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EXECUTIVE SUMMARY

Experience is the best teacher as solution of any problem is concern. As a student

of Business Management, we must have enough practical knowledge. This

practical knowledge cannot be available to students in classroom. So that fieldwork

is essential for achieving such practical knowledge or experience.

I have done the ratio analysis of The Panchmahal District cooperative milk

producers union ltd, godhra. I have done all the profitability ratios, liquidity ratios,leverage ratios and activity ratios, during my project and going through my

research of finance I have found that Panchmahal dairy achieved good profitability

for last three years their net profit and gross profit has increased over the previous

year. There is little problem with liquidity and current ratio to be maintained by

them.

Earnings per share for Panchmahal dairy are also very good as their share holders

get higher returns. Another problem with Panchmahal dairy is their debt equity

ratios and proprietary ratios are also not good as compared to the standard ratios soI think they should work on that overall the performance of Panchmahal dairy is

satisfactory enough as they maintained good profit as well as high dividend for

their share holders.

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INDUSTRY PROFILE

Milk producing animals have been domesticated for thousands of years. Initially,

they were part of the subsistence farming that nomads engaged in. The communitymoved about the country, their animals accompanied them. Protecting and feeding

the animals were a big part of the symbiotic relationship between the animals and

the herders.

In the more recent past, people in agricultural societies owned dairy animals that

they milked for domestic and local (village) consumption, a typical example of a

cottage industry. The animals might serve multiple purposes (for example, as a

draught animal for pulling aplough as a youngster, and at the end of its useful life

as meat). In this case the animals were normally milked by hand and the herd size

was quite small, so that all of the animals could be milked in less than an hourabout 10 per milkier. These tasks were performed by a dairymaid(dairywoman) or

dairyman. The word dairy harkens back to Middle English dairies, demerge, from

dye (female servant or dairymaid) and further back to Old English doge (kneader of

bread).

With industrialization and urbanization, the supply of milk became a commercial

industry, with specialized breeds of cattle being developed for dairy, as distinct

frombeefordraught animals. Initially, more people were employed as milkers, but

it soon turned to mechanization with machines designed to do the milking

Historically, the milking and theprocessing took place close together in space and

time: on a dairy farm. People milked the animals by hand; on farms where only

small numbers are kept, hand-milking may still be practiced. Hand-milking is

accomplished by grasping the teats (often pronounced tit or tits) in the hand and

expressing milk either by squeezing the fingers progressively, from the udderend

to the tip, or by squeezing the teat between thumb and index finger, then moving

the hand downward from udder towards the end of the teat. The action of the hand

or fingers is designed to close off the milk duct at the udder (upper) end and, by the

movement of the fingers, close the duct progressively to the tip to express thetrapped milk. Each half or quarter of the udder is emptied one milk-duct capacity at

a time.

The strippingaction is repeated, using both hands for speed. Both methods result in

the milk that was trapped in the milk product being squirted out the end into a

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http://en.wikipedia.org/wiki/Herdhttp://en.wikipedia.org/wiki/Agriculturehttp://en.wikipedia.org/wiki/Cottage_industryhttp://en.wikipedia.org/wiki/Ploughhttp://en.wikipedia.org/wiki/Meathttp://en.wikipedia.org/wiki/Industrial_Revolutionhttp://en.wikipedia.org/wiki/Urbanisationhttp://en.wikipedia.org/w/index.php?title=Commercial_industry&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Commercial_industry&action=edit&redlink=1http://en.wikipedia.org/wiki/List_of_breeds_of_cattlehttp://en.wikipedia.org/wiki/Beefhttp://en.wikipedia.org/wiki/Working_animals#Animals_used_for_their_strengthhttp://en.wikipedia.org/wiki/Mechanizationhttp://en.wikipedia.org/wiki/Milkinghttp://en.wikipedia.org/wiki/Food_processinghttp://en.wikipedia.org/wiki/Dairy_farminghttp://en.wikipedia.org/wiki/Teathttp://en.wikipedia.org/wiki/Udderhttp://en.wikipedia.org/wiki/Milk_ducthttp://en.wikipedia.org/wiki/Herdhttp://en.wikipedia.org/wiki/Agriculturehttp://en.wikipedia.org/wiki/Cottage_industryhttp://en.wikipedia.org/wiki/Ploughhttp://en.wikipedia.org/wiki/Meathttp://en.wikipedia.org/wiki/Industrial_Revolutionhttp://en.wikipedia.org/wiki/Urbanisationhttp://en.wikipedia.org/w/index.php?title=Commercial_industry&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Commercial_industry&action=edit&redlink=1http://en.wikipedia.org/wiki/List_of_breeds_of_cattlehttp://en.wikipedia.org/wiki/Beefhttp://en.wikipedia.org/wiki/Working_animals#Animals_used_for_their_strengthhttp://en.wikipedia.org/wiki/Mechanizationhttp://en.wikipedia.org/wiki/Milkinghttp://en.wikipedia.org/wiki/Food_processinghttp://en.wikipedia.org/wiki/Dairy_farminghttp://en.wikipedia.org/wiki/Teathttp://en.wikipedia.org/wiki/Udderhttp://en.wikipedia.org/wiki/Milk_duct

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bucket that is supported between the knees (or rests on the ground) of the milkier,

who usually sits on a low stool.

Traditionally the cow, or cows, would stand in the field or paddock while being

milked. Young stock, heifers, would have to be trained to remain still to be milked.In many countries, the cows were tethered to a post and milked. The problem with

this method is that it relies on quiet, tractable beasts, because the hind end of the

cow is not restrained.

In 1937, it was found that bovine so matotropin (BST or bovine growth hormone)

would increase the yield of milk. Monsanto Company developed a synthetic

(recombinant) version of this hormone (RBST). In February 1994, RBST was

approved by the Food and Drug Administration (FDA) for use in the U.S. It has

become common in the U.S., but not elsewhere, to inject it into milk kin dairy

cows to increase their production by up to 15%.

However, there are claims that this practice can have negative consequences for the

animals themselves. A European Union scientific commission was asked to report

on the incidence ofmastitis and other disorders in dairy cows, and on other aspects

of the welfare of dairy cows.[1] The commission's statement, subsequently adopted

by the European Union, stated that the use of RBST substantially increased health

problems with cows, including foot problems, mastitis and injection site reactions,

impinged on the welfare of the animals and caused reproductive disorders. The

report concluded that on the basis of the health and welfare of the animals, RBSTshould not be used. Health Canada prohibited the sale of RBST in 1999; the

recommendations of external committees were that, despite not finding a

significant health risk to humans, the drug presented a threat to animal health and,

for this reason, could not be sold in Canada.

While most countries produce their own milk products, the structure of the dairy

industry varies in different parts of the world. In major milk-producing countries

most milk is distributed through wholesale markets. In Ireland and Australia, for

example, farmers' co-operatives own many of the large-scale processors, while inthe United States many farmers and processors do business through individual

contracts. In the United States, the country's 196 farmers' cooperatives sold 86% of

milk in the U.S. in 2002, with five cooperatives accounting for half that. This was

down from 2,300 cooperatives in the 1940s.

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COMPANY PROFILE

PANCHMAHAL DISTRICT CO-OPERATIVE MILK PRODUCERS. UNION

LTD (GODHRA)

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HISTORY

Panchmahal District Cooperative Milk Producers Union Ltd., Godhra was

established in May 1973. The milk shed has a total human Population of 36.61

lakhs (as per Census of India, 2001) of which 26.43 lakhs comprises rural

population and 3.25 lakhs has been classified as urban population. The milk shed

has 1908 inhabited villages distributed across 18 talukas of two districts of

Panchmahal and Dahod Districts. Initially the milk unions of neighboring districts

like Kaira, Sabar and Baroda helped to organize the dairy cooperatives in

Godhra. The entire operations for milk procurement were handled by these unions.

In 1979, The Panchmahal Milk Union started its activities independently at Godhra

with the help of Gujarat Dairy Development Corporation (GDDC). The union wasincluded under Operational Flood 2, 1982 and GDDC handed over the operations

to the union in 1983. Panchmahal Union got affiliated to the Gujarat Cooperative

Milk Marketing Federation (GCMMF) Ltd. Anand on 1st April 1984.

In the year 2004/05, out of 1600 dairy cooperatives societies (DCS) organized by

the union, 1380 DCS contributed on an average around 2.58 TLPD of milk every

day. The union has milk drying capacity of 18 MTD and ghee manufacturing

capacity of 10 MTD. The union has two chilling centers, one at Chopda and other

at Limdi with the capacity to handled 2.0 LLPD and .3 LLPD respectively. Theannual sale of Panchmahal Milk Union was Rs.157 crores at the end of 31st March

2005.The work of expanding the capacity of milk processing plant to 4 LLPD,

continuous Butter making capacity to 10 MTD, and the ghee making capacity to

14 MTD is on the verge of completion to handle the peak milk procurement of

more than 4 LLPD. 1 Source: Project Report for Establishment of Cattle Feed

Plant by Panchmahal Dairy.

Till March, 1983; the Gujarat Dairy Development Corporation; managed the

activities of the milk union; which handed over the total administration of the

Organization to the elected body of the Panchmahal Dist. Co-operative MilkProducersUnion Ltd. On 1st April, 1983. During the years 1980-1994; Mr.

Babubhai Khatubhai Patel; as one of the youngest Chairman of and fast the

organization to build an image of an outstanding the Co-operative Milk Unions in

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The country; helped growing organization. During this period only in 1982; the

organization was brought under NDDBs ambitious operation Flood-2 project.

Mr. Babubhai Patel helped acquiring 10 acres of land from Govt. of Gujarat to

establish a new plant in 1992; the foundation stone of the new plant was laid by theChief Minister of Gujarat Late Shri Chimanbhai Patel.

The milk processing capacity of the plant was increased from 30,000 to 60,000

kegs per day in 1984; with the facility of Ghee packing unit. In 1985; the milk

processing capacity was further expanded to 100000 kegs per day, with

commissioning of a powder plant having capacity of 10MT per day. The

organization has been maintaining the outstanding growth over the years.

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PROFILE OF UNDIVIDED PANCHMAHAL DISTRICT

Natural Resources

Panchmahal is economically the most backward district of Gujarat state. It is also

not Endowed with superior quality of natural resources like soil and with

adequate quantity Of natural resources like rainfall and forest area. The district

has an undulating Topography and hard rocky terrain (with altitude varying

from 75m to 300m) with shallow medium black soil having low fertility. Soil

depth s vary from just a few cm to 60CM In most areas milch animals are also

not much economically productive as they are of traditional breed having poor

health with low level of milk production. Nine of the 11Talukas from the districtare drought prone. In the remaining talukas also, the rainfall pattern fluctuates

widely. Large temporal variability of rainfall combined with undulating

topography and hard rocky terrain results in high run off seasons even in a so

Called normal year. The forest covers in Panchmahal are also depleting very

rapidly although the official statistics on land use pattern in both the districts,

may not reveal the true story.

Population

The total population of the district is likely to be around 29 lakhs. About 11

percent of it Lives in the urban areas and the remaining falls back upon the

rural areas. Thus, Panchmahal district is predominantly rural in character.

Moreover, the proportion of Scheduled tribal population of Panchmahal is more

than 15 percent based on population statistics. Talukas viz. Devgarh Baria,

Kadana, Fatepura, Ghoghamba, Morva (h) and Santrampur are identified as

predominantly tribal in character. A special development program called Tribal

Sub plan covers these talukas. The overall literacy rat e in the district is only

28 percent as against the state average of 44 percent. 90 percent of the total

population lives below the poverty line. The tribal talukas have distinctly lower.Overall literacy rate (22 percent) and particularly so among females (11 percent).

This has a serious implication on the ability and the ease with which the

population relates itself to its surrounding, gets information, perceives

opportunities and analyses alternatives.

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Agriculture: Risk and Uncertainty

The main occupation in the district and each of the taluka is agriculture as can bereadily seen from the census data. The proportion of total workers engaged in

agriculture is as high as 82 percent in Panchmahal as against 60 percent in the

state. In the tribal taluka the proportion is even higher at 88 percent. Moreover, it

is important to note that while proportion of cultivators is distinctly higher

in Panchmahal as compared to the state average, the proportion of agriculture

labor is distinctly less in the district. This implies on one hand that land is more

equitably distributed with lower average size of holding, and on the other hand a

majority of the labor force feeds itself on some land in the district. Irrigation

facility available at present is very meager in the district, and the potential is alsolow. This coupled with inferior quality of soil and fluctuating rainfall leads to low

and highly fluctuating agriculture productivity in the district. The main crops

grown are maize, paddy, wheat, gram, pulses, cotton and ground nut. The most

promising crops for the district are pulses because of its higher mean yield and

lower variability compared to the state. The other six crops show higher temporal

variability in yield compared to the state. The only saving grace seems to be maize,

cotton, and gram where the mean yield is marginally higher than the state. Small

holding coupled with fluctuating agricultural productivity imply low per capita

income with high variance over time. In such circumstances, farmers are induced

to choose food crops over non food crops in about 80 percent of the area. Becauseof all these characteristics, agriculture production in the district is predominantly

for self consumption rather than for the market. Pulses, gram and cotton are the

major source of cash income for the farmers of the district.

Since irrigation facilities and rainfall are not adequate in the district, the cropping

agriculture intensity is very low in both the districts. It cannot provide sustained

employment to the population throughout the year. Even during the agricultural

Seasons, employment generation in agriculture is not sufficient on account of small

size.

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Seasonal Migration

Seasonal migration out of the district in search of informal and temporaryemployment is rampant. Around three persons per every two family in Panchmahal

get absorbed as Laborers in agriculture, building construction and road

construction activities outside the district. They get employment on an average for

180 to 200 days in a year. They get an average wage rate of about Rs 30 to Rs 50

per person per day of employment. They are away from the district on an average

for about 6 to 8 months in a year during the agriculturally lean season and return to

the district in the agriculture season. Whereas such migration provides obvious

benefits in terms of income, employment, exposure to modern techniques of

production and different lifestyles, it has severe damaging effect on the productionand social life at home. Literacy, skill acquisition and other forms of investment in

human capital suffer. The migrant farmer tends to neglect his agriculture and

related activities. In discussions with officials in the government and other

organization in the district, this factor repeatedly came to the fore as the main

problem.

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OBJECTIVES

The objectives of the Union are to carry out activities for the economic

development of the milk producers by or gaining effective production, processingand marketing of Milk & Milk products.

To achieve above objects the Union may:

(1) Organize and encourage saving schemes.

(2)Settle all the matters of common interest of the affiliated societies and to

further these interests.

(3)Carry on Co-operative propaganda.

(4) Generally to carry on such other activities as to push and further the above

objects and to do all such things as are incidental.

(5)With a view to organize and co-ordinate the activities as to primary societies

affiliated to the Union, the Union shall advise, guide, assist, rectify,

control or take over their management partially or fully when necessary

and may appoint an administrator under section81 of the act.

(6)Union may organize supervision of the affiliated societies and for that

purpose may fix supervision charges to collect with the permission of the

Registrar and collect.

(7)Establish Research and Development Association having independent

existence, to contribute to its funds, and to raise funds for the same from

the members of the Union.

(8)To create funds and trusts for the benefit of the employees to support and to

assist the same. The Union shall approach the Registrar for approval

regarding the contribution by Union and employees and to implements

the same as per rules framed under the laws in force.

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Vision

We at Panchmahal Dairy pledged commitment for the upliftment of our member

producers by continuously putting tireless efforts through delighting our customers

at all level.

We strives to achieve these goals trough

Continuous improvement in the quality of our processes, products &

services.

Innovative Techniques of production & services.

Development of dedicated and devoted workforce

Adoption of high safety and environment standards

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Work Area Profile

DAHOD PANCHMAHAL

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AREA DETAILS

TOTAL POPULATION 20, 24,883

RURAL POPULATION 14, 84,860

CITY POPULATION 1, 99, 300

TOTAL AREA (SQM) 5883.14

RURAL AREA 4983.54

CITY AREA 93.60 (13.60)

LITERRACY 61.50

TOTAL VILLAGE 1213

PRIMARY SCHOOLS 1619

SECONDARY SCHOOLS 311

COLLEGES 6

CHILD WELFARE CENTER 63

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Production Department

Production is defined as arranging the manufacturing resources for the purpose of

conversion of raw materials to saleable products of optimum quality and minimum

cost. Thus production is the systematic step-by-step conversion of raw materials

through creation of from utility in goods. Manufacturing of goods is a highly

complex process. Goods in the stock which are ready to sell do not just happen

they are the end results of careful planning and control. The company makes the

best use of man, material, and machinery for the sole purpose of economical

delivery of quality goods to customers.

Production management is concerned with decision making process related to the

manufacturing process. It makes the best utilization of raw materials available and

does necessary processing on it and converts it into utility, PANCHMAHAL Dairy

has produced 15,04,61,760 Ltr. Milk during the year out of which 10,09,44,886 kg.

i.e.62.52% Consulted Buffalo milk and 6,65,91,094 kg. i.e.37.50% consulted Cow

milk. The figures of overall FAT percentage and SNF percentage in both Buffalo

and cow milk produced in the PANCHMAHAL match with the normal milk

standards (i.e. buffalo milk 6.8% FAT & 9% SNF, cow milk 4.3% FAT & 8.5%

SNF) which aids the union in marketing good quality milk and milk products.

TIME AND MOTION

During my visit to the production plant we have done micro motion study of a

worker whose work was to take the milk pouched from the machine and keep them

on crate, which uses to come serially on the belt conveyers the process is as

follows:

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(1)First we caught two pouches in one hand and again two pouches with other hand

(5sec)

(2)Then they kept all four pouches together in the crate coming over the belt

conveyer (4sec)

(3)They again tuned and caught all the four pouches with two hands (5sec)

(4)And again kept all the four pouches together in the crate coming over the belt

conveyer (4sec)

THE ENTIRE PROCESS WAS COMPLITED IN 18SEC.

PRODUCT LINE

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EQUIPMENTS

EQUIPMENTS NO

Milk Tankers 24

Tempos 70

Belt conveyer 8

Crates 40000

Cans;

40Liter

20Liter

250

25Cans Trolleys 50

Plastic Tube 5

Glass Betties (200ml) 35000

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MARKETING DEPARTMENT

Their marketing system is very simple. They have tried our best to eliminate cost

bearing multi tier distribution system. They are appointing milk distribution agents

directly under our control at our desired place. Milk is distributed to such 275

agents twice a day through their hired vehicles.

These distribution agents use the concept of home delivery and deliver milk house

to house in morning and evening. Also they sell milk on the designated spot at thevicinity of the consumers.

Agents are appointed after thorough investigation of their profile, area survey, and

then after through a comprehensive contract, agency is offered. The fixed amount

is also taken as a deposit for security against which the interest is paid. The deposit

amount serves as the security fund and is paid back to the agent on completion of

his contract with the interest.

The union gives one-day credit to the milk distributors. They have to deposit the

sales amount to the cash collection offices located at Dahod, Godhra, Lunawada,

and Halol. Rests have to deposit the amount in the designated bank in our non-

operative account, and finally tallied with bank statement.

MARKET COVERAGE

They have tried and succeeded in covering all most all urban areas within

Panchmahal and Dahod districts. Also they have covered areas of nearby districts

and neighboring states of Madhya Pradesh and Rajasthan.

MARKET SHARE

They are market leader in our area of operation as far as sale of our products are

concerned. Our market share is more than 70%. No big competitor exists in the

market, which shows the faith of our customers in our products and services.

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MARKETING ACTIVITY

As a part of their marketing activity, they are in continuous touch with the market

and consumers. Time to Time various activities like new area surveys, consumers

surveys, and customers complaint redressed are done by their specially trained

staff to know consumers expectations, needs and problems.

The school students are exposed to the structure, quality of the products and the

services of the organization during their study tours. The

awareness programmes are also organized on request from the principals of the

schools for the students, where our dairy experts visit different schools and try toeducate the children regarding importance of milk consumption and how the

pasteurized dairy milk is better than other locally available cheap loose milk.

From time to time educational booklets, leaflets, banners, hoarding advertisements

through the newspaper and magazines etc are done to make the consumers aware

for healthy living.

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HUMAN RESOURCE DEPARTMENT

The success of any organization depends upon its labor force s o it is very

important for any organization to treat their employee well and arrange proper

welfare for each of them.

A. WELFARE MEASURESCanteen: The organization provides the well ventilated and adequate facility of

canteen. Good quality nutritious food is provided on subsidized rates; round the

clock.

Rest room & change room: The well ventilated rest room & change room with

sufficient facilities of bath; latrines, urinals etc are provided. The locker facility is

also provided to all the shift employees.

Comfortable Work Atmosphere: The employees are provided all possible comfortsat their workplace.

Uniform: All the employees get their three pairs of uniform, every year.

Laundry Facility: The free laundry facility is available to all the employees to

maintain their uniform neat, clean & well pressed.

Shoes, Safety Shoes & Protecting Clothings: Pairs of Shoes, Safety Shoes,Aprons, Overcoat and Woolen Coat are provided to specific employees based on

their needs.

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Emergency Van & First Aid Box: The facility of an emergency van is made

available for employees, round the clock. The first aid medicine box with required

medicines and a trained person is also made available round the clock at TimeKeeping Office.

The organization has created, Medical Assistance Fund with a view to provide

financial help to the employees, their family members, and the milk producer

members of the member co-operative societies, for certain major diseases. The

financial help is rendered up to Rs. 1 lakhs; on decided norms.

Shift Allowance: Those who are working in shifts, are provided the shift

allowances.

Education Allowances: All the employees are given the education allowances Rs.

2400/- annul.

Vehicle Facility: Vehicle Facilities are provided to the families of employees, those

who are living in the quarters in the campus of dairy for the purchase of household

items. The special vehicle arrangements are made for the schools & tuition

purposes; free of cost.

Vehicle Loan: The employees are provided the vehicle loan at low interest rates.

To Managerial Staff Car Loan up to Rs. 2,00,000/-

To Officers Motorbike loan up to Rs. 30,000/-

To Workers Bicycle loan up to Rs. 2000/-.

Festival Advance: Every employee is given Rs. 2500/- interest free festival

advance at the time of Diwali.

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Housing Facility & Housing Loan : Housing Facilities are provided to the technical

personnel in the dairy campus Housing Loan is also rendered to the employees as

per their cadre; on low interest rates; as under.

For A Category Up to Rs.2,50,000/-

For B Category Up to Rs. 1,25,000/-

For C Category Up to Rs. 1,25,000/-

Leave Travel Concession (LTC): The facility of the LTC is provided to every

employee for maximum 4 tickets once in two years.

Employees Co-op. Credit Society: Employees Co-op. Credit Society isestablished which offer attractive interest on deposits to employees. Monthly

compulsory saving scheme is also there for the members; which encourages

employees for saving. Loan facility is also available up to Rs. 50,000/- on

reasonable interest rate.

Get together programmed: This program is held every year on the occasion of

New Year in presence of Chairman and Board of Directors in the dairy campus.

Cultural Activities: Cultural activities like Garba, Navratri Mahotsav, Celebration

on Holy and Ganeshotsav are arranged during every year.

Panchamrut Memento: Panchamrut Memento- 10 gm Silver coin engraved with

organizations logo is given to the employees on retirement or completion of 25

years of service in the organization.

B. SOCIAL BENEFITS

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Provident Fund Scheme:: Employees Provident Fund Act was introduced by

Central Government in 1952, in order to provide financial support to maintain the

standard of living of employees after retirement and/or of his family after death.

The minimum 10 years of service is required for getting the pension benefits under

the scheme.

The 12 % of the salary of employee is deducted from the salary for provident fund

and the milk union adds 12 % of the salary to the P.F.Fund. Out of 24 % of total

contribution, 8.33 % contribution is deposited in employees pension scheme.

All employees are covered under the PF Scheme. Dairy has established

Employees Provident Fund Trust and employees get the fast settlement of their

claims, post retirement and loans for the different purpose as per rules. Under the

scheme, the milk union has linked the Employees deposit linked Insurance

Scheme with LIC. Employees therefore are benefited more than what they are

supposed to gain as per the act.

Super Annuation Scheme: The Milk Union has adopted the contributory Super

Annuation Scheme with the LIC Employees Contribution 7.5 % and Employers

Contribution 7.5 % of the basic + DA. Employees receive pension under this

scheme; on Super Annuation.

Group Insurance Scheme: The union introduced the Group Insurance Scheme for

the benefit of employees. If employee dies during the service, the family members

of the deceased employee will get the insurance benefit of maximum Rs.

3, 00,000/- depends upon the length of service & salary of deceased person.

Workman Compensation (W.C.) Policy: During the course of services and out the

course of services, if an employee is met with an accident, he will get the medical

expenses as well as other compensation under the scheme.

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Group Personal Accident: Those who are not covered under the W.C. Policy, dairy

has arranged for the insurance policy from the insurance company for the

accidental benefits for the employees.

Group Gratuity Scheme:: The Milk Union has arranged for the policy from LIC of

India to offer more benefits under the scheme to the employees. If employee dies

during the service before the age of Super Annuation, his dependant will get the

100 % amount of gratuity. Employee gets the gratuity @ 20 days for every

completed year of his/her service instead of 15 days gratuity as per the provision of

the Act.

C. EMPLOYEES SKILL DEVELOPMENT PROGRAMME

Depending upon the need of the employee, the milk union is arranging different

training programs for their ease in working/performing a task. Every year, all

departmental heads identify the training needs of their employees depending upon

their performance. After identification of training need, milk union is arranging the

in-house/external training programs for the concern employees to meet their

required skill.

The employees are deputed for attending technical seminars; workshops and

conferences at various places in the country and abroad; regularly; to help them to

get exposures on the latest development in their respective fields.

Finance Department

PANCHMAHAL Dairy is the co-operative so it has not special financial

department PANCHMAHAL requires a lot of fund for meaning its working capital

needs and other obligations. It manages its working capital needs through internal

funding only. There is regular assured and smooth in flow of cash from milk sales

from the agents to dairys cash collection center on day to day basis. The dairy runs

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there centers for all 365 days without fail. In fact there is a separate cash recovery

department in the organization to look exclusively this aspect because of its

excellent cash collection system. PANCHMAHAL generally does not face any

difficulty in dispensing amount to the producers every month and meeting otherobligations. For setting up new projects it takes loan from NDDB.

Objectives

The main objectives of the PANCHMAHAL Dairy are as under:

(1)To monitor & measure debtors

(2)To prepare profit & loss account

(3)To maintain working capital at minimum level compared to last year

(4)To prepare a balance sheet of 7th may each year

(5)To monitor & measure internal customer satisfaction

(6)To increase short term investment by 10%

SOURCES OF FINANCE

In the PANCHMAHAL Dairy, requirement of finance is into two major areas:

(1)For working capital

(2) For investment on expansion

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These requirements filled by taking loan and issuing share

(1)For working capital: To meet the needs of arising working capital at

PANCHMAHAL Dairy makes transaction from the following banks:

NDDB

SBI

AGREECULTURE & RURAL BANK

(2)For investment on expansion:

National Dairy Board

Share Capital

Debenture

PAYMENT PROCESS

(1) Collection of sales bills & sales data

(2) Data verification with sales information

(3) Feed concern data in computer

(4) Feed duration data in computer

(5) To pass duration entry to the computer

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RESEARCH METHODOLOGY

RESEARCH PROBLEM:

To know the relationship between the sales and profit through the last three

years profit and its consistency with sales with the help of ratios

To measure efficiency as well as deficiencies of dairy

To analyze weather the dairy uses its resources optimum or not?

RESEARCH OBJECTIVES

PRIMARY OBJECTIVES:

To know the operational efficiency of business by calculating operating

ratio.

To understand the cash management system of PDCMPU ltd.

Measuring the short term and long term financial position of the company,

current & liquid ratios indicate short term financial position & debt equity

ratio fix assets ratio & proprietary ratio show the long term financial

position.

To know the financial position of the business

To understand the sales accounting and debtors management system of

PDCMPU ltd.

To know the position of current assets and current liabilities of PDCMPU

ltd

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SECONDARY OBJECTIVES:

To increase my knowledge regarding with profitability measurement

To share my knowledge with others and have practical experience regarding

with it

RESEARCH DESIGN:

A research design is the specification of method and procedure for accruing the

information needed. It is overall operational pattern of frame work of project thatstipulates what information is to be collected for source by that procedures.

Descriptive Research design is appropriate for this study.

Descriptive study is used to study the situation. This study helps to describe the

situation. A detail descriptive about present and past situation can be found out by

the descriptive study

LOCATION OF THE STUDY:

The study has been confined to Panchmahal district coming under the milk

shed of the dairy. The project work was carried out from June 4, 2011 July 4,

2011.

SOURCES OF DATA:

The study entails that data has to be collected from secondary sources.

The following secondary level data was collected from the computer and

project & input department of the dairy

Companys broacher and its last three years financial statement

Companys last three years annual report

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LITERATURE REVIEW:

All the magazines and manuals provided by the company

Last three years financial report

For research purpose I prefer Prasana Chandra for financial statement

analysis and for ratio analysis I prefer Ambrish Gupta 3rd edition (ch.20)

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RATIO ANALYSIS:

Ratio analysis is a powerful tool of financial analysis. A ratio is defined as the

indicated relationship between two accounting figures. Expressed mathematically

is known as financial ratio. Ratio helps to summaries large quantities of financialdata and to make qualitative judgments about the firms performance

OBJECTIVES OF THE RATIO ANALYSIS:

The first and the most important objectives of the company is to interpret the

financial statement through ratios and measure profitability

Secondly to make comparative analysis of the companies in the line of

business

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IMPOTANCE OF RATIO ANALISIS

1) Liquidity position:

With the help of ratio analysis conclusion can be

drown regarding the liquidity position of the firm would be

satisfactory if it if able to meet its current obligation when they

become due.

2) Long term solvency:

Ratio analysis is equally useful for assessing long

term financial viability of firm. This aspects of financial position of

borrower is of concern to long term creditors security analysis

3) Operational efficiency:

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Another dimension of the usefulness of ratio

analysis, relevant from the view point of management is that it throws

light on the degree of efficiency in management of its assets

4) Overall profitability:

Unlike the outside parties which are interested in

one aspects of financial position of a firm, management is constantly

concerned about the ability of the firm to meet its short term as well as

long term obligation to ensure reasonable return.

5) Inter firm comparison:

Ratio analysis not only throws light on the

financial position of a firm but also serves As stepping stone toremedial measures. This is possible due to inter firm comparison and

comparison with industry averages.

6) Trend analysis:

Ratio analysis enables a firm to take the time

dimension in to account. In other words weather the financial position

of firm is improving or deteriorating over the years.

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RATIO ANALYSIS

TYPES OF RATIOS:

1. Profitability Ratio.

2. Liquidity Ratio

3. Leverage Ratio

4. Activity Ratio

(1) Profitability Ratio:This category indicates the profit earning capacity of a business, it includes

a) Gross Profit Ratio

b) Net Profit Ratio

c) Earnings Per Share

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d) Return on Capital Employed

e) Return on Share Holders Fund

f) Debt Services Coverage Ratio

(2) LIQUIDITY RATIOS:This category indicates whether short term assets are enough to pay short

term liabilities or not. If includes,

a) Current Ratio

b) Liquid Ratio

(3) LEVERAGE RATIO

This ratios indicate the composition of capital and its division into ownedcapital and borrowed capital, it includes

a) Proprietary Ratio

b) Debt Equity Ratio

c) Fixed Capital to Fixed Assets Ratio

(4) ACTIVITY RATIOS:This category indicates the efficiency of Management. It includes.

a) Debtors Turnover Ratio

b) Creditors Turnover Ratio

c) Fixed Assets Turnover Ratio

d) Total Assets Turnover Ratio

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CALCULATION AND INTERPRETATION OF VARIOUS

CATEGORIES OF RATIOS

(1) PROFITABILITY RATIO:

(a) GROSS PROFIT RATIO:

G.P.

= ---------- x 100

Sales

Gross Profit = Sales C.G.S.

GROSS PROFIT

(Rs. In Lakhs)

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Particulars 2008-2009 2009-2010 2010-11

Sales 36557.76 43770.51 52260.87

- C.G.S. 32028.29 38725.45 45905.14

G.P. 4529.47 5045.06 6355.73

GROSS PROFIT RATIO

G.P

2008-09 = -------- x 100

Sales

4529.47

= --------------- x 100

36557.76

= 12.39 %

G.P

2009-10 = -------- x 100

Sales

5045.04

= -------------- x 100

43770.51

= 11.53 %

G.P2010-11 = -------- x 100

Sales

6355.73

= --------------- x 100

52260.87

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= 12.16 %

INTERPRETATION:

The ratio is decrease by first two years and it is not better for the firm.

The higher ratio shows the better condition of the company. In year 2010-11

it is increasing

(b) NET PROFIT RATIO:

Net Profit

= ------------- x 100Sales

Calculation:N.P

2008-09 = -------- x 100

Sales

89.98

= -------------- x 100

36557.76 = 0.24 %

N.P

2009-10 = -------- x 100

Sales

289.96

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= ------------- x 100

43770.51 = 0.66 %

N.P

2010-11 = -------- x 100Sales

308.88

= -------------- x 100

52260.87 = 0.59 %

INTERPRETATION

The net profit ratio of the company is high so. It shows bettercondition of the company more NP is more money in the firm.

(c) Earnings per share:

PAT

2008-09 = -----------------------------------

NO OF EQUITY SHARES

89, 98,000

= -----------------

4, 39,496

= 20.47 RS

PAT

2009-10 = -----------------------------------

NO OF EQUITY SHARES

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2, 89, 96,000

= ---------------------

4, 61,295

= 62.85 RS

PAT

2010-11 = -----------------------------------

NO OF EQUITY SHARES

3, 08, 88,000

= ----------------------

4, 79,465

= 64.42 RS

INTERPRETATION

Eps is increasing in year 2010 and 2011 as compared to year 2009 itindicates that shareholders get better return from dairy.

(D) RETURN ON CAPITAL EMPLOYED

EBIT

= --------------------- X 100

Capital Employed

EBIT = PAT + Interest + Tax

CALCULATION :-

EARNING BEFORE INTEREST & TAX

(Rs. In Lakhs)

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EBIT 2010-2011 2009-2010 2008-09

PAT 308.88 289.96 89.98

Interest 1465.44 579.51 635.286

Tax 150.00 80.00 70.00

EBIT 1924.32 949.53 795.267

CAPITAL EMPLOYED:

C.E. = Sh. Capital + Reserves & Surplus + Secured Loan

(Rs. In Lakhs)

C.E. 2010-11 2009-10 2008-09Sh. Capital 479.46 461.29 439.49

Reserves & Surplus 1940.62 1604.99 1801.52

Secured Loan 1381.05 1703.09 2025.72

3801.13 3769.37 4267.73

RETURN ON CAPITAL EMPLOYED:

E.B.I.T.

2008-09 = ---------------------- x 100

C.E.

795.26

= --------------- x 100

4267.73 = 18.63 %

E.B.I.T.

2009-10 = ---------------------- x 100

C.E.

949.53

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= ------------- x 100

3769.37 = 25.19 %

E.B.I.T.2010-11 = ---------------------- x 100

C.E.

1924.32

= ------------- x 100

3801.13 = 24.32 %

Interpretation

The return on capital employed is increasing by last two years but year2010-11 saws slightly decrease. It shows better position of the company.

Higher the ratio is better for the firm.

(e) RETURN ON SHARE HOLDERS FUND:

PAT

= --------------------- X 100

Share Holders Fund

Particulars 2008-09 2009-10 2010-11

Net Profit 89.98 289.96 308.88

SHARE HOLDERS FUND:

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Sh. Holders Fund = Sh. Capital + Reserves & Surplus

(Rs. In Lakhs)

C.E. 2008-09 2009-10 2010-11

Sh. Capital 439.49 461.29 479.46


Share holders Fund 2241.01 2066.28 2420.08

RETURN ON SHARE HOLDERS FUND

CALCULATION PAT

2008-09 = ---------------------- x 100

S.H. Fund

89.98

= -------------- x 100

2241.01 = 4.02 %

PAT

2009-2010 = ---------------------- x 100

S.H. Fund

289.96

= --------------- x 100

2066.28 = 14.03 %

PAT

2010-11 = ------------------------- x 100

Share Holders Fund

308.88

= ---------------- x 100

2420.08 = 12.76 %

INTERPRETATION

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Higher the ratio, higher the dividend. The ratio suggests the better

equity dividend for the share holders. This ratio also guide to prospective

investors which attract by the company. The ratio is increased by last two

years but the year 2010-11 shows slightly decrease.

(f) Debt Service Coverage Ratio:

Profit for Debt. Payment

= ---------------------------------------------------------

Installment of Principle to be paid + Interest

Profit for Debt. Payment = Net Profit + Interest + Depreciation

(Rs. In Lakhs)

Particulars 2008-09 2009-10 20010-11

PAT 89.98 289.96 308.88

Interest 1465.44 579.51 635.28

Depreciation 579.22 601.73 575.33

PAFDP 2134.64 1471.2 1619.49

Installment of Principal to be paid = Secured loan of last year S.L. of

Current Year.

(Rs. In Lakhs)

IOPTBP 2008-09 2009-10 2010-11

Secured loan last year 3538.56 2025.72 1703.09

Secured loan current

year

2025.72 1703.09 1381.05

IOPTBP 5564.28 3728.81 3084.14

RATIO:

Calculation

PAFDP

D.S.C.R = ------------------------

IOPP + Interest

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2134.64

2008-09 = --------------------

5564.28 + 635.28

2134.64

= ------------

6199.56 = 3.44 Times

2009-10

PAFDP

D.S.C.R = ------------------------

IOPP + Interest

1471.02

= ---------------------------

3728.81 + 579.51

1471.02

= ------------

4308.32 = 3.41 Times

2010-11

PAFDP

D.S.C.R = ------------------------

IOPP + Interest

1619.49

= ---------------------------3084.14 + 1465.44

1619.49

= ------------

4549.58 = 3.55 Times

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INTERPRETATION

More the profit is much better than against payment. More number of

times is better for the firm. The number of times is increased by last three

years. So it is better for the firm.

(2) LIQUIDITY RATIO

(a) CURRENT RATIO

Current Assets= ---------------------

Current Liabilities

(Rs. In lakhs)

Current Assets 2008-09 2009-10 2010-11

Stock 2639.47 4008.56 2623.03Advance & Debtors

Deposits 87.31 90.70 91.30

Due from societies 313.91 376.76 367.11

Advances 56.05 180.88 487.99

Trade Debtors 291.37 885.20 974.02

Sundry Debtors 1508.58 436.56 915.55

Income Tax Deposit 142.32 144.19 318.97

Cash & Bank Balance 6302.60 18347.20 38755.37

Total 11341.61 24470.05 44533.34

(Rs. In Lakhs)

CURRENT LIABILITIES 2008-2009 2009-2010 2010-11

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Deposits 194.53 238.06 285.72

Due to societies 2827.81 4716.97 7158.71

Outstanding against

expenses/purchase

1695.74 1702.53 1766.97

Sundry Creditors 686.87 2053.02 4436.08

Provision for income tax 233.11 293.39 486.40

BOB OD 1221.41 2372.96 32207.14

SBI OD 413.55 954.64 -

BOB CC 995.87 973.43 -

BOB OD-Cattle Feed 975.30 407.80 -

Bill Discounting-bank A/C 2500.00 1500.00 -

ICICI Short term Loan - 10000.00 -

Total 11744.24 25212.84 46341.05

RATIO

Current Assets

CURRENT RATIO = ---------------------

Current Liabilities

11341.61

2008-09 = ---------------

11744.24 = 0.96

24470.052009-10 = ----------------

25212.84 = 0.97

44533.34

2010-11 = -------------

46341.05 = 0.96

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INTERPRETATION

The ideal ratio is 1.33:1 the all the ratio of the company is not nearest

from the ideal ratio. So, it is not better for the firm.

LIQUID RATIO

Liquid Assets

= ---------------------

Liquid Liabilities

Liquid Assets = C.A. Stock / Inventories

(Rs. In Lakhs)

Liquid Assets 2008-09 2009-10 2010-11

Current Assets 11341.61 24470.05 44533.34

- Stock 2639.47 4008.56 2623.03

Liquid Assets 8702.14 20461.49 41910.31

Liquid Liabilities C. L Bank o/d(Rs. In Lakhs)

Liquid Liabilities 2008-2009 2009-2010 2010-11

Liquid Liabilities 11744.24 25212.84 46341.05

- bank old 2196.71 16208.83 32207.14

Liquid Liabilities 9547.53 9004.01 14133.91

Ratio:

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Liquid Assets

2008-09 = ---------------------

Liquid Liabilities

8702.14= --------------

9547.53 = 0.91

Liquid Assets

2009-10 = ---------------------

Liquid Liabilities

20461.49

= -------------

9004.01 = 2.27

Liquid Assets

2010-11 = ---------------------

Liquid Liabilities

41910.31

= ------------

14133.91 =2.97Interpretation

The standard ratio is 1:1 the ratios of three year is nearest form the

standard ratio so, it is better for the firm.

(b) Acid Test Ratio:

Quick Assets= ---------------------

Liquid Assets

Quick Assets = Cash & Bank Balance

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(Rs. In Lakhs)

Quick Assets 2008-09 2009-10 2010-11

Cash 71.64 30.12 7.70

Bank 6230.95 18317.08 38747.66

Total 6302.59 18347.2 38755.36

(Rs. In Lakhs)

Particulars 2008-2009 2009-2010 2010-2011

Liquid Assets 8702.14 20461.49 41910.31

CALCULATION

Quick Assets

2008-09 = ------------------Liquid Assets

6302.59

= ------------

8702.14 = 0.72

Quick Assets

2009-10 = ------------------

Liquid Assets

18347.2

= -------------

20461.49 = 0.90

Quick Assets

2010-11 = ------------------

Liquid Assets

38755.36= ------------

41910.31 = 0.92

Interpretation

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The ideal ratio is 0.50:1 quick assets should minimum 50% by

comparing, it will be very high. The ratio is continuously increasing from

last three years.

(3)Leverage Ratio:

(a) Proprietary Ratio

Proprietors Fund

= --------------------- x 100

Total Assets

(Rs. In Lakhs)

C.E. 2010-11 2009-10 2008-09

Sh. Capital 479.46 461.29 439.49


Proprietors Fund 2420.08 2066.28 2241.01

Total Assets: Net Fix Assets + investment +Current Assets

Calculation:(Rs. In Lakhs)

Total Assets 2008-2009 2009-2010 2010-11

Fix Assets 8579.09 8871.76 10217.01

Investment 253.50 253.50 559.00

Loans & Advance 2399.56 2412.99 3450.69

TOTAL 11232.15 11538.25 14226.7

Ratio

Calculation

Proprietors Fund

2008-09 = -------------------- x 100Total Assets

2420.08

= --------------- x 100

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11232.15 = 21.55 %

Proprietors Fund

2009-10 = -------------------- x 100Total Assets

2060.28

= --------------- x 100

11538.25 = 17.86 %

Proprietors Fund

2010-11 = -------------------- x 100

Total Assets

2241.01

= --------------- x 100

14226.7 = 15.75%

Interpretation

The ratio is not ideal. So the company does not show better growth.

The ratio of last three year is continuously decreased.

(b) Debt Equity Ratio

Long Term Liab.

= --------------------- x 100

S.H.s Funds

Long Term Liabilities= Secured Loan.

(Rs. In Lakhs)

Proprietors Fund 2008-2009 2009-2010 2010-2011

Secured Loans 2025.72 1703.09 1381.05

Calculation

Long Term Liab.

2008-2009 = ------------------- x 100

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S.H.s Fund

2025.72

= ------------ x 100

2420.08 = 83.70%

Long Term Liab.

2009-2010 = ----------------------- x 100

S.H.s Fund

1703.9

= ------------- x 100

2066.28 = 82.46 %

Long Term Liab.

2010-2011 = ------------------- x 100

S.H.s Fund

1381.05

= ------------ x 100

2241.01 = 61.63 %

Interpretation:

It is comparison of debt & equity the debt is high so the ratio of the

company is not so better because this ratio is ideal when is nearest from

40%.

(c) Fixed Capital to Fixed Assets Ratio :

Fixed Capital

= ---------------------

Fixed Assets

Fixed Capital = Share Capital + Reserves & Surplus + Secured Loan

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(Rs. In Lakhs)

Particulars 2010-11 2009-10 2008-09

Sh. Capital 479.46 461.29 439.49


Secured Loan 1381.05 1703.09 2025.72

Fixed Capital 3801.13 3769.37 4267.73

(Rs. In Lakhs)

Particulars 2008-2009 2009-2010 2010-11

Fixed Assets 8579.09 8871.76 10217.01

Ratio:Fixed Capital

2008-09 = ------------------

Fixed Assets

3801.13

= ------------

8579.76 = 0.44

Fixed Capital

2009-10 = ------------------Fixed Assets

3769.39

= -------------

8871.76 = 0.42

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Fixed Capital

20010-11 = ------------------

Fixed Assets

4267.73

= --------------

10217.01 = 0.42

Interpretation

Ideally the ratio should 1:1 because long term capital is long term

liabilities. The companys ratio is low so there are a no chances of over

capitalization.

(4)Activity Ratio:

(a) Fixed Assets Turnover Ratio:

Sales

= ---------------------

Fixed Assets

(Rs. In Lakhs)

Particulars 2008-09 2009-10 2010-11

Sales 36557.76 43770.51 52260.87

(Rs. In Lakhs)

Particulars 2004-2005 2003-2004 2002-03

Fixed Assets 8579.09 8871.76 10217.01

Ratio:

Fixed Sales

2008-09 = -------------------

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Fixed Assets

36557.76

= ------------

8579.09 = 4.26

Fixed Sales

2009-10 = -----------------

Fixed Assets

43770.51

= --------------

8871.76 = 4.93

Fixed Sales

2010-11 = -----------------

Fixed Assets

52260.87= ------------

10217.01 = 5.12

Interpretation

Companys sales are more than fixed assets so the ratio is better for

the firm.

(B) Total Assets Turnover Ratio:

Sales

= ---------------------

Total Assets

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(Rs. In Lakhs)

Particulars 2008-09 2009-10 2010-11

Sales 36557.76 43770.51 52260.87

Total Assets = Current Assets + Fixed Assets

(Rs. In Lakhs)

Particulars 2008-2009 2009-2010 2010-11

Fixed Assets : 8579.09 8871.76 10217.01

+ Current Assets 8702.16 20760.19 42206.06Total Assets 17281.25 29631.95 52423.07

Ratio:

2008-09

Sales

T.A. Turnover Ratio = ------------------

Total Assets

36557.76

= ------------

17281.25 = 2.12times

2009-10

Sales

T.A. Turnover Ratio = --------------------

Total Assets

43770.51

= --------------

29361.95 = 1.49 Times

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2010-11

Sales

T.A. Turnover Ratio = ---------------------Total Assets

52260.87

= ---------- --

52423.07 = 1.0 times

Interpretation

The companys sales are more than the total assets of the company. So theratio is better for the company.

(c) Debtors Turnover Ratio:

Debtors + B /R

= --------------------- --------- x 360

Credit Sales(Rs. In Lakhs)

Particulars 2008-2009 2009-2010 2010-11

Debtors B/ R 1799.95 1321.76 1689.57

(Rs. In Lakhs)

Particulars 2008-2009 2009-2010 2010-11

CREDIT SALES 36557.76 43770.51 52260.87

Ratio:

2008-09

Debtors + BIR

D.T.R. = ---------------------- x 360

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CREDIT SALES

1799.95

= --------------- x 36036557.76 = 18 days

2009-10

Debtors + BIR

D.T.R. = ---------------------- x 360CREDIT SALES

1321.76

= --------------- x 36043770.51 = 11days

2010-11

Debtors + BIRD.T.R. = ---------------------- x 360

CREDIT SALES

1689.57

= --------------- x 360

52260.87 = 12 days

Interpretation

This ratio is expressed in number of days there is less no. of days is better

for the firm it shows the better conditions of the company.

(D) Debtors Turnover Ratio:

360

= -------------------------

Debtors Ratio

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(Rs. In Lakhs)

Particulars 2008-2009 2009-2010 2010-11

Debtors 18 11 12

Ratio:2008-09

360

D.T.R. = ------------------ Debtors Ratio

360

= ----------- = 20 times

18

2009-10

360

D.T.R. = ----------------------

Debtors Ratio

360

= ------------- = 33times

11

2010-11

360D.T.R. = --------------------

Debtors Ratio

360

= ---------- -- = 30times

12

Interpretation

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The no. of times is increased by last three years. It is better for the firm. This

ratio shows more times money will be collected in 360 days.

(E) Creditors Turnover Ratio:

Creditors + B/p

= --------------------- --------- x 360

Credit Purchase

(Rs. In Lakhs)

Particulars 2008-2009 2009-2010 2010-11

Creditors 686.87 2053.02 974.02

(Rs. In Lakhs)Particulars 2009-2009 2009-2010 2010-11

CREDIT PURCHASE 29369.21 38176.98 42569.83

Ratio

2008-09 Creditors + B/p

C.T.R. = --------------------- x 360

Credit Purchase

686.87

= --------------- x 36029369.21 = 8days

2009-10

Creditors + B/p

C.T.R. = --------------------- x 360

Credit Purchase

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2053.02

= ----------------- x 36038176.98 = 19 days

2010-11

Creditors + B/p

C.T.R. = --------------------- x 360

Credit Purchase

974.02

= --------------- x 360

42569.83 = 9 daysInterpretation

More days shows the better conditions of the company. The late payment is

good for the company so the ratio is not better for the company in year 2010-11.

(F) Creditors Turnover Ratio:360

= -------------------------

Creditors Ratio (Rs. In days )

Particulars 2008-2009 2009-2010 2010-11

Creditors 8 19 9

Ratio:2008-09

360

C.T. = -------------------------

Creditors Ratio360

= --------------- = 45 times

8

2009-10

360

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C.T. = -------------------------

Creditors Ratio

360= ------------- = 19 times

19

2010-11 360

C.T. = -------------------------

Creditors Ratio

360

= ---------- = 40 times9

Interpretation

This ratio is lesser it is much better it suggest less times the business makes

payment to its creditors. So the ratio is better for the company.

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Findings

PARTICULARS 2008-09 2009-10 2010-11

Net profit 0.24% 0.66% 0.59%

Gross profit 12.39% 11.53% 12.16%

Earnings per share 20.47rs 62.85rs 64.85rs

Return on capital 18.63% 25.19% 24.32%

Return S.H.welth 4.02% 14.03% 12.76%Debt service

coverage

3.44 3.41 3.55

Current ratio 0.96 0.97 0.96

Liquid ratio 0.91 2.27 2.97

Acid test ratio 0.72 0.90 0.92

Proprietary ratio 21.55% 17.86% 15.75%

Debt equity ratio 83.70% 82.46% 61.63%Fixed capital to assets 0.44 0.42 0.42

Fixed assets turnover 4.26 4.43 5.12

Total asset turnover 2.12 1.49 1

Debt turn over 18days 11days 12days

Credit turnover 8days 19days 9days

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ANALYSIS AND KEY FINDINGS

Gross profit of Panchmahal dairy is relatively stable or we can see slightlydecreased in year2010 and 2011 this indicates that the cost of goods sold is

increased as compared to year 2009.

Net profit of Panchmahal dairy is increasing over the previous year

relatively in year 2009,2010,2011 found 0.24%,0.66%,0.59% this indicates

that the sales of Panchmahal dairy is increased.

Earnings per share are very high in year 2010 as compared to 2009 while in

20110its relatively low but this indicates that Panchmahal dairy use theirresources efficiently to get the maximum return.

Current ratio is not efficient for Panchmahal dairy as the standard ratio for

current assets to liability is = 1.33:1 means there should be 1.33 assets for 1

liability while it has 0.96,0.97,0.96 relatively for year 2009,2010,2011

means dairy has more liability than assets .

Standard liquid ratio is 1:1 while it has 0.91, 2.27, and 2.97 relatively for last

three years it indicates good reserve of liquid assets it indicates better

position of the dairy.

Proprietary ratio of the dairy is decreasing that indicates the insufficient

management and poor planning of dairy.

Debt equity ratio of the last three years shows that there is more debt than

equity fund raised by dairy so it suggests bad capital structure of dairy for

fund raising.

Standard ratio for fixed capital is 1:1 while the dairy has the last three yearsratio 0.44, 0.42, 0.42 so it is very low that indicates poor assets management

by dairy.

Fixed assets turnover ratio of Panchmahal dairy is good because a sale is

greater than fixed assets to generate profit.

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A sale is also greater than total assets so again its profitable for dairy ashigher sales is indicated here.

Debt turnover ratio is 18days, 11days, 12 days respectively for last three

years thats good for dairy because now gets their recovery in early days so

they get cash easily in hand that provide liquidity to dairy.

Credit turnover ratio is 8days, 19days, 9days so dairy get more time to pay

their suppliers of raw material so its beneficiary for dairy.

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Suggestions

To increase gross profit dairy should try to decrease the cost of goods sold

by proper transportation and planning to minimize the cost and maximize the

profit.

Dairy should introduce proper dividend policy for their share holders rather

than distributing high dividend dairy should reserve some amount.

Dairy should try to balance its current ratio by decreasing current liability as

compare to its current assets.

Dairy should raise money through equity rather than debt this provides dairy

capital structure very healthy and efficient.

Even though debt turnover ratio is good dairy should introduce strict

collection policy to gain liquidity of cash.

To increase the sales dairy should provide home delivery as well as timely

availability of milk in morning as well as evening time

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Conclusions

There is no doubt in that Panchmahal dairy generates high profitability as its

net profit is very high over the previous year.

There is some problem with current assets and liability to maintain but it can

easily overcome by decreasing current liability at some extent.

Panchmahal dairy generates high dividend to its share holders it proves its

efficiency to utilize its resources.

Fixed assets turnover ratio is also good as its sales is higher than its fixed

assets to generate high profit

Collection period is also decreasing in last three years so it is good for the

dairy now the dairy get cash earlier than before this provide more in hand.

Payment period for dairy is increased so dairy now get more time to pay its

suppliers of raw material this put dairy in good position,

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BIBLIOGRAPHY

Data collected from the company;

Panchmahal dairys brochures, manuals for general information of company

36th annual report of the company 2008-09



Referred books:

Prasana Chandra financial management 6th edition.

Ambrish Gupta financial accounting for management 3rd edition.

Websites:

http://www.panchamrutdairy.org/about_progress.html

http://wikimapia.org/11338017/Panchmahal-Dairy-Panchamrut

MEHUL2003 3

Documents

Transcript of MEHUL2003 3