A PROJECT REPORT ON

FINANCIAL PERFORMANCE ANALYSIS – A STUDY WITH

REFERENCE TO “HERITAGE FOODS LIMITED”

SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF

DEGREE OF MASTER OF BUSINESS ADMINISTRATION BY

MEHAK VERMA

(1405-21-672-052)

Under the guidance of

MRS. K. VINUTHA

BADRUKA PG CENTRE

Kachiguda, Hyderabad – 500027

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 ANNEXURE – I

DECLARATION

I hereby declare that this Project Report titled

__________________________________________ submitted by me to the
Department of Business Management, O.U., Hyderabad, is a Bonafide work
undertaken by me and it is not submitted to any other University or Institution for
the award of any degree diploma / certificate or published any time before.

Name and Address of the Student Signature of the Student

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 ANNEXURE – II

CERTIFICATION

This is to certify that the Project Report title

_____________________________________________ submitted in partial fulfilment for the
award of MBA programme of Department of Business Management, O.U. Hyderabad, was
carried out by ________________________________ under my guidance. This has not been
submitted to any other University or Institution for the award of any degree/diploma/certificate.

Name and address of the Guide Signature of the Guide

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 ABSTRACT

The most potent instrument for financial analysis is the ratio analysis. According to the financial
activity or function that needs to be assessed, a number of ratios derived from the accounting data can
be classified into a number of classifications.

The relationship between two or more items is indicated by "the indicate quotient of two
mathematical expressions" and. It assesses the firm's financial standing and productivity. Since the
beginning, many different groups of individuals have been interested in the analysis of financial data
to show the operating and financial effectiveness and expansion of businesses. These individuals
employ ratios to ascertain the financial aspects of the company in which they are interested.

• The extent to which the company has borrowed money using its long-term solvency; • The firm's
ability to meet its existing obligations.

• The effectiveness with which the company is using its resources to produce sales income.

• The company's overall operational effectiveness and performance.

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 TABLE OF CONTENTS

S.NO. Content Page. No.

1 Introduction 1-5

2 Literature Review 6 - 19

3 Company and Industry 20 - 45

Profile
4 Data Analysis & 46 - 63
Interpretation
5 Findings & Suggestions 64 - 65

6 References 66 - 70

7 Bibliography 71 - 72

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 FINANCIAL PERFORMANCE ANALYSIS – A STUDY WITH REFERENCE
TO “HERITAGE FOODS LIMITED’’

CHAPTER-I

1. INTRODUCTION:

Financial performance analysis, which is sometimes referred to as analysis and interpretation of

financial statements, is the process of identifying a company's financial strengths and weaknesses by
strategically relating the balance sheet, profit and loss account, and other operational data.

The goal of financial analysis is to evaluate the data in financial statements to assess the firm's
profitability and financial stability. This is how a doctor may examine a patient and take their body
temperature, blood pressure, and other vital signs before determining if they are ill and administering
medication. Before commenting on the financial strength or weaknesses of an organization, a
financial analyst uses a variety of analytical methods to analyze the financial statements.

Financial activity is referred to as financial performance. Financial performance, in a broader sense,

refers to the extent to which financial goals are being or have been achieved. It is the process of
calculating the monetary value of the outcomes of a firm's policies and operations. It measures a
company's overall financial health over a certain time and can be used to compare similar companies
within the same industry or to aggregate industries or sectors.

The ratio analysis is the most powerful tool of financial analysis. Several ratios calculated from the
accounting data can be grouped into various classes according to financial activity or function to be
evaluated.

“The indicate quotient of two mathematical expressions “and as “The relationship between two or
more things. “It evaluates the financial position and performance of the firm. As started in the
beginning many diverse groups of people are interested in analysis financial information to indicate
the operating and financial efficiency and growth of firm. These people use ratios to determine those
financial characteristics of firm in which they interested with the help of ratios one can determine.
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 • The ability of the firm to meet its current obligations.
• The extent to which the firm has used its long-term solvency by borrowing funds.
• The efficiency with which the firm is utilizing its assets in generating the sales revenue.
The overall operating efficiency and performance of firm.

DEFINITION

“The indicate quotient of two mathematical expressions “and as “The relationship between two or
more things. “It evaluates the financial position and performance of the firm. As started in the
beginning many diverse groups of people are interested in analysis financial information to indicate
the operating and financial efficiency and growth of firm. These people use ratios to determine those
financial characteristics of firm in which they interested with the help of ratios one can determine.

• The ability of the firm to meet its current obligations.

• The extent to which the firm has used its long-term solvency by borrowing funds.
• The efficiency with which the firm is utilizing its assets in generating the sales revenue.
• The overall operating efficiency and performance of firm.

The information contained in these statements is used by management, creditors investors and others
to form judgment about the operating performance and financial position of firm. Uses of financial
statement can get further insight about financial strength and weakness of the firm if they properly
analysis information reported in these statements. Management should be particularly interested in
knowing financial strength of the firm to make their best use and to be able to spot out financial
weaknesses of the firm to take suitable corrective actions. The further plans firm should be laid down
in new of the firm’s financial strength and weaknesses. Thus, financial analysis is the starting point
for making plans before using any sophisticated forecasting and planning procedures. Understanding
the past is a prerequisite for anticipating the future.

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A basic limitation of the traditional financial statements comprising the balance sheet and the profit
and loss account is that they don’t give all information related to the financial operations of the firm.
Nevertheless, they provide some extremely useful information to the extent that the balance sheet
mirrors the financial position on a particular date in terms of the structure of assets, liabilities and
owner’s equity and so on, and the profit and loss account shows the results of operation during a
certain period of times in terms of the revenue obtained and the cost incurred during the year. Thus
the financial position and operations statement provides a summarized a view of the financial position
and operations of the firm. The analysis of financial statement is thus an important aid to financial
analysis. The first task of the financial analyst is to select the information relevant to the decisions
under consideration from the total information from the total information contained in the financial
statements. The second step is arranged the information in the way to highlight significant relationship.
The final step is interpretation and drawing of inferences and conclusions. In the brief financial
analysis are the processes of selection, relation, and evaluation

2. STATEMENT OF THE PROBLEM:

The study will predict the asset and liabilities of the organization and analysis for the future
improvement. The study will help to reduce the expenditure in future and improve the financial
position of the company. It also helps to understand whether the company is a good fit to invest or not.
The financial analysis helps the decision makers in taking appropriate decisions for strengthening the
short-term as well as long-term solvency of the firm.

3. OBJECTIVES:
• To study analyses the financial position of the Company through ratio analysis.
• To determine the profitability and evaluate the earning capacity of the company.
• To estimate and determine the possibilities of future growth of business.

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 4. RESEARCH METHODOLOGY:

4.1. Nature of the study:

This study is explanatory research to find whether the company has a good earning capacity
and the determine the possibilities of the future growth of the business.
4.2. Scope of the study:
The scope of the study is limited to collecting financial data published in the annual reports of
the company and analysis through ratios. The study is carried out for 5 years (2019-2023).
4.3.Data collection methods:
The two types of data collection methods are:

Primary Data -The information that is newly collected and being collected for the first time is considered
primary data because it is original in nature.

Secondary data -The secondary data are those that have previously been processed and gathered by
another organization. Secondary data can be found in yearly reports, online, and in periodicals.

The data collected for this research is secondary data which includes the annual reports of
HERITAGE.

4.4. Techniques of analysis:

The techniques like

• mathematical average,
• percentages,
• bar charts etc.,
• Line charts
• Trend analysis
• Graphical analysis etc., are used to analysis the data.

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4.5. Limitations of the study:

• The study is based on only secondary data.

• The period of study was 2019-23 financial years only.
• The accuracy and correctness of ratios are totally dependent upon the reliability of the data
contained in financial statements based on which ratios are calculated.

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 CHAPTER-II

REVIEW OF LITERATURE

Review of literature are some important research works undertaken in recent years which are very
closely connected with the present study are reviewed.

Ravichandran, M. & Subramanian M. Venkata (2016): The main logic behind this study
was to look at Force motors limited study reliability, flexibility and profitability. the expense on the
operations can be checked with the help of ratio analysis such as solvency ratios, liquidity ratios etc,
it provides the relationship between short term capital, capital budgeting and earned benefits of the
company.

Jothi, K. &Geethalakshmi, A (2016): This study tried to quantify the profitability and finance
status of the chosen Indian automobile companies with the help of statistics tools such as mean
deviation, ratio analysis, correlation etc.

Kumar Mohan M. S, vasu.V. Narayan. T (2016): This study contains different ratios such
as current ratio, net profit ratio, etc. and another various mathematical tools like mean, standard
deviation, and then they applied z test and check the scores which shows the great correlation between
the stability and profitability ratios excluding the return on assets and z-scores reveals the great
financial status of the organization.

Shinde Govind P. & Dubey Manisha (2015): The study has been conducted considering the
segments such as passenger vehicle, commercial vehicle, utility vehicle, two and three-wheeler vehicle
of key players performance and also analyze SWOT analysis and key factors influencing growth of
automobile industry.

Zafar S.M. Tariq Khalil A.M. (2014): The study explored that ratios are calculated from
financial statements which are prepared as desired policies adopted on depreciation and stock
valuation by the management. Ratio is simple comparisons of numerator and the denominator that

6
cannot produce a complete and authentic picture of the business. Results are manipulated and also
may not highlight other factors which affect performance of the firm by promoters.

Hari Govinda Rao and et. al. (2013): This study contains the “ratio analyses” on the
performance of the Private Housing Corporation in India. The focus was on quantifying the
profitability and liquidity ratio to check the financial status of the company. basically, there is trade-
off between the liquidity and profitability to attain the fortunate financial status. The main aim of the
study was to check the finance status and its significances. the scholar find out the satisfactory level
of profitability and liquidity . Shareholders can invest their money without risk.

Singh Amarjit & Gupta Vinod (2012): Explored an overview of the automobile industry.
Indian automobile industry itself is a manufacturing hub and many joint ventures have been set up in
India with foreign collaboration. SWOT analysis done there are some challenges by virtue of which
the automobile industry faces a lot of problems, and some innovative key features are keyless entry,
electrically controlled mechanisms, enhanced driving control, soft feel interiors and also need to focus
in the future on things like fuel efficiency, emission reduction safety and durability.

Weill (2004): New empirical data on a crucial corporate governance issue and the connection between
leverage and corporate performance is presented in his work regarding the comparison of leverage and
corporate performance-a frontier efficiency analysis. He has used frontier efficiency methodologies to
obtain performance measurements for businesses from various countries to examine the leverage and
company performance (France, Germany, and Italy). In this study, business performance is regressed
on a variety of factors, including leverage. Depending on the nation, he discovered contradictory
findings; although the relationship between leverage and corporate performance was highly
unfavorable in Italy, it was significantly beneficial in France and Germany.

Patra (2005): It has investigated how liquidity affects profitability utilizing current ratio and acid test
ratio. Inventory turnover, working capital, receivables turnover, and cash turnover ratios, as well as
current assets to total assets ratio.

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Rogers (2001): Using a sample of up to 1849 big Australian enterprises for the years 2094 to 2097,
the author of the study on the impact of diversification on firm performance examines the relationship
between diversification and firm performance. He measured profitability and, for quoted firms, market
value to examine the firm's performance. The results of the comparative study of the chosen sample
revealed that all the selected firms were more focused on sustaining higher profitability and had
controls in place for firm-specific effects and other profitability-related factors. However, in sub-
sample regressions for listed enterprises, this link was not discovered. He concluded that companies
choose either profitability or market value to gauge their performance. The findings suggested that
listed companies might be subject to closer.

Bosworth & Loundes (2002): explore the relationship of discretionary investments, innovation,
productivity, and profitability within a dynamic framework of firm performance. have investigated
about the Dynamic performance of Australian Enterprises. Using a four-year balanced panel data set
of Australian enterprises taken from the Business Longitudinal Survey, they have set up a dynamic
and closed model for firm performance, and the resulting empirical model was tested as a series of
recursive equations. After doing a comparison investigation, they discovered that the ability of
enterprises to invest is significantly influenced by the current economic profit. They noted
complements and substitutes for investments in their findings. They came to this conclusion after
studying how these discretionary investments affected innovation and overall factor productivity.
Lastly, the direct and indirect effects of previous discretionary investments.

Mulla (2002): provided an examination of the financial health of Shri Venkatesh Co-operative Textile
Mills Ltd. in Arunageri, Dharwad District in his work titled "Use of "Z" Score Analysis for Evaluation
of Financial Health of Textile Mills - A Case Study." With the help of several accounting measures,
the "Z" score analysis has been used to examine the overall trend in a company's financial health over
time. He concluded from the analysis that the textiles mill under consideration was only on the point
of financial collapse. On the one hand, current assets decreased due to the poor profitability
performance, whilst current liabilities increased.

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Loundes (2001): The 2090s, according to an analysis of "The Financial performance of Australian
Government Trading Enterprises Pre & Post-Reform." One of the main goals of the study was to
determine whether these changes had any impact on the financial performance of government trading
firms that operate in the power, gas, water, railways, and port sectors. Even if railroads have improved
slightly from a low base, he had concluded that there did not appear to have been a discernible
improvement in the financial performance of the majority of this sector. To increase the effectiveness
and financial performance of government trading firms in Australia, he has proposed numerous steps.

Toby (2007) did research on “Financial management modelling of the performance of Nigerian
Quoted Small and medium-sized Enterprises. He has concluded that the sustained growth, adequate
liquidity, and requisite profitability in the Small and Medium sized Enterprise sector is significantly
related to their investment and financing decisions. The experiential results showed that there was not
significant different between current ratio and the gross profit margin ratio and found the working
capital gap constant. He has also observed that the citation SMES current assets ratio, liquidity ratio,
cash reserve requirement and loan deposits ratio was significantly perceptive to commercial Banks.
Overall, he concluded over model results confirm that the Small and Medium sized Enterprise in
Nigeria is still limited by the liquidity as well as profitability quandary, efficiency limitations, Pecking
order reversals, stringent monetary policy regimes and a risk-over banking system.

Singhania (2007) has analyzed the study concerning the Dividend policy of India companies. From
the analysis he has revealed that the percentage of companies declaring dividend declined over the
years, the average dividend per share increased by nearly eight times. He has found that if companies
imply to declare dividend, increasingly per higher dividends over the years. He considered that the
average dividend pay-out ratio ranged between 25% and68% during 1992-2004. However, he has
mentioned that average dividend yield showed a consistent upward trend throughout the period of
study increasing from 0.75% in 1992 to 10% in 2004 and found the one possible reason for the increase
in dividend pay-out and it may be happened due to the change in tax regime. He suggested that
according to tax preference or tradeoff theory, favorable dividends tax should lead to higher pay-outs.

9
Sharma Nishi (2011): He studied the financial performance of passenger and commercial vehicle
segments of the automobile industry in the terms of four financial parameters namely liquidity,
profitability, leverage, and managerial efficiency analysis for the period of decade from 2001-02 to
2010-11. The study concludes that profitability and managerial efficiency of Tata motors as well as
Mahindra & Mahindra ltd are satisfactory, but their liquidity position is not satisfactory. The liquidity
position of commercial vehicles is much better than the passenger vehicle segment.

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 THEORETICAL FRAMEWORK

Financial analysis is the process of identifying the financial strengths and weakness of the firm. It is
done by establishing relationships between the items of financial statements viz., balance sheet and
profit and loss account. Financial analysis can be undertaken by management of the firm, viz.,
owners, creditors, investors, and others.

Ratio analysis is the method or process by which the relationship of items or groups of items in the
financial statements are computed, determined and presented. Ratio analysis is an attempt to derive
quantitative measures or guides concerning the financial health and profitability of the business
enterprise. Ratio analysis can be used both in trend and static analysis. There are several ratios at the
disposal of the analyst but the group of ratios he would prefer depends on the purpose and the
objectives of the analysis.

Accounting ratios are effective tools of analysis. They are indicators of managerial and overall
operational efficiency. Ratios, when properly used can provide useful information. Ratio analysis is
defined as the systematic use of ratios to interpret the financial statements so that the strengths and
weaknesses of a firm as well as its historical performance and current financial condition can be
determined the term ratio refers to the numerical or quantitative relationship between items/
variables. This relationship can be expressed as:

• Fraction
• Percentages
• Proportion of numbers

These alternative methods of expressing items which are related to each other are, for purposes of
financial analysis, referred to as ratio analysis. It should be noted that computing the ratio does not
add any information in the figures of profit or sales. What the ratios do is that they reveal the
relationship in a more meaningful way so as to enable us to draw conclusions from them.

Financial ratios are mathematical comparisons of financial statement accounts or categories. These
relationships between the financial statement accounts help investors, creditors, and internal
company management understand how well a business is performing and of areas needing
improvement.

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Financial ratios are the most common and widespread tools used to analyze a business’ financial
standing. Ratios are easy to understand and simple to compute. They can also be used to compare
different companies in different industries. Since a ratio is simply a mathematically comparison
based on proportions, big and small companies can be use ratios to compare their financial
information. In a sense, financial ratios don’t take into consideration the size of a company or the
industry. Ratios are just a raw computation of financial position and performance.

Ratios allow us to compare companies across industries, big and small, to identify their strengths
and weaknesses.

Sources of data

Values used in calculating financial ratios are taken from the balance sheet, income statement,
statement of cash flows or (sometimes) the statement of changes in equity. These comprise the firm's
"accounting statements" or financial statements. The statements' data is based on the accounting
method and accounting standards used by the organisation.

Accounting methods and principles

Financial ratios may not be directly comparable between companies that use different accounting
methods or follow various standard accounting practices. Most public companies are required by
law to use generally accepted accounting principles for their home countries, but private companies,
partnerships and sole proprietorships may not use accrual basis accounting. Large multi-national
corporations may use International Financial Reporting Standards to produce their financial
statements, or they may use the generally accepted accounting principles of their home country.

There is no international standard for calculating the summary data presented in all financial
statements, and the terminology is not always consistent between companies, industries, countries,
and time periods.

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Parties interested in financial analysis
The users of financial analysis can be divided into two broad groups.
Internal users
1. Financial executives
2. Top management

External users
1. Investors
2. Creditor.
3. Workers
4. Customers
5. Government
6. Public
7. Researchers

Tools of financial analysis

Several techniques or devices are used to undertake financial analysis. The fundamental objective
of analytical method is to simply the data into understandable terms. The following are the
important tools of financial analysis.

• Comparative Statement
• Common Size Statement
• Trend Analysis
• Ratio Analysis
• Fund Flow Analysis
• Cash Flow Analysis

Comparative Statement

Comparative statement is those statement which is used to study financial position for two or more
periods. It is also Called as horizontal financial analysis.

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Types of Comparative Statement

• Comparative Balance sheet

• Comparative Profit and Loss Account

Comparative Balance Sheet

It shows the account of current assets and current liability on different dates and also shows the
increase and decrease in these accounts.

Comparative Profit and Loss Account

It shows the operational results and progress of business in a given period of time

Common Size Statement

Common size statement is another technique of financial analysis. Common size financial
statement is those statement in which terms are converted into percentages taking some common
base. These statements are also called 100 percent statement or common percentage. Common
size statement includes common size balance sheet and common size profit and loss account.
Ratio Analysis

The term accounting ratios is used to describe significant relationship between figures shown on
balance sheet, in a profit and loss account, in a budgetary control system or in any, other part of
the accounting organization. Ratio simply refers to one number expressed in terms of another
number. Ratio analysis is a technique of analysis and interpretation of financial statement. It is
the process of establishing and interpreting the various ratios for helping in
making certain decision. However, ratio analysis is not an end to itself. It is only a means of better
understanding of financial strength, weakness of a firm. Calculation of mere accounting ratios
does not serve any purpose unless several appropriate ratios are analyzed and interpreted.

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Objectives of Ratio Analysis

• To study the short-term solvency of a firm.

• To study the long-term solvency of a firm.
• To determine the profitability of a firm.
• To measure the performance of a firm.
• To facilitate the process of financial forecasting.
• To communicate the strength and weakness of a firm.
• To enable managerial decision making.

Liquidity Ratio

The term liquidity refers to the firm’s ability to meet its current liabilities. Liquidity ratios are used
to measure the liquidity position or short-term financial position of a firm. These ratios are used to
assess the short-term debt paying ability of a firm, important liquidity ratios are current ratio and
quick ratio.

Current Ratio

Current ratio may be defined as the relationship between current assets and current liabilities. This
ratio is also known as working capital ratio. It is a measure of general liquidity and is the most widely
used to make the analysis of short term financial or liquidity of a firm. It is calculated by dividing
the total current assets by total current liabilities and the ideal current ratio is 2:1. It is calculated as
follows

Current Ratio = Current asset

Current liabilities

The higher the current ratio, the greater the firm’s ability to meet the short-term debts. A very high
current ratio indicates too much of money is blocked in current assets etc. In short, a very high
current ratio indicates that the firm will find it difficult to pay off its debts.

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Quick Ratio

The term liquidity ratio refers to the ability of a firm to pay off its short-term obligations as and when
they become due. Cash in hand and cash at bank are the

most liquid asset. The other assets included in the liquid assets are bills receivables, sundry debtors,
marketable and short term or temporary investments. The Ideal liquid or quick ratio is 1:1. The liquid
ratio can be calculated as follows

Quick ratio = Liquid assets

Current liabilities

Quick Assets = Current Assets - (stock + prepaid expenses)

Liquid ratio is superior to current ratio in testing the liquidity position of a firm. If the current ratio
is 2:1 and quick ratio is 1:1; the liquidity position may be considered satisfactory. If the current ratio
is higher than 2:1, but quick ratio is less than 1:1, it indicates excessive inventory

Absolute Liquid Ratio or Cash Ratio

This ratio establishes the relationship between super quick assets and quick liabilities. And it is taken
as a ratio of absolute liquid assets or absolute quick assets include cash in hand, cash at bank and
marketable securities or short-term investments. It is also known as cash ratio. And ideal absolute
liquid ratio is 0.5: 19

Absolute Liquid Ratio = Absolute Liquid Assets

Current Liabilities

Solvency Ratio

Solvency ratio is one of the various ratios used to measure the ability of a company to meet its long-
term debts. Solvency ratio is also called leverage ratio. It focuses on the long-term sustainability of
a company instead of the current liability payments.

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Proprietary Ratio

Proprietary ratio establishes the relationship between shareholders or proprietors fund and total
assets. This ratio shows how much funds have been contributed by shareholders in the total assets
of the firm. Proprietary ratio is also known as equity ratio or net worth ratio. It is computed as
follows:

Proprietary Ratio = Shareholder’s fund

Total assets

This ratio shows financial health of the firm. A high ratio indicates safety to the creditors and low
ratio show greater risk to the creditors. The ideal ratio is 0.5:1or above.

Profitability Ratios

The ultimate aim of any business enterprise is to earn maximum profit. To the management, profit
is the measure of efficiency and control. Profitability ratio measures the ability of the firm to earn
an adequate return on sales, total assets and invested capital. There are two types of profitability
ratios. First, profitability based on sales and it includes gross profit ratio, operating ratio, operating
profit ratio and net profit ratio. Second, profitability ratio based on investment and it includes return
on investment, return on shareholders fund ratio, return on equity ratio and return on total assets.
Profit is important for everyone associated with the company including creditors and owner.

Return on shareholder’s fund

This is the ratio of net profit to shareholder’s fund or net worth. It measures the profitability from
shareholders point of view. This ratio is called the ‘mother of all the ratio’. This is perhaps the most
important ratio because it measures the return that is earned on the owner’s capital. It is calculated
as follows:

Return on shareholders’ fund = Net profit after interest and tax

Shareholder’s fund

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Return On Investment (ROI)

When a firm invest money in a business, it naturally expects adequate return on its investment.
Therefore, the firm wants to know how much profit is earning on its investment. For this, ROI is
computed. It establishes the relationship between return and investment. It is also called accounting
rate of return.

ROI = Profit before interest and tax

Capital employed

Capital employed may be gross capital employed or net capital employed. Gross capital employed
means total assets minus current liabilities. Alternatively, it refers to total of share capital, revenue
reserves, debenture and other long-term loans. Profit before interest and tax is calculated as gross
profit minus operating expenses. The ideal return on investment ratio is 15%. The higher the return
on investment, greater is the overall profitability and more is the efficient use of capital employed.

Net Profit Ratio

Net profit ratio is the ratio of net profits to revenues for accompany or business segment. It measures
the overall profitability.Net profit and net sales are the two components of net profit ratio. Net profit
is the final profit after adjusting all expenses and all incomes. The main objectives of the ratio is to
measure the overall profitability. This ratio indicates how much of the sales are left after meeting
expenses. The ideal net profit ratio is 5% - 10%.

Net profit ratio = Net Profit×100

Net sales

Net profits can be taken as profit before tax and profits after tax. Higher the ratio, better is the
profitability.

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Fund Flow Analysis

A fund flow statement means a statement which shows increase or decrease in working capital during
a period. The fund flow statement contains the source of funds, use of funds and changes in working
capital. Changes in working capital are obtained by preparing a statement called ‘Statement of
changes in working capital’. It shows the changes in current asset and current liability. Fund flow
statement is also known as ‘where got and where gone statement’ or ‘statement of changes in
financial position’.

Cash Flow Statement

Cash flow statement is a statement showing the changes in cash position from one period to another.
It explains the reasons for increase or decrease in the amount of cash between two balance sheet
dates. In other words, it explains the reasons for inflow or outflow of cash. It is the statement of
sources and use of cash.

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 CHAPTER-III

COMPANY PROFILE AND INDUSTRY PROFILE

Heritage Foods Limited

The Heritage Foods Limited was founded by Mr. Nara Chandrababu Naidu in the year 1992, which is
one of the fastest growing Public Listed Companies in India, with two business divisions - Dairy and
Renewable Energy. The annual turnover of Heritage Foods stood at INR 24,070 million in the financial
year 2020-21.

Currently, Heritage's milk and milk products have a market presence in Andhra Pradesh, Telangana,
Karnataka, Kerala, Tamil Nadu, Maharashtra, Odisha, NCR Delhi, Haryana, Rajasthan, Uttarakhand
& Uttar Pradesh.

In the year 1994, HFL went public and was oversubscribed 54 times. HFL shares are listed on BSE
(Stock Code: 519552) and NSE (Stock Code: HERITGFOOD).

Heritage Dairy

We are one of the Leading Private Dairy Players in India with a Chilling Capacity of 1.95 million
liters per day, Processing Capacity of 2.57 million liters per day and Packaging Capacity of 1.71
million liters per day. By deeply committing ourselves to innovation and to providing authentic, high-
quality milk products, we have grown multifold to occupy a sizeable share in India's Dairy Market.

We process and market a full line of dairy products including fresh milk, curd, buttermilk, lassi, ice-
cream, paneer, ghee, table butter, cooking butter, milk powder, flavored milk, UHT milk and dairy
whitener. Headquartered in Hyderabad, we have a significant presence in the states of Andhra Pradesh,
Telangana, Karnataka, Kerala, Tamil Nadu, Maharashtra, Odisha, NCR Delhi, Haryana, Rajasthan,
Uttarakhand & Uttar Pradesh.

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Heritage Renewable Energy

We at Heritage have recognized our responsibilities to protect the environment. With this, we are
dedicated to expanding our green footprint and thus we have started our clean energy journey by
entering into renewable energy projects for captive consumption.

We have commissioned and been distributing energy through our captive solar & wind power plants
at 11 different plants and locations, namely, Bangalore packing station in Karnataka, Battiprolu
packing station in Andhra Pradesh, Bobbili packing station in Andhra Pradesh, Kalluru packing station
in Telangana, Madanapalli in Andhra Pradesh, Mulugu in Teangana, Sangvi packing station in
Maharashtra &Vadamadurai packing station in Tamil Nadu. Wind power plants are located in
Chinahothur, Vajrakarur&Beluguppa, Ananthapur District in Andhra Pradesh.

VISION

• Delighting every home with Fresh & Healthy products and empowering the Farmer.

MISSION

• To be a nationally recognized brand for Healthy and Fresh products with a revenue of INR
6000 Crores
• To anticipate, understand and respond to our Customers' needs by creating high-quality
products and making them available through innovative and convenient channels
• To embrace the right technology to delight our Customers.
• Advocating the balancing of economic, social and environmental aspects to create a better
tomorrow.
• Empowering the farmer community through our unique 'Relationship Farming' Model
• Be the Employer of Choice by nurturing entrepreneurship and promoting empowerment,
alongside transparency

21
Milk Producers

Effecting change in the standard of living for dairy farmers in terms of:

• Regular income through co-operative efforts

• Women’s participation in income generation
• Protecting farmers from price exploitation by the un-organized sector
• Providing remunerative prices for milk
• Increasing milk productivity through input and extension activities
• Credit facilitation for purchase and insuring of cattle
• Cattle healthcare activities
• Supplying high-quality cattle feed at reasonable prices

Customers

• Timely supply of pure & fresh products

• Supply of high-quality milk and milk products at affordable prices
• More than 15 lakh happy customers
• High customer satisfaction
• Customer care centre
• Supply of products through multiple channels like MRF, e-Commerce &Parlours

22
Employees

• Enhancing the technical and managerial skills of employees through continuous training and
development
• Instituting the best appraisal systems to motivate employees
• Fostering incentive, bonus and reward systems to encourage employees
• Providing fair opportunities to all for career development

Returns

• Dividend Payment since Public Issue (January 1995)

Service

• Highest importance to investor service; no notice from any regulatory authority since 2001 in
respect of investor service
• Very transparent disclosures
Suppliers

• Prompt payments to all suppliers

• Associated with high-quality equipment / ingredient suppliers
Society

• Potential Employment Generation

• More than 3,100 employees are working with Heritage
• More than 12,020 procurement representatives have found self-employment in rural areas
• More than 6900 sales representatives are associated with the company
• More than 942 franchisees operating Heritage Parlours

23
 • Sustainable development with 10.30 MW of renewable energy for running dairy plants.

Contribute to fight against Covid-19 pandemic

To counter the spread of COVID 19 the Company joins hands with the government and decided to
contribute a sum of ₹ 1 crore in its major operating areas across the country.

• CM Relief Fund Andhra Pradesh – ₹30 Lakhs

• CM Relief Fund Telangana – ₹30 Lakhs
• CM Relief Fund Karnataka – ₹10 Lakhs
• CM Relief Fund Tamil Nadu- ₹10 Lakhs
• CM Relief Fund Maharashtra – ₹10 Lakhs
• CM Relief Fund Delhi- ₹10 Lakhs

24
Rebuilding cyclone-affected lives

Donated Rs.48.50 lakhs from the CSR funds and Rs.17.67 lakhs from the Heritage Employee Welfare
funds to SMART Andhra Pradesh Foundation in support of Cyclone Titli that affected families in

Srikakulam, AP.

Helping Kerala stand up after the floods

Donated Rs.44,23,129/- worth of Skimmed Milk Powder from the CSR funds and employees’ one

day’s salary to the needy people in Kerala’s tragic floods.

Uplifting women through education

Inauguration of the Heritage Foods Academic Block at NTR Junior College for Girls, Gandipet by
Mr D. Seetharamaiah, Chairperson, HFL. This Block was built from CSR funds of Heritage Foods
Limited.

Corporate Management Team

Mrs. Bhuvaneswari Nara

Vice-Chairperson & Managing Director

A B.A. Graduate and a Director for several companies. Is a dynamic leader who has extensive
experience in business and has been successfully steering Heritage Foods Limited towards growth and
better prospects? Joined Heritage in 1994 as whole-time Director and is now serving as Vice
Chairperson & Managing Director. Is guiding and monitoring the overall workflow of the
organization.

Mrs. BrahmaniNaraExecutive Director

Holds a Master's in Business Administration from Stanford University, Bachelor’s in Electrical

Engineering from Santa Clara University, California, USA and Communication Engineering from
Chaitanya Bharathi Institute of Technology, Hyderabad, India. Investment Associate in Vertex

25
Venture Management Pvt Ltd between 2009-2011 in Singapore. Joined Heritage in 2011 as Vice
President Business Development and is now serving as Executive Director. Takes care of such vital
functions as design, development and implementation of strategic plans for the organization in a cost-
effective and time-efficient manner.

Dr. M. Sambasiva Rao

President

Postgraduate and Doctorate in Zoology. Served the state and central governments for about two
decades as a member of the Indian Administrative Services (IAS). Dr Rao was the Joint Secretary in
the Department of Commerce under the Ministry of Commerce and Industry, Government of India.

Mr. Srideep M

Holds MBA (PGDB

A, Marketing) from XLRI, Jamshedpur and an Alumni of XLRI, B.Tech (Electronics &
Instrumentation) from CET, University of Kerala. Mr. Srideep is a seasoned professional having a
diversified and rich experience of more than two decades in Business Leadership roles and has deep
domain expertise across Sales & Distribution, Marketing, Category Management, P&L, and General
Management in Beverages, Food & Agribusiness Organizations. He has worked as Vice President –
Marketing for Juices & Value-Added Dairy category in Coca-Cola India & South – West Asia BU
and handled various roles i.e., Director Operations (Coca Cola, INSWA BU, East Franchises, India),
General Sales Manager- (Coca Cola, India, HCCB); as Country Head in Olam International Limited
(Gabon, West Africa) & as Control Systems Engineer in ONGC, Mumbai.

26
Awards & Recognitions

Heritage Foods is proud to have been recognized by some of the most important and influential
publications and organizations around the world.

Certificate of Appreciation

Government of India, Ministry of Finance, Telangana, 2021

AWARDS

• 1st Prize in National Energy Conservation Awards-2018

• 1st Prize in National Energy Conservation Awards-2017
• 2nd Prize in National Energy Conservation Awards-2017
• National Energy Conservation Award 2016
• National Energy Conservation Award 2012
• National Energy Conservation Award 2010
• National Energy Conservation Award 2008
• Bagged the "Coca Cola Golden Spoon Award" 2017 & 2018 for its retail business division.
The annual 'COCA COLA Golden spoon awards' are well-established and highly regarded
within the industry as a mark of exceptional performance.
• Listed among India's prestigious Top-500 companies list for the year 2015 & 2016, compiled
by The Economic Times, on the basis of industry respect and key financial parameters.

27
 • Images Most Admired Retailer of the Year - 2016 (Category Food & Grocery) Awarded the
"Most Admired Retailer of the year - 2016" (Food & Grocery) at India Retail Forum.
• Fortune List of 50 Most Powerful Business WomanN. Bhuvaneswari, Vice Chairperson &
Managing Director, was placed in the list of Fortune-50 Most Powerful Businesswomen in
India for the year 2015
Exports

The Heritage dairy plant, Gokul at Kasipentla in Chittoor District, Andhra Pradesh is certified and
approved for export of ghee and butter manufactured in this plant by the Exports Inspection Agency,
India. Our products are exported to Europe, the Gulf, and several countries in Asia.

Our major exports are:

Heritage Pure Ghee in Bulk and Consumer Packs

Heritage Butter in Bulk and Consumer Packs

Heritage SMP (Skimmed Milk Powder) in Bulk & Consumer Packs

Heritage Parlour

Heritage Parlours are exclusive outlets selling the whole range of Heritage products including Heritage
milk, milk products, ice cream and also products supplied/approved by Heritage Foods Ltd.

It is a franchisee-based business model that provides excellent business opportunities for new
entrepreneurs as well as existing business owners.

With a well-established network of over 858 Parlours in Hyderabad, Vishakhapatnam, Rajahmundry,

Vijayawada, Tirupati and Chennai, Heritage Parlours play a vital role in ensuring that Heritage
products are available to customers at their doorstep. We consider every parlour a brand ambassador
of Heritage, and HFL along with the Franchisee ensures that every Heritage Parlours delivers the right
message to customers.

28
You need to fulfill these criteria to become a Heritage Parlour franchisee owner:

• Visibility – The shop should be in a residential or semi-commercial location.

• Shop Area: 100 square feet.
• Exclusive Heritage outlet- Selling only Heritage products and items supplied/approved by
Heritage Foods Limited.
• Will need to obtain the Shops and Establishment License and other required statutory
licenses/permissions.
• The Franchisee has to renovate/modify the shop as per the HFL design.
• The Franchisee would be required to furnish an interest-free refundable security deposit of
Rs.10,000/-.
• The delivery of products will be done through the regular channel of the company on a cash
and carry basis. (We do not have a policy of supply on credit.)
• The franchisee will have to invest in a deep freezer (300/400 ltrs capacity) for Ice-creams and
a Chest Cooler/Glass door refrigerator for milk and milk products.
• Franchisee should possess a bank account and will be required to submit residential and
identity proofs.
• The agreement with HFL has to be executed by the Franchisee for a period of three years.
• Product sale depends on the season: For example, Buttermilk, Lassi and Ice creams will have
higher sales in summer and less in winter. The Franchisee should make efforts to sell more
quantities based on the season and should also cater to the milk and milk products requirements
of the nearby consumers/households on a regular basis.

29
 Heritage Distribution Centre

The Heritage Distribution Centre (HDC) is an exclusive distribution wing for Heritage Foods Ltd.,
selling the whole range of Heritage products including Heritage Milk, milk products, ice-cream, and
private label products and also products supplied/authorized by Heritage Foods Ltd.

We consider the HDC to be a brand ambassador of the Heritage brand and, HFL along with the
Franchisee, ensures that every Heritage Distribution Center delivers the right service to customers.

To become a Heritage Distribution Center franchisee owner:

• It must be an exclusive Heritage Outlet – selling only Heritage brand of products or products/brands
authorized by HFL.

• Should have at least 5 years of experience in selling Dairy/FMCG distribution.

• Should possess sound knowledge of distribution and should know the retailers and the general business
environment of the assigned market.

• Would obtain all the requisite licenses and permissions to run a distribution set-up.

• Should have requisite manpower and vehicles to conduct the distribution business.

• The franchisee needs to meet the laid down sales targets to ensure the overall viability of the HDC.

• The franchisee would be required to furnish an interest free refundable security deposit of Rs.75000/-
.

• The franchisee would incur a fixed investment of Rs.5 lacs and a monthly expense of approximately
Rs.40500/-.

• The delivery of products will be done on a cash and carry basis.

• HFL would assist the franchisee in terms of milk coolers & freezers required for storage of dairy
products and conditional and part reimbursement of distribution expenses.

• The Franchisee should possess a bank account and needs to furnish proof of identity and residence.

• The agreement with HFL has to be executed by the franchisee for a period of three years.

30
• Product sale depends on the season: For example, buttermilk, lassi and ice-creams will have higher
sales in summers and less in winters. The franchisee should make effort to sell more quantities based
on the season and should also cater to the milk & milk products requirements of consumers/households
of the nearby residential colonies on a regular basis.

PRODUCTS

• Milk
• UHT Milk
• Curd
• Buttermilk
• Ice-Creams
• Frozen Desserts
• Lassi

PRODUCTS MILK

TONED MILK DOUBLE TONED MILK

31
FULL CREAM MILK STANDARDISED MILK

GOLDEN COW MILK SLIM MILK

32
ABOLITION OF FORCED LABOUR

The Company strictly prohibits forced or compulsory labour. The Company is committed to ensuring
that employees enter into employment and stay on in the Company of their own free will. Members
shall uphold this policy.

GIFTS & DONATIONS

No Member shall receive or offer, directly or indirectly, any gifts, donations, remuneration, hospitality,
illegal payments, and comparable benefits which are intended or perceived to be intended to obtain

33
business (or uncompetitive) favours or decision for the conduct of the business. Normal gifts of
commemorative nature for special events may be accepted and reported to the Board.

OTHER DIRECTORSHIPS

The Company feels that serving on the Board of directors of other companies may raise substantial
concerns about potential conflict of interest. Therefore all Directors shall report / disclose such
relationships to the Board on an annual basis. It is felt that service on the Board of a direct competitor
is not in the interest of the Company. Hence all the Directors are barred in accepting such position
without the concurrence of the Board.

ACCOUNTABILITY

The Board of Directors (BOD) shall oversee the Company's adherence to ethical and legal standards.
All employees and members of the BOD shall undertake to stop or prevent actions that could harm
customers or reputation of the Company and to report such actions as soon as they occur to take
corrective steps and see that such actions are not repeated.

COMPLIANCE WITH CODE OF CONDUCT

Each Director and senior management personnel shall adhere to this code of conduct and affirm
compliance with the code on an annual basis as per the Annexure to the Code. Violation of this Code
will lead to appropriate disciplinary action.

WAIVER OF THE CODE

Any waiver of the applicability of the Code or waiver of application of any provision of the Code to
any Member shall be approved by the Board of Directors and disclosed as required by Law or SEBI /
Stock Exchange regulations.

BRANCHES OF HFIL:

HFIL has many wings. They are

1. Dairy
2. Retail

1. Dairy:

It is the major wing among all. The dairy products manufactured by HFIL are

Milk, curd, butter, ghee, flavoured milk, paneer, doodh peda, ice cream.
34
2. Retail:

In the retail sector HFIL has outlets namely “Fresh@”. In those stores the products sold are
vegetables, milk& milk products, grocery, pulses, fruits etc.

In Hyderabad 19 retail shops are there. In Bangalore& Chennai, 3&4 respectively are there. Totally
there are 26 retail shops are there.

Fresh@ is a unique chain of retail stores, designed to meet the needs of the modern Indian consumer.
The store rediscovers the taste of nature every day making grocery shopping a never before experience.

The unique & distinctive feature of Fresh@ is that it offers the widest range of fresh fruits and
vegetables which are directly handpicked from the farms. Freshness lies in their merchandise and the
customers are always welcomed with fresh fruits and vegetables no matter what what time they walk
in.

The following are the directors of the company:

Sri D.Seetharamaiah

Smt. N. Bhuvaneswari

Sri M. SivaramaVaraprasad

Sri R.S.Bakkannavar

The Company was registered as Non-Banking Financial Institution on 5th Day of December 1998 by
Reserve Bank of India as a Deposit Taking Company under the category Hire Purchase Company.

At Present the company is allowing Dairy Loans to Small Farmers under Tie up arrangement with
Heritage Foods (India) Limited. The Company has been earning profits from inception and functioning
in conformity with the rules and directions of Reserve Bank of India.

35
About the founder:

Sri Chandrababu Naidu is one of the greatest Dynamic, pragmatic, progressive and visionary leaders
of the 21st century.
With an objective of Bringing prosperity into the rural families through co-operative efforts, he
along with a few likeminded, friends and associates promoted Heritage Foods in the year 199*
taking opportunity from the industrial Policy, 1991 of 7overnment of India and he
has been successful in his endeavor. At present, Heritage has market presence in the states of Andhr
a Pradesh, Telangana, Karnataka, Kerala, Tamil Nadu, Maharashtra, Odisha, and Delhi.
More than three thousand villages and three lakh farmers are being benefited in these states. #nthe
other side, Heritage is serving millions of customer’s needs, employing more than 3800
employees and generating indirect employment opportunities to more than 10000
people. Beginning with a humble annual turnover of Rs 4.38 crores in 1993-94, the
annual turnover has crossed Rs 2072 crores during the financial year 2014-15.

Heritage Slogan:

• When you are healthy, we are healthy.

• When you are happy, we are happy.
• We live for your “Health & Happiness”

Commitments:

Milk Producers:

Change in life styles of rural families in terms of:

• Regular high income through co-operative efforts.

• Women participation in income generation.
• Saved from price exploitation by unorganized sector.
• Remunerative prices for milk.
• Increase of milk productivity through input and extension activities
• Shift from risky agriculture to dairy farming
36
 • Heritage
• Financial support for purchase of cattle, insuring cattle
• Establishment of Cattle Health Care Centers
• Supplying high Quality Cattle feed.

Customers:

• Timely Supply of Quality & Healthy products.

• Supply high Quality milk and milk products at affordable prices.
• Focused on nutritional Foods.
• More than 4 lakh happy customers.
• High customer satisfaction.
• 24 hours help lines.

Employees:

• Enhancing the technical and managerial skills of employees through continuous training and
development.
• Best appraisal systems to motivate employees.
• Incentive, bonus, and reward systems to encourage employees.
• Heritage forges ahead with a motto “add value to everything you do”.

37
 INDUSTRY PROFILE

Introduction

The Indian food industry is poised for huge growth, increasing its contribution to world food trade
every year. In India, the food sector has emerged as a high-growth and high-profit sector due to its
immense potential for value addition, particularly within the food processing industry.

Accounting for about 32 per cent of the country’s total food market, The Government of India has
been instrumental in the growth and development of the food processing industry. The government
through the Ministry of Food Processing Industries (MOFPI) is making all efforts to encourage
investments in the business. It has approved proposals for joint ventures (JV), foreign collaborations,
industrial licenses, and 100 per cent export oriented units.

Market Size

The Indian food and grocery market is the world’s sixth largest, with retail contributing 70 per cent of
the sales. The Indian food processing industry accounts for 32 per cent of the country’s total food
market, one of the largest industries in India and is ranked fifth in terms of production, consumption,
export and expected growth. It contributes around 8.80 and 8.39 per cent of Gross Value Added (GVA)
in Manufacturing and Agriculture respectively, 17 per cent of India’s exports and six per cent of total
industrial investment. The Indian gourmet food market is currently valued at US$ 1.3 billion and is
growing at a Compound Annual Growth Rate (CAGR) of 21 per cent. India's organic food market is
expected to increase by three times by 2121.

The online food ordering business in India is in its nascent stage, but witnessing exponential growth.
With online food delivery players like Food Panda, Zomato, Tiny Owl and Swiggy building scale
through partnerships, the organized food business has a huge potential and a promising future. The
online food delivery industry grew at 190 per cent year-on-year with an estimated Gross Merchandise
Value (GMV) of US$ 300 million in 2120.

38
Investments

According to the data provided by the Department of Industrial Policies and Promotion (DIPP), the
food processing sector in India has received around US$ 7.54 billion worth of Foreign Direct
Investment (FDI) during the period April 2100-March 2121. The Confederation of Indian Industry
(CII) estimates that the food processing sectors have the potential to attract as much as US$ 33 billion
of investment over the next 10 years and also to generate employment of nine million person-days.

Some of the major investments in this sector in the recent past are:

 Global e-commerce giant, Amazon is planning to enter the Indian food retailing sector by
investing US$ 519 million in the next five years, as per Mr Harsimrat Kaur Badal, Minister of
Food Processing Industries, Government of India.

 ParleAgro Pvt Ltd is launching Frooti Fizz, a succession of the original Mango Frooti, which
will be retailed across 1.2 million outlets in the country as it targets increasing its annual
revenue from Rs 2800 crores (US$ 0.42 billion) to Rs 5000 crores (US$ 0.75 billion) by 2121.

 US-based food company Cargill Inc aims to double its branded consumer business in India by
2121, by doubling its retail reach to about 800,000 outlets and increase market share to become
national leader in the sunflower oil category which will help the company be among the top
three leading brands in India.

 Mad Over Donuts (MOD), outlined plans of expanding its operations in India by opening nine
new MOD stores by March 2121.

 Danone SA plans to focus on nutrition business in India, its fastest growing market in South
Asia, by launching 10 new products in 2121, and aiming to double its revenue in India by 2121.

 Uber Technologies Inc plans to launch Uber Eats, its food delivery service to India, with
investments made across multiple cities and regions.

39
Government Initiatives

Some of the major initiatives taken by the Government of India to improve the food processing sector
in India are as follows:

 The Government of India aims to boost growth in the food processing sector by leveraging
reforms such as 100 per cent Foreign direct investment (FDI) in marketing of food products
and various incentives at central and state government level along with a strong focus on supply
chain infrastructure.

 In Union Budget 2121-21, the Government of India has set up a dairy processing infra fund
worth Rs 8,000 crore (US$ 1.2 billion).

 The Government of India has relaxed foreign direct investment (FDI) norms for the sector,
allowing up to 100 per cent FDI in food product e-commerce through automatic route.

 The Food Safety and Standards Authority of India (FSSAI) plans to invest around Rs 482 crore
(US$ 72.3 million) to strengthen the food testing infrastructure in India, by upgrading 59
existing food testing laboratories and setting up 62 new mobile testing labs across the country.

 The Indian Council for Fertilizer and Nutrient Research (ICFNR) will adopt international best
practices for research in fertilizer sector, which will enable farmers to get good quality
fertilizers at affordable rates and thereby achieve food security for the common man.

 The Ministry of Food Processing Industries announced a scheme for Human Resource
Development (HRD) in the food processing sector. The HRD scheme is being implemented
through State Governments under the National Mission on Food Processing. The scheme has
the following four components:

 Creation of infrastructure facilities for degree/diploma courses in food processing sector

 Entrepreneurship Development Program (EDP)

 Food Processing Training Centers (FPTC)

 Training at recognized institutions at State/National level

40
Road Ahead

Going forward, the adoption of food safety and quality assurance mechanisms such as Total Quality
Management (TQM) including ISO 9000, ISO 22100, Hazard Analysis and Critical Control Points
(HACCP), Good Manufacturing Practices (GMP) and Good Hygienic Practices (GHP) by the food
processing industry offers several benefits. It would enable adherence to stringent quality and hygiene
norms and thereby protect consumer health, prepare the industry to face global competition, enhance
product acceptance by overseas buyers and keep the industry technologically abreast of international
best practices.

Food Processing Companies in India:

The Heritage Group was founded in 2202 by Mr Nara Chandra Babu

Naidu. It is one of the fastest growing private sector enterprises in
India, with five business divisions, namely, Dairy, Retail, Agri,
Bakery and Renewable Energy, under its flagship Company
Heritage Foods Ltd. The annual turnover of Heritage Foods crossed Rs 2126.99 crore.

Introduced primarily for British settlers in India, Kissan has been

present in India since 2135. The UB Group, under the Late Mr
VittalMalya then, acquired Kissan from Mitchell Bros in the year
2160. However, in 2203, Hindustan Unilever Ltd took it over from
the UB Group. Since its launch, innovation has been the main
approach.

LT Foods employ around 900 employees in India and abroad. The

company’s flagship brand ‘Dawaat’ launched in 2190’s is now
recognized as the leading brand in the industry. The company has a
strong nationwide distribution network in the domestic market that
sells products such as branded rice, wheat, and pulses.

41
 Raindrops basmati rice comes from the house of REI Agro Ltd –
world’s largest basmati processing company. REI Agro Ltd was
established in the year 2204 with a vision to consolidate the
fragmented basmati rice industry. Today REI is India’s leading food
major and is listed in Bombay Stock Exchange (BSE), National
Stock Exchange (NSE), London.

Modern Dairies is prestigious is an ISO:9001, ISO 22100, ISO

18001 (environment management) and HACCP (food safety),
certification to its credit. The company manufactures a wide range
of milk and milk products. Strategically located at the centre of milk
rich belt in Karnal, on the National Highway No 1, just 176 Kms
from North Delhi.

The company was started in the year 2202 in Calcutta (now Kolkata)
as a biscuit factory with an initial investment of just Rs 295 (US$
4.76). From a humble beginning, Britannia Industries Ltd is
presently one of India’s most popular food industries. The company's
offerings are spread across the spectrum with products ranging from the healthy ...

Nestle came to India when it set up its first factory in Moga, Punjab
in 2171. Presently, it has four offices and around eight
manufacturing facilities across India. Nestlé has been a partner in
India's growth for over nine decades now and has built a very special
relationship of trust and commitment with the people of India. The
company's a...

Established in 2199, Kohinoor has presence in over 60 countries. The

company owns one of the finest basmati rice brands, also a wide
assortment of food products that include wheat flour, ready-to-eat

42
curries and meals, simmer sauces, cooking pastes to spices, seasonings and frozen food. At present,
the company has customers in the USA, Canada.

Hatsun Agro Product Ltd is the largest private sector dairy in India. It
was established in 2180 and has since been a pioneer in promoting
dairy products. Presently, Hatsun has chilling centers in more than 68
locations, over 1,348 contract vehicles, milk sheds spread over 10
districts in Tamil Nadu and three districts in Karnataka, and over30k...

ParleAgro is the largest Indian food and beverage company, which

started in 2169 as Baroda Bottling Company for carbonated
beverages. The original Parle company was started in the year 2129
and was owned by the Chauhan family. Parle became popular with
the release of its products such as Frooti and Parle-G. ParleAgro,

Started in 2124 with the establishment of the MTR restaurant, MTR

Foods today stands tall as an Indian heritage brand. A household
name, MTR Foods has consolidated its market leadership in the
south of the country and is all set for a strong pan-India presence,
beginning with forays into the northern, western, and eastern regions.

McCain Foods INDIA is a wholly owned subsidiary of McCain

Foods Limited in Canada. Since 2208, the company has been
engaged in agriculture research and development (R&D) and in the
development of the frozen food market in India and other countries
of the subcontinent. The company's products are used by leading fast
food chains, hotels, restaurants.

Ruchi Soya Industries is among the top five FMCG companies in

India with a turnover of over Rs 26,000 crore. It is among the 50
fastest growing FMCG companies in the world and is the number
one cooking oil maker and palm plantation company in India. Over

43
the years, the company has forayed into making soya foods, bakery fats and vanaspati products.

Amul is an Indian dairy cooperative, based at Anand in the state of

Gujarat. Founded in 2146, the brand is today managed by the Gujarat
Co-operative Milk Marketing Federation Ltd (GCMMF) which is
jointly owned by about 3 million milk producers in the state. Amul
the co-operative was formed as a response to the exploitation of
marginal milk prod...

With a 160 year heritage and an existence since 2199, KRBL Ltd is
India’s first integrated rice company with a comprehensive product
chain. KRBL today stands at the top slot of the Indian rice industry,
unmatched and unparalleled in every aspect. It has an extensive and
well-positioned brand presence in both, the domestic and
international market.

Exports of processed food and related products

 During FY11–20, India's exports of processed food and related products (inclusive of animal
products) grew at a CAGR of 11.74 per cent, reaching US$ 20.2 billion.

 Main export destinations for food products have been the Middle East and Southeast Asia.

 In FY21* India’s exports stood at US$ 1.3 billion.

44
Food processing and its segments

 The food processing industry is one of the largest industries in India and ranks fifth in terms
of production, consumption, and exports. As per the latest data available, food processing
sector is expected to reach US$ 258 billion in FY19.

 In FY20* (till December 2119), food processing industry constituted 18 per cent to India’s
GDP through manufacturing.

45
 CHAPTER-IV

DATA ANALYSIS AND INTERPRETATION

RATIO ANALYSIS

4.1 CURRENT RATIO:

Current Ratio = Current Assets
Current Liabilities

Table – 1

Year Current Current Current

Assets Liabilities Ratio
2023 439,72,00,000 306,25,00,000 1.436

2022 278,47,00,000 174,42,00,000 1.597

2021 245,35,00,000 198,29,00,000 1.237

2020 251,89,00,000 304,11,00,000 0.828

2019 252,64,00,000 307,24,00,000 1.219

Graph - 1

Current Ratio
$5,000,000,000

$4,000,000,000

$3,000,000,000

$2,000,000,000

$1,000,000,000

$-
2023 2022 2021 2020 2019

Current Assets Current Liabilities

46
 Graph – 1.1

CURRENT RATIO

1.597
1.436

1.237 1.219

0.828

2023 2022 2021 2020 2019

Analysis
Current ratio compares current assets with current liabilities and tell us whether the current assets are
enough to settle current liabilities. It is inferred from the table that the higher current ratio of Heritage
Fresh Super Market is 1.597 in the year 2022 and the lowest was 0.828 in the year 2020. The ratio of
1.2 to 2 or above is usually considered safe. Heritage Fresh Super Market is in good condition to pay
back its debts as the current ratio for 2023 is 1.436. Hence the current ratio of Heritage Fresh Super
Market is satisfactory.

47
4.2 NET PROFIT RATIO:

Net profit ratio = Net Profit×100

Net sales
Table - 2
Year Net Sales Net Profit Net Profit Ratio

2023 32,086,700,000 658,900,000 2.053

2022 26,404,900,000 1,015,300,000 3.845

2021 24,067,900,000 1,451,600,000 6.031

2020 26,795,900,000 -16,000,000 -0.060

2019 24,794,600,000 834,400,000 3.365

Graph - 2

Net Profit Ratio

35,000,000,000
30,000,000,000
25,000,000,000
20,000,000,000
15,000,000,000
10,000,000,000
5,000,000,000
0
-5,000,000,000 2023 2022 2021 2020 2019

Net Sales Net Profit

48
 Graph – 2.1

6.031

3.845
3.365

2.053

-0.060
2023 2022 2021 2020 2019

Analysis

From the above table, the net profit ratio for the year 2019 was 3.36 and decreased by -0.06 in the year
2020 and can be seen increase in 2021 by 6.03 and for the next 2 years, 2022 & 2023 it has decreased
by 3.84 and 2.05. Company’s Net profit ratio started decreasing year by year which means that
company need to take measures to increase the sales and profits.

49
4.3 QUICK RATIO:

Quick Ratio = Quick Assets

Current Liabilities

Table – 3

Year Quick Assets Current Liabilities Quick Ratio

2023 $470,900,000 306,25,00,000 0.154
2022 $530,500,000 174,42,00,000 0.304
2021 $395,800,000 198,29,00,000 0.200
2020 $789,400,000 304,11,00,000 0.260
2019 $1,077,300,000 307,24,00,000 0.520

Graph – 3

Quick Ratio
$3,500,000,000

$3,000,000,000

$2,500,000,000

$2,000,000,000

$1,500,000,000

$1,000,000,000

$500,000,000

$0
2023 2022 2021 2020 2019

Quick Assets Current Liabilities

50
 Graph – 3.1

Quick Ratio
0.600

0.500

0.400

0.300

0.200

0.100

0.000
2023 2022 2021 2020 2019

Analysis

Ratio of 1.1 is said to be the ideal quick ratio. Indicating that company has in its possession enough
assets which may be immediately liquidated for paying off the current liabilities. The table shows that
the highest liquid ratio of Heritage Fresh Supermarket is 0.52 in the year 2019 that is not more than
the ideal ratio. Hence the liquid ratio of the company is dissatisfactory.

51
4.4 DEBT EQUITY RATIO:

Debt Equity Ratio = Long Term Borrowing

Shareholders Fund

Table - 4

Year Long Term Shareholder’s Debt Equity

Borrowings Fund Ratio

2019 1,542,600,000 8,049,600,000 0.191637

2020 1,601,300,000 4,623,300,000 0.346354
2021 260,700,000 5,937,600,000 0.043907
2022 21,100,000 6,604,900,000 0.003195
2023 7,800,000 7,367,000,000 0.001059

Graph - 4

Debt Equity Ratio

$9,000,000,000
$8,000,000,000
$7,000,000,000
$6,000,000,000
$5,000,000,000
$4,000,000,000
$3,000,000,000
$2,000,000,000
$1,000,000,000
$-
2019 2020 2021 2022 2023

Long Term Borrowings Shareholder's Fund

52
 Graph – 4.1

Debt Equity Ratio

0.4

0.35

0.3

0.25

0.2

0.15

0.1

0.05

0
2019 2020 2021 2022 2023

Analysis

The debt equity ratio is a financial ratio indicating the relative proportion of shareholders equity and
debt used to finance a company asset. Debt to equity ratio greater than 1 indicate the company may be
overleveraged. In all the years debt equity ratio of a company is less than 1. Hence the company is
good in maintaining its debt position.

53
4.5 FIXED ASSET TURNOVER RATIO:

Fixed Asset Turnover Ratio = Cost of Goods Sold

Net Fixed Assets

Net Fixed Assets = Fixed Assets - Depreciation

Table – 5

Year Cost of Goods Net Fixed Fixed Asset

Sold Assets Turnover Ratio
2019 18,408,700,000 8,233,000,000 2.24
2020 21,505,300,000 1,463,600,000 14.69
2021 17,795,400,000 113,300,000 157.06
2022 20,047,000,000 162,000,000 123.75
2023 26,971,600,000 265,300,000 101.66

Graph - 5

Fixed Asset Turnover Ratio

200.00

150.00

100.00

50.00

0.00
1 2 3 4 5

54
Analysis

The above table and diagram show the relationship between costs of goods sold and Net Fixed Assets.
It shows how efficiently the company has utilized the fixed assets. In 2021 there was a sudden increase
in the ratio and gradually decreased in 2022 & 2023.

55
4.6 PROPRIETARY RATIO:

Proprietary Ratio = Shareholders Fund

Total Assets

Table – 5

Year Shareholder’s Total Proprietary

Fund Assets Ratio
2019 8,049,600,000 15,953,100,000 0.505
2020 4,623,300,000 9,618,500,000 0.481
2021 5,937,600,000 8,580,300,000 0.692
2022 6,604,900,000 890,800,000 7.415
2023 7,367,000,000 15,953,100,000 0.462

Graph – 5

Proprietary Ratio

$20,000,000,000

$15,000,000,000

$10,000,000,000

$5,000,000,000

$-
2019 2020 2021 2022 2023

Shareholders Fund Total Assets

56
 Graph – 5.1

Proprietary Ratio
7.415

0.505 0.692
0.481 0.462

2019 2020 2021 2022 2023

Analysis

The high proprietary ratio indicates that a company has enough equity to support the function of
business. The ideal value of the proprietary ratio is dependent on the risk appetite of the investors. If
investor agree to take large amount of risk, then a lower proprietary ratio is preferred. It is inferred
from the table that the proprietary ratio is higher in the year 2022 (7.41) and lower in the year 2023
(0.46). Hence proprietary ratio of the company is satisfactory.

57
4.7 RETURN ON SHAREHOLDER’S FUND:

Return On Shareholder’s Fund = Net Profit After Interest and Tax

Shareholder’s Equity

Table - 7
Year Net Profit After Shareholder’s Return On
Interest and Tax Equity Shareholder’s
Fund
2019 8,344,00,000 8,049,600,000 0.10

2020 (16,000,00,000) 4,623,300,000 (0.35)

2021 14,516,00,000 5,937,600,000 0.24

2022 10,153,00,000 6,604,900,000 0.15

2023 6,589,00,000 7,367,000,000 0.09

Graph - 7

Return On Shareholder’s Fund

$10,000,000,000

$8,000,000,000

$6,000,000,000

$4,000,000,000

$2,000,000,000

$-
2019 2020 2021 2022 2023
$(2,000,000,000)

$(4,000,000,000)

Earnings After Tax Shareholders Fund

58
 Graph – 7.1

0.24

0.15
0.10 0.09

2019 2020 2021 2022 2023

-0.35

Analysis

The above table and diagram show relationship between net profits earned and Total Shareholder’s
Funds. This ratio reveals how profitability the proprietor’s funds have been utilized by the firm. A
comparison of this with that of similar firms will throw light on the relative profitability and strength
of the firm. In the year 2021 and 2022 the shareholders fund has been utilized very efficiently in the
business when compared to the remaining years.

59
 4.8 Sales Growth:

Sales Growth = Current Year Sales - 1

Last Year Sales

Table - 8

Year Sales Growth Percentage

2018 234,386,00,000
2019 247,946,00,000 6%

2020 267,959,00,000 8%

2021 240,679,00,000 (10%)

2022 264,049,00,000 10%

2023 320,867,00,000 22%

Graph - 8

SALES GROWTH
25%

20%

15%

10%

5%

0%
2019 2020 2021 2022 2023
-5%

-10%

-15%

60
Analysis

Sales growths are calculated to analyze the revenue growth from the past years to avoid risks and to
know the performance of the company. From the above graph, the sales growth has gradually increased
in 2022 from 10% to 22% in 2023.It is seen that the company is performing well.

61
 4.9 RETURN ON TOTAL ASSET:

Return On Total Asset = Net Profit *100

Total Assets

Table – 9

Year Net Profit Total Assets Return On Total

Asset
2019 8,344,00,000 15,953,100,000 5.23

2020 (16,000,00,000) 9,618,500,000 (16.63)

2021 14,516,00,000 8,580,300,000 16.92

2022 10,153,00,000 8,908,000,000 11.40

2023 6,589,00,000 11,211,700,000 5.88

Graph – 9

RETURN ON TOTAL ASSET

20.00

15.00

10.00

5.00

0.00
2019 2020 2021 2022 2023
-5.00

-10.00

-15.00

-20.00

62
Analysis

The above table and diagram show the relationship between net profit and total assets in percentage.
The ratio of return on the total assets gradually decreased in 2020 and a sudden increase in 2021 i.e.,
16.92 and decreased in 2022 & 2923. Hence, Returns are not favorable.

63
 CHAPTER – 5

FINDINGS & SUGGESTIONS

FINDINGS

1. The higher current ratio of Heritage Fresh Super Market is 1.597 in the year 2022 and the
lowest was 0.828 in the year 2020. The ratio of 1.2 to 2 or above is usually considered safe.
2. Company’s Net profit ratio started decreasing year by year from 2021 which means that
company need to take measures to increase the sales and profits.
3. The average quick ratio of Heritage Fresh Supermarket is 0.52 in the year 2019 that is not more
than the ideal ratio. Hence the liquid ratio of the company is dissatisfactory.
4. In all the years debt equity ratio of a company is less than 1. Hence the company is good in
maintaining its debt position.
5. The high proprietary ratio indicates that a company has enough equity to support the function
of business. The proprietary ratio is higher in the year 2022 (7.41) and lower in the year 2023
(0.46). Hence proprietary ratio of the company is satisfactory.
6. Fixed asset turnover ratio reveals how efficient a company is at generating sales from its
existing fixed assets. It has increased from the year 2021 which is satisfactory.
7. Return on shareholder’s fund reveals how profitability the proprietor’s funds have been utilized
by the firm. In the year 2021 and 2022 the shareholders fund has been utilized very efficiently
in the business when compared to the remaining years.
8. The sales growth has gradually increased in 2022 from 10% to 22% in 2023.It is seen that the
company is performing well.
9. The ratio of return on the total assets gradually decreased in 2020 and a sudden increase in
2021 i.e., 16.92 and decreased in 2022 & 2923. Hence, Returns are not favorable.
10. Return on investment is not satisfactory. This indicates that the company’s funds are not being
utilized in a better way.

64
SUGGESTIONS

1. Net profit ratio is very low which decrease to 1% for the two years is. Company needs to take
measures to increase sales.
2. The return on asset is very much low for all the years. The company must take measures on
improving sales.

3. The investment on raw material should be made as per the requirement. Unnecessary
investment may block up the funds.
4. Neither too high nor too low inventory turnover ratios may reduce profit and liquidity position
of the industry. So, proper balance should be made to increase profits and to ensure liquidity.
5. The raw material should be acquired from the right source at right quality and at right cost.
6. The organization ought to keep up nonstop liquidity position, as the working capital is not
constant in organization, it continues changing yearly.
7. The organization needs to enhance its quick ratio which helps the organization to change over
its stock into cash.

65
 REFERENCES

BALANCE SHEET OF HERITAGE

FOODS (in Rs. Cr.)

12 mths 12 12 12 12 mths
mths mths mths

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS

Equity Share Capital 46.40 23.20 23.20 23.20 23.20

TOTAL SHARE CAPITAL 46.40 23.20 23.20 23.20 23.20

Reserves and Surplus 690.30 637.29 567.38 435.94 778.58

TOTAL RESERVES AND SURPLUS 690.30 637.29 567.38 435.94 778.58

TOTAL SHAREHOLDERS FUNDS 736.70 660.49 593.76 462.33 804.96

NON-CURRENT LIABILITIES

Long Term Borrowings 0.78 2.11 26.07 160.13 154.26

Deferred Tax Liabilities [Net] 23.83 23.19 23.77 22.92 26.82

Other Long Term Liabilities 35.76 14.22 6.08 4.40 295.09

Long Term Provisions 17.87 16.38 10.05 7.96 6.94

TOTAL NON-CURRENT LIABILITIES 78.23 55.90 65.97 195.41 483.11

66
CURRENT LIABILITIES

Short Term Borrowings 125.69 1.64 0.47 83.17 92.23

Trade Payables 42.77 48.20 32.78 56.85 62.75

Other Current Liabilities 129.09 116.59 152.57 153.08 144.23

Short Term Provisions 8.70 7.99 12.48 11.00 8.03

TOTAL CURRENT LIABILITIES 306.25 174.42 198.29 304.11 307.24

TOTAL CAPITAL AND LIABILITIES 1,121.17 890.80 858.03 961.85 1,595.31

ASSETS

NON-CURRENT ASSETS

Tangible Assets 573.27 529.83 530.05 426.51 438.79

Intangible Assets 3.45 4.42 3.87 6.11 10.86

Capital Work-In-Progress 19.93 7.37 15.45 75.51 22.31

Other Assets 4.31 4.42 4.53 5.85 3.69

FIXED ASSETS 601.07 546.15 556.31 515.56 475.66

Non-Current Investments 65.39 59.73 49.11 185.94 860.14

Deferred Tax Assets [Net] 0.00 0.00 0.00 0.00 0.00

Long Term Loans And Advances 0.00 0.00 5.17 5.08 4.38

Other Non-Current Assets 14.99 6.43 2.10 3.38 2.49

67
TOTAL NON-CURRENT ASSETS 681.45 612.31 612.67 709.96 1,342.67

CURRENT ASSETS

Current Investments 0.00 0.00 0.00 0.00 0.00

Inventories 366.10 195.74 188.50 136.37 132.03

Trade Receivables 27.91 17.98 14.53 21.09 39.97

Cash And Cash Equivalents 19.15 34.98 21.39 55.03 65.40

Short Term Loans And Advances 0.03 0.09 3.66 2.82 2.36

OtherCurrentAssets 26.54 29.70 17.26 36.57 12.87

TOTAL CURRENT ASSETS 439.72 278.49 245.35 251.89 252.64

TOTAL ASSETS 1,121.17 890.80 858.03 961.85 1,595.31

68
PROFIT & LOSS ACCOUNT OF
HERITAGE FOODS (in Rs. Cr.)

12 mths 12 mths 12 mths 12 mths 12 mths

INCOME

REVENUE FROM OPERATIONS 3,207.25 2,640.49 2,406.79 2,679.59 2,479.46

[GROSS]

Less: Excise/Sevice Tax/Other Levies 0.00 0.00 0.00 0.00 0.00

REVENUE FROM OPERATIONS [NET] 3,207.25 2,640.49 2,406.79 2,679.59 2,479.46

TOTAL OPERATING REVENUES 3,208.68 2,642.92 2,407.03 2,681.11 2,482.35

Other Income 11.35 10.31 8.41 302.81 142.19

TOTAL REVENUE 3,220.02 2,653.24 2,415.44 2,983.92 2,624.54

EXPENSES

Cost Of Materials Consumed 2,697.16 2,004.70 1,779.54 2,150.53 1,840.87

Purchase Of Stock-In Trade 84.68 57.99 55.71 60.54 84.40

Operating And Direct Expenses 0.00 0.00 0.00 0.00 0.00

Changes In Inventories Of FG,WIP And -175.87 5.36 -31.43 -13.20 33.91

Stock-In Trade

Employee Benefit Expenses 203.92 176.81 170.39 149.57 136.85

Finance Costs 3.17 3.20 17.85 20.81 20.69

Depreciation And Amortisation Expenses 53.85 49.96 44.05 48.04 43.71

69
Other Expenses 263.57 210.39 178.87 711.58 331.76

TOTAL EXPENSES 3,130.69 2,508.84 2,219.25 3,128.60 2,495.86

PROFIT/LOSS BEFORE 89.34 144.40 196.19 -144.68 128.69

EXCEPTIONAL, EXTRAORDINARY
ITEMS AND TAX

Exceptional Items 0.00 -9.14 0.00 0.00 0.00

PROFIT/LOSS BEFORE TAX 89.34 135.26 196.19 -144.68 128.69

TAX EXPENSES-CONTINUED
OPERATIONS

Current Tax 22.71 34.30 50.04 18.50 42.28

Less: MAT Credit Entitlement 0.00 0.00 0.00 0.00 0.00

Deferred Tax 0.74 -0.58 0.99 -3.18 2.97

Tax For Earlier Years 0.00 0.00 0.00 0.00 0.00

TOTAL TAX EXPENSES 23.45 33.73 51.02 15.33 45.25

PROFIT/LOSS AFTER TAX AND 65.89 101.53 145.16 -160.00 83.44

BEFORE EXTRAORDINARY ITEMS

PROFIT/LOSS FROM CONTINUING 65.89 101.53 145.16 -160.00 83.44

OPERATIONS

PROFIT/LOSS FOR THE PERIOD 65.89 101.53 145.16 -160.00 83.44

70
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C Abad, S A Thore, J Laffarga “Fundamental analysis, Managerial and decision Economics,
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WEBSITES

• www.tatamotors.com
• www.slideshare.com
• www.scribd.com
• www.ibef.org

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