Professional Documents
Culture Documents
Name of Unit:
KAIRA DISTRICT CO-OPERATIVE MILK PRODUCERS UNION
LTD. (AMUL).
Anand-388001
Gujarat, India.
Location :
Kaira District Co-operative Milk Producers' Union Ltd
Amul Dairy Road
Anand. 388 001.
Phone:
+91 02692 256124
+91 02692 256225
Nature of the company:
By nature the company is registered as Co-Operative Union Ltd. Sector
and under a Co-Operative Societies act,14th December 1946.
Slogan/Punch line:
THE TASTE OF INDIA
Website:
www.amul.com
www.amuldairy.org
NATURE
The name Amul itself indicates that it is a co-operative union. There are
various types of co-operative society which are as under:
(1) Producers or manufactures co-operative society
(2) Consumer co-operative society
(3) Housing co-operative society
(4) co-operative farming
(5) co-operative credit solvency
This firm is the firm of association in which person combine together to
form a society for the purpose of manufacturing goods. Although it is
democratic management of industrial production. This is useful where large
capital is neither necessary nor much technical and expert knowledge of the
management is needed. In India some of the Sugar mill and ginning mills are
running under this formation. Dairies are also adopting co-operating format.
Amul is the producers' co-operative society.
COMPETITORS
Competitors are the person who produce and sales the same product as
produced by the unit. Competitors affect the business with several causes.
The main rivals of AMUL are as following
Rich Milk
Sardar milk
Nestle
Britannia
Cheese of Le-Beon
Gowardhan
ORGANIZATION STRUCTURE
B.O.D
Chairman
Vice Chairman
Managing Director
Manager
Deputy Manager
Assistant Manager
Superintendent
Deputy Superintendent
Senior Officer
Assistant
Junior Assistant
Workers
PLANTS LOCATION
ANAND PLANT:
Anand plant is the main plant. Most of the raw material received here.
Products being manufactured here which are,
Butter, Flavored milk, Ghee, Milk Powder, Baby foods, Cheese etc.
MOGAR PLANT:
It is situated on Anand Vadodara National Highway No. 8. It produces
chocolates, Nutramul, Amullite, Amul Ganthia. This plant was established in
1973.
KHATRAJ PLANT:
It is situated between Nadiad Mahemdabad. It produces the Cheese.
This plant also produces paneer.
PUNE & KOLKATA:
In Pune and Kolkata no production is done. Only milk collection and
milk marketing activities are performed.
CHILLING CENTRE:
Kapadwanj, Balasinor, Undel, Khembe there are 120 chilling units in
socities.
BANKERS OF AMUL
(1)
(2)
(3)
Bank of Baroda
(4)
Bank of Maharashtra
(5)
(6)
Corporation Bank
(7)
Axis Bank
RATIO ANALYSIS
The most important task of a financial manager is to interpret the
financial information in such a manner, that it can be well understood by the
people, who are not well versed in financial information figures. The technique,
by which it is to be calculated, is known as Ratio Analysis.
1) Percentage
2) Rate
3) Proportion
RATIO ANALYSIS
Ratio analyses are a powerful tool of financial analysis. A ratio is
defined as the indicated quotient of two mathematical expressions and as
the relationship between two or more things. In financial analysis a ratio is
used as a benchmark for evaluating the financial position and performance
of a firm. The relationship between two accounting figures, expressed
mathematically, is known as a financial ratio.
TYPES OF RATIOS
Several ratios; calculated from the accounting data, can be grouped
into various classes according to financial activity or function to be
evaluated. We may classify the ratios into the following categories.
Liquidity ratios
Leverage ratios
10
Profitability ratios
Capital Structure Ratio
Other Ratio
LIQUIDITY RATIO
It is extremely essential for a firm to be able to meet its obligations as
they become due. Liquidity ratios measure the ability of the firm to meet its
current obligations. In fact, analyses of liquidity needs the preparation of
cash budgets and cash and fund flow statements but liquidity ratios by
establishing a relationship between cash and other current assets to current
obligations, provide a quick current assets to current obligations, provide a
quick measure of liquidity. A firm should ensure that it should not suffer
from lack of liquidity, and also that it does not have excess liquidity. The
failure of company to meet its current obligation due to lack of sufficient
liquidity, will result in poor credit worthless, loss of creditors confidence for
even in legal tangles resulting in the closure of the company. A very high
degree of liquidity is also bed. the firms fund will be unnecessarily tied up in
current assets therefore, it is necessary to strike a proper balance between
high liquidity and lack of liquidity.
The most common ratios, which indicate the extent of liquidity, are
Current ratio
Quick ratio
11
CURRENT RATIO
Current ratio is the ratio of total current assets to total current
liabilities. Current assets of a firm represent those assets which can be in
ordinary course of business converted into cash with in short period of time
and current liabilities defined as liabilities which are short term
manufacturing obligation to meet current assets.
To measure the financial liquidity of Amul
Current assets = Stock, Advance & debtors, Cash & Bank Balance.
Current liabilities = Deposits, Due to societies, O/s against Expenses and
Purchases, Sundry Creditors, Provisions.
Current assets
Current Ratio = ________________
Current liabilities
YEAR
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
CURRENT
ASSETS
16102.2
18596.49
18990.94
19874.21
28995.9
28874.39
CURRENT
LIABILITY
6786
8988.56
9460.79
12106.54
13892.41
17801.69
12
RATIO
(C.A/C.L)
2.37
2.07
2.12
1.64
2.09
1.62
INTERPRETATION
The ideal Current Ratio of any firm is 2:1. In AMUL first three year the ratio
is more than 2, it indicates good financial ability of the sector. But after that
the ratio is declining because of the increase in Current Liability. It indicates
that day by day the amounts of creditors are increasing which is not good for
the sector.
13
QUICK RATIO
Quick ratio is also called acid test ratio. It is the ratio between quick
current assets and current liabilities. It is calculated by dividing the quick
assets by current claim. Quick ratio is the measurement of firms ability to
convert its current assets quickly into cash in order to meet its current claim.
The term quick assets refers to current assets which can be converted
into cash immediately or at a short notice without reduction in value of
quick ratio.
Quick Assets = Stock, due from societies, Advances, trade and Sundry
Debtors Cash and Bank Balance
Quick assets
Quick Ratio = ______________
Current liabilities
YEAR
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
QUICK
ASSETS
11365.37
10686.31
9078.21
10533.65
13258.02
9433.42
CURRENT
LIABILITY
6786
8988.56
9460.79
12106.54
13892.41
17801.69
14
RATIO
(Q.A/C.L)
1.67
1.19
0.96
0.87
0.95
0.53
INTERPRETATION
The ideal Quick Ratio is 1:1. In AMUL the Quick Ratio is more than 1 in
2003-04 and 2004-05. But than after it started declining and reached below 1
for the next four years. The reason is continuous increase in the current
liability.
15
LEVERAGE RATIO
In the short term creditors like bankers and suppliers of raw material;
are more concerned with firms current debt-paying ability, on the other
hand, long-term creditors like debenture holders, financial institution are
more concerned with the firms long term financial strength In fact a firm
should have short as well as long term financial position. To judge the longterm financial position of the firms financial leverage or capital structure
ratios are calculated. These ratios indicate funds provided by owners and
lenders. As a general rule, there should be an appropriate mix of debt and
owners equity in financing the firms assets.
STOCK TURNOVER RATIO
This ratio indicates the efficiency of the firm in selling its product. It
is calculated by dividing the cost of good sold by average inventory.
Average Stock
Inventory turnover = ___________________ 300
Cost of Goods Sold
YEAR
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
AVGERAGE
STOCK
4493.49
4900.41
7199
7471.21
10214.83
COST OF
GOODS SOLD
43660.28
47221.13
56259.48
65762.20
88181.97
RATIO
(A.S./C.O.G.S)*300
31 days
31 days
38 days
34 days
35 days
INTERPRETATION
From the above ratio we can say that AMUL is turning its inventory of
finished good into sales in 31 days in 2003-04 and 2004-05, 38 days in
2005-06, 34 days and 35 days in 2006-07 and 2007-08 respectively. It is
good
for
any
co-operative
17
sector.
Debtors
Debtors Turnover Ratio = ________ 300
Sales
YEAR
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
AVGERAGE
DEBTORS
6690.15
6797.52
7679.62
6759.25
7625.77
SALES
54088.29
59459.07
70206.23
81631.69
107187.29
137212.35
18
RATIO
(A.D./SALES)*300
37 days
34 days
33 days
25 days
21 days
INTERPRETATION
From the above ratios we can say that AMULS Debtors remain outstanding
for 37 days in 2003-04, 34 days in 2004-05, 33 days, 25 days, 21 days in
2005-06, 2006-07 and 2007-08 respectively. The Collection period of
Debtors is decreasing day by day. It is good sign for AMUL.
19
YEAR
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
AVGERAGE
CREDITORS
5930.37
7098.06
8095.97
9798.1
12312.25
NET
PURCHASE
41188.59
49931.03
57374.94
64034.16
93690.87
20
RATIO
(A.C. /N.P.)*300
43 days
43 days
42 days
46 days
39 days
INTERPRETATION
From the above we can say that the payment of Creditors is outstanding by
AMUL. 43 days in 2003-04 and 2004-05, 42 days, 46 days, 39 days in 200506, 2006-07 and 2007-08 respectively. The payment period to Creditor
remain same in every year. It is good for AMUL.
21
SALES
NET FIXED
ASSETS
9588.26
6107.85
4968.66
5371.69
6122.97
54088.29
59459.07
70206.23
81631.69
107187.29
137212.35
RATIO
(Sales/N.F.A)
5.64
9.73
14.13
15.20
17.51
INTERPRETATION
From the above ratio we can say that in AMUL Fixed Assets is recovered in
5.64 times in 2003-04, 9.73 times in 2004-05, 14.13 times, 15.2 times, 17.51
times in 2005-06, 2006-07 and 2007-08 respectively. We can say that the
total Fixed Assets Turnover is increasing day by day. It is good sign for
AMUL.
22
Sales
_______________
Working Capital
YEAR
SALES
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
54088.29
59459.07
70206.23
81631.69
107187.29
137212.35
WORKING
CAPITAL
9320.2
9607.93
9530.15
7767.67
5033.89
23
RATIO
(Sales/W.C.)
5.80
6.18
7.37
10.51
21.42
INTERPRETATION
From the above we can say that AMUL is able to recover its Working
Capital 5.8 times in 2003-04, 6.18 times in 2004-05, 7.37 times in 2005-06,
10.51 times 2006-07 and 21.42 times in 2007-08. Working Capital Turnover
is also increasing day by day. It is good and from it AMUL can generate
more and more sales.
24
YEAR
SALES
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
54088.29
59459.07
70206.23
81631.69
107187.29
137212.35
TOTAL
ASSETS
26326.08
25277.94
24595.17
25761.82
35864.51
25
RATIO
(Sales/T.A.)
2.05
2.35
2.85
3.17
2.99
INTERPRETATION
From the above data we can say that in AMUL Total Asset Turnover is
recovered 2.05 times in 2003-04, 2.35 times in 2004-05, 2.85 times, 3.17
times, 2.99 times in 2005-06, 2006-07 and 2007-08 respectively. Till 200708 the Total Asset Turnover Ratio is increasing because the total asset is
quiet same in every year. But in 2007-08 the Total Assets is increasing by
40% from 2006-07. So the turnover ratio is declining in that year.
26
Net Assets = Net Fixed Asset + Current Asset after deducting Current
Liability
YEAR
SALES
2003-04
2004-05
2005-06
2006-07
2007-08
54088.29
59459.07
70206.23
81631.69
107187.29
NET
ASSETS
18908.46
9607.93
14498.81
13139.36
11126.86
27
RATIO
(Sales/N.A.)
2.86
6.18
4.84
6.21
9.63
INTERPRETATION
From the above data we can say that Assets Turnover in AMUL during
2003-04 is 2.86 times, 6.15 times in 2004-05, 4.84 in 2005-06, 6.21 times in
2006-07 and 9.63 times in 2007-08 respectively. The Net Asset Turnover is
increasing day by day. But the total Current Liability is also increasing and it
is directly affected to Net Asset Turnover. If the Current Liability is
decreased than the Net Asset can be Turnover by more than this ratio.
28
PROFITABILITY RATIOS
A company should earn profit to survive and grow over a long period
of time. Profit are essential but it would be wrong to assume that every
action initiated by management of a company should be aimed at
maximizing profits irrespective of social consequences and profit is looked
upon as a term of above since some firms always want to maximize profits
at due cost of employees, customers, and society. Except such infrequent
cases, it is fact profit must be earned to sustain the operation of the business
to be able to obtain funds from investor for expansion and growth and to
contribute towards the social overhead for the welfare of society.
Profit is the difference between revenues and expenses over a period
of time. Profit is the ultimate output of the company; and it will have no
future if it fails to make sufficient profits. There fore financial manager
should continuously evaluate the efficiency of its company in term of
profits.
Generally two types of profitability ratios are calculated.
Profitability in relation to sales
Profitability in relation to investment
Measures of Profit
Profit can be measured in various ways
1) Gross Profit
(2) Net Profit
29
YEAR
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
GROSS
PROFIT
10428.01
12235.94
13946.75
15869.49
19005.32
SALES
54088.29
59459.07
70206.23
81631.69
107187.29
137212.35
RATIO
(G.P./Sales)*100
19.27
20.58
19.87
19.44
17.73
INTERPRETATION
From the above ratio we can say that Gross Profit Ratio in 2003-04 is
19.27%, 20.58% in 2004-05 20.58%, 19.87% in 2005-06, 19.44% in 200607 and 17.73% in 2007-08 respectively. The total amount of Gross Profit is
increasing every year. But the ratio is decreasing; the main reason is increase
in the Purchase Price Milk and Raw Material.
30
NET
PROFIT
252.46
311.23
323.74
411.50
451.51
575.53
SALES
54088.29
59459.07
70206.23
81631.69
107187.29
137212.35
RATIO
(N.P./Sales)
0.46
0.52
0.46
0.50
0.42
0.42
INTERPRETATION
From the above figure we can say that the percentage of Net Profit is 0.46%
in 2003-04 and 2005-06. In 2004-05 it is 0.52%, 0.50% in 2006-07 and
0.42% in 2007-08 respectively. The total amount of sales is increased every
year but at the other side total operating expenses is also increased day by
day. So it directly affect to Net Profit Ratio of AMUL.
OPERATING EXPENSES RATIO
31
100
Sales
YEAR
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
OPERATING
COST
53422.7
58785.45
69636.1
80627.15
106956.62
SALES
54088.29
59459.07
70206.23
81631.69
107187.29
137212.35
32
RATIO
(O.C./Sales)
98
98
99
98
99
INTERPRETATION
From the above data we can say that Operating Expense remains same
during the 2003-04, 2004-05, 2006-07 i.e.98 %. In 2005-06 and 2007-08 it
was 99%. The Operating Expenses of AMUL is increasing out of 1 Rs of
sales 98 and 99 paisa is consumed in operating Expenses. The main reason is
increase in Marketing, Packaging, and Processing Expenses and the price of
Raw Material and Milk.
33
100
Capital Employed
YEAR
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
NET
PROFIT
252.46
311.23
323.74
411.50
451.51
575.53
CAPITAL
EMPLOYED
19540.09
16289.38
15063.48
13572.19
11767.44
34
RATIO
(N.P./C.E.)
1.29
1.91
2.15
3.03
3.84
INTERPRETATION
From the above data we can say that Return on Capital Employed during
2003-04 is 1.29%. It was 1.91% in 2004-05, 2.15% in 2005-06, 3.03% in
2006-07 and 3.84% in 2007-08 respectively. Return on Capital Employed is
increasing day by day. The recover Ratio of Capital Employed in the
business is increasing it is good sign for AMUL.
Net profit
Return on Shareholders Fund = __________
100
Shareholders Fund
YEAR
NET PROFIT
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
252.46
311.23
323.74
411.50
451.51
575.53
SHAREHOLDER
S
FUND
3201.91
3452.65
3683.51
4138.50
4486.30
INTERPRETATION
36
RATIO
(N.P. /S.F.)
7.88
9.01
8.78
9.94
10.06
From the above ratio we can say that the Return on Shareholder Fund is
7.88% in 2003-04, 9.01% in 2004-05, 8.78% in 2005-06, 9.94% in 2006-07,
and 10.06% in 2007-08 respectively. The Return on Shareholders Fund is
increasing every year. So it is good sign that the recover ratio of amount
invested is increasing.
YEAR
NET PROFIT
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
252.46
311.23
323.74
411.50
451.51
575.53
38
NO. OF
SHARES O/S
12.13
13.95
15.97
19.80
22.29
RATIO
(N.P. /Share)
20.81
22.31
20.25
20.78
20.26
INTERPRETATION
From the above data we can say that Earning per Share is 20.81Rs in 200304, 22.31 Rs in 2004-05, 20.25 Rs in 2005-06, 20.78 Rs in 2006-07 and
20.26 Rs in 2007-08. Earning per Share ratio is comparatively better for
AMUL. The shares of AMUL are distributed only to the Societies, so the
main earning is distributed to its Societies.
39
(1) Dividend =
40
YEAR
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
RATIO
(Div./E.P.S)
69.82
64.95
72.10
69.78
72.06
INTERPRETATION
From the above ratio we can say that Dividend Pay Out Ratio is 69.82% in
2003-04, 64.95% in 2004-05, 72.10% in 2005-06, 69.78% in 2006-07 and
72.06 in 2007-08. From the Total Earning per Share averagely 70% amount
is distributed to the Shareholders.
41
Total Debt
Debt-Equity Ratio = ____________
Net Worth
YEAR
TOTAL DEBT
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
10840.16
10363.16
9216.63
7363.71
5874.95
42
INTERPRETATION
From the above ratio it is clear that Debt-Equity Ratio in 2003-04 is 3.38
times. It was 3.0 times in 2004-05, 2.45 times in 2005-06, 1.74 times in
2006-07 and 1.28 times in 2007-08. The ideal Debt-Equity Ratio is 2:1, in
AMUL 2003-04, 2004-05 and 2005-06 the Ratio is more than 2, because of
the higher amount of Long Term Debt but than after it is declining, so it
shows that Total Long Term Debt is decreasing. It is good sign for AMUL.
PROPRIETARY RATIO
43
TOTAL
ASSETS
26326.08
25277.94
24595.17
25761.82
35864.51
RATIO
(Sales/T.A.)
12.16
13.66
15.26
16.39
12.80
INTERPRETATION
From the above ratio it is clear that Proprietary Ratio for the year 2003-04 is
12.16%. In 2004-05 it is 13.66%, in 2005-06 it is 15.26%, in 2006-07 it is
16.39% and in 2007-08 it is 12.8%. Out of total Assets the above percentage
is invested by Proprietor and it is not better but we can say it is good for any
Co-Operative Society.
OTHER RATIOS
44
DEBT RATIO:
This Ratio can be found out by dividing Total Debt by Net Asset.
Debt = Loans + Debentures + Fixed Deposit
Net Asset = Total Assets Current Liability
Debt Ratio =
Total Debt
____________
100
Net Assets
YEAR
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
TOTAL
DEBT
10840.16
11363.16
9716.63
7363.71
15374.95
NET
ASSETS
19540.09
16289.38
15063.48
13572.19
107187.29
137212.35
45
RATIO
(Debt./N.A.*100)
55.48
69.75
64.50
54.25
70.32
INTERPRETATION
From the above ratio we can say that Debt Ratio in 2003-04 is 55.48%. It
was 69.75% in 2004-05, 64.5% in 2005-06, 54.25% in 2006-07 and
130.65% in 2007-08. It is comparatively good, except 2007-08.
46
This Ratio can be found out by dividing Total Liability by Total Asset
Total Liability = Debentures + Loans + Fixed Deposit + Current Liability
Total Liability
____________ 100
Total Assets
YEAR
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
TOTAL
LIABILITY
17618.62
19296.36
18608.22
18796.43
28947.46
TOTAL
ASSETS
26326.08
25277.94
24595.17
25761.82
35864.51
RATIO
(Sales/T.A.)
67.00
76.00
76.00
73.00
81.00
INTERPRETATION
From the above ratio we can say that Total Liability to Total Asset Ratio in
2003-04 is 67%. In 2004-05 and 2005-06 it is 76%, in 2006-07 it is 73% and
in 2007-08 it is 81%. From the above ratio we interpret that in compare of
Total Assets. The percentage of Total Liability is comparatively less so it
indicate good sign for AMUL.
CHALLENGES TO BE MET
47
CONCLUSION
48
According to my point, success factor being Amul are hard work discipline,
co-operative structure, production technology development, and the proper
method for paying the debt and collecting the payment. The main cost for
AMUL is transportation cost for collecting the milk from different villages.
But now AMUL have the chilling facilities to some big villages (milk
collection centre). So that the milk is stored up to 2-3 days. Then AMUL
collect the milk from there after 3 days.
49
BIBLIOGRAPHY
(1) Companys Annual Reports (last 6 years)
(2) www.Google.com
(3) www.Amuldairy.com
(4) Prasanna Chandra, Financial Management Fourth Edition
50