Comparative Study of Organized Agri-Food Businesses in India

Michael Vinrald Samuel* Mrinalini Shah**

India is the second largest producer of fruits after China with an estimated production of 54.4 million tonnes in 2008. Indias diverse agro-climatic condition allows production of a wide range of tropical, subtropical and temperate fruits. Sighting huge business opportunities, retail giants like the UKs Tesco, Frances Carrefour, and American Wal-Mart are looking to make a foray into the Indian retail market by providing the Indian customer a unique experience of shopping. Not lagging behind are the Indian cooperatives like Reliance with Reliance Fresh, Aditya Birla Group, ITC, Mahindra & Mahindra, and Adani Group. This research has specifically been carried out to understand the present organized agri-food retail sector in India as well as the objectives, strategies, and financial performances of six existing companies in this business. The research paper will enable business houses to plan and decide at what level they can venture the present highly fragmented Indian market. Key words : Agri-Food Supply Chain, Unorganized and Organized Retailing, Business Strategies, New Business Development, and Company Profiling.

Introduction
India is the second largest producer of fruits after China with an estimated production of 54.4 million tonnes in 2008 (Economic Survey, Ministry of Agriculture, Govt. of India 2008). Indias diverse agro-climatic condition allows production of a wide range of tropical, subtropical and temperate fruits. Indias fruit production is practised over an area of 3.79 M hectares and accounts for more than 10 per cent of the worlds total production, the shares ranging from 4 per cent of citrus fruits to about 46 per cent of mangoes (MOFPI 2008). Indias exports of fresh fruit and vegetable reached Rs 2437.12 crores in 2007-08 (APEDA 2008). Food processing industry is one of the largest in the country and has shown a growth rate of 16 per cent in 2008 (MOFPI 2008). Ministry of Food Processing Industries in India is planning to establish 30 mega food parks with a subsidy of about $12 million and channelling incoming FDI across the country. Punjab, Maharashtra, Andhra Pradesh, Jharkhand, and the North-East Region are the first few states the Indian government is considering for land acquisition ranging from 10 acres to 500 acres for mega food parks (MOFPI 2008). A highly fragmented retail sector coupled with flourishing economy provided an ideal platform for establishment of organized retailing in India (Economic Times Intelligence Group 2003). Metropolitan Indians swiftly shifting lifestyles gave these organized retailers and supermarkets the critical fecundity to develop and flourish. In addition to these behavioural changes, the Indian government revolutionized its policies which

watered down the precincts on overseas ventures for intercontinental superstore chains to be instituted in India. Agri-food retailing is a key sector geared to be exploited as presently this segment is mainly unorganized, besides being disjointed. The emerging organized retail sector is expanding exceptionally with an anticipation of US$ 427 billion by 2010 from US$ 350 billion in 2006 (IBEF 2007). This unparalleled intensification would primarily impinge diminutive traders in conjunction with next-door vendors. Globalization, non-interventionist reforms, and invigorating pace (8 per cent) of Indian economy have made the retail majors like the UKs Tesco, Frances Carrefour, and American Wal-Mart consider foraying into the currently immature as well as promising segment by providing the Indian shoppers an inimitable experience of shopping. Not sheathing behind are the Indian powerhouses like Reliance with Reliance Fresh, Aditya Birla Group with more, ITC with e-chaupal, and Mahindra & Mahindra with Mahindra Shubhlabh Services Limited, (MSSL) to name a few (CRISIL, 2008). These organized retailers aim precisely to present the shoppers an improved, in addition to a healthier, produce at a lower price. Reliance Industries, Indias leading private corporation, was one of the initial companies to establish its own retail chains under the brand name Reliance Fresh in 2006. Their number of stores soared from 330 in 2007 to 1,500 by the end of 2008 (CRISIL 2008). During the next few years, Mukesh Ambani, the billionaire behind the chain, plans to have 4,000

* Research Scholar (SCM), Institute of Management Technology, Ghaziabad, India. Email: mvsamuel@imt.edu ** Professor, Operations Management, Institute of Management Technology, Ghaziabad, India. Email: mrinalini@imt.edu

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to 5,000 retail outlets double the figure of Tescos supermarkets within England. These stores are estimated to swathe in excess of ten million square feet which was achieved formerly over thirty to forty years in the US and Europe. Reliance aimed to replace Indias traditional agri-food supply chain, comprising farmers, middlemen, wholesalers, retailers, and vendors, with their personal set of around 500,000 recruits by 2010 (CRISIL 2008). This study intends to elucidate existing supply chains of organized agri-food companies in India, business approaches of existing organized agri-food companies and an assessment of their pecuniary performances. Ground survey was carried to identify and map organized agri-food supply chains. The corporations were chosen in accordance with their commercial and pecuniary performances, daton which were obtained from published annual balance sheets. The study has been divided into the following three sections: Discussion on the existing organized agri-food retail sector in India. Detailing a few existing organized agri-food retail companies alongside their business objectives and strategies in India. Comparing the financial performance of the companies considered.

Existing Agri-Food Retail Sector in India

To map the echelons of organized agri-food supply chains the researchers travelled extensively throughout India. It was established that corporates have ventured into business at upper and lower levels of existing unorganized agri-food supply chains. This research illustrates that organized retailing is a far-fetched dream in India as agri-food companies are still dependent upon spot markets to buy and sell their produce (Figure 1). These organized retail companies are operating their business from: i. Growers to commission agents and ii. Commission agents to consumers.

Growers to Commission Agents

Foremost agri-food retail chains from growers to commission agents are Fresh and Healthy Enterprises Limited (FHEL) (A subsidiary of CONCOR), Adani Group (with Adani Agri Fresh Limited) and MSSL for apples. These agri-food retail chains procure fresh fruits unswervingly from orchards, hoard these, and trade the same within mandis (spot price markets). These retail chains maintain cold supply chains throughout the
Grower / Producer

Forwarding Agent

Agri Food Retail Chains including Untifuti, FHEL and Adani Group

Leg 1 Growers to commission agents

Normal Trucks Customer

Refrigerated Trucks

Whole Saler Aarhat

Mashakhar

Agri-Food Retail Chains

Retailers

Other Mandis

Other Cities

Retailers

Retail Stores

Leg 2 Commission agents to consumers

Customer

Customer

Customer

Figure 1: Legs of AgriFood (Apple) Supply Chain Followed by Organized Retailers in India.

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71

shipment. Organized retail chains own CA (controlled atmosphere) stores which score over conventional CS (cold stores) as the former controls the entire atmosphere. The CO2 levels in these stores are contained within 0 to 20 per cent and O2 level is retained between 0 and ambient. The T (Temperature) and RH (Relative Humidity) are maintained at 2 C and 9095 per cent respectively (Samuel et. al. 2008). Modified atmosphere leads to retarding RoR (rate of respiration) of fruits thereby preserving critical attributes such as the aura, flavour, and appearance up to six months. These companies hoard fresh fruits and vegetables for trading during off seasons. Fresh fruits stored in CA stores score over those in cold storage as fruits turn soggy and shrink due to unrestrained high RoR. Introductions of CA stores have made it possible to in provide better quality fruits to consumers during off seasons. Organized agri-food companies ship hoarded fruits to mandis in refrigerated trucks across nation and trade the same through commission agents to wholesalers.

probable causes enunciated were poor post-harvest management facilities as well as deficient organized distribution system. The subsequent explanations for venture were irregular supply of agri-foods within the domestic markets. The subsidiary has developed an integrated storage, handling, and transportation infrastructure for fresh fruits and vegetables across India. Adani Group constructed CA storage units at three locations (Rewali, Sainz, and Rohru) in Himachal Pradesh with a combined capacity of approximately 18,000 Mt to provide consistent quality of fruits and vegetables throughout the year. Cold supply chain was considered to increase shelf life of fruits as well as enhance efficiency of the system. The company strategized to concentrate on seasonal produce that were grown far from major consumption markets, and amendable storage life using modern integrated cold chain facilities. Superior facilities were thought to leverage logistics strength in addition to arbitrage price differential between peak and off seasons.

Commission Agents to Consumers

Companies dealing in this part of the supply chain include Reliance Fresh, Aditya Birla More, Big Bazar, Spencers, Big Apple, 6-Ten, etc. These retail chains procure produce from commission agents and supply directly to consumers through company-operated stores. Emergence of these retail chains have brought about significant positive impact upon unorganized retailers in India as retailers have stopped resorting to malpractices in terms of weights and quality of produce. Retailers have begun telephone and door-to-door services in societies to lure as well as provide conveniences to customers. These retailers have also begun quoting competitive prices for customer loyalty.

Fresh & Healthy Enterprise Limited (FHEL)

CONCOR deliberated to capture Indias large horticultural biodiversity and significant volumes of fruits and vegetable. As per the industry 30 per cent of the fruit and vegetable production is lost due to poor postharvest management, costing at almost Rs 60,000 cr. Realizing this potential CONCOR established its fully owned subsidiary called Fresh and Healthy Enterprise Limited (FHEL) in February 2006 with Rs 35 crore as equity from itself. FHEL was set up to create a top-notch cold chain infrastructure within the country and cold chain logistics solutions for various stakeholders. Their first controlled atmosphere (CA) store was setup at Rai near Delhi. FHEL intended to develop postharvest management facilities including appropriate handling of produce starting from orchards, during cold storage, shipment in refrigerated containers, and distribution, to provide value to consumers. The thought behind was that contemporary cold supply chain will act as a catalyst for developing a modern, efficient, and safe food chain to meet rising demands of retail chains. The company also plans to present customized end-toend cold supply chain services from farm gates to end consumers.

Existing Agri-Food Retail Companies in India:

The study examines a total of six corporations falling in both halves of the supply chain, i.e. i. Growers to commission agents and ii. Commission agents to consumers. Amongst the studied companies Adani Agri Fresh Limited, Fresh & Healthy Enterprises Limited, and Mahindra Shubhlabh Services Limited fall within the former, while Aditya Birla More, Spencers, and Subhiksha are in the latter.

Mahindra Shubhlabh Services Limited (MSSL)

Mahindra Group established Mahindra Shubhlabh in 2000, with an equity stake from International Finance Corporation (IFC, Washington) with the objective to integrate agri-food chains from farms to contemporary retail outlets. By 2008, Mahindra Shubhlabh was Indias leading exporter of fresh grapes to the European Union.

Adani Agri Fresh Limited

Adani Group launched their 100 per cent owned subsidiary named Adani Agri Fresh Ltd. to capture Indias large fresh fruits and vegetables market. The

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Mahindra Shubhlabh is the first Indian corporate to be awarded EUREPGAP certificate as Primary Marketing Organization for grapes alongside GLOBALGAP and TNC certifications. For domestic consumption MSSL aims to integrate agri-food supply chain for providing shoppers a healthy and quality produce at cheapest price.

Aditya Birla Retail Limited

According to Mr Kumar Mangalam Birla, Chairman, Aditya Birla Group Indian consumer, are underserved even with existing shopping outlets as these malls are not providing an international experience to the shoppers (Business Line 2007). Sighting the above vision, a string of conveniently positioned local stores were established within the brand More for fulfilling the needs of Indian households. The company plans to build direct linkages with farmers and invest appropriately in backend infrastructure to ensure the freshest supply of agri-foods to consumers by connecting households directly to farmers. The company acquired Trinethra Super Retail in January 2007. This deal gave More more than half a million square feet of selling area in addition to a strong presence in business in the southern states (Business the Standards, 2007).

entrant it introduced Indian consumers with organized retailing, becoming the countrys first agri-food chain back in 1920. The company embossed and positioned their brand as Taste the World in order to provide a wide range of quality products to discerning young customers as well as delighting shoppers with excellent ambience and merchandise. Spencers has been able to provide quality goods and services by continuously evolving and innovating.

Subhiksha
Subhiksha ventured the sector in 1997 with its foremost store in Chennai. Within a decade, the administration began facing trouble with daily operations resulting in defaults in vendor payments leading to empty stores. The company started facing major financial crisis by January 2009 and in February 2009 the management declared closing every part of its 1,600 outlets till further notification (ICMR 2009) According to the (Financial Express, 2009) the main reasons for Subhikshas failure included small-format grocery retailing, lack of transparency, and liquidity crisis coupled with poor management.

Spencers
Spencers has been a part of Indian retail landscape since its inception in 1863. Its presence could be experienced from Peshawar to Cochin and Karachi to Chittagong. The company was originally owned by Mr John William Spencer, and later it acquired Indian ownership and became a division of RPG Group in 1989. As an early Turnover (Total Sales) Total expenses Profit after Taxation (PAT) Gross Fixed Assets(GFA) 1. Plant and machinery / computers / electrical installations 2. Other fixed assets

Agri-food companies financial performances

The infer sections enunciated existing agri-food companies business in India. In this section the researchers have measured the financial performances of companies to access their growth. Figure 2 illustrates the financial performance measures considered for the study:

Asset utilization ratios 1. Total income / Avg. total assets 2. Total income / Compensation to employees 3. Sales / Avg. GFA (excl. revaluation, and work in program) 4. Sales /Avg. net fixed assets Financial Performance Measures Working cycle and turnover ratios 1. Debtors (Days) 2. Creditors (Days) 3. Debtors turnover ratio 4. Creditors turnover ratio Profitability ratio (%) 1. Profit before Interest, Taxes, Depreciations and Amortizations (PBDITA) / Total Income

Return ratio (%) 1. PAT/Avg. capital employed 2. PAT/Avg. total assets

Figure 2: Financial Performance Measures Considered for the Study

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73

Turnover (Total Sales) and Total Expenses

From figure 3 one can see that the maximum turnover in terms of volume has been of Spencers as it possesses its retail stores providing a range of fast moving consumer good (FMCG) products apart from daily groceries. However, turnover of MSSL and FHEL are relatively low as the two companies are present only in back-end supply of fresh agri-foods. Total expenses (Figure 4) of companies are not only proportionate to total sales but surprisingly are more. By analysing the two figures one comes across that all companies are incurring heavy losses in business.

Figure 7: Plant and machinery / computers / electrical installations costs (Rs crores) for considered companies

Figure 3: Turnover (Rs crores) for considered companies

Figure 8: Other fixed costs (Rs crores) for considered companies

Profit after Taxation (PAT)

Figure 5 compliments the above justification by noticeably portraying PAT in negative. However, by comparing Figures 3 and 5 one can notice that high turnovers have led to heavier losses.

Figure 4: Total expenses (Rs crores) for considered companies

Gross Fixed Assets

Spencers, Adani Agri Fresh, and FHEL have gradually built their assets (Figure 6) including plant and machinery, computers, and electrical installations (Figure 7) in addition to other costs (Figure 8). A part of PAT may be explained from fixed assets. However, the next few years will be critical for these companies as further losses will result into a catastrophe with fixed assets acting as a catalyst.

Figure 5: Profit after Taxation (Rs crores) for considered companies

Asset Utilization Ratio

Asset utilization ratio (Figure 9) has been made known to comprehend growth of the companies. A momentous dip in asset utilization ratio has been noticed which is alarming as these trends are universal for all companies. Asset utilization ratio was further divided in order to isolate the cause. However, it is observed that trends are cross-functionally similar, i.e. human resource (Figure 10), operations (Figure 11), and net fixed assets (Figure 12).

Figure 6: Gross Fixed Assets (Rs crores) for considered companies

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Return Ratio
Trends for return ratio were quite similar to profitability ratio both in terms of average capital employed (Figure 14) as well as total assets (Figure 15). Quick corrective strategies are required for Spencers and FHEL as these figures will not permit them to survive for long.

Figure 9: Asset utilization ratios (Total income / Avg. total assets) for considered companies

Figure 13: Profitability ratio (%) (PBDITA/ Total Income) for considered companies

Figure 10: Asset utilization ratios (Total income / Compensation to employees) for considered companies

Figure 14: Return ratio (%) (PAT/Avg. capital employed) for considered companies Figure 11: Asset utilization ratios (Sales / Avg. GFA (excl. reval. & WIP)) for considered companies

Figure 15: Return ratio (%) (PAT/Avg. total assets) for considered companies

Figure 12: Asset utilization ratios (Sales /Avg. net fixed assets) for considered companies

Profitability Ratio
From Figure 13 one observes a positive trend towards profitability for MSSL. Whereas a dip of fortunes for Spencers and FHEL. Not a single company is generating profit which evidently indicates that all companies have miles to cover to intimidate unorganized retail sector.

Figure 16: Working cycle and turnover ratios (Debtors) (Days) for considered companies

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75

Working Cycle and Turnover Ratio

Working cycle and turnover ratio in terms of cycle (days) for debtors and creditors (Figures 16 and 17) were found to be alarming for MSSL. However, debtors (Figure 18) as well as creditors (Figure 19) turnover ratios were observed at endurance levels for all considered companies.

costing Rs 177.79 crores. However, over the years their total sales have only been Rs 26.4 crores with total expenses to the magnitude of Rs 43.97 crores (Table 1). The total profit after taxation was Rs ()17.56 crores for the financial year (20078). Figure 20 unlocks an array of questions which the company management might find hard to explain in terms of strategies as well as investments.

Fresh & Healthy Enterprises Ltd. (FHEL)

FHEL being a subsidiary of CONCOR has invested in two phases in their fixed assets (Figure 3). In financial year 20067 they spent Rs 54.29 crore and in 20078 Rs 82.61 crore. They have constructed a CA store in the outskirts of Delhi at a place called Rai. FHEL have considerably increased their sales from Rs 4.76 crore in 2007 to Rs 16.3 crore in 2008 (Table 1). Though the sales volume has increased four times the expenditure has increased nine times from Rs 5.1 crore in 2007 to Rs 47.46 crore in 2008 leading to net profit of Rs ()82.61 crore. The management of FHEL needs to justify the phenomenon of reduction in profits with increase of sales volumes, as well as how they will recover high amount invested for fixed asset (Figure 21). Asset utilization ratio in terms of total income has been quite low at 0.2, but is good in terms of compensations to employees 16.32. Sales compared to net as well as gross fixed assets is quite low at 0.39 and 0.24 in 2008 (Table 1). The profitability ratio is 62.67 and return

Figure 17: Working cycle & turnover ratios (Creditors) (Days) of considered companies

Figure 18: Working cycle & turnover ratios (Debtors turnover ratio) (Credit Sales/ Average debtors) of considered companies

Figure 19: Working cycle & turnover ratios (Creditors turnover ratio) (Credit Purchased/ Average creditors) of considered companies

Figure 20: Comparative graph between (Gross Fixed Assets/ Total Sales/ Total expenses/ Profit after Taxation) (Rs crore) for Adani Agri Fresh Limited

Discussion and Conclusion:

Brief assessment of companies based on performance measures

Adani Agri Fresh Limited

Adani Agri Fresh invested heavily on fixed assets (Figure 3) by constructing three CA stores in Himachal Pradesh

Figure 21: Comparative graph between (Gross Fixed Assets/ Total Sales/ Total expenses/ Profit after Taxation) (Rs crore) for Fresh & Healthy Enterprises Limited

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ratios are also negative at 24.04 and 20.67 in terms of capital employed and assets for 2008. Working cycle and turnover ratio are high in terms of debtors (34.14 days) as well as creditors (98.85 days).

Spencers Retail Limited

Spencers and chiefly involved in front-end retailing having chain of retail stores throughout India. They have maximum fixed assets worth of Rs 515.26 crore (Table 1) followed by Adani Agri Fresh with Rs 177.79 crore. The sales revenue has increase from Rs 90.76 crore in 2005 to Rs 855.62 crore in 2008. With increased sales volumes, expenditures have also increased from Rs 98.81 crore in 2005 to Rs 1063.10 crore in 2008 (Figure 22). However, profit after taxation reduced from Rs ()3.14 crore to Rs ()89.31 crore during 20058. Amongst all the companies considered in the study Spencers have the maximum sales, expenditure, PAT, and gross fixed asset. The asset utilization ratio (total income/avg. total assets) in terms of total assets has considerably decreased from 4.02 in 2005 to 1.48 in 2008. The asset utilization ratio in terms of compensations to employees is downwards from a high of 19.13 in 2005 to 10.59 in 2008. Sales compared to net as well as gross fixed assets has reduced significantly from 7.62 and 8.72 in 2005 to 3.52 and 2.68 in 2008 (Table 1). The profitability ratio at ()12.84 is least for its class and return ratios have reduced substantially from ()21.00 to ()72.99 and ()13.15 to ()15.36 from 2005 to 2009 for capital employed and assets. Working cycle and turnover were found to be comparatively low at 9.21 days for debtors and 64.87 days for creditors in 2008. However, figures of creditors and debtors increased considerably from 3.31 days and 42.87 days in 2005 to 9.21 days and 64.87 days in 2008 (Table 1).

Figure 23: Comparative graph between (Gross Fixed Assets/ Total Sales/ Total expenses/ Profit after Taxation) (Rs crore) for Aditya Birla Retail Limited

Mahindra Shubhlabh Services Ltd. (MSSL)

MSSL has the lowest fixed assets worth Rs 2.45 crore (Table 1) followed by FHEL with Rs 82.61 crore. The sales revenue has increased from Rs 12.38 crore in 2005 to Rs 37.38 crore in 2008. With increase in sales volumes, expenditures have also increased from Rs 19.41 crore in 2005 to Rs 52.32 crore in 2008. However, profit after taxation increased from Rs. ()6.06 crore to Rs ()1.86 crore from 2005 to 2008. All the companies considered in the study are running into losses but still MSSL leads them with the best figures of Rs()1.86 crore (PAT). The asset utilization ratio in terms of total income has been low at 1.1, but is good in terms of compensations to employees at 12. Sales compared to net as well as gross fixed assets is high at 15.54 and 22.79 respectively for 2008 which is the highest in the lot (Table 1). The profitability ratio is good at 1.46 and return ratios are comparatively good at values of ()13.78 and ()5.22 in terms of capital employed and assets for 2008 (Figure 24). Working cycle and turnover ratio are highest in terms of debtors at 147.05 days as well as creditors 190.21 days which the management needs to introspect.

Figure 22: Comparative graph between (Gross Fixed Assets/ Total Sales/ Total expenses/ Profit after Taxation) (Rs crore) for Spencers.

Aditya Birla Retail Limited

Aditya Birla More is still premature and has a long way to go. With only one years performance it is not possible to assess or conclude their performance (Figure 23). The company management believes they can excel in business and one believes their words.

Figure 24: Comparative graph between (Gross Fixed Assets/ Total Sales/ Total expenses/ Profit after Taxation) (Rs crore) for Mahindra Shubhlabh Services Limited The research enables to understand the existing organized agri-food retail sector in India as well as the objectives and financial performances of six existing companies. Financial statements of considered agri-food companies provide reflection on growth, endurance,

Comparative Study of Organized Agri-Food Businesses in India

77

sustainability, and profitability over the next decade (Table 2). While concluding, considering the present pecuniary situation of the companies considered, one is compelled to think Are organized agri-food companies really a threat to unorganized agri-food sector in India, or based on their financial performances they will meet the same fate as Subhiksha?

Economic Times Intelligence Group (2003), Changing Gears: Retailing in India, Economic that Times Knowledge Series, Mumbai: Economic Times Intelligence Group. Financial Express (2009), Small-format retail biz model failed Subhiksha, Company Information, 5 March, 2009. ICMR (2009), Subhiksha: An Indian Retailer in Trouble, Center for Management Research, Case Code: BSTR333. IBEF (2007), India Brand Equity Foundation, Ministry of Commerce & Industry, Government of India, New Delhi MOFPI (2008), Visions, Strategy and Action Plan for Food Processing Industries, New Delhi: Ministry of that Food Processing Industries, Government of India. Samuel, M.V., B.S. Sahay, and M. Shah, (2008), A Case Study on Cost Optimization of Apple Supply Chain, Redefining Business Horizons, New Delhi: Macmillan Publishers India Ltd., pp. 15967.

References
APEDA (2008), Annual Report, Agricultural and Processed Food Products, New Delhi Export Development the Authority, Ministry of Commerce and Industry, Government of India, pp. 22730. Business Line (2007), Aditya Birla Retail Plans Rs 9,000cr rollout, Aditya Birla press release, 19 May, 2007. Business Standards (2007), Trinethra acquisition gives Birlas the upper hand, press release, 4 January, 2007. CRISIL (2008), Annual Retailing Review, Crisil Research, pp. B5566. Government of India, (2008), Economic Survey 2008, New Delhi: Ministry of Agriculture, Government of India.

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Table 1: Financial performance of considered companies (Data compiled from various published sources)

Company 0.5 33.97 153.26 177.79 12.88 54.29 82.61 2.06 2.07 2.15 2.36 2.45 16.76 22.64 71.46 188.34 515.26 20.21 23.3 89.12 16.09 10.66 1.57 1.69 9.2 1.23 4.77 3.94 2.14 198.88 0 1.48 74.26 0 2.58 12.41 10.59 80.87 72.29 82.99 33.86 0 3.3 13.92 11.46 0 4.13 16.46 7.34 7.03 5.8 3.52 12.14 12.78 10.74 8.3 0 4.02 19.13 7.62 0.69 0.05 1.1 12 15.54 22.79 8.72 8.6 7.65 4.83 2.68 15.8 18.24 7.1 0.58 0.05 1.33 10.5 12.21 17.42 0.41 0.05 1.23 8.29 6.92 9.55 0.37 0.04 2.12 10.51 10.06 12.95 0.38 0.04 1.65 4.85 5.7 6.94 -32.19 5.34 18.09 1.96 1.46 1.02 3.75 3.32 7.10 12.84 3.91 4.87 4.95 44.83 16.71 0.2 16.32 0.39 0.24 62.67 0.05 0.02 0.09 13.27 18.31 0.18 2.24 0.37 24.04 115.64 38.86 74.85 19.87 13.78 21.00 44.36 37.47 45.69 72.99 10.55 11.39 5.62 3117 0.33 20.67 56.05 22.76 29.40 6.29 5.22 13.15 26.99 17.62 25.01 15.36 5.55 7.24 3.84 0 34.14 41.01 31.26 75.57 112.62 147.05 3.31 3.12 5.38 6.88 9.21 0.54 0.70 0.45 5.73 0.09 9.60 9.43 0 119.23 840.00 98.85 64.38 57.52 138.04 173.48 190.21 42.87 37.46 74.57 64.60 64.87 4.49 3.54 23.28 0 10.68 8.9 11.67 4.82 3.24 2.48 110.01 116.72 67.82 53.00 39.62 666.33 515.05 797.57 0 98.3 50.08 0.14 4.29 0.25 0.16 41.38 11.19 9.20 45.625 122.25 2.5 1.45 8 0.18 0.11 0.07 0.05 -

Sales (crores)

Total expenses (crores) Sales / Avg. GFA Debtors (Days) Creditors (Days)

Profit after Taxation (PAT) (crores) Plant & machinery (crores) Sales /Avg. net fixed assets PBDITA/ Total income PAT/Avg. capital employed PAT/Avg. total assets Debtors turnover ratio Creditors turnover ratio 12.50 3.12 122.85 65.08 9.48 10.9 3.89 2.54 2.65 11.22 10.59 7.31 6.18 6.52 107.89 126.59 27.36

Gross Fixed Assets (GFA) (crores)

Overall Fixed Assets (OFA) (crores)

Total Total income / income / CompenAvg. total sation to assets employees

Mar-05

Adani

Mar-06

Adani

Mar-07

Adani

Mar-08

Adani .

26.4

43.97

17.56

Mar-04

Aditya Birla

Mar-05

Aditya Birla

Mar-06

Aditya Birla

Mar-07

Aditya Birla

33.17

31.77

Mar-08

Aditya Birla

Mar-07

FHEL

4.76

5.1

0.19

Mar-08

FHEL

16.3

47.46

18.14

Mar-04

MSSL

12.46

19.41

6.06

Mar-05

MSSL

20.78

26.22

2.68

Mar-06

MSSL

14.61

24.44

3.75

Mar-07

MSSL

27.53

30.73

1.32

Mar-08

MSSL

37.38

52.32

1.86

Mar-04

Spencers

90.76

98.81

3.14

Mar-05

Spencers

138.32

147.75

9.06

Mar-06

Spencers

290.63

335.43

15.54

Mar-07

Spencers

539.83

617.08

52.34

Mar-08

Spencers

853.62

1063.1

89.31

Mar-04

Subhiksha

216.56

219.72

2.58

Mar-05

Subhiksha

278.13

282.47

5.17

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Mar-06

Subhiksha

334.98

357

6.11

Table 2: Comparative growth indicators of considered agri food companies Company Names FHEL* Very low as compared to gross fixed assets More than double the total sales Much higher than total sales 60% of total expenses 80% of total expenses Much higher than gross fixed assets MSSL* Spencers*

S. No.

Financial Performance Measures

Adani Agri Fresh Ltd.*

Total Sales (Crores)

Very low as compared to gross fixed assets

Total expenses (Crores)

Almost double to total sales

3 Very high as compared to total sales High at 44.83% Moderate at 16.71% Poor Poor Poor Poor Company is incurring heavy losses Company is incurring heavy losses Company is incurring heavy losses Good at 34 days Good Quite low which is extremely good for the company Quite high which is extremely critical for the company Very Good Extremely Good Company is incurring losses Very Good Good Very low at 0.05% Very low at 0.069% Extremely low as compared to total sales

PAT (Crores)

The company incurred a loss of The company incurred a loss of The company incurred a loss of The company incurred a heavy -17.56 crores. -18.14 crores. -1.86 crores. loss of -89.31 crores. Very high as compared to total sales Critical at 198.88% Figures not available Poor Poor Poor Poor Company is incurring losses

GFA (Crores)

Ten folds to total sales

Comparative Study of Organized Agri-Food Businesses in India

Plant & machinery

Critical at 98.3%

OFA

High at 50.08%

Asset Utilization Ratio

Total income / Avg. total assets Very poor

Total income / Compensation to employees

poor

Sales / Avg. GFA

Very poor

Sales /Avg. net fixed assets

Very poor

Profitability Ratio (%)

PBDITA/ Total income

Company is incurring heavy losses

Return Ratio (%) Company is incurring losses Company is incurring losses Company is incurring losses Company is incurring losses

PAT/Avg. capital employed

Company is incurring heavy losses

PAT/Avg. total assets

Company is incurring heavy losses

Working cycle & turnover ratios Extremely poor at 147 days Extremely poor at 190 days Quite low which is extremely good for the company Quite low which is extremely good for the company Terrifically good at 9 days Extremely good at 65 days Surprisingly high which is critical for the company Low which is extremely good for the company
79

Debtors (Days)

Good at 45 days

Creditors (Days)

Good

Debtors turnover ratio

Quite low which is extremely good for the company

Creditors turnover ratio

Quite low which is extremely good for the company

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