FA Final Report

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Jubilant Foodworks Ltd

Financial Accounting

Project Report

Submitted To:

Prof. Sonal Ved

By:

Pranjal Upadhyay

MMS A

Roll No. 60

17th September 2013



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Table of Contents

Sector Analysis ........................................................................................................................................ 3

Notices .................................................................................................................................................... 5

JFL List of Directors ................................................................................................................................. 6

Management Discussions and Analysis .................................................................................................. 9

Director’s Report................................................................................................................................... 11

Corporate Governance Report .............................................................................................................. 13

Auditor’s Report.................................................................................................................................... 15



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Sector Analysis

The Indian Fast Food Market is one of the fastest growing markets all across the

globe. Every year we can see a steady rise in the Fast Food Market in India which bank upon both Indian and Foreign Investors.

The Indian Fast Food Market is growing at a rapid rate of around 30-35% per annum.

There are number of foreign fast food chains which are aggressively targeting the

Indian consumers. They collect enough local information before entering the local

market and starts targeting there specific market right from the word go.

Relaxation in the rules of FDI was supposed to be the big step to bring in the foreign

Investor in big numbers but some poor government policies and poor market

conditions didn’t supported the cause.

Two of the most popular Fast Food joints in Indian are

1. MacDonald’s

2. Domino’s Pizza

The Market shares of the various Fast food Joints in world markets is shown below

19%

10%

9%

2%

2%

2%1%

55%

Market Share of Major Players in Fast Food

Indutry(Globally)

McDonald's Corporation

Doctor's Associates,Inc

Yum! Brands, Inc

Jack in the box,Inc

Wendy's International, Inc

Burger King Corporation Inc

Dominos Inc

Others



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The stakes in Indian Markets are high, with India's quick-service restaurant market

worth $13 billion.

According to the “Indian Food Service Report 2013” given by NRAI that’s the

National Restaurants Association of India, Indian Fast Food Industry which in current

state is estimated to be of worth Rs 2, 47,680 crore is expected to touch Rs 4,08,040

crore by the year 2018.

700 million people or about 60 percent of India’s population are under the age of 30

are the prime targets for fast-food in India. The youth are more attracted towards

Burgers then a normal vada sambhar at a restaurant which is time consuming.

The other foreign fast food chain which planned to enter the Indian market last year

was Dunkin’s Donuts. The brand launched their product in the market partnering with

the major Fast Food operator Jubilant Foodworks Ltd that provides Domino’s Pizza

chain in India. According to the analysts in a country like India the affordable Menus play a vital role as incomes in this part of the world are comparatively low by global

standards and lunch are even available at a cost as low as 50 U.S. cents on street

stalls.

Jubilant Foodworks is majorly known as the Pizza dominated fast food chain. The

Pizza market in India is majorly controlled by the Domino’s Pizza whereas on a

global level there are many other big players as shown by the fig below:-

Yum brand is next big thing in the Indian Market and they are ready to invest in big

numbers by launching more than 100 stores in the next year.

Pizzeria plans to enter the Indian Market next year and in this case the Indian Market

will be more tough to compete with but in either cases the customers or the consumers

will be at all gains.

Papa John, 10%

Pizza Hut, 17%

Dominos, 19%

Pizzeria, 54%



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JFL List of Directors

1. Mr. Shyam S. Bhartia

Designation: Chairman & Director

Qualifications: Commerce Graduate from St.Xavier’s College, Qualified cost and works

accountant.

Specialised experti se: Pharmaceuticals, chemicals, foods, Oil & gas.

Experience: Chairman of the Chemicals Committee of FICCI and 35 years of working invarious sectors specially chemicals.

He has been an important member of the Jubilant Board since 21June, 1978.

2. Mr. Hari S. Bhartia

Designation: Co-Chairman & Director

Qualifications: Chemical Engineer from IIT, Delhi.

Specialised experti se: Pharmaceuticals, chemicals, foods, Oil & gas.

Experience: President of CII, Chairman of IIM (Raipur), Chairman on the board of governors of IIT, Kanpur and over 30 years of working experience in various sectors.

He has been an important member of Jubilant Board since 1st November 1983.

3. Mr. Ajay Kaul

Designation: CEO cum Whole Time Director.

Qualifications: Engineer from IIT, Delhi, MBA from XLRI.

Specialised experti se: Sales and Marketing.

Experience: He has work experience in different fields ranging from airlines, expressdistribution, logistics, and credit card, all within the umbrella of service.

He has been a Whole Time Director at JFL since 14 th March 2005.



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4. Ms. Ramni Nirula

Designation: Independent Director

Qualifications: Economics Graduate and Masters in Business Administration from

University of Delhi.

Specialised experti se: Banking and Finance sector industries.

Experience: Worked in ICICI bank and held various leadership positions in areas of Strategy

and Corporate Banking.

She became the Independent Director of Jubilant Foodworks limited in October 2009 .

5. Mr. Phiroz Vandrevala


Qualifications: Graduate from Kolkata University and a Qualified Chartered Accountant.

Specialised experti se: Finance

Experience: He has been a part of the expert committees made by RBI to guide the Central

Bank in its policy making efforts.

He became the Independent Director of Jubilant Foodworks limited in May 2010.

6. Mr. Vishal Marwaha


Qualifications: Commerce graduate from University of Delhi and a qualified Chartered

Accountant.

Specialised experti se: Private equity and investment banking

Experience: Over 20 years of experience as an investment banker and a private equity investor.

He became the independent Director of Jubilant Foodworks Limited in October 2009.



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7. Mr. Arun Seth


Qualifications: Engineer from IIT, Kanpur, MBA from IIM, Calcutta.

Specialised experti se: Telecommunication and IT industry in India

Experience: He worked for 14 years for BT group in various group.

He became the independent Director of Jubilant Foodworks Limited in 2009.



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Management Discussions and Analysis

1. Economic Overview

The growth rate has been decelerating in the FY 2013 at 5% for the second consecutive year.

The impediments to growth have been due to the high interest rates, worsening current

account deficit, higher fiscal deficit and external global challenges. The Prediction for the FY

2014 shows that the Indian GDP is likely to accelerate. The key factors for growth could be

Favourable external demand outlook

Reform initiated by the government

The rise in GDP will help RBI lower the interest rates for lending and also attract new

business to the country.

2. Industry Overview

The ongoing challenges in the Indian Market have impacted sectors like Infrastructure,

manufacturing etc but the Indian Food Service Industry (FSI) remains undeterred and

continues to grow rapidly. The size of FSI scaled to 75,000 Crore in 2012 from 53,000 Crore

in 2010 and is further expected to touch 1, 37,000 Crore with next 2 years.

Despite all the growth momentum a strong pressure was felt on the same store sales due to

the market slowdown in the country.

Composition of the overall Indian Food Services Industry

Indian FoodService Industry

30% Organised

Format

Fine and CasualDinning

Take Away, Homedelivery- Quick

ServiceRestaurant(QPR)

70% UnorganisedSector

Roadside eateries,Street stalls, Trolleys,

Dhabas



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3. Growth Drivers

The domestic FSI growth continues to be pushed forward by drivers working synergistically

and cohesively. On demand side, the market is being influenced by the expanding consumer

base and increase in the family disposable income. On supply side, a surge in the number of

brands entering the market to tap the present opportunities is changing the current market

scenario.

4. Business Overview

Jubilant FoodWorks Ltd. (JFL) - a Jubilant Bhartia Group company, along with its

subsidiary, manages the Domino’s Pizza brand with exclusive rights for India, Bangladesh,

Nepal and Srilanka. As India’s largest and fastest growing food service company, Domino’s

Pizza India enjoys a dominant 62% share in the organised pizza market and more than 70%

share in the pizza home delivery segment countrywide.

The JFL Company’s leadership position is evident from the facts and numbers – it sells

nearly 66 Lakh pizzas a month across its network of 576 pizza stores across 123 cities in

India; the top 10 Stores in the world by the number of pizzas sold in a year are of Domino’s

Pizza India; Domino's Pizza's 30-minute home delivery promise has a success rate of roughly

99%.

5. Business Strengths

Both brands of the Company - Domino’s Pizza and Dunkin’ Donuts - enjoy a very strong

brand legacy. Founded way back in 1960, Domino’s Pizza is a well recognised global pizza Delivery brand. The Company’s roll-out of the Dunkin’ Donuts brand has helped it build avery balanced and complementary portfolio of brands for the Indian consumers. TheCompany is Cognisant of the industry dynamics and believes that there is tremendous

potential to grow and achieve. With the established brand pedigrees, the Company is well poised to benefit from the Opportunities in the fast growing Indian QSR market.

6. Technology Enabled Growth Strategy

The Company has been proactive in adopting technologies in various aspects of its

operations. It has well integrated IT and overall maintenance systems that support an efficientand robust business model. The Company has also built up dynamic online and mobileordering systems to boost its sales.



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Director’s Report

According to the Director’s report the Company has been growing in numbers in the

financial year 2013. The Company’s total incomes yields a growth of 38%, and stood at14,153 Million. The Profit before Interest, Tax and Depreciation increased from 1,922

Million in FY 2012 to 2,522 Million in FY 2013, registering a growth of 31%. The net profit

registered a growth of 28% to 1,351 Million in FY 2013 from 1,056 Million in FY 2012.

Dividend

The Company has got some expansion plans and keeping in view, the requirement of

Capital, the Board has not recommended any dividend.

Operational Performance

The steady growth continued in the FY 2013, hallmarked by customer focussed innovation

combined with both the powerful brands. Both the brands Domino’s Pizza and Dunkin

Donuts have made their priority to understand their consumers; this is one of the prime

reasons of the growth and success that the company is seeing.

Domino’s Pizza

During FY 2013, 111 new stores were added to the Domino’s network as they entered into

18 new cities. Domino’s pizza store count at the end of the year stood at 576 stores across123 cities. During FY 2013, a Same Store Sales (SSS) growth of 16.2% was delivered by the

company. A significant milestone was achieved when Domino’s Pizza open its 500th

store in

New Delhi.

During FY 2013, the new product offerings included Taco Indiana, Potato Smackers, Spicy

Twistyz and Cheesy Boloroni Pizza. The emotional proposition described as happiness Home

delivered “Khushiyon ki Home Delivery” has been changed after four years and in its

endeavour to deepen the bonding and engagement with consumers, a new brand

positioning “Yeh Hai Rishton Ka Time” was launched.

Dunkin’ Donuts

By the end of the FY 20013, there were a total of 10 restaurants in India, 9 of them are in

Delhi NCR area and 1 in Chandigarh. The consumer response has been phenomenal and the

company is planning to expand by rolling out strategy to attract more and more consumers.

The company offered Dunkin’ Donuts Diwali Gift packs at the time of Diwali and Dunkin’

Donuts winter blast wherein new varieties were offered to the consumers.



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Corporate Governance Report

The Company’s philosophy about the corporate governance is driven by the interest of

business needs of the organisation and its stake holders. Keeping the same philosophy inmind, and to sustain the shareholders’ trust, corporate governance is given top priority in the

Company. This ethos also underlines the Company’s commitment for fulfilment of its social

responsibilities.

The Main Points of JFL Company’s Corporate Governance Report are:

Board of Directors are the main operators at the core of the Company’s Corporate

Governance, they oversees how the management works and protects the long-term

interests of all the stakeholders and the employees. The Company believes that an

active, responsible and independent Board is necessary to ensure high standards of corporate governance are implemented. The independency of the Board has to be

maintained so out the total 7 directors, 4 are independent Directors.

There are different committees formed under the corporate governance:-

1. Audit Committee

2. Remuneration Committee

3. Compensation Committee

4. Investors Grievance Committee

These committees enable the company to have a more focussed attention on each

diversified matter.

The Company’s corporate philosophy follows the SEBI code and guidelines to

prevent Insider trading.

To maintain utmost transparency a Whistle Blower Policy is established. The

establishment of such Policy helps in maintaining a neutral and unbiased forum for

both Indian and foreign partners and employees to voice their concern in a better

manner without fear of getting fired.

The company has a strong focus on retaining and nurturing the best available talent in

the organisation. There are different plans and schemes established to award the bestemployees in both junior and senior executive levels.

The company maintains a regular communication with their employees and

stakeholders, including e-mailing and messaging of financial performance, in order to

maintain a trust and confidence level in the employees and shareholders.



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The Share Holding Pattern has been shown above which shows that 54% of the company’s

shares belong to the Promoters and Promoters group. The next major share that of 42% which

the company posses is that of the FIIs. The Indian Public and the Corporate Bodies posses

each of 2% shares in the company.

Director’s Responsibility Statement

In order to maintain uniformity all the applicable accounting standards have beenfollowed and material departures are made to follow the same.

The company has selected in particular such accounting policies and have applied

them in order to maintain consistently and help the company make proper judgments

and also estimates that are reasonable and are also prudent so as to give a true and fair

view of the affairs of the Company at the end of the FY 2013 and also about the profit

of the Company for that FY 2013.

The company has taken proper as well as sufficient care for the maintenance of

required accounting records in accordance to the provisions of the Companies Act,

used for safeguarding the assets of the Company and also prevent and detect fraud inthe company.

To prepare the annual report “going concern” basis has been used.

Promoters and

Promoters group

54%

Indian Public

2%

FIIs

42%

Corporate Bodies

2%

Share Holding Pattern



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Auditor’s Report

Report on Financial Statement

The auditors have audited the Financial Statements of Jubilant Foodworks Ltd which

comprises the Balance sheet for the FY 2013 and also the Profit and Loss statement for the

year end. This information will be attached with a summary of important accounting policies

and other desired information.

Management Responsibility for Financial Statements

The responsibility of preparing the Financial Statements in order to present a fair view of the

financial performance, financial position and cash flow lies mainly on the management of the

Company, the company works according to the different Accounting Standards.

Auditor’s Responsibility

The auditor’s responsibility is to give their views on the Financial Statements based on their

audit. The auditor’s while auditing the report had worked accordance to the Accounting

Standards.

Auditor’s Opinion

According to the auditors, they have prepared the report with reference to the explanation

given to them by the company. The information is so presented that it provides a fair and trueview with the accounting standards generally accepted in India:

The Balance Sheet of the state of affairs at 31st march 2013.

The P/L statement of the company and profit for the year on the last date.

The cash flow statements of the company and cash flow for the year on that date.

Rules on other Legal and Regulatory Requirement

As per the Section 277(3) of the Act, Auditor’s report that:

Auditors have got all the information and answers provided to them by the company

in order to prepare the Audit.

Auditors believe that proper books have been kept by the company for their

examination of those books.

Balance sheet, Statement of P/L and Cash flow are all in agreement with the account

books.

Considering the written representation received from the Directors, none of the

directors is disqualified as on 31st march 2013.



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References

FA Final Report

Documents

Transcript of FA Final Report