INDUSTRY ANALYSIS

FOOD PROCESSING
INDUSTRY

SUBMITTED BY:

Name Roll No. SAP ID

Anish Parhi B009 80011220265
Divya Anand B013 80011220151
Pranjali Amola B028 80011220264
Pulkit Bhatia B033 80011220173
Tanvi Khandwala B045 80011220072
Vishnu Gupta B050 80011220192
Jubilant Foodworks:
Major sources of cost are as below:
Jubilant 2020 2019 2018
Revenue 395,460.09 399,688.95 300,316.45
Total Expense 351,628.70 89% 356,919.35 89% 268,992.61 90%
Cost of raw materials consumed 90,232.66 26% 91,407.95 26% 66,017.54 25%
Employee benefits expense 78,461.67 22% 79,643.67 22% 60,410.54 22%
Salaries, allowances, gratuity and bonus 69,458.23 89% 60,164.65 76% 54,164.64 90%
Depreciation and amortisation expense* 34,414.00 10% 35,227.72 10% 15,588 6%
Other Expense 117,053.44 33% 103,346.51 29% 86,282 32%
Packing materials consumed 12,103.66 10% 11,719.87 11% 9,106.59 11%
Freight and forwarding charges 11,774.01 10% 10,629.08 10% 8,492.33 10%
Advertisement and publicity expenses 24,694.88 21% 17,088.28 17% 14,276.62 17%
Franchisee fee 13,577.17 12% 12,422.75 12% 9,873.08 11%
 Jubilant Foodworks is using approx. 90% of their revenue as an expense
 Of which major portion is used in raw materials considering the amount of raw materials
used for the processed food.
 Another major component in the employee salaries
 Considering the machineries required in the company for the processing the depreciation
Amortization expense on right-of-use assets takes up major chunk as well.
 Company has also been making an expense on advertising and publicity and have increased
their allocation over years and have been expanding constantly with about 4% in franchisee
fees.
 There are not major variable components of expense in this industry except the advertising
and PR expense.

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Nestle:

 Major portion of the total expense has been allocated to use of raw materials used
for packaging and making of food products.
 Salaries, allowances, gratuity and bonus make almost 85-90% of the employee
benefit expense.
 In other expenses, it has been noted that the major expense is in the area of
advertisement and publicity.
 Compared to Jubilant the depreciation and amortization expense is low on
machinery because the machinery used would be low.
 As found in all other companies the major expense

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Britannia Industries:
Major sources of cost are as below:

 Britannia Industries is using approx 83% of their revenue as an expense of which major
portion is used in cost of materials consumed considering the amount of raw materials used
for the processed food.

 Other major expense is purchase of stock in trade which is purchases of finished goods that
the company buys towards conducting its business.

 For employee benefits and salaries, the company spends around 4% of its revenue.

 The company spends its other major chunk of expense as miscellaneous expense which is
around 23% for FY19-20 in which conversion charges take up the major chunk.

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Key Performing Indicators:
1. Operating Margin: This is used in Food Processing industry to check whether the profitability is
increasing or not and is used a benchmark to compare with the other companies in the industry.
Nestle > Britannia > Jubilant.
Upon looking at the operating margin, it is clearly visible how well jubilant has performed in last
five years and shows how profitable the company has become.
2. Unplanned Downtimes: This is one of the important KPIs in this industry and could results in
high maintenance cost and lower productivity and could heavily impact on the financial metrics.
3. Throughput: It is a measure of how much product the manufacturing process are able to out
over a set period of time. This KPI gives an idea on production level, any bottlenecks in the
process and could point to the issues or breakdowns in the production lines.
4. Yield: Although Throughout measures the productivity, yield is a better KPI which measure how
much is produced correctly.
5. Inventory Turnover: Considering the industry deals in perishable item, it is important to keep an
eye on this to know how frequently the inventory is sold and replaced.
6. Distribution cost: Distribution channels being one of the key parts of the industry it is essential
to keep a measure of distribution cost as percent of revenue to determine how efficient the
distribution system of the company is.
7. Days Sales Outstanding: This is an important aspect to look as this shows the number of days
sales yet to be collected. Focusing on this helps the company to collect on the debts.

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