AGRO-PROJECT CASH FLOW ANALYSIS AND 

FINANCE(AG60121) 
 
 
Assignment Submitted  
To 
 
Prof. P.K. Singh 
IIT Kharagpur-721302 
 
 
 
 
 

 
 
BY 
 
(Group-1) 
 
1. Praneet Jain 
2. Ashutosh Gupta 
3. Shail Daswani 
4. Monica Marmit 
5. Manish Prajapat 
6. Praveen Kumar 
7. Nirmaan J Sarkar 
8. Saurabh Sihag 

 
INTRODUCTION
Godrej Agrovet Limited is a diversified, Research & Development focused agri-business
company established in 1991.The company is dedicated to improving the productivity of
Indian farmers by innovating products and services that sustainably increase crop and
livestock yields.They operate across five different businesses verticals - Animal Feed, Crop
Protection, Oil Palm, Dairy and Poultry and Processed Foods.
They are constantly experimenting and looking for research-based solutions to improve farm
productivity and thereby, the profitability of farmers.They are investing significantly in
cutting-edge Research & Development to support their innovation pipeline.
In 2015, they set up the Nadir Godrej Centre for Animal Research and Development in
Nashik, Maharashtra; a one-of-its-kind animal husbandry research centre in the private sector
in India. The focus is to leverage capabilities at the centre, to develop cost effective solutions
to improve animal productivity.
They are working to find ways to innovate and improve farm productivity at the Research &
Development Centre, which is recognised by the Department of Science and Technology,
Government of India and they also collaborate with a number of multinational companies and
Japanese research firms.
They are planning to create significant value by developing successful brands and add more
value-added products to the current portfolio. The different businesses in which Godrej
agrovet is investing are:-

1. Animal Feed​ :- Their Animal Feed business is one of the largest organised players in
the Compound Feed market in India, with annual sales of more than a million tonnes
across cattle, poultry, aqua feed and specialty feed. Their portfolio includes products
in Cattle, Poultry, Aqua and Specialty Feed and they have over 32 state-of-the-art
manufacturing plants.
2. Oil palm​ :- They are among the largest oil palm developers in India and work directly
with Indian farmers to develop over 61,700 hectares of smallholder Oil Palm
Plantations to bridge the demand and supply of edible oil. They have plantations
across Andhra Pradesh, Goa, Gujarat, Orissa, Tamil Nadu, Maharashtra and
Chhattisgarh. They have commissioned an oil palm mill in Mizoram as well,which is
one of the largest private sector investments in the state.They have five oil palm mills
across the country.
3. Crop protection :- ​Through the Crop Protection business, they meet the niche
requirement of farmers through innovative agrochemical offerings and have a strong
market share in plant growth promoters, soil conditioners, and cotton herbicides.They
are the world’s largest producers and marketers of Homobrassinolides. They offer a
range of products that cover the entire life-cycle of a crop. A robust, pan-India
 
 distribution channel of over 6,000 distributors, have enabled a wide reach across the
country.
4. Cream line dairy :-​In December 2015, they made their foray into the dairy business,
acquiring a majority stake in Creamline Dairy Products Limited - ​a leading Dairy
player in South India.​They sell milk and milk-based products under the brand name
"Jersey".With an aggregate processing capacity of about 1.36 million litres per day
and 119 chilling centres, they have a formidable presence in the southern states of
Telangana, Andhra Pradesh, Tamil Nadu, Karnataka and parts of Maharashtra.
5. Advanced Chemical Industries Limited (ACI) :- ​In 2004, they entered into a joint
venture with the Advanced Chemical Industries Limited (ACI) Group from
Bangladesh, to manufacture and sell Compound Feed. The ACI-Godrej Agrovet joint
venture ranks among the top three feed companies, across all categories in
Bangladesh.​Over the last decade, they have become a leading player in the Animal
Feed market and are ranked among the top 4 players across all categories of Animal
Feed
6. Godrej Tyson foods :- ​In 2008, they entered into a joint venture with Tyson
Foods,U.S.A-​one of the largest poultry processing companies in the world.​, to
manufacture and market processed poultry and vegetarian products​Godrej Tyson
Foods is the second largest player in the processed poultry segment in India.​They
have plants in Bangalore and Mumbai with completely integrated breeding and
hatchery operations.

Given below is the total turnover and revenue generation of the Company from
different businesses-

Sr.No. Products /Services % of Total Turnover

1. Animal Feeds 71

2. Agricultural Inputs 13

3. Vegetable oils 16

 
BALANCE SHEET STATEMENT ANALYSIS 
 
The balance sheet is one of the​ three fundamental financial statements​ and is key to both
financial modeling​ and accounting. The balance sheet displays the company’s total assets,
and how these assets are financed, through either debt or equity. It can also be referred to as a
statement of net worth, or a statement of financial position.
The balance sheet is based on the fundamental equation:

Assets = Liabilities + Equity

A company's assets include property, plant , financial investments, Trade receivables and
Inventories. Borrowings, Trade Payables and other Financial liabilities account for the
liabilities of a firm. The difference between these two gives owners;s or firm's Equity which
is also the net worth of the company.

Given Below is compact Balance Sheet for Godrej Agrovet for last 5 financial years:-

As at March As at March As at March As at March As at march

31,2015 31,2016 31, 2017 31,2018 31,2019
Assets
Total Non Current Assets 83,475.14 125,101.55 128,686.30 138,394.91 149,881.00
Total Current Assets 83,965.93 113,958.71 111,198.32 119,787.38 139,231.00
Total Assets 167,441.07 239,060.26 239,884.62 258,182.29 289,112.00
Equities
Total Equity 60,918.02 69,655.73 90,261.58 128,888.35 139,088.00
Liabilities
Total Non Current Liabilities 13,599.92 8,797.03 9,600.06 9,328.33 10,784.00
Total Current Liabilities 106,523.05 169,404.53 140,022.98 119,965.61 139,240.00
Total Liabilities 120,122.97 178,201.56 149,623.04 129,293.94 150,024.00
Total Equity and Liabilities 167,441.07 239,060.26 239,884.62 258,182.29 289,112.00

As we can see from the table equity of the company is increasing which means net worth of
the firm is increasing. Maximum increase in net worth can be seen in years 16-17 and 17-18
because of investments in oil firms.

 
As we can see Godrej Agrovet has debt on its balance sheet but is it a concern for its
shareholders is a matter of discussion.

According to the last reported balance sheet, Godrej Agrovet have liabilities of ₹18.8b due
within 12 months, and liabilities of ₹3.00b due beyond 12 months. Offsetting these
obligations, it had cash of ₹410.4m as well as receivables valued at ₹7.67b due within 12
months. So it has liabilities totalling ₹13.8b more than its cash and near-term receivables,
combined.

Given Godrej Agrovet has a market capitalization of ₹88.7b, it's very hard that these
liabilities pose any threat to it;s investors. But there are sufficient liabilities that we would
certainly recommend shareholders continue to monitor the balance sheet, going forward.

Also these liabilities are moreover approximately constant over the years which is a good
health indicator for a firm.

Godrej has increased its investment in financial year 15-16 and 18-19 as we can see from the
graph. It invested in increasing inventories and property as well as in different companies in
the financial year 15-16. In 2015, the company acquired Astec LifeSciences to enhance its

 
crop protection and agrochemicals business which gave it major boost during year 16-17 and
17-18.

PROFIT AND LOSS STATEMENT ANALYSIS

Profit and loss statement (often referred as P&L report, income statement, or statement of
operations) is one of the primary reports in the system of enterprise accounting, which plays
an important role in the ​financial statement analysis​. It contains summarized information
about firm’s revenues and expenses over the reporting period (In our case, a reporting period
of 1 FY year).

The goal of the statement of income is to measure the profit of a business over the reporting
period by excluding the expenses of a firm from its revenues. We analysed the P&L reports
of Godrej Agrovet Ltd. for the FYs’ 2015-16, 2016-17, 2017-18 and 2018-19.

Financial Year Revenue from Operations Other Income Total Income YoY Growth
INR Cr INR Cr INR Cr %

2015-16 3366 55 3421 N.A

2016-17 3616 54 3670 7.3%

2017-18 3691 28 3719 1.3%

2018-19 4286 58 4344 16.8%

As we can see from the above table, there has been a steady growth of Total Income as each
financial year has passed, and we can particularly observe a high growth rate of revenues
from FY 2017-18 to 2018-19, which shows that the company bounced back efficiently after
the revenues in 2017-18 did not increase much primarily due to demonetization after-effects.

Furthermore, income from other sources saw a dip in 2017-18, primarily because of the fact
that Godrej Agrovet Ltd. did not sell any pre-owned property, plant or equipment in that year,
whereas in all other FYs, there has been a profit from the sale of property, plant or
equipment.

Financial Year Cost of Material Consumed Employee expenses Total expenses

INR Cr INR Cr INR Cr

2015-16 2670 135 3074

2016-17 2840 165 3292

2017-18 2832 195 3335

2018-19 3218 203 3956

Over the last 4 years, Godrej Agrovet has heavily invested in human resources and research
which is evident from the fact that its administrative expenses have shot up from INR 190 Cr

 
in 2015-16 to INR 250 Cr in 2018-19. Also, due to higher sales of goods, the cost of goods
sold has rapidly increased from 2017-18 to 2018-19 suggesting a significant increase in
expenses over the past two FY years.

Due to sharp increase in the key raw material prices across feed categories and higher sale of
traded products compared to its branded products in the crop protection business, Godrej
Agrovet Limited saw an increase in costs of materials consumed in FY 2019.

Financial Year EBITDA YoY Growth Depreciation EBIT

INR Cr % INR Cr INR Cr

2015-16 346 N.A 44 302

2016-17 377 8.9 49 328

2017-18 366 -2.9% 53 313

2018-19 388 6% 59 319

As we can easily spot, the EBITDA have had a negative growth in 2017-18, mainly because
of the after effects of demonetization.

Financial Year EBIT Interest Expenses Taxes P&L

INR Cr INR Cr INR Cr INR Cr

2015-16 302 91 51 160

2016-17 328 68 73 188

2017-18 313 32 90 191

2018-19 319 22 99 2018

As we can observe, the interest expenses for 2015-19 have reduced drastically over the years,
suggesting the fact that Godrej Agrovet Limited is improving its debt/equity ratio. This is
primarily because of the fact that the company went public in October 2017, and has been
able to raise significant money through equity instruments as well.

We have also observed that the company has reduced its advertisement and distribution
expenses by 20% from FY’18 to FY’19, and despite this fact we’ve observed that there is an
increase in sales of the company. This is probably due to the recently-announced government
measures such as Income support scheme and setting-up of Rashtriya Kamdhenu Aayog
which expected to drive the growth of agri-business company Godrej Agrovet without much
advertisement.

The dividend amount to the shareholders also increased from INR 83 Cr in 2017-18 to INR
86 Cr in 2018-19, suggesting a positive wealth creation for its shareholders.

 
CASH FLOW ANALYSIS

The cash flow statement (CFS) measures how well a company manages its cash position,
meaning how well the company generates cash to pay its debt obligations and fund ita
operating expenses.

The statement has three distinct sections, each of which relates to a particular component -
operations, investing and financing - of the company’s business activities. Below is the
individual components summary of the cash flow statement of Godrej Agrovet Ltd.

As at March 31, 2019 As at March 31, 2018

Net Cash Flow from 36,256.00 24,124.00

Operations

Net Cash Flow from -12,932.00 -17,036.00

Investing

Net Cash Flow from -23,182.00 -9,668.00

Financing

As we can deduce from the above table that the net cash flow from the operation sector has
significantly increased which can be supplemented by the fact that a new plant has been set
up in Seethanagaram, Andhra Pradesh and became operational during the Financial Year
2018-19. This also explains the increase in net cash flow from investing sector which has a
component of “​property, plant, and equipment”​ .

The further division of the individual components is given below along with the percentage
growth to assess the investment quality of company’s cash flow.

Cash flow from operating activities

Particular As at March 31, 2019 As at March 31, 2018 % Change

Net profit before taxes 30,749.00 28,132.00 9.302573582

Various Adjustments 5,596.00 9,265.00 39.6006476

Operating Profit Before 36,345.00 37,397.00

Working Capital
Changes 2.813059871

Various Adjustments 8,741.00 -6,994.00 224.978553

Cash generated from 45,086.00 30,403.00

operations 48.29457619

 
Direct taxes paid (net of -8,830.00 -6,279.00
refunds received) 40.63

Net Cash Flow From 36,256.00 24,124.00

operating Activities 50.29016747

During the Financial Year 2018-19, the ‘Vegetable oil’ segment had contributed the in the net
profit before taxes count, a growth of 16.0% driven by increase in the price of crude palm oil
followed by ‘Animal Feed’ and ‘Crop Protection’ having growth of 14.2% and 7.5%
respectively.
Cash flow from financing activities

Particular As at March 31, 2019 As at March 31, 2018 % Change

Repayment of short term -183,567.00 -356,512.00

borrowings 48.51

Proceeds from short term 173,164.00 329,929.00

borrowings 47.51

Others -12,779.00 16,915.00 175.55

Net Cash Flow From -23,182.00 -9,668.00

Financing Activities 139.78

There have been various decision undertakings during the Financial Year 2018-19, which
reflect the debt and equity transactions shown in the above table. For instance, with effect
from March 27, 2019, Godrej Maxximilk Private Limited (“GMPL”) has become a
Subsidiary of the Company. Godrej Agrovet has acquired an additional 2.16% of the Paid-up
Equity Share Capital of GMPL, increasing its total shareholding in GMPL from 49.9% to
52.06%.
Cash flow from investing activities

Particular As at March 31, 2019 As at March 31, 2018

% Change

Acquisition of property, -16,854.00 -14,352.00

plant and equipment and
cwip 17.43

Proceeds from sale of 3,183.00 128.00

property, plant and
equipment 2386.71875

Intercorporate deposits -19,564.00 -886.00

given 2108.126411

Others 20,027.00 -1,926.00 1,139.82

 
Net Cash Flow From -12,932.00 -17,036.00
Investing Activities 24.09