Ajesh

1.
1 INTRODUCTION
Business decisions may be based upon intuition or upon an intelligent analysis of
factual data. There is no formula for analysis. Much depends on the purpose of analysis, the
nature of analysis and exclusiveness of significant conclusions.
There are three basic steps in the analysis of business problem;
1. Breakdown the figure into classification so that one can compare the past of the whole to each
other and
2. Compare with significant outside factors and thus determine their relationship
3. This permits one to determine the reason for relat5ionship thus making possible understanding
of essential nature of the situation and findings of solution to the problems involved in the
situation.
From the above view point the researcher of this project makes an attempt in analyzing
the capital structure planning by breaking down the figures into classifications to compare the
parts of the whole to each other. This project taken up to strengthen the academic of the project
Cost of Capital Analysis

The impact of changes in the capital structure on the cost of capital analysis and the
profitability is analyzed as capital structure decisions are not taken in isolation. They are largely
influenced by their twin factors of minimizing the cost of capital and maximizing the returns.
Thus the cost of capital is the combination of various specific costs which are discussed below.
Cost of Equity
Equity capital like other sources of funds does not certainly involve a cost of the firm. It
may be recalled that the objectives of the financial management is to maximize the shareholders
wealth and maximization of market price of shares in the operational substitute for wealth
maximization. When equity shareholders invest their funds, they also except returns in the form
of dividends.
The market value of shares is a function of the returns that the shareholders except and
get. Thus in order to evaluate the capital structure of the firm it is necessary to know the cost of
capital of the company.
Cost of Debt
Cost of debt describes about the cost of raising finance from long term funds or
outsiders fund. Thus an optimum amount of dent in the capital structure of the firm may reduce
its costs. However over utilization of debt may increase the interest payments of the company.
Debt of a firm is predominated figure in the capital structure and so there lays the
essentiality to calculate the cost of debt to derive at optimum capital structure.
Weighted Average Cost of Capital

Weighted average cost of capital is the composition of specific cost of capital lays cost of
equity and cost of debt. The overall cost of capital helps the company to analyze the overall
efficiency of the company. It describes the overall cost of capital of the company. Thus it is a
technique to measure the capital structure of the company.
Capital Structure
Given the objectives of the firm to maximize the value of its equity shares, the firm
should select the best mix of the equity and debt capital structure refers to the composition of
long term sources of funds such as debentures, long term debt, preference share capital and
equity including reserves and surplus. Optimum or balanced capital structure means an ideal
combination of borrowed and owned capital that may attain the marginal goal (i.e.) maximizing
the value of shareholders.
The choice of amount of debt and equity is made after comparison of certain
characteristics of each kind of security of internal factors related to the firms operations and
external factors that affect the firm. Thus the capital structure of the company may be a
combination of debt and equity leads to the maximum value of the firm.
Objective of Capital Structure

In context of the optimum capital structure, the firm may be faced with the problem of
mixing the equity securities and debt securities.
1. Payment of high interest.
2. Higher control of equity shareholders.
Thus optimum capital structure is decided on the basis of two danger points.
2
Tools and Techniques of Capital Structure

Companies do not plan their capital structure may prospect in short run but ultimately
they will face series problem in f\raising funds to meet their additional financial requirements in
future.
Whenever the financial manager considers the question of capital structure, it is always
the question of capital structure (i.e.) to decide the proportion of ownership funds and borrowed
funds. So the study was made to analyze the capital structure of the company using various
tools.
Ratio Analysis
One approach to analyze the capital structure of the firm is to make the comparison of
the ratios of the firm. Comparison is helpful as it is acts as a red signal to the management that
there may be something wrong with the capital structure of the company.
Ratio shows the significant relationship between figures shown in the Balance Sheet, in
Profit and Loss account or in any other part of accounting organization. Ratios are the best guide
for execution of basic managerial function like planning, forecasting and controlling.
1.2 INDUSTRY PROFILE

Milk is considered as a complete and ideal food and it contains most of the proximate
principles of a well balanced diet. India is the worlds largest milk producer and in set to become
the worlds largest food factory. Indian dairy industry embarked on recent innovation technology
by having a wide ranging impact on the growth of the industry.
This revolution is contributing to the productive utilization of growing milk surplus. Its
important for healthy, active people to eat right. A glass of Milma milk three times a day gives
you more vitamin sand minerals than any other popular health drink and ensures that you get
sufficient proteins to help in providing the building blocks that constructs and repairs muscle.
Milma milk also helps to meet your calcium requirement. Dairy products are the richest source
of important nutrients like vitamin D which helps to use calcium effectively.
Calcium Counts for Young and Old

Calcium is one of the most important nutrients in Milmas pasteurized milk. Calcium,
one of the most abundant minerals in the human body, is frequently found lacking in the daily
diet. Calcium is important not only for building and maintain strong bones but also for
regulating the heart beat and proper functioning of the nerves. With calcium playing such a
clerical role in maintain your health, you cannot afford a deficiency. Milmas low far or fat free
milk give the same amount of calcium and other nutrients, minus fat. Pregnant women need
calcium for the growth of the baby.
The Fresh and Glowing Fresher

A well-nourished boy is more component to meet the mental and physical demands of
college life. Skipped meals and unhealthy eating habits can short change essential nutrients of
our body. Healthy eating not only made us look and feel good, but also make our body and for
the future.
Increasing our daily milk consumption will not help us on the calcium front, but also
help balance our diet and keep it nutrients rich. Consumption of three glass of Milma milk
everyday for the strong bones, good looks and a sharp mind.
The Power Drink for Teenagers

Milk is a vital drink throughout life and more so when it needs the teenagers in growing.
The 15% of the human grows during the teenage period. So that calcium is very much needed in
teenage for the growth. The essential growth nutrients like protein, potassium and calcium is
essential for all humans for their growth. Milma milk is the power drink for active young boys
and girls.
Kerala Co-Operative Milk Marketing Federation (KCMMF), popularly called Milma
was established in April, 1980 with its head office at Thiruvananthapuram for the successful
implementation of Operation Flood (a dairy programme launched in 1970 under the aegis of
National Dairy Development Board (NDDB).
TRCMPU
TRCMPU is carrying out various input activities in its milk shed and a details of the activities
carried out by the Regional Union in the Financial year 2011-2012 are given below.
Union has distributed Rs. 4.00 crores as price incentive to the societies and Rs. 3.5 crores as
summer incentive to the farmers.

In the financial year total numbers of 465 first aid centers are functioning in four districts and
29336 numbers of cases were attended.

Total number of de-centralized vetenary units are 30 and 29681 cases had been attended.
Total number of production enhancement camp (Gosamvardhini) conducted is 244 and total
number of cases attended is 12013.

50% subsidy on cattle insurance premium.
Total; A.I centers functioning under union is 26 and the total number of A.I performed is 9211.
Under100P scheme, 65 hectors of land was cultivated under fodder development programme in
Pathanamthitta District.
Under 100P-CMP Programme, various projects are implemented with the financial assistance to
the tune of Rs. 10.06 crores from the Govt. of Indi. 52 bulk coolers were installed with a total
capacity of 19600 liters.
Schemes for Milk Production Enhancement
Rs, 137.68 lakhs were spending for calf adoption scheme.

5
Insurance subsidy for new mini Dairy units was given for an amount of Rs. 3.15lakhs.
Cattle feed subsidy for a new mini dairy units was given for Rs. 37.39 lakhs.
Rs. 3.22 lakhs was spending for fodder cultivation schemes.
Rs.2.57 lakhs was spending for de-warming.
Under Benevolent fund scheme financial assistance to depend of deceased farmers and
scholarship for higher education are given Rs.25.64 lakhs spend during 2011-2012.
De-centralized vetenary units for providing vetenary service at doorstep of farmers and free
medicine Rs.51.14 lakhs during 2011-2012.
Future Plan
Maximization of women participation in Dairy sector.

10% growth rate in income through Dairying for the farmers.
Reaping on corporative identity through mnemonic symbol.
Enhance processing capacity.
Plan to launch new products.
Introducing of new brands.
Export of products.
Plans to custom pack products such as cheese, tera fino and fruit drinks.
Building of brand equity.
Restructuring of district system.
Benchmarking performance to international Quality Standards.
Introducing of bulk milk coolers at society for improvement of bacterial quality.
Quality awareness training.
1.3 COMPANY PROFILE

Brief Introduction of Milma
Kerala Co-Operative Milk Marketing Federation (KCMMF) popularly called Milma was
established in April 1980 with its head office Thiruvananthapuram for the successful
implementation of Operation Flood (a dairy development programme launched in 1970 under
the aegis of National Dairy Development Board (NDDB)).
6
The name Milma represents;
2100 primary milk co-operative societies.

5.24 lakhs farmer member.
Three Regional Cooperative milk producers union.
Eleven diaries.
Fourteen milk chilling centers.
Two cattle fed plant 10 MT per day capacity of 500 MT per day.
One milk powder plant 10MT per day capacity.
A well established training centre.
More than 4000 retail outlets.
Over 18000 people working either directly or indirectly for the functioning of Milma.
Apart from these, Milma servers millions of consumers day in and day out.
Mission
To channelize marketable surplus milk from rural areas to urban deficit areas to maximize the
returns to the producer and provide quality milk products to consumers.

To carryout activities for promoting production procurement processing and marketing of milk
and milk products for economic development of farming community.

To build a viable dairy in the state.
To provide a constant market and stable price to the farmers for the products.
The motto of co-operation of the people, by the people and for the people in the
foundation of the three tier system followed by the organization. At the village level Milma have
village milk co-operative societies- the local milk producers as its members. These village cooperative units at the regional level and from co-operative milk producers unions. These unions
are federated at the level a form- State federation namely Kerala Co-operative Milk Marketing
Federation.
Milma- the Farmers Organization

Milma is an organization for the farmers. Farmers are the producer of the raw materials
that the milk. The shareholders in the organization and the chairman and the Board of Directors
are elected among them.
The farmers are the members of the Anand pattern co-operative societies (APCOS). The
President of the APCOS forms the general body of the Regional milk unions which federated to
form KCMMF
Milmas Associates
Chief associates are;
National Dairy Development Board (NDDB)

NDDB under Dr. Varghese Kurians guidance set up KCMMF at 1980. Ever since then
there has been a close co-operation between NDDB and Federation.
Amul
The dairy co-operative of Gujarat has been the inspiration for the development of the
vast network of co-operative in Kerala.
Government of Kerala
The phenomenal success of the Dairy co-operative in Kerala could not have been
achieved without foundation of animal husbandry activities, led by the Animal Husbandry
Department, Kerala.
MILMA have 3 Regional Co-operative Unions;
1. Thiruvananthapuram Regional Co-operative Milk Producers Union Ltd.
2. Ernakulam Regional Co-operative Milk Producers Union Ltd.
3. Malabar Regional Co-operative Milk Producers Union Ltd.
Thiruvanthapuram Regional Co-operative Milk Producers Union Ltd (TRCMPU) is one
of the Regional Co-operative Milk Producers Union in Kerala state, and is the oldest one among
the three. The TRMPU includes the four southern district of Kerala.
a)
b)
c)
d)
Thiruvanthapuram
Kollam
Alleppy
Pathanamthitta
2678 primary milk co-operative societies now functioning as on31.03.2013.
8.31 lakhs farmer members.
Three regional co-operative milk producers union.
Thirteen diaries capable of handling 12 lakhs liters of milk per day.
Ten milk chilling centers.
Two cattle feed plants with cumulative capacity of 600 MT per day.
One milk powder plant of 10 MT per day capacity.
A well established training centre.
5200 retail outlets.
Over 32000 people working either directly or indirectly for the functioning of Milma.
Apart from these the company serves millions of consumers day-in and day- out.
1.4 PRODUCT PROFILE
Product and service details
o
o
Milma pasteurized having two kinds;

Toned milk
Double Toned milk
Toned Milk
Toned milk is considered common milk in which the colour of the package is blue which
contains 3.5% fat and 8.5% of SNF. This milk mainly focused on domestic consumer and is
available in 500 ml packet. Milma gives 4% of commission of sale of each packet of milk. The
price of the toned milk is Rs. 17.50.
Double Toned Milk

This milk contains high fat content of about 4.5% fat and 9% SNF. The price of the
double toned milk is Rs. 16. Both the above milk can be stored for 2 days under cool condition
below 7 degree Celsius.
Sambharam
Sambharam (Butter milk) is a favorite beverage in Kerala. Milma sambharam is only
product of its kind in the market and it is very popular throughout the state is comes in 200ml
packet. It is seasonal product mainly for summer season and is very demand in summer. In
future Milma is planning to launch 500ml packet of sambharam price is at Rs. 20.
Curd
It is a fermented product prepared from pasteurized skim milk using curd culture from
National Dairy Regional Institute (NDRI) is delicious tasty, free cholesterol and is available in
500ml packet. The market price of curd is Rs.20.
Ghee
Milma ghee is available in 500ml, 100ml 50ml and 1 liter. Ghee is the only exporting
product of Milma. The market price of the Milma ghee is as follows;
500ml Rs.210
100ml Rs.44
200ml Rs.86
50ml Rs.23
1 Liter- Rs.400
Peda
An indigenous product manufactured by evaporating water content from whiles some
cows milk and sweetened with cane sugar. It is nutritious and delicious sweet bite for children
and in 10 piece box which costs Rs.60. milma peda is produced in Pathanamthitta Dairy.
Milma Sip Up
It is made from pasteurized skim milk sweetened and flavored which is available in 25ml
polythene tube, which flavored by vanilla, strawberry, pineapple served in chilled condition. It is
good for health and is nutritious substance to all other sip ups. The market price of the sip up is
Rs.3.
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Ice Cream
Milma ice cream is available in average of lip smacking flavours. Vanilla, chocolate,
pineapple, strawberry and pista. The only ice cream and Kerala manufactured in a dairy is
Milma ice cream and hence this is fresher than any other ice cream produced in the
Thiruvananthapuram dairy. The market price of ice cream is Rs.105, for standard flavour like
chocolate and butterscotch are Rs. 125, 135.
Cattle Feed
Balanced cattle feed is the major input to the dairy farmers of the state federation. There
is a high level of acceptance for this product in the market. The cattle feed is distributed to the
farmers at a reasonable price through different agencies.
Milma Instant Dairy Whitener

Milma has a plant in Allapuzha for the milk powder production from milk. The market
price of 500gm of milk powder is Rs. 175 and for 200gmis Rs.65.
Palada Mix
Palada mix is a product of Kozhikod dairy. The market price of Palada mix of 250gm is
RS.60.
Mango Drink
Thiruvananthapuram dairy is producing the mango drink. The market price of the mango
drink is Rs.50 per liter.
Milma Butter
Milma butter is produced in Thiruvanthapuram dairy. The market price of milma butter
is Rs.35 for 100gm. The product can be stored up to 6 months from the manufacturing date
under regeneration condition.
Low Fat Panner

Thiruvanthapuram dairy is producing the low fat panner. The market price of low fat
panner is Rs.28 for 100gm.
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Milma Chocolick
Milma chocolik is a chocolate produced in the Ernakulam Dairy. The market price is
Rs.14 for Choc bar and Rs.12 for mango bar.
Milma Plus
Milma plus is satirized from skimmed flavoured milk which is good energy drink
producer in the Allapuzha and Kollam Dairy. Milma plus is the flavours like chocolate,
strawberry pineapple, mango and pista. The market price of milma plus is Rs.20 for 200ml.
1.5 DEPARTMENT PROFILE
Human Resource Department

In Pathanamtitta Dairy the human resource management is headed by the assistant
manager, the dairy had a total strength of 120 workers out of which 80 are permanent and 35 are
temporary. Temporary employees are appointed for a period of 6 months usually they include
stenographers, typist etc...
Marketing Department
Marketing department of any organization has a key role to play the profile and
development. The marketing department in Pathanamthitta dairy is headed by an assistant
manager. Under he comes marketing officer, senior assistant officers etc...
Production Department
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Production department is concerned with the process which combines and transfers
various resources into value added product or service. It is the core department of the company.
An organizations wealth is to successfully utilize the resource available in the organization that
is men, material, money and machine. The importance of production department is the
processing of the milk and its other by-products. The production department is headed by the
assistant manager.
Finance and Accounting Department

Finance is considered as the life blood of business organization. Finance management
is one of the important areas of the management as the effectiveness of the business enterprise is
based on finance. The Pathanamthitta dairy the finance department is headed by the assistant
manager. The structure of the department is shown below;
Assistant Manager
Junior Superintendent
Senior Assistant
Junior Assistant
Quality Control Department

Milma works with an aim of giving high quality products to its customers. The quality
control department is headed by assistant manager followed by quality control officers,
bacteriologist, lab technicians and lad assistants. Milma products are tested at each of every
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stage of production. High quality is maintained within the by not touching the milks with boards
except at the time being brought from societies.
Engineering and Maintenance Department

This department is concerned with the maintenance and the repair work of existing
machines and new machines. It also handles all the electric wiring and other electric supplies.
This department is headed by the assistant manager and is followed by the deputy manager,
technical superintendent and electricians.
Procurement and Input Department

It is the most important function of this department and headed by the assistant
manager of the dairy, purchase and stores department. The department ensures the timely
availability of all other materials and other than milk, veterinary medicines and other inputs.
Organizational Chart
Dairy Unit manager
HR
Department
P and I
Department
Production
Department
Assistant
Manager
Assistant
Manager
Assistant
Manager
Assistant
Manager
MPO
Senior
Officer
Quality control
officer
Assistant
MPO
Technical
Officer
Supervisor
Operators &
Attendants
Junior
Superintend
ent
Senior
Assistant
Stenographer
Quality Control
Department
Chemist
Lab
Technicians
Lab Assistant
Maintenance
Department
Assistant
manager
Deputy
Manager
Technical
Supervisor
Marketing
Departmen
t
Finance
Manager
Assistant
Manager
Assistant
Manager
Marketing
Officer
Junior
Superinte
ndent
Assistant
Marketing
Officer
Field
Officer
Senior
Assistant
14
Junior
Assista
nt
1.6 NEED OF THE STUDY
This study helps to find out the Cost of Capital of Milma Dairy, Pathanamthitta.
Covers comparison and analysis of the performance of the concern and to point out the threat.
15
1.7 OBJECTIVES OF THE STUDY
To examine the capital structure of the company.

To evaluate the cost of capital analysis in the Milma dairy.
To measure the profitability of the firm.
To study the leverage analysis in the reference of annual report.
To give suggestion on the basis of the above analysis, for an effective financial decisions
making.
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SCOPE AND LIMITATIONS OF THE STUDY
1.8 Scope of the Study
The study helps to find out the strength and weakness of the concern in its management of Cost
of Capital and also the reason for the variation in profitability.

It gives the management an overall idea about its past performance and this is in turn will help
them to take corrective measures if they are not satisfied with their past performance.
1.9 Limitations of the Study
The availability of information and data limited by the time factor.

The study is based on the data obtained from the annual reports of the company.
The analysis of various ratios is done only for a period of 5 years.
Hence conclusion made may not be complete.
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2. REVIEW OF LITERATURE
Brander and Lewis (1986)1

Provide the theoretical framework that links capital structure and market structure. Contrary
to the project maximization objective postulated in industrial organization literature, these
theories like the corporate finance theory, assumes that the firms objective is to maximize the
wealth of the shareholders and show that the market structure affects the capital structure by
influencing the competitive behaviour and strategies of the firm. Firms in the oligopolistic
market will follow the strategy of maximizing their output for improving profitability in
favourable economic condition. In unfavorable economic conditions, they would take a cut in
production and reduce their profitability.
Jensen and Mocking2

1
Brander and Lewis (1986) , Financial Management by M.Y Khan & P.K Jain, Tata McGraw
Hill Publishing Co. Ltd, 1997
Jensen and Mocking (1986) , Principles of Management Accounting by Dr. S.N Maheswari,
Sultan Chand & Sons, 1995.
2
18
Argue that the shareholders lenders conflict results into risk shifting and wealth
appropriation in favour of shareholders as they take on risky investment projects (assets
substitution). Hence, shareholders and managers as their agents are prompted on to take on more
borrowing to finance. Risky project venders would receive interest and principal if project
succeed and shareholders would appropriate the residual income finance corporate theory that
justifies the use of high debt is the tax-shield theory.
Modigliani and Miller (1963)3

Profitability firms borrow more to save taxes since interest cost are tax deductible. The
output maximization by oligopoly firms is supposed to increase their profitability. Hence, both
the Agency Cost theory and tax-shield theory would predict a positive relationship between
capital structure and market structure. Capital structure increases the chances of financial
distress and bankruptcy. Firms face cost of financial distress when they are unable to service
debt. They will have high debt ratios if these costs are zero or trivial.
Scott(1976) Kim(1990)4
Since cost of financial distress are trivial and high levered firm can actually go bankrupt,
firms with high probability of bankrupt will have low debt ratio. The chances of bankruptcy for
firms with large reserve funds will be relatively less but, unleveled firms with high profitability
and large reserve funds would have great competitive advantage. These firms with deep purse
may not survive but they would also gain by driving their rival firms into bankrupt.
Bolton and Scharfstein (1990)5

These firms follow a policy of aggressive production and predatory price cuts to eliminate
their rivals by forcing them into financial distress. Their strategy pays them off particularly
3 Modigliani and Miller (1963) , Financial Management by I.M Pandey, Vikas Publishing
House Pvt Ltd, 1995

Scott(1976) Kim(1990) , Financial Management by M.Y Khan & P.K Jain, Tata McGraw Hill
Publishing Co. Ltd, 1997
4
Bolton and Scharfstein , Financial Management by Prasanna Chandra, Tata McGraw Hill
Publishing Co. Ltd, 1995.
5
19
when external funding is not available to the firms of the target predatory price behaviour. The
implication of this model is that the unleveled firm with deep purses (high profitability and
reserve funds) would have incentive to increase output to drive the competitors into bankruptcy.
Empirically, we can predict a negative relationship between capital structure and market
structure.
Myres (1977)6
Provide a model under which debt causes under-investment (asset substitution). Firms reject
those profitable, low risk investment projects that have the possibility of passing on benefits
from shareholders to lenders. Further, internal financing is cheaper than external financing due
to asymmetric information. Higher debt makes higher output costly for a levered firm. There are
a few empirical studies that have investigated the issues of capital structure and market structure
using the data of the U.S firms.
Chevalien (1993)7
Provide evidence in support of a negative relationship between capital structure and market
structure. This result is consistent with the bankruptcy cost or the asymmetric information /
pecking order hypothesis.
6 Myres (1977) , Cost and Management Accounting by S.N Maheswari, Sultan Chand & Sons,
1996
7
Chevalien (1993) , Cost Accounting by Jain & Narang, Kalyani Publishing, New Delhi, 1997.
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3. RESEARCH METHODOLOGY
Research
Research is common pestilence refers to search for knowledge. Once can also define
research as a scientific and systematic search for a pertinent information on a specific topic. In
fact, research is an art of scientific investigation. Redman and Mary define research as a
systematic effort to gain new knowledge.
Research is an academic activity and as such the term should be used in a technical
sense. According to Clifford Woody, research comprises defining redefining problems,
formulation of hypothesis, collecting, organizing and evaluating data, making deductions and
research conclusion and at last carefully testing the conclusion to determine whether they fit the
formulating hypothesis.
Research Design
A research design is the arrangement of condition for collection and analysis of data in
a means that aims relevance to the research purpose with economy in procedure. In this study
the analytical research is followed.
Sources of Data Collection

In this study secondary data is the main source.
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Primary Data
The primary data are those data which are collected for the first time by the researcher.
Secondary Data
The secondary data are those data which have already been collected someone else and
which have already been passed through the statistical process. In this study secondary data is
the main source. Thus the data was collected through;
Annual Reports
Books
Website of Milma Dairy
Internet
Tools used for Analysis

1)
2)
3)
4)
Ratios
Leverage Analysis
Capital Structure and Cost of Capital
Trend Analysis
Area of study
Milma dairy , Pathanamthitta , kerala
Period of study
The period of study is from 2009 to 2013.
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4. DATA ANALYSIS AND INTERPRETATION

4.1 Ratio
4.1.1 Debt Equity Ratio
This financing of the total assets of the business concern is done by owners
equity (also known as internal equity) as well as outsiders debt (also known as outsiders
equity). How much fund has been provided by the owners and how much by the outsiders in
the acquisition of the total assets is a very significant factor affecting the long term solvency
position of the concern.
Table Showing Debt Equity Ratio
Year
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013
Long Term Debt

3314097.2
2614008.3
41829512.05
41859512.05
1885645
Shareholders Fund
3567417.08
4752742.35
5980284.19
5980284.19
6280250
Ratio
.929
.55
6.99
6.99
.300
Interpretation
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The debt equity ratio was 3.29 in the year 2008-2009. It indicates long term debt is high
compare than shareholder fund but it was decreased during the next year. The lower proportion
of debt provides a higher margin of safety for them.
Graph 1
Ratio
8
7
6
5
Ratio
4
3
2
1
0
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013
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4.1.2 Interest Coverage Ratio

Apart from EBIT-EPS analysis, the ability of the firm to use debt from the profitability point
of view can also be judged in terms of coverage ratio namely;
Interest Coverage = Earnings before I and T / Fixed Interest Charges
Table Showing Interest Coverage Ratio
Year
EBIT
Interest
Ratio
2008-2009
5435117.60
323242
16.81
2009-2010
6060665.58
699996.00
8.66
2010-2011
10710115.35
699996.00
15.30
2011-2012
3775818.47
699996.00
6.39
2012-2013
14891082
700000
21.27
Interpretation
The above table indicates that interest covered by earning was 7.81 times on an average.
Even though there has been a small fall in the ratio during the year 2010 and 2011 when
compared 2012. The ratio went up 10.04 times in the year 2012-2013. This was due to high
increase in the earning before interest and taxes.
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Graph 2
Ratio
25
20
15
Ratio
10
5
0
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013
26
4.1.3 Debtors Turnover Ratio

Debtors turnover ratio measures the number of times the receivables are rotated in terms of
sales. This ratio also indicates the efficiency of credit collection and efficiency of credit policy.
The ratio is helpful in determining the operational efficiency of a business concern and the
efficiency of credit policy. It is important to maintain reasonable quantitative relationship
between receivables and sales.
Debtors Turnover Ratio = Sales / Debtors
Table Showing Debtors Turnover Ratio
Year
Sales
Debtors
Times
2008-2009
115570571.80
2889264.30
40
2009-2010
139266692.88
3027536.80
46
2010-2011
168393118.14
2629747.795
64.03
2011-2012
139266692.88
2629747.795
52.96
2012-2013
252541100.5
4194870.23
66.20
Interpretation
27
It is shown in the table that there is an increasing ratio of debtors turnover ratio from the
year 2009-2011, but the small variation in the year 2012 was due to the change in organization
strategy.
Graph 3
Times
70
60
50
Times
40
30
20
10
0
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013
28
4.1.4 Debtors Collection Period

Debtors collection period indicates the financial strength of the organization because it
facilitates a comfortable working capital. The higher the turnover ratio and shorter the collection
period, better the trade credit management. Debtors collection period measures the quality of
debtors. Since it measures the rapidity or lowness with which money is collected from them.
Debtors Collection Period = 365 Days / Debtors Turnover
Table Showing Debtors Collection Period
Year
Days of Year
Debtors Turnover
Days
2008-2009
365
40
2009-2010
365
46
2010-2011
365
64.03
2011-2012
365
52.96
2012-2013
365
66.20
Interpretation
29
In the year 2008-2009, the debtors collection period is 9 days. It indicates too liberal and
insufficient credit collection performance. In the subsequent years company has taken measures
and decreased collection period. It shows good sign for the company.
Graph 4
Days
10
9
8
7
6
Days
5
4
3
2
1
0
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013
30
4.1.5 Profitability Ratio

A company should earn profit to survive and grow over a long period of time. Profits
are essential, but it would be wrong to assume that every action initiated by management of a
company should be aimed at maximizing profits. The profitability ratios are calculated;
I.
II.
III.
Gross Profit Ratio

Net Profit Ratio
Current Ratio
I. Gross Profit Ratio

Gross profit ratio is the relationship between Gross Profit and sales. This ratio can be
obtained the degree to which the selling price of the goods per unit may decline without
resulting in loses from operation to the firm. It is expressed in percentage data.
Gross Profit Ratio = Gross Profit / Net Sales * 100
II. Net Profit Ratio

Net profit ratio is the relationship between net profit and net sales. It is calculated after
excluding non-operating expenses. It is used to measure the efficiency and overall profitability
of the organization. This ratio helps in determining the efficiency with which affairs of the
business are being managed.
Net Profit Ratio = Net Profit / Sales* 100

31
III. Current Ratio

Current Ratio = Current Assets / Current Liabilities
Table Showing Gross Profit Ratio
Year
Gross Profit
Sales
Ratio
2008-2009
3526118.86
344446633.69
1.024
2009-2010
8291413.38
412094161.81
2.012
2010-2011
4730881.83
493670662.22
.958
2011-2012
18286413.36
422094161.81
4.332
2012-2013
164961078
21423516.62
7.70
Interpretation
In 2008-2009 Gross Profit Ratio is average. This shows that opening stock is over valued.
But from 2009-2010 the ratio increases when compared to the previous years, this proved that
the selling price of the goods sold has gone up without corresponding increases in the costs.
32
Graph 5
Ratio
9
8
7
6
Ratio
5
4
3
2
1
0
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013
33
Table Showing Net Profit Ratio
Year
Profit after Sales
Sales
Ratio
2008-2009
-3435117.60
344446633.69
-1.578
2009-2010
-6060665.58
412094161.81
-1.470
2010-2011
-10710115.37
493670662.22
-2.169
2011-2012
3775818.47
422094161.81
0895
2012-2013
33849156.26
21423516.62
1.58
Interpretation
In 2008-2009 Net profit ratio is low. It indicates lack of improvement in the operational
efficiency of the business. From the year 2012-2013 the ratio is increased which shows that the
good profitability condition of the business.
34
Graph 6
Ratio
1000
800
600
Ratio
400
200
0
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013
-200
35
Table Showing Current Ratio
Year
Current Assets
Current Liabilities
Current Ratio
2008-2009
102458078.38
108869852.32
.941
2009-2010
218954815.6
238225938.85
.919
2010-2011
10156426.31
401442464.05
.253
2011-2012
25570689.92
401424664.05
.637
2012-2013
24147041
45101080.5
.535
Interpretation
The Current Ratio indicates that there is a fluctuation in each year, which represents there is
adequate for the day to day transaction.
36
Graph 7
Current Ratio
1
0.9
0.8
0.7
0.6
Current Ratio
0.5
0.4
0.3
0.2
0.1
0
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013
37
4.2 Leverage Analysis
4.2.1 Degree of Financial Leverage

Financial leverage affects the earning per share. When the economic conditions are good and
the firms EBIT is increasing, its EPS increases faster with more debt in the capital structure.
DFL = % Change in EPS / % Change in EBIT
Table Showing Degree of Financial Leverage

Year
EBIT
EPS
Ratio
2008-2009
13672
11188
1.22
2009-2010
17608
15566
1.13
2010-2011
22244
20230
1.09
2011-2012
25999
23056
1.12
2012-2013
34674
32132
1.07
38
Interpretation
The above table shows that the EBIT of the company has increased in the year 2011-2012.
The decline in the year 2012-2013 was due to increase in the interest payments. On an average
the financial leverage was 1.21% times which implies that one percent change in EBIT will lead
to 1.07% change in EPS.
Graph 8
Ratio
1.25
1.2
1.15
Ratio
1.1
1.05
1
0.95
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013
39
4.2.2 Operating Leverage

Operating Leverage can be defined more precisely in terms of the way given
change in volume or value of sales, affects portfolio degree of Operating Leverage.
Degree of Operating Leverage (DOL) is defined as the percentage change n the Operating
Profit that results from a percentage change in units sold.
Operating Leverage can also be calculated by the formula.
DOL = Contribution / EBIT
Table Showing Operating Leverage
Year
Contribution
EBIT
Ratio
2008-2009
42042
13672
3.07
2009-2010
51548
17608
2.92
2010-2011
55807
22244
2.50
2011-2012
59304
25999
2.28
40
2012-2013
62433
34674
1.80
Interpretation
The above table indicates the Operating Leverages for 5 years that is from 2009-2013. The
leverage was 2.04% times on an average. The leverage was increased in the year 2008-2009 and
lowest in the year 2012-2013.
Graph 9
Ratio
3.5
3
2.5
Ratio
2
1.5
1
0.5
0
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013
41
4.2.3 Combined Leverage

The Degree of Financial Leverage and Operating Leverage can be combined to see the
effect of total leverage of EPS associate with a given change in sales. The degree of Combined
Leverage (DOL) is given by the formula.
Degree of Combined Leverage = Operating Leverage * Financial Leverage

Degree of Financial leverage constitutes a double edged sword. They have tremendous
acceleration effect on EPS and EBIT.
Table Showing Combined Leverage

Year
Financial Leverage
Operating Leverage
Combined Leverage
2008-2009
1.22
3.07
3.74
2009-2010
1.13
2.92
3.29
2010-2011
1.09
2.50
2.72
2011-2012
1.12
2.28
2.46
2012-2013
1.07
1.80
1.92
42
Interpretation
The table shows Combined Leverage for five years (2009-2013) Combined Leverage was
higher in the year 2008-2009 amounts to 3.74 percent which explain that 2 percent change in
sales would lead to 2 percentage changes in Earnings per Share. The Combined Leverage was
3.74% on an average. This leverage was due to the existence of Financial Leverage of the
company.
Graph 10
Combined Leverage
4
3.5
3
2.5
2
1.5
1
0.5
0
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013
Combined Leverage
43
Table showing sources of funds during the year 2008-2009
Particulars
Amount (in lakhs)
Percentage
Share Capital
4439
7%
Reserves and Surplus
28306
48%
Secured Loans
17267
29%
Unsecured Loans
7434
13%
Deferred Tax Liability
1744
3%
Total
59189
100%
Interpretation
From the above table of the total funds employed of Rs.59189 lakhs. Funds 7% raise through
share capital 48% of the raise using reserves and surplus, 29% of the source from secured loans
and 13% funds from unsecured loans and 3% of the funds are raised by deferred tax liability
further it is inferred that majority of the funds has been used in the form of reserves and surplus.
44
Ta
x
Li
ab
ilit
y
Lo
an
s
Lo
an
s
Su
rp
lu
s
ns
ec
ur
ed
D
ef
er
re
d
an
d
Ca
pi
ta
l
Se
cu
re
d
Re
se
rv
es
Sh
ar
e
Graph 11
Percentage
60%
50%
40%
30%
20%
10%
0%
Percentage
45
Table showing sources of funds during the year 2009-2010
Particulars
Amount (in lakhs)
Percentage
Share Capital
4439
6%
39178
55%
Secured Loans
18811
26%
Unsecured Loans
6978
10%
2471
3%
Total
71877
100%
Interpretation
From the above table of the total funds employed of Rs. 71877 lakhs funds 6% raise
through share capital 55% of the funds are raise through Reserves and Surplus, 26% of the
source from Secured loans and 3% of the fund are raised by Deferred Tax Liability further it is
inferred that majority of the funds has been used in the form of Reserves and Surplus.
46
Ta
x
Li
ab
ilit
y
Lo
an
s
Lo
an
s
Su
rp
lu
s
ns
ec
ur
ed
D
ef
er
re
d
an
d
Ca
pi
ta
l
Se
cu
re
d
Re
se
rv
es
Sh
ar
e
Graph 12
Percentage
60%
50%
40%
30%
20%
Percentage
10%
0%
47
Table Showing Sources of Funds during the year 2010-2011
Particulars
Amount (in lakhs)
Percentage
Share Capital
4439
6%
50685
68%
Secured Loans
11676
16%
Unsecured Loans
5865
8%
1818
2%
Total
74483
100%
Interpretation
From the above table of the total funds employed of Rs.74483 lakhs. Funds 6%
of funds are raised through Share Capital 68% of the raise using Reserves and Surplus, 16% of
the sources from Secured Loans and 8% funds from Unsecured and 2% of the funds are raised
by Deferred Tax Liability further it is inferred that majority of the funds has been used in the
form of Reserves and Surplus.
48
Ta
x
Li
ab
ilit
y
Lo
an
s
Lo
an
s
Su
rp
lu
s
ns
ec
ur
ed
D
ef
er
re
d
an
d
Ca
pi
ta
l
Se
cu
re
d
Re
se
rv
es
Sh
ar
e
Graph 13
Percentage
80%
70%
60%
50%
40%
30%
20%
10%
0%
Percentage
49
Particulars
Amount (in lakhs)
Percentage
Share Capital
4439
5%
67999
85%
Secured Loans
7279
9%
Unsecured Loans
475
1%
Total
80193
100%
Interpretation
raise through Share Capital 85% of the fund raised through Reserves and Surplus, 9% of the
sources from Secured Loans and 1% of funds are raised by Deferred Tax Liability further it is
inferred that majority of the funds has been used in the form of Reserves and Surplus.
50
Ta
x
Li
ab
ilit
y
Lo
an
s
Lo
an
s
Su
rp
lu
s
ns
ec
ur
ed
D
ef
er
re
d
an
d
Ca
pi
ta
l
Se
cu
re
d
Re
se
rv
es
Sh
ar
e
Graph 14
Percentage
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Percentage
51
Particulars
Amount (in lakhs)
Percentage
Share Capital
4439
6%
47142
62.5%
Secured Loans
16054
21%
Unsecured Loans
2637
3.5%
5255
7%
Total
75527
100%
Interpretation
raise through Share Capital 62.5% of the fund raised through Reserves and Surplus, 21% of the
sources from Secured Loans,3.5% of funds was raised through from Unsecured Loans and 7%
of funds are raised by Deferred Tax Liability further it is inferred that majority of the funds has
been used in the form of Reserves and Surplus.
52
Ta
x
Li
ab
ilit
y
Lo
an
s
Lo
an
s
Su
rp
lu
s
ns
ec
ur
ed
D
ef
er
re
d
an
d
Ca
pi
ta
l
Se
cu
re
d
Re
se
rv
es
Sh
ar
e
Graph 15
Percentage
70%
60%
50%
40%
30%
20%
10%
0%
Percentage
53
4.4 Cost of Capital

In order to run and manage a company funds are needed, right from the promotional stage
up to end, finance play a vital role in a companys life, if the funds are adequate the business
suffers and if the funds are not properly managed, it is therefore, necessary that correct estimates
of the current and further need of capital be made to have an optimum Capital Structure, which
shall help the organization to run the work smoothly and without any stress.
Overall Cost of Capital
KO= EBIT / V
EBIT Earning before Interest and Tax
V=S+B
Value of the Firm = Value of Equity + Value of Debt
Table Showing Net Income Approach during the year 2008-2009

Particulars
Amount (RS. In Lakhs)
Value Share (S)
23257
Market Value of the bond(B)
29168
Value of the Firm (V=S+B)
52425
Earnings before interest and Tax
13672
0.26%
54
Interpretation
From the above table, Value of the Firm is Rs.52425; the overall Cost of Capital is 0.26%.
Graph 16

60000
50000
40000
30000
20000
10000
of
Ca
pi
ta
l
O
ve
ra
ll
Co
st
(V
=
S+
B)
Fir
m
of
th
e
Va
lu
e
Va
lu
e
Sh
ar
e
(S
)
55
Particulars
Value Share (S)
32744
26445
59189
17608
0.29%
Interpretation
56
Graph 17
70000
59189
60000
50000
40000
32744
30000
26445
17608
20000
10000
0
of
Ca
pi
ta
l
O
ve
ra
ll
Co
st
Fir
m
of
th
e
Va
lu
e
Va
lu
e
Sh
ar
e
(V
=
S+
B)
(S
)
57
Particulars
Value Share (S)
43617
28260
71877
22244
0.30%
Interpretation
58
Graph 18
80000
71877
70000
60000
50000
43617
40000
28260
30000
22244
20000
10000
0
of
Ca
pi
ta
l
O
ve
ra
ll
Co
st
(V
=
S+
B)
Fir
m
of
th
e
Va
lu
e
Va
lu
e
Sh
ar
e
(S
)
59
Particulars
Value Share (S)
55124
19359
74483
25999
0.34%
Interpretation
60
Graph 19
74483
80000
70000
60000
50000
40000
30000
20000
10000
0
55124
25999
19359
of
Ca
pi
ta
l
O
ve
ra
ll
Co
st
(V
=
S+
B)
Fir
m
of
th
e
Va
lu
e
Va
lu
e
Sh
ar
e
(S
)
61
Particulars
Value Share (S)
72438
7755
80193
34679
0.43%
Interpretation
62
Graph 20
90000
80193
80000
72438
70000
60000
50000
40000
34679
30000
20000
7755
10000
0
of
Ca
pi
ta
l
O
ve
ra
ll
Co
st
(V
=
S+
B)
Fir
m
of
th
e
Va
lu
e
Va
lu
e
Sh
ar
e
(S
)
63
Table Showing Net Operating Income Approach during the year 2009-2013
Year
Cost of Capital
Value of the Firm
2009
0.26%
52425
2010
0.29%
59189
2011
0.30%
71877
2012
0.34%
74483
2013
0.43%
80193
Interpretation
From the above table showing that the overall Cost of Capital is very low 0.26% in the year
2009 and value of the firm were Rs. 52425. But it started growing and reached 0.43% and
Rs.80193.
64
Graph 21.1
Cost of Capital
0.50%
0.45%
0.40%
0.35%
0.30%
0.25%
0.20%
0.15%
0.10%
0.05%
0.00%
2009
2010
2011
2012
2013
Cost of Capital
65
Graph 21.2
66
Value of the Firm

Value of the Firm
80193
71877
74483
59189
52425
2009
2010
2011
2012
2013
4.4 Trend Analysis
Trend Analysis of sales = Sales of the Year / Total Sales * 100
Table showing Trend Analysis in Sales
67
Year
Sales of the Year
Total Sales
Sales Trend
2008-2009
344446633.69
3530020028.25
9.75
2009-2010
412094161.81
3530020028.25
11.67
2010-2011
493670662.22
3530020028.25
13.98
2011-2012
422094161.81
3530020028.25
11.95
2012-2013
607502951
3530020028.25
17.21
Interpretation
The Trend Analysis shows that there was an increasing rate of sales in every year. During the
year 2008-2009 the sales was just 9.75 but in the year 2012-2013 we can see that there is a rapid
growth in sales as compared to previous years. This was mainly due to increase of demand in
milk products.
Graph 22
68
Sales Trend
20
18
16
14
12
10
8
6
4
2
0
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013
Sales Trend
5. FINDINGS, SUGGESTIONS AND CONCLUSION
5.1 Findings
Debt Equity Ratio indicates the average position of the firm. It shows .929% in the year 2009
and in the year 2013 it shows .30% low level.
69
Interest Coverage Ratio in the year 2009 was 16.81% and 2012 shows the low level of 6.39%
and it shows high level in 2013 of 21.27%.

Debtors Turnover Ratio indicates the increasing year to year. It shows 66.20% in the year 2013
which shows the good position of the firm.

The Gross Profit Ratio is increasing year to year. The highest ratio is 7.70% during the year
2013. The lowest ratio is .958% during the year 2011.

The Net Profit Ratio is high in the year 2013 at 1.58%. In 2011 Net Profit declined at -2.169%
and in the year 2009, 2012 the ratio is very low at -1.578% and -1.470% respectively.
The Degrees of Financial Leverage in the year 2009 were increased to 1.22%. In the 2013 it
shows decreasing of 1.07%.

The Operating Leverage indicates increase in the year 2009 with 3.07% and in the year 2013 it
shows decreasing of 1.80% which indicates low position of the firm.

The Combined Leverage shows the highest in the year 2009 at 3.74%. But in the year 2013 it
decreased to 1.92%.
The sources of funds are increasing year by year. The highest source of funds during the year
2012 was 80193 and lowest in the year 2009 of 59189.

Net Income Approach shows the low rate of .26% during the year 2009. But in the year 2013 it
shows 0.43% which indicates the good position of the firm.
5.2 Suggestions
In order to overcome the problems of Long term Solvency, Profitability and Leverage
position, Cost of Capital is suggested to follow.
The companys current financial position is not so good, so they have to take much care about
decision regarding capital.

Motivating the employees in the organization is beneficial to the company.
The financial leverage is low, so it must be increased in future.
The sources of funds increasable it must be increasing in future.
Through reducing the Cost of Capital, the company can gain a lot.
70
5.3 Conclusion
Capital Structure is the key indicator to determine the position of an organization. It
can reduce the loss of wastage through effectively controlling Cost of Capital. In this study of
Milma Dairy it found that they are concentrating on the Cost of Capital analysis and maintaining
it.
The employees can be rewarded and they motivated and they may work truthfully for
the organization. So the Capital Structure may be normally increased by their effective work.
Profits are essential, but it would be wrong to assume that every action initiated by the
management of the company should be aimed at maximization of profits. It enhances the
71
goodwill of the company; stakeholders evaluate the performance of the company on the basis of
the profits. So that the Capital Structure and Cost of Capital analysis is necessary.
The thing is that, the company is giving more importance to the welfare of employees,
the company is basically a service oriented industry, and in such a way they are providing
quality goods and services rather than making profits.
APPENDIX
TRCMPU
Final Audit 2008-2009
Manufacturing and Trading Account for the year ended 31-2-2009
Sl.
No
Particulars
Amount
Sl.
Particulars
amount
No
72
1.
Purchase &
106945938.29
1.
Sales Milk &
228626306.29
2.
Consumption
Consumption of other
210374.67
2.
Products
Sales by Transfer
15570571.80
3.
materials
Stock transfer in
207272568.17
3.
Other Sales
249755.60
4.
Freight / Carriage
5076085.38
5.
Taxes & insurance

Wages & Allowance
4510831.38
6.
Manufacturing
10341557.61
7.
expenses
Procurement & Input
687048.12
Charges
Selling Expenses
5876111.19
Total
340920514.83
Gross Profit
3526118.86
Grand Total
344446633.69
Total
344446633.69
Grand Total
344446633.69
TRCMPU LTD
Sl.
Particulars
Amount
Sl.
Particulars
Amount
No
1.
Raw Material
119973693.59
No
1.
Sales Milk &
272449735.91
2.
Consumed
2.
Products
Sales by Transfer
139266692.88
346136.29
materials
73
3.
Stock transfer in
251299833.27
4.
Freight / Carriage
6250179.82
5.
Taxes & insurance

Wages & Allowance
6290760.88
6.
Manufacturing
10816213.61
7.
expenses
Procurement & Input
1838389.74
Charges
Selling Expenses
6914674.25
9.
Taxes & Insurance
72867.00
Total
403802748.45
Gross Profit
8291413.38
Grand Total
412094161.81
3.
Other Sales
377733.02
Total
412094161.81
Grand Total
412094161.81
TRCMPU LTD
Manufacturing & Trading Account for the year ended 31-3-2011
Sl.
Particulars
No
1.
Raw Material
2.
Consumed
Amount
Sl.
Particulars
Amount
151139165.10
No
1.
Sales Milk &
324973460.97
2.
Products
Sales by Transfer
168393118.14
229560.39
materials
74
3.
Stock transfer in
295497727.96
4.
Freight / Carriage
7375030.39
5.
Taxes & insurance

Wages & Allowance
5536543.65
6.
Manufacturing
11326195.57
7.
expenses
Procurement & Input
9748261.62
Charges
Selling Expenses
9056296.93
9.
Taxes & Insurance
46729.00
Total
489955511.02
Gross Profit
4730881.83
Grand Total
494686392.85
3.
Other Sales
1015730.63
Total
494686392.85
Grand Total
494686392.85
TRCMPU LTD
Sl.
Particulars
No
1.
Raw Material
2.
Consumed
Amount
Sl.
Particulars
Amount
119976193.59
No
1.
Sales Milk &
282449735.91
2.
Products
Sales by Transfer
139266692.88
348636.29
materials
75
3.
Stock transfer in
251299833.27
4.
Freight / Carriage
6250179.82
5.
Taxes & insurance

Wages & Allowance
6290760.88
6.
Manufacturing
10816213.61
7.
expenses
Procurement & Input
1838389.74
Charges
Selling Expenses
6914674.25
9.
Taxes & Insurance
72867.00
Total
403807748.45
Gross Profit
18286413.36
Grand Total
422094161.81
3.
Other Sales
377733.02
Total
422094161
Grand Total
422094161
TRCMPU LTD
Sl.
Particulars
Amount
Sl.
Particulars
Amount
No
1.
Raw Material
125368473.5
No
1.
Sales Milk &
354561850.5
2.
Consumed
385544.5
2.
Products
Sales by Transfer
252541100.5
materials
76
3.
Stock transfer in
282545584.75
4.
Freight / Carriage
6250179.25
5.
Taxes & insurance

Wages & Allowance
6980000.00
6.
Manufacturing
11500000.80
7.
expenses
Procurement & Input
2512415.50
Charges
Selling Expenses
6914674.70
9.
Taxes & Insurance
85000.00
Total
442541873.00
Gross Profit
164961078.00
Grand Total
607502951.00
3.
Other Sales
4000000.00
Total
607502951.00
Grand Total
607502951.00
TRCMPU LTD
Profit & Loss Account for the year ended 31-3-2009
Sl.
Particulars
Amount
Sl.
No
No
.
1.
.
1.
Salaries and other
3854412.16
Particulars
Amount
Gross Profit b/d
3526118.86
Miscellaneous Income
169130.25
benefits
2.
Administrative
564541.18
Expenses
77
3.
Miscellaneous
3918442.40
Expenses
4.
Depreciation & other
469722.97
services
5.
Interest on
323242.00
Borrowings
Total
9130366
Grand Total
9130366.71
Total
3698249.11
Net Loss
5435117.60
Grand Total
9130366.71
TRCMPU LTD
Sl.
Particulars
Amount
Sl.
No
No
.
1.
.
1.
Salaries and other
7376868
Particulars
Amount
Gross Profit b/d
8449929.31
benefits
78
2.
Administrative
619513.88
196699.39
Expenses
3.
Miscellaneous
4825591.06
Expenses
4.
1185325.27
services
5.
Interest on
Borrowings
Total
14707294.28
Grand Total
14707294.28
Total
8646628.70
Net Loss
6060665.58
Grand Total
14707294.28
TRCMPU LTD
Sl.
Particulars
Amount
Sl.
No
No
Particulars
Amount
79
1.
Salaries and other
6891506.23
1.
Gross Profit b/d
4730881.33
171694.46
benefits
2.
Administrative
972056.37
Expenses
3.
Miscellaneous
5821591.22
Expenses
4.
1227541.84
services
5.
Interest on Borrowings
Total
Grand Total
699996.00
15612691.66
15612691.66
Total
492576.29
Net Loss
10710115.37
Grand Total
15612691.66
TRCMPU LTD
80
Sl.
Particulars
Amount
No
.
1.
Sl.
Particulars
Amount
Gross Profit b/d
18286413.36
196699.39
No
Salaries and other
7376868
.
1.
benefits
2.
Administrative
619513.88
Expenses
3.
Miscellaneous
4825591.06
Expenses
4.
1185325.27
services
5.
Interest on
699996.00
Borrowings
Total
14707294.28
Net Profit
3775818.47
Grand Total
18483112.75
Total
18483112.75
Grand Total
18483112.75
TRCMPU LTD
81
Sl.
Particulars
Amount
No
.
1.
Sl.
Particulars
Amount
.
1.
Gross Profit b/d
164961078.00
2.
300000.00
No
Salaries and other
8850250.00
benefits
2.
Administrative
700000.50
Expenses
3.
Miscellaneous
5200000.00
Expenses
4.
200000.50
services
5.
Interest on Borrowings
700000.00
Total
15650251.0
Net Profit
149610827.00
Grand Total
165261078.00
Total
165261078.00
Grand Total
165261078.00
TRCMPU LTD
Balance Sheet as on 31-3-2009
82
At the
Particulars
At the end of
At the
Particulars
At the end of
begin
the year 31-3-
begin
the year 31-3-
ning
2009
ning
2009
of the
of the
year
0
Cash in Hand
56414.59
Borrowings
3314097.00
year
0
Adjusting heads due
1106042.36
Cash at Bank
218779.65
107763809.96
Adjusting Head due
285291.86
by
0
Inter unit accounts

due by
Funds, Reserves &
to
3567417.08
Inter unit Accounts
Provisions
100185695.48
due to
0
Closing Stock
1711896.80
Fixed Assets
7858170.42
Net Loss
5435117.60
115751366.40
115751366.40
TRCMPU LTD
83
Previous
Particulars
year 31-32008
3314097.00
1106042.36
Borrowings
Adjusting heads
At the end
Previous
Particulars
At the end
of the year
year 31-3-
31-3-2010
2631944
2008
56414.59
Cash in Hand
31-3-2010
54702.22
5585998.93
218779.65
Cash at Bank
942364.15
285291.86
Adjusting Head
1357410.28
of the year
due by
107763809.
Inter unit
232639939.
96
accounts due by
92
3567417.08
Funds, Reserves
4752742.35
& Provisions
due to
100185695.
Inter unit
48
Accounts due to
1711896.80
Closing Stock
1357410.28
214375813.
62
5435117.60
Fixed Assets
2224525.33
Net Loss
6060665.58
Loss of the year
5435117.60
245610625.
245610625.
20
20
TRCMPU LTD
84
Previous
Particulars
year 31-32009
2631944
5585998.93
Borrowings
Adjusting heads
At the end
Previous
Particulars
At the end
of the year
year 31-3-
31-3-2011
1687048.00
2009
54702.22
Cash in Hand
31-3-2011
23368.71
3325480.33
942364.15
Cash at Bank
3237268.65
5980284.19
1357410.28
Adjusting Head
3877485.31
of the year
due by
232639939.
Inter unit
92
accounts due by
4752742.35
Funds, Reserves
36816983.7
& Provisions
due to
1357410.28
Inter unit
483796.06
Accounts due to
214375813.
Closing Stock
2534507.58
Fixed Assets
15304809.4
62
2224525.33
2
6060665.58
Net Loss
10710115.3
7
5435117.60
Loss of the year
11638445.1
4
47809796.2
47809796.2
TRCMPU LTD
85
Previous
Particulars
year 31-32011
1687048.00
3325480.33
Borrowings
Adjusting heads
At the end
Previous
Particulars
of the year
year 31-3-
31-3-2012
1687048.00
2011
54702.22
Cash in Hand
31-3-2012
23368.71
3325480.33
942364.15
Cash at Bank
18651532.2
of the year
due by
5980284.19
Inter unit
36816983.7
accounts due by
36816983.7
Funds, Reserves
5980284.19
& Provisions
Net Profit
At the end
1357410.28
Adjusting Head
3877485.31
due to
1357410.28
Inter unit
483796.06
Accounts due to
3775818.47
214375813.
Closing Stock
2534507.58
Fixed Assets
15304809.4
62
2224525.33
2
5435117.60
Loss of the year
10710115.3
7
51585614.7
51585614.7
TRCMPU LTD
86
Previous
Particulars
year 31-32012
1687048.00
3325480.33
Borrowings
Adjusting heads
At the end
Previous
of the year
year 31-3-
31-3-2013
1885645
2012
23368.71
Cash in Hand
31-3-2013
25000
3520465.5
18651532.2
Cash at Bank
19025550
Adjusting Head
4512255.15
due by
36816983.7
Inter unit
accounts due by
5980284.19
Funds, Reserves
Net Profit
At the end
of the year
41580615
3877485.31
due to
6280250
483796.06
& Provisions
3775818.47
Particulars
Inter unit
584235.85
Accounts due to
149610827
2534507.58
Closing Stock
2815350.5
15304809.4
Fixed Assets
175915411
202877802.
202877802.
6.BIBLIOGRAPHY
Financial Management by M.Y Khan & P.K Jain, Tata McGraw Hill Publishing Co. Ltd, 1997.
Principles of Management Accounting by Dr. S.N Maheswari, Sultan Chand & Sons, 1995.
Financial Management by I.M Pandey, Vikas Publishing House Pvt Ltd, 1995.
Financial Management by Prasanna Chandra, Tata McGraw Hill Publishing Co. Ltd, 1995.
87
Cost and Management Accounting by S.N Maheswari, Sultan Chand & Sons, 1996.
Cost Accounting by Jain & Narang, Kalyani Publishing, New Delhi, 1997.
Websites
http//www.google.com
http//www.wikipedia.com
88

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1.

Cost of Capital Analysis

Weighted Average Cost of Capital

Objective of Capital Structure

Tools and Techniques of Capital Structure

1.2 INDUSTRY PROFILE

Calcium Counts for Young and Old

The Fresh and Glowing Fresher

The Power Drink for Teenagers

summer incentive to the farmers.

29336 numbers of cases were attended.

number of cases attended is 12013.

Schemes for Milk Production Enhancement

Rs, 137.68 lakhs were spending for calf adoption scheme.

Maximization of women participation in Dairy sector.

1.3 COMPANY PROFILE

The name Milma represents;

2100 primary milk co-operative societies.

returns to the producer and provide quality milk products to consumers.

and milk products for economic development of farming community.

Milma- the Farmers Organization

National Dairy Development Board (NDDB)

1.4 PRODUCT PROFILE

Product and service details

Milma pasteurized having two kinds;

Double Toned Milk

Milma Instant Dairy Whitener

Low Fat Panner

1.5 DEPARTMENT PROFILE

Human Resource Department

Finance and Accounting Department

Quality Control Department

Engineering and Maintenance Department

Procurement and Input Department

1.6 NEED OF THE STUDY

1.7 OBJECTIVES OF THE STUDY

To examine the capital structure of the company.

SCOPE AND LIMITATIONS OF THE STUDY

1.8 Scope of the Study

of Capital and also the reason for the variation in profitability.

1.9 Limitations of the Study

The availability of information and data limited by the time factor.

Brander and Lewis (1986)1

Jensen and Mocking2

Hill Publishing Co. Ltd, 1997

Modigliani and Miller (1963)3

Bolton and Scharfstein (1990)5

House Pvt Ltd, 1995

Sources of Data Collection

Tools used for Analysis

4. DATA ANALYSIS AND INTERPRETATION

Table Showing Debt Equity Ratio

Long Term Debt

4.1.2 Interest Coverage Ratio

Interest Coverage = Earnings before I and T / Fixed Interest Charges

Table Showing Interest Coverage Ratio

4.1.3 Debtors Turnover Ratio

Debtors Turnover Ratio = Sales / Debtors

Table Showing Debtors Turnover Ratio

4.1.4 Debtors Collection Period

Debtors Collection Period = 365 Days / Debtors Turnover

Table Showing Debtors Collection Period