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The current, third phase of Operation Flood aims at ensuring that the cooperative institutions become selfsustaining. With an investment of US$360 million from the World Bank, commodity and cash assistance from the EEC and NDDB's own internal resources, the programme envisages substantial expansion of the dairy processing and marketing facilities; an extended milk procurement infrastructure; increased outreach of production enhancement activities; and professionalization of management in the dairy institutions.
Amul-2 was completed in April 1965 was declared open by late Shri Morarji Desai. This dairy was capable of producing 40 tonnes of milk powder 20 tonnes of butter a day. Further expansion of the dairys milk handling capacity to 750000 liters a day came in 1974. In the same year, the union set up a plant to make high protein earning food, chocolates, at Mogar plant 8 km away from Anand town. The investment in this plant is Rs. 100 cores. The National Dairy Development Board (NDDB) financed 70% of its cost as loan and 30% as grant. Milk to this dairy is brought from various adjoining villages in insulted tankers instead of it in cans. This reduced the transportation costs significantly. Further, another plant named Amul-3 was established in 1992.this plant has the total capacity of producing 14 lakhs of milk per day. From the late fifties Kaira Union has been investing heavily in schemes to improve the milk yield of animals. The union built up a fully fledged infrastructure for breeding animals and ensuring animal health care. The co-operative dairying system which took root in Kaira was beneficial and viable. The union, which started with two societies, has now 945 societies with 537000 members in 1955; milk production went up from 250 liters to 1 million liters a day. The turnover of the union in 1994-95 was Rs. 344 cores. In 2008-09, Amul has collected 8.4 million litres of milk per day, from 13,328 village societies with 2.79 million members. Every day Amul collects 4,47,000 litres of milk from 2.12 million farmers (many illiterate), converts the milk into branded, packaged products, and delivers goods worth Rs 6 crore (Rs 60 million) to over 500,000 retail outlets across the country. Based in the village of Anand, the Kaira District Milk Cooperative Union (better known as Amul) expanded exponentially. It joined hands with other milk cooperatives, and the Gujarat network now covers 2.12 million farmers, 10,411 village level milk collection centres and fourteen district level plants (unions) under the overall supervision of GCMMF.
1.2
GCMMF: An Overview
Gujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest food products marketing organisation. It is a state level apex body of milk cooperatives in Gujarat which aims to provide remunerative returns to the farmers and also serve the interest of consumers by providing quality products which are good value for money. GCMMF was the sole marketing agency for the products produced by the different milk cooperative member societies of the State of Gujarat and for those of other States marketing their products under the Amul brand name. In the 1940s, in the district of Kaira in the State of Gujarat, India, a unique experiment was conducted that became one of the most celebrated success stories of India. At that time, In Gujarat, milk was procured from farmers by private milk contractors and by a private company, Polsons Dairy in Anand, the headquarters of the district. The company had a virtual stranglehold on the farmers, deciding the prices both of the procured as well as the sold milk. Polsons Dairy chilled the milk and supplied it to the city of Bombay. It also extracted dairy products such as cheese and butter. In 1946, under inspiration from a leading freedom fighter, Mr. Vallabhbhai Patel (who belonged to Gujarat and who later became the Home Minister of the Central Government), Mr. Tribhuvandas Patel, a local farmer, freedom fighter and social worker, organized the farmers into co-operatives. These co-operatives would procure milk from the farmers, process the milk and sell it in Gujarat and in Bombay. In 1949, purely by chance, a dairy engineer, named Dr. Verghese Kurien, who had just completed his studies in dairy engineering in the U.S.A., came to India and was posted by the Government of India to a job at the Dairy Research Institute at Anand. A chance meeting between Dr. Kurien and Mr. Tribhuvandas Patel changed Dr. Kuriens life and the course of Indias dairy industry. Though the purpose of this meeting was too simply to elicit some technical help from Dr. Kurien on commissioning some of the equipment just purchased by his co-operative, especially the chilling and pasteurizing equipment, the two men instantly struck a rapport. After the commissioning problem was solved, Dr. Kuriens involvement with the Kaira District Co -operative Milk Producers Union Limited (that was the name of the co-operative registered) grew very rapidly and it soon extended to the larger sociological issues involved in organizing the farmers into co-operatives and running these co-operatives effectively. He observed the exploitation of farmers by the private milk contractors and Polsons Dairy and understood how co-operatives could transform the lives of the members. At first, the main activity was collection and processing of the milk brought everyday by the member farmers to the local office of the co-operative. It was soon realized that it was not enough to merely act as the collection and selling agents for the farmers. A variety of support services were required to enable the farmers to continue selling their milk of adequate quality and to avoid disasters such as death of their cattle (for a family owning just one or two cattle and depending on its milk for their income, death of cattle could indeed be a disaster). The farmers were progressively given new services such as veterinary care for their cattle, supply of cattle feed of good quality, education on better feeding of cattle and facilities for artificial insemination of their cattle. All these were strictly on payment basis: none of the services were free. This experiment of organizing farmers into co-operatives was one of the most successful interventions in India. A very loyal clientele of member farmers was built up who experienced prosperity on a scale they could not have dreamt of ten years earlier, since with good prices paid for their milk, raising milky cattle could
become a good supplementary source of revenue to many households. The co-operatives were expanded to cover more and more areas of Gujarat and in each area, a network of local village level co -operatives and district level co-operatives were formed on a pattern similar to that at Anand (the so called Anand pattern). Kaira District Co-operative Milk Producers Union became better known by the brand name of the products marketed by it (Amul) than by the name of the co-operative itself. Amul meant priceless in Sanskrit. It was also a word that was easy to pronounce, easy to remember and that carried a wholly positive connotation. This became the flagship brand for all the dairy products made by this Union. In 1954, Kaira District Co-operative Milk Producers Union built a plant to convert surplus milk produced in the cold seasons into milk powder and butter. In 1958, a plant to manufacture cheese and one to produce baby food were added. Subsequent years saw the addition of more plants to produce different products. In 1973, the milk societies/district level unions decided to set up a marketing agency to market their products. This agency was the GCMMF. It was registered as a co-operative society on 9 July 1973. It had, as its members (ordinary share holders), the district level milk unions. No individual could become a shareholder in GCMMF. Starting from a daily procurement of 250 litres per day in 1946, GCMMF had become a milk giant with the milk procurement at about 4 million litres per day by 1999 with 12 dairy plants all over the State of Gujarat. Even at the time of its formation, GCMMF had three major products in its portfolio: liquid milk, butter and milk powder. Gradually, many new products were added to its range, largely milk derivatives. In milk alone, it sold full cream milk; semi toned milk, and fully toned milk, all with different names and in readily identifiable pouches. By reducing the fat, it could not only sell separately fat derivatives such as cream and butter (which were also products that yielded a higher margin), but also make the resultant milk available at cheaper prices, so that poorer people also could consume milk. It had undertaken a unique experiment in the 1970s to supply milk to places as far away as Delhi and Calcutta through insulated rail tankers, and this was so successful that it had continued since then. In the 1970s, GCMMF introduced its cheddar cheese and in 1983, a cheese spread. In the same year, it entered also the sweet market (milk based) through the introduction of Amul Shrikhand, a sweetish sour item produced by milk and curd (a form of yogurt). Amulya, a dairy whitener was introduced and was priced below the prevailing brands and soon became the market leader. In 1990s, GCMMF introduced a whole lot of new products: a condensed milk called Amul Mithaimate; Amul Lite, a low fat, low cholesterol spread butter, and Amul ice cream. After 1996, it went on to introduce a still greater variety of products: pizza (mozzarella) cheese, cheese slice, chee powder, malai paneer (a form of se cottage cheese), gulab jamun (a sweet primer to be processed by deep frying to make a sweet called gulab jamun), buttermilk, a chocolate based beverage called Nutramul and chocolates. In 1996, GCMMF launched its Amul brand ice cream. Indias ice cream market was estimated to be around Rs.8 billion in the year 2000. GCMMF launched its ice creams in fourteen flavors in the city of Mumbai and the State of Gujarat. It was priced at about 30 percent less than the prevailing prices, and it also emphasized that it was fully vegetarian, i.e., it did not contain any gelatin. This was an important attribute to many consumers in Gujarat, which was a predominantly vegetarian state. In less than a year, Amul ice cream commanded a share of about 55 percent in Gujarat and 30 percent in Mumbai; by the year 2000, its share in India as a whole had reached 30 percent. In 1997, GCMMF also scored a major achievement when it managed to get some of the co-operatives in the other States of the country, trying to launch their own ice cream brands, to sell all their ice creams under the Amul brand name. This enabled GCMMF to leverage the capacity of more than 180 co-operatives in the country, with a milk procurement of more than 11 million litres per day, and located close to the markets.
7
In addition, it also diversified into non-milk products. The most important of this diversification was into edible oils in 1988. At that time, the prices of edible oils were being manipulated by oil traders with the result that the prices were shooting up to unacceptable levels. Even though oil seed growers co-operatives existed, most of them were run badly and losing money. Edible oils have always been a very sensitive subject in India, leading to even fall of governments. Hence the government persuaded NDDB to arrange for procurement of clean, unadulterated groundnut oil and sell it through its own outlets. Thus it was essentially a market intervention operation. Besides, this provided NDDB to reorganize the groundnut farmers co-operatives as it had done with milk producing farmers four decades earlier. Gujarat was the right State for this experiment, since more than 60 percent of the countrys groundnut oil production was accounted for by Gujarat. GCMMF marketed this oil on behalf of NDDB. GCMMF launched a new brand, named Dhara, not wanting to carry over the Amul brand name which was deeply associated in the public mind with milk derivatives. It sold its oil on a platform of absolute purity, a claim it could justifiably make. Since much of the edible oil in India was adulterated, purity could be a differentiating factor. It also coined a slogan, Dhara, Shudh Dhara, meaning, literally, flow, and pure flow. The launch was also supported by an advertising campaign with a catchy jingle. Later, mustard and certain other oils were also marketed under the Dhara brand name. Even though the oil traders fought back bitterly and often violently, and used their political connections to the full, Dhara was able to hold its own and became the leading brand of packaged edible oils. However, it must be said that dealing in edible oils was found to be a far more difficult task as compared to dealing in milk, and the success achieved in organizing groundnut farmers into co-operatives was limited. In the late 1990s, GCMMF undertook distribution of fruit based products on behalf of NDDB. This was done under yet another brand name introduced by GCMMF: Safal. Under this name were launched a mango drink sold under tetrapack (also in small 100ml. sizes to be served in aircraft), tomato ketchup, and a mixed fruit jam. In fact, the launches of all these products were completed during a single year, 1998-99. The success of these products was very limited as on the year 2000. By the year 2000, the range of products marketed by GCMMF was truly wide: three varieties of milk, flavored milk, buttermilk, four varieties of milk powder, two varieties of butter, five varieties of cheese, two varieties of ghee, butter, chocolates, chocolate drink, sweets, ice cream, edible oils and fruit and vegetable based products. Except in ice creams, chocolate and chocolate-based beverages, Amul brand were the market leader in each and every one of its products.
Members: No. of Producer Members: No. of Village Societies: Total Milk handling capacity: Milk collection (Total - 2008-09): Milk collection (Daily Average 2008-09): Milk Drying Capacity: Cattle feed manufacturing Capacity:
13 district cooperative milk producers' Union 2.79 million 13,328 11.22 million litres per day 3.05 billion litres 8.4 million litres 626 Mts. per day 3500 Mts per day
8
4. Registration Date:
14th December, 1946
6. Bankers:
(1) (2) (3) (4) (5) (6) (7) The Kaira District Co-operative Bank Ltd. Axis Bank State Bank Of India Bank Of Maharashtra Corporation Bank Bank Of Baroda Bank Of Saurashtra
10
7. Board of Directors: (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) Shri Ramsinh Prabhatsinh Parmar Shri Rajendrasinh Dhirsinh Parmar Shri Bhaijibhai Amarsinh Zala Smt. Madhuben Dharmsingh Parmar Shri Dhirubhai Amarsinh Chavda Shri Pravinsinh Fulsinh Solanki Shri Mansinh Khoyabhai Chauhan Shri Shivabhai Mahijibhai Parmar Shri Ranjitbhai Kantibhai Patel Shri Chandubhai Madhabhai Parmar Shri Maganbhai Gokalbhai Zala Smt. Saryuben Bharatbhai Patel Shri Bipinbhai Manishankar Joshi Chairman Vice-Chairman Director Director Director Director Director Director Director Director Director Director Director
7. Auditors:
Mr. B B Bhabhor Special Auditor, Milk Union, Anand.
8. No. of Shifts:
(1) 8:30am to 4:30pm (2) 4:30pm to 12:30am (3) 12:30am to 8:30am
11
Board of Directors Chairman Vice Chairman Managing Director General Manager (Dairy Plant & Technology) Assistant General Manager Manager Deputy Manager Assistant Manager Superintendent Deputy Superintendent Senior Officer Assistant Junior Assistant Workers
12
Symbol of Amul is a ring of four hands, which are coordinated each other .The actual meaning of this symbol is coordination of hand of different people by whom this union is now at top.
y y
First hand is for the farmers (producers), without whom the organization would do not existed. Second hand is for the representatives of processors by whom the raw milk processed into different finished products.
Third hand is for marketers without whom the product would have not been able to reach to the customer.
Fourth hand is for customers without whom the organization could not carry on because they are the people who consume the product.
The union of Amul would not have been succeeded without the coordination of the above four hands.
13
1.8 Plants
y Mogar Plant
Established in 1973, this is situated on Anand -Vadodara Highway No. 8. The main products of this plant are Chocolates, Nutramul, Amul Lite and Amul Ganthia.
y Anand Plant
There are 3 plants situated in Amul. And the main products are Milk, Buttermilk, Milk Powder, Butter, Ghee, Flavored Milk etc.
y Kanjari Plant
The product is cattle feed. Old plant establish in 1964 & new plant in 1980.
y Khatraj Plant
It is situated between Nadiad-Mahemdabad. The main product of this plant is Cheese.
y Chilling Centre
Kapadvanj, Undel and Balasinor
14
Amul Calci+
Butter
Amul
Lite
15
Kool
Koko
Nutramul
Energy
Drink
A drink for Kids - provides energy to suit the needs of growing Kids
Flavoured
Spiced
Best Thirst
Amul Lassee
16
Powder Milk Amul Food Spray Infant Milk Amul Milk Instant Full Cream Powder
Sagar Powder
Skimmed
Milk
Which is especially useful for diet preparations or for use by people on low calorie and high protein diet.
Amulya
Dairy
Whitener
Amul
Cheese
Spreads
Spreads
in 3 great
Amul
Emmental
Cheese
The Great Swiss Cheese from Amul, has a sweet-dry flavour and hazelnut aroma
Amul Cheese
Pizza
Mozzarella
great tasting
Gouda Cheese
17
Amul
Malai
Paneer
Mithai
Mate
Masti Dahi
Sweetened Condensed Milk - Free flowing and smooth texture. White to creamy color with a pleasant taste.
Gulab
Amul
Chocolates
Amul Basundi
18
Health
Food
and
Amul C Amul
Butt i C tt
Amul M l i Utt l li i us Pi
Amul Amrakhand Avsar Ladoos Amul Shakti 3% fat Milk Amul Shakti Toned Milk Amul Snowcap Soft Mi Amul Cow Ghee Amul Infant Milk Formula 1 (0-6 months) Amul Infant Milk Formula 2 ( 6 months above) Amul Shakti Standardised Milk 4.5% fat Amul Slim & Trim Double Toned Milk 1.5% fat Amul Saathi Skimmed Milk 0% fat Amul Cow Milk Yogi Sweetened Flavoured Dahi (Dessert) Amul Masti Spiced Butter Milk Amul Lassee Amul Shakti White Milk Food
19
Royal Treat Range (Butterscotch, Rajbhog, Malai Kulfi) Nut-o-Mania Range (Kaju Draksh, Kesar Pista Royale, Fruit Bonanza, Roasted Almond) Nature's Treat (Alphanso Mango, Fresh Litchi, Shahi Anjir, Fresh Strawberry, Black Currant, Santra Mantra, Fresh Pineapple) Sundae Range (Mango, Black Currant, Sundae Magic, Double Sundae) Assorted Treat (Chocobar, Dollies, Frostik, Ice Candies, Tricone, Chococrunch, Megabite, Cassatta) Utterly Delicious (Vanila, Strawberry, Chocolate, Chocochips, Cake Magic)
y y
Milk Drink:
y y y y
Amul Kool Flavoured Milk (Mango, Strawberry, Saffron, Cardamom, Rose, Chocolate) Amul Kool Cafe Amul Kool Koko Amul Kool Milk Shake (Mango, Strawberry, Badam, Banana)
20
2.1.1 Primary Objective: To highlight the areas towards which need further attention would be given.
2.1.2 Secondary Objectives: For evaluating a companys financial position and operations. To measure a firms current position by comparing current financial statements with previous years data. To know how much a firm have use the debt finance in business by calculating leverage ratios. To know the actual liquidity position of a firm by calculating liquidity ratios. To know the actual turnover in terms of the inventory, debtors, assets, etc. by calculating turnover ratios. To know the profitability of a firm by calculating profitability ratios like gross profit ratios and net profit ratio. To give some suggestion to firm if any found during data interpretation,
21
22
Financial ratios have been classified in several ways. For our purpose, we divide them into five broad categories as follows:
y y y y y
Liquidity ratio Turnover ratio Profitability ratio Leverage ratio Other ratio
23
[Rs. In lacks]
Year
2004-05 2005-06 2006-07 2007-08 2008-09
Current assets
18596.49 18990.94 19874.21 28995.90 28874.39
Current liabilities
8988.56 9460.79 12106.54 23392.41 22798.69
Ratio (%)
2.07 2.01 1.64 1.24 1.27
24
2.5
1.5
0.5
0
2004-05 2005-06 2006-07 2007-08 2008-09
Interpretation:
-05 The ideal current ratio for any firm is of 2:1. In Amul current ratio is more than 2 for the year 2004 and 2005-06. After this, current ratio has been declined. Normally, a high current ratio is considered to be a good sign of financial strength. So, we can say that Amul has good financial strength for first two year. But after this, it has been declined.
25
[Rs. In lacks]
Year
2004-05 2005-06 2006-07 2007-08 2008-09
Quick assets
10934.13 9319.68 10796.31 13258.02 9433.42
1.4
1.2
1 0.8
0.6
0.4
0.2
0
2004-05
2005-06
2006-07
2007-08
2008-09
Interpretation: The ideal acid-test ratio for any company is of 1:1 which shows a firms ability to generate the liquidity more quickly against its liability. In Amul, the acid-test ratio for the first year is more than 1 and in second year it in almost near to 1. But after this, it has been decli ed very much in the next n three month which is not a good sign. This happen because current liability has been increased regularly over the year. This is the reason why acid-test ratio is less than 1.
26
Cash and Bank Balance + Current Investments Cash Ratio = Current Liability
[Rs. In lack]
Year
2004-05 2005-06 2006-07 2007-08 2008-09
Ratio (%)
0.33 0.21 0.36 0.28 0.15
27
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
2004-05 2005-06 2006-07 2007-08 2008-09
Interpretation:
As we know cash ratio shows cash and cash equivalent available againstliability. So, from the above data and chart we can see that in 2004 -05, the cash ratio was 0.33% which decreased to 0.21% in 2005-06. In 2006-07, it again increases to 0.36%. But, because of the decreases in the cash and bank balance and also decrease in the investments, cash ratio again decrease in 2007 -08 to 0.28% which again decrease to 0.15% in 2008-09.
28
Where, Cost of goods sold (COGS) = opening stock + purchase + direct expenses closing stock. Average stock = (opening stock + closing stock) / 2
29
[Rs. In lacks]
Year
CO S
47221.13 56259.48 65762.20 88181.97 113314.28
Avg. Stock
6125.59 8666.81 9374.58 12407.89 17589.43
Ratio (Times)
7.71 6.49 7.01 7.11 6.44
7.5
6.5
5.5
2004-05 2005-06 2006-07 2007-08 2008-09
Interpretation:
As we know, inventory turnover ratio shows cycle threw which an inventory moving from the firm to generate sales. So, from the above data and graph we can say that, in Amul the inventory turnover ratio is of fluctuating type. From last five year, in 3 year its turnover is more than 7 times of avg. inventory and in 2 year it is below it. The higher inventory turnover ratio reflects the better and efficient inventory management. So, the ratio of Amul shows the good performance of inventory management.
30
Year
Avg. debtors.
6797.52 7679.63 6759.25 7625.77 6916.47
Ratio (Times)
8.75 9.14 12.08 14.06 19.84
25
20
15
10
31
Interpretation:
Debtors ratio indicates the no. of days taken to collect dues from debtors. From the above data, it is measured that the debtors turnover ratio in Amul is increasing every year. Ratio which was 8.75times in 2004-05, increased to 12.08 times in 2006-07 which was further increase to 19.84 times in 2008-09. This higher debtors turnover ratio shows the greater efficiency of credit management in Amul.
Net sales Fixed assets turnover ratio = Avg. net fixed assets
[Rs. In lack]
Year
2004-05 2005-06 2006-07 2007-08 2008-09
Net sales
59459.07 70206.23 81631.69 107187.29 137212.35
Ratio (Times)
7.58 12.68 15.79 18.65 21.09
32
25
20
15
10
2004-05
2005-06
2006-07
2007-08
2008-09
Interpretation:
In Amul, fixed assets turnover ratio is of increasing type every year. Fixed assets turnover ratio which was 7.58% in 2004-05, increased to 12.68% in 2005-06. This ratio was further increased to 15.79% and 18.65% in 2006-07 and in 2007-08. Last year, this ratio increased to 21.09% in 2008 -09.fixwd assets turnover ratio shiws the return a firm generating from utising fixed assets. So, this shows the good and efficient utilisation of fixed assets in Amul.
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[Rs. In lacs]
Year
Net Sales
59459.07 70206.23 81631.69 107187.29 137212.35
Ratio (Times)
2.30 2.82 3.24 3.48 3.80
4
3.5
3
2.5
2
1.5
1
0.5
0
2004-05 2005-06 2006-07 2007-08 2008-09
Interpretation:
From the above figure, it is cleared that the total asset turnover ratio is increases every year. Ratio which was 2.30 times in 2004-05 increased to 2.82 times and to 3.24 times in year 2005 and in -06 2006-07. This ratio is further increased to 3.48 times in 2007-08. And in last year also, it increased to 3.80 times. Total assets turnover ratio indicates the return from overall use of all assets in a firm in a production process. This ratio indicates the efficient use of all assets employed in Amul.
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Year
2004-05 2005-06 2006-07 2007-08 2008-09
Gross Profit
12237.94 13946.75 15869.49 19005.32 23898.07
Net Sales
59459.07 70206.23 81631.69 107187.29 137212.35
Ratio (%)
20.58 19.87 19.44 17.73 17.42
35
21
2 .5
19.5
19
18.5
18
17.5
17
16.5 16
15.5
Interpretation:
From the above data, it is cleared that the gross profit is increasing every year. But, the gross profit ratio is decreasing every year. This happen because of more increasing in net sales than gross profit. Gross profit ratio which was 20.58% in 2004 -05 decrease to 19.87% in 2005-06 which further decreased to 19.44% and to17.73% to in 2006 and 2007-08. It was further decreased to 17.42% last -07 year in 2008-09.
* 100
[Rs. In lacks]
Year
2004-05 2005-06 2006-07 2007-08 2008-09
Net Profit
311.23 323.74 411.50 451.51 575.53
Net Sales
59459.07 70206.23 81631.69 107187.29 137212.35
Ratio (%)
0.52 0.46 0.50 0.42 0.42
0.6
0.5
0.4 0.3
0.2 0.1
0
2004-05 2005-06 2006-07 2007-08 2008-09
Interpretation:
From the above data, it is cleared that the net profit is increasing every year. But net profit ratio is decreasing. This is because of increase in net sales every year. The ratio which is 0.52% and 0.46% in 2004-05 and in 2005-06, reaches to 0.50% and 0.42% in 2006-07 and in 2007-08. In 2008-09, the ratio remains same as 0.42 as that in 2007-08.
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Year
2004-05 2005-06 2006-07 2007-08 2008-09
Ratio (%)
1.21 1.30 1.63 1.47 1.59
1.8 1.6
1.4 1.2 1 0.8 0.6
0.4 0.2 0
2004-05 2005-06 2006-07 2007-08 2008-09
38
Interpretation:
Return on assets indicates how efficiently a firm is earning by employing its assets. From the above data, it is cleared that the return on assets is increasing every year. ROA ratio which was 1.21% and 1.30% in the year 2004-05 and 2005-06, increased to 1.63% in 2006-07. But after it, the ratio decreased in 2007-08 to 1.47%. But in 2008-09, it again increased to 1.59% which is good sign.
Profit for the year ROCE = Total assets Cr. Liability * 100
[Rs. In lacks]
Year
2004-05 2005-06 2006-07 2007-08 2008-09
Profit
311.23 323.74 411.50 451.51 575.53
Ratio (%)
1.79 2.06 2.87 2.03 3.04
39
3.5
3 2.5
2
1.5
1
0.5
0
2004-05 2005-06 2006-07 2007-08 2008-09
Interpretation:
ROC ratio indicates how a firm is generating revenue from the capital employed by it. In 2004-05, ROC ratio was1.79% which increases to 2.06% and to 2.87% in 2005-06, and in 2006-07. But, it decrease to 2.03% in 2007-08 which again increases to 3.04% in 2008 -09. The above data indicates increase in return on capital year every year which is good for Amul.
40
[Rs. In lack]
Year
Profit
311.23 323.74 411.50 451.51 575.53
45 40 35 30 25
20 15 10 5
0 2004-05 2005-06 2006-07 2007-08 2008-09
Interpretation:
Earnings per share is earning available to share holders from the net profit.In Amul, the earnings per share are quite high. EPS in 2004-05 is of Rs.22.31, which decreased in 2005 -06 to Rs. 20.25 per share. This ratio in next two year, i.e. in 2006-07 and in 2007-08 remains near to Rs. 20. But, in 200809, it again increases to Rs. 25.41 per share. It can be said that, share holders of Amul are earning good amount from their share.
41
Here, the numerator of this ratio includes all debt, short-term as well as long-term, and the denominator of this ratio is total assets (the balance sheet total).
42
[Rs. In lack]
Year
2004-05 2005-06 2006-07 2007-08 2008-09
Debt
7330.00 5290.00 2530.00 10001.63 6111.07
Total Assets
25277.94 24595.17 25761.82 35864.51 36424.39
Ratio (%)
0.29 0.22 0.10 0.28 0.17
0.35 0.3
0.25
0.2
0.15
0.1
0.05
0
2004-05 2005-06 2006-07 2007-08 2008-09
Interpretation:
Debt-assets ratio shows the debt taken by a firm against the total assets. From the above data it is measured that, in Amul the debt-assets ratio are of fluctuating type. The ratio which was 0.29% in 2004-05 has decreased to 0.22% in 2005-06. This ratio again decreased to 0.10% in 2006 -07. Then it increases to 0.28% in 2007-08 which again decreases to 0.17% in 2008-09.
43
Year
2004-05 2005-06 2006-07 2007-08 2008-09
Debt
7330.00 5290.00 2530.00 10001.63 6111.07
E uity
3452.65 3754.41 4221.59 4591.36 4751.22
Ratio (%)
2.12 1.41 0.60 2.18 1.29
2.5
1.5
0.5
0
2004-05 2005-06 2006-07 2007-08 2008-09
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Interpretation:
Debt-equity ratio shows the proportion of equity against the debt. From the above ratio it is clear that debt-equity ratio in 2004-05 was 2.12%. It was 1.41% in 2005-06, 0.60% in 2006-07, and 2.18% in 2007-08, 1.29% in 2008-09. In 2004-05, and in 2007-08 the ratio is more than 2 because of the higher amount of long term debt. But in remaining year it is less than 2. From the above data it is also cleared that the firm is mainly financed by debt.
Share holders fund Proprietary ratio = Total assets [Rs. In lack] * 100
Year
2004-05 2005-06 2006-07 2007-08 2008-09
Total assets
25277.94 24595.17 25761.82 35864.51 36424.39
Ratio (%)
13.66 15.26 16.39 12.80 13.04
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18
16 14 12 10
8 6 4 2 0
2004-05
2005-06
2006-07
2007-08
2008-09
Interpretation:
Proprietary ratio indicates share holders fund invested in a business. From the above ratio it is clear that proprietary ratio for year 2004-05 is 13.66%. In 2005-06 it is 15.26%, in 2006-07 it is16.39%, in 2007-08 12.80%, and in 2008-09 it is 13.04%. Though, it is less but good for a co-operative society.
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[Rs. In lack]
Year
2004-05 2005-06 2006-07 2007-08 2008-09
Dividend
202.69 233.45 287.10 325.50 337.15
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15
14.9
14.8
14.7
14.6
14.5 14.4
14.3
2004-05 2005-06 2006-07 2007-08 2008-09
Interpretation:
From the above data, it is clear that the dividend per year paid by Amul is nearer to Rs. 14 for last five year. In 2004-05, dividend paid by Amul is Rs. 14.53 which increases to Rs. 14.60 in 2005 -06. But after it, dividend slightly decreases to Rs. 14.50 in 2006-07 which again increases to Rs. 14.60 in200708. Last year in 2008-09, it increases to Rs. 14.89. This ratio indicates that the Amul distribute this much amount as dividend from the profit earned from last five year.
Dividend per share Dividend pay-out ratio = Earnings per share * 100
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[Rs. In lack]
Year
2004-05 2005-06 2006-07 2007-08 2008-09
80
70
60
50
40
30
20
10
0
2004-05
2005-06
2006-07
2007-08
2008-09
Interpretation:
It is clear from the above data that Amul distribute good amount of profit as dividend to its share holders. In 2004-05, Amul has distributed 65.13% of its earning as a dividend to its share holders. In 2005-06, it has distributed 72.10% of its earning as dividend which decreases to 69.78% in 2007 -08. This amount again increases to 72.06% in 2008-09 which it has distributed as dividend from its earning. Last year in 2008-09, Amul has distributed 58.60% of its earning as a dividend.
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It is my pleasure that Amul gave me a chance to work with it for two month as trainee. We normally use to study various theoretical aspects of industries during our M.B.A. Programme. I understood how difficult it was to handle the entire organization; especially when it is a co-operative organization. Amul is really a great organization which distributes all its profits among its members i.e. those who supply milk to Amul. It would perhaps be the first organization in the India to run successfully on the co-operative basis. The analysis of financial statements is process of evaluating the relationship between components parts of financial statements to obtain a better understanding of the firms position and performance. The report is devoted to an in-depth analysis of financial statements and its use for decision making by various parties interested in them. Ratio analysis is the widely used tool of financial analysis. It can be used to compare the risk and return relationship of the firm. It is defined as the systematic use of ratio to interpret the financial statement s so that the strengths and weaknesses of the firm as well as the historical performance and current financial condition can be determined. And as Amul is co-operative society, it is more interesting to see the financial performance of it because the aim of co-operative society is of not to earning profit, but to serve the society/people. Different types of ratios are calculated while data interpretation process. Liquidity ratios, turnover ratios, profitability ratios, and leverage ratios have been calculated for the financial evaluation the statements like balance sheet and profit and loss a/c. Each ratio has their own importance and values. Some ratio indicates good performance of an organization in their respective area while some ratios came as poor results in their respective areas. And as a result, some important findings and suggestions are found during ratio analysis. But, at the end this analysis as a part of my summer training report has ends with good results for both, the organization as well as me as trainer which will help me in future and for organization, it has provided valuable recommendation which may help an organization to make decision in future. To conclude, it was a great experience for me to work in Amul as a part of my summer training.
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5.1 Findings
During my study, from the analysis of balance sheet i found that the organization is financially very sound and good. And every year it becomes stronger financially by earning good amount of profit. I also found that Amul is mostly use debt finance than equity. Because the Amul is co-operative sector and it does not issue shares. It only issues shares to its milk centres from whom Amul may not get sufficient amount of money to run the organization. It is also found that the turnover ratio of debtors is increasing every year which shows the good credit management of a firm. I found that the net profit of the Amul Dairy is increasing every year which depict that the Amul enjoying the good position in the competitive market. It is also found that Amul is distributing a good amount of money to its shareholders as a dividend every year. From the data analysis and interpretation, I also found that the compared with last years Amuls performance is increasing every year. In other words, Amul is doing well every year compared to last year.
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Some of the employees in the organization does not co-operate with others. So, Amul should try to know their problem should try to solve it. I also found that some of the employees are trying to avoid their responsibility. So, Amul should take some strict action on it to run the organization smoothly. During my analysis, I recognized that Amul is not fully utilizing some of its assets and also the inventories. So, I suggest that Amul should take necessary action on it and should try to fully utilize it.
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BIBLIOGRAPHY
BOOKS Chandra, Prasanna (2008), Financial Management: Theory and Practice (7th Edition), New Delhi: Tata McGraw-Hill Publication Company Limited
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