PREPARED BY: PARESH VAGHANI T.Y.B.B.

A ROLL NO: 158

B.B.A. Department,

GUIDED BY: VIDHI JOSHI (Lecturer) SSCCM

SWAMI SAHAJANAND COLLEGE OF COMMERCE & MANAGEMRNT, (Affiliated to Bhavnagar University) Plot No.639, ISCON Megha city, Behind Bhavnagar Uni. Karyalay, Bhavnagar -364002.

Batch - 2008-11

BHAVNAGAR JILLA DOODH UTPADAK SANGH LTD SARVOTTAM DAIRY

A Research Project Report On:

Financial Performance
A PROJECT REPORT SUBMITTED TO BHAVNAGAR UNIVERSITY OF BHAVNAGAR IN PRACTICAL FULFILLMENT OF THE DEGREE OF THIRD YEAR BACHELOR OF BUSINESS ADMINISTRATION

PREPARED BY: PARESH VAGHANI T.Y.B.B.A. ROLL NO: 158

GUIDED BY: VIDHI JOSHI

(Lecturer of SSCCM)

SWAMI SAHJANAND COLLEGE OF COMMERCE AND MANAGEMENT BHAVNAGAR UNIVERSITY BHAVNAGAR BATCH: 2008-11

4 9

CANDIDATE STATEMENT
I PARESH J. VAGHANI from T.Y.B.B.A of SWAMI SAHJANAND COLLEGE OF COMMERCE AND MANAGEMENT, hereby declare that the project work presented in this report is prepared with my own efforts and is carried out under the guidance of Mrs. VIDHI JOSHI of SSCCM. In this project I try my level best for collecting and searching those information and present easily. This project belongs to SWAMI SAHJANAND COLLEGE OF COMMERCE AND MANAGEMENT, without prior information of any person; I present the BHAVNAGAR JILLA DOODH UTPADAK SANGH LTD OF SARVOTTAM DAIRY.

Date: Place: Bhavnagar

Signature:

X
P a re sh Va gha ni

PREFACE

4 9

Management study without practical knowledge is like learning horse riding without sitting on horse and by just reading the book. Basically science is theoretical knowledge and art is practical knowledge to apply it. Thus they are supplementary to each other and are highly dependent on each other. Practical knowledge is very essential for a management student because through this the student gets the total know how of different departments of the unit.

Experience is the best teacher

I had taken my practical training from SARVOTTAM DAIRY and I fell that it is running well though there is tough competition nowadays. The following report prepared by me is the reflection of all the knowledge gained by me. I had tried my level best to show each aspect of the unit. This report is truly for the purpose of study and as a part of training.

Applied Knowledge is Power.

ACKNOWLEDGEMENT
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One Teacher is equal to hundred Mothers

I have a great pleasure and zeal that I express my deep gratitude and thanks to our respected Trust Mr. SAVANISIR and Principal Mrs. HETALMAM to inspire and motivate us for our industrial training. She gives us a clear vision about industrial training. I am also thankful to coordinator Mrs. POOJA MEHTA and also thanks to Mrs. VIDHI JOSHI who guided us in report writing. I am also thankful to library head MATANGIMAM. I would like to express my gratitude to the industry for giving their valuable time and give information to him for the work in each field. I am thankful to every executive officer, accountant Mr. NILESHBHAI and head of the production department Mr. HASMUKHBHAI PANDYA who give me his precious time. I am also thankful to the management of SARVOTTAM DAIRY who helped to develop this report and provide infrastructure facility to take up my industrial training at SARVOTTAM DAIRY.

Signature:

X
Pa re sh Va gha ni

4 9

CONTENTS

NO
1 2 3 4 5 6 7 8 9 10 11 12

PARTICULARS
Name and Address History of SARVOTTAM DAIRY Development of unit Size of unit Form organization Formal organization The Product of Sarvottam dairy Manufacturing process Organization Structure Time Keeping System Employee services Contribution of the Dairy to the Industry

PAGE NO

1.1: NAME AND ADDRESS

1.

Name of Industry: Address:

SARVOTTAM DAIRY Sarvottam Dairy, BhavnagarRajkot Highway Road, Sihor, Bhavnagar.

2.

3.

Telephone:

Office:Fax: -

(02846) 329633,225502 (0278) 2436743 Co-operative firm Special milk Silver Milk Kanchan Milk Light Milk Butter Milk Bhavnagar Jilla Sahkari Bank Ltd. State Bank of Saurashtra. I.D.B.I. Bhavnagar. Bank of Baroda. Jagdishbhai Mehta Medium scale Industry. 53

4. 5.

Form of Organization: Products:

6.

Bankers:

7. 8. 9. 10.

Auditors: Size of Unit: Total Worker & staff:

R.G. No.
11.

REDG/U28701 Milk Sweets Cheese Chocolates Ice-Cream 1,80,000 Litter per Day

Main Product:

12.

Future Plan : -

13.

Average Marketing

1.2: HISTORY:
Right Person makes brilliant company, Brilliant company makes bright future
GUJARAT DAIRY DEVELOPMENT BOARD establishes BHAVNAGAR DAIRY IN 1974. Bhavnagar dairy has brand name SAURAS. By this name

Bhavnagar dairy sells milk and ghee in Bhavnagar district, by co-operative members of the district the milk is sold to the SANGH and after processing the milk it is sold under the name of Bhavnagar dairy. In year 1989 the highest milk purchased from co-operative members was 42,500 liters and they sell the purchased milk to different areas of district. As the year passed the production came down and due to some crisis government closed Bhavnagar Dairy on 2412-1999. SANGH was enabling to serve Bhavnagar dairy from crisis. When SANGH was established in 1974 they took the responsibilities to solve the problems of their co-operative members but the response by the government was not proper to save Bhavnagar dairy to help the small milk producers. Because of the crisis of Bhavnagar dairy the milk producers of whole district came into financial crisis as they had no option to sell their milk. After sometime the producers made meeting in JILLA PANCHAYATS ground and majority of them took the responsibility of re-establishment of SANGH. Mr. H.R. NANDVA and Mr. M.P.PANDYA decided to establish the SANGH. Mr. H.R.NANDVA and Mr. M.P.PANDYA send the application to GUJARAT GOVERNMENT for the re-establishment of SANGH in the district. On temporary basis GOVERNMENT think up milk producer of Bhavnagar district with UTTAM DAIRY AHMEDABAD and Government also formed a government body under president ship of Mr. V.C.JOSHI to take care of the responsibility of producers of Bhavnagar district and UTTAM DAIRY and also to work as a mediator between this two.

As I mentioned above that H.R.NANDVA and M.P.PANDYA are the main bodies of this work on the behalf of whole district. They started to sell the milk produced by the district to UTTAM DAIRY on 3-1-2000 and on the date of 14-42000 UTTAM DAIRY established a chilling center in TALAJA near Bhavnagar. This system was temporary. So a permanent body was required to be formed on behalf of all the milk producers. For this purpose, the meeting of milk producer was needed under the chairmanship of Mr. MAHENDRABHAI PANOT.

The registrar of Bhavnagar Mr. K.B.UPADHYAY also supported and guided for further process. At the end, on the date of 27-6-2001 under the registration number: REDG/U 28701 the SANGH formed second time. But as the handling of the milk was done by UTTAM DAIRY the SANGH started to make the members at co-operative level and after some time they started to provide animal food and other basic things to their members in order to increase the number of member. At the end, with the help of that is GUJARAT CO-OPERATIVE MILK MARKETING FEDERATION. The meeting was held between Mr. MOHANBHAI BHARWAD the chairman of UTTAM DAIRY and Mr. MAHENDRABHAI PANOT the chairman of BHAVNAGAR JILLA DOODH UTPADAK SANGH LTD. In this meeting it was decided that the chilling center which was developed by UTTAM DAIRY and other dead stock was purchased by SANGH, they started production in TALAJA on rented land. On the date 21-11-2004 the SANGH started its production and distribution system. The profit earned thereby under the name of SARVOTTAM DAIRY was used in purchasing a land near Sihor and a new plant was established on the date 12-12-2005.

1.3: DEVELOPMENT OF THE UNIT:

SARVOTTAM DAIRY was established on 12-12-2005 and it is a single largest dairy of district level. Basically SARVOTTAM was the brand name of the products which was processed by BHAVNAGAR JILLA DOODH UTPADAK SANGH LTD. After the closure of Bhavnagar dairy in 1999 the dairy of our own district was needed because other district had their own dairies and our milk producers did not earn require profit. So taking this problem into consideration

the political bodies and some business persons of the district started a new venture namely SARVOTTAM DAIRY to solve the problem of milk procedure of the district. When SARVOTTAM DAIRY was started at that time many problems arises regarding row materials, equipments, machinery, etc. it had not purchasing power of hiring the skillful labour, knowledgeable employee. But its performance was very effective between the tough competitions and now they have 1 distributor in every Taluka and 17 distributors in Bhavnagar city. At present, the dairy collects 1,80,000 liters of milk per day, but it processed only on 50,000 liters and remaining 1,30,000 liters of milk is sent to Mather dairy. Sarvottam Dairy is not looking the better sale of its product but also they are looking better quality.

Better product, Better value, Better living

1.4: SIZE OF UNIT:

According to the industrial policy 1991;

Small Scale:
Small Scale Unit is a unit in which investment in fixed assets and current assets is between Rs. 25 Lacs to Rs. 5 Crore.

Medium Scale:
Medium Scale Unit is a unit in which investment in fixed assets and current assets between range of Rs. 5 Crore but not more than 10 Crore.

Large Scale:
Large Scale Unit is the one in which investment in machinery and plant is more than Rs.10 Crore.

In SARVOTTAM DAIRY the total plant cost is of 7 crore and it is said to be a MEDIUM SCALE co-operative dairy.

1.5: FORM ORGANIZATION:

Depending on the ownership, the business organization can be classified in the following forms:

SARVOTTAM DAIRY is a CO-OPERATIVE ORGANIZATION. The producers of milk get together and form a SANGH which runs by trained and experienced persons and they get the profit from selling their milk to the SANGH. The SANGH is processed that milk and sell it to the local market and the profit is divided into the form of dividend.

1.6: FORMAL ORGANIZATION

Board of directors:
Mr. MAHENDRABHAI PANOT, CHAIRMAN Mr. H.R.NANDVA, M.D Mr. BHALIYA MAUJIBHAI, DIRECTOR Mr. CHUNILAL BARAIYA, DIRECTOR Mr. BHIKHABHAI KHODAFAD DIRECTOR Mr. DAYARAMBHAI BARAIYA, DIRECTOR Mr. GIRJASANKARBHAI DHANDHALIYA DIRECTOR Mr. MATHURBHAI ZINJALA DIRECTOR Mr. JESHABHAI KHER DIRECTOR Mrs. SHRADDHABEN RAJYAGURU DIRECTOR Mrs. PRABHABEN VALAKI DIRECTOR Mrs. DEVUBEN BHATT DIRECTOR Mr. LAKHUBHAI KAMALIYA DIRECTOR MEMBER OF GUJRAT CO-OPERATION MILK MARKETING FEDRATION DIRECTOR.

Bankers of the dairy:

1) Bhavnagar District Co-operative Bank, Bhavnagar. 2) 3) 4) Bhavnagar District Co-operative Bank, Talaja. Bhavnagar District Co-operative Bank, Sihor. Bank of Baroda, Bhavnagar.

5) Bank of Baroda, Sihor. 6) IDBI, Bhavnagar. 7) State Bank of Saurastra, Sihor.

Auditors:
Mr. Jagdishbhai Mehta. Charted Accountant

1.7: THE PRODUCTS OF SARVOTTAM DAIRY

Milk is the core product of the dairy but they also produce buttermilk. There are different brands which has a difference between them regarding price, Fat and S.N.F. These brands are as below;

1) 1) 2) 3) 4)

SARVOTTAM SPECIAL MILK SARVOTTAM SILVER MILK SARVOTTAM KANCHAN MILK SARVOTTAM LIGHT MILK SARVOTTAM BUTTERMILK

1.8: MANUFACTURING PROCESS:

SARVOTTAM DAIRY is a consumer goods production sector. Milk is essential ingredient in our life. In Every stage of life milk is useful to develop and maintain our body. The process is as under:

The process is described as under;

 Receive milk from members of co-operative society.

Basically the SANGH itself says that it is a joint effort of the milk producers. There are 10 routs of milk producers. These routes are covering almost all the villages of milk producers. The dairy only accepts the milk from that producer who is its member in co-operative society. Jesser, Gadhada, Timana, Nesvad, TarSara, Vallbhipur, Goriyali, Gopnath, Bagdana, and Mahuva these are the routs and every route allotted specific time for carrying down their milk to the dairy.

Milk Tank:
In the milk tank they store the milk for the process. The milk gets the

steady temperature in the tank before the process starts. We can also say that the different process on milk starts from this tank.

Taking general FAT and S.N.F.:

The dairy do the test of FAT and Solid Not Fat (S.N.F.) for the payment to

co-operative members because as the FAT and S.N.F. is high the member get higher amount of his milk. The part of FAT in the milk can be known by using the SULPHURIC ACID. Moreover, because of heat the FAT part comes out in the liquid form. After that a SANTRIFUSE comes out which is measured by LITEROMETER. S.N.F. is measured by using LACTOMETER. In the boiled milk, they put the lactometer and after using the formula given below they can know about S.N.F. figure;

There is a certain standards are there for S.N.F. and FAT. They are, -The milk of buffalo must contain 6% S.N.F. and 9% FAT -The milk of cow must contain 8.5% S.N.F. and 3.5% FAT

Standardization:

There are certain standards set for the milk. Each standard have their own S.N.F. and FAT. Afterwards it is decided that what should be the price of the milk. There are four standards,

Variety
Amul Gold (Whole milk) Amul Shakti (Standardised milk) Amul Taaza (Toned milk) Amul Slim N Trim(Double toned milk)

Fat (%)
6 4.5 3 1.5

SNF (%)*
9 8.5 8.5 9.0

Pasteurization:
On the name of the founder of this process it is called pasteurization.

Louie Pasteur is the founder of this method. He found this process to save the liquor of king from spoiling out. To save the milk from the bacteria they boiled the milk on certain temperature and quickly down the temperature. In the olden process they emptied the milk into a big utensil and after that they boiled the milk up to 63 degree Celsius temperature for 30 minutes and after that they cool down the temperature for 30 minutes. This method was very time consuming and improper. In the modern era the H.T.S.T. method is used for pasteurization. H.T.S.T. means High Temperature Short Time method. In this method they boiled the milk up to 72 degree Celsius for 16 seconds and after this they quickly level down the temperature up to 5 degree Celsius. They use GASKET PLATES for these methods. Gasket plates are adjusted by a specific way that the milk passes from one gasket to another gasket. The first gasket had hot water on both the side and the milk is in the middle plate, so because of heat from both the side the milk is boiled out up to 72 degree Celsius and after 16 seconds milk is passes to another gasket which contains cold water on both the side. Here the temperature of milk is level down to 5 degree Celsius.

Test of Pasteurization: Because of pasteurization the milk becomes bacteria free. To see that the milk is free from bacteria or not, there is one test namely PHOSPHATE TEST. In this test they set the temperature on 72 degree Celsius. On 72 degree Celsius all the bacteria is fade away and also phosphate enzyme is fade away from the milk. After that they do a test for phosphate enzyme if the phosphate enzyme is still there in the milk the color of milk becomes yellow which shows that the pasteurization is not done properly and if there is no change in the color than it is proved that the milk can use for the general purpose.

Packaging:
For the packaging they use the machine of R.M.C. Packaging System Pvt.

Ltd. It costs more than 50,000 Rs. The machine can fill 160 pouch of milk in a minute. There are two machines in the dairy for the packaging and the machines are fully automatic, once you set the program there is rarely any problem.

Dispatch:
There are total 31 distributors in the district. From the 31 distributors 17

distributors are only in Bhavnagar city and rest of the distributor are in the different Taluka. The distributors vehicles come to the dairy in the early morning and they get their carats of milk as per requirement. The distributor must book their order before the evening of previous day, and then they can get the milk in next morning.

1.9: ORGANIZATIONAL STRUCTURE

1.10: TIME KEEPING SYSTEM:

The company has a fully fledged time keeping system. At the security office near the company gate, all the staff members has to sign in the attendance register in morning at 9.00 a.m. While all the workers have to sign in the attendance register at the beginning of every shift. The security officer records the time. The register is passed over the manager. The timings of both the staff members and the workers are as below: The milk process is an ongoing process. The milk comes from the cooperative members of village in the morning time as well as evening time. The time is nearly about 09:00 am for morning and 10:00 pm for evening and they are processing it for a day as well as night and at evening they start packaging and the process of packaging is continue till 3:00 am and after that the distributors come to the dairy with their respective vehicles for taking the milk to their village or town. So, there are always some responsible people in dairy to lookout that the process is going well or not. There is two-shift policy in the dairy. The time keeping system is as below: Production department: Shift First Shift Second Shift Engineering department: Shift First Shift Second Shift Time 9:00 am To 9:00 pm 9:00 pm To 9:00 am Time 9:00 am To 9:00 pm 9:00 pm To 9:00 am

Administrative department:

There is no shift in administrative department. The office starts at 8:00 am and it closes at 5:00 pm. There is an overtime facility in this dairy. Rs. 25 per hour for an over timer. 2-3 official leave is allowed to the employees per month and if they take more from the official, their salary will be deducted.

1.11: EMPLOYEES SERVICES

Employees play an important role in the success of any business. According to the Indian legislation some industries establishment other than plantation and meaning provide full facility and benefit to their employees. Employees services and benefit denoted as wage cost not directly related to the production efforts for maintaining good relationship between the workers and management. Employees are the heart of the organization therefore the dairy is making most focus on employees services. It is said that if you give proper attention on employees, the employees will give you fully attention in your business and profitability of business will increase. Some of the important services of the Sarvottam dairy mainly two types are as under: 1) 2) Statutory services. Non- Statutory services.

1)

STATUTORY SERVICES:-

These mandated by the factory act, 1948; the mines act 1952; the plan station labour act, 1951; and some other acts, of all these the factories act is more significant and hence is covered in detail here.

Accident fund. Provident fund. Insurance of every employee. Medicine facility.

2)

NON- STATUTORY SERVICES:-

Non- Statutory benefits, also called voluntary benefits, includes loans for house building, education of children, leave travel concession, fair price shops, loans for purchasing personal convenience and a host of other facilities. The Sarvottam dairy has provided Non- Statutory facilities are as follows:

Uniform facility. Mobile facility. Canteen facility. Shoes facility.

1.12: CONTRIBUTION OF UNIT TO THE INDUSTRY

The total capacity of dairy is 1,80,000 liters per day. From which they use 50,000 liters of milk for packaging and distribute it in the district and rest of 1,30,000 liters of milk they sent to Mather dairy. If we take the production part of the dairy, But if we take the selling part, the dairy only have 20-22% market of Bhavnagar district. There is two reasons for this scarcity, first is that the dairy was started in the year 2005 so it does not have huge amount for marketing. And the second is that the Amul brand is so much popular in the district that people only buy Amuls milk or the products of Amul as there are many competitors in this industry. The Sarvottam dairy is largest producer of milk at district level apart from this dairy the competitors like B.D.P.L., SUGAM, and RAJWADI are also there to compete in the local level.

CONTENTS

NO
1 2 3 4 5 6

PARTICULARS
What is Research Research objective Research Design Research Instrument Research Process Limitation of Study

PAGE NO
26 27 28 30 32 35

WHAT IS RESEARCH?

Research for knowledge through objective & systematic method of findings solution to a problem i.e. Research. Research methodology has many dimensions & research methods do constitute a part of Research methodology. The scope of Research methodology is wider than that of Research methods we talk of Research methodology. We not only talk of the Research methods but also consider the logic behind the methods. We use in the context of our Research study & explain why we are using particular methods or technique & why we are not using others. So that the Research results are capable of evaluated by researcher & others. Why a research study has been undertaken, how the research problem has been defined in what way & why the hypothesis has been formulated, what data have been collected & what particular method has been adopted, why particular technique of analyzing data has been used & a host of similar other questions are usually answered when we talk of research methodology.

RESEARCH OBJECTIVES

There must an objective behind any research. Without objective there is no meaning of research. The purpose of research is to discover answers to questions through the application of scientific procedures. The main aim of research is to find out the truth which is hidden and which has not been discovered yet. As each research has some or the other objectives the following are the objectives of this research:

It helps investors to know efficiency of the company while taking investment decision.

To study the mechanism of ratio prevailing in the company and its effect on the financial condition of the company.

To take decision regarding long term finance ratio analysis is very useful tool.

It helps management to know efficiency of the different department.

We can know the level of profit, expenses, dividend pay-out ratio etc.

RESEARCH DESIGN
There are the different types of research designs can be conveniently described if we categorized them as: 1. Research design in case of exploratory. 2. 3. Research design in case of descriptive. Research design in case of hypotheses-testing.

From the above are the different types of research design are as followed:

1. RESEARCH DESIGN IN CASE OF EXPLORATORY: Exploratory research studies are also termed as formulate studies. The main purpose of such studies is that of formulating a problem for more precise investigation or of developing the working hypotheses from an operational point of view. The major emphasis in such studies is on the discovery of ideas and insights. As such the research design appropriate for such studies must be flexible enough to provide opportunity for considering different aspect of a problem under study. Generally, the following three methods in the context of research design for such studies are talked about: (a) the survey of concerning literature; (b) the experience survey and (c) the analysis of insight- stimulating examples. In my project I use this research design because of this research design is base on the literature, experience survey or secondary data collection.

2. RESEARCH DESIGN IN CASE OF DESCRIPTIVE: Descriptive research studies are those studies are concerned with describing the characteristics of a particular individual, or of a group, whereas diagnostic research studies determine the frequency with which something occurs or its association with something else. Most of the social research comes under this category. The research design must make enough provision for protection against bias and must maximize reliability, with due concern for the economical completion of the research study.

3. RESEARCH DESIGN IN CASE OF HYPOTHESIS-TESTING: Hypothesis-testing research studies (generally know as experimental studies) are those where, the researcher tests the hypothesis of causal relationships between variables. Such studies require procedures that will not only reduce bias and increase reliability, but will permit drawing inferences about causality. Usually experiments meet this requirement. Hence, when we talk of research design in such studies, we often mean the design of experiments. Today, the experimental designs are being used in researches relating to phenomena of several disciplines. Since experimental designs originated in the context of agriculture operational, we still use, though in a technical sense, several term of agriculture (such as treatment, yield, plot, block etc.) in experimental deigns.

RESEARCH INSTRUMENT
There are the different types of method of data collection. The task of data collection begins after a research problem has been defined and research design/ plan chalked out. While deciding the methods of data collection to be use for the study, the researcher should keep in mind two types of data viz.,
1. Primary data 2. Secondary data.

The primary data are those which are collected afresh and for the time, and thus happen to be original in character. The secondary data on the other hand are those which have already been collected by someone else and which have already been passed thought the statistical process. The researcher would have to decide which sort of data he would be using (thus collecting) for his study and according to him he will have to select one or the other method of data collection. The method of collecting primary and secondary differ since primary data are originally collected, while in case of secondary data the nature of data collection works is merely that of compilation, we describe the different of data collection, with the pros and cons of each method.

1. PRIMARY DATA:
The primary data are those which are collected afresh and for the time, and thus happen to be original in character. We collect primary data during the course of doing experiments research but in case we do research of the descriptive type and perform surveys, whether sample surveys or census surveys, then we can obtain primary data either through observation or through direct communication with respondent in one form or another or through personal interview.

2. SECONDARY DATA:
Secondary data means data that are already available i.e., they refer to the data which have already been collected and analyzed by someone else. When the research utilized secondary data, then he has to look into various sources form where he can obtain them. In this case he is certainly not confronted with the problems that are usually associated with the collection of original data. Secondary data may either be published data or unpublished data. In respect or concern with my project I have used only secondary data so my project report is based on secondary data from the following sources of firm, 1) Profit and loss account 2) Balance sheet

RESEARCH PROCESS
Formulating the research problem

Extensive literature survey

Development of working hypotheses

Preparing the research design

Collection of the data

Analysis of the data

1) Formulating research problem:

The researcher must be aware about the problem; it means he must know the area of research, objective of the research. The best way of understanding research problem is to discuss it with ones own colleagues or with those having expertise knowledge. In academic institution the researcher can seek help from guide who is usually an experienced man and has several research problems in mind.

2) Extensive literature survey:

Once the problem is formulated, a brief summary of it should be written down. It is a compulsory for a research worker writing a thesis for a Ph.D. degree to write a synopsis of the topic and submit it to the necessary committee or the research board for approval.

3) Development of working hypothesis:

After extensive literature survey, researcher should state in clear terms the working hypotheses. Working hypotheses is tentative assumption. Made in order to draw out and test its logical or its empirical consequence. One can develop working hypotheses in following steps, Discussion with the colleagues and exports about the problem. Examination of data and records, if available, concerning the

problem for possible trends. Review of similar studies in the area or of the studies on similar

problems, Exploratory personal investigation which involves original field

interviews on a limited scales with interested parties and individuals.

4) Preparing the research design:

While designing research following items must be include, a) Sources of Data: The data sources can be primary or secondary.

Primary Data: Primary data are the raw data and structures of variables that have been

specifically collected and assembled for a correct information research problem. The questionnaire we got filled from the customers served as our primary data. Following are the types of primary research, Observation method Interview method i. Personal interview ii. Telephone interview Questionnaires

Secondary Data: The information that is collected from Newspapers, Magazines or Reports

is known as Secondary Data. b) Contact Method:

There is a various ways; mail, telephone, personal or online interview, to contact the people, Questionnaires etc.

5) Collecting Data:
It is very important to collect data, which are appropriate. There are several ways of collecting the appropriate data. Here I have collected all the data through secondary data collection method.

6) Analysis of Data:
For the analysis of collected data, we have used the tabulation technique and graphical method.

LIMITATION OF THE STUDY

Every coin has two sides it means there are merits and demerits of each and every method and research. Following are the limitation of my project report,

As my project report is based on secondary data only provided by company so there must be primary data also be collected before taking any decision based on this project.

Lacks of advanced scientific techniques for analysis and interpretation. It means that I have amylase data by ratio analysis method as my project report is on ratio analysis but there are many other method which are not used in my project report.

In such cases respondents were not able to give all information in such cases as much as possible information was taken.

I cant meet each and every user because of Human Limitations and other problems so we select some sample.

Conclusion is derived by oneself Time constrain.

CONTENTS

No.
1 2 3 4 5

Particular
Introduction Meaning Classification of ratio analysis Advantages of ratio analysis Limitation of ratio analysis

Page No
38 39 40 51 52

INTRODUCTION

The financial statement as prepaid and presented annually is of little use for the guidance of prospective investors, creditors, and even management. They are interested in information regarding the exact financial position of the business, its earning capacity, the present position with regarding the profitability and the future possibilities. They have only the published accounts of the company before taking any decision about their money. The publishes accounts contain profit & loss account, balance sheet, directors report, auditors report and the chairmans speech. The earning capacity and result could be ascertained from the profit and loss account. An idea about the financial position can be head from the balance sheet. The directors report and chairmans speech would assist them in foreseeing the future prospects of the company. However, accurate conclusion cannot be drawn from the mass of figures included in these financial statements. Hence they are to be analysis an interpreted with the help of the number of devices.

MEANING

The financial statement as prepaid and presented annually is of little use for the guidance of prospective investors, creditors, and even management. If relationships between various related items in these financial statements are established, they can provide useful clues to gauge accurately the financial health and ability of business to make profit .this relation between two related items of financial statement is known as ratio. A ratio, is thus, one number expressed in terms of another, e.g. in order to obtain the rate of return on paid of capital, the net profit of the business is divided by the paid up capital, the figure so obtained in the ratio. If the same is multiplied by 100, a percentage rate of return on capital is obtained. A ratio is customarily expressed in three different ways it may be expressed as a proportion between two figures. For example, if the current assets are twice the current liabilities it can be said that the current ratio is 2:1. Second method is to express it in form of % e.g. the rate of return on capital employed is 30%. This method is to express it as rates. For example, stock turnover is 6 or stock turns 6 times a year.

CLASSIFICATION OF RATIO ANALYSIS

Accounting ratios are classified in to two parts, which are as following: 1) TRADITIONAL CLASSIFICATION 2) FUNCTIONAL CLASSIFICATION This accounting ratio are again divided in to different parts:

1)TRADITIONAL CLASSIFICATION
The traditional ratio is divided in to three categories on the basis of the statement from which the figures are for computing the ratio. The ratio are divided as follow, a) BALANCE SHEET RATIO: When ratio is calculated, by taking information from balance sheet, it is known as balance sheet ratio e.g. ratio, of current assets to current liabilities. Following are the balance sheet ratio which are covered in my project work Current ratio Liquidity ratio Proprietary ratio Debt- equity ratio Capital gearing ratio

b) REVENUE STATEMENT RATIO The ratios which are calculated by taking information from revenue statement it means from profit and loss A|C than it is known as revenue statement ratio. Following are the revenue statement ratio: Gross profit ratio

 Operating ratio Operating profit ratio Net profit ratio Interest coverage ratio

c) COMPOSITE RATIO When ratio shows relationship between one item from P&L a\c and another from balance sheet than it is composite ratio. Following are the composite ratios: Capital turnover ratio Inventory turnover ratio Debtors turnover ratio Creditors turnover ratio Working capital ratio Fixed assets turnover ratio Return on capital employed Return on investment Return on share holder fund

2) FUNCTIONAL CLASSIFICATION:
Functional classification of ratio divides ratio in to different parts according to their utility. Following are the functional ratio, a) LIQUIDITY RATIO:

This ratio is useful for outside person or investors of the business. Liquidity ratio shows whether the firm will be able to meet its liability as and when they mature. Liquidity ratios are as follow, Current ratio Liquidity ratio Acid- test ratio b) LEVERAGE RATIO: The composition of capital of business and the proportion of owners are capital and Capital provided by outsiders are related to measure the firms ability to meet its interest cost and repayment its liabilities. Leverage ratios are as follow: Proprietary ratio Debt equity ratio Interest coverage ratio Capital gearing ratio Debt to total capital ratio

c) EFFICIENCY TURNOVER RATIO: Efficiency turnover ratio shows efficiency of the work done. Efficiency turnover ratio is useful to measure efficiency of different department. These ratios are useful to take decision for top management. These ratios are as follow: Inventory turnover ratio Debtor turnover ratio Creditors turnover ratio Fixed assets turnover ratio

d) PROFITABILITY RATIO:

A various number of ratios are design to indicate the profitability ratio of the business and are grouped into the category of profitability ratio. Profitability ratios are as follow: Gross profit ratio Net profit ratio Operating profit ratio Expense ratio Operating ratio Return on investment Return on equity Return on capital employed

ADVANTAGES OF RATIO ANALYSIS

The process to concern with the identification of the significant accounting data relationship which give the decision makers inside in to the company being assessed.

A ratio analysis involves the study of the total financial picture. The analyst can recommend and indicate positive action with confidence.

One of the most faithful areas for the use of traditional financial ratio seems to be that of predicting company future.

Ratio enables the companys management to analysis business situation and to monitor their performance as well as that of their competitors.

Ratio analysis helps the management to diagnose the situation, monitor the performance and check out future plans of the company.

The priority ratio enables the chief executive understand the relationship between his organization at the end, and the market, investors, suppliers, and employers at the other. He is also in position to watch well is the organization using its assets and how well it is proved for the future.

LIMITATION OF THE RATIO ANALYSIS

Industry ratio present a more difficult problems to the financial analyst because of the following reasons: A) B) It is difficult to determine the industry to which a company belongs. The whole emphasis of the system of accounting is on consistency rather than profitability among different company at a single paint in time. Within limits, a company may be able to arrange its current assets and liabilities.

So as to have the desire at the time the balance is presented to stock holders.

Financial standard data are not exact and have therefore treated with grade caution.

The ratio to the refers past events and may not represent the present of future events.

Financial statements are generally based on historical original cost. The current economic conditions are ignored.

The technique of ratio analysis has failed to accomplished the expected impact ability moreover it has made technique more complicated and complex for beyond the understanding of ordinary business man.

Not all ratio and percentage are significant and useful. A ratio is little value. It is necessary to have some standard with which to compare it. The standard may be a budget one. It may be set by a company. It may be historical one; it may be based on the past performance of the company. It may be based on the industry comparison.

Changes in many ratios are closely associated and connected with one another.

While comparing the ratio of particular firm with those of similar firm, the different between the firms should be recognized.

Ratio are likely to be miss-used there are some situation in which they may appear to be miss-lending.

-: PROFITABILITY RATIO :GROSS PROFIT RATIO:

It is a ratio expressing relationship between gross profits earned to net sales. It is useful indication of the profitability of business. The gross profit margin represents the limits beyond which fall in sales are outside the tolerance limit.

Sr .No.
1 2 3

Year
2007-08 2008-09 2009-10

Gross Profit Ratios

7.27 % 7.57% 4.67%

Analysis: Gross profit ratio for the last three years are 7.27 %, 7.57 %, and 4.67 % while standard ratio for gross profit ratio is 50%. But here all the ratio of the firm is below standard ratio. From the year 2008-09 to 2009-10, firms gross profit increased by 0.30 % and reached at 4.67 % in 2009-10. From this chart we can say that firms profit is fluctuating since last three years. Over roll, Firms gross profit decreased by 3.40 % from 2007-08 to 2009-10.

NET PROFIT RATIO:

Net profit ratio it shows overall profitability of business. This ratio indicates what proportion of sales revenue is left to the proprietors after all operating expenses are met. The higher this ratio the better will be the profitability. If the gross profit is increasing over last five years but the net profit is declining it indicates administrative expenses are increasing. The Equation of net profit is as follow:

Sr .No.
1 2 3

Year
2007-08 2008-09 2009-10

Net Profit Ratios

0.344 % 0.589 % 0.262 %

Analysis:

Net profit ratio of the firm for last three years are respectively 0.344%, 0.589%, and 0.262% Standard ratio for net profit ratio is 20% but here in this firm it very less compare to standard ratio. In year 2007-08 ratio is 0.334% and second year increase by 0.245 and reach 0.589 Year 2008-09 ratio is 0.589 in year 2009-10 decrease and reach 0.262. From this chart we can say that firms profit for last three years is not maintain it is decreases by 21% from 2007-08 to 2009-10.

OPERATING RATIO
It is a ratio showing relationship between cost of goods sold plus operating expenses and Net Sales. It shows the efficiency of the management. The higher the ratio, the less will be the margin available to proprietor. This ratio is also usually expressed as a percentage.

Sr .No.
1 2 3

Year
2007-08 2008-09 2009-10

Operating Ratios
92.74% 92.43 % 95.32 %

Analysis:

Net profit ratio of the firm for last three years are respectively 92.74%, 92.43%, and 95.32% In year 2007-08 operating ratio 92.74% but in 2008-09 reach 92.43 and year 2009-10 its increase by 3.11% and reach at 95.32%. In overall year 2007 to 2010 operating expenses is increase by 2.58. From this chart we can say that firms profit for last three years is not maintain it is decreases by 21% from 2007-08 to 2009-10.

STOCK TURNOVER RATIO:Stock turnover ratio is also known as inventory turnover ratio. This ratio is calculated to know how many time stock is turn over to calculate stock turnover ratio is calculated by dividing cost of goods sold with average stock average stock is calculated by combining opening stock and closing stock than dividing by two.

Sr.No.
1 2 3

Year
2007-08 2008-09 2009-10

Stock Turn-over Ratios

80.60 times 311 times 301 times

Analysis: Stock turns over ratio of last three year are 80.60 times, 311 times, and 301 times respectively. Standard ratio for stock turnover ratio is 4 times but here it is very high compare to standard ratio. The movement of stock is very high. It seems there is no any unsalable item of inventories in the firm.

-: BALANCE SHEET RATIOS :CURRENT RATIO:It is also known as working capital ratio as it is a measure of working capital available at a particular time. It shows the proportion of current asset to current liabilities.

Sr .No.
1 2 3

Year
2009-10 2008-09 2007-08

Current Ratios
0.572 : 1 0.650 : 1 0.611 : 1

Analysis: Here the current ratios of the firm of last three year are 0.572:1, 0.650:1, and 0.611:1 respectively. From this we can say that firms assets are around 0.572 to 1 times of their current liabilities.

Standard ratio for current ratio is 2:1, but firms ratio is very low compare to standard ratio The current ratio of the firm is increases form 2007-08 to 2008-09 by 113% but in the year of 2009-10 it is decreases by 54%.

LIQUID RATIO:A variant of current ratio is the liquid ratio or quick ratio which is designed to show the amount of cash available to meet immediate payments. It is obtained by dividing the liquid assets by liquid liabilities. This ratio is used as a measure of the companys ability to meet its current obligations. A quick ratio of 1:1 (standard) indicates highly solvent position.

Sl .No.
1 2 3

Year
2009-10 2008-09 2007-08

Liquid Ratios
0.44 : 1 0.56 : 1 0.53 : 1

Analysis: Liquid ratio of the last three year of the firm is 0.44:1, 0.56:1, and 0.53:1 respectively, which shows lower liquidity of the firm. Standard ratio for liquid ratio is 1 but here liquid ratio of the firm is very less compared to standard ratio. To increase the liquid ratio firm should decrease its liabilities and increase liquid assets.

ACID-TEST RATIO
The measure of absolute liquidity may be obtained by comparing only cash and bank balance as well as readily marketable securities with liquid liabilities. This is a very exacting standard of liquidity and it is satisfactory if the ratio is 0.5: 1. It is computed by dividing the value of quick assets by liquid liabilities.

Sl .No.
1 2 3

Year
2009-10 2008-09 2007-08

Acid-test Ratios
1.13 : 1 1.25 : 1 1.00 : 1

Analysis: Liquid ratio of the last three year of the firm is 1.13:1 ,1.25:1, and 1:1 respectively. Which shows comfortable position of the firm. Standard ratio for liquid ratio is 1 and in 2009-10 also 1:1 so its good position of the firm, in 2007-08 to 08-09 it comes 1.13 and 1.25 respectively.

Very high liquid ratio of the firm may not be useful because there may be disadvantage of excessive working capital but Sarvottam dairy make an efficient use of the working capital.

PROPRIETARY RATIO
The ratio shows the proportion of proprietors fund to the total assets employed in the business. The proprietors funds or shareholders equity consist of share capital and reserves & surplus.

Sr .No.
1 2 3

Year
2007-08 2008-09 2009-10

Proprietary Ratios
14.30 % 23.97 % 17.40 %

Analysis:

Net profit ratio of the firm for last three years are respectively 14.30%, 23.97%, and 17.40% In year 2007-08 proprietary ratio is 14.30 and increase 2008-09 by 9.67 and reaches 23.97% and last year decrease and reaches at17.40. In three year ratio continue fluctuating and it shows very low standard.

LONG TERM FUND TO FIXED ASSETS

Normally, the fixed assets of business must be purchase out of fixed capital only, which includes share capital, reserves and long term liabilities. This ratio, therefore, shows the relationship between fixed capital and fixed assets. The ratio must be 1 : 1.

Long term Fund Sr .No.

1 2 3

Year
2007-08 2008-09 2009-10

to Fixed Assets Ratios

55.77 61.58 55.15

Analysis: Long term fund to fixed assets ratio of the last three year of the firm is 55.77 , 61.58, and 55.15 respectively. In year 2007-08 ratio is 55.77 and second year its increase by 5.81 and reaches at 61.58% and in last year decrease by 6.43 and reaches at 55.15%.

As per chart ratio continues fluctuating 2008-09 increase and 2009-10 decrease.

-: EFFICIENCY TURNOVER RATIO :RETURN ON CAPITAL EMPLOYED:It is an index of profitability of business and is obtained by comparing net profile with capital with capital employed. The ratio is normally expressed in the percentage. The term capital employed includes share capital, reserves and long term loans such as debentures.

Return on Sr .No. Year Capital Employed Ratios

1 2 3 2007-08 2008-09 2009-10 3.94 % 7.07 % 4.08 %

Analysis: Here return on capital employed ratios are 3.94%, 7.07%, and 4.08% respectively for the last three years. Here also first step ratio medium and second step increase and last year decrease. 2007-08 3.94 and 2008-09 its increase by 3.13 and reaches at 7.07% 2009-10 decrease and reaches at 4.08.

FIXED ASSETS TURN-OVER RATIO:To ascertain the efficiency and profitability of business, the total fixed assets are compared to sales. The more the sales in relation to the amount invested in fixed assets, the more efficient is the use of fixed assets. It is indicate higher efficiency.

Sr .No.
1 2 3

Year
2007-09 2008-09 2009-10

Fixed Assets Turnover Ratios

6.37 7.39 8.58

Analysis: Fixed assets turns over ratio of last three year are 6.37 times, 7.39 times, and 8.58 times respectively. Higher ratio indicate firm has a capability to earn more with less investment.

TOTAL ASSETS TURN-OVER RATIO:The amount invested in the business are invested in all assets jointly and sales are effected through them to earn profits. So in order to find out relation between total assets to sales.

Sr .No.
1 2 3

Year
2007-08 2008-09 2009-10

Total Assets Turnover Ratios

4.22 4.61 4.85

Analysis: Total assets turns over ratio of last three year are 4.22 times, 4.61 times, and 4.85 times respectively. Higher ratio indicate firm has a capability to earn more with less investment.

CONCLUSION

As a part of one of my subject of TYBBA I have taken tanning at SARVOTTAM DAIRY for 25 days during my project report I conclude following things. SARVOTTAM DAIRY is most popular company which is receive milk from the society and process on that afterwards sells in to market. Its having a good market at their place, and its have better infrastructure facilities. Company having latest technology which is use for milk, company is cooperative firm so that its no have any financial problems in coming years. The company is having marvelous support from consumers. The companys Management criterion is good its executive officers and the chairman are having good Field knowledge and he is highly experienced. Going through the report, assumptions can be made that the company will be having Wide scope of development in the next coming years. And I am sure that company will achieve all their objectives in coming year.

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PUBLISHER: - VIKAS PUBLISHING HOUSE PVT LTD.

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PUBLISHER: - SUDHIR PRAKASHAN

FINANCIAL MANAGEMENT, S.N. MAHESHWARY, 9th EDITION

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