Working Capital of Verka

8/12/2019 Working Capital of Verka

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PROJECT REPORT ON STUDY

OF

WORKING CAPITAL MANAGEMENT

AT

VERKA MILK PLANT BATHINDA

Submitted T! Submitted B"! #

M$% S&'dee( Kum&$ )*e+%, R&'-eet K&u$

R** N% ./0

MBA)IC, 1$d

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UNIVERSITY SCHOOL OF BUSINESS STUDIES

GURU KASHI CAMPUS2 TALWANDI SABO

ACKNOWLEDGEMENT

I am highly indebted to the management of Verka Milk Plant Bathinda to undertake

me as training in their organization. I would like to thank specially to Mr. S. K.

Sharma !eneral Manager" for pro#iding me an opportunity to undertake training at

Verka Milk Plant Bathinda.

I wish to e$press my gratitude towards Mr. %. K. &adhwa for permitting me to work

under his guidance and cooperation. I ha#e no words to e$press my gratitude to the

profound interest taken by him at e#ery stage of the pro'ect. (is encouragement and

support made my target easily achie#able. I would also like to thank other office and

marketing staff of Verka Milk Plant Bathinda for their cooperation and helpful

beha#iour.

I also e$press my sincere thanks to my parents and friends who always ha#e been

source of inspiration to me and supported me morally and financially in e#ery acti#ity

during the training.

%bo#e all I would like to thank almighty for showering

his blessings to complete the pro'ect.

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PREFACE

)or the completion of the BB% ll it has been mandatory to obtain an Industrial

*raining in )inance. *his training session really help me in gathering knowledge of

market.

I ha#e prepared this pro'ect on the topic +)inancial %nalysis of Verka Milk Plant

Bathinda, in which I ha#e written about how an organization can manage its working

capital in its daily business operations.

*his report is prepared during training is life-s greatest treasure as it is full of

e$perience obser#ation and knowledge. *he training held was #ery gainful as it took

us close to real life. *his period also pro#ide a chance to gi#e theoretical knowledge a

practical result.

*his report is a result of /0 days training that I ha#e taken at #erka milk plant bti. It has

been #ery educati#e and fruitful e$perience for me for it has gi#en mean insight into

some practical e$perience.

I wish this great organization success so it may flourish and ser#e the nation and ha#e

to achie#e many goals.

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STUDENT DECLARATION

I hereby declare that the summer training report entitled submitted in the partial

fulfillment of the re1uirement for degree of BB%2II

*o #erka milk plant Bathinda is my original work and not submitted for the award of

any other degree diploma or any other similar title or price.

Pro'ect guide3 4ame3

Mr. %. K. &adhwa 5an'eet kaur

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CONTENTS

*(6 P57)I86

Introduction Indian dairy industry

9airy Plants

MI8K)692P:4;%B

MI8K P8%4* B%*(I49%

MANAGEMENT BOARD OF DIRECTORS

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7:*8I46 7) *(6 S*:9?2>@ the State had A milk processing plants with an

aggregate processing capacity of A million lac liters per day. In addition to these

processing plants and /0 co2operati#es milk chilling centers operate in the State.

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&ith the increase in milk production. Maharashtra now regularly e$ports milk to

neighbouring states. It has also initiated a free school feeding scheme benefiting more

than three million school children from o#er => schools all o#er the State.

I'di&' d&i$" i'du3t$"

9airy is a place where handling of milk and milk products is done and technology

refers to the application of scientific knowledge for practical purposes. 9airy

technology has been defined as that branch of dairy science which deals with the

processing of milk and the manufacture of milk products on an industrial scale.

In de#eloped dairying countries such as the :.S.%. the year =@0 is seen as the

di#iding line between farm and factory2scale production. Various factors contributed

to this change in these countries #iz. concentration of population in cities where 'obs

were plentiful rapid industrialization impro#ement of transportation facilities

de#elopment of machines etc. whereas the rural areas were identified for milk

production the urban centres were selected for the location of milk processing plants

and product manufacturing factories. *hese plants and factories were rapidly e$panded

and modernized with impro#ed machinery and e1uipment to secure the #arious

ad#antages of large2scale production. 4early all the milk in the :.S.%. before =>

was deli#ered as raw natural" milk. !radually farmers within easy dri#ing distance

began deli#ering milk o#er regular routes in the cities. *his was the beginning of the

fluid milk2sheds which surround the large cities of today. Prior to the =@0s most milk

was necessarily produced within a short distance of the place of consumption because

of lack of suitable means of transportation and refrigeration.

*he Indian 9airy Industry has made rapid progress since Independence. % large

number of modern milk plants and product factories ha#e since been established.

*hese organized dairies ha#e been successfully engaged in the routine commercial

production of pasteurized bottled milk and #arious &estern and Indian dairy products.

&ith modern knowledge of the protection of milk during transportation it became

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possible to locate dairies where land was less e$pensi#e and crops could be grown

more economically.

In India the market milk technology may be considered to ha#e commenced in =>0

with the functioning of the Central 9airy of %arey Milk Colony and milk product

technology in =>0A with the establishment of %M:8 9airy %nand. *he industry is

still in its infancy and barely =D of our total milk production under goes organized

handling.

Hi3t$" 4 I'di&' M&$5et Mi*5 I'du3t$"!

Beginning in organized milk handling was made in India with the establishment of

Military 9airy )arms.

(andling of milk in Co2operati#e Milk :nions established all o#er the country

on a small scale in the early stages.

8ong distance refrigerated rail2transport of milk from %nand to Bombay since

=>/0

Pasteurization and bottling of milk on a large scale for organized distribution

was started at %arey =>0" Calcutta (aringhata =>0>" 9elhi =>0>" &orli

=>A=" Madras =>AE" etc.

6stablishment of Milk Plants under the )i#e2


9/65

More than F//0 million people economically acti#e in agriculture in the world

probably FGE or e#en more H of them are wholly or partly dependent on li#estock

farming. India is endowed with rich flora )auna continues to be #ital a#enue for

employment and income generation especially in rural areas. India which has AAD of

economically acti#e population engaged in agriculture deri#es E=D of !ross

9omestic Product !9P from agriculture. *he share of li#estock product is estimated at

F=D of total agricultural sector

Contribution of li#e stock sector to gross domestic product

Percentage contribution"

=>020= =>>2>=

AE.0 A?.

=F. =A.

/.= E.=

=.E .E

=A.0 =.

8i#e stock populations3

4umber of animals in thousand"

Source3 production yearbook =>>0 G)%7 statistics di#ision"

9

Sheeps !oats Pigs Chickens Cattle

/0 ==>F/F ==?@ /E0 =>/A00

Buffaloes (orses Mules Camels

?>0 >> =?/F =0F


10/65

Mi*5 P$du+ti'

=>0 J =? million tonnes

=>>A J ?.@ million tonnes

=>>? J ?/.E m*

Pro'ected" FF J F/ m*

6$pected to reach2 FF to F0 m* J FF

India contributes to world milk production rise from =F2=0 D it will increase upto

E2E0D year FF"

Mi*5 Cm(3iti'

Sr.

no

Constituents Buffalo Cow !oat 8i1uid skimmed milk

= Moisture gm" @=. @?.0 @A.@ >F.=

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F Protein gm" /.E E.F E.E F.0

E )at gm" A.0 /.= /.0 .=

/ Minerals gm" .@ .@ .@ .?

0 Carbohydrates gm" 0. /./ /.A /.A

A 6nergy calories kcal" ==?. A?. ?F. F>.

? Calcium mg" F=. =F. =?. =F.

@ Phosphorus mg" =E. >. =F.>.

> Iron mg" .F .F .E .F

Indian Buffaloes3 9airy business 9irectory =>>A"

Buffaloes are classified into two categories

=" re#erine depending upon #ariation in their habitat genome"

F" Swamp buffaloes3 2 /@ chromosomes

South 6ast %sian countries

Stocky animals marshy land habitat

5i#er Buffaloes3 2 0 chromosomes

2 Massi#e in size and curled horns

2 Prefer to enter clear water

India3 leading most buffalo populated country ?@ millions most of re#erine

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Mi*5 ($du+ti'3 %bout >0D of world buffalo milk /0.E million tones" is produced

in %sia Pacific while A/./D is produced in India )%7.=>>F"

)rom =>0 to =>>F milk production in the world increased by /.FAD

*he D of total bo#ines slaughtered*otal bo#ine slaughtered D"

&orld =?.= to =?./D or 2 =.AD per annum

India =0D per annum

%sia A.AD

Increasing trend of buffalo population in most of the %sian countries in Brazil and

Italy

Production performance

G$6t73 *he a#erage birth wt.Indian buffaloes" low F= kg (igh /= kg

(igher in male cal#es than in females

%#erage daily gain of 0/@ gm between E2A months// gm between birth to EA months

Body weight at first cal#ing2 ranges from

EA?kg9harwati"to0E=kg4ili5a#i"

(igher growth rate in re#erine breeds than swamp

MILK PRODUCTION

Production performance of different breeds of Buffaloes3

%ge at =stcal#ing

months"

8actation.


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4ili 5a#i /F. /=./2/?.E =?A0 =0>A2F@@ F@@ >"

D&i$" P*&'t3!

IndiaLs modern milk supply goes back to 9ecember =0 =>0 when the %arey Milk

Plant in Bombay launched the supply of pasteurized and bottled milk on large2scale for

the first time in India. Subse1uently o#er the years the share of the organized sector

increased after the launching of 7peration )loodin =>?.

)rom an insignificant F liters per day lpd" milk processing in =>0= the

organized sector is presently handling o#er F million lpd in almost 0 dairy plants.

%lready one of the world-s largest li1uid milk plants is located in 9elhi handling o#er

@ liters of milk per day Mother 9airy 9elhi". IndiaLs first automated dairy

capacity3 = mlpd" Mother 9airy !andhinagar was commissioned at !andhinagar

near %hmedabad !u'arat in &estern India. It is owned by India-s biggest dairy

cooperati#e group !u'arat Cooperati#e Milk Marketing )ederation !CMM)" in

%nand with an annual turno#er in e$cess of 5s FF billion :S 0 million" in =>>>.

9airy Plants :pdate3 IndiaLs first #ertical dairy commissioned

%mul2III with its satellite dairies at %nand in !u'arat with total installed capacity of

=.0 tone capacity3/ lpd" has been commissioned at 4oida outside 9elhi in

=>>>. It is owned and managed by the Pradeshik Cooperati#e 9airy )ederation

8imited 8ucknow in :ttar Pradesh.

Re3u$+e3! D&i$" P*&'t3

In this section 9airy (*&'t3are listed alphabetically and regionwise including li1uid

milk plants and product manufacturers both &estern and indigenous in the public

cooperati#e and pri#ate sectors. *he address phone and fa$ numbers list of products

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manufactured and capacities and other details of these Plants can be obtained from

9%I5< I49I% =>>?or from us.

Ve$5&2 Pun'abLs leading milk brand

7ne of the leading dairy brands of 4orth India Verka is yet another contribution from

the state of Pun'ab. *he flagship brand of the Pun'ab State Cooperati#e Milk

ProducersL )ederation 8td Milkfed" Verka is today en'oying the patronage of

customers both within and outside the country. MilkfedLs future programmes can ne#er

be complete without Verka.

Verka is a brand leader in milk powders particularly in northern eastern sectors. *he

Milkfed brand commands a premium price o#er milk powders manufactured by

competitors which include multinational as well as pri#ate trade and other cooperati#e

federations. Milkfed claims that Verka has car#ed a niche on the basis of the sheer

strength of its 1uality freshness and purity.

Milkfed is ser#ing nationwide consumers through its network of 5egional offices and

strong distribution channels. Milkfed markets a wide #ariety of products which

include li1uid milk skimmed milk powder whole milk powder infant food ghee

butter cheese lassi S)M ice cream malted food and Verka Vigour etc. *he annual

turno#er of Milkfed has touched to 5s /0 crore.

Milkfed states that it has successfully le#eraged on the brand e1uity of Verka to launch

new trends needs tastes and hopes. Verka brands included #aried #arieties of cheese

like the processed cheddar cheese cheese spread and cheese singles. *here are alsomilk powders like 9airy &hitener Skimmed Milk Powder and Infant Milk Powder.

(ealth 9rinks like Verka Vigour Verka 8assi Sweetened )la#oured Milk and a

mango drink called 5aseela ha#e also hit the markets. Milkfed has now come out with

Verka Curd and a whole lot of different fla#ours of ice creams. Milkfed has also made

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a foray into the international markets. *hey say that it was the domestic competition

that dro#e them to alien destinations. (owe#er Milkfed has already established its

ghee market in the Middle 6ast. Verka ghee reaches all the 6mirates and is a#ailable in

almost all super markets. In addition to ghee SMP is also e$ported to %sian Countries

like Philippines Bangladesh and Sri 8anka. Verka Malt Plus Malted Milkfood" is

being e$ported to Bangladesh also.

&ith *echnology Mission Programmes e#er widening markets and increasing e$ports

Milkfed is preparing itself to take Verka to greater heights. *he federation has planned

to introduce more #alue2added products like *etra2Pack Plain Milk and low calorie

lassi. It has also sought technical assistance from the Israel 9airy Board to initiate

breed impro#ement and milk production enhancement programme in the state.

Milkfed not only pro#ides assured market to milk producers but also carries inputs to

enhance milk to their doorsteps. *he 9istrict Cooperati#e Milk ProducerLs :nions and

Milk Plants ha#e attained self2sufficiency or are on the threshold of attaining it.

Milkfed has played a #ery #ital role in pro#iding a strong base for remunerati#e price

to the producer they get more money for their milk and payments are timely. In

addition technical input ser#ices in feeding breeding and management are easily

accessible. Value addition is one of MilkfedLs thrust areas and the plants produce not

only pasturised homogenised milk but also buttermilk cream cheese ice cream

butter and clarified butter2oil ghee" and se#eral other products. *he Milk :nions ha#e

marketed milk and milk products of the #alue of 5s FF.@? crore during the pre#ious

year.

It should be noted that the state go#ernment has recently announced a new pro'ect in

which ?@ bulk milk coolers are to be installed by the central go#ernment at the le#el of

milk cooperati#es in the districts of 5opar 8udhiana !urdaspur and Patiala under a

Centrally Sponsored Scheme. )or this purpose the !o#ernment of India has already

released an amount of 5s =/E.=0 lakh for the installation of F/ bulk milk coolers for

implementation of this programme in 5opar district. *his mo#e is e$pected to help the

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farmers to produce 1uality milk and get better farm gate price and consumers shall get

1uality milk. *he budgetary outlay for the programme is 5s =./= crore. Milkfed is an

ape$ body at the state le#el. It has == Milk :nions at district le#el operating = milk

plants and more than 0 cooperati#e societies at #illage le#el with a total of E lakh

members.

%part from the main arena of collecting more and more milk and enrolling more and

more milk producers Milkfed and its units ha#e a work force of about 0

employees. 6#ery morning and e#ening milk is lifted from the #illages through pri#ate

#ehicles 2 this means regular employment to about A transporters most of whom are

self2employed. Some = workers man the milk procurement and technical input

operations.

MILKFED#PUNJAB

*he Pun'ab State Cooperati#e Milk Producers- )ederation 8imited popularly known as

MI8K)69 Pun'ab came into e$istence in =>?E with a twin ob'ecti#e of pro#iding

remunerati#e milk market to the Milk Producers in the State by #alue addition and

marketing of produce on one hand and to pro#ide technical inputs to the milk

producers for enhancement of milk production on the other hand. %lthough the

federation was registered much earlier but it came to real self in the year =>@E when

all the milk plants of the erstwhile Pun'ab 9airy 9e#elopment Corporation 8imited

were handed o#er to Cooperati#e sector and the entire State was co#ered under

7peration )lood to gi#e the farmers a better deal and our #alued customers better

products.*oday when we look back we think we ha#e fulfilled the promise to some

e$tent. *he setup of the organisation is a three tier system Milk Producers Cooperati#e

Societies at the #illage le#el Milk :nions at 9istrict le#el and )ederation as an %pe$Body at State le#el. MI8K)69 Pun'ab has continuously ad#anced towards its co#eted

ob'ecti#es well defined in its byelaws. N (ome N 7rganisation N Procurement N

Products N Marketing N %chie#ements N 8ooking Beyond.

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Milkfed has formulated company specifications for its milk milk products

to pro#ide standard and 1uality of products to consumers.

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Milk Cheese Paneer 9rinks

!hee Butter Icecream Sweets Milk Powder

)resh Products Packing

7n the basis of 1uality with efficient administration MI8K)69 has not only

established new mile stone of pro#iding ser#ices to 9airy farmers but scaled new

heights in delighting esteemed customers also. *his has resulted into tremendous

achie#ements in all fields.

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TURNOVER3

*he annual turno#er of Milkfed which was 5s.?A crores in the year F?2@ has hit

the le#el of 5s.>E= crores in the year F@2>.

E8UITY PARTICIPATION!

*he paid2up e1uity of Milkfed as on E=.E.F= was to the tune of 5s./A.@A crores

which comprises of 5s.F@.>E crores from the cooperati#e members and balance

5s.=?.>E crores from State !o#ernment.

MI8K)69 !57&*( %* % !8%4C6

P%5*IC:8%5S :4I* 02A A2? ?2@ @2> >2=

):4C*I74%8

S7CI6*I6SC:MM:.47S. A//0 A=/ A== 0>@> A=00

M6MB65S(IP C:MM:.47S E.?A E.0A E.AE E.A E.A0

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I4 8%CS

%V!. 9%I8< MI8K

P57C8K! SP9 ?./0 ?.@= ?.@F ?.?@ @.F=

P6%K MI8K P57C 8K! SP9 =./ ==.A/ ==.E? ==.0/ =F.E>

%.I. C8:S*65

S7CS.C77M:.47S. EFE E/= E@@ /EE 0/

)79965 S669

S:PP8I69M.*s. ///.= /.E /E. 0. 0?F.

C%**86 )669

S789M.*s. ?E?F/ AA>? AA?0 ?E0?? @A=?/

%V!..9%I8< CI* /=.>F A=.==

S%86 7) 8%SSI 8%C P%CK6*S =.0/ =F.F =A.@> =>.=A F>.0=

S%86 7) IC62

C56%M8%C 8I*56S >.=? =.FE =F.=@ =0.A= =?.A@

6OP75*S 5S.I4 8%CS A>@.=? ==/F.F@ ?=E.A? ==/.E0 =EE/.>

*:547V65 5S.I4 C5756S 0@0. A0E. A?0. ?A. >E=.

MI8K P57C:56M64* 46*&75K3

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&orking on %nand Pattern the process of organizing societies at #illage le#el started

in Pun'ab as early as =>?@. Presently there is strong 4etwork of about A=00 as on

E=.E.F@" Milk Producers Cooperati#e Societies

organized at #illage le#el. %bout E.A0 8akh milk

producer members are attached to these societies.

)resh milk is procured from the milk producers

twice a day through #illage le#el societies directly

without the assistance of any middleman.

I4P:* S65VIC6S3

It is one of the fundamental ob'ecti#es of MI8K)69to carry out

acti#ities for promoting milk production in the State. In #iew of

this #arious technical input ser#ices like #eterinary health care artificial insemination

ser#ices #accination supply of V65K% balanced cattle feed and 1uality fodder seed

etc. are pro#ided for enhancing milk production and economic de#elopment of farming

community.

C86%4 MI8K P579:C*I74 P57!5%MM63

)or impro#ing 1uality of raw milk right from milk producerLs le#el 1 massi#e

programme called CMP has been launched under which =>0 Bulk Milk Coolers ha#e

been installed in the societies and many more in pipe line. Besides more than =

%utomatic Milk Collection Stations ha#e been pro#ided to the societies for bringing

efficiency and total transparency in the system. *raditional manual method of milk

testing at society le#el is being replaced with 6lectronic Milk *esters.

WOMEN DAIRY PROJECT!

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(ousehold le#el dairying is largely the domain of women especially in small and

marginal household families. In #iew of this fact Milkfed has undertaken &omen

9airy Pro'ect in si$ Milk :nions namely (oshiarpur 5opar Patiala ;alandhar

8udhiana and %mritsar with an ob'ecti#e to empower rural women in the field of

dairy. *his Programme is being implemented under Support to *raining

6mployment Programme S*6P" with the assistance of !o#ernment of India. :nder

this programme E> women societies with =>@A women beneficiary members will be

organized.

S6**I4! :P 7) BI! C7MM65CI%8 9%I5< )%5MS3

In order to enhance the milk production and making the dairy farming a profitable and

sustainable profession Milkfed has planned to

establish at least ten progressi#e big dairy farms in

each Milk :nion by arranging soft terms loans

from the banks.

P579:C*IVI*< 64(%4C6M64* P57!5%MM63

&ith a #iew to enhance milk production so as to reduce a#erage cost per Kg. of milk

produced Milkfed and its affiliated Milk :nions are pro#iding technical input ser#ices

like animal health care artificial insemination ser#ices #accination supply of

balanced cattle feed supply of 1uality fodder seeds etc. to specific target group i.e.

Milk Producers Cooperati#e Members at their door steps.

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C7MM:4I*< B%S69 SI8%!6 M%KI4! I4 K%49I %56%S3

Milkfed initiated community based silage making to fulfill shortage of green fodder in

Kandi area of (oshiarpur !urdaspur. *his will ensure a#alability of green fodder in

the shape of Silage during scarcity period. *his will help in impro#ing milk

production. 0 Silo pits of capacity =0 M.*. each will be constructed during the year

F>2=. 5s.=.=0 crore shall be gi#en as capital grant for construction of Silo pits

chaff cutters weighing balance and training.

)79965 S669 M:8*IP8IC%*I74 P57!5%MM63

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4on a#ailabilty of 1uality fodder seed was a ma'or constraint. Milkfed established its

own automatic fodder seed production processing unit at Bassi Pathana of capacity 2

=0 M*G9ay. 9uring the year Milkfed produced AFF@ 1uintals of 1uality fodder seed

and during the year more than @ 1uintals of seed will be produced.

P57VI9I4! MI8KI4! M%C(I46SGMI8KI4! P%587:5S3

*o upgrade milking technology Milkfed is pro#iding milking machinesGmilking

parlours to dairy cooperati#e societiesGprogressei#e dairy farmers at 0DGF0D subsidy.

*ill date /0 Milking Macines and / Milking Parlours ha#e been pro#ided against the

target of @ milking machines for the year F>2=. 5s.F. crore ha#e been recei#ed

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from !o#t. of Pun'ab as financial assistance. *his will impro#e Bacterological 1uality

of milk hygenic conditions of teats of animals and reduce stress to animalsGMilkers

and somatic cell counts.

MARKETING 9 E:PORT

MI8K)69 P:4;%B is ser#ing nation wide consumers through its net work of

5egional 7ffices and strong 9istribution channels. MI8K)69 markets a wide #ariety

of products which include 8i1uid Milk Skimmed Milk Powder &hole Milk Powder

9airy &hitener !hee Butter Cheese 8assi *etra Pack Sweetened )la#ored Milk

:(* milk in *etra Pack Ice Cream Malted )ood Verka Vigour Khoa etc. etc%

V65K% is brand leader in milk powders particularly in northern eastern

sectors and Skimmed Milk Powder marketed by Milkfed commands a premium price

o#er powders manufactured by competitors which include multi2national as well as

pri#ate trade and other Cooperati#e )ederations. 4ow Verka has arri#ed on the sheer

strength of its 1uality freshness and purity. %nd of course it-s home made taste at the

most affordable price. *o people today Verka is the part of their daily li#es.

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Milkfed Pun'ab is making a#ailable pasteurised milk packed and processed under

hygienic conditions at the doorsteps of the consumers.Keeping in #iew the

modern days human stress strains and undernourished persons those do not

get ade1uate Vitamin % 9 from other sources Milkfed felt its moral

responsibility to take care of their health by enriching Verka milk with

Vitamin % 9.

&ith competition in national market zooming up efforts to enhance e$port of Milk

Products ha#e been made. Milkfed has established its ghee market in Middle

6ast market. Verka ghee reaches all the emirates and is a#ailable almost in all

the super markets. *he penetration is so deep that #erka ghee is a#ailable in

far off labour camps.

)uture Planning

Pun'ab is the State which has pioneered the green re#olution in the country. It is

because of the efforts of the Pun'ab farmers that India now occupies an en#iable

position of self2reliance in respect of foodgrains on the &orld map. Conse1uent upon

intensification of agriculture Pun'ab agriculture has now reached saturation le#el

beyond which further growth appears to be limited. *his necessitates a fresh look at

the agricultural scenario pre#ailing in the State so that the Pun'ab farmer who is #ery

enterprising and is recepti#e to new technology continues to reaps the fruits of his

labour without permanent damaging his en#ironment.

*he programme aims at bringing a #oluntary shift in cropping pattern introduction of

incomeGemployment generatingGproducti#ity oriented programmes directly benefiting

the farmer of Pun'ab. :nder the programme following schemes are proposed for 9airy

9e#elopment concerning Milkfed Pun'ab32

Milk Production and (ygienic Quality Impro#ement %ssistance.

26


27/65

Modernisation of Milk *esting.

6stablishment of Method2cum25esult 9emonstration :nits.

In the field of dairy de#elopment Commercialized 9airy )arming for producing more

milk round the year of high 1uality was felt the only solution for the #iability of 9airy

Industry in the present 4ational and International 9airy Scenario. It will help ?D

rural population of Pun'ab in increasing their income.

&ith the ob'ecti#e to accelerate the pace of Milk Production in the State of Pun'ab and

to impro#e the 1uality of milk right at the Society le#el and to increase the milk

procurement to ha#e =D capacity utilisation of Milk Plants a detailed %ction Plan

#ision F/ has been prepared 'ointly by Milkfed 9istrict Milk :nions and

Cooperati#e 9epartment spelling out therein the #arious acti#ities to be undertaken for

9airy 9e#elopment in the State of Pun'ab.

*he broad ob'ecti#e of the Plan is to produce ma$imum milk of the best 1uality at the

least cost per liter collect store and transport it at least cost in an idle way to be of

best 1uality when recei#ed at Milk Plants dock to utilise it for high standard #alue

added products to earn ma$imum income and inturn paying remunerati#e price for raw

milk to the Milk Producers.

It is hoped that with the implementation of Vision2F/ plan the number of Milk

Producers Cooperati#e Societies will increase to @ from 0@/ in March2Fk and the

membership of these societies will increase from E.E@ lacs in March2Fk to /.?0 lacs by

the end of March2F/. Similarly the a#erage milk procurement will increase to =0.E

lac ltrs. per day in the FE2/ from @.== lac ltrs. per day in =>>>2Fk. *he detailed

in#estment proposals ha#e been submitted to 4ational dairy 9e#elopment Board for

funding.

27


28/65

Milk Plant Bathinda

Milk Plant Bathinda

was commissioned in

September =>?/

with a total outlay of

5s. =.A Crores by

*he Pb. 9airy 9e#.

Corporation limited. It was one of the select co2operati#es that were co#ered under the

7peration )lood2= Programme. Subse1uently on Ist March =>@ it was handed o#er

by the State !o#t. to *he Pun'ab State Co2operati#es milk Producers federation 8td.

MI8K)69" which is an ape$ le#el organization of milk producers operati#e in the

State. )urther to this de#elopment the Milk Plant was handed o#er to *he Bathinda

9istrict Co2operati#e Milk Producers :nion 8td. registered in the year =>?@ under

Pun'ab co2operati#e %ct." on =st ;anuary =>@@. Milk Plant set up with a twin ob'ecti#e

of pro#iding remunerati#e milk market to the milk producers in this area and also

28


29/65

supply good 1uality milk products to the consumers at reasonable rates and also

marketing of milk producers at #illage le#el.

*he :nion has a processing capacity of =*8P9 and drying capacity of A.F M*9.It

also owns four Milk Chilling Centres namely 5ampura=0*8P9" *alwando

Sabo=*8P9" Bhikhi =0*8P9" and sardulgarh F*8P9". In addition the union has

hired ice factory Bhagta with a capacity of F*8P9.

Milk and Milk products are prepared asper the norms by pasteurizing the milk and

others re1uired process to fulfill the targetGnorms as per the market demand. Milk plan

also got IS72>=3F with (%CCP as per IS3 =03 >@" and also appro#ed by the

6$port Inspection %gency 4ew 9elhi for e$port the milk products. Milk products

ha#ing standards norms of P)%GBISG6!! M%5K and our prescribed specification if

International Standards for e$port of ghee and Milk Powder to 9ubai and Middle 6ast

Countries.

Products 3 2 B5%492V65K%"

Milk

!hee

Skimmed Milk Powder

&hole Milk Powder

*able Butter

Paneer29


30/65

Khoa

S.).M.

Milk Cake

8assi

Kheer

Ice Cream

*(6 6O*64SI74 7) *(6 B5%49

%fter winning faith of innumerable consumers Verka did not stop. )or there was a

scope for more. Changing times brought new trends needs tastes and hopes.

Verka dynamic as e#ertoo ac21uired newer forms.By adding #alue to milk

to satisfy a 1uality 2 conscious society. %nd what successR forconsumers

could ha#e their own pick as we came up with #aried #arieties of cheese like

the Processed Cheddar Cheese Cheese Spread and cheese Singles. %nd

there were milk powders like 9airy &hitenerSkimmed Milk Powder and

Infant Milk Powder. (ealth 9rinks like Verka Vigour Verka 8assi

Sweetened )la#oured Milk and a mango drink called 5aseela. *hen there

were Verka Curd and a whole lot of different fla#ours of Ice Creams. Milkhad ne#er meant so much before.

OBJECTIVES OF VERKA MILK PLANT

*he ob'ecti#e of milk plant is collected milk from different #illages. It utilize in

proper way.

It pro#ides best 1uality of product.

*he #erka milk plant is played main roll in increase the dairy form. People are

shown interest in dairy form.

Its main purpose is made dairy business in rural area.

30


31/65

M%4%!6M64* B7%59 7) 9I56C*75S

Sh. V.K.Singh I%S" M.9.milk fed Pun'ab

S.Sandhura Singh Chairman

S.Bikerm'it Singh Vice Chairman

S. 8abh Singh 9irector

S.Sukhpal Singh 9irector

S.;agsir Singh 9irector

S.Sur'it Singh 9irector

S.;awala Singh 9irector

S.Balwinder Singh 9irector

S.%mrik Singh 9irector

Smt.Surinder P. Kaur 9irector

S.Boota Singh !alib ;.5. Co2op.S7C.)erozpur

S.(.S.;atana 9y.5eg.co2op.S7C.B*I

S.Karnail Singh 9y.9ir. 9airy 9e# .B*I

S.*.P.S.&alia Milkfed 4ominee

Sh.M.9.Sharma 4.9.9.B.4ominee

31


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Sh.5.K.*iwari !.M.Milk plant B*I

7:*8I46 7) *(6 S*:9


33/65

SC7P6 7) *(6 S*:9


34/65

9ata Collection Methods3

Structured and non2disguised 1uestionnaire has been used to achie#e the

ob'ecti#es of this report .*his pro#ed to be a cost effecti#e accurate and speedy way

of achie#ing the desired ob'ecti#es. *he greatest ad#antage being its #ersatility. It

opened a broad way of enticing the knowledge and opinions of the sample.

%nother important reason for choosing the method was its unbiasedness. 4o

bias of the researcher can creep in and it-s easy to tabulate and interpret.

:nderstanding of reports being prepared by the units3

)or understanding the #arious types of reports being sent to finance department

by different section personal inter#iews ha#e been conducted with the concerned

persons with prior permission from concerned department head.

Suggestions3

Suggestions on the basis of working capital ha#e gi#en for better results.

)or analyzing the concept the techni1ues ha#e been used32

5atio analysis

Common size statement

Statement of changes in working capital

7perating cycle

8IMI*%*I74S 7) *(6 S*:9


35/65

%s the receipts from debtors is directed to the corporate office and hence not

much information regarding the recei#able management could be obtained.

In#estment o funds are also made by corporate office so it becomes difficult toknow that how much in#estment is made in different ways for continuous

a#ailability of funds.

%n Introduction *o &orking Capital Management

+&orking capital means the part of the total assets of the business that change from

one form to another form in the ordinary course of business operations.,

Concept of working capital32

*he word working capital is made of two words =.&orking and F. Capital

*he word working means day to day operation of the business whereas the word

capital means monetary #alue of all assets of the business.

&orking capital

&orking capital may be regarded as the life blood of business. &orking capital is of

ma'or importance to internal and e$ternal analysis because of its close relationship

with the current day to2 day operations of a business. 6#ery business needs funds for

two purposes.

8ong term funds are re1uired to create production facilities through purchase of

fi$ed assets such as plants machineries lands buildings etc.

Short term funds are re1uired for the purchase of raw materials payment of wages

and other day2to2day e$penses. It is other wise known as re#ol#ing or circulating

capital.

It is nothing but the difference between current assets and current liabilities. i.e.

35


36/65

&orking Capital T Current %sset J Current 8iability.

Businesses use capital for construction reno#ation furniture software e1uipment or

machinery. It is also commonly used to purchase in#entory or to make payroll. Capital

is also used often by businesses to put a down payment down on a piece of commercial

real estate. &orking capital is essential for any business to succeed. It is becoming

increasingly important to ha#e access to more working capital when we need it.

Concept of working capital32

U !ross &orking Capital T *otal of Current %sset

U 4et &orking Capital T 6$cess of Current %sset o#er Current 8iability.

Current %ssets Current 8iabilities

Cash In handG at Bank

Bills 5ecei#able

Sundry 9ebtors

Short *erm 8oans

In#estmentsG stock

*emporary In#estment

Prepaid 6$penses

%ccrued Incomes

Bills Payable

Sundry Creditors

7utstanding 6$penses

%ccrued e$penses

Bank o#erdraft

&orking capital in terms of fi#e components3

=. Cash and e1ui#alents3 2 *his most li1uid form of working capital re1uires constant

super#ision. % good cash budgeting and forecasting system pro#ides answers to key

1uestions such as3 Is the cash le#el ade1uate to meet current e$penses as they come

due &hat is the timing relationship between cash inflow and outflow &hen will

36


37/65

peak cash needs occur &hen and how much bank borrowing will be needed to meet

any cash shortfalls &hen will repayment be e$pected and will the cash flow co#er it

F. %ccounts recei#able3 2 Many businesses e$tend credit to their customers. If you do

is theamount of accounts recei#able reasonable relati#e to sales (ow rapidly are

recei#ables being collected &hich customers are slow to pay and what should be

done about them

E. In#entory3 2 In#entory is often as much as 0 percent of a firmLs current assets so

naturally it re1uires continual scrutiny. Is the in#entory le#el reasonable compared

with sales and the nature of your business &hatLs the rate of in#entory turno#er

compared with other companies in your type of business

/. %ccounts payable3 2 )inancing by suppliers is common in small business it is one of

the ma'or sources of funds for entrepreneurs. Is the amount of money owed suppliers

reasonable relati#e to what you purchase &hat is your firmLs payment policy doing to

enhance or detract from your credit rating

0. %ccrued e$penses and ta$es payable3 2 *hese are obligations of your company at

any gi#en time and represent a future outflow of cash..>#rrf

Management of Cash

It is the duty of the )inance Manager to pro#ider ade1uate cash to all segments of the

organization. (e has also to ensure that no funds are blocked in idle cash this will

in#ol#e cost in terms of interest to the business. % sound cash management scheme

therefore maintains the balance between the twin ob'ecti#es of li1uidity and cost.

Meaning of Cash

.

37


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'he term +cash, with reference to cash management is used in two senses. In a

narrower sense it includes coins currency notes che1ues bank drafts held by a firm

with it and the demand deposits held by it in banks. In a broader sense it also includes

+near cash assets, such as marketable securities and time deposits with banks. Such

securities or deposits can immediately be sold or con#erted into cash ifG the

circumstances re1uire. *he term cash management is generally used for management

of both cash and near cash assets.

M%4%!6M64* 7) I4V64*75I6S

In#entories are goods held for e#entual sale by a firm. In#entories are thus one

of the ma'or elements that help the firm in obtaining the desired le#el of sales.

Kinds of in#entories

In#entories can be classified into three categories3

5aw Material3 *hese are goods which ha#e not yet been committed to

production in a manufacturing firm. *hey may consist of basic raw materials or

finished components.

&ork2in2process3 *his includes those materials which ha#e been committed to

production process but ha#e not yet been completed.

)inished goods3 *hese are completed products awaiting sales. *hey are the

final output of the production process in a manufacturing firm. In case of

wholesalers and retailers they are generally referred to as a merchandise

in#entory.

*he le#els of the abo#e three kinds of in#entories differ depending upon the nature of

business. )or e$ample a manufacturer will ha#e le#els of all the three kinds of

in#entories. &hile a retailer or a wholesaler will ha#e a high le#el of in#entories of

finished goods but will ha#e no in#entories of raw materials or work2in2progress.

38


39/65

Moreo#er depending upon the nature of the business in#entories may be durable or

non2durable #aluable or ine$pensi#e perishable or non2perishable etc.

Management of In#entory

In#entoWries often constitute a ma'or element of total working capital and hence it has

been correctly obser#ed +!ood in#entory management is good financial

management,. In#entory management co#ers a large number of issues including

fi$ation of minimum and ma$imum le#els determining the size of the in#entory to be

carried deciding about the issue price policy setting up receipt and inspection

procedure determining the economic order 1uantity pro#iding proper storage

facilities keeping check on obsolescence and setting up effecti#e information system

with regards to the in#entories. (owe#er management of in#entories in#ol#es two

basic problems3

Maintaining a sufficiently large size of in#entory for efficient and smooth

production and sales operations.

Maintaining a minimum in#estment in in#entories to minimum the direct2

indirect costs associated with the holding in#entories to ma$imize the

profitability.

In#entories should neither be e$cessi#e nor inade1uate. If in#entories are kept at a high

le#el higher interest and storage costs would be incurred. 7n the other hand a low

le#el of in#entories may result in fre1uent interruption in the production schedule

resulting in underutilization of capacity and lower sales. *he ob'ecti#e of in#entory

management is therefore to determine and maintain the optimum le#el of in#estment

in in#entories which helps in achie#ing the following ob'ecti#es3

6nsuring a continuous supply of materials to production department facilitating

uninterrupted production.

Maintaining sufficient stock of raw material in a period of short supply.

39


40/65

Maintaining sufficient stock of finished goods for smooth sales operations.

Minimizing the carrying cost.

M%4%!6M64* 7) %CC7:4*S 56C6IV%B86S

%ccounts recei#able also popularly termed as recei#ables" constitute a significant

portion of the total current assets of the business ne$t after in#entories. *hey are a

direct conse1uence of +trade credit- which has become an essential marketing tool in

modern business. &hen a firm sells goods for cash payments are recei#ed

immediately and therefore no recei#ables are created. (owe#er when a firm sells

goods or ser#ices on credit the payments are postponed to future dates and recei#ablesare created. :sually the credit sales are made on open account which means that no

formal acknowledgements of debt obligations are taken from buyers. *he only

documents e#idencing the same are a purchase order shipping in#oice or e#en a

billing statement. *he policy of open account sales facilities business transactions and

reduces to a great e$tent the paper work re1uired in connection with credit sales.

Meaning of 5ecei#ables

5ecei#ables are assets accounts representing amounts owed to the firm as a result of

sales of goods or ser#ices in the ordinary course of business. *hey therefore

represents the claims of a firm against its customers and are carried to the +assets side-

of the balance sheet under titles such as accounts recei#ables trade recei#ables

customers recei#ables or book debts. *hey are stated earlier the results of e$tension

of credit facility to the customers .*he ob'ecti#es of such a facility is to allow the

customers a reasonable period of time in which they can pay for the goods purchased

by them.

Meaning of 5ecei#able Management

40


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5ecei#ables are a direct result of credit sales. Credit sale is resorted by a firm to push

up its sales that ultimately result in pushing up the profits earned by the firm. %t the

same time selling goods on credit results in blocking of funds in accounts recei#ables.

%dditional funds are therefore re1uired for the operational needs of the business that

in#ol#e e$tra costs in terms of interest. Moreo#er increase in recei#ables also

increases chances of bad debts. *hus creation of accounts recei#ables is beneficial as

well as dangerous. *he finance manager has to follow the policy which uses the cash

funds as economically as possible in e$tending recei#ables without ad#ersely the

chances of increasing sales and making more profits. Management of accounts

recei#ables may therefore be defined as the process of making decisions relating to the

in#estment of funds in this assets that will result in ma$imizing the o#erall return on

the in#estment of the firm.

*hus +the ob'ecti#e of recei#ables management is to promote sales and profits until

that point is reached where the return on in#estment in further of recei#ables is less

than the cost of funds raised to finance that additional credit i.e. cost of capital",.

Policies for Managing 5ecei#ables

% firm should established recei#ables policies after carefully considering both benefits

and costs of different policies. *hese policies relate to3

Credit Standards.

Credit *erms.

Collection Procedures.

6ach of these has been e$plained below3

*he term credit standard represents the basic criteria for e$pansion of credit to the

customers. *he le#els of sales and recei#ables are likely to be high if the credit

standards are relati#ely loose as compared to a situation when they relati#ely tight.

41


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*he fi#e +Cs, generally determines the firm-s credit standards3 Character Capacity

Capital Collateral and Condition. Character denotes the integrity of the customer i.e.

his willingness to pay for the goods purchases. Capacity denotes his ability to mange

the business. Capital denotes his financial soundness. Collateral refers to the assets

which the customer can offer by way of security. Conditions refer to the impact of

general economic trends on the firm or to special de#elopment in certain areas as of

economy that may affect the customer-s ability to meet his obligations. Information

about the fi#e +Cs, can be collected both from internal as well as e$ternal sources.

Internal sources include the firm-s pre#ious e$periences with the customer

supplemented by its own well de#eloped information system. 6$ternal resources

include customer-s de#eloped information system. 6$ternal resources include

customer-s references trade associations and credit rating organizations such as 9on

Brad Street Inc. of :S%. *his organization has more than hundred years e$perience in

the field of credit reporting. It publishes a reference book si$ times year containing

information about important business firms region wise. It also supplies credit reports

about different firms on re1uest.

%n indi#idual firm can translate its credit information into risk classes or groups

according to the probability of loss associated with each class. 7n the basis of thisinformation the firm can decide whether it will be ad#isable for it to e$tend credit to a

particular class of customers.

*wo different concepts of working capital are 32

XBalance sheet or *raditional concept

X7perating cycle concept.

Balance sheet or *raditional concept32 It shows the position of the firm at certain point

of time. It is calculated in the basis of balance sheet prepared at a specific date. In this

method there are two type of working capital32

!ross working capital

42


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4et working capital

!ross working capital32 It refers to the firm-s in#estment in current assets. *he sum ofthe current assets is the working capital of the business. *he sum of the current assets

is a 1uantitati#e aspect of working capital. &hich emphasizes more on 1uantity than its

1uality but it fails to re#eal the true financial position of the firm because e#ery

increase in current liabilities will decrease the gross working capital.

4et working capital32 It is the difference between current assets and current liabilities

or the e$cess of total current assets o#er total current liabilities.

&orking capital T current assets 2 current liabilities.

4et working capital3 2 It is also can defined as that part of a firm-s current assets which

is financed with long term funds. It may be either positi#e or negati#e. &hen the

current assets e$ceed the current liability the working capital is positi#e and #ice

#ersa.

7perating cycle concept3 2 *he duration or time re1uired to complete the se1uence ofe#ents right from purchase of raw material for cash to the realization of sales in cash is

cycle or working capital cycle.

43


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SI!4I)IC%4C6 7) &75KI4! C%PI*%8

)actors re1uiring consideration while estimating working capital.

*he a#erage credit period e$pected to be allowed by suppliers.

44

SIGNIFICANCE OFWORKINGCAPITAL

PAYMENTTOSUPPLIERS

DIVIDENDDISTRIBUTI0N

EASYLOANFROMBANKS

INCREASEEFFECIE

NCY

INCREASE IN FIXASSETS

INCREASE DEBTCAPACIT

Y


45/65

*otal costs incurred on material wages.

*he length of time for which raw material are to remain in stores before theyare issued for production.

*he length of the production cycle or" work in process.

*he length of sales cycle during which finished goods are to be kept waiting

for sales.

*he a#erage period of credit allowed to customers.

*he amount of cash re1uired to make ad#ance payment.

45


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Y*ypes of &orking Capital32

46

Types OfWor!"#C$p!%$&

O" T'e B$s!sOf T!(e

O" T'e B$s!sOf B)SCo"*ep%

Gross Wor!"#C$p!%$& Ne% Wor!"#C$p!%$& Re#+&$rWor!"#C$p!%$&

Te(por$ryWor!"# C$p!%$

Se$so"$&Wor!"#C$p!%$&

Spe*!f!*Wor!"#C$p!%$&


47/65

Importance of &orking Capital 5atios

5atio analysis can be used by financial e$ecuti#es to check upon the efficiency with

which working capital is being used in the enterprise. *he following are the important

ratios to measure the efficiency of working capital. *he following easily calculated

ratios are important measures of working capital utilization.

%4%8


48/65

*he current ratio is the relationship between current assets and current liabilities. It is

also known as working capital ratio because it is a measure of general li1uidity and is

most widely used to make the analysis of short2term financial position.

It is calculated by di#iding total of current assets by current liabilities.

*he current assets of a firm represents those assets which can be con#erted into cash

within a short period of time normally one year. *he current liabilities are those

obligations which are payable within a short period of generally one year.

C7MP7464*S 7) C:5564* 5%*I732

Current %ssets Current 8iabilities

=. Cash in (and=.7utstanding e$penses

F. Cash at BankF.Bills Payable

E. Marketable SecuritiesE.Sundry Creditors

/. Short2term In#estments/.Short2term %d#ances

0. Bills recei#ables 0.Income *a$ Payable

A. Sundry debtorsA.9i#idendsPayable

?. In#entories ?.Bank 7#erdraftif not permanent"

48


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@. &ork2in2progress

>. Prepaid e$penses

Bank o#erdraft can be taken as short term arrangement as well as

permanent or long term arrangement with a bank. But when it is taken as long term it

should be e$cluded.

I4*65P56*%*I74 7) C:5564* 5%*I732

% ratio e1ual or near to the rule of thumb of F3= i.e.

current assets double the current liability is considered to be satisfactory.*his means to

pro#ide for delays and losses in the realisation of current assets. (owe#er the rule of

F3= should not be blindly followed while making interpretation of the ratio because

firms ha#ing less than F3= ratio may be ha#ing a better li1uidity than e#en firms ha#ing

more than F3= ratio. *his is so because the current ratio measures only the 1uantity of

current assets and not 1uality of current assets.

C:5564* 5%*I7 7) V65K% MI8K P8%4* )75 *(6 F>2

F= I4 5:P66S"

Particulars 2F=" "

Cash in (and F@>>>A.0= E=A@.>@

Cash at Bank =E==A =/A>0FE.FF

In#entories >F>//>E.= >@@/?@>.?

Current %ssets a" >00@AF/E.= >FA0//@=.>

Sundry Creditors E=/>E@EA.>? FE0F=>0.=

%d#ances )rom Customers >A@[email protected]= >=F>A.E

7ther 8iabilities 0/00>>.A =A0=?0E>.EF

Current 8iabilities b" >0?F/>0.@ />=/=0@0.?F

49


50/65

Current 5atio aGb" .>>@00>>=.@@0/0>?0

%s of march E= F= with amounts e$pressed in rupees V65K% MI8K P8%4*-s

current assets amounted to 5s. >00@AF/E.= balance sheet" which is the numerator

while current liabilities amounted to 5s. >0?F/>0.= balance sheet" which is the

denominator. By di#iding the e1uation gi#es us a current ratio of .>>@00>>.

%s of march E= F> with amounts e$pressed in rupees V65K% MI8K

P8%4*-s current assets amounted to 5s. >FA0//@=.> balance sheet" which is the

numerator while current liabilities amounted to 5s. />=/=0@0.?F balance sheet"

which is the denominator. By di#iding the e1uation gi#es us a current ratio of

=.@@0/0>?0.

7BS65V%*I7432

*he analysis shows that the current ratio of V65K% MI8K P8%4* is lower than the

rule of thumb i.e. =.@@ in year F@2F>. *he lower ratio is primarily due to the

reason that huge amount of sundry creditors and the cash at is comprising in thecurrent assets. But the current ratio decreases in the year F>2F= and lower than the

accepted rule of thumb. *he decrease in the ratio is attributable to increase in Sundry

creditors which is to finance the in#entory. %s the current ration in both the years

under obser#ation is not fairly .

*he current ratio is used e$tensi#ely in financial reporting and is relied upon by the

bankers and financial institutions while e$tending short term finance. (owe#er while

easy to understand it can be misleading in both a positi#e and negati#e sense 2 i.e. a

high current ratio is not always necessarily good and a low current ratio is not

necessarily bad.

50


51/65

%nalysis through Chart

F. Quick 5atio

*he1uick ratiois also known as 1uick assets ratio or acid2test ratio. *he

1uick ratio is the relationship between 1uick assets and current liabilities. %n asset is

said to be li1uid if it can be con#erted into cash within a short period without loss of

#alue. So we can say that the cash in hand and cash at bank are the most li1uid assets.

7ther 1uick assets are bills recei#ables sundry debtors marketable securities. *he 1uick

ratio is more conser#ati#e than the current ratio because it e$cludes in#entory and

other current assets which are relati#ely more difficult to turn into cash within a gi#en

period of time. *herefore a higher ratio means a more li1uid current position.

Quick 5atio T QuickG8i1uid %ssets

Current 8iabilities

8i1uid %ssets T current assets J in#entories Z prepaid e$penses"

51

year-2009,1.88545975

year-2010,

0.9985599year-2009

year-2010
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C7MP7464*S 7) Q:ICK G8IQ:I9 5%*I732

QuickG 8i1uid %ssets Current 8iabilities

=. Cash In (and=.7utstanding 6$penses


E. Bills 5ecei#ables E.Sundry Creditors

/. Sundry 9ebtors/.Short *erm %d#ances

0. Marketable Securities 0.Income *a$ Payable

A. *emporary In#estments A.9i#idend Payable

?.Bank 7#erdraft

*he basics and use of this ratio are similar to the current ratio in that it gi#es users anidea of the ability of a company to meet its short2term liabilities with its short2term

assets. %nother beneficial use is to compare the 1uick ratio with the current ratio. If the

current ratio is significantly higher it is a clear indication that the companyLs current

assets are dependent on in#entory.

I4*65P56*%*I74 7) Q:ICK 5%*I732

:sually a high acid test ratio is an indication that the firm is li1uid and has the abilityto meet its current or li1uid liabilities in time and on the other hand a low 1uick ratio

represents that the firm-s li1uidity position is not good.

%s a rule of thumb of the acid test ratio is =3= is considered satisfactory. It is generally

thought that if 1uick assets are e1ual to current liabilities than the concern may be able

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to meet its short term obligations. % 1uick ratio of =3= does not necessarily means

satisfactory li1uidity position if all the debtors can not be realized and cash is needed

immediately to meet the current obligations. In the same manner a low 1uick ratio

does not necessarily means a bad li1uidity position as in#entories are not absolutely

non li1uid. (ence a firm ha#ing a high 1uick ratio may not ha#e a satisfactory

li1uidity position if it has a slow paying debtors. 7n the other hand firm ha#ing a low

1uick ratio may ha#e a good li1uidity position if it has fast mo#ing in#entories.

Q:ICK 5%*I7 7) V65K% MI8K P8%4* )75 *(6 F>2

F= I4 5:P66S"

Particulars 2F=

Cash In (and F@>>>A.0= E=A@.>@

Cash %t Bank =E==A =/A>0FE.FF

Quick %ssets a" =A=0>.0 =?A>A>F.F

Sundry creditors E=/>E@EA.>? FE0F=>0.=

%d#ances from customers >A@[email protected]= >=F>A.E

7ther liabilities 0/00>>.A =A0=?0E>.EF

Current 8iabilities b" >0?F/>0.@ />=/=0@0.?F

Quick 5atio aGb" .==?0=0@ .EA=F==

%s of march E= F= with amounts e$pressed in rupees V65K% MI8K P8%4*.-s

1uick assets amounted to 5s.=A=0>.0 balance sheet" while current liabilities

amounted to 5s. >0?F/>0.@ balance sheet". By di#iding the e1uation gi#es us a

1uick ratio of .==?0=0@.

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%s of march E= F> with amounts e$pressed in rupees V65K% MI8K P8%4*-s

1uick assets amounted to 5s. =?A>A>F.F balance sheet" while current liabilities

amounted to 5s. />=/=0@0.?F balance sheet". By di#iding the e1uation gi#es us a

1uick ratio of .EA=F==.

7BS65V%*I7432

%s pre#iously mentioned the 1uick ratio is a more conser#ati#e measure of li1uidity

than the current ratio as it remo#es in#entory from the current assets used in the ratioLs

formula. By e$cluding in#entory the 1uick ratio focuses on the more2li1uid assets of a

company.

*he 1uick ratio of the year F>2F= and F@2F> is much

lower than the rule of thumb. *herefore we can easily say that the short term li1uidity

position of the #erka milk plant is not mo#ing towards more acceptable situation.


E.C%S( 5%*I7

*he cash ratio which is most conser#ati#e of the current ratios is calculated in

con'unction with thecurrent ratioand the 1uick ratioby taking into account only of

cash cash e1ui#alents and in#ested funds out of current assets to co#er current

liabilities.

54

year-2009,

0.03601211

year-2010,0.011075158

year-2009

year-2010
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Cash ratio T Cash Bank Z Short2term Securities

Current 8iabilities

C7MP7464*S 7) C%S(G %BS78:*6 5%*I732

QuickG 8i1uid %ssets Current 8iabilities

=. Cash In (and=.7utstanding 6$penses


E. Marketable Securities E.Sundry Creditors

/. *emporary In#estments

/.Short *erm %d#ances

0.Income *a$ Payable

A.9i#idend Payable

?.Bank 7#erdraft

Cash ratio is also known as absolute li1uid ratio. It includes cash in hand and cash at

bank and marketable securities or temporary in#estments. *he acceptable norm for this

ratio is =3F or .03= or 0D.

C%S( 5%*I7 7) V65K% MI8K P8%4* )75 *(6 F>2

F= I4 5:P66S"

Particulars 2F=

Cash in hand F@>>>A.0= E=A@.>@

Cash at bank =E==A =/A>0FE.FF

Marketable securities

%bsolute 8i1uid %ssets

a"

=A=0>.0 =?A>A>F.F

Sundry creditors E=/>E@EA.>? FE0F=>0.=

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%d#ances from customers >A@[email protected]= >=F>A.E

7ther liabilities 0/00>>.A =A0=?0E>.EF

Current liabilities b" >0?F/>0.@ />=/=0@0.?F

Cash ratio

aGb"

.==?0=0@ .EA=F==

%s of march E= F= with amounts e$pressed in rupees V65K% MI8K P8%4*-s

cash assets amounted to 5s. =A=0>.0 balance sheet" while current liabilities

amounted to 5s. >0?F/>0.@ balance sheet". By di#iding the e1uation gi#es us a

cash ratio of .==?0=0@.

%s of march E= F> with amounts e$pressed in rupees V65K% MI8K

P8%4*-s cash assets amounted to 5s. =?A>A>F.F balance sheet" while current

liabilities amounted />=/=0@balance sheet". By di#iding the e1uation gi#es us a cash

ratio.

7bser#ation32

*he cash ratio is the most stringent and conser#ati#e of the three short2term li1uidity

ratioscurrent 1uick and cash". It only looks at the most li1uid short2term assets of the

company which are those that can be most easily used to pay off current obligations. It

also ignores in#entory and recei#ables as there are no assurances that these two

accounts can be con#erted to cash in a timely matter to meet current liabilities.

*he analysis shows that both in the year F@2F> and year F>2F= the cash ratio

is not satisfactory on the parameters of rule of thumb. *his is because cash in hand and

bank are less than the current liabilities.

56
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/. &75KI4! C%PI*%8 *:547V65 5%*I73

&orking capital turno#er ratio indicates the #elocity of the utilization of the net

working capital. *his ratio measures the efficiency with which the working capital is

being used by a firm. % higher ratio indicates efficient utilization of working capital

and #ice2 #ersa. *his ratio can be calculated by di#iding cost of sales by a#erage

working capital.

&orking capital turno#er ratio T Cost of salescost of goods sold"G %#erage working

capital

57

year-2009,

0.03601211

year-2010,

0.011075158

year-2009

year-2010


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&75KI4! C%PI*%8 *:547V65 5%*I7 7) V65K% MI8K P8%4* )75 *(6

F>2F= I4 5:P66S"

Particulars 2F=

Sales

a"

0/@?E=@@=.EE /0>EA@EA?.E0

!ross Profit

b"

=A?>?0=./ =0?FFF0.

Cost of !oods Sold

cTa2b"

0EFA0F=F>.> //EA/@=/F.E

%#erage working capital

d"

/AAF@/@E0.? /=E@?/EA.=

&orking capital turno#er ratio

cGd"

=.=/FEEF@@ =.?E>@=F0

%s of march E= F= with amounts e$pressed in rupeesV65K% MI8K P8%4* -s

Cost of Sales amounted to 5s.0E0A0F=F>.> balance sheet" while a#erage working

capital amounted to 5s. /AAF@/@E0.? balance sheet". By di#iding the e1uation gi#es

us a working capital turno#er ratio of =.=/F times.

%s of march E= F> with amounts e$pressed in rupees V65K% MI8K P8%4*-s

Cost of Sales amounted to 5s. //EA/@=/F.E balance sheet" while a#erage working

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capital amounted to 5s. /=E@?/EA.= balance sheet". By di#iding the e1uation gi#es

us a working capital turno#er ratio of =.?E

7bser#ation32

*he analysis shows that the working capital turno#er ratio of #erka milk

plant is slightly higher than the pre#ious year. !enerally the higher the working

capital turno#er the more efficient is the management of working capital. Meaning

thereby that there is proper utilization of working capital and the span between

deployment of resources and realization thereof by way of sales is less which will

ultimately result in less cost of capital.


B" C7MM74 SI[6 S*%*6M64* %4%8


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*his analysis is mainly to see the composition of working capital.

C7MM74 SI[6 S*%*6M64*

Particulars 2

F=

%M7:4* P65C64*%!6 %M7:4* P65C64*%!6

C:5564*

%SS6*S

In#entories >F>//>E@.= F@.@@ >@@/?@>.?@ FF.0@

Cash Bank

Balances

=EF==0A.0= ./= =/A>0FE.FF .EA

8oans

%d#ances

FF?0AA?>.EF ?.? E=/??A>.E= ??./

*7*%8 EF=??F??E.@ = /F/F@F.= =

C:5564*

8I%BI8I

*I6S

Sundry

Creditors

E=/>E@EA.>? EF.> FE0F=>0.= /?.@A

%d#ances >A@[email protected]= =.== >=F>A.E [email protected]

7ther

8iabilities

0/00>>.A 0A.>@ =A0=?0E>.EF EE.A=

*7*%8 >0?F/>0.=@ = />=/=0@0.?F =

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%4%8 F>2=32

% big portion of current assets are in#ol#ed in in#entories is near about F@D in the

year of F>2= andFF.0@D in F@2>. *he share of loans and ad#ances are

decreased by A.E/D. although the share of cash and bank balances has increased

with the figures about .0D. 7n the other hand sundry creditors are EF.>D in

year F>2= and /?.@AD in year F@2> and other liabilities are increase at

FE.E? D from the ma'or portion of current liabilities.

So altogether we may say that in F@2F> current assets ha#e increased due to

increase in in#entories cash bank balances as compared to pre#ious year.

&hile on a side of current liabilities though this has also increased due to increase in

other liabilities as compared to pre#ious year .

Schedule of Changes in &orking Capital F>2F="

Particulars 7P64I4! C87SI4! 6))6C* 7) &75KI4!

C%PI*%8

I4C56%S6 96C56%S6

C:5564* %SS6*S

In#entories >@@/?@>.?@ >F>//>E@.= FA=/.?@

Cash Bank

Balances

=/A>0FE.FF =EF==0A.0= =/@EAA.?=

8oans %d#ances E=/??A>.E=

FF?0AA?>.EF

@F0/=>

*7*%8 /F/F@F.= EF=??F??E.@

C:5564*

8I%BI8I*I6S

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Sundry Creditors FE0F=>0.= E=/>E@EA.>? ?>?=@@A.@?

%d#ances >=F>A.E >A@[email protected]= [email protected]=

7ther 8iabilities =A0=?0E>.EF 0/00>>.A [email protected]

@

*7*%8 />=/=0@0.?F >0?F/>0.=@

&orking

CapitalC.%.2

C.8."

E0EFA/>A./ FFA/@[email protected]

4et decrease in

&orking

Capital

=F?F==@=?.@ =F?F===@=?.@

*7*%8 E0EFA/>A./ E0EFA/>A./ /@A/FA0.F

/

=E0/@=F?/

%nalysis of changes of working capital in F>2= 32

*he most important part of current assets the in#entories are increase in the closing but

the cash and bank balance and loans and ad#ances are decrease in the closing of the

year.

7n the other hand in the liabilities the sundry creditors and the ad#ances and the other

liabilities are increase in the closing of the year.

So the result of the increase of the liabilities the working capital is be decrease. So the

o#er all performance of working capital is not good.

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CONCLUSION

After doing the analysis of The Verka Milk Plant, it is observed that

% satisfactory le#el of working Capital is not maintained in the

company.

Current %ssets of the company are decreased e#ery year. Verka milk

plant is doing e#erything to further increase current assets in future.

Sales of the #erka milk plant increased e#ery year this means the

company growing its share in the market and gi#ing though competition to its

competitors.

%lmost all the ratios of the #erka milk plant are decreasing and the

ratios are not at satisfactory le#el. It is due to hea#y amount e$pended on e$penditure.

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*his means the company policies are not working effecti#ely and position of company

is not so good.

M%;75 )I49I4!S

=. V65K% MI8K P8%4* sales is increasing day by day from last two years.

F. 7#erall all ratios of the #erka milk plant are not good and company need to

work with more efficiency.

E. 8ack of ad#ertisement can be said as weak point the V65K% MI8K P8%4*.

/. Membership of the #erka milk plant is increasing. 4ow its total members areFA@EE.

0. Its achie#ements in the current year are positi#e.

A. Milk is the main raw material for production in the #erka milk plant.

BIBLIOGRAPHY

B77K %:*(75

=" Management %ccounting 5.K. Sharma

F" )inancial Management Shashi k. !upta

&6BSI*6S

www.google.com

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www.milkfed .nic.in

7*(65 S7:5C6 7) I4)75M%*I74

%nnual 5eports of V65K% MI8K P8%4*.

Working Capital of Verka

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