SGPC’s GURU NANAK INSTITUTE OF MANAGEMENT STUDIES

Matunga (E), Mumbai – 400 019

Summer Internship Project Report

Titled

“FINANCIAL ANALYSIS OF THE BOMBAY

NATURAL COMPANY”

In the partial fulfillment of the Degree of

MMS
By
Mr. Pavan Verma
[MMS-A (58)]
Semester III & Specialization: Finance
Batch: 2017-19
Under the Guidance of

Mr. Saiyam Adhani

(Designation : Cofounder)

Prof. Kapil Bhopatkar

(Project Guide)
2018-19
 SGPC’s GURU NANAK INSTITUTE OF MANAGEMENT STUDIES
Matunga (E), Mumbai – 400 019

CERTIFICATE

This is to certify that Mr. Pavan Verma a student of Class: MMS

SEMESTER: III bearing Roll No. MMS A-58 has successfully completed
the project titled, “FINANCIAL ANLAYSIS OF THE BOMBAY
NATURAL COMPANY”, in the partial fulfillment of the Degree of MMS.

Place: Mumbai

Date:

Name of the Project Guide: Prof. Kapil Bhopatkar

Signature of the Project GUIDE:

Signature Institutes Seal

(Dr. D.Y. Patil)

Director
 STUDENT DECLARATION

I hereby declare that the project titled “FINANCIAL ANALYSIS OF THE

BOMBAY NATURAL COMPANY” is my own work conducted under the

supervision of Prof. Kapil Bhopatkar

I further declare that no part in this project work has been plagiarized
without proper citations and has not formed the basis for the award of any
degree, diploma, associateship, fellowship previously.

Name of Student: Pavan Verma

Signature of the Student:

 ACKNOWLEDGMENT
This project on “FINANCIAL ANLAYSIS OF THE BOMBAY NATURAL
COMPANY” “is the hard work and good wishes of many people. I would like to

thank my project guide, Prof . Kapil Bhopatkar for her involvement in my project
work and timely assessment that provided me inspiration and valued guidance
throughout my project.

I sincerely extend my gratitude to my company guide, Mr.Saiyam Adhani who

played a pivotal role in the learning and experience during my internship.
 TABLE OF CONTENT

Sr.no Topic Designation

1 EXECUTIVE SUMMARY

2 INTRODUCTION TO FINANCIAL ANALYSIS

3 INDUSTRY OVERVIEW

4 COMPANY OVERVIEW

5 PROJECT DETAILS

6 DATA ANALYSIS and INTERPRETATION

7 FINDINGS

8 RECOMMENDATION

9 CONCLUSION

10 LIST OF ABBREVATIONS

11 REFERENCES

12 Project Progress Report Duly Filled & Signed

 EXECUTIVE SUMMARY

Subject Matter :-

This report is an analysis of the financial statement and performance of the company for
“The Bombay Natural Company” .This report will provide you assessment and analysis
of profitability ,liquidity ,performance, position of the company using financial statement

Method of Analysis :-

Method of analysis include analysis of financial statement using ratio analysis such as
current and ,quick ratios other ratios also.

In this analysis financial ratios are use to gain critical review to a specific area of
assessment of company performance

It has been recommended that the company should look into ways of improving sales
,improve profitability and expand financing to grow and expand the business

The analysis is limited due to lack of information since being a startup hence no
comparative study has been possible .given the nature of business it would have been
interesting to evaluate by comparing it by past records and also with industry benchmark

The project also includes how the funding can be increase of the company by using
following funding options :-

1. Bootstrapping your business.

2. Crowdfunding.
3. Seek Angel Investment for Your Startup.
4. Seek Venture Capital for your Startup.
5. Seeking Funds from Business Incubators and Accelerators.
6. Source Funds by winning contests.
7. Raise Money through Bank Loan.
8. Acquire Loans from Microfinance Providers or NBFCs
9. Government Programs that Offer Startup Capital.
 INTRODUCTION FINANCIAL STATEMENT ANALYSIS

Financial statement is an organized collection of data according to logical and consisted

accounting procedures. Its purpose is to convey an understanding of some financial
aspects of a business form. It may reveal a series of activities over a given period of time,
as in the case of an income statement.

The focus of the financial analysis is on key figures in the financial statements and the
significant relationships exist between them. The analysis of financial statements is a
process of evaluating relationships between component parts of financial statements to
obtain a better understanding of the firm’s position and performance.

Financial Analysis:

Financial analysis is the process of identifying the financial strengths and weakness of the
firm by property establishing relationships between the item of the balance sheet and the
profit and loss account. Financial analysis can be undertaken by management of the firm,
or by parts outside the firm.

USERS OF FINANCIAL ANALYSIS:

 Management
 Trade creditors
 Investors
 Government
 Others
Management:

Management of the firm would be interested in every aspect of the financial analysis. It is
their overall responsibility to see that the resources of the firm are used most effectively
and efficiently and that the firm’s condition is sound.

Trade Creditors:

The trade creditors are to be paid in a short term solvency of the concern. The current
ratio and acid test ratio will enable the creditors to assets the short term

solvency position of the concern.

Investors:

The Investors are interested their money in the firms shares, are not concerned about the
firms earnings. They restore more confidence in those firms that show steady growth in
earnings. As such, they concentrate on the analysis of the firms present and future
profitability. They are also interested in the firm’s financial structure to the extent it
influences the firms earning ability and risk.

Government:

The financial statements are used to asses tax liability of business enterprise. These
statements enable the government to find out whether the business is following various
regulations or not.
Others:

Trade associations, stock exchange and public at may also analyze the financial
statements to judge the financial position of different concerns.

Definition

According to Myres “Financial statement analysis is largely is a study of the Relationship

among the various financial factors in a business as disclose by a single set of statement
and a study of the trend of these factors as show in a series of statements.

Financial statements are indicators of the two significant factors:

1. Profitability

2. Financial Soundness

Analysis and interpretation of financial statements therefore refers to such a treatment of

the information contained in the income statement and the balance sheet so as to afford
full diagnosis of the profitability and financial soundness of the business.

The term “analysis” means methodical classification of the data given in the financial
statements. The term “interpretation” means “ explaining the meaning and significance of
the data so simplified.

Types of financial Analysis

Financial analysis can be classified in to different categories depending upon.

(a) The material used

(b) The modus operand of analysis

On the basis of materials used. According to this basis financial analysis can be of

two types:

a) External Analysis:

Those who are outsider for the business do this analysis. The outsiders include investors,
credit agencies. government agencies and other creditors who have no access to the
internal records of the company. These persons mainly depends upon, the published
financial statements. Their analysis serves only a limited purpose. The position of this
analysis has improved in recent times on account of increased governmental control over
companies and governmental regulations regulations requiring more detailed disclosures
of information by the companies in their financial statements.

b) Internal analysis:

This analysis is done by persons who have access to the books of account and other
information to the books of accounts related to the business., Executives and employees
of the organization or by officers appointed for this purpose by the government or the
court under powers vested in them can therefore do such an analysis. The analysis in
done depending upon the objective to be active depending upon the objective to be
achieved through this analysis.
c) Horizontal Analysis:

In case of this type of analysis financial statements for a number of years are reviewed
and analyzed. The current year’s figures are compared with the standard or base year.
The analysis statement usually contains figures for too or more years and the changes are
shown regarding each item from the base year usually in the form of percentages. such as
analysis given the management considerable insight into levels and areas of strength and
weakness.

d) Vertical Analysis:

In case of this type of analysis a study is made of the quantitative relationship of the
various items in the financial statements on a particular type, such an analysis is useful in
comparing the performance of servral companies in the same group, or divisions or
departments in the same company. Since this analysis depends on the data for one period,
is nor very conductive financial position. It is also called ‘Static Analysis’ as it frequently
used to ratios developed on one date or for one accounting period. Tools or Techniques
used for Analysis:
1. Ratio Analysis

2. Comparative statement Analysis.

These are explained in bring as follows.

1. Ratio Analysis:

Ratio Analysis is widely used tool of financial analysis. It is defined as the systematic use
of ratio to interpret the financial statements so that the strength and weakness 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 two items/
Variable. This relation can be expressed as.

a. Percentages

b. Fractions

c. Proportion of numbers.

Accounting ratios showed the relationship in mathematical terms between two

interrelated accounting figures. This is the most important tool available to financial
analysis for their work.

Ratio analysis is a process of identifying the financial strengths and weakness of the firm.
This may be accomplished either through a trend analysis of the firm’s ratios over a
period of time or through a comparison of the firm’s ratios with its nearest competitors
and with the industry averages. The four most important financial dimensions which a
firm would like to analyze are:
liquidity ,Leverage, Activity and Profitability.

Nature of Ratio Analysis:

A Financial ratio is a relationship between tow accounting numbers. Ratios help to make
a qualitative judgment about the firm’s financial performance.

Financial Ratio:

Financial Ratio is a relationship between two financial variables. It helps to ascertain the
financial condition of a firm.

Types of financial Ratios:

 Liquidity ratios
 Leverages ratios
 Activity ratios
 Profitability ratios

Liquidity Ratio:

Liquidity Ratio measure the firm’s ability to meet current obligations, and are calculated
by establishing relationships between current assets and current liabilities.
Leverage ratio:

Leverage ratios measures the proportion of outsider’s capital in financing the firm’s
assets, and is calculated by establishing relationships between borrowed capital and
equity capital.

Activity Ratio:

Activity ratio reflects the firms efficiency in utilizing its assets in generating sales and is
calculated by establishing relationships between sales and assets.

Profitability Ratio:

Profitability ratios measure the overall performance of the firm by knowing the
effectiveness of the firm in generating profit, and are calculated by establishing
relationship between profit figures on the one hard, and sales and assets on the other .

Utility of Ratio Analysis

 Assessment of the firm’s financial conditions and capabilities.

 Diagnosis of the firm’s problems, weakness and strengths.
 Credit analysis
 Comparative analysis
 Time series analysis
Caution in using ratio analysis

 Standards of comparisons
 Company differences
 Prices level
 Changing situations
 Past data

Standard of Comparison:

 Time series analysis

 Inter-firm analysis
 Industry analysis
 Preformed financial statement analysis
 Advantages of Ratio Analysis:

1. It helps in analysis of the situation i.e. analysis on the financial situation and
performance.

2. Inter-firm and Intra-firm comparison is both possible on the basis of accounting ratio

3. Accounting Ratio not only indicates the present position but they also indicate the
cause leading up to the position of a large extent

4. It helps in obtaining best result when ratios for a number of years are put in tabular
form so that the figure for one year can be easily compoared with those of other year

5. It indicates the trend of the change, which helps in preparation of estimates for the
future.

6. They provide simplicity to the complex accounting information presented by the

financial statements

7. They are very helpful to outsiders as well as for internal management

8. It is very helpful to internal managements, discharge of the basic managerial functions.

9. It also helps in planning, policy & controlling the activities.

10. They are helpful in establishing the standard casting system.

Limitations of ratio analysis:

1. Ratio provides only guidelines to the management they are only the means. However
They scratch surfaces and raise question. The limitation of the ratio may force the
management to have detailed investigation of the situation under question.

2. single accounting ratio is not useful at all unless it is studied with other accounting
ratios

3. They are based only on the quantitative information. Hence, qualitative information
puts limit on the ratios

4. Ratios are subject to arithmetical accuracy of the financial statements. Moreover

financial statement also include estimated date like provision for depreciation, bad and
doubtful debts etc. hence, result revealed by ratios are subject to such estimates.

5. Ratios are computed on the basis of financial statements which are historical in nature.

6. Knowledge of ratios only is meaningless unless it is also found how it is made up.

7. Lack of homogeneity of data, personal judgment lack of consistency etc. is the factors
which limit the conclusion to be derived on the basis of accounting ratios.
 INDUSTRY OVERVIEW

Organic Food: Way of Life

Organic provides a choice of “healthy life” to consumers by providing healthy

food. It gives assurance that toxic persistent pesticides, synthetic fertilizers or
genetically modified organisms (GMOs) are not used in production, and antibiotics
or growth hormones are not given to livestock. It also means that stringent organic
cultivation standards have been met with respect to impact on soil, water, and air
support environmental protection. The market research company Ecovia
Intelligence estimates that the global market for organic food reached US$89.7
billion in 2016. Most of the major markets continue to show double-digit growth
rates, including India. The main reason for this growth can be attributed to the
growing health concerns among consumers and increasing awareness with regard to
the health benefits of organic food. Other factors driving organic food sales across
the globe include increasing income levels, improving standard of living, and
government initiatives aimed at encouraging widespread adoption of organic
products. While the organic market is growing steadily, it is far from becoming a
mass product. The key challenge the sector faces is in higher cost of cultivation and
its subsequent value chains, leading to high price mark-ups. The market
segmentation focus is also on affluent consumers.

In 2016, the global organic food market stood at $110.25 billion, according to
management consulting firm TechSci Research. That number is expected to reach
$262.85 billion by 2022. While Europe and North America make up the strongest
demand for organic food, intense competition in those regions means companies
must look elsewhere to gain a foothold. With the global organic food market being
wide open for the taking, major players are shifting their focus to new
opportunities. And some of those opportunities may lie in the densely populated
Asia-Pacific market which boasts strong GDP growth rates, especially in India and
China.
The Indian organic market: A new paradigm in agriculture

The Government of India and the state governments have taken steps to improve
the regulatory framework of organic products along with rolling out several
schemes to incentivize organic farming. On the regulatory front, Food Standards
and Safety Authority of India (FSSAI), in December 2017, have recognized both
the certification systems (NPOP and PGS-India) valid for organic food products.
This provides an impetus to both promote and regulate markets so that domestic
consumers and export countries can trust Indian organic products. On the
production front, the Government has rolled out several schemes to incentivize
organic cultivation like National Program for Organic Production (NPOP), National
Project on Organic Farming (NPOF), National Mission on Sustainable Agriculture
(NMSA)/Paramparagat Krishi Vikas Yojana (PKVY), Rashtriya Krishi Vikas
Yojana (RKVY), Mission for Integrated Development of Horticulture (MIDH),
National Mission on Oilseeds & Oil Palm (NMOOP) and Network Project on
Organic Farming of ICAR. To facilitate organic farming, 11 state governments
(Kerala, Karnataka, Andhra Pradesh, Sikkim, Mizoram, Nagaland, Himachal
Pradesh, Madhya Pradesh, Gujarat, Rajasthan and Odisha) have come out with their
own State Organic Farming Policies, and Sikkim became the first state to be
declared as Organic State. Many other states such as Chhattisgarh and Uttarakhand
are also promoting an organic marketplace wherein producers and consumer can
directly interface. With all these initiatives, it is expected that the cost of cultivation
will come down and productivity will improve significantly. This will result in
lowering the prices of organic products for mass consumers to switch over to
organic products and create further demand.

India’s progress in the organic sector has been remarkable. In the 1990s, the sector
was limited to the export of tea to European markets. Currently, India is emerging
as a key player in the global arena, exporting over 300 products in 20 different
categories to over 20 countries. Additionally, India is the largest exporter of organic
cotton and houses the largest number of organic producers in the world. Alongside
the developments pertaining to the global markets, the domestic markets are
growing at a rate higher than the global average and are expected to keep growing
at a 25% CAGR through 2020. India has substantial potential for expansion of
organic agriculture owing to many factors, including favourable agro-climatic
conditions. Hilly and rain-fed areas of the country such as the North Eastern Region
and Deccan Plateau traditionally practice low input agriculture and are therefore
more

Amenable to the switch to organic agriculture. In addition to that, areas that have
been subject to intensive agriculture and excessive use of chemical substances
present a scope for expansion of organic agriculture. This would help improve and
preserve the soil quality and thereby increase production in the long run. The rise in
per capita purchasing power, accompanied by the increase in awareness regarding
the social, environmental and health benefits of organic products, has not only
increased the demand for such products but also incentivized the development of
the organic value chain, as evidenced by continuous developments in industries
such as e-commerce, supply chain, storage and processing. Having recognized the
untapped potential, both government and private actors have increased their
involvement and investment in the sector. The Government has allocated INR2
billion for the cultivation of high-value major agricultural produce and INR5 billion
to promote farmer-producer organizations for Operation Green. In addition, the
Government intends to promote farmer-producer organizations and village-
producer organizations in large clusters under the Rashtriya Krishi Vikas Yojana,
Mission Organic Value Chain Development and Pradhan Mantri Kaushal Vikas
Yojana. This has also been linked to the National Rural Livelihood Mission to
enable self-help groups to partake in organic farming techniques. Sikkim became
India’s first fully organic state in 2016 with 75,000 ha under organic cultivation,
thereby providing impetus to other states to pursue similar objectives. Meghalaya,
for instance, aims to make the switch by 2020.
 Benefits of organic products

The consumers are increasingly becoming aware of the food safety issues and
environmental issues because of their increased concern about health, the
environment’s health and its global implications. Organic food now has become a
viable alternative for an increasing number of consumers, who are worried about
the presence of chemicals residue and the negative consequences on the
environment caused by intensive production methods. Many farmers also now see
organic farming as a way to stabilize or even increase their income due to public
policy support and growing market demand. The benefits of organic products are
threefold as summarized below:

• Health: Organic agriculture regulates how food is grown and processed. In

addition to meeting the health and safety requirements of conventional food,
organic food must also meet the additional safety standards of organic farming such
as tougher regulations on manure use. Studies have shown that organic food
contains a lower concentration of pesticides as compared to conventionally grown
food10. Hence, there is a good reason to believe that organic farming reduces
health risk.

• Toxin and GMO-free: Organic products are the most heavily regulated food
products in the US. Only organic products come with a guarantee that no toxic
persistent pesticides, synthetic fertilizers or GMOs are used in their production.
Additionally, no antibiotics or growth hormones are given to livestock. Organic
producers and processors are subject to rigorous announced and unannounced
certification inspections by third-party inspectors to ensure that proper due
diligence procedures and protocols are being followed.
• Higher nutritional content: Recent studies have found that organic fruits,
vegetables and grains have fewer nitrates and cadmium and fewer pesticide
residues than non-organic crops, making them safer to consume.

• Environment: Organic farming primarily focuses on eco-friendly agriculture

practices. It might not eliminate the negative environmental impacts wholly, but it
can help reduce water pollution and improve the soil quality. Organic cultivation
promotes conservation of biodiversity, enhances ecological functions and
ecosystem services. It is a self-reliance system that improves the economic
productivity.
 Organic food market

Figure 1: Market size of packed organic food and beverages (in INR
million)

Figure 2: Turnover of top organic companies (in INR crore)

Figure 3: Value of organic export (in INR crore) *Textile excluded

Figure 4: Organic agriculture area by state in 2014-15

 Figure 5: Production of organic crops in India by category in thousand MT
for 2014-15

Organic packaged food and beverages is an emerging niche market in India and its
primary consumers are high-income urbanites. The total market size for organic
packaged food in India in 2016 was INR533 million, growing at 17% over 2015,
and is expected to reach INR871 million by 2021.

India’s exports of organic products increased by 17% between 2015-16 and 2016
17. In India, the majority of the demand comes from tier 1 cities16. Companies are
witnessing notable growth as demand from metro cities increase with the entry of
several new players in the organic food market such as Conscious Foods, Sresta,
Eco Farms, Organic India, Navdanya and Morarka Organic Foods to name a few.
 Analysis of FMCG Sector for organic food

PEST analysis

i) Political

• Tax Structure: Complicated tax structure, high in direct tax and changing tax policies
are challenges for this sector.

• Infrastructure Issues: Performance of FMCG sector is very much dependent on

government spending on Agricultural, Power, and Transportation Infrastructure.

• Regulatory Constraints: Multiplicity permits and licenses for various states, prevailing
outdated labor laws, cumber some and lengthy export procedures are major constraints.

• Policy framework: FDI into Retail sector (single-brand & multi-brand retail), License
rules in setting up of Industry, Changes in Statutory Minimum Price of commodities are
barriers for growth of this sector.
ii) Economical

• GDP Growth: Growth of FMCG industry is consistent with the Indian economy. It has
grown by 15 % over past 5 years. It shows good scope for this sector in near future.

• Inflation: Inflationary pressures alter the purchasing power of consumer which Indian
economy is facing in recent years. But it has not affected much to Indian FMCG sector.

• Consumer Income: Over the past few years, India has seen increased economic growth.
The GDP per capita income of India increased from 797.26 US dollars in 2006 to 1262.4
US dollars in 2014 . It resulted in increase of consumer expenditure

• Private Consumption: The Indian economy, unlike other economies, has a very high
rate of private consumption (61%).

iii) Social

• Change in consumer Profile: Rapid urbanization, increased literacy, increase in nuclear

families and rising per capita income, have all caused rapid growth and change in
demand patterns, leading to an explosion of new opportunities. Around 45 per cent of the
population in India is below 20 years of age and the young population is set to rise
further.

• Change in Lifestyle : In past decade changes are taking place in consumption pattern of
Indian consumer with more spending on discretionary ( 52%) than necessities ( eg food,
clothings). In last decade the apparel, footwear and healthcare segments have registered
highest growth whereas essentials such as cereals, edible oil ,fruits and vegetables shown
decline.
• Rural focus: As market is getting saturated, companies are focusing on rural area for
penetration by providing consumers with small sized or single-use packs such as sachets.

iv) Technology

• Effective use of technology is seen only in leading companies like HUL, ITC etc.

• E- Commerce will boost FMCG sales in future. More than 150 million consumers
would be influenced by digital by 2020 and they will spend more than $45 billion on
FMCG categories
 SWOT ANALYSIS

i) Strengths

• Low operational costs: One of the important strength of this sector is low operational
cost.

• Presence of established distribution networks in both urban and rural areas. A well
established and wide distribution network of both MNC and Indian FMCG companies
increased an access for consumers.

• Presence of well-known FMCG brands: The presence of strong brands in Indian FMCG
sector not only results in increased sales but also provides an opportunity in future.

ii) Weakness

• Low scope for investing in technologies and achieving economies of scale, especially in
small sectors.

• “Me- too products, which illegally mimic the labels of established brands .These
products narrow the scope of FMCG products in rural and semi- urban markets.

• Less innovative abilities and systems: Indian FMCG sector,especially small players are
lagging behind in adopting innovative approaches for fulfilling needs of the consumers.
iii) Opportunities

• Untapped rural market, changing life style: An untapped, huge and fragmented rural
market is an opportunity for FMCG players. The Penetration level for many FMCG
product categories is very low especially in rural area.

• Rising income levels, i.e. increase in purchasing power of consumers: According

Mckinesy Global Institute report, in next two decades income level of Indian consumer
will almost triple and India will become world’s fifth – largest consumer market by 2025

• India’s middle class size will increase to 583 million , or 41% of the population.
Extreme rural poverty has declined from 94% in 1985 to 61% in 2005 and is projected to
drop to 26% by 2025. This will result into increased purchasing power of Indian
consumer.

• Large domestic market with more population of median age 25 years: India has large
young population, 54 % of Indians are under 25 years of age. A rising productive
population fuels growth and drives personal consumption

• High consumer goods spending: The rising income is resulting into high spending into
consumer goods. According to a Nielsen report, the spending on consumer goods set to
triple to $ 5 billion by 2011 - 15.

• Export potential to neighboring countries like Bangladesh, Pakistan, Srilanka.

iv) Threats

• Entry of MNCs with liberalization: In the post liberalization era Indian market has
become highly competitive.Many multinational companies have entered in to the Indian
market.

• The removal of import restrictions resulted in replacement of domestic brands.

• Rural demand is cyclical in nature and also depends upon monsoon to large extent.

• Complicated, changing and uneven tax structure is one of the major threats for FMCG
sector.

• New packaging norms made mandatory for all companies to sell products in standard
size packs.
 COMPANY OVERVIEW

The Bombay Natural Company

The Bombay Natural Company is a privately held organic goods company

established in the year 2017 with its headquarters in Mumbai.

The Bombay Natural Company is a first cooperative farmer’s initiative in India that
offers handpicked “NATURAL” products preserved with goodness of non-
processed nutrients. We have a wide range of products such as flour, spices, pulses,
oil and more are available in over 60 natural varieties and growing. All our
products are free from pesticides and other harmful chemicals and are not even
processed using machines.

The Bombay Natural Company engages in various social initiatives, CSR and Eco-
friendly models that harness co-operative farming and generating employment for
woman, home makers and farmers across Mumbai.

The Bombay Natural Company brings you foods that are completely pesticide &
chemical free with natural preservatives.

All our products are brought to you by co-operative farming purchase of

agricultural produce that are rightly monitored and tested. We pledge to convert
10,000 households this year to natural foods.
 Products list (All Organic)
Sr. No. Product Name Price (INR/kg)
Rice
1. Brown Rice 130
2. Kolam Rice 95
Dals
3. Green Moong Dal (split/whole) 135
4. Toor Dal 135
5. Urid Dal (clean) 190
6. Yellow Moong Dal 145
7. Chana Dal 165
Cereals
8. Poha (Flattened Rice) 90
9. Split Wheat Dalia 70
Pulses
10. Chick Peas 200
11. Kabuli Chana 200
12. Kala Chana 120
13. Peanuts 185
14. Rajma (Dark Brown) 160
Spices
15. Ajwain 110
16. Coriander Powder 220
17. Cumin 450
18. Fennel 300
19. Fenugreek 100
20. Mustard 120
21. Red Chilli Powder 190
22. Masala Tea Powder 11000
23. Turmeric 530
24. White Sesame 240
Sugars
25. Brown Sugar 130
26. White Sugar 75
27. Jaggery 95
28. Jaggery Powder 130
Flour
29. Bajra Flour 55
30. Bengal Gram Flour 170
31 Jowar Flour 65
32. Multigrain Flour 60
33. Ragi Flour 75
34. Rava (Suji) 70
35. Wheat Flour 40
Others
36. Himalayan Rock Salt 80
37. A2 Ghee 2000
 Initiatives

Project Pragati: The Bombay Natural Company is an all women organization and
work closely to empower other women through employment, self-employment and
social enterprising opportunities. Project Pragati follows a four-prong approach and
has a wide distribution network of 196 urban women participating in community
life to bring healthy & natural platter to urban households. On the other hand, the
organization ensures to monitor and reach out to the most disadvantaged groups in
rural communities to provide them an economic and social wellbeing through
employment. They engage in traditional activities of crushing, pounding and
refining edible foods. These women have become role models for their families and
communities through their personal resilience.

A wide distribution network of 196 urban women across Mumbai are steering the
organization by getting their products delivered to their closest urban households.

Image 2: Project Pragati

Co-Operative Farming: The Bombay Natural Company are first of its kind in India to
engage in cooperative farming initiatives who ensure to procure naturally grown produce
and process the foods in the most traditional yet manual methods followed in rural areas.
They enable a transparent process for farmers in the villages to trade at best prices who
otherwise struggle in open markets also making the process simpler for them to sell.

Before they obtain the agricultural produce or the raw materials for processing, they
check for its quality and ingredients. Their agents make sure that the materials meet the
stringent criteria with respect to their smell, touch and visibility to the naked eye. Further
on inspection, the testing analysts confirm the purity and quality strength via tests. The
Bombay Natural Company does nothing but promotes “DESI” food that our ancestors
would grow process and consume. They procure grains or pulses from the village farmers
which are not grow with High yield variety seeds or chemicals.

Image 3: Co-Operative Farming

 Strategies of The Bombay Natural Company

Exhibitions: The Bombay Natural Company relies heavily on exhibitions for the sales
and promotion of their products. Majority of their sales for the first year relied heavily on
the success of such exhibitions.

Image 4: Exhibitions
Celebrity Endorsements: Another method of promotion is the endorsements through
celebrities via their Instagram handle which helps reach the product to the fans following
those celebrities.

Image 5: Celebrity Endorsements

Digital Marketing: The Company follows the route of Digital Marketing by promoting
their brands on Facebook, Instagram through mentioning the benefits of consuming the
organic foods.

Image 6: Digital Marketing

Partnership with Hey Dee-Dee: Since the company encourages women empowerment,
it has strategically partnered with the all women led delivery start-up Hey Dee-Dee
wherein the company helps them deliver their products.

Corporate Farmers Market

The Company is adopting an approach wherein it would sell their best selling products in
corporates and increase their revenue.
 Project Details

Objectives

 To analyse financial statement of the company using ratio analysis :-

The report shows the financial analysis of the company using ratios .Ratio
analysis is done on of balance sheet , Profit and Loss Statement and some
combined ratio .
 To find out financial stability of the company :-
There are ratios calculated on behalf of the balance sheet and Profit and loss
statement .
Also to find out that the calculated ratios are able to meet the industry standards or
not are the over performing or underperforming .
 Providing Funding options :-
The report also tells us that what are the funding options required a start up
company .
And how to raise funds to boost the bootstrap business

Limitations

 Data given for analysis was only of one year.

 Data provided was less because its startup company.
 Company not listed in stock exchange .
 No proper maintenance of accounting records of company

Methodology Used

 Ratio analysis :-
The report shows calculation of following ratios :
Liquidity ratios
Turnover ratios
Profitability ratios
 Sources of Data
 Secondary Data :-
1) Balance sheet and profit & loss account collected from company
2) Informal interaction with cofounders

Methods Used

 Liquidity Ratios :-
This ratio tells us that if the company is able to meet its short term obligation and
contingencies .It tells us the relation between current asset and current liabilities.

 Profitability Ratios :-
It measure the overall performance of the organization that how effectively it is
able to produce products and gain maximum profit .

 Turnover Ratio :-
It tells us the efficiency of asset to generate sales for the company .
 DATA ANALYSIS & INTERPRETATION

Ratio analysis is a technique of analysis and interpretation of financial statements. It is

used as a device to analysis and interpret the financial health of a firm. Analysis of a
financial statement with the aid of ratio helps to arrangements in decision making control.

LIQUIDITY RATIOS

1) Current ratio = Current asset/current liabilities =1.46 : 1 Times

Interpretation :-Measure the ability of a company to pay it current debts with its assets.

The standard ratio is 2:1,if standard is not maintained the company may face liquidity
problem .

2) Acid test ratio = quick asset /quick liabilities = 0.62 :1 Times

Interpretation:- These are the asset that can be converted in cash quickly . (excludes
stock and preraid expenses from current asset and bank overdraft from current
liabilities) . The standard is 1:1.
TURNOVER RATIO

3) Inventory turnover ratio = COGS/Average Inventory = 3.37 Times

Interpretation :-High turnover means high efficiency ,it also indicates that the product is
fast moving or slow moving item.

4) Debtor turnover ratio = Credit sales / average debtor = 11.92 Times

Interpretation :- It measure how many times company converts its receivables into cash

Measure efficiency of collection department.

5) Creditor turnover ratio = Credit purchase / average creditor = 21.42 Times.

Interpretation :- It measure how much time the company to pay cash in year.

6) Total asset turnover ratio = Sales/ Ney fixed asset = 1.20 Times

Interpretation :- It identifies how much asset is used in generating sales.

PROFITABILITY RATIO

7) Gross profit ratio= GP/ sales * 100 = 35.10%

Interpretation :-The ratio indicates basic margin on sale of goods.

Higher GP ratio indicatesefficiency in production of unit.

8) Operating profit ratio = Operating profit / sales * 100 = 12.66%

Interpretation :- It shows the margin left after meeting , manufacturing an selling ,

general . Expenses, and depreciation charges.

9) ROCE = EBITDA / capital employed *100 = 38.50%

Interpretation :- It indicates overall profitability of business . It indicates out of which

Rs.100 invested in business what is the profit.
 FUNDING OPTIONS

Most business startups usually begin with high hopes and investor confidence. However,
a few circumstances can either make or mar any business startup.

A comprehensive research conducted by experts has shown that business startups within
the first year often capitulate due to a myriad of reasons.

The salient requirement for any business to prosper is nothing short of capital. This is
because capital is the basic ingredient for any business to thrive. Without adequate
finance, business startups tend to crumble, and this malignant obstacle often causes infant
business startup owners to seek financial backing for their startups.

After you must have conducted the right market data analysis research for your startup,
obtaining the required funding for your business is entirely up to you.

Here are a few tips on the procedure you can adopt, in order to source for the required
funding for your startup.

1. Bootstrapping your business

In order to succeed in your first time out in your business startup, you must ensure that
you have some saved up funds you can easily access or funds you can obtain from friends
or family.

The process of utilizing personal saved up funds or funding from friends and family is
known as bootstrapping or self -funding.

Obtaining funding from family and friends is a unique way to kick off your startup.
Friends and family are usually flexible when it comes to servicing your loan debt much
more than other external sources.

So, if you approach the right friend or family member that supports your idea, you can
get some, if not all the funds you require to start up your business.
Pros

- Funds can easily be accessed

- Little or no bureaucratic obstacles

- Flexible interest rates

Cons

- Bootstrapping doesn't work for large businesses; it only works for small-scale
enterprises

2. Crowdfunding

Modern technology has made it easier for people to share their problems on an interactive
social platform. Crowdfunding platforms are basically set up for individuals to pitch their
business ideas or challenges to a community of investors or people willing to support
their ideas or cause.

How it basically works is that an individual makes a business pitch on the crowdfunding
platform, he shares his business model and it's potential for growth. If his idea is bought
by the crowd funders on the platform, they'll make a pledge to support his business model
publicly and donate funds respectively.

Pros

- Crowdfunding essentially creates public interest for your business, thus running some
free marketing and providing finance for your business at the same time
- Crowdfunding eliminates the intricacies involved in placing your business in the hands
of an investor or a broker and wields that power to simpletons on the crowdfunding
platform

- Has a potential to attract venture-capital investment as the business progresses.

Cons

- The heavy competition inherent in crowdfunding platforms can prove to be difficult if

someone or people are pitching the same business idea as yours.

- If your business pitch isn't as solid as your competition, then there is a probability that
your business idea will be overlooked or rejected

3. Seek Angel Investment for Your Startup

You might be curious if there is such a thing as Angel investment or Angel investor? Yes,
there is. Angel investors are basically people with a huge amount of capital and are
willing to invest it on over the edge business ideas.

Angel investors sometimes come together in groups to scrutinize business proposals, in

order to select the perfect candidate to invest in.

Pros

- Angel investors offer mentorship alongside capital for startups

- Angel investors are willing to take risks on business idea as they anticipate heavy return
on investment from your startup
Cons

- Angel investors provide lower investment capital to business ideas compared to venture
capitalists.

4. Seek Venture Capital for your Startup

Venture capitals funds are managed by professionals that have a keen eye for seeking out
companies with great prospects.

Their modus operandi involves them investing in a solid business rather than an equity.
Once there is an IPO or acquisition of the business they are partnered with, they then pull
out and seek other investments.

Pros

-Venture Capitals effectively monitor the progress of a company they have invested in,
thus ensuring the sustainability and growth of their investment.

- The mentorship and expertise venture capitals bring to the table can also sustain a
business or company effectively

- Companies with astronomical growth rates such as Uber, Flipkart have a pre-designed
exit strategy that enables them to reap huge profits that they can, in turn, re-invest in the
growth of their company.

Cons

- Venture capitals will remain loyal to your business till they have recovered their capital
and profits. This usually occurs during a slim three to five-year timeframe

- You tend to lose control of your business since you're giving up a large part of it to
venture capital investors
- Venture capital investors seek bigger companies with proven levels of stability and
identifiable workforce. This could prove to be an obstacle for you because business
startups don't usually have this level of stability.

5. Seeking Funds from Business Incubators and Accelerators

Businesses that are just starting out can access funds provided by business incubators and
accelerators.

The programs offered by them can be found in major cities across the globes.

Slight differences separate the terms "business incubators and accelerator".

Core Difference

Business incubators basically nurture business while accelerators fast-track businesses.

Pros

- Business owners receive mentorship from their investors

- Connections can be made with other startups

Cons

- During its 4-8 month lifespan, if commitment is lacking, the startup might spiral in a
downward direction
6. Source Funds by winning contests

Another amazing way to source for funds is through engaging in competitions or contests
that requires entrepreneurs to showcase or pitch their business module against other
competitors vying for the same funding for their businesses.

As a contestant, you are required to present a comprehensive and detailed business plan if
you are looking to win over investor confidence.

Pros

- In the process of participating in these contests, media coverage will be allotted to your
startup, thus giving you the much-needed publicity for your business startup.

Cons

- Losing contests or competitions can demoralize the faint hearted, thus causing them to
abandon their plans of starting up their business.

7. Raise Money through Bank Loan

Banking institutions provide financial backing on loans to individuals who approach

them with a solid business plan. The business plan must be well structured to convey the
modus operandi, profit forecast and estimated time of maturity.

The financial provision of banks is in two forms, they are working capital loan and
funding.
Working Capital Loan

This loan is designed to traverse one full cycle of revenue generation. Stocks and debtors
usually have leverage on the limit.

Funding

This process involves providing the business plan and concise information of the
valuation, alongside the project report on which the loan was sanctioned.

Pros

- Large capital can be accessed by entrepreneurs

- Capital provided can fast-track the process of income generation

Cons

- High risk of Collateral loss, since it is an important requirement for loan grants

8. Acquire Loans from Microfinance Providers or NBFCs

Microfinance was set up to give access to capital to small-scale entrepreneurs that lack
access to conventional banking capital or loans. Individuals with poor credit ratings see
microfinance institutions as a respite whenever they are out of favor by conventional
banks.

Non-Banking Financial Corporations (NBFCs) give out loans to individuals who seek
loans, without necessarily imposing any legality like conventional banks and credit repair
services do.
9. Government Programs that Offer Startup Capital

Government programs that offer startup capital are an excellent way to source funding for
your business. You are required to submit a plan that can be accepted by the grant
committee. Once your plan has been scrutinized and approved, you will be provided with
the funds to start up your business.

Pros

- Funding from government is usually substantial in size, thus providing you with surplus
capital to manage your startup

Cons

- The process of scrutiny, approval and eventual release of funds may take a lot of time
due to government bureaucracy

10. Other Ways you can Raise Money for your Startup

Product Pre-Sale: An amazing way of raising funds for your business is through product
pre-sale before launching your products officially. This builds consumer confidence in
your brand and allows you to size up the demand for your product before its official
launch.

Companies like Apple and Samsung adopt this procedure, allowing consumers to make
pre-purchases before the official release of their products.

Selling Assets: Doing away with assets in your possession that have high financial value,
can effectively serve as an immediate source of funding for your startup

Credit Cards: Business credit cards are an instant source of funding. New businesses
that incur heavy expenditure can utilize credit cards as long as they fulfill the minimum
payment requirement.
 FINDINGS

1. The company does not maintains proper books of account as per accounting norms.
2. The company delayed the selection process of raw material since they were pre-
occupied in some other task.
3. The company used a many strategy for the selection of the supplier since it provides
with a quantitative approach for evaluation.
4. The company had not a single person in their operations department to streamline the
supplier selection and other supply chain services.
5. The strategic partnership with Hey Dee-Dee is rather expensive and has a very small
capacity for each cycle.
6. The company has no IT system in practice, which makes it difficult for the
maintenance of records.
7. They do not have any standard operating procedure for their processes which results
in delay of their activities.
8. The company has not tied up with any transport company that would help them
supply their products to them resulting in heavy costs with different transport
facilities.
9. The company has no full time staff whatsoever to keep track of the daily business
activities.
10. The company is looking for a funding from different investors but not getting any
because of lack of brand growth.
11. The company lacks a proper and attractive website that results in the loss of business
opportunities.
12. The company is planning to enter into another business stream of cold-pressed juices
for which they have purchased a small company but is still not operational.
 RECOMMENDATION

13. The company should maintain proper books of accounts , or outsource to any
accounting firm this will help the company to maintain clarity in the records.
14. The company should use qualitative and quantitative methods to evaluate the
suppliers
15. The company should hire some professionals from every specialization to keep atrack
of proper business working.
16. The should have standard operating procedure to avoid delay of time and work
activities.
17. The company should install IT system to keep a track of records and maintain their
required documents.
18. The company should tie up with any delivery company for cheap transportation of
products door to door , which will further result in reduction of overall cost and the
company can earn more margins.
19. The company should maintain proper books of accounts to attract more investors to
invest in the company.
20. The company must have full time staff to keep a track on day to day business.
21. The company should have an attractive website to attract more investors and
customers.
22. The company is planning to enter into another business of cold press juices ,before
getting into this the company should have huge amount of funds .
 CONCLUSION

The organic food market being a niche market is now up and growing. For any company
to sustain for a long time in the business, need to develop an action plan, test it and
follow it so that it isn’t swallowed in the vast ocean of competition out there. The market
potential for the organic food industry is going to be tremendous in the coming few years
since the public is getting extra conscious when it comes to what they consume and what
they do not consume. To become a market leader in the sector, one does not only need to
sell aggressively but develop methods of reducing the costs wherever it can.

The Bombay Natural Company being a new entrant into the market made a very good
profit in their first year because of aggressive selling. Now as they plan to grow into this
sector, they should not only focus on the selling part but also rather concentrate on the
operations and human resource aspect of the business. They need to work on developing
a Standard Operating Procedure for their employees and themselves to follow. This
would help the company in the long run and help them reduce costs and improve the
quality of their products and service. Being as they are, they would not survive long in
the market, other companies would eat away their margins, and the company might incur
heavy losses in terms of money as well as opportunity.

Therefore, to conclude, The Bombay Natural company has a very good brand name and a
presence that they can leverage to grow the company further and become one of the
industry leaders. What they seriously need is the leadership to make full use of this and
the project helps us understand that how with the help of operational tools can help them
achieve that.
 REFERENCES

https://www.finextra.com/blogposting/15065/10-funding-
options-to-raise-startup-capital-for-your-business

https://www.cleverism.com/financial-statement-analysis-introduction/
 LIST OF ABBREVATIONS

1. NBFC’s – Non Banking Financial Institutions

2. GMO–Genetically Modified Organisms
3. GDP–Gross domestic Product
4. FSSAI–Food Standard Safety Association India
5. NPOP–National Program of Organic Products
6. RKVY–Rashtriya Krishi Vikas Yogna
7. CAGR–Compound Annual Growth Rate
8. INR–Indian Rupee
9. FMCG–Fast Moving Consumer Goods
10.PEST–Political Economical Social Technical
11.SWOT–Strength Weekness Opportunity Threats
12.MNC–Multi National company
13.COGS–Cost of Goods Sold
14.GP–Gross Profit
15.ROCE–Return on Capital Employed
16.EBITDA–Earning Before Interest taxes Depreciation Amortization
 PROJECT PROGRESS REPORT

Name of Student :- Pavan Verma

Class & Roll no:-MMS – A – 58 (FINANCE)
Project Guide :- Prof .Kapil Bhopatkar

Project Title :- FINANCIAL ANALYSIS OF THE BOMBAY

NATURAL COMPANY

Sr.no Date Topic Next Student Project Guide

Discussed Meeting Signature Signature

Date