year, increase income by P1,500,000

 Increase 10% per product, increase profit by 6.25%

6.2 Key Financial Indicators

Table 4. Business ratios

Financial Ratios
Debt Ratio 0.68 0.56
Current Ratio 7.61 5.87
Inventory Turnover 5.04 7.96
10.65
Return on Sales 7.26% %
13.77
Return on Assets 8.37% %
26.41 31.09
Return on Equity % %

6.3 Break-even Analysis

Table 5. Break-even Analysis for 2018

6.3 Break Even Analysis

24 | P a g e
 N a v a r r o ’ s F o o d s | 25

Profit
24,000,000.00
18,000,000.00 PROFIT
12,000,000.00
6,000,000.00
0 The Breakeven
Point
-6,000,000.00
-12,000,000.00 LOSS
-18,000,000.00
-24,000,000.00
Loss
0 40,000 80,000 120,000
160,000
Navarro’s product sold in average year

The Breakeven Point will be at 120,000 products sold every year. So if you add
10,000 products every year there will be an increase in income by P1,500,000. If there
is an increase of 10% per product there will be 6.25% increase in profit.

The break-even analysis is feasible. Previous financial reports showed an average

increase of 1.6 Million every year, thus maintained strategies will achieve the target.
With heightened marketing and distribution however, Navarro’s can achieve even
beyond the target increase in profit.
6.4 Projected Profit and Loss

Table 6. Income Statement

Navarro Foods International Inc.

Statement of Comprehensive Income and Retained Earnings

2018 2019
Sales 24,176,910.00 28,210,860.00
Less: COGS -16,897,457.00 -18,678,917.00
25 | P a g e
 N a v a r r o ’ s F o o d s | 26

Gross Profit 7,279,453.00 9,531,943.00

Less: Operating Expense and -3,592,664.00 -4,239,289.00
General Administrative Expense
Income from Operations 3,686,789.00 5,292,654.00
Less: Income tax expense -431,037.00 -690,320.00
Net Income after tax 3,255,752.00 4,602,334.00
Add: Cumulative Earning January 1 3,687,890.00 4,163,642.00
Cumulative Earnings December 31 6,943,642.00 8,765,976.00

6.5 Projected Cash Flow

Table 7. Cash flow

Navarro Foods International Inc.

Statement of Cash Flow

Cash flow from Operating Activities 2018 2019

Income before income taxes 2,836,989.00 3,966,732.00
Adjusments
Depreciation 836,658.00 878,158.00
(Increase)/Decrease in Trade Receivables -382,251.00 -1,335,248.00
(Increase)/Decrease in Inventories 454,407.00 564,545.00
(Increase)/Decrease in Prepaid Expense -4,796.00 -26,557.00
Increase/(Decrease) in Trade and other Payables 40,567.00 57,896.00
Net Cash Provided/Used from Operation before Tax Payment 3,781,574.00 4,105,526.00
Income Taxes Payment -542,520.00 -669,668.00

Net cash provided by Operating Activities 3,239,054.00 3,435,858.00

Cash flow from Investing Activites -177,839.00 -410,000.00
Cash flow from Financing Activities -2,532,700.00 -1,678,000.00
Net Increaase in cash -1,369,101.00 591,668.00
Add cash balance January 1 2,789,624.00 1,590,723.00
Cash balance December 31 1,949,038.00 3,530,249.00

6. 6 Projected Balance Sheet

Table 8. Balance sheet

Navarro's Foods International Inc.

26 | P a g e
 N a v a r r o ’ s F o o d s | 27

Statement of Financial Position

2018 2019
Assets:
Current Assets
3,182,297.0
Cash 1,720,743.00 0
3,159,806.0
Trade and other receivables 2,530,658.00 0
3,762,649.0
Inventories 3,714,674.00 0
45,50 67,057.0
Prepaid expense 0.00 0
10,171,809.0
Total Current Assets 8,011,575.00 0
Non-current Assets:
8,538,454.0
Property, Plant, & Equipment 6,911,228.00 0
14,922,803.0 18,710,263.0
Total Assets 0 0
Liabilities and Stockholder's Equity
Current Liabilities
992,815.0 1,274,941.0
Trade and other payables 0 0
152,347.0 380,969.0
Income taxes payable 0 0
1,655,910.0
Total Current Liabilities 1,145,162.00 0
Non-current Liabilities
9,875,000.0
Advance from Stockholders 7,875,000.00 0
Stockholder's Equity
600,000.0 700,000.0
Share Capital 0 0
302,641.0 479,353.0
Cumulative Earnings 0 0
6,000,000.0
Reserves 5,000,000.00 0
7,179,353.0
Total Stockholder’s Equity 5,902,641.00 0
14,922,803.0 18,710,263.0
Total Liabilities and Stockholder's Equity 0 0

6.7 Business Ratios

Table 9. Business ratios

27 | P a g e
 N a v a r r o ’ s F o o d s | 28

Financial Ratios
2018 2019
Debt Ratio 0.6 0.61
Current Ratio 7 6.14
Inventory Turnover 4.55 4.96
Return on Sales 15.25% 18.76%
Return on Assets 46.53% 46.87%
Return on Equity 55.16% 64.11%
8,515
Working Capital 68,666,413.00 ,899.00

Accounts Receivable Turnover 9.55 8.93

Gross Margin 30.11% 33.79%

The business ratios present how the debt ratio will increase by 0.01 in 2019 while the return on

assets, equity, and capital also increases. The ratios show both increased liabilities while also

redeeming increased returns and profits. This shows stable growth. As expenses and

investment increases, the return also appreciates.

Formulas for Computations:

Debt Ratio = Total Liabilites / Total Assets

Current Ratio = Current Assets / Current Liabilities

Return on Sales = Operating Profit / Net Sales

Return on Assets = Net Income / Average Total Assets

Return on Equity = Net Income / Shareholder Equity

Working Capital = Current Assets – Current Liabilities

Accounts Receivable Turnover = Net Credit Sales / Average Accounts Receivable

Inventory Turnover = Cost of Goods Sold / Average Inventory

Gross Margin = Gross Margin / Net Sales

VII. Human Resources

7.0 human resource

28 | P a g e
 N a v a r r o ’ s F o o d s | 29

The company’s people are its primary assets. Navarro’s Foods has fairly invested in

the training and development of its people. It has joined and participated on trainings

and seminars organized by the Department of Trade and Industry, the Philippine

Trade Training Center, Department of Science and Technology, Philippine Business

for Social Progress, and the Pampanga Chamber of Commerce and Industry.

Currently, Navarro’s is employing 48 factory workers and 6 office employees.

Navarro’s is also leading a balanced life program for its workers by providing work-

life balance through its outings, get-together, and parties.

Navarro’s foods is also providing 100% of meals and uniform subsidy to its workers,

on top of other benefits and the base pay.

7.1 Production Process Task

Figure 2. Production Process

Semi-processed products upon receipt in the plant will be checked by the Quality Control

Officers before bringing in the Cold Storage. Then, the production and cooking process begins

in the order indicated in figure 2.

Receipt of
Sealing and
Raw Production Cooling Packaging Storing
labeling
Materials
The production process starts with the receipt of raw materials and ingredients ordered after

pre-orders were tallied and the demand has been forecasted based on previous sales. After

that, products will be stored in the cold storage and will then be cooked after, then packed and

29 | P a g e
 N a v a r r o ’ s F o o d s | 30

sealed, and labeled. The sealed and labeled products will then be stored before distributed to

the partners.

7.2 Organizational Structure

Navarro’s organizational structure is headed by its founder/CEO Mr. Gil Navarro. The

company has more than 10 administrative officers and 48 workers with 450 subcontractors. The

organizational chart is attached in the appendix.

30 | P a g e
 N a v a r r o ’ s F o o d s | 31

7.3 Management Team and Gaps

Navarro’s is having difficulty in terms of hiring qualified and dedicated staffs. According to an

office in-charged in the group’s interview, Navarro’s sees employees leaving the company

immediately even before being hired.

Among the mentioned reasons for this initially high turnover are 1) applicants do not qualify

to the standards of office and clerical work; and 2) applicants do not see themselves as part of

the production.

The rest of the operations in human resource is stable. The study of the human resource of

the company is limited to these data which were the only information provided by the company.

These HR problems are not seen to be priority problems of the company as it currently has an

operating management team and sees no need to immediately restructure its hiring and

retention policies.

7.4 Personnel Plan

Figure 3. Personnel Plan

Possible
Culture promotion
adaptation
Retention and
further
Orientation development
Hiring and training

The above personnel plan indicates where each employee is headed to. It illustrates the

step-by-stem process of how rank-and-file employees may reach managerial positions, similar

to other large-scale companies.

31 | P a g e
 N a v a r r o ’ s F o o d s | 32

The process starts with the identification of total needed staffs for every additional opened

store location. Only then would the human resources department would post a hiring

announcement for the company. According to the interview conducted with the company, the

peak of their hiring season starts and ends during ber-months (September to December).

The training and orientation stage allows the HR manager to discuss the company overview,

its history, and day-to-day processes with the newly-hired employees. After that, employees are

being evaluated based on their capacity to absorb the processes and knowledge being

transferred to them. If the HR sees the willingness of the employee to continuously learn, and

his ability to pick up information fast, then the employee will be retained in the company and will

be given further trainings and development programs.

As the newly-hired employees get retained in the company longer, then they learn to adapt

to the existing group and company orientation and culture. The next stage, depending on the

skills, abilities, behavior, and commitment, is promotion.

As of writing, all employees and factory workers of Navarro’s Foods have been regularized.

VIII. TOWS Matrix

Table 11. SWOT Strategy Integration

Weaknesses Strengths

1.Newly established
1.Poor promotional tools
production site

2.Expertise in
2.Lack of back log planning formulating product
for production (crab paste and
others) mixture

32 | P a g e

Threats
1.Changing weather that
causes less crab
reproduction
2.Increasing number of
competitors
3.Stricter exportation
policies and higher tariffs
(in countries outside the
ASEAN region)
Opportunities
1.New market in a new
geographic location
(emerging communities
and business centers)
33 | P a g e
N a v a r r o ’ s F o o d s | 33
3.Not hands-on in export
transactions through OFW 3.Business tie-up
stores
WT Strategies ST Strategies
Produce more than the
demand during peak Increased sales and
season so production will physical presence
compensate for the lean claims percentage of
season (W2T1) competitor's market
share (S1T2)
Maximize marketing
platforms like social media
and add retail stores while
doing business tie-ups as
soon as possible since Maximize expertise
social media platforms are in product mixture
highly accelerating when it formulation and play
comes to their functionality of raw materials to
as advertising and produce products
promotional tools even during lean
(W1, W2, T3) season (S2,T1,T2)
Heighten relations with
foreign embassies of
countries outside the
ASEAN Region and Filipino
communities for them to
allow the company sell
products. This strategy will
be effective and must only
be implemented after the
internal management and
documentation concerns
have been fully addressed.
(W4T3)
WO Strategies SO Strategies
Expertise in product
Use heightened promotion, mixture formulation
online and physical shall be used in
presence to market introducing new
products and increase products for a new
 N a v a r r o ’ s F o o d s | 34

sales. This strategy can be

implemented the soonest
possible time, maximizing
the readily-available online
platforms for advertising
and promotions market segment (S1,
(W1,W2, W4, O1) S2, O1, O3, O4)

Increase production to
increase export in foreign Propose business
countries and supply for plan to local
2.increasing number of
local consumers after the restaurants and ask
local restaurants
new site facility has been them to allow the
established (W4, O1, O3, company to supply
O4) for their needs. (S3,
O2, O3)
Create a department within
the company that will
hands-on organize and
manage the exportation and
OFW relations of Navarro’s.
This way, the weakness of
unorganized processing
when it comes to OFW
store owners relationship
and the opportunity due to
increasing export sales
3.increasing population
through OFW stores will be
addressed. The weakness
lies only in the internal
management, therefore the
opportunity shall still be
grabbed and maximized
after the internal issues
have been resolved.
(W3, O4)

The association of
Philippines to the ASEAN
countries, and the
4.export opportunities connection of ASEAN
through OFW stores countries among each other
has allowed easy access for
trade inside the region. This
5.ASEAN integration shall be maximized through
market penetration in
countries inside the ASEAN
region. (O5, W1)

34 | P a g e
 N a v a r r o ’ s F o o d s | 35

XII. Problem Identified

The study and interview with the people of Navarro’s allowed the researchers to identify the

following problems:

1. lack of proper internal management of its owner to tracking of records especially in their

export activities

2. lack of strong and innovative marketing initiatives and image building

3. lack of production planning (no production and selling during rainy days)

XIII. Recommendations

Although the household setting of the company has allowed it to continue without proper

documentation, marketing and selling strategies (most importantly in the export market), its

continuous growth calls for the need of a more systematic management and an integrated

marketing strategy.

Since Navarro’s management system is not organized and staffs lack proper training to

address customer and corporate concerns, the researchers proposes an organizational

restructuring where the owner/manager maintains his position with a key person working as his

right hand. The key person shall have the proper knowledge on finance and accounting, human

resource, and product manufacturing to be able to oversee the entire system. Staffs shall also

be given proper orientation and training.

Next, Navarro’s shall hire a marketing consultant or a project-based marketer who will

improve their marketing mix and selling propositions. After which, the activities may be

continued by the key person or the staffs.

35 | P a g e
 N a v a r r o ’ s F o o d s | 36

There shall also be a separate department for export and OFW store owners relations

where the export activities, documentation, expansion, and etc., shall be managed accordingly

and more efficiently.

The company shall also see the opportunity in doing business tie-ups and partnerships. This

action will bring more stable sales for the company, thus a strengthened brand image.

Lastly, since there is no supply of crabs during lean season, Navarro’s manufacturing and

exportation stops. This results to yet another lean season of sales. The researchers recommend

the overproduction of crab pastes whenever supply is abundant. The increased production will

1.) decrease overall production costs and 2.) allow Navarro’s to stock reasonable amount of

products readily available even during lean season, when raw materials are not available for

production. The excess in present supply would compensate the slack in supply for future

demand

The increased production is aligned with the company’s acquisition of a new production site

that can store more produce and/or manufacture more products.

Table 12. SPATRES

Persons In-
Strategies Actions Time Table Resources
Charged

The production practices of

Navarro's must be
January 2018 up
restructured in a way that
to June 2018
Production even during lean seasons Additional supply of
(adaptation); the
1. Head, factory when crabs are mostly not crabs, bottles, and
new plan will be
Restructure workers, reproducing and/or are not labels plus other
carried out for as
Production finance on-demand, production is still factory overheads
long as it is
officers ongoing and sales will still be including labor
deemed
alive. Else, develop a new
effective.
product which may
compensate for the lack or
36 | P a g e
 N a v a r r o ’ s F o o d s | 37

insufficient crab paste supply.

Aside from joining trade fairs

and expos, Navarro's may
Marketing venture into organizing events
2. Heighten head, third that would showcase its
September 2017 Budget allocation
and innovate party products and at the same time
until proven for marketing and
marketing consultant or feature its corporate social
effective operating expenses
initiatives in-house responsibility efforts, Moreso,
staffs, owner Navarro's may also forge
partnerships among
restaurateurs.

Provide trainings and seminars

among office staffs to allow
them learn about the
company deeper and more
3.More September 2017
Office staffs, intimately. This will also give Budget allocation
organized until staffs fully
top level them proper orientation on for staff
management learn the
management document handling, customer development
system business
feedback and relations, and
other pertinent administrative
duties.

Create a department within

the company that will hands-
on organize and manage the
exportation and OFW
relations of Navarro’s. This
4.Create way, the weakness of
another unorganized processing
CEO, sales when it comes to OFW store
department
and owners relationship and the January 2017
for exports
marketing opportunity due to increasing (formulation of
management
department, export sales through OFW team and strategies)
and OFW stores will be addressed. The
new manager
stores weakness lies only in the
handling internal management,
therefore the opportunity
shall still be grabbed and
maximized after the internal
issues have been resolved.

37 | P a g e
 N a v a r r o ’ s F o o d s | 38

Appendix 1

Main Products

38 | P a g e
 N a v a r r o ’ s F o o d s | 39

Appendix 2

Production

39 | P a g e
 N a v a r r o ’ s F o o d s | 40

Appendix 3

Interview Questionnaire

Q: May sariling fish pond ba yung Navarro's na kinukuhanan nila ng crab? Or may supplier sila?
A: May isa lang kaming supplier ng talangka at hindi kami kumukuha sa ibang supplier dahil ang
supplier namin ay kami ang nagbigay ng puhunan sakanila.

Q: Ano lahat ng lugar (international) na sinusupply na ng Navarro's?

A: China, Hongkong, UAE, Singapore

Q: Sa International ba may stall or nasa supermarket lang?

A: Supermarket lang ang meron kami sa mga sinusupplyan naming abroad.

Q: May online shop na ba? Yung pwede silang mag order online?
A: Naka tie up kami sa Shopinas, wherein pwede silang mag order ng mga products namin doon.

Q: Isa lang ba yung factory nila?

A: Oo, yung sa Masantol, Pampanga lang.

Q: Sino lahat ng competitors ( yung pinaka competitors)

A: Mga home made products Gabriel's talangka at Susie’s Cuisine.

Q: Gaano katagal ang expiration?

A: In can 1 year, Bottled crab paste 2 years

Q: Kapag ba pinapadala nila yung mga products sa ibang bansa gaano katagal bago makadating
at gaano kamahal ang bayad (shipping fee)? May trabahador ba sila sa ibang bansa?

40 | P a g e
 N a v a r r o ’ s F o o d s | 41

A: Actually wala kaming idea kung gaano katagal bago makadating sakanila iyong mga products
kapag pinadala. Wala kaming workers sa ibang bansa.

Q: Mga gaano po katagal bago makadating po yung products niyo sa ibang bansa?
A: Honestly wala kaming idea dahil sinasabihan lang kami ng mga buyer kung kailan nila
kailangan tapos sila na bahala non.

Q: Sila po kukuha dito sa Pilipinas ng products?

A: Yung iba pero yung sa China and Hongkong kami nagpapa-ship kung kailan ipapa-ship ni
buyer.

Q: May times po ba na mahirap ang talangka?

A: Meron, kasi kapag walang ulan mahirap ang talangka lalo na kapag season na nang tag init.

Q: So mahirap po ang supply ng talangka kapag walang ulan? Pag tag init na po ganon? Paano po
non? Di naman po kayo nagkukulang ng supply ng talangka?
A: Oo mahirap lalo na pag summer dumadami lang kasi ang talangka. Lumalabas naman sila pag
bilog ang buwan yan ang behavior ng talangka
A: This year nagkulangan kami wala kaming premium

Q: Yung mga shell po ng talangka ano po ang ginagawa niyo doon?

A: Tinatapon na di naman kasi pwede gawin ingredients

Q. Sino po ang mga target market niyo?

A: Mga balik bayan

Q: Kanino po ba idea yung crab paste? Paano naisip na crab paste nalang yung product?
A: Kay Sir Gil idea iyong crab paste dahil maraming talangka noon sa masantol kaya niya naisip
iyon

Q: Anong name po ng supplier ng crab? Bote? And yung label po sa bote? And san po kinukuha?

41 | P a g e
 N a v a r r o ’ s F o o d s | 42

A: Confidential sabihin yung name ng supplier sa crab sa Bicol nakukuha iyong label namin dito
lang sa Pampanga yong bote sa manila.

Q: Ilan po yung nabebenta niyo per day/months/ year?

A: (NO ANSWER)

Q: Ilan po yung ginagawa niyo per day/ months/ year?

A: (NO ANSWER)

Q: May Human resource?

A: Meron

Q: Accounts department?
A: Wala

Q: Purchase department?
A: Meron

Q: IT?
A: wala

Q: Marketing department?
A: Meron

Q: Ano pa po yung naiisip niyong pwedeng maging product niyo in the future po?
A: Crab paste na may flavor spicy, mild spicy.

________________________________ _______________
42 | P a g e
 N a v a r r o ’ s F o o d s | 43

Name and Signature of Interviewee Date

In behalf of Navarro’s Food International Inc.

Appendix 3

Organizational Chart

43 | P a g e
 N a v a r r o ’ s F o o d s | 44

Appendix 4
Milestones in Gantt Chart

Table 2. Gantt Chart of Activities

Jan Jan Jan Jan Feb Feb Feb Feb July July Aug Aug
18 19 24-26 31 2-7 9-14 16-21 22 10 21 14 22

January 18- Plant Visit, Observation, Interview and Gathering of Data

January19- Submission of draft report on gathering of Data
February 2- Submission of unofficial report gathering of data
February 22- Oral Defense
July 10- Start of a more comprehensive data gathering
July 21- Request of financial statements to SEC
August 14- Submission of Final draft
August 22- Final defense

Appendix 5
Financial Statements
44 | P a g e
 N a v a r r o ’ s F o o d s | 45

A. Value Added Tax (VAT)

Amount
Input Tax 636,350.64
Output Tax 3,343,303.18

B. Withholding Taxes

Amount
On Compensation 4,526.26

On Services/Rent 37,101.08

C. Tax Cases

As of December 31, 2015, the company has no pending tax court cases.

Deficiency Tax Assessment

The owner-taxpayer has no deficiency tax assessment , whether protested or not. The owner-
taxpayer has not been involved in any cases under preliminary investigation, litigation and/or
prosecution in courts or bodies outside the Bureau of Internal Revenue (BIR).

22 Events after Balance Sheet Date

No any significant events took place after the Balance Sheet date that could affect the presentation of
the financial statements.

45 | P a g e
 N a v a r r o ’ s F o o d s | 46

17. DEPRECIATION AND AMORTIZATION

This account of:

2015
Depreciation GENERAL AND
Expenses for the COGS – Factor ADMINISTRATIVE
Year Overhead EXPENSE

Building 269,162.00 201,872.00 67,290.00

Factory Equipments 227,980.00 170,985.00 56,995.00
Service Vehicle 208,500.00 156,375.00 52,125.00
Equipments, Furnitures and Fixtures 138,516.00 103,887.00 34,629.00

P 844,158.00 P 633,119.00 P 211,039.00

Manager estimates that 75% of the Depreciation and Amortization were used up for processing and
record keeping for the production.

18. Related Party Transactions

Related party relationships exist when one party has the ability to control, directly or indirectly
through one or more intermediaries, the

Outstanding balances from related party transactions are summarized below:

2015 2014
Advances from Stockholders P 6,875,000.00 P 8,875,00.00

TOTAL RELATED PARTY TRANSACTIONS P 6,875,000.00 P 8,875,00.00

19. Lease Commitments

46 | P a g e
 N a v a r r o ’ s F o o d s | 47

The Company entered into a lease agreements with the and following Lessors and Lease Terms under
operating lease:

Name of Lessor Date Renewed Lease Term Monthly rental

Robinson Land Corporation 25-Nov-15 Renewable Every Year 8,000.00
Robinson Land Corporation 1-Feb-15 Renewable Every Year 26,000.00

At year end, the Company has outstanding commitment under cancellable operating leases that fall due
as follows:

2015
Not later than one year P 400,00.00

20. Categories of Financial Assets and Financial Liabilities

The following table set forth the carrying values and estimated fair values of the Company’s financial
assets and liabilities recognized as of December 31, 2014. The account consists of:

2015 2014
Financial Assets: P P
Cash 2,182,391.00 1,590,723.00
Trade and Other Receivables 4,155,806.00 2,930,558.00
Total Financial Assets P 6,338,197.00 P 4,521,281.00

2015 2014
Carrying Value Carrying Value
Financial Liabilities:
Trade and Other Payables P 1,154,941.00 P 896,815.00
Advances from Shareholder 6,875,000.00 8,875,000.00
Total Financial Assets P 8,029,941.00 P 9,771,815.00

5. Trade and Other Receivables

This account consists of:
47 | P a g e
 N a v a r r o ’ s F o o d s | 48

2015 2014
Amounts Receivable P 4,155,806.00 P 2,930,558.00
TOTAL CAS P 4,155,806.00 P 2,930,558.00

6. Inventories
This account consists of:

2015 2014
Raw Materials Inventory P 1,609,300.00 P 2,237,800.00
Finished Goods Inventory 953,049.00 1,176,674.00
TOTAL INVENTORIES P 2,562,349.00 P 3,414,474.00

7. Prepayments
This account consists of:

2015 2014
Prepaid Expenses P 60,057.00 P 35,500.00
TOTAL REPAYMENTS P 60,057.00 P 35,500.00

8. Property, Plant and Equipment

This account consists of:

2015
Additions/
December 31 Revaluations Impairments January 1
COST
Land 2,307,105.00 - 2,307,105.00
Building and bldg. in Progress 5,780,745.00 397,500.00 - 5,383,245.00
Factory Equipments 1,615,794.00 - 1,615,794.00
Service Vehicle 3,127,500.00 - 3,127,500.00
Equipments, Furnitures and Fixtures 954,113.00 12,500.00 - 941,613.00
Total Cost 13,785,257.00 410,000.00 - 13,375,257.00
Accumulated Depreciations
Building and bldg. in Progress 2,960,784.00 269,162.00 - 2,691,622.00
Factory Equipments 1,489,769.00 227,980.00 - 1,261,789.00
Service Vehicle 2,293,000.00 208,500.00 - 2,084,500.00
Equipments, Furnitures and Fixtures 922,344.00 138,516.00 - 783,828.00
Total Accum. Dep’n. 7,665,897.00 841,658.00 - 6,821,739.00

Carrying Value: 6,119,360.00 (431,658.00) - 6,553,518.00

2014
Additions/
December 31 Revaluations Impairments January 1
48 | P a g e
 N a v a r r o ’ s F o o d s | 49

COST
Land 2,307,105.00 - 2,307,105.00
Building and bldg. in Progress 5,383,245.00 - 5,383,245.00
Factory Equipments 1,615,794.00 172,839.00 - 1,442,955.00
Service Vehicle 3,127,500.00 - 3,127,500.00
Equipments, Furnitures and Fixtures 941,613.00 16,000.00 - 925,613.00
Total Cost 13,375,257.00 188,839.00 - 13,186,418.00
Accumulated Depreciations
Building and bldg. in Progress 2,691,622.00 269,162.00 - 2,422,460.00
Factory Equipments 1,261,789.00 227,980.00 - 1,033,809.00
Service Vehicle 2,084,500.00 208,500.00 - 1,876,000.00
Equipments, Furnitures and Fixtures 783828.00 136,016.00 - 647,812.00
Total Accum. Dep’n. 6,821,739.00 841,658.00 - 5,980,081.00

Carrying Value: 6,553,518.00 (652,819.00) - 7,206,337.00

NAVARRO FOODS INTERNATIONAL INC.

STATEMENT OF CASH FLOWS

49 | P a g e
 N a v a r r o ’ s F o o d s | 50

For the year ended December 31, 2015

(with comparative financial information for the year ended December 31, 2014)

Notes 2015 2014

CASH FLOW FROM OPERATING ACTIVITIES
Income Before Income Taxes 2,966,732.00
1,736,789.00
Adjustments
Depreciation 8.17 844,158.00 841,658.00
(Increase)/Decrease in Trade Receivables 5 (1,225,248.00) (282,751.00)
(Increase)/Decrease in Inventories 6 852,125.00 1,481,462.00
(Increase)/Decrease in Prepaid Expense 7 (24,557.00) (3,396.00)
Increase/(Decrease) in Trade and Other Payable 9 258,126.00 38,496.00
Net cash provided/used from Operation before Tax Payment 3,671,336.00 3,812,258.00

Income Taxes Payment 10 (669,668.00) (422,520.00)

Net cash provided by operating activities 3,001,668.00 3,389,738.00

CASH FLOW FROM INVESTING ACTIVITIES

Acquisition of office Equipments 8 (410,000.00) (188,839.00)

CASH FLOW FROM FINANCING ACTIVITIES

Advances from Stockholders 11 (2,000,000.00) (4,500,000.00)

NET INCREASE IN CASH

ADD CASH BALANCE JANUARY 1 4 1,590,723.00 2,889,824.00

CASH BALANCE DECEMBER 31 4 2,182,391.00 1,590,723.00

NAVARRO FOODS INTERNATIONAL INC.

STATEMENT OF COMPREHENSIVE INCOME AND RETAINED EARNINGS
For the year ended December 31, 2015
(with comparative financial information for the year ended December 31, 2014)
50 | P a g e
 N a v a r r o ’ s F o o d s | 51

Notes 2015 2014

Sales 14 27,860,860.00 23,926,910.00

Less: Costs of Goods Sold 15,17 20,400,839.00 17,197,457.00

Gross Profit 7,460,021.00 6,729,453.00

Less: Operating Expenses

General and Administrative Expenses 16,17 4,493,289.00 4,992,664.00

Income from Operations 2,966,732.00 1,736,789.00

Less: Income Tax Expense 10 890,020.00 521,037.00

Net Income After Income Tax 2,076,712.00 1,215,752.00

Add: Cumulative Earning January 1 13 4,102,642.00 2,886,890.00

Cumulative Earnings December 31 13 6,179,354.00 4,102,642.00

NAVARRO FOOD INTERNATIONAL INC,

STATEMENT OF FINANCIAL POSITION
As of the year ended December 31, 2015
(with comparative financial information as of December 31, 2014)

51 | P a g e
 N a v a r r o ’ s F o o d s | 52

Notes 2015 2014

ASSETS
Current Assets
Cash 4 2,182,391.00 1,590,723.00
Trade and other receivables 5 4,155,806.00 2,930,558.00
Inventories 6 2,562,349.00 3,414,474.00
Prepaid Expense 7 60,057.00 35,500.00
Total Current Assets 8,960,603.00 7,971,255.00

Non-Current Assets
Property, Plants & Equipments 8 6,119,360.00 6,553,518.00

TOTAL ASSETS 15,079,963.00 14,524,773.00

LIABILITIES & STOCKHOLDERS EQUITY

Current Liabilities
Trade and other Payables 9 1,154,941.00 896,815.00
Income Taxes Payable 10 370,669.00 150,317.00
Total Current Liabilities 1,525,610.00 1,047,132.OO

Non-Current Liabilities
Advances from Stockholders 11 6,875,000.00 8,875,000.00

Stockholder’s Equity
Share Capital 12 500,000.00 500,000.00
Cumulative Earnings 13 179,353.00 102,641.00
Reserves 13 6,000,000.00 4,000,000.00
Total Stockholder’s Equity 6,679,353.00 4,602,641.00

TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY 15,079,963.00

14,524,773.00

References

52 | P a g e
 N a v a r r o ’ s F o o d s | 53

Agustin M. (2015). Strategic Marketing Plan for Mt. Arayat National

Park Resort. Angeles City, Holy Angel University.

Baker, M. (2008) the Strategic Marketing Plan Audit. Cambridge,

Strategy Publication Ltd.

Emerson M. (2014). The Five Ps of Marketing: Product, Place,

Promotion, Price and Profit. USA, The UpStore INC.
Retrieved from:
http://www.inc.com/theupsstore/the-five-ps-of-
marketing-product-place- promotion-price-and-profit.html

Emerson M. (2014). The Five Ps of Marketing: Product, Place,

Promotion, Price and Profit. USA, The UpStore INC.
Retrieved from:
http://www.inc.com/theupsstore/the-five-ps-of-
marketing-product-place- promotion-price-and-profit.html

53 | P a g e