National foods,financial analysis, financial ratios

1. Contents
..........................................................................................................................................................3
AboutNational Foods Limited .............................................................................................................4
Vision Statement:...............................................................................................................................4
Global Presence:.................................................................................................................................4
Brands...............................................................................................................................................5
Recipe Mix......................................................................................................................................5
Pickles............................................................................................................................................5

2. Ketchup..........................................................................................................................................5
Fruitily............................................................................................................................................5
Salt................................................................................................................................................5
Performance of the Products...............................................................................................................6
Ketchups........................................................................................................................................6
Recipe Mix......................................................................................................................................6
Fruitily............................................................................................................................................6
Salt................................................................................................................................................6
Pickles............................................................................................................................................6
Graphical Illustrations:........................................................................................................................7
Previous Sales Trend:..........................................................................................................................7
Expenses trend:..................................................................................................................................8
Forecasted Income statement:............................................................................................................9
Forecasted Balance Sheet: ................................................................................................................10
Forecast analysis ..............................................................................................................................11
Notes to Financial Statements...........................................................................................................12

3. Submitted by: Saad Ismail (15940)
Amin Punjani (15900)
Usman Pervez (16349)
Qayum Ali (16515)
Submitted to: Ms. Misbah Iqbal

4. About National Foods Limited
National FoodsLimitedbeganitsjourneyinn197o as a spice company.Theyintroducedarevolutionary
productthat broughtthe conceptof havingcleanand healthyfood.Theiraimwastoprovide hygienic
foodthat save time inthe kitchen.
National FoodsLimited’sphilosophywasto produce productsthatconformto international standards.
To research that continuously produce new and adventurous products, which are scientifically
tested, and hygienically produced.
VisionStatement:
To be a Rs. 50 billion food company by the year 2020 in the convenience food segment by
launching products and services in the domestic and international markets that enhance
lifestyle and create value for our customers through management excellence at all levels.
Global Presence:
By providing tasteful and quality food, National Foods Limited has won the hearts of millions of
consumers worldwide. They have successfully established their global presence in 45 countries
in 5 continents. They have subsidiary companies in UAE (NF DMCC), UK (National Foods
Pakistan (UK) ltd) and Canada (National Epicure Inc).

5. Brands
Recipe Mix
 Palak Paneer
 Quorma
 Bombay Biryani
 Haleem
 Fish Masala
 Malai Tikka
 Achar Gosht
Pickles
 Garlic Pickle
 Vinegar Pickle
 Mango Pickle
 Lemon Pickle
Ketchup
 Tomato Ketchup
 Chili Garlic Sauce
 Hot & Spicy Sauce
Fruitily
 Orange
 Lemon
 Mango
 Mixed Fruit
Salt
 Iodized Salt
 Chinese Salt

6. Performance ofthe Products
Ketchups
From many years, this product of the National Foods Limited has seen a continuous growth in
revenues and gross margins. According to the Director’s Report of 2013 and 2014, the company
showed a significant increase in the sales. According to the report, the company achieved
39.6%, and 20% increase in sales in 2013 and 2014 respectively. Because of this the company
also observed a significant improvement in the gross margins. The directors view this
performance as a result of a strong marketing campaign and advertisements that are carried
out by their efficient marketing department.
Recipe Mix
These are one of the most profitable categories of NFL. This category has most of the years
showed a significant increase in sales and the profit margins. In 2013, this category showed a
sales increase of 25.2% and about a 17% increase in 2014. According to the Director’s Report,
this continuous growth is a reason of a strong Branding campaign such as ‘National Ka Pakistan’
where one of the most famous chefs of Pakistan play a part in promoting the brand.
Fruitily
This category covers refreshing drinks, and faces a severe competition from other brands.
Though with this tough competition, Fruitily managed to achieve the growth of 5.6%, but
gained an impressive market share, and there was also some growth in its Gross Margin. The
company introduced a special deal boosted the sales at some outlets.
Salt
Salt has been one of the most special products of National Foods Limited because this product
has never fall short of the expectation of the company. In 2013, the company saw a growth of
26.5% in this product. Also there was also a significant improvement in the gross margin, and
the company consider as a great potential for the future. In 2014, there was a slight decrease in
the growth of sales as there was a 17% growth rate, but still it holds a very strong position in
the portfolio of National Foods Limited.
Pickles
The Pickles of NFL is going through a bit different scenario then other categories. Though the
sales of this product noticed an 18% growth, but there was not a significant growth in the gross
margin, in fact it reduced. The directors view this reduction in the margins due to the increase
material costs. This has forced the company to redesign the plant to fully achieve the potential
and raise the standards. Other than this, the market is becoming more and more challenging
because of increasing completion. But the company is working very hard to meet the
challenging targets.

7. Graphical Illustrations:
Previous Sales Trend:
The salesof National Foodshave grownwitharelativelylow percentage growthinthe pastthree years.
In 2013, the percentage increase insalesreducedto 19.2%, and 13.8% increase in sales in 2013 and
2014. The decline sales in 2014 was majorly effected by termination of operation in South
Africa. Due to ineffective business operation and high cost the management decided to convert
its operation from south-Africa towards middle-east countries which resultantly improved the
sales during the next year to the level of 19.32%.
0
5
10
15
20
25
30
35
2011 2012 2013 2014 2015
Sales

8. Expenses trend:
Gross saleswasincreasingduringthe pastfew yearsbutwithdecreasingmargin.Costof the goodsales
followedthe same patternwhichisincreasedwithrise in grosssales butwithdecliningmargin.The cost
of the goodsalesrecorded15.55%, 13.01% and 19.41% for the year 2013, 2014 and 2015 respectively.
Due to windingupof the businessoperationfromsouth-Africaregion,the operatingexpense declined
to itslowestpoint.Howeveritagainincreasedduring2015. Administrative expense,anddistribution
cost increasedduringthe pastyears.The companystressesitsmarketingdepartmentforestablishing
innovative marketingidea.The increase insaleswasthe resultof massiveinvestmentinmarketing
strategieswhichcausedraise inthe distributioncost.
-100
-50
0
50
100
150
2015 2014 2013 2012 2011 2010
Chart Title
Distribution cost admin cost other operating expense financial charges

9. ForecastedIncome statement:
Income Statement
Particulars FY '15 A FY '16 F.1 FY'16 F.1
(Rupees In Thousand)
Sales 11,604,290 14,041,191 14,041,191
Cost of Sales (7,541,804) (9,125,583) (9,125,583)
Gross profit 4,062,486 4,915,608 4,915,608
DistributionCosts (2,125,366) (2,571,693) (2,571,693)
Administrative Costs (458,844) (513,905) (513,905)
OperatingProfit 1,478,276 1,830,010 1,830,010
Otherincome 111,965 111,965 111,965
OtherExpenses (120,719) (120,719) (120,719)
EBIT 1,469,522 1,821,256 1,821,256
Finance Cost (37,269) (37,269) (1,153)
EBT 1,432,253 1,783,987 1,820,103
Taxes (438,690) (553,036) (564,232)
EAT/EACS 993,563 1,230,951 1,255,871
CommonDividend (412,227) (516,999) (527,466)
Additionto RetainedEarnings 581,336 713,952 728,405

10. ForecastedBalance Sheet:
Balance sheet
FY '15 A FY '16 F FY '16 F (2)
(Rupees in Thousand)
ASSETS
Non-CurrentAssets
Property,PlantandEquipment 1,518,286 1,518,286 1,518,286
Intangibles 39,089 39,089 39,089
Long terminvestments 31,719 31,719 31,719
Long termdeposits 34,768 34,768 34,768
1,623,862 1,623,862 1,623,862
CurrentAssets
Storesand SparesandLoose Tools 5,897 7,135 7,135
Stock inTrade 2,254,723 2,728,215 2,728,215
Trade Debts 1,150,666 1,392,306 1,392,306
Advances 50,404 50,404 50,404
Trade Deposits 29,736 29,736 29,736
OtherReceivables 13,452 13,452 13,452
investmentinMutual Funds 389,245 389,245 389,245
Cash andBank Balances 37,041 44,820 44,820
3,931,164 4,655,313 4,655,313
5,555,026 6,279,175 6,279,175
SHARE CAPITAL AND RESERVES
Issued,SubscribedandPaidup 518,034 518,034 518,034
UnappropriatedProfits 2,238,854 2,952,806 2,967,259
2,756,888 3,470,840 3,485,293
NON CURRENT LIABILITIES
DeferedTaxation 93,414 93,414 93,414
RetirementBenefitsandObligations 19,495 19,495 19,495
112,909 112,909 112,909
CURRENT LIABILITIES
Trade andOtherPayables 1,672,683 2,023,946 2,023,946
AccuredInterest 2,520 3,049 3,049

11. Short TermBorrowing 384,094 384,094 12,814
Taxation- ProvisionLesspayments 484,578 484,578 484,578
SalesTax Payables 141,354 171,038 171,038
2,685,229 3,066,706 2,695,426
2,798,138 3,179,615 2,808,335
5,555,026 6,650,455 6,293,628
Additional Funds Needed -371,280
Additional Funds Needed (after 2nd pass) -14,454
Forecast analysis:
The company will work on its vision of making it a 50 billion rupees food company till 2020 but
will do it with the launch of other new products. However those new products will not be
launched before the new fiscal year so it is better to take the average from previous 5 years and
then increase the sales from that percentage. This increased the sales by 21% which made the
11,604,290 to 14,041,191.
For Cost of Goods Sold they said that the company maintains a 65% of sales as COGS. So this
made COGS 9,125,583. They also guided us that their main raw material in recipe mix and
pickles is chilies. The breakup that they gave us of COGS was that 60% goes in raw material,
20% goes into packaging, 13% goes into labor, and the remaining goes into electricity and other
overheads.
Administration and Distribution cost are increased from 21%. The reason is that the company is
expanding its operations in Middle east, Taiwan, Holland, Canada, and UK. This will increase
their distribution cost and administration cost for managing the transportation and managing
the increase in sales.
In the first pass the company got a negative balance of Additional Funds Needed of 381820. The
company is currently operating in under capacity so Operating fixed Assets will not be

12. increased, the excess will be utilized to pay off the loans as per the company’s policy. This will in
turn lead to a significant decrease in the finance costs
Notes to FinancialStatements
1. Sales are expected to increase by 21%. Analyzing the past trends of the company, it is
evident that the sales are being increased with an average 21%. Also the company aims
to become Rs. 50bn Company by the end of 2020. Company is planning to extend the
product line and category which will bolster the company’s growth hence it will make it
easy for the company to achieve the expected target.
2. Finance cost has been decreased from 37 Million to 1 Million as the company paid back
the running finance which it took from several banks by way of pari-passu charge
against the hypothecation of company’s stock in trade, movables and trade debts.
3. Dividend payout ratio is kept constant as of previous year.
4. Stock in trade is expected to increase by 21% (percentage of increase in sales) as the
company has penetrated Middle East Asian market and the demand for the national
foods products is also expected to increase.
Short term borrowings are paid of by the utilization of additional funds. The company has paid
back the running finance in full where as it has also paid back a noticeable amount of export
refinance. The company aims to pay back the remaining amount of export refinance with the
additional funds.