04 KXCM6082 Venkatareddy

A STUDY TO ASSESS FINANCIAL PERFOMANCE OF BAMUL A PROJECT REPORT
SUBMITTED IN PARTIAL FULFILLMENT OF REQUIREMENT FOR THE AWARD OF
MASTER OF BUSINESS ADMINISTRATION BY VENKATA REDDY M.V REG NO.O4KXCM6082
UNDER THE GUIDANCE OF Prof.VIJAYENDRA. S
CENTRE FOR POST GRADUATE STUDIES C#17, KENGERI SATELLITE TOWN BANGALORE 560060
SURANA COLLEGE P.G. CENTRE
ACKNOWLEDGEMENT
I would like to thank our Dean of Studies Prof, H.R. Appannaiah and Dr. H.V.S Raghavan HOD of MBA Department and SURANA College P.G. Centre for aiding me in my study by providing me much needed support in times of need. I would like to also use this opportunity to express my gratitude to Prof.Vijayeadra.S for ably guiding me in my endeavor towards the completion of the project. I would be most inappropriate if I do not convey my heartfelt gratitude to Mr. Satish Finance Manager of BAMUL who encourage and permitted me to take up this study. Finally, I would also like to thank my family, friends, and all the respondents for helping me in their own way, in this endeavor for successfully completing my project.
Date: Place: Bangalore VENKATA REDDY M.V
CONTENTS
CHAPTER 1. 2.
TITLE
Industrial Background Introduction to the problem
Page No.
10-14
16-18
3. 4. 5. 6. 7. 8. 9.
Review of literature Theoretical perspectives Profile of the company
20-21
23-47 4958
Data Analysis & interpretation
60-87
Summary of findings, Suggestions and recommendations Bibliography
8 9-91 93
Appendices & Annexure
95-106
LIST OF TABLES
Table Particulars No. 1. Comparative income statement for the yr ended 31st Mar 99-00 &00-01 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. Comparative balance sheet as on 31st Mar 99 & 00 Comparative income statement for the yr ended 31st Mar 00-01 & 01-02 Comparative balance sheet as on 31st Mar 00-01 & 01-02 Comparative income statement for the yr ended 31st Mar 01-02 & 02-03 Comparative balance sheet as on 31st Mar 01-02 & 02-03 Comparative income statement for the yr ended 31st Mar 02-03 & 03-04 Comparative balance sheet as on 31st Mar 02-03 & 03-04 Comparative income statement for the yr ended 31st Mar 03-04 & 04-05 Comparative balance sheet as on 31st Mar 03-04 & 04-05 Common size balance sheet as on 99-00 to 04-05 Current ratios from the year 99-00 to 04-05 Acid test ratios from the year 99-00 to 04-05 Fixed assets ratios from the year 99-00 to 04-05 Fixed assets turn over ratios from the year 99-00 to 04-05 Stock turn over ratios from the year 99-00 to 04-05 ROCE ratios from the year 99-00 to 04-05 Ratio of Return on share holders funds from the year 99-00 to 04-05 Ratio of Return on total assets from the year 99-00 to 04-05 Ratio of Gross profit from the year 99-00 to 04-05 Ratio of Net profit from the year 99-00 to 04-05 Operating ratios from the year 99-00 to 04-05 Page No.
CHAPTER- I
INDUSTRIAL BACKGROUND The term Market Milk refers to fluid whole milk that is sold to individual for direct consumption. As major enterprise, the market milk industry is of comparatively recent origin even in developed dairy countries such as U.S.A. In India, Dairying has been practiced as a rural cottage industry since the remote past. Semicommercial dairying started with the establishment of military dairy forms and co-operative milk unions through the country towards the end of the nineteenth century. However, market milk technology may be considered to have commenced in 1956 with commissioning of the Central Dairy of Are Milk Colony and milk product technology with the establishment of Amul Dairy, Anand.
In developed countries such as U.S.A., the year 1850 is seen as the dividing line between farm and factory-scale product. Various factors contributed to this change in these countries viz. Concentration of population in cities where jobs were plentiful, rapid industrialization, improvement in transportation facilities, development of machines etc., where as the rural areas were identified for milk production; the urban centers were selected for the location of milk processing plants and product manufacturing factories. Gradually farmers within easy driving distance began delivering milk over regular rounds in cities. This was the beginning of the fluid milk being necessarily produced within a short distance of the place of consumption because of lack of suitable means of transportation and refrigeration.
10
MARKET MILK INDUSTRY IN INDIA AND ABROAD Although a beginning in organized milk handling was made in India with the establishment of Military Dairy Farms (oldest Allahabad, 1989), the salient features of the market milk industry has been: 1. Handling of milk in co-operative milk unions established all over the country on a small scale in the early stages. 2. Long distance refrigerated rail transport of milk from Areay to Bombay since 1945. 3. Pasteurization and bottling of milk on a large scale for organized distribution was started at Areay (1950), Worli (1961), Calcutta (Haringhata, 1956), Madras (1965) etc. 4. Establishment of milk plants under the five years plans for Dairy development all over India. These were taken up with the dual object of increasing the national level of milk consumption and ensuring better returns to primary milk producers. Their main aim was to produce more, better and cheaper GROWTH AND DEVELOPMENT OF THE INDUSTRY Until the year 1940, there was very little published information on the method of preparation and use of these products. The credit for the first publication on the subject goes to Dr. W.B. Davis, the first director of Dairy research, Indian Dairy research Institute (now NDRI), Bangalore. Within the span of three or four decades since his book appeared, considerable research has been conducted at the National Dairy Research Institute and other places on indigenous Dairy products.
11
PRESENT STATUS OF THE INDUSTRY The Indian Dairy industry is heading towards 21st century with an accelerated and positive momentum. With unprecedented growth in milk production by over two and half times in the last two decades to about 58.8 million tones in 1992, India has emerged as the largest milk producer country in the world with an annual milk production of 74 million tones. Food processing industry ranks the fifth largest industry in the country. Though the milk and milk products have 85% business in unrecognized sector, it is having only 7% growth per year. The quantum growth in milk production and per capita availability of milk from 107 gm per day to 190 gm per day in 1992, which is expected to reach to about 300 gm per day by 2010 A.D., can be attributed to the organized efforts in Dairy development by the country since 1970. In which, National Dairy Development Board (NDDB) with an aim to link dairy development with marketing launched operation flood project. The establishment of a co operative structure as a ready and regular buyer of milk produce gave a new turn to the rural economy. Today over 275 Dairy plants and 83 milk products factories in the co operative, public and private sectors handle an estimated 12 15% of the total milk produced. In most of the countries in the in the world, the proportion of milk delivered to the dairies is over 90%. The trends are now changing fast in India too and it is accepted that the processing of the milk on organized scale will increase sharply like in developed countries. This will consequently increase the dairy products in the countrys food a sector has increased from 6% in 1973-1974 to 30% in 2004-2005 the value of the output of the opportunities for value addition. Now, the days of milk scarcity and milk imports are behind us, the organized sectors can seize the opportunity of tapping the market of value added dairy products like Butter, Cheese, Casein, Wheigh protein concentrate, Lactose, Khova, Paneer etc.
12
The organized dairy industry has done a splendid job by transforming itself from an impost zero dependent enterprise to a self sufficient industry and then embarking on export of various products. And, now it is poised for another wave of expansion by undertaking large scale processing of milk in the organized sector. CHANGING PATTERN OF THE INDUSTRY The demand for milk products is on the rise. The increase in purchasing power and pace of urbanization is leading to a change in the lifestyle and consumption habits of the households. The current trends indicate that 44% of the total population will be urban by the year 2004 A.D. this will definitely lead to an increase in consumption of dairy products. The dometstic market for butter and ghee is growing at a healthy rate of over 10% per annum but the same may not be true in case of an international market. The production and export of butter has witnessed a major decline in some of the developed countries. The situation is alarming to the industries which are having international market for this product. These companies definitely have to think about other potential products that are gaining steady growth all over the world. The production of powder milk and related products has become an increasingly important segment of dairy industry. The concept was started to utilize the a sizeable part of the dairy industry. Cheese, which is considered a main delicacy in the breakfast in so many countries, hasnt been given its due status so far. About 2% of the total milk productions go into cheese preparation. The demand in India is gathering momentum. The export potential of cheese has generated interest in the private sector in setting up larger units.
13
A major quantity of milk output is converted into varieties of traditional dairy products catering to regional tastes. These products are produced in large quantities but on a small scale by the organized sector, by using the old process that is empirical in nature. There are so many popular products but still those are being prepared in house holds. Hardly, efforts have been made to capture and capitalize in this area. For example, the popularity of curd is very much evident all over India in the daily diet. Still, there is no method to get it ready in time. This area still requires much attention by the scientists, technocrats and entrepreneurs.
14
CHAPTER-II
SURANA COLLEGE P.G. CENTRE 15
INTRODUCTION TO THE PROBLEM A poorly defined problem will not yield useful results. It is rightly said that a problem well defined is half solved, poorly defined problems cause confusion and do not allow one to develop a good research design. The question is how we can identify a research problem. Three categories of symptomatic situations namely, overt difficulties, latent difficulties and unnoticed opportunities should be studied. Overt difficulties : They are quite apparent and manifest themselves Latent difficulties : They are those not so apparent and if not checked, would soon become evident. Unnoticed difficulties: They are not clearly seen and some effort is required to explore them. The problem should be briefly described and its salient features brought out. The explanation should cover the following. STATEMENT OF THE PROBLEM The topic An Analysis of financial performance of BAMULa company that had shown a growth with steady pace of increased profits and turnover in recent years. The study is to conducted to evaluate the performance and market standing of the BAMUL in order to give a better scope to the investors, shareholders, creditors and the management themselves about the rating of the BAMUL and its performance in the market.
PURPOSE OF THE STUDY SURANA COLLEGE P.G. CENTRE 16
The purpose of doing this project is mainly to make a thorough study of the working of the BAMUL from its inception till date with reference to financial management. 1. To assess the BAMULs trends for the last 5 years with regard to operational performance. 2. The purpose also includes assessing the market strength of the company. OBJECTIVES OF THE STUDY: 1. To study all the financial statements. 2. To identify the operational performance. 3. To examine the factors affecting the financial and operational performance. 4. Bring out the results of financial statements through ratio analysis. 5. To identify the market strengths of the company through short term projections.
HYPOTHESIS: The study is based on the statements of account for previous years. The current trends may be slightly affected due to changes in the financial flexibilities. The external factors such as fiscal policy, Bank rate, govt policies etc, are as applicable in the previous years for current trends and their inputs is to be professionally changed.
SCOPE OF THE STUDY: SURANA COLLEGE P.G. CENTRE 17
The study is exclusively conducted for the BAMUL for one financial year. The trends indicated may differ from year to year as the pattern of investments, borrowings etc, and change. The study becomes more meaningful only if it covers a longer period of 5 or more years which beyond the scope of this project. How is the industry to be defined? What geographic areas are to be considered? What time period is to be appraised? Who are the targets?
18
CHAPTER-III
REVIEW OF LITERATURE: SURANA COLLEGE P.G. CENTRE 19
The project report presupposes a good knowledge of the subject and the title, which has been chosen for a detailed analysis. Attempts have been made to acquire the detailed information on the subject through a detailed literature survey. This requires an extensive survey of literature available in the form of published articles in business magazines, publication of institutions, newspapers and Journals.
Purpose of Literature survey: After deciding about the topic of the project, it was decided to do a detailed literature survey, to know what type of work was already done in the similar topic. The purpose of doing a literature survey was to avoid repetition of the same study of the topic and also to understand the scope of the subject and difficulties which arise during the course of the study. Literature survey was done to know which were the statistical tools used by others, to determine the accurate methodology which has to be followed during the study, to decide about the objectives of the study. Extensive literature survey requires visiting a number of institutions and the important institutions among them include the Federation of Karnataka, Chamber of Commerce and Industries etc, Because of lack time and other constraints the literature survey was restricted only for describing about the topic of the study with particular references to the earlier studies made by others and based on that the topic was ultimately selected.
In order to understand the present status as well as other studies made on the specific issue, a survey of literature was made by referring to published articles form various journals, newspapers and business magazines and the survey of the same is given below. Methodology: SURANA COLLEGE P.G. CENTRE 20
The methodology followed for the above literature survey is as under The topic was selected by consulting the project guide tentatively. Based on the area under the topic selected, first a good book was referred and the bibliography list form the book was prepared. The specific chapter from each of the referred book from the bibliography was studied to acquire good knowledge of the topic. With the reference published in various articles and magazines and by visiting various libraries with the list of bibliography, literature survey was undertaken. From various publications the relevant articles were studied and abstracts were prepared. The topic of the study was finally drawn to a conclusion with specific methodology and objectives to be followed for collection and analysis of the data. Conclusion: The literature survey helped in deciding about the methodology which is adopted for the collection, analysis and presentation of data. The literature survey also helped in understanding the gap in the past period works, which contributed to the selection of the topic.
21
CHAPTER-IV
THEORETICAL PERSPECTIVES Financial analysis is the methodological classification of data given in the financial statements. The financial statements provide a summarized view of the operation of a firm. As a matter of fact that one can know much about a firm by a careful examination of its financial statements. However the focus of financial analyst is on the key figures contained in the financial statements and the significant relationship that exists between them. Thus financial analysis, helps in evaluating the relationship between different items constituting the financial statements and obtaining a better understanding about the financial position and the performance of the firm.
SIGNIFICANCE OF THE FINANCIAL ANALYSIS
HELPS IN SCREENING: Financial analysis can serve as a preliminary screening tool in the selection of investments. It greatly helps the investors in studying 3 Ps i.e. prospects, payment and protection. The prospects of a firm can be judged by looking to both, its present and the future profitability. The capacity of payment can be judged on the basis of present and prospective liquidity of the firm. The protection can be judged on the basis of tangible assets backing, which the firm enjoys.
HELPS IN FORECASTING:
23
Financial analysis can be used as a forecasting tool for future profitability and financial soundness of the business. A comparative study of the key figure in the financial statement facilitates this work.
HELPS IN DIAGNOSIS: The financial analysis helps the management identifying the factors responsible for meeting managerial, operating and other problems.
HELPS IN EVALUATION: The financial analysis is an important tool for evaluating the performance of both the management and the organization. It is thus, a yardstick used by the financial analyst to evaluate the financial conditions and performance of the firm.
APPLICATIONS OF FINANCIAL ANALYSIS:

ASSESSING CORPORATE EXCELLENCE: According to Porters and Waterman the following financial indicators help in quantitative evaluation for judging corporate excellence Compound growth Compound equity growth Market value to book value ratio Return on capital employed Return on equity Return on sales Industrial Development Bank of India study reveals the following indicators to judge corporate excellence. Growth rate of sales Growth rate of assets Profit before tax to capital employed Working capital to gross sales Dividend coverage Debt equity ratio
25
JUDGING CREDIT WORTHINESS For judging the credit worthiness of a potential customer, a number of adhoc scanning models employing several financial variables have been used on such model shown below explains how it will helps in judging credit worthiness of the client.
Points Character Average past payment Capacity Profit margin Cash flow Capital Current ratio D/E ratio Collateral Net worth Market value to Net worth Conditions On time 0-5% Low <1 <1 Low 30 days late 6-10% Average 1-1.15 1-2 Average 60 days late >10% High >1.5 >2 High High Prosperity TOTAL --------------------
Low Average Recession Average
26
GUIDELINES FOR FINANCIAL ANALYSIS
Use ratios to get clues to ask the right questions. Be selective in the choice of ratios Employ proper benchmarks Know the tricks used by the accountants Read the footnotes
27
TOOLS OF FINANCIAL ANALYSIS
A financial analyst can adopt the following tools for analysis of the financial statements. These are also the methods of financial analysis. I. Comparative financial statements Comparative Income statement Comparative Balance sheet
II. Common size financial statements III. Trend percentages IV. Fund flow analysis V. Ratio analysis
I. COMPARATIVE FINANCIAL STATEMENTS: Comparative financial statements are those statements which have been designed in a way so as to provide time perspective to the consideration of various elements of financial position embodied in such statements. In these statements, figures two or more periods are placed side by side to facilitate comparison. Both the income statement and the Balance Sheet can be prepared in the form of comparative financial statements.
28
Comparative income statement:
The Income Statement discloses net profit or net loss on an account of operations. The Comparative Income Statement will now the absolute figures for two or more periods, the absolute change from one period to another and if desired the change in terms of percentages. Since the figures two or more periods are shown side by side, the reader can quickly ascertain whether sales have increased or decreased etc. Thus only a reading of data included in Comparative Income Statement will be helpful in deriving meaningful conclusions.
Comparative Balance Sheet:
Comparative Balance Sheet on two or more different dates can based for comparing assets and liabilities and finding out any decrease or increase in those items. Thus, while in a single Balance Sheet the emphasis is on present position, it is on change in the comparative Balance Sheet is very useful in studying the trends in an enterprise. Comparative financial statements can be prepared for more than two periods or more than two dates. However, it becomes very cumbersome to study the trend with more than two periods data.
29
The American Institute of Certified Public Accountants has explained utility of preparing the comparative financial statements as follows. The presentation of comparative financial statements in an annual and other report enhances the usefulness of such reports and brings out more clearly the nature and trend of current changes affecting the enterprise. Such presentation emphasizes the fact that the statements for a series of periods are for more significant than those of a single period and that the accounts of one period are but an installment of what is essentially a continuous history. In any one year, it is ordinarily desired that the Balance Sheet, the Income Statement and the surplus statement be given for one or more preceding years as well as for the current year.
II. COMMON SIZE FINANCIAL STATEMENT: Common size financial statements are those in which figures reported are converted into percentages to some common base. In the Income Statements the sale figures is assumed to be 100 and all figures are expressed as a percentage of sales. Similarly in the Balance Sheet the total of assets or liabilities are taken as 100 and all the figures are expressed as a percentage of this total.
Comparative utility of common size financial statements: The comparative common size financial statements show the percentage of each item to the total in each period but not variations in respective items from period to period. In other words, common size financial statements when read horizontally do not give information about the trend of individual items but the trend of their r/s to total observations of these trends is not very useful because there are no definite norms for the proportion of each item to total.
30
III. TREND PERCENTAGES
The accounting principles and practices should be constant throughout the period for which analysis is made. In the absence of such consistency, the comparability will be adversely affected. Trend percentages are immensely helpful in making a comparative study of the financial statements for several years. The method of calculating trend percentage involves the calculation of percentage relationship which each item bears to the same item in the base year. Any year may be taken as the base year. Each item of base year is taken as 100 and on that basis the percentage for each of the item of each of the each year is calculated. These percentages can also be taken as Index numbers showing relative changes in the financial data resulting with the passage of time. While calculating trend percentages, care should be taken regarding the following matters affected. The base year should be carefully selected. It should be a normal year and be representative for the items shown in the statement. Trend percentages should be calculated only for items having logical relationship with one another. Trend percentages should be studied after considering the absolute figures on which they are based otherwise, they may give misleading results. The figures for the current year should also be adjusted in the light of price level changes as compared to the base year before calculating the trend percentages. In case this is not done, the trend percentages may take the whole comparison meaningless.
31
IV. FUNDS FLOW ANALYSIS :
Funds flow analysis has become an important tool in the analytical kit of financial analysts, credit granting institutions and financial managers. This is because the Balance Sheet of a business reveals its financial status at a particular point of time. It does not shortly focus those major financial transactions which have been behind the Balance Sheet changes. Funds flow analysis reveals the changes in working capital position. It tells about the sources from which the working capital was obtained and the purpose for which it was used. It brings out in the open the changes which have take place behind the Balance Sheet. Working capital being the life-blood of the business, such an analysis is extremely useful.
Calculation of funds flow analysis, includes following steps, 1. Statement of changes in working capital 2. Calculation of funds from operation 3. Statement of sources and applications of funds
32
V. RATIO ANALYSIS:
The balance sheet and profit and loss account of any organization gives all the information regarding the financial operation of that organization. Never the less, they provide some extremely useful information to the extent the balance sheet mirrors the financial position on a particular date in terms of the structure of assets, liabilities and owners equity, etc and the profit and loss account shows the results of operations during a certain period of time in terms of the revenues obtained and the cost incurred during the year. Therefore much can be learnt about the firm from a careful examination of its financial statements as invaluable documents or performance reports. The analysis of financial statements is thus an important aid to financial analysis. The analysis of financial statements is a process of evaluating relationships between component parts of financial statements to obtain a better understanding of the firms position and performance. The first task of the financial analyst is to select the information relevant to the decision under consideration from the total information contained in the financial statements. The second step involved in financial analysis is arranging the information in a way to highlight significant relationships. The final step is interpretation and drawing of inferences and conclusions. In brief, financial analysis is the process of selection, relation and evaluations. Ratio analysis is a widely used tool of financial statement. Ratio analysis is defined as the systematic use of ratios to interpret the financial statements so that the strengths and weakness of firm as well as its historical performance and current financial condition can be determined. The items ratio refers to the numerical or quantitative relationship Between two variables or two items. What the ratios do is that they reveal the relationship in a more meaningful way, so they can help us to draw required conclusions from them.
The ratio analysis, thus as a quantitative tool, enables analysts to draw quantitative answers to questions such as: SURANA COLLEGE P.G. CENTRE 33
1. Are the net profits adequate? 2. Are the assets being used efficiently? 3. Is the firm solvent? 4. Can the firm meet its current obligations? Etc.
Standards of Comparison The ratio analysis involves comparison for a useful interpretation of the financial statements. A single ratio in itself does not indicate favorable or unfavorable condition. It should be compared with some standard. Standards of comparison may consist of: 1. Ratios calculated from the past financial statements of the same time. 2. Ratios developed using the projected financial statements, of the same firm. 3. Ratios of some selected firms, especially the most progressive and successful at the same point in time, and 4. Ratios of the industry to which the firm belongs. The ratios enable the analyst to draw conclusions regarding the financial analysis involves their comparison, for a single ratio, like absolute figures, fails to reveal the true position. Four types of comparisons are involved: i. Trend ratios ii. Inter firm comparison. iii. Comparison of items within a single years financial statement of a firm. iv. Comparison with standards or plans.
34
Trend ratios involve comparison of ratios of a firm over time i.e. present with past. The inter-firm comparison involves comparison of ratios of one firm with some other firm in the some industry. Steps involved in ratio analysis: 1. Selection of relevant data from the financial statements depending upon the objective of the analysis. 2. Calculating of appropriate ratios from the above data. 3. Comparison of calculated ratios with the ratios with the ratios of the same firm in the past or the ratios developed from projected financial statements the ratios of some other firms of the comparison with the ratios of the industry to which the firm belong. Types of ratios Ratios can be classified in to four broad groups, 1. Liquidity ratios 2. Turnover ratios 3. Leverage/ Capital structure. 4. Profitability ratios. 5. Activity ratios.
1. Liquidity ratios: The importance of adequate liquidity in the sense f the ability of a firm t meet its current/short term obligations, when they become due for payment can hardly be overSURANA COLLEGE P.G. CENTRE 35
stressed. In fact liquidity is a pre-requisite for the survival of a firm. The short term creditors of the firm are interested in the short-term solvency or liquidity of a firm. But liquidity implies from the view point of utilization of the funds of the firm that funds of the firm, the funds are idle or they earn very little. A proper balance between the two contradictory requirement i.e., liquidity and profitability is required for efficient financial management. The liquidity ratios measure the ability of a firm to meets its short-term obligations and reflects the short-term financial strength/solvency of a firm. The ratios which indicate the liquidity of a firm are: a. Net working capital b. Current ratios c. Acid test /Quick ratio and d. Turnover ratios a. Net working capital: Net WC represents the excess of current assets (CA) over current liabilities (CL). The term CA refers to assets which in the normal course of business get converted into cash over a short period usually not exceeding one year. CL is those liabilities which are required to be paid in short period, normally a year. Although NWC is really not a ratio, it is frequently employees as a measure of a companys liquidity position. An enterprise should have sufficient NWC on order to be able to meet the claims of the creditors and meeting the day-to day needs of business. The greater the amount of NWC the greater the liquidity of the firm. Inadequate WC is the first sign of financial problems for the firm. NWC reveals the coverage that the CA offers the CL of a firm.
b. Current Ratio: The current ratio is the ratio of total current assets to the total current liabilities. Current Assets Current ratio = -------------------------Current Liabilities The current ratio of a firm measures its short-term solvency. As a measure of short-term solvency. As a measure of short term/current financial liquidity it indicates the rupees of CA available for each rupee of CL/ obligation. The higher the current ratio the larger amount of rupees available per rupee of CL, the more the firms ability to meet current SURANA COLLEGE P.G. CENTRE 36
obligations and the greater the safety of funds of short term creditors. It is important to note that a very high ratio of CA to CL may be indicative of stack management practices as it might signal excessive inventories for the current requirements and poor credit management in terms of over-extended a/cs receivable. At the same time the firm may not be making full use of its current borrowing capacity. A current ratio of 2:1 is considered satisfactory. A 100% margin is considered to be a good margin of safety even in the worst situations. 2. Acid-test or quick ratio: As observed above, one defect of current ratio is that it fails to convey any information on the composition of the CA of a firm. The acid-test ratio is a measure of liquidity designed to overcome this defect of the current ratio. It is often referred to as quick ratio because it is a measurement of a firms ability to convert its CA quickly into cash in order to meet its CL. Thus it is a measure of quick or acid liquidity. The acid-test ratio is the ratio between quick CA and CL and it is calculated by dividing the quick assets with CL. The term quick assets refers to CA which can be converted into cash immediately or at a short notice without diminution of value. Included in this category of CA are
i. ii. iii.
Cash and bank balances. Debtors or receivables. Short-term marketable securities.
Thus, the CA which is excluded is: Pre-paid expenses and inventory. Quick assets Acid test ratio = ----------------------Current liabilities It is a rigorous measure of a firms ability to service short-term liabilities. It is considered as the best liquidity test for any firm, generally and acid-test ratio of 1:1 is considered satisfactory as a firm an easily meet its current claims.
37
2. Turnover ratio: The liquidity ratios relate to the liquidity of the firm as a whole. Another way of examining the liquidity is to determine how quickly certain assets are converted into cash. The ratios measure these are referred to as turnover ratios. The three turnover ratios that are relevant are: a. Inventory turnover ratio. b. Debtors turnover ratio c. Creditors turnover ratio. a. Inventory turnover ratio: It is computed as follows Cost of goods sold Inventory turnover ratio = ------------------------------Average inventory
The cost of goods sold (COGS) means, sales- gross profits: The average inventory refers to the simple average of the opening and closing inventory. The ratio indicates how fast inventory is sold. A high ratio is good from the view point of liquidity and vice versa. A low ratio would signify that the inventory does not move fast and stays on the shelf or in the warehouse for a long time. According to inventory holding period can also be calculated with the help of the following formula. 12 months Inventory holding period = ---------------------------------Inventory turnover ratio
b. Debtors turnover ratio: It is determined by dividing net credit sales by average debtors outstanding during the year. Net credit sales Debtors turnover ratio = --------------------------Average debtors
38
Net credit sales consist of gross credit sales minus returns, if any form customer, average debtors is the simple average of debtors at the beginning and at the end of the year. The ratio measures how at the end of the year. The ratio measures how rapidly debts are collected. A high ratio is indicative of shorter time lag between credit sales and cash collection. A low ratio shows that debts are not being collected rapidly. With the help of the debtors turnover ratio we can calculate debt collection period. The formula for the same is: 12 months/ 365 days Debt collection period = -----------------------------------Debtors turnover ratio
c. Creditors turnover ratio: It is a ratio between net credit purchases and the average amount of creditors outstanding during the year. It is calculated as follows: Net credit purchases Creditors turnover ratio = -------------------------------Average creditors Net credit purchases are nothing but gross credit purchases less returns to suppliers. Average creditors are the average of creditors at the beginning and at the end of the year. A low turnover reflects liberal credit terms granted by suppliers while a high ratio shows that accounts are to be settled rapidly. The creditors turnover ratio is an important tool analysis as a firm can reduce its requirements of CA by relying on suppliers credit. The extent to which trade creditors are willing to wait for payment can be approximated by the creditors turnover ratio one can easily calculate the creditors payment period. 12 months/ 365 days Creditors payment period = ----------------------------------Creditors turnover ratio
39
4 Leverage/ Capital structure ratios: The second category of financial ratios is leverage or capital ratios. The short term creditors who are interested in the current financial position would, as already observed make use of the liquidity ratios. The long term creditors would judge the soundness of the business on the basis of long term financial strength measured in terms of its ability to apply the interest regularly as well as repay the installment of the principal on due dates or in one lump sum at the time of maturity. Their long term solvency of a firm can be verified on the basis of leverage or capital structure ratios. The leverage or capital structure ratios can be defined as financial ratios which can throw light on the long-term creditors with regard to: i. Periodic payment of interest during the period of loan. ii. Repayment of principal on maturity or in pre-determined installments on due date. There are thus two aspects of long-term solvency of a firm. i. Ability to repay the principal when due ii. Regular repayment of interest. Accordingly, there are two different but mutually dependent and interrelated, types of leverage ratios. First, ratios which are based on the relationship between borrowed funds and owners capital. Such as: a. Debt-equity ratio. b. Debt-assets ratio. c. Equity-assets ratio.
40
The second type are capital structure ratios, popularly called coverage ratios, is calculated from the profit and loss a/c. Included in this category are: a. Interest coverage ratio. b. Dividend coverage ratio c. Total fixed charges coverage ratio d. Cash flow coverage ratios e. Debt-service coverage ratio.
a. Debt-equity ratio (D/E): The relationship between the borrowed funds and owners capital is a popular measure of the long-term financial solvency of a firm, the relationship is shown by the debt-equity ratios. This ratio reflects the relative claims of creditors and shareholders against the assets of the firm. Alternatively, this ratio indicates the relative proportions of debt and equity in financing the assets of the firm.
The relationship between outsiders claims and owners capital can e shown in different ways and accordingly there are many variety of the debt-equity ratio. Long-term debt Debt-equity ratio = -------------------------------Shareholders equity
The debt considered is exclusive of CL. The share holders equity includes: b. Equity and preference share capital c. Past accumulated profits but excludes fictitious assets like past accumulated losses, discount on issue of shares etc to the shareholders. Equity so defined SURANA COLLEGE P.G. CENTRE 41
may also be called as net worth. The debt-equity ratio is an important tool of financial analysis to appraise the financial structure of the firm. It has important implication from the view point of the creditors, owners and the firm itself. The ratio reflects the relative contribution of creditors and owners of business in its financing. A high ratio shows a large share of financing by the creditors relatively to the owners and, therefore a larger claim against the assets of a firm. A low ratio implies a smaller claim of creditors. The D/E ratio indicates the margin of safety to the creditors. If for instance the D/E ratio is 1:2 it implies that for every rupee of outside liability the firm has two rupees of owners capital or the state of creditors is only half of the owners. There is therefore a safety margin of 50% available to the creditors of the firm. b. Coverage ratios: The second category of leverage ratios are coverage ratios. The ratios are computed from information available in the p&l a/c. For a normal firm in the ordinary course of business the claims of creditors are not met out of the sale proceeds the permanent assets of the firm. The obligations of the firm are normally met out of the earnings or operating profits. These claims consist of: i. ii. iii. Interest of loans. Preference dividend Amortization of principal or repayment of loans.
c. Interest coverage ratios: This ratio measures the debt servicing capacity of the firm so far as fixed interest on long-term loan is concerned. The formula for calculating interest coverage ratio is as follows: EBIT Interest coverage ratio = --------------Interest
42
EBIT is the interest before taxes. It should be noted that this ratio uses the concept of new profits before taxes because interest is tax deductible so that tax is calculated after paying interest on long-term. This ratio indicates the extent to which a fall in EBIT is tolerable in the sense that the ability to service it debts would not be adversely affected. d. Dividend coverage ratio: It measures the ability of a firm to pay dividend on preference shares which carry a stated rate of return.
EAT Dividend coverage ratio = -----------------------------Preference Dividend EAT is Earnings after taxes. It can be seen that although preference dividend is fixed obligation but the earnings taken into a/c are often taxes. The ratio reveals the safety margin to the preference share holders.
4. Profitability Ratios: The management of the firm is naturally eager to measure its operating efficiency. Similarly, the owner invests their funds with the expectation of reasonable returns. The operating efficiency of a firm and its ability to ensure adequate returns towards shareholders depends ultimately on the profits ratios: a. Operating profit ratio: EBIT Operating profit ratio = ------------Sales
b. Net profit Ratio: SURANA COLLEGE P.G. CENTRE 43
EAT Net profit Ratio = -------------Sales
Return on assets: Here the profitability ratios are measured in terms of the relationship between profits and assets. Return on assets may also be called profit-to-assets ratio. There are various approaches possible to define profits and assets, according to purpose and intent of the calculation of the ratio. Depending upon how two terms are defined, many variations of returns on assets are possible. The content of net profit may be i. Net profits after taxes. ii. Net profit after taxes and interest iii. Net profit after taxes plus interest minus tax savings. Assets may be defined as: 1. Total assets 2. Fixed assets 3. Tangible assets The ratio for return on assets can be calculated as illustrated below: Net profit after taxes Return on assets = -------------------------------Average total assets The return on assets based on the ratio would be an under-estimate as the interest paid to the creditors is excluded from the net profit. In point of fact the real return on the total assets is the net operating earnings including interest. A more reliable indicator of the true return on assets is the net profits inclusive of interest.
Return on total share holders equity: SURANA COLLEGE P.G. CENTRE 44
According to the ratio, profitability is measured by dividing the net profit after taxes by the average total shareholders equity. The ratio reveals how profitably the owners funds have been utilized by the firm. A comparison of this ratio with that of similar firms as also with the industry average will throw light on the relative performance and strength of the firm. The formula to calculate the same is as follows: Net profit after taxes = -----------------------------------------------Average total shareholders equity
Return on total Shareholders equity
Earnings per share (EPS): It measures the profit available to the equity shareholders on a per share basis i.e. The amount that they can get on every share held. It is calculated as follows; Net profit available to equity share holders. EPS = ------------------------------------------------------Number of ordinary shares outstanding EPS is a widely used ratio. It can be used to draw inferences out eh basis of: 1. Its trend over a period of time. 2. Comparison with the EPS. 3. Comparison with the industry average
Advantages of ratio analysis The ratio analysis is the most powerful tool of the financial analysis, as stated in the beginning of the report; May diverse groups of people are interested in analyzing the financial information to indicate the operating and financial efficiency and growth of the firm. These people use ratios to determine those financial characteristics of the firm in which they are interested, with the help of ratios one can determine:
1. The ability of the firm to meet its current obligations. SURANA COLLEGE P.G. CENTRE 45
2. The extent to which the firm has used its long term solvency by burrowing funds. 3. The efficiency with which the firm is utilizing its assets in generating sales revenue and. 4. The overall operating efficiency and performance of the firm. 5. It adds considerable significance to the financial analysis because it studies ratios of several years and isolated the exceptional instances occurring in one or two periods. Limitations of Ratio Analysis 1. It is difficult to decide on the proper basis of comparison. 2. The comparison is rendered difficult because of differences in situations of two companies or of one company over years. 3. The price level changes make the interpretations of ratios invalid. 4. The differences in the definitions of items in the balance sheet and P&L statement make the interpretation of ratios difficult. 5. The ratios calculated at a point of time are less information and defective as they suffer form short term change. 6. The ratios are generally calculated from past financial statements and thus are no indicators of future.
Objectives of the study 1. To examine overall financial performance of the unit. 2. To identify various areas contributing towards the unsatisfactory operational performances. 3. To predict the financial health and viability of the unit in the years to come with an objective to improve its operational efficiency, effectiveness and profitability. Uses of ratio analysis 1. Helps in decision making. SURANA COLLEGE P.G. CENTRE 46
2. 3. 4. 5. 6. 7.
Helps in financial forecasting and planning. Helps in communicating. Utility to investors. Utility to creditors. Utility to employees. Utility to government.
VI. DUPONT ANALYSIS: The DUPONT Company of the U S pioneered a system of financial analysis which has received widespread recognition and acceptance. A useful system of analysis which considers important inter relationship based on information found in financial statements, it has been adopted by many firms in some terms or the others. The Apex of the DUPONT chart is the return on assets (ROA), defined as the product of the net profit margin (NPM) and the total assets ratio.
Net profit/Total assets = (Net sales/Net sales)(Net sales/Average total assets) ROA = (N/P margin) (TATR)
Such decomposition helps in understanding how the return on total assets is influenced by the net profit margin and the total assets ratio.
47
48
CHAPTER-V
PROFILE OF THE COMPANY INTRODUCTION The activities of human beings are classified into two, Economic activities and Non economic activities. Economic activities are those which are fulfilled to satisfy the financial needs of human. Business is also one of such activity which aims at providing goods and services required by the community. Business can be done by organization. This project works relates to the study of co-operative union. The main principle adopted in co-operative societies insures each for all and all for each. The members of co-operative union are organized to achieve economic and social development on the basis of accounts maintained by the union, an attempt is made in this project report to analysis the financial performs of the organization. Bangalore Milk Union (BAMUL) is a co-operative organization and it covers Bangalore Urban & Rural districts. It is started in the year 1965.it is joined venture of UNICEF, government of India and government of Karnataka. A detail of the companys profiles is provided here with location: Bangalore diary is started Dr M.H Mari Gowda Road, Bangalore 29,Both the production center and office are started to adjacent to each other with in a common premises which covers 52 acres of land capacity. Initially the dairy had a capacity to process 50000 liters per day during 1975 it was increased to 1.5 Lakh liters per day. In 2004-2005 it was increased to 6.54 liters per day.
49
Company environment The union through its progressive policies laud by the farmers elects Board of directors and professional managers. There is coordinal relationship among all the members. This is because of various facilities provided to employee. They are Free training classes, canteen facilities, shift allowance, D.A, TA Uniforms and washing allowance etc.. Loans, overtime pay, free ghee, milk fair price shops etc.. Attendance bonus, house holding advance, leave facilities, encouragement for sports OBJECTIVES To form Dairy Co-operative Societies at Village level and dissemination of information like good animal feeding, breeding practices & Clean milk Production through Extention Services. To provide assured market & remunerative price for the milk produced by the farmer members. To provide Technical Input Services like Animal Husbandry, Artificial Insemination, Balanced Cattle Feed, Fodder Development, etc., To facilitate rural development by providing opportunities for self employment at village level, preventing migration to urban areas, introducing cash economy & opportunity for steady income. To provide scientifically processed Fresh & Pure Milk to the urban consumers at competitive price. The philosophy of this co-operative milk producers organization is to eliminate middlemen and organize institutuions owned and managed by the milk producers by themselves, by employing professionals. Achieve economies of scale & to ensure maximum returns to the milk producers, at the same time providing wholesome milk at reasonable price to urban consumers. Ultimately, the complex network of co-operative organization should build a strong bridge between masses of rural producers and millions of urban consumers & achieve a socio-economic revolution ill the vicinity of the Territory.
ORIGIN OF THE ORGANISATION SURANA COLLEGE P.G. CENTRE 50
On January 1st 1958 a pilot scheme under Department of Animal Husbandry, Government of Karnataka was started to cater Veterinary Hospitals & Milk process facilities at National Dairy Research Institute (NDRI). In 1962 the Bangalore Milk Supply Scheme came into existence as an independent body. Bangalore Dairy, a jointventure of UNICEF, Government of India & Government of Mysore was dedicated to the people of Karnataka on 23 rd January 1965 by the then Honble Prime Minister Late Sri Lal Bahadoor Shastriji. Sprawling over an area of 52 acres, the Dairy had an initial capacity. to process 50,000 liters of milk per day. This Dairy was handed over to Karnataka Dairy Development Corporation (KDDC) in December 1975 as a part of Rural Milk Scheme of Mysore, Hassan & Kudige under Operation Flood-II and then transferred to Karnataka Milk Federation (KMF) in May 1984 as a successor of KDDC. To cater to the growing demand for milk by the consumers of Bangalore City, the capacity was increased to 1.5 Lakh liters per day under the Operation Flood-II during 1981 and later increased to 3.5 Lakh liters per day under operation Flood-II during 1994. As per the policies of the National Dairy Development Board (NDDB), Bangalore Dairy was handed over to Bangalore Milk Union (BAMUL) on 1st September 1988. The Union is capable of process the complete procured milk by timely implementation of several infrastructure projects like commissioning of Mega Dairy, commissioning of new chilling centers & several new equipments like pasteurize, Cream separators, packing machines etc., were put into operation to create additional processing and packing facilities to handle and market more milk.Today, the Union has become biggest Milk Co-operative Union in Southern India. BAMUL is certified for ISO 9001-2000 and HACCP (IS-15000) for quality management and Food Safety System . BAMUL also registered under MMPO-92, and got a National Productivity Award twice.
51
ORGANISATION STATUS The member producers and their Dairy Co-operative Societies (DCS) are the vital constituents of the Union and their progress is the judging yardstick on the efficiency of the Unions operation. Hence the maximum importance has been given to the development and the progress achieved in the fruits of these efforts.
MILK PROCUREMENT The operational efficiency is reflected on procurement prices paid to the member producers. BAMUL is offering the most remunerative milk procurement price to member producers. Annual average Milk Procurement for the year 2004-05 is 6.54 Lakh liters per day. During the flush season it has procured to the peak of 7.10 Lakh liters per day. The average milk procurement price paid during the year was Rs. 9.40 for every Liter of: Milk supplied to the Union. Hence a tremendous progress has been achieved in milk procurement. Milk collected at DCS will be transported to Chilling Centers, through 83 Milk Procurement Routes, by travelling 14,738 KMs every day. 2 Bulk Milk Cooler (BMC) Routes are also in operation, which collects milk from 13 BMC centers of 28 DCS directly transported to Bangalore Dairy through insulated tankers.
MILK MARKETING SURANA COLLEGE P.G. CENTRE 52
The Bangalore Milk Union is marketing milk and milk products in the brand name of Nandini through 976 retailers, 52 Franchisee Outlets, 22 Milk Parlors, 8 Whole sale Dealers, 8 Transporter Cum Distributors and 10 Day counters being served by 142 distribution routes. The key success factor of BAMUL in becoming a market leader is the narrow price spread maintained between purchase & sales, marketing higher volumes of milk. The volume of sales plays a critical role in determining costs. Hence, the market strategy of Bangalore Milk Union is to regard selling of market milk as it core marketing activity and to concentrate its efforts in this direction to increase the volume of milk sales. The impressive growth in the sale of milk by BAMUL over the years is due to the persistent efforts to maintain timely supply. Maintaining quality and attending to the complaints of consumers and agents with prompt follow-up action in concerned areas. TYPES OF MILK AND MILK PRODUCTS MARKETING BY BAMUL Toned Milk: Karnatakas most favorite Milk Nandini Toned Milk is fresh and pure Milk containing 3.0% fat and 8.5% SNF Homogenized Toned Milk: Nandini homogenized Milk is pure milk containing 3% fat and 8.5% SNF Full Cream Milk: Full Cream Milk containing 4% fat and 9% SNF. Nandini Curd: Nandini curd is made from pure Milk it is thick and delicious. Nandini Butter: Nandini Butter is made out of fresh pasteurized cream. Nandini Ghee: Nandini Ghee made form pure Butter it is fresh and pure with a delicious flower. Nandini Butter Milk: Nandini spiced Butter Milk is a fleshing health drink. It is made from quality curds. Nandini Peda: Made from pure Milk, it is delicious treat for the family. Mysore pak Masti dahi
INFRASTRUCTURE DEVELOPMENT
53
The strategy of Bangalore Milk Union is Procure More, Sell More & Serve More and reaping the benefits of economies of scale. In order to realize this, strategy, the Union has implemented the following projects so that more and more milk can be procured and processed in this 21st century. This will help us to serve our producer members by passing on the maximum benefits reaped out by implementing these projects. Hence, we are consciously adopting that growth-oriented strategy of helping our producers to grow by ourselves growing constantly. As a part of our growth oriented strategy, we are strengthening our infrastructure facilities by embarking on new ambitious projects, commissioning of new equipment strengthening existing facilities at all the centers of union. Challenge: Although BAMUL sets high standards for its products and customer serve, its prior reliance on manual operations, made it impossible to keep up with surging demand. In designing mega dairy, BAMUL looked towards an automated system that would allow it to achieve consistent quality parameters for each product. Energy and manpower would also be more effectively optimized and controlled and all plant equipment would be integrated. In addition, employees would be trained in how to use the new automated systems and valuable management information would be collected at the main server and used for marketing and evaluations. Milk quality is immediately checked for quality parameters upon arrival at the plants main gate. From this point forward each operation is automated with controls for fat separation, temperature and flow control pasteurization and system cleaning-in-process (CFI). The system also gathers and distributes data for production maintenance breakdown, quality, CIP, along with utility and pressurized water supply system measurements.
At the heart of the system is a redundant Allen-Bradley PLC-5/80C plat form which communicates to analog and digital I/O on control Net a producer-consumer communication network. Human machine interface is provided through RSView 32 software operating in server-client configurations and the entire plant is networked with Control Net and RS View clients. Milk transportation flow is controlled through Rockwell Automation 1336 Plus2 variable-speed drives. Plant floor data and historical information is also intergrated to the SURANA COLLEGE P.G. CENTRE 54
plants business systems.Customer are also seeking significant benefits. Milk now reaches market faster at a higher quality and will a longer shelf life. This is in stark contrast to its previous reliance on manual system5 that led to time legs in each production stage. Mega Dairy with a capacity to process 6 Lakh liters of milk per day has been commissioned. This dairy has been built by inverting Rs.380.70 cores obtained as term loan from National Development Board. The Mega Dairy has latest state-of-the-art technological facilities in dairy processing and the Union will have the ability to manufacture milk and milk products to world class standards. BAMUL is also obtained a MMPO-92 Certificate by Government of India, ISO 90012000 and HACCP (ISO 14000) certification by SAI Global an Australian based company. BAMUL also got a National, Productivity Award twice. Apart from the existing SIX Chilling Centers BAMUL is allow going to commission one more chilling center at Kanakapura shortly with a chilling capacity of 50,000 Liters per day. Finance The union has achieved a record of Rs 313 crore in the year 2004-2005 as against Rs 278 crore for the year 2003-2004 i.e. an increase of 8%. The union has earned a Net Profit of Rs 513 Lakhs for the year 2004-2005 as against Rs 387 Lakhs during 2003-2004 even after the payment of major loans this improvements in Net Profit is achieved due to in managerial efficiency, energy management, market development and quality excellence.
Technical Input Services:
55
Bangalore Milk Union is providing various Technical Input & Extension Services to the producer member & their Cattle though ELEVEN Camp Offices One in Each Taluk i.e. Anekal Bangalore Head Office (Bangalore South), Yelahanka (Bangalore North), Channapattana, Devanahalli, Doddaballapura, Hosakote, Kanakapura, Solur (Magadi), Nelamangala & Ramanagara. From these camps the Technical Inputs like weekly Mobile Veterinary Service, Emergency Veterinary Service. Artificial Insemination service Periodical Vaccinations, BAlanced Cattle Feed Sales, Mineral Mixture Sales, Fodder development and Fodder Seed Production, Clean Milk Production practices, Extension Services for Cattle Feeding, breeding and milk production etc.. will be carried over.
ANIMAL HEALTH AND OTHER ACTIVITIES Animal Health: The Union is taking special care to promote the health of the cattle of member milk producers. Veterinarya facilities have been extended to all the DCS. Mobile veterinary routes, emergency veterinary routes, infertility camps, vaccination against foot & mouth disease and thaileriasis diseases, etc. are being regularly done. The Union has spent Rs. 134.46lakhs during 2001-02 in order to extend these facilities. There is also a backup of First Aid Services to needy DCSs. Artificial Insemination: Artificial Insemination (AI) has been the main functional tool in dictating this upsurge of development of Dairying in BAMUL. Farmers have taken up cross-breeding from way back in 1962. The union has surveyed and appropriately located AI centers based on cattle population. It has been planned to popularize the idea of cluster AI centers and replace the Single AI centers in a phased manner, The use of progeny tested semen from Nandini Sperm Station is also giving a further boost to the breeding activities. To reduce infertility in cattle, a frontal attack has been continuously attempted by conducting Infertility. Camps, moo the expert guidance and by the use of infellility connected drugs. During 1999-2000, a Vertical Silo of 10,000 liter capacity for storing Liquid Nitrogen has been installed under TMVD program in collaboration with National Dairy Development Board and Karnataka Milk Federation. In addition this facility is being used for Supplying SURANA COLLEGE P.G. CENTRE 56
liquid nitrogen to neighboring Unions and also to Department of Animal Husbandry. This has helped in protecting the quality of semen straws, thereby considerably increasing the probability of conception during artificial insemination of cattle.
Cattle Feed & Fodder Development: The Union is implementing several programs to increase milk production and also to reduce the cost of milk production in the milk shed area. Balanced cattle feed is being procured from the Cattle Feed Plants of KMF for distribution among member producers. Fodder seeds are distributed to member producers at 50% subsidy. In addition to this, technical advice on growing of fodder crops are being extended to them. Chaff cutters have been supplied to milk producer at 60% subsidy to ensure effective utilization of fodder. A Seed Processing plant was commissioned at Rajankunte by interviewing Rs. 41 Lakhs. The Union is catering to the Seed production needs of many Unions in Karnataka and also Southern India.
IN THIS MILLENNIUM BAMUL wants to become not only the largest Union, but also become one amongst the bestrun milk unions in the country. The Union is aware of the challenges of the new private entrants, who are mainly thriving on unfair trade practices. They procure milk at least cost. SURANA COLLEGE P.G. CENTRE 57
Without bothering about the welfare of the producers and without extending any technical inputs for improving milk production. They market milk by resolling to unhealthy and unethical practices deceiving the unsuspecting consumers. The Union wants to counter this in a positive manner by trying to improve its efficiency of operation and market promotion. It wants to become well trenched in the market as market leader. It wants to follow the strategy of cost-competitiveness, which is hard to match by the competitors.
58
CHAPTER-VI
DATA ANALYSIS BAMULS COMPARATIVE INCOME STATEMENT SURANA COLLEGE P.G. CENTRE 59
for the year ended 31st March 1999-00 and 2000-01 Particulars Net sales Cost of goods sold Gross profit Operating expenses: Staff expenses 168387 Admin expenses 7967 Selling expenses 68788 Total operating expenses Operating profit 49946 43081 -6865 245143 251044 +5901 74974 +6186 8447 +480 167622 -765 1846463 295088 1913167 294125 +66705 -964 1999-00 2141551
(in 000s)
2000-01 Absolute in or de %in or de 2207294 +65742 +3.06 +3.6 -0.33
-0.45 +6.01 +9.0
+2.4 -0.13
BAMULS COMPARATIVE BALANCE SHEET as on 31st March 1999 and 2000 Particulars APPLICATION 1999-00 2000-01 (in 000s) % in or de
Absolute in or de
60
OF FUNDS 1)Total current assets 2)Current liabilities 3)Working capital (1-2) 4) Fixed assets 136906 482791 131184 590204 -5722 +107413 -4.18 +22.24 140254 144869 +4615 +3.29 277159 276053 -1106 -0.39
TOTAL(3+4) SOURCES OF FUNDS Capital & Borrowings
619697
721388
+101691
+16.41
619697
721388
+101691
+16.41
INTERPRETATION: A comparison of figures of 1999-00 with 2000-01 shows that has compared to 1999-00 in 2000-01 the sales has gone up by 3.06 %. However there has been steep hike in costs also. As a result the overall G/P amount has comedown by 0.33%. And also there has been steep hike in operating expenses. As a result the overall N/P has comedown by 0.13%.
61
The company has decreased the investment in current assets, where as liability increases from the year 1999-00 to 00-01. It shows the danger signal to the management. It concentrates more on investing in fixed assets.
BAMULS COMPARATIVE INCOME STATEMENT for the year ended 31st March 2000-01 and 2001-02 (in 000s) Particulars Net sales COGS G/P 2000-01 2207294 1913169 294125 2001-02 2322342 1965488 356854 Absolute in or de +115048 +50319 +62729 % in or de + 5.21 + 5.73 +21.31 62
Operating expenses Staff expenses Admn expenses Selling & ad expenses Total operating expenses Operating profit 251044 43081 294150 62704 +43106 +19623 +17.17 +45.55 74974 95347 +20373 +27.17 167622 8447 189740 9064 +22118 +617 +13.19 + 7.29
BAMULS COMPARATIVE BALANCE SHEET as on 31st March 2000-01 and 2001-02 PARTICULARS APPLICATIONS OF FUNDS 1. current assets 2. current liabilities 144869 174414 +2954 +20.3 63 276053 292003 +1595 + 5.77 2000-01 2001-02 (in 000s) % in or de Absolute in or de
3. working capital(1-2) 4. fixed assets TOTAL(3+4) SOURCES OF FUNDS Capital borrowings 721388 741931 +20543 + 2.84 131184 590204 721388 117589 624342 741931 +13595 +3414 +20543 + 5.78 + 2.84 +10.36
INTERPRETATION: In 2001-02 when compared to the year 2000-01 the sales has gone up by 5.21% and COGS has gone up by just 2.73%. As a result G/P has gone up 21.31% and total operating expenses has been gone up by 17.17%. In addition to these operating expenses, the O/P has increased to an extent of 45.55%. This shows the BAMULS ability to utilize the funds effectively. Due to the increase in the ratios in current assets, current liabilities, working capital and fixed assets, the capital employed by the BAMUL in the year 2001-02 has gone up by 2.84%.
64
BAMULS COMPARATIVE INCOME STATEMENT For the years ended 2001-02 and 2002-03 (in 000s) Particulars Net sales COGS G/P OPERATING EXPENSES Staff expenses Administration expenses 9064 10834 +1770 +19.53 65 189740 204679 +14939 + 7.87 2001-02 2322342 1965488 356854 2002-03 Absolute in or de % in or de 2533221 +210879 + 9.08 2096262 436959 +130774 +80105 + 6.65 +22.4
Selling and distribution expenses Total operating expenses 95347 294150 118768 334281 +23421 +40131 +13.6 +24.5
Operating profit
62704
102678
+39974
+63.75
BAMULS COMPARATIVE BALANCE SHEET as on 31st March 2001-02 and 2002-03 PARTICULARS APPLICATIONS OF FUNDS 1. current assets 2. current liabilities 3. working capital (1-2) 4. fixed assets TOTAL(3+4) SOURCES OF 117589 624342 741931 111701 637377 749039 -5888 +12996 +7108 +2.08 +0.95 66 +5.0 174414 168892 -5522 -3.1 292003 280593 -11410 -3.9 2001-02 2002-03 (in 000s) % in or de Absolute in or de
FUNDS Capital borrowings 741931 749039 +7108 + 0.95
INTERPRETATION: In the year 2002-03 when compared to the year 2001-02 the sales has gone up by 9.08% and COGS has also gone up by 6.65%. In addition to that the G/P and O/P are also gone up by 22.4% and 63.75% respectively; this shows the ability of the management of BAMUL in the year 2002-03. The investment of BAMUL in current assets in the year 2002-03 has come down by 3.9%, where it also decreases the liabilities in the year 2002-03. In the year 2002-03 the investment in fixed assets also increases to the extent of 2.4%. As a result, investment in total assets and the borrowings ratio has gone up by 0.95% when compared to the year 2001-02
67
BAMULS COMPARATIVE INCOME STATEMENT for the year ended 31st March 2002-03 and 2003-04 Particulars Net sales COGS G/P Operating expenses Staff expenses Admn expenses Selling & ad expenses Total operating expenses 334281 348421 +14140 +4.23 68 118768 133171 +14403 204679 10834 204920 10330 +241 -504 +0.11 -4.65 +12.12 2002-03 2533221 2096262 436959 2003-04 2787379 2316272 471107 Absolute in or de +214158 +220010 +34148 (in 000s) % in or de +10 +10.4 +7.8
Operating profit
1026678
122686
+20008
+19.4
69
BAMULS COMPARATIVE BALANCE SHEET as on 31st March 2002-03 and 2003-04 PARTICULARS APPLICATIONS OF FUNDS 1. current assets 2. current liabilities 3. working capital(1-2) 4. fixed assets TOTAL(3+4) SOURCES OF FUNDS Capital borrowings 749039 687426 -61613 - 8.2 111701 637337 749039 68436 618990 687426 -43265 -18347 -61613 - 2.8 - 8.2 -38.7 168892 157574 -11318 - 6.7 280593 226010 -54583 -19.4 2002-03 2003-04 (in 000s) % in or de Absolute in or de
70
INTERPRETATION: In the year 2003-04, the sales have gone up by 10% when compared to the previous year 2002-03. The manufacturing expense in the year 2003-04 is less when compared to 2002-03 is less. As a result the G/P in the year 2003-04 has gone up by 7.8 and total operating expenses has varied some what, as a result the operating profit of the BAMUL has gone up by 19.4%. In the year 2003-04 the investment of BAMUL in current assets and fixed assets has been decreased by 19.4% and 2.6% respectively. The investment in working capital is decreased to the extent of 38.7%, as a result decrease in total assets 18.2%.
71
BAMULS COMPARATIVE INCOME STATEMENT for the year ended 31st March 2003-04 and 2004-05 Particulars Net sales COGS G/P Operating expenses Staff expenses Admn expenses Selling & dist expenses Total operating expenses Operating profit 348421 122686 258949 56987 -89472 -65699 -53.5 133171 50031 -83140 +6.24 -25.7 204920 10330 198482 10436 -6438 +106 -3.14 +1.02 2003-04 2787379 2316272 471107 2004-05 3134589 2818654 315936 Absolute in or de +347210 +502382 -155171 ( in 000s) % in or de +12.4 +21.6 -32.9
72
BAMULS COMPARATIVE BALANCE SHEET as on 31st March 2003-04 and 2004-05 PARTICULARS APPLICATIONS OF FUNDS 1. current assets 2. current liabilities 3. working capital(1-2) 4. fixed assets TOTAL(3+4) SOURCES OF FUNDS Capital borrowings 687426 676313 -11113 +1.64 68436 618990 687426 68725 607588 676313 +289 -1402 -11113 +0.43 -1.84 +1.64 157574 266889 +109315 +69.3 226010 335614 +109604 +48.4 2003-04 2004-05 (in 000s) % in or de Absolute in or de
73
INTERPRETATION: A comparison of the figures of BAMUL of 2003-04 with 2004-05, the shows that as compared to 2003-04 in 2004-05, the sales have gone up by 12.4%, however there has been increase in cost of goods sold as a percentage of 21.6. As a result the G/P has come down by 32.9%. Operating expenses like staff expenses come down by 3.14% and administration expenses increased by 1.02% where as selling and distribution expenses has been steep like it has gone by 62.4%, it shows the BAMUL has taken lots of selling and distribution activities in the year 2005. As a result O/P amount has come down by 53.5. In the year 2005 the total assets percentage has gone up by 1.64%.
74
BANGALORE URBAN & RURAL DIST MILK PRODUCERS SOCIETIES UNION Ltds COMMON SIZE BALANCE SHEET as on 1999-00 to 2004-05 Assets 1999-00 % 100 Total Current Assets Fixed Assets Total Assets Liabilities & Capital Current Liabilities Long term Liabilities Shareholders funds Total Liabilities & Capital 100 100 100 100 100 100 49.2 34.3 56.9 27.4 59.5 21.5 60.8 19.8 55.1 24.2 43.1 28.7 63.5 100 1999-00 % 100 16.5 68.2 100 2000-01 % 100 15.7 68.2 100 2001-02 % 100 19.0 69.5 100 2002-03 % 100 19.4 73.3 100 2003-04 % 100 20.7 64.5 100 2004-05 % 100 28.2 36.4 31.8 31.8 30.5 26.7 35.5 2000-01 % 100 20001-02 % 100 2002-03 % 100 2003-04 % 100 2004-05 % 100
INTERPRETATION:
75
In the year 2004-05 BAMULS working capital position has been very much improved when compared with last five years, because in the year 2004-05 the proportion of current assets has increased by a higher percentage (about 10) as compared to increase in the proportion of current liabilities (about 7). This has improved the working capital position of the BAMUL. Except the years 2003-04 and 2004-05, there has been a slight deterioration in the D/E ratio though it continues to be very sound. In the last 4 years except 2003-04 & 2004-05, the proportion of share holders funds in the total liabilities has come down from 34.3% to 19.4%. While that of the debenture holders has gone up from 49.2% to 60.8%.
1. Computation of Financial Ratios of BAMUL

Particulars Short term 1999-00 2000-01 2001-02 2002-03 2003-04
(in 000s)
2004-05
76
solvency ratios 1) current ratio = Current assets Current liabilities =1.97 =1.90 =1.67 =1.66 =1.43 =1.25 277159 140254 276053 144869 292003 174414 280593 168892 226010 157574 335614 266889
INTERPRETATION: The current ratio of the BAMUL in the year 1999-00 is equal to an ideal current ratio i.e. 2. After 1999-00, the ratio will be declining at a constant rate. It shows that the business of BAMUL is trading beyond its resources. In the year 2004-05, the BAMULs current ratio is just 1.25 which is less than all of the previous years mentioned above are a danger signal to the BAMULs management.
77
Particulars 2) Liquid ratio (or) acid test ratio (or) quick ratio =liquid assets Current liabilities
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
207646 140253 =1.48
170011 144869 =1.17
180163 174414 =1.03
208967 168892 =1.23
160285 157574 =1.01
164243 266889 =0.61
[Liquid assets refers to all current assets excluding prepaid expenses and inventory]
INTERPRETATION: BAMUL is having ideal liquid ratio of 1:1 in all the years except the year 2004-05. It indicates in the year 2004-05 over stocking by the BAMUL having low liquidity ratio as compared to the other years.
78
Particulars Long term solvency Fixed Assets Ratio = fixed assets Total long term funds
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
139522 578207 =0.24
579850 624027 =0.93
580197 738356 =0.82
595409 722611 =0.91
568996 622231 =0.91
540021 632533 =0.85
[Long term funds includes share capital, reserves and surplus and long term loans]
INTERPRETATION: The ideal ratio is 0.67. The ratio should not be more than 1. In each year & every year Fixed assets ratio of BAMUL is less than 1. it shows that the working capital of BAMUL has been financed through long term funds. This is desirable to the BAMUL to some extent, because a part of working capital termed as core working capital is more (or) less of a fixed nature.
79
II. TURN OVER RATIOS

Particulars 1) Fixed assets turnover ratio Net sales Fixed assets(net) (or) COGS Fixed assets (net) =15.34 =3.8 =4.1 =4.25 =4.89 =5.80 2141552 139521 2207293 579850 2322342 580197 2533221 595409 2787378 568996 3134590 540021 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05
INTERPRETATION: In the year 1999-00, the BAMUL has a very high fixed assets turnover ratio i.e. 15.34 which indicates efficient utilization of fixed assets in generating sales. In the year 2000-01, there is a sudden fall in the fixed assets turnover ratio. It is decreased 75.22% when compared to the year 1999-00 which indicates that the BAMUL has made an excessive investment in fixed assets. And after that there is an increment in the ratio signifies that the management of BAMUL utilizes the fixed assets effectively in generating the more sales.
Particulars 2) Stock
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
80
turnover ratio 1846463 32265 = COGS Avge stock =57.2 =33.9 =30.64 =45.72 =78.7 =36.1 1913169 56305 1965488 64134 2096262 45846 2316272 29433 2818654 97959
Cost of goods sold (COGS) = [Sales gross profit] (or) [operating stock + purchases + carriage inwards and other direct expenses closing stock] Opening stock + closing stock Average stock = 2 INTERPRETATION: Every year it has a very high stock turnover ratio. It is considered better as it indicates that more sales are being produced by each rupee of investment in stock but it may not always be an indicator of favorable results. It may be the result of a very low level of stock which results in frequent out of stock position. Such a situation prevents the company from meeting customers demands and the company cannot earn maximum profits.
81
III. PROFITABILITY RATIOS

Particulars 1) Over all profitability ratio(or) return on capital (or) Return on Capital Employed 34729 Operating Profit = ________* 100 capitalEmployed 416681 =8.33% 17870 8559033 =0.20% 54606 872200 =6.26% 15703 876002 =1.79% 72135 795006 =9.07% 31829 875645 =3.63% 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05
Capital employed = Fixed assets + current assets provision for taxation Operating profit = Net profit + provision for tax income from interest on debt INTERPRETATION: This ratio indicates how well the management has utilized the funds supplied by owners and creditors. Only in the years 1999-00 and 2003-04 ROI ratios are good which shows the high earning power of the net assets of the business. But in the years 2000-01 and 2002-03 the ratio is very low which shows the poor ability of the management in utilizing the funds. In the year 2004-05 the ratio will be decreased from 9.07% to 3.63%. 59.9% decrease in the ratio because of decrease in net profit. This shows the bad signal to the management, therefore the management should be alert for improving the ratio because it measures overall performance of the business.
82
Particulars 2) Return on Share holders funds: Net profit after tax & interest = *100 Share holders funds
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
23758 203945 =11.6%
7393 198725 =3.72%
3573 196005 =1.82%
22853 221932 =10.29%
38752 203664 =19.02%
5129 268177 =1.96%
INTERPRETATION: In the years 2004-05, 2001-02 and 2000-01 net profit to networth is very much below the average and speaks companys poor performance. Whereas in the years 199900, 2002-03 and 2003-04 the ratio is good which satisfactorily brings confidence in the minds of shareholders because of high rate of return. The management has to take the measures to improve the ratio.
83
Particulars 3) Return on total assets
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
23758 Net profit after tax * 100 Total assets 619696 =3.83%
7393 721388 =1.02%
3573 741931 =0.48%
22853 749038 =3.05%
38752 687426 =5.6%
5130 676323 =0.75%
INTERPRETATION: In the recent year 2004-05 and in the year 2001-02 the company has very low returns on total assets which is very much below the average it indicates it does not effectively pooled the funds together have been used. In the rest of the years the ratio is very much satisfactory.
84
Particulars 4) Gross profit ratio
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
295088 Gross profit = ----------*10 0 Net sales =13.77% 2141552
294124 2207293 =13. 32%
356854 2322342 =15.3%
436959 2533221 =17.2%
471106 2787378 =16.9%
315936 3134589 =10.07%
INTERPRETATION: In the last 2 years the G/P ratio has been decreased, it may indicate higher cost of goods sold due to higher cost of production. It may also be due to lower selling prices. Hence the management of BAMUL must take the following precautionary measure to improve the G/P ratio. Lowering COGS, selling prices remains constant Increasing selling prices, the cost of goods remaining constant Increasing the sale of those goods which have a higher gross margin.
Whereas in the rest of the years the gross profit ratio is very much satisfactory which indicates lower cost and is a sign of good management.
85
Particulars 5) Net profit ratio
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
23758 Net profit = --------*100 Net sales =1.10% 2141551
7393 2207293 =0.33%
3573 2322342 =0.15%
22853 2533221 =0.90%
38753 2787378 =1.39%
5129 3134589 =0.16%
INTERPRETATION: BAMUL is having very low N/P ratios in almost all of the years which indicates continuous rising of cost of production and continuous falling of selling prices. The management of BAMUL is to take care to improve the ratio because it is the overall measure of a firms ability to turn each rupee of sales into profits.
86
Particulars 6) Operating ratio
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2091606 COGS +Operating expenses /net sales *100 =98% 2141552
2164213 2207293 =99.8%
2259638 2322342 =93.7%
2430543 2533221 =92.5%
2531522 2787378 =90.8%
3077604 3134589 =96.0%
87
CHAPTER-VII
SUMMARY OF FINDIGS, RECAMMANDATIONS AND SUGGETIONS

Gross profit in the year 2004 -05 has been decreased to the percentage of 32.9 because of steep hike in cost of goods sold rather than net sales of the year. Percentage increases of current assets are less than the percentage increase of current liabilities. This would not lead to safer liquidity position of the company. The operating profit in the year 2004-05 has come down by 53.5 % because heavy advertising and selling expenses. The total assets %has gone up by 1.64% in the year 2004-05 when compared to the year 03-04.In the year 03-04 the total assets % has been decreased due to the decrease in the ratio of working capital. In the year 04-05 the investment in current assets has been increased by 9% and investment in fixed assets has been decreased by 9%. One of the important finding in this study is the ratio of current liabilities has been increased by 8%, where as long term liability has been decreased by 12%. The current ratio of the BAMUL is not satisfactory except the year 99-00. It is an indication of trading beyond its resources. In the year 04-05 over stocking by the BAMUL having low liquidity ratio as compared to the other years. The low fixed assets ratio in the year 04-05 that is 5.8 is an indication of under utilization of fixed assets in generating sales. Stock turn over of the concern is very low in the year 04-05 when compared to the other years, which results in frequent out of stock position. Return on capital employed in the year 04-05 has been decreased from 9.07% to 3.63%.This would not lead to build confidence in the minds of share holders. In the year 04-05 the management does not efficiently pooled the funds together have been used. The gross profit ratio in the last three years has been decreased due to higher cost of production. Due to continuous rising of cost of production and continuous falling of selling prices the net profit ratio of the concern is very much decreased.
89
RECOMMANDATIONS Closing stock of the concern can be reduced as much as possible which is the main component in the cost of good is sold. It is advisable to the company to improve the working capital position of the BAMUL by improving ratio of current assets rather than current liabilities. It should maintain the standard current ratio that is 2:1. It is advisable to maintain the liquid ratio of 1:1 to reduce the over stocking. The company has to reduce the investment in fixed assets in order to decrease the dead investment. The company should decrease the current liabilities and at the same time it should raise the long term liability, otherwise trading on equity is not possible. The company has maintained increasing rate of fixed assets turn over ratio, it is advisable to continue in the same way. Inventory should be dispatched. Company should invest more on working capital.
90
SUGGESTIONS
First and foremost the management must take the fallowing precautionary measures to improve the gross profit ratio 1. Lowering cost of goods sold, selling prices remains constant. 2. Increasing selling prices, the cost of goods sold remaining constant. 3. Increasing the sale of those goods which have a higher gross margin.
Though the ratios in the year 04-05 are low compared to other years it can not predict the feature of the concern. The concern should make a sincere effort to maintain the ratio in a standard level. It is also advisable to reduce the fluctuations in the ratios.
The company should focus more often advertise their products in the media most of the people dont know the different products offered by BAMUL. It should find the ways to make consumers know about the difference between BAMUL products and other products like in quality, price etc. It should increase the sales centers, collection centers and supply milk various parts of the city as well as state. It is advisable to the management to improve the net profit ratio because it is the over all measures of a firms ability to turn each rupee of sales in to profits.
91
92
BIBLIOGRAPHY
1. Books
Title of the book 1. Financial Mgt 2.Elements of mgt accounting 3.Mgt Accounting 4.Financial Accounting 5.Mgt Accounting Name of the Author Prasanna Chandra S.N. Maheshwari B S Raman I.M. Pandey R.K.Sharma 2003 2000 2002 Edition of the book 2005 2003 Name of the publisher Tata McGrawHill Sultan Chand &sons United publishing Vilas publishing Kalyani publishers Mangalore&2003 New delhi &2000 Ludhiana &2002 Place and year of publication Delhi &2005 New delhi&2003
2. Reports of BAMUL: B/S of the company for the last six years, P&L a/c, Organisation chart etc. 3. Website: http://Kmfnandini.coop/html/kmfunits-nmp.htm
93
ANNEXURES
94
Trading Profit & Loss a/c for the Year 2004-2005 Dr Particulars Opening Stock Purchases Procurement Transport Processing & Conversion expenses Gross Profit c/d Total Staff expenses Administrative expenses Rates & Taxes 315936 3267780 Total 198482 Gross Profit b/d 10436 Other income 676 Interest on Deposits and Selling & Distribution Interest & Bank charges Procurement &input expenses Depreciation Net profit c/d Total Staff Loans 50031 Grants 35161 15342 34393 5130 349652 Total Amount Particulars 22728 Sales 2487780 Closing Stock 108286 333050
(in 000s) Cr
Amount 3134290 133490
3267780 315936 22761 8460
2494
349652
Balance Sheet as on 31st March 2005 (in 000s) Liabilities Share Capital (Paid-up capital) Nominal Share SURANA COLLEGE P.G. CENTRE Amount Assets 103137 Fixed Assets 241 Work-in-progress Amount 540021 43717 95
Capital Share Suspense
908 Deferred Revenue expenditure Investments 120917 Inventory 407238 Sundry Debtors 43882 Cash & Bank balances 266889 Loans &Advances Service Deposits Others 943212 Total
14802
Reserves & Surplus Loan Liability Profit & Loss a/c Current Liabilities & Provisions Total
9048 155740 47013 94748 21814 15640 668 943212
96
Dr
Trading Profit & Loss a/c for the Year 2003-2004 Amount Particulars 36138 Sales 1985853 Closing Stock 81112 235897 Amount
Cr (in 000s)
Particulars Opening Stock Purchases Procurement Transport Processing & Conversion expenses Gross Profit c/d Total Staff expenses Administrative expenses Rates & Taxes
2787378 22728
471106 2810106 Total 2044917 Gross Profit b/d 10330 Other income 821 Interest on Deposits and Staff Loans 133171 Grants 41589 30217 34288 38753 494189 Total
2810106 471106 11689 8207
Selling & Distribution Interest & Bank charges Procurement &input expenses Depreciation Net Profit c/d Total
3187
494189
Balance Sheet as on 31st March 2004 Liabilities Share Capital (Paid-up capital) Nominal Share SURANA COLLEGE P.G. CENTRE Amount Assets 103358 Fixed Assets 211 Work-in-progress Amount
(in 000s)
568996 18753 97
Capital Share Suspense
15 Deferred Revenue expenditure Investments 100095 Inventory 418567 Sundry Debtors 65180 Cash & Bank balances 157574 Loans & Advances Service deposites Others 845000 Total
22203
5530 46084 45098 88286 29592 19641 817 845000
98
Dr Particulars Opening Stock Purchases Procurement Transport Processing & Conversion expenses Gross Profit c/d Total Staff expenses Administrative expenses Rates & Taxes
Cr
(in 000s) 2533221 36138
436959 2569359 Total 204679 Gross Profit b/d 10834 Other income 640 Interest on Deposits and Staff Loans
2569359 436959 10877 8959
Selling & Distribution Interest & Bank charges Procurement &input expenses Depreciation Net Profit c/d Total
118768 Grants 51809 16235 32884 22853 458703 Total
1907
458703
99
Balance Sheet as on 31st March 2003 Liabilities Share Capital (Paid-up capital) Nominal Share Capital Deferred Revenue expenditure Investments 93348 Inventory 527106 Sundry Debtors 26427 Cash & Bank balances 168892 Loans & Advances Service Deposits Others 917930 Total Amount Assets 101965 Fixed Assets 192 Work-in-progress
(in 000s) Amount 595409 3051 29604
9274 523734 42330 135480 30276 19252 880 917930
100
Cr
(in 000s)
2322342 55553
356854 2377895 Total 189739 Gross Profit b/d 9063 Other income 4945 Interest on Deposits and Staff Loans 95347 Grants 59080 10708 23814
2377895 356854 13968 8047
Selling & Distribution Interest & Bank charges Procurement &input expenses Project Overhead Capitalisation [less] Depreciation Net Profit c/d Total
1551
31777 3573 380420 Total
380420
Balance Sheet as on 31st March 2002 Liabilities Share Capital (Paid-up capital) SURANA COLLEGE P.G. CENTRE Amount Assets 100891 Fixed Assets
(in 000s) Amount 580197
101
Nominal Share Capital Share Suspense Reserves & Surplus Loan Liability Profit & Loss a/c Current Liabilities & Provisions Total
169 Work-in-progress
38143
Investments 91371 Inventory 545925 Sundry Debtors 3573 Cash & Bank balances 174414 Loans & Advances Service Deposits Others 916343 Total
6000 73140 34753 106560 36318 38700 2533 916343
102
Trading Profit&Loss a/c for the year 2000-2001 Amount Particulars 39896 Sales 1669567 Closing Stock 66327 210094 Amount
Cr
(in 000s) 2207294 72714
2280008 294124 10021 11546
Selling & Distribution Interest & Bank charges Procurement & Input expenses Depreciation Net Profit c/d Total
74974 17600 11816
20543 9604 315691 Total
315691
103
Balance Sheet as on 31st March 2001 Liabilities Share Capital (Paid-up capital) Nominal Share Capital Share Suspense Reserves & Surplus Loan Liability Profit & Loss a/c Current Liabilities & Provisions Total Investments 91219 Inventory 522663 Sundry Debtors 7393 Cash & Bank balances 144869 Loans & Advances Service Deposits Others 866256 Total Amount Assets 9996 Fixed Assets 148 Work-in-progress
(in 000s) Amount 579850 4353
6001 92183 24874 96445 46491 13859 2200 866256
104
Trading Profit & Loss a/c for the Year 1999-2000 Amount Particulars 24634 Sales 1625648 Closing Stock 58902 177176
Cr
(in 000s) Amount 2141552 39896
2181448 295088 7705 8103
Selling & Distribution Interest & Bank charges Procurement & Input expenses Depreciation Net Profit c/d Total
68788 19074 8893
9078 23758 310896 Total
310896
105
Balance Sheet as on 31st March 2000 Liabilities Share Capital (Paid-up capital) Nominal Share Capital Reserves & Surplus Loan Liability Profit & Loss a/c Current Liabilities & Provisions Total Investments 62276 Inventory 415751 Sundry Debtors 41490 Cash & Bank balances 140253 Loans & Advances Service Deposits Others 759950 Total Amount Assets 100046 Fixed Assets 134 Work-in-progress
(in 000s) Amount 139521 337268
6000 591 24902 124953 53181 10359 4610 759950
106
107

04 KXCM6082 Venkatareddy

Hochgeladen von

Dokumentinformationen

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

04 KXCM6082 Venkatareddy

Hochgeladen von

Copyright:

Verfügbare Formate

A STUDY TO ASSESS FINANCIAL PERFOMANCE OF BAMUL A PROJECT REPORT

SUBMITTED IN PARTIAL FULFILLMENT OF REQUIREMENT FOR THE AWARD OF

MASTER OF BUSINESS ADMINISTRATION BY VENKATA REDDY M.V REG NO.O4KXCM6082

UNDER THE GUIDANCE OF Prof.VIJAYENDRA. S

SURANA COLLEGE P.G. CENTRE

SURANA COLLEGE P.G. CENTRE

SURANA COLLEGE P.G. CENTRE

SURANA COLLEGE P.G. CENTRE

SURANA COLLEGE P.G. CENTRE

Date: Place: Bangalore VENKATA REDDY M.V

SURANA COLLEGE P.G. CENTRE

Review of literature Theoretical perspectives Profile of the company

Data Analysis & interpretation

Appendices & Annexure

SURANA COLLEGE P.G. CENTRE

SURANA COLLEGE P.G. CENTRE

SURANA COLLEGE P.G. CENTRE

SURANA COLLEGE P.G. CENTRE

SURANA COLLEGE P.G. CENTRE

SURANA COLLEGE P.G. CENTRE

SURANA COLLEGE P.G. CENTRE

SURANA COLLEGE P.G. CENTRE

PURPOSE OF THE STUDY SURANA COLLEGE P.G. CENTRE 16

SCOPE OF THE STUDY: SURANA COLLEGE P.G. CENTRE 17

SURANA COLLEGE P.G. CENTRE

SURANA COLLEGE P.G. CENTRE

SIGNIFICANCE OF THE FINANCIAL ANALYSIS

SURANA COLLEGE P.G. CENTRE

APPLICATIONS OF FINANCIAL ANALYSIS:

SURANA COLLEGE P.G. CENTRE

Low Average Recession Average

SURANA COLLEGE P.G. CENTRE

GUIDELINES FOR FINANCIAL ANALYSIS

SURANA COLLEGE P.G. CENTRE

TOOLS OF FINANCIAL ANALYSIS

SURANA COLLEGE P.G. CENTRE

Comparative income statement:

Comparative Balance Sheet:

SURANA COLLEGE P.G. CENTRE

SURANA COLLEGE P.G. CENTRE

III. TREND PERCENTAGES

SURANA COLLEGE P.G. CENTRE

IV. FUNDS FLOW ANALYSIS :

SURANA COLLEGE P.G. CENTRE

SURANA COLLEGE P.G. CENTRE

Cash and bank balances. Debtors or receivables. Short-term marketable securities.

SURANA COLLEGE P.G. CENTRE

SURANA COLLEGE P.G. CENTRE

SURANA COLLEGE P.G. CENTRE

SURANA COLLEGE P.G. CENTRE

SURANA COLLEGE P.G. CENTRE

b. Net profit Ratio: SURANA COLLEGE P.G. CENTRE 43

EAT Net profit Ratio = -------------Sales

Return on total share holders equity: SURANA COLLEGE P.G. CENTRE 44

Return on total Shareholders equity

SURANA COLLEGE P.G. CENTRE

SURANA COLLEGE P.G. CENTRE

SURANA COLLEGE P.G. CENTRE

ORIGIN OF THE ORGANISATION SURANA COLLEGE P.G. CENTRE 50

SURANA COLLEGE P.G. CENTRE

MILK MARKETING SURANA COLLEGE P.G. CENTRE 52

SURANA COLLEGE P.G. CENTRE

Technical Input Services:

SURANA COLLEGE P.G. CENTRE