A

Project Report
On
“FINANCIAL PERFORMANCE OF SARVOTTAM DAIRY”

(Bhavnagar District Co-operative milk producers

union limited)

A Project Submitted To
The Bhavnagar University of Bhavnagar in practical
fulfillment for the degree
Of
Bachelor of Business Administration
By, Guided By,
JAPADIYA SATISH. J NETRAMEM
(T.Y B.B.A)
Roll no: 38

Swami Sahajanand College of commerce &

management
Bhavnagar University
Bhavnagar
Batch
2007­10
 DECLARATION

I, undersigned Mr.Satish Japadiya, hereby declare that the project report

entitled “financial performance of Sarvottam Dairy” under the guidance of
Miss.Netra Mam submitted in partial fulfillment of the requirements for the award of
the degree of Graduation in Bachelor of Business Administration in Swami
Sahajanand College of Commers & Management, Bhavnagar is my original work
– research study – Carried out during 1st May, 2009 to 30th June, 2009 and not
submitted for the award of any other degree/diploma/fellowship or other similar titles
or prizes to any other institution/organization or university by any other person.

Place: BHavnagar

Date: 30-06-2009 Signature

Satish Japadiya

.
 PREFACE
“Practice makes more perfect”

In the field of management every time there is a requirement of

understanding or practical aspect of the organization with managerial mind. There is
requirement to go for practical training of any subject supplement to the theoretical
knowledge and clarified concept.

It is more applicable in the field of the management especially a

professional course like B.B.A. Moreover SWAMI SAHJANAND COLLEGE OF
COMMERS& MANAGEMENT, Bhavnagar has prescribed 21 days project report
training during the II Sem. as a part of B.B.A programmers. My training at the
SARVOTTAM DAIRY is to comply with this requirement also.

The project report includes various ratio of the company and comparison
of financial statements of last three years and analysis on Working Capital Of
Company, which provide perfect direction of invest the money. The data collections
were by annual report of the different companies, and discussion with concerned
employees and experts.

At the end findings and suggestions are reported.

I hope this serves the Purpose.

 ACKNOWLEDGEMENT

Words are indeed inadequate to convey my deep sense of gratitude to all those who
have helped me in completing this summer project to the best of my ability. Being a
part of this project has certainly been a unique and a very productive experience on
my part.

I am really thankful to, Mr. HASMUKH PANDYA, MANAGER (Production)

for making all kinds of arrangements to carry the project successfully and for guiding
and helping me to solve all kinds of quarries regarding the project work. His
systematic way of working and incomparable guidance has inspired the pace of the
project to a great extent.

I would also like to thank my mentor and project – coordinator, Ms. Netra
Mam, (faculty guide) for assigning me a project of such a great learning experience
and acquainting me with real life project financing and appraisal.

I am very grateful to Mr.Hardik Bakshi (faculty guide) Swami Sahjanand

College of Commers & Management Who has given me the opportunity to do this
project in the Sarvottam Dairy Shihor. and very thankful to all lecturers of Swami
Sahjanand College of Commers & Management for their useful guidance and
advise.

Last but not least I would like to thank all the employees of Sarvottam Dairy.
who have directly or indirectly helped me with their moral support for the completion
of my project.

SATISH
JAPADIYA
 TABLE OF CONTENTS
DECLARATION

Preface

Acknowledgments

Executive summary

Chapterisation

1. Introduction page no.

1.1 introduction of Sarvottam dairy

1.2. History& development of unit

1.3 Objectives of Sarvottam dairy

1.4 size of the unit.

1.5 form of organisation

1.6 organization structure

1.7 manufacturing process

1.8 Time keeping system.

1.9 employees services

1.10 boards of directors

2. COMPANY PROFILE

3. RESERCH METHODOLOGY

3.1 Meaning of research method.

3.2 Research objective

3.3 Research design

4. DATA ANALYSIS AND INTERPRETATION

4.1 Introduction

4.2 methods of analyzing financial statement

4.3 comparative balance sheets

4.4 trend percentage

4.5 common size statements

4.6 Ratio analysis

4.6.1 Liquidity ratio

4.6.2 Leverage ratio

4.6.3 Activity ratio

4.6.4 Profitability ratio

4.7 working capital analysis

5. Findings and suggestion

6. Bibliography
[1] COMPANYPROFILE

• NAME OF COMPANY: -SARVOTTAM DAIRY

• ADDRESS OF THE COMPANY: -

SARVOTTAM DAIRY,
BHAVNAGAR – RAJKOT
HIGHWAY ROAD,
SIHOR,
BHAVNAGAR.

PH.NO:- (02846) 329633,225502

FAX NO.:- 91-02846-225501

• BANKERS: - BHAVNAGAR JILLA SAHKARI

BANK LTD.

STATE BANK OF SAURASHTRA.

I.D.B.I. BHAVNAGAR.

BANK OF BARODA.

• AUDITOR: - Mr. JAGDISHBHAI MEHTA

(C.A.)

• YEAR OF ESTABLISHMENT: - 1ST MARCH 2000

• YEAR OF REGISTRATION: - 12TH DECEMBER 2005

• R.G. NO.:- REDG/U28701

• FORM OF ORGANIZATION: - CO-OPERATIVE FIRM

• BRAND NAME OF PRODUCTS: -
SARVOTTAM SPECIAL.
SARVOTTAM KANCHAN.
SARVOTTAM SILVER.
SARVOTTAM LIGHT.
SARVOTTAM CHHASH.
• TOTAL WORKERS & STAFF: - 73 WORKERS

• MAIN PRODUCT: -MILK

• RAW – MATERIALS: -RAW MILK

• COMPETITORS: -B.D.P.L.

• MILK COLLECTION

• CENTER: - SIHOR

PALIYAD

GADHADA (SWAMI).

• FUTURE PLAN: - GHEE, SWEETS, CHEESE

CHOCOLATES, ICE-CREAM ETC.

• AVERAGE MARKETING: - 20000 LITER PER DAY.

• ANNUAL OUTPUT: - 216 LAC LITERS

• SLOGAN & PUNCHLINE: -“SARVOTTAM DOODH PITA HEI

BHAVNAGAR.”

“SARVOTTAM DOODH SO
TOUCH NU DOODH.”
1. INTRODUCTION

I have visited “SARVOTTAM DAIRY” Sihor on the 19th October 2008 for the
purpose of taking practical training for the betterment of my knowledge in the field of
management and as a part of my study programme. This is most famous for
production milk in district level.

This industry located at Sihor (DADA NI VAV) area. The plan area of the
industry covers 30acres land in Sihor on Bhavnagar to Rajkot highway road. This is
large scale industry.

Sarvottam Dairy established in 1st march 2000 by Shari Bhavnagar District

‘SAHKARI’ milk manufacture ‘SANGH’. Sarvottam Dairy is a unique dairy.

Sarvottam Dairy wants to decrease privatization and increase cooperative

and development rural area. It wants take revolution as AMUL DAIRY has given.

Sarvottam Dairy is received milk approximately 50000 liters and selling 20000
liters, after the surplus milk passed from AMUL DAIRY Anand.
 1.1 HISTORY AND DEVOLOPMENT

‘GUJARAT DAIRY DEVELOPMENT BOARD’ establishes 1974 BHAVNAGAR

DAIRY. Bhavnagar Dairy has brand names “SAURAS” by this name Bhavnagar
Dairy sells milk and ghee in the Bhavnagar district. Milk was gathered by making
milk purchased from the cooperative members are 42500 liters and they selling was
54000 liters after decrease in purchased and sales government had close the
Bhavnagar Dairy on the date of December 24th 1999.

The “SANGH” was also enabling to do anything for the crisis of Bhavnagar
dairy. When the “SANGH” is established in 1974 they take the responsibility to solve
the problem of their cooperative members.

Because of close the dairy in December 24th 1999 managed by Nigam and
the meeting was called by all milk producers of the Bhavnagar in the ground of Jilla
Panchayat because of purchase and selling management they assigned
responsibility Mr. HARISHANKAR R.NANDVA and Mr. MAHASHANKAR P.PANDYA
with the support of the political bodies like Mr. SUNIL OZA, Mr. RAJENDRASINH
RANA and Mr. MAHENDRABHAI PANOT of Bhavnagar district Mr. HARISHANKAR
R. NANDVA and Mr. MAHASHANKAR P.PANDYA send a application to the Gujarat
Government for the reestablishment of SANGH in the district. Both Mr.
HARISHANKAR R.NANDVA and Mr. MAHASHANKAR P.PANDYA had done
present Bhavnagar Dairy was merger with Uttam Dairy by Ahmadabad by
Government department. In this organization they assigned organization
responsibility to V.C. JOSHI.
1.2 SIZE OF THE UNIT
There are three types of industry.

1) Small scale industry.

2) Medium scale industry.

3) Large scale industry.

According to the industrial policy 1991:

• Small scale unit is a unit in which investment up to 25 lac to 5crore.

• Medium scale unit is a unit in which investment in fixed assets fall between
ranges of 5crore to 10 crore.

• Large scale unit is a unit in which investment in machinery and plant exceeds
investment more than 10 crore.

SARVOTTAM DAIRY invests up to 5 crore on its plant and assets. So it is a

medium scale industry.

Depending on the ownership the business organization can be classified in

the following forms:

• Sole proprietorship.

• Partnership.

• Join Sector Company.

• Co-operative organizations.

• Government Company.

As the name it suggests that it is a cooperative unit

 1.3 FORM OF ORGANIZATION

Before 8 years, the form of this industry was sole proprietorship but it is
converted in to co-operative firm. As the name it suggests that it is a co-operative
unit. In additional to above there is also other like computer it in dairy manufacturing
department. The dairy occupies about 30 acre lands for manufacturing unit and it
has one big cold store room on its premises the average receive milk 55,000 liters
and selling 20,000 liters per day.
1.4 ORGANISATION STRUCTURE
The good organization structure is most important and vital because with the
help of the good organization structure, the managerial ability and inner energy of
the managers come out. The managerial ability and develop of the business depend
upon the organization structure of an organization.

The organization structure of the “SARVOTTAM DAIRY” includes three

levels.

1) Top level.

2) Middle level.

3) Lower level.

1) TOP LEVEL
Top level includes the unit or groups. Top level consists of mainly Board of
Directors, General Manager, and Chairman etc.

• Chairman: MAHENDRABHAI PANOT

• G.M. : HARISHANKAR R.NANDVA

• Joint G.M.: MAHASHANKAR P.PANDYA

2) MIDDLE LEVEL
Middle level is the very important level, because it is the linker who combines
both the level top level to the bottom level.

• Finance head: Mr. BHIKHUBHAI PATEL

• Production head: Mr. HASMUKHBHAI PANDYA

 • Co-operative head: Mr. BHARATBHAI KHER

• Marketing head: Mr. VIJAYBHAI RAMANA

• Auditor: Mr. JAGDISHBHAI MEHTA (C.A.)

3) LOWER LEVEL

A lower level or bottom level seen at the lowest in the chart of company. It is
the level where actual work is done.

Workers. Formal.
1.6 CHART OF ORGANIZATION
 1.7 MANUFACTURING PROCESS

Manufacturing process is most important factors of each and every

business. The SARVOTTAM DAIRY is producing milk product. Dairy is use
two types of producing method, one is a milk and second is a butter milk
means milk are their raw materials the dairy produce product as the regular
and after the milk. First the checking fat and after put the machinery.
SARVOTTAM DAIRY is a consumer goods production sector. Milk is essential
ingredient in our life.

Process of milk the first milk receives rural area and TALUKA area and
received milk in put in to tank and third step milk in general fat and solid not
fat and after maintain (S.N.F. and fat). If the fat is increase so, adding water
but fat is decrease, so the adding powder S.N.F after maintain and fat the last
step persuasion and after packing. In every stage of life milk is useful to
develop and maintain our body.
 In the process of milk and butter milk product separate machine is used
after packing milk and buttermilk product they are kept in cold storage.
1.10 BOARD OF DIRECTORS:-

• Mr. MAHENDRABHAI PANOT - Chairman and M.D.

• Mr. MAVJIBHAI BHALIYA - Director

• Mr. CHUNILAL BARAIYA - Director

• Mr. DAYARAMBHAI BARAIYA - Director

• Mr. BHIKHABHAI KHODIFAD - Director

• Mr. LAKHUBHAI KAMALIYA - Director

• Mr. GIRIJASHANKARBHAI DHANDHALIYA- Director

• Mr. JESABHAI KHER - Director

• Mr. MATHURBHAI ZINZAVAT - Director

• Mrs. DEVUBEN BHATT - Director

• Mrs. PRABHABEN VALAKI - Director

• Mrs. SHARDABEN RAJYAGURU- Director

• Mr. HARISHANKAR R. NANDVA- GM/ Director

• Mr. MAHASHANKAR P.PANDYA - JOIN G.M

[3] RESEARCH METHODOLOGY
WHAT IS RESEARCH?

Research is the systematic process of collecting and analyzing

information to increase our understanding of the phenomenon under
study. It is the function of the researcher to contribute to the
understanding of the phenomenon and to communicate that
understanding to others

RESEARCH METHODOLOGY:
Research Methodology is a systematically solve the research problem. It has many
dimensions and research methods constitute a part of the research methodology.

• Thus when we talk about research methodology, we do not only talk of the
research methods but also consider the logic behind the methods. We use in
context of our research study, so that research results are capable of being
evaluated either by researcher himself or by others.
• To effectively carry out in research, I would use the following research process,
which consists of series of actions or steps.
Research method include following points are as follow,

1) research objective
2) process of research method
3) types of research method
4) source of data
3.1 RESEARCH OBJECTIVES
The Objectives of ANALYSING Financial PERFORMANCE OF SARVOTTAM
DAIRY is as follows:

1. To judge the financial stability of a DAIRY.

2. To measure the SARVOTTAM DAIRY’S short-term and long-term

solvency.

3. To measure the SARVOTTAM DAIRY’S operating efficiency and

profitability.

4. To compare intra-firm position, inter-firm position and pattern position

with industry.

5. To assess the future prospects of the SARVOTTAM DAIRY.

6. Financial statements analysis is an attempt to determine the

significance and meaning of the financial statement data so that
forecast may be made of the future earnings, ability to pay interest and
debt maturities (both current and the long term) and profitability of a
sound dividend policy

7. The purpose of objective of financial PERFORMANCE analysis is to

diagnose the information contained in financial statements so as to
judge the profitability and financial soundness of the SARVOTTAM
DAIRY
3.2 RESEARCH DESIGN
A plan of what data to gather, from whom, how and when to collect the data, and
how to analyze the data obtained

a systematic plan to guide archaeological research according to the scientific

method and take full advantage of the information potential

RESEARCH DESIGN

Research Design includes the following steps:

1. PROBLEM IDENTIFICATION

 Find out Ratios of SARVOTTAM DAIRY and compare financial statements

for judging the financial performance.

 Find deviation of calculated ratios from standard or Norms

 Calculating the working capital analysis of sarvottam dairy.

2. INFORMATION NEEDED

 Information about firm’s assets, liabilities, revenue, expenditure, bankers,

investment etc.

 Information about firm’s loan, security, stock level & other financial
information.

3. DATA COLLECTION

My data collection source was secondary i.e.

 Annual reports of companies

 Balance sheet

 Profit & Loss Accounts

4. ANALYSIS & INTERPRETATION

 The data collected and analysed subjectively as well as graphically where it is

possible. The analysis is based upon available information & interpreted
accordingly.

5. CONCLUSION

 On the basis of analysis conclusion has been drawn.

6. SUGGESTION

 Suggestion has been given in order to improve performance of the firm.

7. LIMITATION

 My scope of study is limited to the annual reports, Balance sheet of units &
within the SARVOTTAM DAIRY’s last 3 years data for analysis.
4. DATA ANALYSIS AND INTERPRETATION
4.1 INTRODUCTION:

Information contained in Financial Statements that is Balance sheet,

profit and loss account or income and expenditure etc is usually used by
management, creditors, investors, and others to form judgment about the company’s
operating performance and financial position.’ the end of the financial accounting
processing in a set of reports which are called financial statements’. Users of the
financial statements can get better insight about the financial strength and
weaknesses of the firm if they properly analyze the information reported in these
statements.

A company’s management should be interested in knowing the financial

strength to make their best use and be able to spot out financial weaknesses of the
firm to take suitable corrective actions. The future plans of the firm should be laid
down in view of the firm’s financial strength and weaknesses.

MEANING:
The term “Financial performance Analysis” also known as analysis and
interpretation of financial statements refer to the process of determining financial
strength and weaknesses of the firm by establishing strategic relationship between
the items of the balance sheet, profit and loss account and other operative data.
According to Metcalf and Titard, “Analyzing financial statements is the
process of evaluating the relationship between the component parts of the financial
statements to obtain a better understanding of a firm’s position and performance.”

In the words of Myers, “Financial statement analysis is largely a study of

relationship among the various financial factors in a business as disclosed by a
single set of statements, and a study of the trend of these factors as shown in a
series of statements

Therefore, financial performance Analysis is the starting point for

making plans before forecasting and planning procedures. That understanding the
past is a prerequisite for anticipating the future. There are 5 method s of analyzing
the financial performance of SARVOTTAM DAIRY:
4.2 METHODS OF ANALYSIS OF FINANCIAL STATEMENTS

The analysis and interpretation of financial statements is used to determine the

financial position and results of operations as well. A number of methods or devices
are used to study the relationship between different statements. The following
methods of analysis are generally used:
1. Comparative statements

2. Trend analysis

3. Common size statements

4. Funds flow analysis

5. Cash flow analysis

6. Ratio analysis

These are explained as follows:

1. Comparative statements

The comparative financial statements are statements of the financial position

at different periods of time. The elements of financial position are shown in a
comparative form so as to give an idea of financial position at two or more periods.
Any statement prepared in a comparative form will be covered in comparative
statements. From practical point of view. Generally, two financial statements
(Balance Sheet and the Income Statement) are prepared in comparative form for
financial performance Analysis purposes.
2. Trend analysis

The financial statements may be analyzed by computing trends of series of

information. This method determines the direction upwards or downwards and
involves the computation of the percentage relationship that each statement items
bears to the same in the base year. The information for a number of years is taken
up and one year, generally taken for the base year. In figures for the base year are
taken as 100 and trend ratios for other years are calculated on the basis of the base
year. The analyst is able to see the trend of the figures, whether upward or
downward.

3. Common size statements

The common size statements, balance sheet and the income statements are
shown in analytical percentages. The figures are shown as percentages of total
assets, total liabilities and the total sales. The total sales are taken as 100 and
different assets are expressed as a percentage of the total. Similarly various
liabilities are taken as a part of the total liabilities. These statements are also known
as component percentage as 100 percent statements because every individual item
is stated as a percentage of the total 100.

4. Funds flow analysis

The fund flow statement is a statement, which shows the movement of the
funds and is the report of the financial operations of the business undertaking. It
indicates various means by which funds were obtained during a particular period and
the ways in which these funds were employed. In simple words, it is a statement of
sources and application of funds.

5. Cash flow analysis

Cash flow statement is a statement, which describes the inflow (sources) and
outflow (uses) of the cash and cash equivalents in an enterprise during the specified
period of time. Such a statement enumerates net effects of the various business
transactions on cash and its equivalents and takes into account receipts and
disbursements of cash. A cash flow statement summarizes the causes of changes in
cash position of a business enterprise between the dates of the two balance sheets.

6. Ratio analysis

Ratio analysis is a technique of analysis and interpretation of financial

statements. It is the process of establishing and interpreting various ratios for
helping in making certain decisions. However ratio is not end itself. It is only a
means of better understanding of financial strengths and weaknesses of a firm. A
ratio is a simple arithmetical expression of the relationship of one number to another.
It may be defined as the indicated quotient of the two mathematical expressions.
 4.3 COMPARATIVE STATEMENT
COMPARATIVE BALANCE SHEET

LIABILITIES 2006-07 2007-08 2008-09 ASSET 2006-07 2007-08 2008-09

Paid-up- 2164700 3186800 4460800 Fixed 2813474 3402882 50289944
capital asset 5 8

Share reserve 3590 3929 37609 Investment 106000 106000 106000

Reserves and 886452 4152845 14852845 Current 7540982

other funds asset

Current Deposits 676468 134425 439686

liability

Deposits 9466870 1299045 127140049 Advances 2669189 1282757 5023399

2 and other 9
dues

Provision 9797868 1225312 25024794 Bank 409244 144394 6921494

toward the 9 balance
payment milk
co-op society

Provision for 3742328 6374366 9665232 Cash on 228406 849 2485

current liability hand

Net profit 740950 747678 2192289 Closing 4105544 5023399

stock

Loans and 1296227 1163861 11645135

liabilities(long 6 9
term)

TOTAL 3976503 5134761 80602934 TOTAL 3976503 5134761 80602934

5 9 5 9
 INTERPRETATION

• SHARE CAPITAL:

4500000
4000000
3500000
3000000
2500000 2006-07
2000000
2007-08
1500000
1000000 2008-09
500000
0
SHARE
CAPITAL

We can see from the above chart that share capital of the
SARVOTTAM DAIRY is continuously increasing. it increases the owners capital
in the dairy and avoid unnecessary burden of interest on the company.

• FIXED ASSETS:

60000000

50000000

40000000
2006-07
30000000
2007-08
20000000 2008-09
10000000

0
FIXEDASSETS
 The above chart represents that the fixed assets of
SARVOTTAM DAIRY is continuously increasing , it shows progress of the dairy
during the given period.

INVESTMENTS:

120000

100000

80000
2006-07
60000
2007-08
We can
40000 2008-09
20000
see
0 from
INVESTMENTS
the
above
chart that the investments of the SARVOTTAM DAIRY are stable during the 3
years.

• CURRENT ASSETS;

35000000
30000000
25000000
20000000 2006-07
15000000 2007-08
10000000 2008-09

5000000
0
CURRENT ASSETS

The table shows that the current assets of the SARVOTTAM DAIRY
are increasing since last 3 years. It can be said a progressive feature for the
dairy.
• CURRENT LIABLITIES :

50000000

40000000

30000000
2006-07
20000000 2007-08
10000000 2008-09

0
CURRENT
LIABLITIES

We can see from the chart that the current liability of the SARVOTTAM
DAIRY is increasing since last 3 years. It is not good for the health of the
SARVOTTAM DAIRY.

• SALES:

400000000
350000000
300000000
250000000
2006-07
200000000
2007-08
150000000
2008-09
100000000
50000000
0
SALES(Rs)

We can see from the above chart that the sales of SARVOTTAM DAIRY are
increasing from year to year. This can be said a step toward the progress…
• NET PROFIT:

2500000

2000000

1500000 2006-07

1000000 2007-08
2008-09
500000

0
NET PROFIT

AS we can see from the above chart net profit of

SARVOTTAM DAIRY is stable during the year 2007&2008. But it rapidly
increases in the year 2009. This may due to decrease in the operating expanses
and increase in sales..

• GROSS PROFIT

30000000

25000000

20000000
2006-07
15000000
2007-08
10000000 2008-09
5000000

0
GROSS PROFIT

GROSS PROFIT of the SARVOTTAM DAIRY is also increasing but in the

year2007-08 gross profit is high but due to high operating expanses net profit is
low.
 4.2 COMMON SIZED STATEMENTS

COMMON SIZED PROFIT & LOSS A/C

2006- 2007- 2008-
2006-07 2007-08 2008-09 07 08 09

PARTICULARS RS. RS RS % % %

100 100 100

SALES 150849860 216876774 3715998

COST OF GOODS 95.02 92.72 92.43

SOLD 143347562 201097798 3434799

2811984 4.97 7.28 7.57

GROSS PROFIT 7502298 15778976 5

TOTAL 4.60 6.93 6.97

OPERATING 2592755
EXPANSES 6761348 15031298 6

0.37 0.35 0.60

NET PROFIT 740950 747678 2192289

We can see from the above table sales is increasing gradually during the period
where as the cost of goods sold is decreasing every year which results into
increase in the gross profit. The gross profit of the Dairy is increasing but with
that operating expanse also increasing so there is low margin of net profit.
 COMMON SIZED BALANCESHEET

SOURCES OF FUNDS
PARTICULARS 06-07 07-08 08-09 06- 07- 08-
07 08 09

RS. RS. RS. % % %

SHARE CAPITAL

PAID UP 2164700 3186800 4460800 5.44 6.21 5.53

RESERVE SH CAP 3590 3729 37609 0.01 0.01 0.05

RESERVE & FUNDS: 886451 4152845 1486284 4.09 9.54 21.26

5

CURRENT LIABILITIES:

DEPOSITES 9466870 1299045 1271404 23.81 25.30 15.77

2 9

PROVISIONTOWARDS 9797868 1225312 2502479 24.64 23.86 31.05

MILK CO OPERATIVE 9 4
SOCIATY

PROVISION FOR 3742328 6374366 9665232 9.41 12.41 11.99

CURRENT DUES

LOAN{LONG TERM} 1296227 1163861 1164531 32.60 22.67 14.45

6 9 5

TOTAL 3976503 5134761 8060293 100 100 100

4 8 3

 We can see that share capital in the year 2006-07 is only 5.44% which
increases in the next year and becomes 6.215 of the total assets. In the
current year it becomes 5.53%.

 The reserve funds are only 4.09% of the total assets. It increases next year
and becomes 9.54% and again increases 21.26%. This can be said a
considerable increase.
 Current liabilities are 32.60% of the total liability which decrease in the next
year and becomes 22.67% and in the current year it becomes 14.45%. this
can be said good for dairy
 Long term loan of the dairy is 32.60% of the total assets in the year 2006-07
which decreases in the year 2007-08 and becomes 22.67 % in the next year it
again decreases and becomes 14.45% of the total assets. This can be said
good for dairy as it has enough inner funds for expansion. As its share capital
and other funds are increases continuously, it has less need of outside funds.
 COMMON SIZED BALANCESHEET
APPLICATION OF FUNDS
PARTICULARS 06-07 07-08 08-09 06-07 07-08 08-09

RS. RS. RS. % % %

FIXED ASSETS 28134745 34028828 50289944 70.75 66.27 62.39

INVESTMENTS 106000 106000 106000 0.27 0.21 0.13

CURRENT ASSETS:

DEPOSITS 676468 134425 439686 1.70 0.26 0.55

ADVANCES&OTHER 7540982 12827579 17819926 18.97 24.98 22.11

DUES

CLOSING STOCK 2669189 4105544 5023399 6.71 7.99 6.23

BANK BALANCES 409244.26 144394.26 6921494.2 1.03 0.28 8.59

6

CASH IN HAND 228406 849.55 2485 0.57 0.001 0.003

TOTAL 39765035 51347619.81 80602934 100 100 100

• As per the above statement, we can see that fixed assets are decreasing
slightly. In the year 2006-07, it is 70.75% of the total assets. It decreases in
the year 2007-08 and becomes 66.27% and in the current year it becomes
62.395 of the total assets.

• Investments of the dairy remain constant for all the three years. It does not
change.

• The proportions of the deposits are 1.70% of the total assets and it decreases
in the next year and reaches at only 0.26% of the total assets. In the current
year 2008-09 , it again raises slightly and becomes 0.55% of the total assets.

• Advances & other dues and closing stock has slight difference in them.

• Bank balances of the dairy are increasing where as cash in hand shows
decreasing trend.
4.3 TREND ANALYSIS
For studying the trend of various items of financial statements, he figures of a
single year are not enough. Comparative figures of some more years are
required. if the items of other years in the form of percentage ,the method is
known as trend percentage method .the figures of one year is taken as
base .every item in this base statement is taken as 100. Figures of each item
in the other years statement are divided by corresponding item in the
statement of base year. Here the year 2006-07 is taken as the base
year……….

TREND PERCENTAGE STATEMENT

2006- 2007-
2008-09
PARTICULAR 2006-07 2007-08 2008-09 07 08
%
% %

2813474 5028994
Fixed assets 34028828 100 120.94 178.75
5 4

Investments 106000 106000 106000 100 100 100

1152428 3020699
Current assets 172122791 100 149.63 262.11
9 0

Share capital 2164700 3186800 4460800 100 147.21 206.07

1486284
Reserves & funds 886451 4152845 100 468.47 1676.66
5

2300706 4740407
Current liabilities 31617949 100 137.42 206.04
5 4

Loans &long term 1296227 1164531

11638619 100 89.78 89.84
liabilities 6 5

2811984
Gross profit 7502298 15778976 100 210.32 374.81
5

Net profit 740950 747678 2192289 100 100.9 295.87

3976503 8060293
Total assets 51347619 100 129.12 202.69
5 4
 We can see from the above trend percentage statement that as compared to
the base year all the items in the statement are increasing except investments
and loans & long term liabilities.

 Investments remain constant in all the years. Long term

liabilities & loans are decreasing gradually from 2006-07 to 2008-09. it shows that
outside liabilities are decreasing . it is good for Dairy.

 Dairy has acquired excellent growth in the current year

as compared to previous year’s .All the items are increased at a very high rate.
Dairy is undergoing at a very high growth rate and will expand its operation in the
near future.
  4.4 RATIO ANALYSIS

4.1.1 INTRODUCTION

The ratio analysis is one of the most powerful tools of the Financial
performance Analysis. It is the process of establishing and interpreting various ratios
(quantitative relationship between figures and groups of the figures). It is with the
help of ratio that the financial statements can be analyzed more clearly and
decisions made from such analysis.

4.1.2 MEANING

A ratio is a simple arithmetical expression of the relationship of one number to

another. It may be defined as the indicated quotient of two mathematical
expressions.
According to the Accountant’s Handbook by Wixon, Kell and Bedford, a ratio is an
expression of the quantitative relationship between the two numbers.

According to the Kohler, a ratio is the relation of the amount, a, to another b,

expressed as the ratio of a to b; a:b (ais to b) or as a simple fraction, integer,
decimal fraction & percentage. In simple language ratio is one number expressed in
terms of the another and can be worked out by dividing one number into the other.

The significance of a ratio can only truly be appreciated when:

1. It is compared with other ratios in the same set of financial statements.

2. It is compared with the same ratio in previous financial statements (trend

analysis).

3It is compared with a standard of performance (industry average). Such a

standard may be either the ratio which represents the typical performance of the
trade or industry, or the ratio which represents the target set by management as
desirable for the business
4.1.3 CLASSIFICATION OF RATIOS

The ratios have different use for different people. Therefore ratios can be classified
into different categories. Various ratios can be divided into following categories
depending upon their use.

Traditional classification
Traditional classification or classification according to the statement, from which
ratios are calculated is as follows:

 Profit and loss account

 Balance sheet ratios
 Inter statement ratios

Classification according to the nature of ratios

In this type of ratios more emphasis is given to the nature of ratios, whether these
pertain to sales, earning, inventory etc.

 Liquidity or solvency ratio

 Debtors ratio
 Creditors ratio
 Sales ratio
 Earning ratios
 Cost of expenses ratio

According to importance of ratios

Under this type of ratios, ratios can be divided into two categories as following:

Primary ratios:

1. Return on capital employed

Secondary ratios:

1. Production cost ratios

2. Distribution cost ratios
 3. Selling cost ratios

Functional classification
The four most important financial dimensions, which a firm would like to analyze,
are:

 Liquidity ratios
 Leverage ratios
 Activity ratios
 Profitability ratios
4.1.4 LIQUIDITY RATIOS:

Liquidity refers to the ability of the concern to meet its current obligations and
when these become due. The short – term obligations are met by realizing amounts
from current, floating or circulating assets. A firm should ensure that it does not
suffer from lack of liquidity and also that it does not have excess of liquidity. The
failure of the company to meet its obligations due to lack of sufficient liquidity will
result in poor creditworthiness, loss of creditors confidence, or even in legal tangles
resulting in the closure of the company. A very high degree of the liquidity is also
bad, idle assets earn nothing. The firm’s funds will be unnecessarily tied up in
current assets. Therefore, it is necessary to strike a proper balance between the
high liquidity and lack of liquidity.

The most common ratios which indicates the extent of liquidity or lack of it are:

• Current ratio
• Quick ratio
• Absolute ratio
 1. CURRENT RATIO

This ratio indicates the extent to which current liabilities are covered by those
assets expected to be converted to cash in the near future. Current assets
normally include cash, marketable securities, accounts receivables, and
inventories. Current liabilities consist of accounts payable, short-term notes
payable, current maturities of long-term debt, accrued taxes, and other accrued
expenses (principally wages).

Current Ratio=Current Assets/Current Liabilities

This ratio is an indicator of the firm’s commitment to meet its short-term liabilities. An
ideal current ratio is (2:1). The ratio of 2 is considered as a safe margin of solvency
due to the fact that if the current assets are reduced to half i.e. 1 instead of 2, then
also the creditors will be able to get their payable in full.

Following table shows the Current ratios of sarvottam dairy in different years

YEAR CURRENT CURRENT RATIO

ASSETS LIABLITIES

2006-07 11524289 23007065 0.50 TIMES

2007-08 17212791 31617949 0.54 TIMES

2008-09 30206990 30206990 0..63 TIMES

Analysis

In the table we see that the change of Current ratios over different periods:
From the analysis, we can see that in 2006-07 the current assets were 0.50 than the
current liabilities .. A minimal increase is seen in 2007-08 and it went up to 0.54
times which kept slightly increasing and resulted at 0.63times in 2008-09. as we
finds that the current ratio of Sarvottam Dairy is not satisfactory. It shows that for
every Rs 1 of liability there is only Rs.63 is available. It seems that the current
liabilities of Sarvottam dairy are more than current assets. However ratio is
increasing gradually but it need to improve a lot..
 2. QUICK RATIO: (ACID TEST RATIO OR LIQUID RATIO)

This ratio indicates the firm’s liquidity position as well. It actually refers to the extent
to which current liabilities are covered by those assets except inventories.
Quick Ratio=(Current Assets-Inventories)/Current Liabilities

An asset is liquid if it can be converted into cash immediately or reasonably soon

without a loss of value. Cash is (the most liquid asset

Generally, a quick ratio is (0.5:1) is considered to represent a satisfactory

current financial condition. A quick ratio of (0.5:1) or more does not necessarily imply
sound liquidity position of dead stock is fairly low.

Following table shows the Quick/ acid test ratios of SARVOTAM DAIRY in
different years:

YEAR QUICK ASSETS CURRENT RATIO

LIABLITIES

2006-07 4081512 23007065 0.38 TIMES

2007-08 4319201 31617949 0.41 TIMES

2008-09 12545341 47404074 0..53 TIMES

Analysis-

Following table shows the change of Current ratios over different periods:. In 2006-
07, the quick ratio was 0.38 times which increased and resulted as 0.53times in
2008-09. The ratio would be satisfactory only if it is 0.5:1. Hence, SARVOTTAM
DAIRY need to improve this ratio. It can be done by increasing its quick assets or by
decreasing liquid assets. Last years ratio can be considered satisfactory.
 3. ABSOLUTE LIQUID RATIO / CASH RATIO:

As all book debts may not be liquid, and cash may be immediately needed to pay
operating expenses and moreover, inventories are not absolutely non-liquid. To a
measurable extent, inventories are available to meet current obligation.

It would be appreciated that a company with a lower quick ratio may be quite
solvent in case its inventory has a ready market; its realizable value is even above
the book value and the portion.

Since cash is the most liquid asset, a financial analyst may examine the ratio
of cash and its equivalent to current liabilities.

An absolute liquid ratio of (0:5:1) may be adequate. The higher the ratio, the
more solvent is the business.

Following table shows the Inventory Turnover ratio of SARVOTAM DAIRY in

different years:

YEAR QUICK ASSETS TOTAL ASSETS RATIO

2006-07 4081512 39765035 0.10 TIMES

2007-08 4319201 51347619 0.08 TIMES

2008-09 12545341 80602934 0..15 TIMES

Analysis-

Analysis shows a gradual increase of liquidity Ratio over the last three yeas. In
2006-07, the ratio was 0.10 times, then it decreased to 0.08 times in following
year and increased further to 0.15timestimes in the year 2008-09.

As there is a slight increase in the cash ratio but it still need to improve a lot.
4.1.5 LEVERAGE RATIO (TEST OF LONG TERM SOLVENCY)

Solvency of a business means its ability to meet its long – term liabilities debenture
holder; mortgagors and other long – term depositors are primarily interested in
ascertaining whether the company is having adequate profit to pay its interest
obligation regularly. They would very much like to study the financial structure, the
contribution of long-term depositors, vie a vie the owner to the total capital
employed.

1. DEBT – EQUITY RATIO

The ratio is also called ‘External Internal Equity Ratio’. It indicates the comparative
claims of outsiders and owner in the concern’s total equities the claim of depositors,
mortgagors, bondholders, suppliers, and other creditors are matched with those of
owner, i.e. shareholders or proprietors. The management has to keep healthy
balance between the two equities: external and internal.

Debt Equity Ratio = Total Debt * 100

Net worth

TOTAL DEBT NET WORTH

Debentures and Bonus Equity share capital

Loan and Mortgage Pref. Share capital

Security deposit with company Reserve capital & Revenue

Fixed Deposit / Unsecured loans Profit and Loss (Cr.)

All Current Liabilities

 If the proportion of outside fund is quite high, the company is technically said
to be highly leveraged. In case the ratio is 100%, it is considered quit satisfactory.

High – Debt Company is able to borrow funds on very restrictive terms and
conditions.

Following shows the Return on Total Assets of SARVOTAM DAIRY in different

years:

YEAR TOTAL DEBT NET WORTH RATIO

2006-07 35969341 3795692 947.63%

2007-08 28851410 8091052 356%

2008-09 59049389 21553543 273.96%

So, in the year 2006-07, the debt equity ratio is 947.63% that is outside
creditors have a larger claim the owners of the dairy.

In the year 2007-08 the ratio decreases and becomes 356%and in 2008-09 it
becomes 273.96%.. Allover it shows the decreasing trend which is beneficial feature
shows the progress of dairy. SARVOTTAM DAIRY should try to reach at 100% .
 2. EQUITY RATIO / PROPRIETORY RATIO

It is variant of debt – equity ratio. It is an important test to judge the long-term

solvency of a concern. It establishes relationship between the proprietor or
shareholder’s funds and the total assets. It may be expressed as:

Equity ratio = Proprietor’s funds *100

Total Assets

Proprietor’s fund or Net worth = Equity Share Capital + Reserve and Surplus +
Preference Share Capital.

Total Assets = Total Equities or Total Resources of the concern.

If we take the total assets as 100, the percentage of proprietor’s funds

indicates the contribution made by the owners towards total assets. The nearer the
percentage of proprietor’s funds to 100, the larger is their contribution and the
greater is the securities for creditors, depositors, mortgagors, and debenture
holders.

Following shows the PROPRIETORY RATIO of SARVOTAM DAIRY in different

years:

YEAR PROPRIETORS TOTAL ASSETS RATIO

FUND

2006-07 3054742 39765035 9.54%

2007-08 8091052 51347619 15.75%

2008-09 21553543 80602934 26.74%

So, proprietors fund in the dairy increases every year. It is only 9.54% in 2006-07
and increases rapidly in 2008-09 and reaches at 26.74% of the total assets of the
dairy.. This indicates that out of the total assets of the dairy 26.74% are contributed
by the owners themselves. So the dairy still need to improve this ratio so that
unnecessary burden of interest can be reduced. The increase in the ratio is due to
increase in the proprietors funds.
3. FIXED ASSET TURNOVER RATIO:

: The Fixed Asset Turnover ratio measures the effectiveness in generating Net Sales
revenue from investments in Net Property, Plant, and Equipment back into the
company evaluates only the investments.

Fixed assets turnover ratio = sales /fixed assets

The more the sales in relation to fixed assets, the more efficient is the use of fixed
assets. It indicates the higher efficiency. I

Following table shows the Fixed assets turnover ratio ratios of SARVOTAM DAIRY
in different years:

YEAR SALES FIXED ASSETS RATIO

2006-07 150849860 28134745 5.36 TIMES

2007-08 218876764 34028828 6.37 TIMES

2008-09 371599816 50289944 7.39 TIMES

Analysis shows that the fixed asset turnover ratio was at 5.36 times in year 2006-
07. However, it declined to 6.37times in the following year. In 2008-09 the turnover
somewhat increased to 7.39times.as we can see from the above that fixed assets in
the Sarvottam dairy is efficiently utilized.
5 ACTIVITY RATIOS (Efficiency Ratio):
Funds of creditors and owners are invested in various assets to generate
sales and profits. The better the management of assets, the larger the amount of
sales. Activity ratios are employed to evaluate the efficiency with which the firm
manages and utilizes its assets. These ratios are also called turnover ratios because
they indicate the speed with which assets are being converted or turned over into
sales and assets.

. STOCK TURNOVER RATIO:

Stock t Turnover Ratio = cost of goods sold

Average stock

YEAR COST OF GOODS AVERAGE STOCK RATIO

SOLD

2006-07 146724249 1439595 101.92 TIMES

2007-08 201097798 2192685 91.38 TIMES

2008-09 343479971 2909512 118.05 TIMES

We can see from the above table that in the year 2006-07, the stock turnover ratio is
9.96 times which is comparative less. In the next year ratio rapidly increases and
reaches at 91.38 times in the year 2007-08. In the next year it becomes 118.05
times. The ratio of stock turnover is increasing rapidly. As the dairy produces the
product daily and sells it, the stock turnover ratio is high. The increase in the ratio
shows the increasing capacity of SARVOTTAM DAIRY. The higher the ratio the
greater is the operating capacity of the dairy.
PROFITABILITY RATIO:
A Company should earn profits to survive and grow over a long period of time. Profit
is the difference between revenues and expenses over a period of time. Profit is
ultimate output of the company and it with has no future if it fails to make sufficient
profits. Therefore, the financial manager should continuously evaluate the efficiency
of its company in term of profits. The profitability ratios are calculated to measure the
operating efficiency of the company. Besides management of the company, creditors
and owner are also interested in the profitability of the firm. Owners want to get a
reasonable return on their investment. This is possible only when the company
earns enough profits.
Profitability ratios, deals with two aspects ‘profits’ or earning and ‘expenses’
incurred to earn that profit. ‘Sales’ has been the main source of recovery of
expenses and earning of profit. These ratios thus study the relationship of profits as
well as expenses with sales. These have accordingly been divided into categories:

A. RATIO OF PROFIT TO SALES

1. Gross profit ratio
2. Net profit ratio
3. Operating net profit ratio

B. RATIO OF EXPENSES TO SALES

C. RETURN ON INVESTMENT RATIO
(A). RATIO OF PROFIT TO SALES

1. Gross Profit Ratio:

The gross profit margin measures the percentage of each sales dollar
remaining after the firm has paid for its goods.

Gross Profit Margin (GPM) = Gross profit / Gross turnover

Gross Profit = Sales – Cost of Goods

Cost of Goods = (Opening Stock + Net Purchase + Procurement Expenses +

Production Expenses – Closing Stock)

Gross profit ratio is an indicator of the extent of average mark-up on cost of goods. It
is primarily a test of the efficiency of purchases and sales management

Following shows the Gross Profit Margin of SARVOTAM DAIRY in different years:

YEAR GROSS PROFIT SALES RATIO

2006-07 7502298 150849860 4.97%

2007-08 15778976 2168774 7.28%

2008-09 28119845 371599816 7.57%

So, the Gross Profit Margin was only 4.97% in the year 2006-07. than it increased
rapidly and becomes 7.28% in 2007-08.It has remained pretty much stable
throughout the whole two years. It increased slowly in next year. It indicates that
sarvottam dairy is managing its Sales and Cost of Goods Sold very well but it still
need to improve it.
 2. Net Profit Ratio / Net Profit Margin:

Net profit margin measures the percentage of each sales dollar remaining
after all costs and expense, including interest, taxes, and preferred stock dividends
have been deducted.

Net Profit margin = Net profit / sales x 100

Net profit margin ratio establishes a relationship between the net profit and sales
and indicates management’s efficiency in manufacturing administering and selling
the products. This ratio is the overall measure of the firm’s ability to turn each rupee
sales into net profit

Following shows the Net Profit Margin of SARVOTAM DAIRY in different years:

YEAR NET PROFIT SALES RATIO

2006-07 560044 150849860 0.37%

2007-08 747678 2168774 035%

2008-09 2192289 371599816 0.60%

The Net Profit Margin was 0.37% in 2005-06, decrease to 0.35% in 2007-08 and
then again increased to 0.60% in 2005-06.

The main reason of the law profit margin is high cost. High cost, in turn, generally
occurs due to inefficient operations. Profit margin also declined because in 2006-07
SARVOTAM DAIRY used a lot of long-term debt. This invariably resulted in more
interest cost, which brought the Net income down
 (B)RATIO OF EXPENSES TO SALES:

1. Operating Expenses Ratio:

Control over operational expenses is an important requisite for successful

management. Operating ratio indicates proportion of net sales that have been
absorbed by the expenses on operation.

This ratio relates to the total operating expenses (i.e. total expenses non-
operating expenses) to net sales and is expressed in percentage. Its formulation is
as below:

Operating Ratio = Total Operating Expenses * 100

Net Sales

Operating Expenses = Cost of Goods Sold + Office and Administration Expenses +

Repairs, Maintenance & Depreciation + Selling and Distribution Expenses +
Necessary Provisions

A higher operating expenses ratio is unfavorable since it will leave a small

amount of operating income to meet interest, dividends etc. certain expenses are
within the management policy.

Following table shows the Inventory Turnover ratio of SARVOTAM DAIRY in

different years:

YEAR TOTAL SALES RATIO

OPERATING
EXPANSES

2006-07 7729642 150849860 99.63%

2007-08 16007200.24 2168774 99.65%

2008-09 26609943 371599816 96.39%

Analysis-
Analysis shows a very high operating ratio in sarvottam dairy in year 2006-07.

There is a slight increase in operating expanses in 2007-08. Than there is

decrease in operating expanses in the year 2008-09. In the current year 2008-09
the operating ratio decreases to 96.39% which would result into increase in the
net profit. The operating expanses shows decreasing trend but it need to
decrease further for better return(profit).
(C) RETURN ON INVESTMENT RATIO:

1. Return on Equity Capital:

Return on equity capital is calculated by dividing net profit after tax by total equity
capital. It is calculated as:

Return on equity capital = Profit after tax * 100

Equity capital

Following table shows the Inventory Turnover ratio of SARVOTAM DAIRY in

different years:

YEAR RPOFIT AFTER EQUITY CAPITAL RATIO

TAX

2006-07 560044 2164700 26%

2007-08 747678 3186800 23%

2008-09 2192289 4460800 49%

Analysis-

Analysis shows that return on the equity in the year 2006-07 is 26% which
decrease in the year 2007-08 and becomes 23%. It again increases in the next
year and becomes 49%. So the return on equity can be satisfied for
SARVOTTAM DAIRY. The return on equity is continually increasing. It is higher
in the current year. It is due to increase in the net profit.
 2. Return on Capital Employed:
Return on capital employed is considered to be the prime or principal ratio. It
throws the light on the over – all profitability of the business, which means how
much, earning the amount investment in the business, is yielding.

Profit is the chief motive of organizing business enterprise. Maximization of

profit is the natural instinct of every businessman. The success of the business is,
therefore, judged by the extent of return on the amount invested in the business.

The ratio of the return on investment has 2 components.

1. Capital employed
2. NET profit

The Ratio is computed as = Net Profit (adjusted) * 100

Capital Employed

Following table shows the Return on capital employed of SARVOTAM DAIRY in

different years

YEAR RPOFIT AFTER EQUITY CAPITAL RATIO

TAX

2006-07 560044 16017017 3.50%

2007-08 747678 18981993 3.93%

2008-09 2192289 31006569 7.07%

Analysis-

Analysis shows a gradual increase of Return on capital employed over

the last three yeas. In 2006-07, the ratio was 3.50% then it increases to
3.93% in following year and increased further to 7.07% in the year 2008-
09.Comparatively there is the less return on capital employed but it shows
increasing trend. it is good for future but it still need to improve
4.5 WORKING CAPITAL ANALYSIS

“Working 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 capital:-

The word working capital is made of two words 1.Working and 2. Capital

The word working means day to day operation of the business, whereas the word
capital means monetary value of all assets of the business.

Working Capital: -

Working capital may be regarded as the life blood of business. Working capital is of
major importance to internal and external analysis because of its close relationship
with the current day-to-day operations of a business. Every business needs funds for
two purposes.

* Long term funds are required to create production facilities through purchase of
fixed assets such as plants, machineries, lands, buildings & etc

* Short term funds are required for the purchase of raw materials, payment of
wages, and other day-to-day expenses.

. It is otherwise known as revolving or circulating capital

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

Working Capital = Current Asset – Current Liability.

Concept of working capital

• Gross Working Capital = Total of Current Asset

• Net Working Capital = Excess of Current Asset over Current Liability

Current Assets Current Liabilities

• Cash in hand / at bank • Bills Payable
• Bills Receivable • Sundry Creditors
• Sundry Debtors • Outstanding expenses
• Short term loans • Accrued expenses
• Investors/ stock
• Temporary investment • Bank Over draft
• Prepaid expenses

• Accrued incomes

.
 Working capital analysis
PARTICULARS 06-07 07-08 08-09
CURRENT ASSETS:

DEPOSITS 676468 134425 439686

ADVANCES&OTHER DUES 7540982 12827579 17819926

CLOSING STOCK 2669189 4105544 5023399

BANK BALANCES 409244.26 144394.26 6921494.26

CASH IN HAND 228406 849.55 2485

TOTAL CURENT ASSETS 11524289 17212791 30206990

LESS

CURENT LIABLITIES

DEPOSITES 9466870 12990452 12714049

PRVISIONS TOWARDS PAYMENT OF 9797868 12253129 25024794

MILK CO OPERATIVE SOCIATIES

PROVISIONS FOR CURRENT DEBTS 3742328 6374366 9665232

TOTAL CURRENT LIABLITIES 23007065 31617949 47404074

NET WORKING CAPITAL - - -17197084

11482776 14405158

TOTAL APPLICATION OF FUNDS

 [A]TOTAL CURRENT ASSETS

YEAR CURRENT ASSETS 35000000

30000000
25000000
2006-07 11524289 20000000
2006-07
2007-08
15000000
2007-08 17212791 10000000
2008-09

5000000

2008-09 30206990 0
CURRENT ASSETS

INTERPRETATION;
AS we can see from the above table that in 2006-07, the total
current liabilities are 11524289 which increases in 2007-08 and becomes 17212791.
Again it increases in 2008-09 and becomes30206990.

In 2006-07 the current assets are 11524289 which increases by 5688502

And becomes 17212791 in 2007-08 . the working capital again increases
by 12994199 and becomes 30206990.

As the current assets shows the increasing trend . it increases every year.
It shows the progressing trend of sarvottam dairy.
 TOTAL CURRENT LIABILITIES

YEAR
50000000 CURRENT LIABLITY
40000000
2006-07
30000000
23007065 2006-07
2007-08
2007-08
20000000
31617949 2008-09
10000000

2008-09
0 47404074
CURRENT LIABLITY

`INTERPRETATION;

THE above table shows that current liabilities in 2006-07 is 23007065. it

increases by 8610884 and reaches at 31617949 in 2007-08. it again
increases by 15786125 and becomes 47404074.

The table shows the increasing trend of current liabilities that is liabilities
of sarvottam dairy increases from year to year. It indicates negative
feature for dairy’s progress. Sarvottam dairy should make the efforts for

reducing its current liabilities to maintain its working capital.

 NET WORKING CAPITAL

YEAR WORKING
0 CAPITAL
WORKING CAPITAL
2006-07-5000000
-11482776
2006-07

2007-08 -17405158
-10000000 2007-08
2008-09
-15000000
2008-09 -17197084
-20000000

INTERPRETATION;

The above table shows that in year 2006-07 working capital of sarvottam
dairy is -11482776. It again decreases and becomes -17405158 in 2007-
08. It also decreases in the next year slightly. This is not good for Dairy’s
operating. SARVOTTAM DAIRY should try to improve this to avoid the risk
of operating…
 5.1 FINDINGS

1. Current assets of SARVOTTAM DAIRY are less than the current liabilities. It
is not good for the Dairy.

2. The share capital of the SARVOTTAM DAIRY is continuously increasing

during the 3 years. It shows that the Dairy is on the way of progress.

3. Net profit of the Dairy is also increasing. it shows reduction in the operating
expanses and increase in the sales.

4. Working capital of the SARVOTTAM DAIRY is in negative.

5. Investments of the SARVOTTAM DAIRY remain constant during the 3 years.

6. Current liabilities of Dairy are also increasing. it is not good for Dairy.

7. The growth in the year 2008-09 is remarkable. It is positive in all the fields.

8. Lack of advertisement can be said as weak point of the SARVOTTAM

DAIRY .Highest ever net profit of Rs. 2192289

9. Currently there are 76 members of this co-operative society. The number of

members is increasing from year to year..

10. Purchase of milk is also increasing. This shows step towards the growth.

11. SARVOTTAM DAIRY is paying 15% share dividend every year.

12. Commonly it can be said that Dairy is on the way of progress…..

 5.2 SUGGESTIONS

1. SARVOTTAM DAIRY need to improve its current assets or on the

other hand needs to decrease the current liability to maintain the
adequate amount of working capital.

2. SARVOTTAM DAIRY needs to decrease its operating expanses so

that the net profit can be enhanced.

3. Dairy should increase the proprietors’ capital. it reduces the burden of

interest, the Dairy liable to pay and as a result it enhances the net
profit.

4. There is a training need in the employees of SARVOTTAM DAIRY.

5. Dairy should try to decrease the cost of selling the goods .so that net
profit can be increased.

6. Dairy need to improve its advertisement. It should try to cover as much

as possible.
 8. CONCLUSION

I have taken practical knowledge of SARVOTTAM Dairy’ financial position.

I have acquired a lot of knowledge of practical aspects of firm.

It can be said about the dairy that it is on the way of progress.Dairys total
production and selling are increasing. In the current year 2008-09, Total turnover of
the dairy has shown an increase of 29.18% as compared to previous year. Net profit
of the dairy is also highest in the current year. It increases by 193.21% as compared
to previous year which can be said a fabulous growth. , it is expected that the Dairy
would be in a position to maintain the growth in future years.

The share capital of the dairy has increased rapidly in SARVOTTAM DAIRY
compared to previous year. The no of members of the Dairy is also increasing.
 9. BIBLIOGRAPHY:

NAME OF BOOK AUTHOR

1. Financial Management Khan & Jain

2. Financial Management I.M.Pandey

3. Research Methodology C.R.Kothari

4. Annual reports of the SARVOTTAM DAIRY

 APPENDIX

BALANCESHEET OF THE YEAR 2006-07

LIABILITIES 2006-07 ASSET 2006-07

Paid-up-capital 2164700 Fixed asset 28134745

Share reserve 3590 Investment 106000

Reserves and other funds 886452 Current asset 7540982

Current liability Deposits 676468

Deposits 9466870 Advances and other 2669189

dues

Provision toward the payment milk 9797868 Bank balance 409244

co-op society

Provision for current liability 3742328 Cash on hand 228406

Net profit 740950 Closing stock

Loans and liabilities(long term) 1296227

6

TOTAL 3976503 TOTAL 39765035

5
 BALANCESHEET OF THE YEAR 2007-08

LIABILITIES 2007-08 ASSET 2007-08

Paid-up-capital 3186800 Fixed asset 34028828

Share reserve 3929 Investment 106000

Reserves and other funds 4152845 Current asset

Current liability Deposits 134425

Deposits 1299045 Advances and other 12827579

2 dues

Provision toward the payment milk 1225312 Bank balance 144394

co-op society 9

Provision for current liability 6374366 Cash on hand 849

Net profit 747678 Closing stock 4105544

Loans and liabilities(long term) 1163861

9

TOTAL 5134761 TOTAL 51347619

9
 BALANCESHEET OF THE YEAR 2008-09

LIABILITIES 2008-09 ASSET 2008-09

Paid-up-capital 4460800 Fixed asset 50289944

Share reserve 37609 Investment 106000

Reserves and other funds 14852845 Current asset

Current liability Deposits 439686

Deposits 127140049 Advances and other 5023399

dues

Provision toward the payment milk 25024794 Bank balance 6921494

co-op society

Provision for current liability 9665232 Cash on hand 2485

Net profit 2192289 Closing stock 5023399

Loans and liabilities(long term) 11645135

TOTAL 80602934 TOTAL 80602934