ADF final analysis

ADF Foods Limited engages in the manufacture, marketing, and distribution of food products in

India and internationally. Its products include Indian pickles, chutneys, canned foods, frozen

foods, spices, ready to eat curries, snacks, parathas and naans, curry powders, and cooking pastes

and sauces. The company offers its products under the Ashoka, Camel, Aeroplane, Khansaama,

Truly Indian, and ADF Soul brands through distribution networks in Europe, the United States,

the Middle East, Australia, Canada, and Asia. It also offers contract manufacturing services. The

company was founded in 1932 and is based in Mumbai, India.

Apart from marketing and distributing its own Brands, ADF Foods Ltd are also contract

manufacturers for leading multinationals and Main stream Retailers worldwide.

Technical Analysis

  BSE NSE

Open 50.25 51.20

Day High 51.50 51.85

Day Low 49.90 49.50

Previous Close 50.25 50.35

52-Week high 86.35 86.40

52-Week low 42.30 43.75

P/E 7.31 7.31

Market Cap (Rs cr) 102.9 102.8

Volume 7423.00 3160

Simple Moving Average

According to simple moving average analysis, adffoods is in a strong downtrend. Major resistance levels are 51.4975, 55.595, 57.97825.

Exponential Moving Average 

According to exponential moving average analysis, adffoods is in a strong downtrend. Major resistance levels are 51.80391, 53.761, 57.022.

Relative Strength Index (RSI)

RSI is 40.5. According to RSI analysis, adffoods is technically weak.

Moving Average Convergence-Divergence (MACD)

As it name implies the MACD is all about convergence and divergence of two moving averages.

Convergence occurs when the moving averages move towards each other. Divergence occurs when the

moving averages move away from each other. The shorter moving average (12-day) is faster and

responsible for most MACD movements. The longer moving average (26-day) is slower and less reactive

to price changes in the underlying security.

The MACD Line oscillates above and below the zero line, which is also known as the centerline. These

crossovers signal that the 12-day EMA has crossed the 26-day EMA. The direction, of course, depends on

direction of the moving average cross. Positive MACD indicates that the 12-day EMA is above the 26-

day EMA. Positive values increase as the shorter EMA diverges further from the longer EMA. This

means upside momentum is increasing. Negative MACD values indicate that the 12-day EMA is below

the 26-day EMA. Negative values increase as the shorter EMA diverges further below the longer EMA.

This means downside momentum is increasing.

MACD: -1.53 and Signal Line: -1.55. No trend identified using macd analysis.

Fundamental Analysis

Economic Analysis

Over 90% of fruits, vegetables and milk are still consumed fresh. But there

is disparity in the quality and prices of food items available across regions.

Also, a lot of these items are seasonally available, hence no uniformity in

quality and prices. 

Supply Abundant supply of vital foods. The industry faces over

supply in certain segments . However, more than half of

this is available in unpacked or loose form, thus benefiting

only the unorganized sector. segment enjoys high

penetration even in rural areas. Supply is higher because of

unorganized sector (bidis).

Demand Processed food demand is growing at 10%-15% per annum.

Growth of dual income households has given rise to

demand for instant foods, especially in urban areas.

Tobacco demand is largely inelastic. Demand growth is

pegged at 4%-6% for cigarettes.

Barriers to

entry

Huge investments in promoting brands and setting up

distribution networks. Punitive taxation policies of

government in case of tobacco.

Bargaining

power of

suppliers

Many established players have a slight edge in bargaining

power. However, for commodities , companies are

dependent on the

integrated backwards and have their own supply chains.

Therefore, the bargaining power of suppliers is not high.

Bargaining

power of

customers

High as a result of intense competition both among branded

and unbranded products. As consumption is more or less a

habit, the bargaining power of consumers is only to the

extent of choice of brand.

Competition The competition takes place mainly on basis of product

quality. However, in a bid to increase penetration of new

products, companies often compete on pricing and by

offering discounts and freebies.

Company Analysis

Financial Analysis

Beta0.954

Confidence in Beta13.6%

Market CapitalRs. 100.0 Cr

Diluted Trailing Twelve Months

(TTM) Earnings Per Share (EPS)

Rs. 6.89

TTM Price-to-Earnings (P/E) Ratio

7.28

Beta: Beta of a stock is defined as sensitivity of a stock with respect to market or index. Here

beta of a stock is calculated with respect to NIFTY. Beta of ADF is 0.954 which means 1% rise

or fall in nifty would result in 0.954 % rise or fall in ADF on average.

Beta indicates the stock's correlation with the market index and cautions on the risk associated

with it. Stocks with beta more than 1 will outperform markets (on average) if market goes up but

at the same time they have huge potential for losses if market goes down. Investors with less risk

appetite should stick with low-beta stocks.

Confidence in Beta: Since beta calculation is a statistical process, we associate a confidence

with beta which tells us about the relevance of beta of calculated. According to the statistical

processes involved, beta with a confidence of 13.6 % or more can be trusted. Here CIB is less

than 13.5% so; it is not much trusted stock.

ADF Foods Industries- ratio

------------------- in Rs. Cr. -------------------

 Mar

'11Mar '10 Mar '09 Mar '08 Mar '07

Investment Valuation Ratios

Face Value 10.00 10.00 10.00 10.00 10.00

Dividend Per Share -- -- -- -- --

Operating Profit Per Share (Rs) 9.57 8.89 11.59 8.19 12.44

Net Operating Profit Per Share

(Rs)63.59 51.65 54.19 50.61 79.76

Free Reserves Per Share (Rs) 44.69 39.32 36.01 33.70 --

Bonus in Equity Capital -- -- -- -- --

Profitability Ratios

Operating Profit Margin(%) 15.04 17.21 21.38 16.17 15.59

Profit Before Interest And Tax

Margin(%)9.42 10.89 14.55 9.58 10.29

Gross Profit Margin(%) 9.67 11.18 15.13 9.86 10.53

Cash Profit Margin(%) 14.40 14.00 19.15 12.59 12.91

Adjusted Cash Margin(%) 14.40 14.00 19.15 12.59 12.91

Net Profit Margin(%) 10.89 12.59 7.56 6.28 7.99

Adjusted Net Profit Margin(%) 10.89 12.59 7.56 6.28 7.99

Return On Capital

Employed(%)11.57 13.93 21.53 13.77 23.07

Return On Net Worth(%) 12.74 13.25 9.16 7.43 18.42

Adjusted Return on Net

Worth(%)10.74 8.54 15.93 7.64 18.37

Return on Assets Excluding

Revaluations55.78 50.39 46.49 44.02 35.42

Return on Assets Including

Revaluations55.78 50.39 46.49 44.02 35.42

Return on Long Term

Funds(%)12.15 14.01 22.14 13.95 23.07

Liquidity And Solvency Ratios

Current Ratio 2.19 4.33 2.32 2.54 1.97

Quick Ratio 2.63 3.90 1.96 1.82 1.12

Debt Equity Ratio 0.21 0.01 0.02 0.05 0.26

Long Term Debt Equity Ratio 0.16 0.01 0.01 0.05 0.26

Debt Coverage Ratios

Interest Cover 11.44 11.25 11.01 5.98 3.98

Total Debt to Owners Fund 0.21 0.01 0.02 0.05 0.26

Financial Charges Coverage

Ratio12.25 11.29 11.04 7.01 5.54

Financial Charges Coverage

Ratio Post Tax12.44 11.80 7.13 5.70 5.08

Management Efficiency Ratios

Inventory Turnover Ratio 11.40 17.62 10.34 13.16 8.61

Debtors Turnover Ratio 7.88 11.94 13.65 14.67 13.84

Investments Turnover Ratio 11.40 17.62 10.34 13.16 8.61

Fixed Assets Turnover Ratio 1.99 1.91 2.03 1.09 1.76

Total Assets Turnover Ratio 1.47 1.46 1.79 1.03 1.79

Asset Turnover Ratio 1.99 1.91 2.03 1.09 1.76

 

Average Raw Material Holding 11.86 15.57 15.00 19.86 --

Average Finished Goods Held 10.80 5.24 6.27 5.65 --

Number of Days In Working

Capital142.46 163.30 107.16 93.92 47.96

Profit & Loss Account Ratios

Material Cost Composition 53.09 48.40 47.13 48.30 --

Imported Composition of Raw

Materials Consumed1.20 5.81 0.60 1.97 --

Selling Distribution Cost

Composition12.90 12.80 14.59 14.99 --

Expenses as Composition of

Total Sales76.97 84.62 87.38 85.42 --

Cash Flow Indicator Ratios

Dividend Payout Ratio Net

Profit24.59 26.28 41.17 66.12 35.40

Dividend Payout Ratio Cash

Profit16.62 17.91 22.94 33.46 21.87

Earning Retention Ratio 70.83 59.25 76.32 35.66 64.51

Cash Earning Retention Ratio 81.41 76.36 83.75 67.01 78.09

AdjustedCash Flow Times 1.27 0.09 0.10 0.33 0.87

ADF Foods Industries

Liquidity and Solvency Ratios

Current ratio

2006-07 2007-08 2008-09 2009-10 2010-2011

0

1

2

3

current ratio

A comparatively higher current ratio indicate a good liquidity and satisfactory debt repayment

capacity of the firm .It also an indicator of safety of investment made by creditors.

In the last 2 year the constantly the current ratio of the company is increasing which shows the

liquidity position of the company and also the satisfactory repayment of capacity of the

company. It also shows that the investment made by the creditor is also safe and in safe position.

Highest in 2010-11 then down in 2011-12 from 4.33 to 2.19 which indicated tough situation for

company

Quick ratio

2006-07

2007-08

2008-09

2009-10

2010-2011

00.5

11.5

22.5

33.5

quick ratio

Even if the current ratio is high, a low quick ratio does not indicate a good debt repayment

capacity of the firm.

The authenticity of decision taken on the basis of current ratio can verify through quick ratio.

Here the company has the high liquidity ratio than the standard liquidity ratio. The company has

3.9 in the year 2010-11 which indicate that the company has good financial position and also

indicate a good short term solvency or debt repayment capacity of the firm.

The company has decreased the liquidity ratio in comparison to 2012 last year ratio of liquidity

which indicates the company has less repayment capacity than the last year.

Debt equity ratio

2006-07 2007-08 2008-09 2009-10 2010-110

5

10

15

20

Debt Equity Ratio

Significant:

A high debt-equity ratio levels more investment of load capital than equity capital in meeting

the requirement of finance of the firm

This situation is highly risk because of a higher claim of the outsiders to the firm.

Here the company has the higher debt equity ratio than the standard ratio of debt-equity.

Year b year the risk went to down. But the last year 2012 the risk was up.

This shows that the company has the decreasing the debt in comparison to last year

Long Term Debt Equity Ratio

2006-07 2007-08 2008-09 2009-10 2010-110

5

10

15

20

Long Term Debt Equity

Long term debt ration indicated that long term debt again the equity. If the ratio is high it means

that company make more debt for long term planning which is danger situation for the company.

Above the chart ratio was went down by year which good for company that they have less debt.

Management Efficiency Ratios

Inventory turnover ratio

2006-07 2007-08 2008-09 2009-10 2010-110

5

10

15

20

Inventory Turnover Ratio

This ratio indicated that in a year how many times the inventory convert in to the final good that

mean how many time company generated sales. More ration indicated low storage low inventory

which is good and above the chart the was going up except the last year 2012 down to 17 to 11.

Debtors turn over ratio

2006-07 2007-08 2008-09 2009-10 2010-1105

101520

Debtors Turnover Ratio

This ratio indicated that how many time the debtor’s payment in the year. More ratio indicated that more times payment by debtors. But above the chart it indicated that company customer snot payment in the times. Which create long term cash scarcity or fund.

Assets Turnover Ratio

2006-07 2007-08 2008-09 2009-10 2010-110

5

10

15

20

Total Assets Turnover Ratio

Interpretation

This ratio signifies the company‘s ability to make the sales with compare to the total assets. It

shows whether the total assets of bank it is utilized properly or not .This firm’s ratio is in year

2011-10 is 1.32, in year 2011-12 is 2 and in year 2010-11 is 1.91 it was indicated that company

is able to utilize their assets in good manner.

FIXED ASSETS TURNOVER RATIO

2006-07 2007-08 2008-09 2009-10 2010-1105

101520

Fixed Assets Turnover Ratio

Significance

A high fixed assets turnover ratio is an indicator efficient utilization of fixed assets in generating

sales.It levels that use of less fixed assets made possible higher generation of sales.The

comparison of a firm ‘s fixed assets turnover ratio with that of past year and with the industry

standard may be a helpful tool to evaluate the activity level.

Debt Coverage Ratios

Interest Cover

2007-08 2008-09 2009-10 2010-11 2011-120

0.51

1.52

2.5

Interest Cover

Series1

The EBIT and the operating profit are same. So the interest coverage ratio measures as to how

many times the interest burden of the firm is covered by the operating profit of the firm. A

higher coverage ratio indicate better debt servicing capacity. It is beneficial from the viewpoint

of both the firm and the lenders.

Here in the year 2011-12the company achieved the higher ratio than the last fiancial year 2010-

09. It is increased 11.33 from 11.57which gives the benefit to the company on measuring the

long term solvency.

Fixed-Charge Coverage Ratio

2006-07 2007-08 2008-09 2009-10 2010-1105

101520

Financial Charges Coverage Ratio

A ratio that indicates a firm's ability to satisfy fixed financing expenses, such as interest and

leases. It is calculated as the following: the company year by year capable to pay expenses for

fixed which good indication for company.

Profitability Ratios

Net Profit Margin

A ratio of profitability calculated as net income divided by revenues, or net profits divided by

sales. It measures how much out of every dollar of sales a company actually keeps in earnings.

2006-07 2007-08 2008-09 2009-10 2010-1105

101520

Net Profit Margin(%)

From the above chart it come out that the net profit is not consistence but at last year there was

down word trend and profit down in 2011 10% from 2010 to 12

Return On Capital Employed - ROCE

2006-07 2007-08 2008-09 2009-10 2010-110

5

10

15

20

Return On Capital Employed(%)

ROCE should always be higher than the rate at which the company borrows, otherwise any

increase in borrowing will reduce shareholders' earnings.

A variation of this ratio is return on average capital employed (ROACE), which takes the

average of opening and closing capital employed for the time period.

Return On net worth

2006-07 2007-08 2008-09 2009-10 2010-110

5

10

15

20

Return On Net Worth

The amount of net income returned as a percentage of shareholders equity. Return on

equity measures a corporation's profitability by revealing how much profit a company

generates with the money shareholders have invested.  

From the above chart it is indicated that there is there is too much floatation in roe but in 2011 it

was down 12.74 to 12.25.

Industry analysis

Rising income levels: The average real per capita income growth in India rose from 3.3% during

the Ninth Plan (1997-2002) to 6.1% during the Tenth Plan (2002-2007). Growing affluence and

higher spending capacity provides a huge opportunity for the food services sector.

Growth of middle class: India has the presence of a strong 300 m middle class population. This

is roughly equal to the population of US, the country with the third largest population in the

world. The middle class has been the largest patron of the food services industry and the increase

in the middle class is expected to lead to its growth.

Younger population: Over 65% of India's population is below 35 years of age. A majority of

this age group eats out. An increase in this population segment provides opportunity for the

growth of the foods segment industry.

Rising urbanization: On an average, the spending on eating out in Tier 1 and Tier 2 towns is

double that of Tier 3 towns. With 29% of India’s population residing in urban centers and

growing fast, higher spending on eating out is expected to benefit the industry.

SWOT Analysis

Strengths

The company engaged in the business of marketing food and food ingredients to

Consumers and institutional customers.

The company is affiliated to ConAgra Foods Inc. of USA, which is one the world’s

largest food companies.

Sundrop is the largest brand in the premium segment of the refined oil consumer

Packs

Weakness

These prices vary on factors like good monsoons, weather conditions, demand and supply

scenario, foreign exchange fluctuations and government policy both at domestic and

international level.

Opportunities

In the Edible Oils category the Company continued to work on the increasing health

consciousness of the Indian consumer and significantly increased the distribution and

display of Sundrop while supporting the brand with a higher level of media investments.

In the Snacks Category the Company continued its focus on ACT II Popcorn, through

sustained national media presence for the brand, significant increase in retail distribution

and increasing awareness of the category.

Favorable government policies will ensure that the organized edible oil industry grows

significantly.

The biggest opportunity is the consolidation that is taking place in the edible oil industry;

as leaders and organized players, the company is set to gain most from this consolidation

Threats

A macro threat is that of vegetable oil seeds being diverted for non-food production like

bio-fuel and other alternate energy.

Rising crude oil prices and volatility in international prices are the other sources of

concern. Macro economic and global issues like inflation, recession, political and social

upheavals, in adequate or excessive rainfall, acts of God and nature will have an effect on

the industry as a whole

Key investment and impact

The US acquisition has now turned around from November and going forward this

company will start contributing as well. The domestic market roll-out of SOUL has

started and products are already available in 10 cities

ADF Foods Limited, a leader in the Ethnic Food business, has declared its results for the

Quarter ended 31st December 2011. The company while announcing its results for the

third quarter of 2012 has stated that it’s consolidated Income from Operations has

increased by 31 percent to Rs. 115.29 crore from Rs. 88.32 crore in the corresponding

period.

On standalone basis, Profit After Tax of Rs. 9.09 crore and EBITDA reached Rs. 18.13

crore in Q3 2012 for the period ending 31st December 2011.

Agro Tech Foods Ltd

Agro Tech Foods Ltd (ATFL) is a public limited company engaged in the business of

marketing food and food ingredients to consumers and institutional customers. We are

affiliated to ConAgra Foods Inc. of USA, which is one the world’s largest food

companies. 

2008-Agro Tech Foods has appointed Mr. Phani K Mangipudi as Acting Company

Secretary and Compliance Officer effective January 11, 2008 approved by the Board of

Directors at their meeting held on January 23, 2008.

-Agro Tech Foods Ltd has has appointed Mr. Greg Estep and Mr. Alejandro Castro as

Directors of the Company.

2009 - Agro Tech Foods Ltd has informed BSE that at the meeting of the Board of

Directors of the Company held on January 21, 2009, Mr. Satish Tandon has been

inducted into the Board as an Additional Non-Executive Independent Director.

Technical analysis

Simple Moving Average

Price just got above it's 20-day simple moving average which is a positive signal. According to

simple moving average analysis, atfl is in a strong uptrend. Major support levels are 444.2875,

434.229, 402.1105.

Exponential Moving Average 

Price just got above it's 20-day exponential moving average which is a positive signal. According

to exponential moving average analysis, atfl is in a strong uptrend. Major support levels are

439.9824, 431.0988, 400.3835.

Relative Strength Index (RSI)

RSI is 54.4. According to RSI analysis, atfl is marginally strong.

Moving Average Convergence-Divergence (MACD)

As it name implies the MACD is all about convergence and divergence of two moving averages.

Convergence occurs when the moving averages move towards each other. Divergence occurs

when the moving averages move away from each other. The shorter moving average (12-day) is

faster and responsible for most MACD movements. The longer moving average (26-day) is

slower and less reactive to price changes in the underlying security.

The MACD Line oscillates above and below the zero line, which is also known as the centerline.

These crossovers signal that the 12-day EMA has crossed the 26-day EMA. The direction, of

course, depends on direction of the moving average cross. Positive MACD indicates that the 12-

day EMA is above the 26-day EMA. Positive values increase as the shorter EMA diverges

further from the longer EMA. This means upside momentum is increasing. Negative MACD

values indicate that the 12-day EMA is below the 26-day EMA. Negative values increase as the

shorter EMA diverges further below the longer EMA. This means downside momentum is increasing.

MACD: 2.02 and Signal Line: 3.17. According to MACD analysis, atfl is marginally weak.

Company Analysis

Financial Analysis

Beta0.685

Confidence in Beta10.9%

Market CapitalRs. 1083.0 Cr

Diluted Trailing Twelve Months (TTM) Earnings Per Share (EPS)

Rs. 14.35

TTM Price-to-Earnings (P/E) Ratio 31

Beta: Beta of a stock is defined as sensitivity of a stock with respect to market or index. Here

beta of a stock is calculated with respect to NIFTY. Beta of ATF is 0.685 which means 1% rise

or fall in nifty would result in 0.685 % rise or fall in ATF on average.

Beta indicates the stock's correlation with the market index and cautions on the risk associated

with it. Stocks with beta more than 1 will outperform markets (on average) if market goes up but

at the same time they have huge potential for losses if market goes down. Investors with less risk

appetite should stick with low-beta stocks.

Confidence in Beta: Since beta calculation is a statistical process, we associate a confidence

with beta which tells us about the relevance of beta of calculated. According to the statistical

processes involved, beta with a confidence of 10.9 % or more can be trusted. Here CIB is less

than 10.9% so, it is not much trusted stock.

Key Financial Ratios of Agro Tech Foods

Mar'11

Mar '10 Mar '09 Mar '08 Mar '07

Investment Valuation Ratios

Face Value 10.00 10.00 10.00 10.00 10.00

Dividend Per Share 1.75 1.50 1.00 -- --

Operating Profit Per Share (Rs) 11.37 10.60 7.37 9.43 9.03

Net Operating Profit Per Share (Rs)294.9

2266.55 317.45 414.72 426.01

Free Reserves Per Share (Rs) 62.83 51.83 43.26 35.88 29.17

Bonus in Equity Capital -- -- -- -- --

Profitability Ratios

Operating Profit Margin(%) 3.85 3.97 2.32 2.27 2.11

Profit Before Interest And Tax Margin(%) 3.18 3.45 1.99 2.03 1.90

Gross Profit Margin(%) 3.21 3.50 2.00 2.03 2.10

Cash Profit Margin(%) 2.55 4.07 2.13 1.81 1.76

Adjusted Cash Margin(%) 2.55 4.07 2.13 1.81 1.68

Net Profit Margin(%) 4.38 3.81 2.67 1.60 1.54

Adjusted Net Profit Margin(%) 4.38 3.81 2.67 1.60 1.42

Return On Capital Employed(%) 16.66 21.31 16.44 18.72 18.50

Return On Net Worth(%) 17.90 16.68 16.06 14.54 16.83

Adjusted Return on Net Worth(%) 7.84 15.78 10.54 14.25 15.47

Return on Assets Excluding Revaluations 72.83 61.83 53.26 45.88 39.21

Return on Assets Including Revaluations 72.83 61.83 53.26 45.88 39.21

Return on Long Term Funds(%) 16.66 21.31 16.46 20.61 20.77

Liquidity And Solvency Ratios

Current Ratio 2.13 1.95 2.03 1.67 1.54

Quick Ratio 1.37 1.33 1.47 1.08 1.09

Debt Equity Ratio -- -- -- 0.11 0.19

Long Term Debt Equity Ratio -- -- -- -- 0.06

Agno tech food

Liquidity and Solvency Ratios

Current ratio

2006-07 2007-08 2008-09 2009-10 2010-11

16.614.29

19.48

12.19 11.81

current ratio

A comparatively higher current ratio indicate a good liquidity and satisfactory debt repayment

capacity of the firm .It also an indicator of safety of investment made by creditors.

In the last 3 years the constantly the current ratio of the company is increasing which shows the

liquidity position of the company and also the satisfactory repayment of capacity of the

company. It also shows that the investment made by the creditor is also safe and in safe position.

Highest in 2010 then increase in 2011 from 2.13 to 1.95 which indicated tough situation for

company.

Quick ratio

2006-07 2007-08 2008-09 2009-10 2010-11

16.614.29

19.48

12.19 11.81

quick ratio

Even if the current ratio is high, a low quick ratio does not indicate a good debt repayment

capacity of the firm.

The authenticity of decision taken on the basis of current ratio can verify through quick ratio.

Here the company has the high liquidity ratio than the standard liquidity ratio. The company has

1.37 in the year 2010-11 which indicate that the company has good financial position and also

indicate a good short term solvency or debt repayment capacity of the firm.

The company has decreased the liquidity ratio in comparison to 2011 last year ratio of liquidity

which indicates the company has less repayment capacity than the last year

Debt equity ratio

2006-07 2007-08 2008-09 2009-10 2010-11

0.19

0.11

0 0 0

Debt Equity

Significant:

A high debt-equity ratio levels more investment of load capital than equity capital in meeting

the requirement of finance of the firm

This situation is highly risk because of a higher claim of the outsiders to the firm.

Here the company has the higher debt equity ratio than the standard ratio of debt-equity.

Year b year the risk went to down. But the last year 2011 there was no risk.

This shows that the company has the decreasing the debt in comparison to last 3 years.

Long term debt ratio

2006-07 2007-08 2008-09 2009-10 2010-11

16.614.29

19.48

12.19 11.81

Long Term Debt Equity Ratio

Long term debt ration indicated that long term debt again the equity. If the ratio is high it means

that company makes more debt for long term planning which is danger situation for the

company. Above the chart ratio was went 0 for 4 years which good for company that they have

less debt.

Management Efficiency Ratios

Inventory turnover ratio

2006-07 2007-08 2008-09 2009-10 2010-11

16.614.29

19.48

12.19 11.81

Inventory Turnover Ratio

This ratio indicated that in a year how many times the inventory convert in to the final good that

mean how many time company generated sales. From the above chart it seems that there is

fluctuation in inventory highest in 2008-09 and then decrease for continuous 2 years for 2010

and 2011. More ration indicated low storage low inventory which is good and above the chart the

was going up except the last year 2011 down to 12.19 to 11.81.

Industry Analysis

Rising income levels: The average real per capita income growth in India rose from 3.3% during

the Ninth Plan (1997-2002) to 6.1% during the Tenth Plan (2002-2007). Growing affluence and

higher spending capacity provides a huge opportunity for the food services sector.

Growth of middle class: India has the presence of a strong 300 m middle class population. This

is roughly equal to the population of US, the country with the third largest population in the

world. The middle class has been the largest patron of the food services industry and the increase

in the middle class is expected to lead to its growth.

Younger population: Over 65% of India's population is below 35 years of age. A majority of

this age group eats out. An increase in this population segment provides opportunity for the

growth of the foods segment industry.

Rising urbanization: On an average, the spending on eating out in Tier 1 and Tier 2 towns is

double that of Tier 3 towns. With 29% of India’s population residing in urban centers and

growing fast, higher spending on eating out is expected to benefit the industry.

SWOT Analysis

Strengths

The company engaged in the business of marketing food and food ingredients toconsumers and institutional customers.

The company is affiliated to ConAgra Foods Inc. of USA, which is one the world’slargest food companies.

Sundrop is the largest brand in the premium segment of the refined oil consumerPacks

Weakness

These prices vary on factors like good monsoons, weather conditions, demand and supply

scenario, foreign exchange fluctuations and government policy both at domestic and

international level.

Opportunities

In the Edible Oils category the Company continued to work on the increasing health

consciousness of the Indian consumer and significantly increased the distribution and

display of Sundrop while supporting the brand with a higher level of media investments.

In the Snacks Category the Company continued its focus on ACT II Popcorn, through

sustained national media presence for the brand, significant increase in retail distribution

and increasing awareness of the category.

Favorable government policies will ensure that the organized edible oil industry grows

significantly.

The biggest opportunity is the consolidation that is taking place in the edible oil industry;

as leaders and organized players, the company is set to gain most from this consolidation

Threats

A macro threat is that of vegetable oil seeds being diverted for non-food production like

bio-fuel and other alternate energy.

Key investment and impact

Of the proposed four units, according to ATFL chief executive officer Sachin Gopal, the

peanut butter manufacturing facility coming up in Gujarat would be the first to

commence operations.

“Right now, the civil works on the Gujarat plant are being executed. The facility will

commence commercial operations this year," Gopal told Business Standard adding that

this would enable the company to use locally sourced peanuts.

Stating that ATFL would “at least” be doubling its manufacturing capacity in a couple of

years, he said the company would expand the category of ready-to-eat (RTE) meals,

peanut butter and cooking sprays.

Net Sales and PAT of the company are expected to grow at a CAGR of 10% and 19%

over 2010 to 2013E respectively.

Agro Tech’s plan is to “move from being a commodity-centric to food-centric company

and (to be) seen as leading FMCG player. In the near term, it plans to increase its share of

food business to 25 per cent from 15 per cent as of now,” Gopal said.

As a part of this plan, apart from introducing new products in the food segment, ATFL is

targeting to have its presence in 500,000 retail stores in a year’s time as compared with

300,000 stores at present.