Ratio Analysis of Agricultural Industry

Submitted by –
Group Avirodh
Himanki Saluja (p40074)
Manvi Singh (p40083)
Masoom Vyas (p40084)
Rahul Saran (p40095)
Rohit Verma (p40096)
Siddharth Harish (p40099)
 Agriculture Industry
• Agriculture, known also as husbandry or farming, is the science of cultivating
plants, animals, and other life forms for food, fiber, and fuel.

• Agriculture is the primary source of livelihood for about 58 per cent of India’s
population.

• We are analyzing 3 agricultural co-operatives and 3 agricultural private companies

• Agricultural co- operatives
• Ocean Agro co-operative society ltd.
• National Agricultural Cooperative Marketing federation of India ltd.
• Krishak Bharti co-operative ltd.
• Agricultural private companies
• Nuziveedu seeds Ltd.
• Monsanto agriculture India Ltd.
• Godrej Agrovet Ltd.
 Ocean Agro Co-operative Society Ltd.

Ocean Agro was founded in Vadodara, Gujarat and brings high quality agricultural inputs for
farmers across India and now the world. Founded as a private company in the 1970s, which
became a publicly traded company in 1994, they have always maintained a vision of being the
leader in providing products that are environmentally sustainable and work in conjuncture with
nature to help farmers be the best stewards of their lands.
 Ocean Agro co-operative society ltd.
Mar 2014 Mar 2015 Mar 2016 Mar 2017 Mar 2018
12 Months 12 Months 12 Months 12 Months 12 Months
IGAAP IGAAP IGAAP IGAAP IGAAP
Quick Ratio 3.228 3.2229 2.871 2.685 2.65

Current 4.139 4.08 3.6900 3.500 3.423

Ratio

• As the quick ratio is pretty high over the years which signifies that the co-
operative is under utilizing their assets. But we can see that company is
improving its quick ratio.
• Current ratio ideally should be 2:1. But it is evident in above table that current
ratio is approaching close to ideal over years which means co-operative is trying
to make better use of current assets.
 Profitability Ratio
Mar 2014 Mar 2015 Mar 2016 Mar 2017 Mar 2018
12 Months 12 Months 12 Months 12 Months 12 Months
IGAAP IGAAP IGAAP IGAAP IGAAP

Gross Profit 59.66 61.25 65.24 67.20 65.08

Ratio

Net Profit 0.64 0.745 1.58 2.08 0.99

Ratio

Return on 5.2 5.59 7.87 9.51 4.93

capital
employed
• Gross profit is improving over five years as sales of the co-operative is improving in
comparison to cost of goods sold(COGS).
• Net profit is quite low in comparison to the gross profit because expenses incurred by
the co-operative are huge. It is evident that net profit improved till 2017 because of
improvement in sales. But as expense kept on increasing net profit further decreased
in 2018. However, it is still better than 2014.
• Return on capital employed increased till 2017 but fell drastically in 2018. Total
equity of the co-operative remained same throughout the years but reserves and
surplus improved. Also, as EBIT improved therefore return on capital employed
increased. In 2018 net profit of the co-operative fell drastically hence EBIT also
decreased.
 Efficiency Ratio

Mar 2014 Mar 2015 Mar 2016 Mar 2017 Mar 2018
12 Months 12 Months 12 Months 12 Months 12 Months
IGAAP IGAAP IGAAP IGAAP IGAAP

Inventory 1.80 1.992 1.868 1.70 1.616

Turnover Ratio

Working 0.12 0.144 0.0983 0.100 0.0960

Capital
Turnover
• From calculation of activity ratio it is evident that –

• Inventory turn over ratio signifies how fast co-operative is able to sell its
inventory. Co-operative is not able to sell its inventory due to which
inventory turn over ratio is decreasing.

• Working capital ratio is fluctuating . It is not following the particular trend

but over years it has reduced. Even though working capital has increased but
the same effect is missing in the operating revenue.

• Overall it can be concluded that activity ratio of co-operative has reduced

due to accumulating inventory and less return on working capital.
 Solvency Ratio
Mar 2014 Mar 2015 Mar 2016 Mar 2017 Mar 2018
12 Months 12 Months 12 Months 12 Months 12 Months
IGAAP IGAAP IGAAP IGAAP IGAAP

Debt Equity 0.033 0.028 0.0287 0.029 0.0291

Ratio

Total Asset to 36.53 42.50 42.88 41.72 42.59

Debt Ratio

Interest 1.75 1.79 2.17 2.43 1.76

Coverage
Ratio
• Debt to equity ratio should ideally be 2:1. As it can be seen through calculations
it is low which indicates co-operative is in safer financial position. Also, debt of
co-operative is not so high and co-operative is functioning more on employed
equity.

• Total asset to debt ratio is also high and is improving over years which indicates
that debts can be easily recovered from the assets of the co-operative. It further
boost the confidence of lender for the company.

• Interest coverage ratio is quite fluctuating over years . It increased for two years
but overall over years it remained same which indicates that company is not able
to improve its interest paying ability.
Overall Analysis of Ocean Agro Co-operative Ltd.

• Co-operative is in profit making state as it is evident from the analysis of

profitability ratio. In order to continue this company has to decrease its
expense which are increasing.

• Liquidity ratios signify that co-operative need to make proper utilization of the
current assets available.

• Activity ratios reflect that co-operative needs to clear its inventory at a

comparative faster rate.

• From solvency ratio it is evident that financial health of the co-operative is

good. It just need to improve its ability to pay high taxes.
 Krishak Bharti Co-operative Ltd.

Krishak Bharati Cooperative Ltd (KRIBHCO) is a Multi-State Cooperative Society

deemed to be registered under the Multi-State Cooperative Societies (MSCS) Act, 2002.
The Government of India through the Department of Fertilizers was a member of
KRIBHCO but its equity holding was reduced to NIL on 4th July 2013 under the
provisions of the MSCS Act 2002. KRIBHCO is not owned nor controlled nor financed
by the Government of India / Any State Governments.
KRIBHCO was incorporated on 17th April 1980 as a national level Multi State
Cooperative Society to implement first gas based “state-of-the-art” high capacity
Fertilizer Complex consisting of 2 x 1350 MTPD Ammonia plants and 4 x 1100 MTPD
Urea plants each with annual installed capacity of 8.91 Lakh MT Ammonia and 14.52
lakh MT of Urea at Hazira District-Surat, Gujarat, India based on natural gas from
Bombay High/ South Bassein. Hazira fertilizer complex was commissioned in 1985 in
record time with saving of Rs. 90 crore in project cost.
 Krishak Bharti Cooperative

Liquidity ratio

Ratio analysis Mar 2014 Mar 2015 Mar 2016 Mar 2017 Mar 2018
12 Months 12 Months 12 Months 12 Months 12 Months
IGAAP IGAAP IGAAP IGAAP IGAAP

Current Ratio

1.216725373 1.150318454 1.115842174 1.07754418 1.132698108

Quick Ratio

1.086178972 1.054625668 1.006095368 0.895094455 0.93744014

• From the quick and current ratio it is quite evident that they are very
close to there ideal values specifically quick ratio which indicates that
firm is capable of converting there current assets into cash so that it can
pay off its liability on a timely basis.

• Where as if we look at the ratios from 2014-18 they are declining which
indicates little increase in current liability in comparison of current
assets.
 Profitability Ratio

Mar 2014 Mar 2015 Mar 2016 Mar 2017 Mar 2018
12 Months 12 Months 12 Months 12 Months 12 Months
IGAAP IGAAP IGAAP IGAAP IGAAP

Gross Profit
Ratio

24.6572731 22.64576145 22.60196372 12.44143575 10.96544702

Net Profit
Ratio

2.394521646 0.418149217 5.688613712 3.988587151 3.560887893

Return on
capital
employed
20.45800501 33.16647938 58.69055052 48.87264332 41.70450756
• Net profit ratio and return on capital employed has shown increment from
2014-18 which shows the cooperative’s ability to transform money from
sales into profits, and returns, showing the ability of this firm to generate
returns for its shareholders.

• Where as gross profit ratio is declining continuously from, 2014-18

which shows that cooperative is unable to make reasonable profits from
on sales.
 Efficiency Ratio

Mar 2014 Mar 2015 Mar 2016 Mar 2017 Mar 2018
12 Months 12 Months 12 Months 12 Months 12 Months
IGAAP IGAAP IGAAP IGAAP IGAAP

Inventory
Turnover Ratio

11.54348015 16.3255665 13.41432958 7.581637634 7.817829897

Working
Capital
Turnover

0.682437376 1.434281444 1.089346184 1.439836784 0.758052546

• Krishak bharti’s inventory turnover ratio is continuously declining which
shows that the cooperative is unable to pay there inventory properly i.e.
firm takes time in converting there inventory into cash.

• Cooperative has a very low working capital turnover ratio. which has
increased from 2014-17 than again declined in 2018 which shows that this
cooperative is unable to use its working capital efficiently.
 Solvency Ratio

Ratio analysis Mar 2014 Mar 2015 Mar 2016 Mar 2017 Mar 2018
12 Months 12 Months 12 Months 12 Months 12 Months
IGAAP IGAAP IGAAP IGAAP IGAAP

Debt Equity
Ratio
0.16454054 0.065573248 0.034713486 0.003249435 0.002762908
Total Asset to
Debt Ratio
13.23138603 32.64792295 69.23023628 753.367784 850.8388123
Interest
Coverage
Ratio 2.074860335 2.045456985 2.174594967 1.79743021 1.82167408
• Cooperative has a very low debt to equity ratio through out all the years and least
in 2018 which shows that there equity is much higher than its long term
borrowings which is a positive sign for this cooperative.

• Total asset to debt ratio is increasing continuously and it is maximum in 2018

which shows that firm has more total assets than its long term liabilities and
current liability (debt).

• Interest coverage ratio is declining continuously which shows that the firm is
unable to make interest payment on its debts. Company will not be able to pay
high interest in future. Which is a bad sign for this cooperative
National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED) 
It was established on the auspicious day of Gandhi Jayanti on 2nd October 1958. Nafed is
registered under the Multi State Co-operative Societies Act. Nafed was setup with the object to
promote Co-operative marketing of agricultural produce to benefit the farmers. Agricultural farmers
are the main members of Nafed, who have the authority to say in the form of members of the
General Body in the working of Nafed.
The objectives of the NAFED shall be to organize, promote and develop marketing, processing and
storage of agricultural, horticultural and forest produce, distribution of agricultural machinery,
implements and other inputs, undertake inter-state, import and export trade, wholesale or retail as
the case may be and to act and assist for technical advice in agricultural, production for the
promotion and the working of its members, partners, associates and cooperative marketing,
processing and supply societies in India. 
Ratio Analysis For National Agricultural Co-Op. Mktg. Fedn. Of India Ltd.
Liquidity Mar 12 Mar 13 Mar 15 Mar 16 Mar 17
Ratio 12 months 12 months 12 months 12 months 12 months
IGAAP IGAAP IGAAP IGAAP IGAAP

Current
Ratio
0.003230061 0.000136805 5.22071E-05 0.00013826 0.00038837
Quick
Ratio 0.003230061 0.000136805 5.22071E-05 0.00013826 0.00038837

• NAFED is a government funded organization. Its main role is price

stabilization. It can be seen that the current asset has limited amount of
cash and bank balance.

• The data for inventory and other current asset is not provided hence the
current ratio and quick ratio is almost equal.
Profitability Mar 12 Mar 13 Mar 15 Mar 16 Mar 17
Ratio 12 months 12 months 12 12 months 12 months
IGAAP IGAAP months IGAAP IGAAP
IGAAP

Gross Profit 5.211575 8.8456115 1.996348 1.3283437 21.26212

Net Profit -17.48009 -13.41557 -6.184562 -26.99033 -6.355266
Return on
Capital
Employed -986.36993 -823.7379 -821.89444 -809.6774 -242.2878

Efficiency Mar 12 Mar 13 Mar 15 Mar 16 Mar 17

Ratio 12 months 12 months 12 12 months 12 months
IGAAP IGAAP months IGAAP IGAAP
IGAAP

Inventory
turnover NA NA NA NA NA
Working Capital
turnover -0.305463 -0.192364 -0.0658983 -0.06534616 -0.018526
Profitability Mar 12 Mar 13 Mar 15 Mar 16 Mar 17
Ratio 12 months 12 months 12 months 12 months 12 months
IGAAP IGAAP IGAAP IGAAP IGAAP

Debt Equity NA NA NA NA NA

Total Asset to Debt NA NA NA NA NA

Interest Coverage -0.030364 0.25109 -0.089347 -0.066293 0.66955

• The company has gross profit but its selling and distribution expense,
compensation to employees and other operating expense are so high that the net
profit has gone into negative. Again, the fact that NAFED is a government
organization, its main purpose is not to earn profit but to help the farmers.

• The debt ratios cannot be found out as the current assets are almost negligible
and the current liabilities are too high.
Monsanto Agriculture India Ltd.

Monsanto is a sustainable agriculture company. It delivers agricultural products that support farmers all
around the world.
Monsanto is focused on empowering farmers—large and small—to produce more from their land while
conserving more of our world's natural resources such as water and energy. Monsanto does this with its
leading seed brands in crops like corn, cotton, oilseeds and fruits and vegetables. Monsanto also produces
leading in-the-seed trait technologies for farmers, which are aimed at protecting their yield, supporting
their on-farm efficiency and reducing their on-farm costs.
Monsanto strives to make their products available to farmers throughout the world by broadly licensing
their seed and trait technologies to other companies. In addition to it, Monsanto also manufactures
Roundup® and other herbicides used by farmers, consumers and lawn-and-garden professionals.
Monsanto could not exist without farmers. They are the customers--the lifeblood of the company. More
important, they are the support system of the world's economy, working day in and day out to feed, clothes
and provide energy for our world.
 Monsanto-Liquidity ratio

Ratios March 20 March 2015 March 2016 March 2017 March 2018
12 months 12 months 12 months 12 months 12 months
IGAAP IGAAP IGAAP INDAS IGAAP

Current Ratio 2.37 3.27 2.95 3.00 2.35

Quick ratio 1.16 1.82 2.31 2.01 1.43

• Both the current ratio and quick ratio of the firm is fluctuating a bit and also
they are more than the ideal ratio which shows that the current assets are
accumulated and they are unable to convert there assets into cash.
 Profitability ratio

Ratios March 20 March 2015 March 2016 March 2017 March 2018
12 months 12 months 12 months 12 months 12 months
IGAAP IGAAP IGAAP INDAS IGAAP

Gross profit 44.34 38.93 43.13 42.28 49.67

Net profit 18.23 17.82 23.44 24.48 19.45

Return on capital 364.70 79.44 126.20 98.01 96.83

employed
• To measure the profitability of Monsanto we have taken gross profit , net
profit and return on capital employed ratios, which reflects that the firm is
able to transform money from sales into profits, and returns, showing the
ability of a company to generate returns for its shareholders.

• Though there return on capital employed is declining with the year which
shows that the firm’s long term loans are increasing with the year in
comparison of earning before interest and tax.

• One can conclude that Monsanto is making more economical use of

capital.
 Efficiency ratio

Ratios March 20 March 2015 March 2016 March 2017 March 2018
12 months 12 months 12 months 12 months 12 months
IGAAP IGAAP IGAAP INDAS IGAAP

Inventory turnover
ratio

1.494541 2.304039 2.347887 1.655945 1.413057

Working capital
turnover ratio

2.098581 2.093242 1.75786 1.71657 1.965189

• As one can see the inventory turnover ratio of Monsanto initially increased
a bit but in the later years it again got reduced to almost the same value
which shows Monsanto is unable to manage there inventory which means
they are unable to sell there total average inventory during the years.

• Working capital ratio has also decreased over the years which reflects that
Monsanto’s a bit of ineffectiveness in utilizing its working capital.

• So, one can conclude that Monsanto is moderately able to convert there
resources into revenue.
 Solvency Ratio

Ratios March 2014 March 2015 March 2016 March 2017 March 2018
12 months 12 months 12 months 12 months 12 months
IGAAP IGAAP IGAAP INDAS IGAAP

Debt equity ratio

0.049021 0.292801 0.213043 0.243976 0.22303
Total asset to debt
ratio 32.84305 5.435124 7.381287 6.383577 7.400165
Interest coverage
ratio 145.9213 161.5294 120.4088 125.963 149.8938
• Debt equity ratio is less which indicates that financial condition is safe. This
in turn means that safety margin for lenders is high.

• High total asset to debt ratio signify that company has ability to pay debts
from the assets available. Higher ratio means more security to lenders. But
company’s total asset to debt ratio has significantly reduced due to increase
in debts overtime.

• Company has high interest coverage ratio that implies that company is able
to pay high interest. It is fluctuating for this company but not with much
margin. And over the period it has changed marginally.
Godrej Agrovet Pvt Ltd.
Godrej Agrovet Limited is a diversified, Research & Development focused agri-business
company, dedicated to improving the productivity of Indian farmers by innovating
products and services that sustainably increase crop and livestock yields. They hold
leading market positions in the different businesses in which they operate - Animal Feed,
Crop Protection, Oil Palm, Dairy and Poultry and Processed Foods.
 Godrej Agrovet Pvt. Ltd.

Liquidity Mar 12 Mar 13 Mar 15 Mar 16 Mar 17

Ratio 12 months 12 months 12 months 12 months 12 months
IGAAP IGAAP IGAAP IGAAP IGAAP

Current Ratio
0.914513892 0.709562532 0.794133821 0.998518691 0.999936094
Quick Ratio
0.511345412 0.384014296 0.384886769 0.539820579 0.520662918

Godrej Agrovet Ltd has a normal current ratio which can be

further improved. But its quick ratio seems to be pretty less, this
is characterized due to high inventory with the company.
Profitability Mar 15 Mar 16 Mar 17 Mar 18 Mar 19
Ratio 12 months 12 months 12 12 months 12 months
IGAAP IGAAP months IGAAP IGAAP
IGAAP

17.2744462
Gross Profit 17.97382555 14.71203959 1 15.23636237 13.50357658
Net Profit 5.736305321 4.567006182 5.61975355 5.061076818 4.759089082
Return on
Capital 144.094036
Employed 157.1854103 208.756409 7 140.3688317 155.2926717
Efficiency Mar 12 Mar 13 Mar 15 Mar 16 Mar 17
Ratio 12 months 12 months 12 12 months 12 months
IGAAP IGAAP months IGAAP IGAAP
IGAAP

Inventory 5.33678277
turnover 7.754125679 5.586822224 3 5.721910775 5.569758656
Working Capital
turnover -3.549245785 -0.893259872 -1.3846875 -220.9606742 -946.2222222
SOLVENCY RATIO Mar 12 Mar 13 Mar 15 Mar 16 Mar 17
12 months 12 months 12 months 12 months 12 months
IGAAP IGAAP IGAAP IGAAP IGAAP

Debt Equity 0.118886667 0.037081168 0.022102324 0.013647508 0.014451283

Total Asset to Debt 23.13707771 93.0770422 120.8220551 147.3843093 145.1646766
Interest Coverage 9.180006327 3.261243602 5.006231884 9.522300831 14.61652447

• The company has high gross profit as well as net profit margins. This can help the
firm in the long run and along with that the return on capital employed is also
sufficiently high and this indicates that the firm is in good shape.
• A small concern is that the inventory turnover ratio has been decreasing but the
company has the room for improvement. With high interest coverage ratio, it can
be said that the company has the capability to pay off its interests quite easily.
• Overall financially it can be said that Godrej Agrovet is in good health.
Nuziveedu Seeds Pvt. Ltd.
Nuziveedu Seeds Limited (NSL) India’s largest hybrid seed – company, (in terms of
sales of hybrid seeds to Indian farmers in 2015 – 2016) NSL has been recognized as
the largest Bio Agri company by Bio spectrum survey of Agricultural Biotechnology
companies in India consecutively for the past eight years since 2009. * believes that it
has played an important role in Indian agriculture by developing and supplying quality
hybrids and varietal seeds to millions of farmers. Nuziveedu Seeds, which was
originally established as a part of NSL Group, has served Indian farmers for more
than four decades. The company has its presence in 20 states and markets
approximately 150 varieties of seed products to more than 5.5 million farmers across
the country.
 NUZIVEEDU SEEDS Pvt. Ltd.

PROFITABILIT Mar 2014 Mar 2015 Mar 2016 Mar 2017 Mar 2018
Y 12 Months 12 Months 12 Months 12 Months 12 Months
RATIOS IGAAP IGAAP IGAAP IGAAP IGAAP
Gross Profit 48.14 45.83 51.19 49.52 43.53

Net Profit 14.45 13.23 11.16 10.93 4.70

Return on 164.14 148.63 119.49 104.69 52.65

Capital
Employed

• As it is evident from the above data that the gross profit and net profit
are declining because its expenses which include employee
compensation, royalties and selling and distribution charges are quite
high
• Return on capital is declining due to decreasing net profit and
fluctuating equity capital
EFFICIENCY Mar 2014 Mar 2015 Mar 2016 Mar 2017 Mar 2018
RATIOS 12 12 12 Months 12 Months 12 Months
Months Months IGAAP IGAAP IGAAP
IGAAP IGAAP
Inventory 0.84 0.94 0.83 0.79 1.10
Turnover

Working Capital -0.2 10.64 1.34 0.49 0.52

Turnover

• Inventory turnover is quite low and increased in the last year which
shows that the company is trying to sell its inventory
• As working capital turnover shows the difference between current
assets and current liabilities in 2014 liabilities were more than
assets and then assets increased over the years.
SOLVENCY Mar 2014 Mar 2015 Mar 2016 Mar 2017 Mar 2018
RATIOS 12 12 Months 12 Months 12 Months 12 Months
Months IGAAP IGAAP IGAAP IGAAP
IGAAP
Debt Equity 0.10 0.08 0.06 0.04 0.03
Total Assets 84.72 45.64 54.93 70.61 97.55
to Debt
Interest 5.06 3.86 3.82 4.63 4.10
Coverage

• Debt equity ratio is decreasing over the year which signifies that
the company owes very less debt same goes with total assets to
equity ratio which tells that company’s assets are significantly
more than its debts.
• Interest coverage ratio tells the ability of the company to pay off
its interest, since its declining over the year so its ability to pay its
interest is decreasing.
 Comparative company and industry analysis

Ratios NAFED KRIBHCO Ocean Monsanto Godrej Nuziveedu

Agro Agrovet
Current Ratio 0.000388 1.132698 3.423077 2.350058 0.999 1.081858
Quick Ratio 0.000388 0.93744 2.65 1.430945 0.520 0.297133
Gross Profit 21.2627 10.96545 65.08728 49.67 13.503 43.53298
Net Profit -6.3552 3.560888 0.997506 19.45207 4.759 4.707809
Return on Capital
Employed -242.29 41.70451 4.935065 96.83284 155.292 52.65306
Inventory turnover NA 7.81783 1.616915 1.413057 5.569 1.109964
Working Capital
turnover -0.01850 0.758053 0.096032 1.965189 -946.222 0.526613
Debt Equity NA 0.002763 0.029182 0.2231 0.0144 0.03597
Total Asset to Debt NA 850.8388 42.59155 7.40012 145.164 97.553
Interest Coverage 0.66904 1.821674 1.76 149.89 14.616 4.1042
Group- Avirodh Section B