INTRDUCTION OF THE ORGANIZARION

’ Name of Unit: KAIRA DISTRICT CO-OPERATIVE MILK PRODUCER’S UNION LTD. (AMUL). Anand-388001 Gujarat, India.

’Location : Kaira District Co-operative Milk Producers' Union Ltd Amul Dairy Road Anand. – 388 001.

’Phone: +91 – 02692 – 256124 +91 – 02692 – 256225

’Nature of the company:

By nature the company is registered as “Co-Operative Union Ltd.” Sector and under a “Co-Operative” Societies act,14th December 1946.

’Slogan/Punch line:

“THE TASTE OF INDIA”

’Website: www.amul.comwww.amuldairy.org

1

LOGO OF THE AMUL

Logo of AMUL is a ring of four hands, which are co-coordinated each

other. The actual meaning of this symbol is co-ordination of hand of

different people by whom this union is now at top.

FIRST HAND: Is for farmers (producers), without whom the organization

would not be existed. Farmers are the inspiration of the AMUL-taste of

India.

SECOND HAND: Is for the representatives of processors by whom the raw

milk processed in to different finished products.

THIRD HAND: Is for marketers without whom the products would not

been able to reach to the customers.

FOURTH HAND: Is for customers without whom the organization could

not carry on because they are the people who consume the products.

2

NATURE

The name Amul itself indicates that it is a co-operative union. There are various types of co-operative society which are as under:

(1) Producers or manufactures co-operative society(2) Consumer co-operative society(3) Housing co-operative society(4) co-operative farming(5) co-operative credit solvency

This firm is the firm of association in which person combine together to form a society for the purpose of manufacturing goods. Although it is democratic management of industrial production. This is useful where large capital is neither necessary nor much technical and expert knowledge of the management is needed. In India some of the Sugar mill and ginning mills are running under this formation. Dairies are also adopting co-operating format. Amul is the producers' co-operative society.

COMPETITORS

Competitors are the person who produce and sales the same product as produced by the unit. Competitors affect the business with several causes. The main rivals of AMUL are as following

Rich Milk Sardar milk Nestle Britannia Cheese of Le-Beon Gowardhan

3

ORGANIZATION STRUCTURE

B.O.D

Chairman

Vice Chairman

Managing Director

General Manager (Dairy Plant & Technology)

Assistant General Manager

Manager

Deputy Manager

Assistant Manager

Superintendent

Deputy Superintendent

Senior Officer

Assistant

Junior Assistant

Workers

4

GOALS & OBJECTIVES OF AMUL

The main objectives of the co-operative society are as follows:

It is voluntary organization. A member can continue this membership as long as he or she desire and can by giving a notice withdraw his or her capital and ceased to be a member.

There is no limit to its membership face value of one share is generally kept between Rs 1 and Rs 10. Thus small value of share makes it possible to enroll a large number of persons because even a poor man can affected by this much amount.

Its object is to serve the members and to earn the profit.

5

OBJECTIVE OF THE REPORT

(1)To measure the short term solvency of the enterprise.

(2)To measure the long term solvency of the enterprise.

(3)To measure the enterprise’s operating efficiency and profitability.

(4)To compare intra firm position and pattern position with an industry.

PURPOSE OF THE REPORT

(1) To identify the magnitude & direction of changes in enterprise’s financial & performance.

(2) To ascertain the strength & weakness of the enterprise on terms of liquidity, profitability & solvency.

6

PLANTS LOCATION

ANAND PLANT:

Anand plant is the main plant. Most of the raw material received here. Products being manufactured here which are, Butter, Flavored milk, Ghee, Milk Powder, Baby foods, Cheese etc.

MOGAR PLANT:

It is situated on Anand – Vadodara National Highway No. 8. It produces chocolates, Nutramul, Amullite, Amul Ganthia. This plant was established in 1973.

KHATRAJ PLANT:

It is situated between Nadiad – Mahemdabad. It produces the Cheese. This plant also produces paneer.

PUNE & KOLKATA:

In Pune and Kolkata no production is done. Only milk collection and milk marketing activities are performed.

CHILLING CENTRE:

Kapadwanj, Balasinor, Undel, Khembe there are 120 chilling units in socities.

7

BANKERS OF AMUL

(1) Kaira district Central Co-operative Bank Limited

(2) State Bank of India

(3) Bank of Baroda

(4) Bank of Maharashtra

(5) HDFC Bank Limited

(6) Corporation Bank

(7) Axis Bank

8

RATIO ANALYSIS

The most important task of a financial manager is to interpret the

financial information in such a manner, that it can be well understood by the

people, who are not well versed in financial information figures. The technique,

by which it is to be calculated, is known as ‘Ratio Analysis’.

1) Percentage 2) Rate 3) Proportion

Ratio Analysis is an important technique of financial analysis. It depicts

the efficiency or shortfall of the organization in the form of trend Analysis.

Different ratio appeal to different people managements, having the task

of running business efficiency, will interest in all ratios.

A Supplier of goods on credit will be partially interested in liquidity

ratios, which indicate the ability of the business to pay its bills.

Existing and future shareholders will indicate the ability of business to

purchase.

Existing and future shareholders will interest in investment ratios, which

indicate the level of return that can be expected on an investment in business.

Major customers, intent on having a continuing source of supply, will be

interested in the financial stability, as reveled by the capital structure, liquidity

and profitability ratios.

Debenture and loan stock holders will be interested in ability of a

business will be interested in the ability of a business to pay interest, and

ultimately to repay capital.

A banker, gibing only short-term loans, will be interested mainly in the

liquidity of the business, and its ability to repay those loans.

9

STEPS IN RATIO ANALYSIS

Collection of information, which are relevant from the financial

statements and then to calculate different ratios accordingly.

Comparison of computed ratios of the same organization or with the

industry ratios.

Interpretation, drawing of the inference and report-writing.

RATIO ANALYSIS

Ratio analyses are a powerful tool of financial analysis. A ratio is

defined as “the indicated quotient of two mathematical expressions” and as

“the relationship between two or more things”. In financial analysis a ratio is

used as a benchmark for evaluating the financial position and performance

of a firm. The relationship between two accounting figures, expressed

mathematically, is known as a financial ratio.

TYPES OF RATIOS

Several ratios; calculated from the accounting data, can be grouped

into various classes according to financial activity or function to be

evaluated. We may classify the ratios into the following categories.

Liquidity ratios

Leverage ratios

Profitability ratios

Capital Structure Ratio

10

Other Ratio

LIQUIDITY RATIO

It is extremely essential for a firm to be able to meet its obligations as

they become due. Liquidity ratios measure the ability of the firm to meet its

current obligations. In fact, analyses of liquidity needs the preparation of

cash budgets and cash and fund flow statements but liquidity ratios by

establishing a relationship between cash and other current assets to current

obligations, provide a quick current assets to current obligations, provide a

quick measure of liquidity. A firm should ensure that it should not suffer

from lack of liquidity, and also that it does not have excess liquidity. The

failure of company to meet its current obligation due to lack of sufficient

liquidity, will result in poor credit worthless, loss of creditor’s confidence

for even in legal tangles resulting in the closure of the company. A very high

degree of liquidity is also bed. the firms fund will be unnecessarily tied up in

current assets therefore, it is necessary to strike a proper balance between

high liquidity and lack of liquidity.

The most common ratios, which indicate the extent of liquidity, are

Current ratio

Quick ratio

11

CURRENT RATIO

Current ratio is the ratio of total current assets to total current

liabilities. Current assets of a firm represent those assets which can be in

ordinary course of business converted into cash with in short period of time

and current liabilities defined as liabilities which are short term

manufacturing obligation to meet current assets.

To measure the financial liquidity of Amul

Current assets = Stock, Advance & debtors, Cash & Bank Balance.

Current liabilities = Deposits, Due to societies, O/s against Expenses and

Purchases, Sundry Creditors, Provisions.

Current assets Current Ratio = ________________

Current liabilities

YEAR CURRENT ASSETS

CURRENT LIABILITY

RATIO(C.A/C.L)

2003-04 16102.2 6786 2.372004-05 18596.49 8988.56 2.072005-06 18990.94 9460.79 2.122006-07 19874.21 12106.54 1.642007-08 28995.9 13892.41 2.092008-09 28874.39 17801.69 1.62

12

Current Ratio

00.5

11.5

22.5

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

INTERPRETATION

The ideal Current Ratio of any firm is 2:1. In AMUL first three year the ratio

is more than 2, it indicates good financial ability of the sector. But after that

the ratio is declining because of the increase in Current Liability. It indicates

that day by day the amounts of creditors are increasing which is not good for

the sector.

13

QUICK RATIO

Quick ratio is also called acid test ratio. It is the ratio between quick

current assets and current liabilities. It is calculated by dividing the quick

assets by current claim. Quick ratio is the measurement of firm’s ability to

convert its current assets quickly into cash in order to meet its current claim.

The term quick assets refers to current assets which can be converted

into cash immediately or at a short notice without reduction in value of

quick ratio.

Quick Assets = Stock, due from societies, Advances, trade and Sundry

Debtors Cash and Bank Balance

Quick assets

Quick Ratio = ______________

Current liabilities

YEAR QUICK ASSETS

CURRENT LIABILITY

RATIO(Q.A/C.L)

2003-04 11365.37 6786 1.672004-05 10686.31 8988.56 1.192005-06 9078.21 9460.79 0.962006-07 10533.65 12106.54 0.872007-08 13258.02 13892.41 0.952008-09 9433.42 17801.69 0.53

14

Quick Ratio

1.67

1.19

0.96 0.87 0.95

0.53

00.20.40.60.8

11.21.41.61.8

QuickRatio

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

YEAR

TIM

ES

INTERPRETATION

The ideal Quick Ratio is 1:1. In AMUL the Quick Ratio is more than 1 in

2003-04 and 2004-05. But than after it started declining and reached below 1

for the next four years. The reason is continuous increase in the current

liability.

LEVERAGE RATIO

15

In the short term creditors like bankers and suppliers of raw material;

are more concerned with firm’s current debt-paying ability, on the other

hand, long-term creditors like debenture holders, financial institution are

more concerned with the firm’s long term financial strength In fact a firm

should have short as well as long term financial position. To judge the long-

term financial position of the firm’s financial leverage or capital structure

ratios are calculated. These ratios indicate funds provided by owners and

lenders. As a general rule, there should be an appropriate mix of debt and

owner’s equity in financing the firm’s assets.

STOCK TURNOVER RATIO

This ratio indicates the efficiency of the firm in selling its product. It

is calculated by dividing the cost of good sold by average inventory.

Average StockInventory turnover = ___________________ × 300

Cost of Goods Sold

Cost of good sold = Opening stock + Purchase of Milk + Purchase

of Raw Material + Purchase expenses – Closing

stock

Opening Stock + Closing StockAverage Inventory = ____________________________

2

16

YEAR AVGERAGE STOCK

COST OF GOODS SOLD

RATIO(A.S./C.O.G.S)*300

2003-04 4493.49 43660.28 31 days2004-05 4900.41 47221.13 31 days 2005-06 7199 56259.48 38 days2006-07 7471.21 65762.20 34 days2007-08 10214.83 88181.97 35 days2008-09

Inventory Turnover

010203040

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Year

Day

s

INTERPRETATION

From the above ratio we can say that AMUL is turning its inventory of

finished good into sales in 31 days in 2003-04 and 2004-05, 38 days in

2005-06, 34 days and 35 days in 2006-07 and 2007-08 respectively. It is

good for any co-operative sector.

DEBTORS TURNOVER RATIO

17

A firm sells goods for cash and credit is used as a marketing tool by a

number of companies. When the firm extends credit to its customer. Book

debts (debtors or receivables) are created in the firm’s accounts. Book debts

are expected to be converting into cash over a short period and, therefore are

included in current assets. The liquidity position of the firm depends on the

quality of debtors to a great extent. Financial analyses apply three ratios to

judge the quality or liquidity debtors: (a) debtor turnover (b) Collection

period and (c) again schedule of debtors.

Debtor’s turnover Ratio can be found out dividing Average Debtors by Sales

Sales = Net Sales of Milk and Milk products

Debtors = Trade Debtors, Sundry debtors,

DebtorsDebtors Turnover Ratio = ________ × 300

Sales

YEAR AVGERAGE DEBTORS

SALES RATIO(A.D./SALES)*300

2003-04 6690.15 54088.29 37 days2004-05 6797.52 59459.07 34 days 2005-06 7679.62 70206.23 33 days2006-07 6759.25 81631.69 25 days2007-08 7625.77 107187.29 21 days2008-09 137212.35

18

Debtors Turnover Ratio

010203040

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Year

Day

s

INTERPRETATION

From the above ratios we can say that AMUL’S Debtors remain outstanding

for 37 days in 2003-04, 34 days in 2004-05, 33 days, 25 days, 21 days in

2005-06, 2006-07 and 2007-08 respectively. The Collection period of

Debtors is decreasing day by day. It is good sign for AMUL.

19

CREDITOR TURNOVER RATIO

Creditor turnover ratio is computed by net credit purchases to average

creditors.

Creditors = Outstanding against Purchases + Societies + Outstanding against

Expenses + Sundry Creditors

Creditor Turnover Ratio = _ Average Creditors × 300Net Purchase

YEAR AVGERAGE CREDITORS

NET PURCHASE

RATIO(A.C. /N.P.)*300

2003-04 5930.37 41188.59 43 days2004-05 7098.06 49931.03 43 days 2005-06 8095.97 57374.94 42 days2006-07 9798.1 64034.16 46 days2007-08 12312.25 93690.87 39 days2008-09

20

Creditors Turnover Ratio

35

40

45

50

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Year

Days

INTERPRETATION

From the above we can say that the payment of Creditors is outstanding by

AMUL. 43 days in 2003-04 and 2004-05, 42 days, 46 days, 39 days in 2005-

06, 2006-07 and 2007-08 respectively. The payment period to Creditor

remain same in every year. It is good for AMUL.

21

FIXED ASSETS TURNOVER RATIO

Firm may wish to know its efficiency of utilizing fixed assets

separately for AMUL the fixed assets turnover ratio is

SalesFixed Assets Turnover = __________________

Net Fixed Assets

YEAR SALES NET FIXED ASSETS

RATIO(Sales/N.F.A)

2003-04 54088.29 9588.26 5.642004-05 59459.07 6107.85 9.732005-06 70206.23 4968.66 14.132006-07 81631.69 5371.69 15.202007-08 107187.29 6122.97 17.512008-09 137212.35

Fixed Asset Turnover Ratio

0

5

10

15

20

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Series1

INTERPRETATION

From the above ratio we can say that in AMUL Fixed Assets is recovered in

5.64 times in 2003-04, 9.73 times in 2004-05, 14.13 times, 15.2 times, 17.51

times in 2005-06, 2006-07 and 2007-08 respectively. We can say that the

total Fixed Assets Turnover is increasing day by day. It is good sign for

AMUL.

22

WORKING CAPITAL TURNOVER RATIO

A firm may also like to relate net working capital to sales. It may thus

computer net working capital turnover by dividing sales by net working

capital turnover for Amul the ratio is

Sales Net Current assets Turnover = _______________

Working Capital

YEAR SALES WORKING CAPITAL

RATIO(Sales/W.C.)

2003-04 54088.29 9320.2 5.802004-05 59459.07 9607.93 6.182005-06 70206.23 9530.15 7.372006-07 81631.69 7767.67 10.512007-08 107187.29 5033.89 21.422008-09 137212.35

23

Net Current Asset Turnover

05

10152025

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Series1

INTERPRETATION

From the above we can say that AMUL is able to recover its Working

Capital 5.8 times in 2003-04, 6.18 times in 2004-05, 7.37 times in 2005-06,

10.51 times 2006-07 and 21.42 times in 2007-08. Working Capital Turnover

is also increasing day by day. It is good and from it AMUL can generate

more and more sales.

24

TOTAL ASSETS TURNOVER RATIO

Total Assets Turnover Ratio shows the firms ability in generating

sales from all financial sources committed to total assets thus

Sales

Total Assets Turnover = _____________

Total Assets

Total assets (TA) include Net fixed assets (NFA) and Current Assets (CA)

for Amul the ratio is

YEAR SALES TOTAL ASSETS

RATIO(Sales/T.A.)

2003-04 54088.29 26326.08 2.052004-05 59459.07 25277.94 2.352005-06 70206.23 24595.17 2.852006-07 81631.69 25761.82 3.172007-08 107187.29 35864.51 2.992008-09 137212.35

25

Total Asset Turnover

0

1

2

3

4

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

INTERPRETATION

From the above data we can say that in AMUL Total Asset Turnover is

recovered 2.05 times in 2003-04, 2.35 times in 2004-05, 2.85 times, 3.17

times, 2.99 times in 2005-06, 2006-07 and 2007-08 respectively. Till 2007-

08 the Total Asset Turnover Ratio is increasing because the total asset is

quiet same in every year. But in 2007-08 the Total Assets is increasing by

40% from 2006-07. So the turnover ratio is declining in that year.

26

NET ASSETS TURNOVERS

The firm can compute net assets turnover simply by dividing sales by

net assets (NA) net assets turnover may also called capital employed

turnover for Amul the ratio is

Net Assets = Net Fixed Asset + Current Asset after deducting Current

Liability

Net assets turnover = Sales Net Assets

YEAR SALES NET ASSETS

RATIO(Sales/N.A.)

2003-04 54088.29 18908.46 2.862004-05 59459.07 9607.93 6.182005-06 70206.23 14498.81 4.842006-07 81631.69 13139.36 6.212007-08 107187.29 11126.86 9.63

27

Net Asset Turnover

0

5

10

15

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

INTERPRETATION

From the above data we can say that Assets Turnover in AMUL during

2003-04 is 2.86 times, 6.15 times in 2004-05, 4.84 in 2005-06, 6.21 times in

2006-07 and 9.63 times in 2007-08 respectively. The Net Asset Turnover is

increasing day by day. But the total Current Liability is also increasing and it

is directly affected to Net Asset Turnover. If the Current Liability is

decreased than the Net Asset can be Turnover by more than this ratio.

28

PROFITABILITY RATIOS

A company should earn profit to survive and grow over a long period

of time. Profit are essential but it would be wrong to assume that every

action initiated by management of a company should be aimed at

maximizing profits irrespective of social consequences and profit is looked

upon as a term of above since some firms always want to maximize profits

at due cost of employees, customers, and society. Except such infrequent

cases, it is fact profit must be earned to sustain the operation of the business

to be able to obtain funds from investor for expansion and growth and to

contribute towards the social overhead for the welfare of society.

Profit is the difference between revenues and expenses over a period

of time. Profit is the ultimate output of the company; and it will have no

future if it fails to make sufficient profits. There fore financial manager

should continuously evaluate the efficiency of its company in term of

profits.

Generally two types of profitability ratios are calculated.

Profitability in relation to sales

Profitability in relation to investment

Measures of Profit

Profit can be measured in various ways

1) Gross Profit

(2) Net Profit

29

GROSS PROFIT TO SALES RATIO

Gross profit ratio is calculated by dividing Gross Profit by sales. Here

gross profit is the different between sales and the manufacturing cost of

good sold.

Sales – Cost of Good sold Gross profit margin = ______________________ × 100

Sales

YEAR GROSS PROFIT

SALES RATIO(G.P./Sales)*100

2003-04 10428.01 54088.29 19.272004-05 12235.94 59459.07 20.582005-06 13946.75 70206.23 19.872006-07 15869.49 81631.69 19.442007-08 19005.32 107187.29 17.732008-09 137212.35

Gross Profit Ratio

161718192021

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

INTERPRETATION

From the above ratio we can say that Gross Profit Ratio in 2003-04 is

19.27%, 20.58% in 2004-05 20.58%, 19.87% in 2005-06, 19.44% in 2006-

07 and 17.73% in 2007-08 respectively. The total amount of Gross Profit is

increasing every year. But the ratio is decreasing; the main reason is increase

in the Purchase Price Milk and Raw Material.

30

NET PROFIT RATIO

Net Profit is obtained when operating expenses; interest and taxes are

subtracted from gross-profit. The net profit margin ratio is measured by

dividing profit after tax by sales.

Net profit Net profit margin = __________ × 100

Sales

YEAR NET PROFIT

SALES RATIO(N.P./Sales)

2003-04 252.46 54088.29 0.462004-05 311.23 59459.07 0.522005-06 323.74 70206.23 0.462006-07 411.50 81631.69 0.502007-08 451.51 107187.29 0.422008-09 575.53 137212.35 0.42

Net Profit Ratio

0

0.2

0.4

0.6

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

INTERPRETATION

From the above figure we can say that the percentage of Net Profit is 0.46%

in 2003-04 and 2005-06. In 2004-05 it is 0.52%, 0.50% in 2006-07 and

0.42% in 2007-08 respectively. The total amount of sales is increased every

year but at the other side total operating expenses is also increased day by

day. So it directly affect to Net Profit Ratio of AMUL.

OPERATING EXPENSES RATIO

31

Operating Expenses ratio is found out by dividing operating cost by

sales.

Operating Cost = Total Cost – Interest – Provision – Closing Stock

Operating Cost Operating Cost Ratio = __________ × 100

Sales

YEAR OPERATING COST

SALES RATIO(O.C./Sales)

2003-04 53422.7 54088.29 982004-05 58785.45 59459.07 982005-06 69636.1 70206.23 992006-07 80627.15 81631.69 982007-08 106956.62 107187.29 992008-09 137212.35

32

Operating Cost Ratio

97.5

98

98.5

99

99.5

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

INTERPRETATION

From the above data we can say that Operating Expense remains same

during the 2003-04, 2004-05, 2006-07 i.e.98 %. In 2005-06 and 2007-08 it

was 99%. The Operating Expenses of AMUL is increasing out of 1 Rs of

sales 98 and 99 paisa is consumed in operating Expenses. The main reason is

increase in Marketing, Packaging, and Processing Expenses and the price of

Raw Material and Milk.

RETURN ON CAPITAL EMPLOYEED

33

Return on Capital Employed Ratio is found out by dividing Net Profit by

Capital Employed

Capital Employed = Total Assets – Misc. Expenses – Current Liability

Net profit Return on Capital Employed = __________ × 100

Capital Employed

YEAR NET PROFIT

CAPITAL EMPLOYED

RATIO(N.P./C.E.)

2003-04 252.46 19540.09 1.292004-05 311.23 16289.38 1.912005-06 323.74 15063.48 2.152006-07 411.50 13572.19 3.032007-08 451.51 11767.44 3.842008-09 575.53

Return On Capital Employed

012345

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

34

INTERPRETATION

From the above data we can say that Return on Capital Employed during

2003-04 is 1.29%. It was 1.91% in 2004-05, 2.15% in 2005-06, 3.03% in

2006-07 and 3.84% in 2007-08 respectively. Return on Capital Employed is

increasing day by day. The recover Ratio of Capital Employed in the

business is increasing it is good sign for AMUL.

RETURN ON SHAREHOLDER FUND

35

Return on Shareholder Fund Ratio is found out by dividing Net Profit by

Shareholders Fund.

Shareholders Fund = Equity Share Capital + Reserve and Surplus –

Misc. Expenses

Net profit Return on Shareholders Fund = __________ × 100

Shareholders Fund

YEAR NET PROFIT SHAREHOLDERSFUND

RATIO(N.P. /S.F.)

2003-04 252.46 3201.91 7.882004-05 311.23 3452.65 9.012005-06 323.74 3683.51 8.782006-07 411.50 4138.50 9.942007-08 451.51 4486.30 10.062008-09 575.53

Return On Shareholder Fund

0

5

10

15

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

INTERPRETATION

36

From the above ratio we can say that the Return on Shareholder Fund is

7.88% in 2003-04, 9.01% in 2004-05, 8.78% in 2005-06, 9.94% in 2006-07,

and 10.06% in 2007-08 respectively. The Return on Shareholders Fund is

increasing every year. So it is good sign that the recover ratio of amount

invested is increasing.

EARNING PER SHARE

37

The profitability of the common shareholders investment can

also be measured in many other ways on such measure is to

calculate the earning per share. The earning per share is calculated

by dividing the profit after taxes by the total number of common

(ordinary) shares outstanding.

EPS calculation made over years indicate whether or net the

firms earning power on per-share basis has changed over that

period. Earning per share of the company should be compared with

the industry average and the earning per share of other firms.

Earning per share simply shows the profitability of the firm on per

share basis.

Net Profit Earning per share = __________________________________

Number of common shares outstanding

YEAR NET PROFIT NO. OF SHARES O/S

RATIO(N.P. /Share)

2003-04 252.46 12.13 20.812004-05 311.23 13.95 22.312005-06 323.74 15.97 20.252006-07 411.50 19.80 20.782007-08 451.51 22.29 20.262008-09 575.53

38

Earnings Per Share

19

20

21

22

23

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

INTERPRETATION

From the above data we can say that Earning per Share is 20.81Rs in 2003-

04, 22.31 Rs in 2004-05, 20.25 Rs in 2005-06, 20.78 Rs in 2006-07 and

20.26 Rs in 2007-08. Earning per Share ratio is comparatively better for

AMUL. The shares of AMUL are distributed only to the Societies, so the

main earning is distributed to its Societies.

DIVIDEND PAYOUT RATIO

39

Dividend payout ratio is known as a payout ratio. It measures the

relationship between the earning belonging to the ordinary shareholders and

the dividend paid to them. In other words, the D/P ratio shows what

percentage share the net profit after taxes and preference dividend is paid out

as a dividend to the equity holders. It can be calculated by dividing the total

dividend paid to owners by the total profits/earnings available to them.

Alternatively it can be found out by dividing the DPS by the EPS.

The rate of dividend per ordinary share = 15 %

Amt. provided for Dividend (1) Dividend = ________________ × 100

Earning per share

Dividend per share (1) Dividend payout ratio = ________________ × 100

Earning per share

40

YEAR DIVIDENED EARNING PER SHARE

RATIO(Div./E.P.S)

2003-04 14.53 20.81 69.822004-05 14.53 22.31 64.952005-06 14.60 20.25 72.102006-07 14.50 20.78 69.782007-08 14.60 20.26 72.062008-09

Divideend Payout Ratio

60

65

70

75

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

INTERPRETATION

From the above ratio we can say that Dividend Pay Out Ratio is 69.82% in

2003-04, 64.95% in 2004-05, 72.10% in 2005-06, 69.78% in 2006-07 and

72.06 in 2007-08. From the Total Earning per Share averagely 70% amount

is distributed to the Shareholders.

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CAPITAL STRUCTURE RATIO

In this type of Ratio the comparison made for Capital Structure. In

this Ratio the proportion is to be found out between different types of long

term capital.

In this type of ratios we can find out following type of ratios

Debt Equity Ratio

Proprietary Ratio

DEBT – EQUITY RATIO

Debt-Equity Ratio Compute by dividing Total Debt to Net Worth.

Total Debt = Debentures + Deposits + Long Term Loans

Net Worth = Equity Share Capital + Reserve & Surplus

Total Debt Debt-Equity Ratio = ____________

Net Worth

YEAR TOTAL DEBT NET WORTH RATIO(T.D./N.W)

2003-04 10840.16 3201.91 3.382004-05 10363.16 3452.65 3.002005-06 9216.63 3754.41 2.452006-07 7363.71 4221.59 1.742007-08 5874.95 4591.36 1.282008-09

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Debt-Equity Ratio

0

1

2

3

4

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

INTERPRETATION

From the above ratio it is clear that Debt-Equity Ratio in 2003-04 is 3.38

times. It was 3.0 times in 2004-05, 2.45 times in 2005-06, 1.74 times in

2006-07 and 1.28 times in 2007-08. The ideal Debt-Equity Ratio is 2:1, in

AMUL 2003-04, 2004-05 and 2005-06 the Ratio is more than 2, because of

the higher amount of Long Term Debt but than after it is declining, so it

shows that Total Long Term Debt is decreasing. It is good sign for AMUL.

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PROPRIETARY RATIO

Proprietary Ratio is found out by dividing Proprietary Fund by Total

Assets.

Proprietary Fund = Equity Share Capital + Reserve and Surplus

Proprietary fund Proprietary Ratio = ____________

Total Assets

YEAR PROPRIETARY FUND

TOTAL ASSETS

RATIO(Sales/T.A.)

2003-04 3201.01 26326.08 12.162004-05 3452.65 25277.94 13.662005-06 3754.41 24595.17 15.262006-07 4221.59 25761.82 16.392007-08 4591.36 35864.51 12.802008-09

Proprietary Ratio

0

5

10

15

20

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

INTERPRETATION

From the above ratio it is clear that Proprietary Ratio for the year 2003-04 is

12.16%. In 2004-05 it is 13.66%, in 2005-06 it is 15.26%, in 2006-07 it is

16.39% and in 2007-08 it is 12.8%. Out of total Assets the above percentage

is invested by Proprietor and it is not better but we can say it is good for any

Co-Operative Society.

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OTHER RATIOS

In this Ratio we find following types of Ratio

Debt Ratio

Debtors – Asset Ratio

DEBT RATIO:

This Ratio can be found out by dividing Total Debt by Net Asset.

Debt = Loans + Debentures + Fixed Deposit

Net Asset = Total Assets – Current Liability

Total Debt Debt Ratio = ____________ × 100

Net Assets

YEAR TOTAL DEBT

NET ASSETS

RATIO(Debt./N.A.*100)

2003-04 10840.16 19540.09 55.482004-05 11363.16 16289.38 69.752005-06 9716.63 15063.48 64.502006-07 7363.71 13572.19 54.252007-08 15374.95 107187.29 70.322008-09 137212.35

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Debt Ratio

0

20

40

60

80

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

INTERPRETATION

From the above ratio we can say that Debt Ratio in 2003-04 is 55.48%. It

was 69.75% in 2004-05, 64.5% in 2005-06, 54.25% in 2006-07 and

130.65% in 2007-08. It is comparatively good, except 2007-08.

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TOTAL LIABILITY TO ASSET RATIO

This Ratio can be found out by dividing Total Liability by Total Asset

Total Liability = Debentures + Loans + Fixed Deposit + Current Liability

Total Liability Total Liability to Total Assets Ratio = ____________ × 100

Total Assets

YEAR TOTAL LIABILITY

TOTAL ASSETS

RATIO(Sales/T.A.)

2003-04 17618.62 26326.08 67.002004-05 19296.36 25277.94 76.002005-06 18608.22 24595.17 76.002006-07 18796.43 25761.82 73.002007-08 28947.46 35864.51 81.002008-09

Total Liability to Total Asset Ratio

020406080

100

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

INTERPRETATION

From the above ratio we can say that Total Liability to Total Asset Ratio in

2003-04 is 67%. In 2004-05 and 2005-06 it is 76%, in 2006-07 it is 73% and

in 2007-08 it is 81%. From the above ratio we interpret that in compare of

Total Assets. The percentage of Total Liability is comparatively less so it

indicate good sign for AMUL.

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CHALLENGES TO BE MET

Expansion upgrading of plant and equipment to met increasing

demanded for quality and quantity with the help of better-qualified

personnel.

Rapid increase in productivity while respecting the basic man land

animal dynamic that is control to dairy and agriculture development in

India

Development of new markets and expansion of old ones replacing

additional system with quality packaged milk products and vegetable.

Creating a national information network to ensure that accurate timely

information is available to all who need it.

Rapid progress towards the highest qualify standard strengthens

institutions leaders, managers and members.

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CONCLUSION

Amul is a highly successful co-operative sector in world. Which truly work for farmers, who are the members of union all departments are working well and help the union to reach toward top position. I have list out some recommendations they are follow.

Amul has competitive established system. The four hands of Amul are working successfully with corporation. The people of Amul are very co-operative and enthusiastic. Amul is famous as “Anand pattern” for its co-operative organization in world. So it’s a matter proud for people of Anand as well as India. Amul is really “The Taste of India”.

By this summer internship report anybody can get the overview of the condition of the financial statement and the organization’s past and present situation. The ratio analysis shows the direction of the organization’s growth.

According to my point, success factor being Amul are hard work discipline, co-operative structure, production technology development, and the proper method for paying the debt and collecting the payment. The main cost for AMUL is transportation cost for collecting the milk from different villages. But now AMUL have the chilling facilities to some big villages (milk collection centre). So that the milk is stored up to 2-3 days. Then AMUL collect the milk from there after 3 days.

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BIBLIOGRAPHY

(1) Company’s Annual Reports (last 6 years)

(2) www.Google.com

(3) www.Amuldairy.com

(4) Prasanna Chandra, Financial Management Fourth Edition

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