History of Ice Cream and the Global Industry

[Type the document title]
EXECUTIVE SUMMARY
Gamu Dairy Foods is a company, located in Hubli, Karnataka where I have done my
project. The proprietor of Gamu Dairy Foods is Dinesh Shetty.
The studies under taken in the Gamu Dairy Foods brought about with two objectives which
include comprehensive studies of organization and knowledge of production firm along with
the fulfillment of the objective mentioned in the college spectrum.
1.1.AREA COVERED
1.1.1 Accounts and Finance Department
1.1.2 production Department.
1.1.3 Stores Department.
1.1.4 Human resource Department.
1.1.5 Marketing Department.
B.TITLE OF THE PROJECT

"An specialization on Financial Productivity in GAMU DAIRY FOODS HUBLI"
1.2. INDUSTRY PROFILE
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Would you believe the forerunner of snow cones was around in 400 B.C.? Alexander the
Great sent his slaves into the Apennines Mountains for snow and ice to concoct the luscious
iced fruit nectars he craved.
During China's Tang Dynasty (618-907 A.D.) something vaguely on the order of ice cream
was made from cow, goat and buffalo milk, flavored with camphor and thickened with flour.
It's extremely doubtful this is a flavor of ice cream Baskin Robbins will ever stock!
In the 1300's, Marco Polo was said to have brought recipes thousands of years old from the
Far East for water ices. Where exactly in the Far East he actually got them is debatable as
history shows us that he really didn't go to China after all.
A freezing method using ice and salt was in existence since before the fourth century A.D.,
and used by India and China. The method was introduced to Europe in the mid 1600's and
ices made with sweetened milk appeared in Naples in 1664 to the delight of Italians.
Charles I, in the 1600's paid his cook, Dimarco, an extra 500 pounds per year to keep his ice
cream recipe a secret and a treat only for his Royal Table. After the beheading death of
Charles 1, Dimarco let the recipe be known to all of Europe.
Frozen confectionery desserts arrived in America during the 1700's and noted Maryland
governor Bladen enjoyed serving these icy treats to his guests. New York City
was the site of the first ice cream parlor in 1774, opened by Phillip Lenzi. Also
sold at his
established were water ices and fruits candies. George Washington loved ice cream so much
that a large part of his spending was devoted to it - $200 for just one summer!
Aunt Sallie Shadd, a freed black slave, perfected ice cream as we know it today. She'd
opened a catering business with family members and one of her customers was Dolly
Madison, wife of President James Madison. Mrs. Madison enjoyed Sallie's ice cream so
much it became part of the menu at her husband's inauguration in 1812 as well as
the
official dessert of white house dinners.Hand-cranked ice cream freezers came along in 1846
and in 1851 James Fussell established the first commercial ice cream plant. Plain ice cream
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cones were invented in 1896 and waffle cones were introduced in 1904 at the St. Louis
World's Fair.
Over the years many flavors have been added to the original vanilla. It was only natural
someone would try to improve on it so along came toppings - syrups, jams, marshmallow
crme, nuts, maraschino cherries, whipped cream and more. Here are a few favorite toppings
of people polled and all are delicious.
1.2.1. Chopped cinnamon apple rings topped with fish-shaped crackers and grated cheese;
1.2.2. Splashed with balsamic vinegar a la Martha Stewart;
1.2.3. Broken pieces of frosted animal cookies;
1.2.4.Crumbled toffee bits, chocolate chips or M & M's;
1.2.5.Caramel topping, powdered vanilla malt and peanuts;
1.2.6. Crushed pretzels;
1.2.7. Chopped candy bars;
Looking at some industry facts first. In 2007, the global market of ice creams was pegged at
$61.6 billion in terms of retail value or 15 billion liters in terms of volume. Of this, the AsiaPacific ice cream market was worth $13 billion in terms of retail value and 5,128 million
liters in terms of volume. Coming to India, the Indian ice cream industry is currently
estimated to be worth Rs. 2,000 crores, growing at a rate of approximately 12%. RS Sodhi,
Chief General Manager of Gujarat Co-operative Milk Marketing (GCMMF), the makers of
Amul, explains, The ice cream market in India can be divided into: the branded market
and the grey market. The branded market at present is 100 million liters per annum valued at
Rs. 800 crores. The grey market consists of small local players and cottage industry players.
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1.3 Industry at a glance
The industry can be divided into the branded market and the unbranded market. The
branded market at present is 100 million liters per annum valued at Rs. 800 crores.
In 2008-09, in the branded ice cream market, Amul held the number one spot, with a
market share or 38%, followed by Kwality Walls at 14%, Vadilal at 12% and Mother
Diary at 8%.
The per capita consumption of ice cream in India is approximately 300 ml, as against
the world average of 2.3 liters per annum.
Vanilla, Strawberry and Chocolate together constitute approximately 60% of the
market.
The per capita consumption of ice creams in India is just 300 ml per annum, compared to 22
liters in the US, 18 liters in Australia, 14 liters in Sweden. India is a way too far behind even
in terms of the world average per capita ice cream consumption of 2.3 liters per annum. This
when India is a country with hot climate with a young population.PankajChaturvedi,
Executive Director of Baskin Robins, explains Indian cuisine has a huge range of desserts
in its mix. Ice cream always competes against these for attention. Besides desserts, ice
cream also vies for attention with other like foods for example in summers with cold drinks,
coffee, juice.
Another trend that is witnessing a change is the seasonal nature of the industry. Having said
that, the peak season for ice cream still remains the summer months of April-June and dips in
the months of November-February. According to the industry players, this trend especially
holds true for the North and the Western parts of India. According to PankajChaturvedi, The
variation in sales for Baskin Robins can range from 1530% from season to off season
depending on geography and brand.
2. BACKGROUND OF THE COMPANY
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The ice cream industry has traditionally grown at a healthy rate of 12% year-on-year.
The growth in Ice cream industry has been primarily due to strengthening of distribution
network and cold chain infrastructure. Channels such as Mobile Vending Units have been
increasing year on year to reach out to a larger set of consumers. Besides, consumers also
have the choice of trying out varied product offerings from different brands to keep them
excited, PaulThachil, CEO Dairy & Foods, Mother Dairy Fruit & Vegetable.
What exactly is defined as 'ice cream' under the
guidelines? The Prevention of Food Adulteration (PFA) Rules,
1955 define ice cream as a frozen product that contains not less
than 10% milk fat, 3.5% protein, 36.0% total solids, and 0.5%
permitted stabilizer and emulsifier. Players who deviate from
these norms tactfully call their product frozen dessert. However,
it is illegal to sell "ice cream" which has contents below these
specified standards.
The basic steps in the manufacturing of ice cream are generally first blending the
ingredients, pasteurization, and homogenization, aging the mix, freezing, and hardening.
Now, during the hardening process, the ice cream mixture is incorporated with air. This is
done to make the product 'light' and 'creamy'. This is necessary as without air, ice cream
would be like frozen ice. Now the ice cream can contain a considerable quantity of air, even
up to half of its volume. This perhaps makes ice cream a business with high profit margin.
Manish Vithalani of Space Dotz informs, "A ice cream mix (consisting of milk,
emulsifier, sugar and so on) costs about Rs. 60-65 a liter. And in one liter you can add up to
one liter of air. Therefore, per liter the mix would cost you approximately Rs 32. If you take
an 150 ml cup, you can make 13 cups of ice cream from one liter of mixture. Calculating on
that basis, the per cup costing comes to about Rs 5. Now add to that Rs 5 worth of packaging
cost, electricity, labor, transportation, advertisement cost etc. It comes to approximately Rs
10 per cup." Depending on the variety, the profit margin therefore can go up to even 100%.
While for bigger players, the distribution and advertising costs eats into the profit margins,
for smaller players, it is the volumes that matter.
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Besides selling their products through kiosks, parlors and push carts, a significant
part of the revenue comes from corporate sales. Says Panka jChaturvedi, "About 55% of our
business is contributed by exclusive ice cream parlors and kiosks while 30% is from
corporate or food service (as we categorize it) sales. The rest comes in from retail and
exports." A chef at a prominent five star Delhi hotel tells us their banquet section itself buys
6 gallons of ice cream from manufacturers on a daily basis. The demand, he informs, goes up
to 10 gallons during peak season.
What is the cost of setting up a small scale ice cream manufacturing unit? Manish
Vithalani says, "The cost for setting up a small scale ice cream plant could come to
approximately Rs. 10 lakhs, including the cost of a ice cream plant, labor (3-4), storage
freezers, and so on. This price is not including the land cost." Of late, a number of players
who have entered the segment are playing on innovative aspects, for example, natural flavors
made from fruits. Some players like Mumbai-based Space Dotz are also coming up with
newer technology. According to DilipJagad of Space Dotz, "Unlike the normal ice cream,
our product comes in the form of balls. Besides, the product has no air content and uses
cryogenic technology, used in rocket science." Another noteworthy innovation was the probiotic and low fat ice cream bought into the market by Amul.
2.1 The Challenges

There are several challenges that affect the industry adversely. As mentioned earlier, the
industry players not only face competition from their competitors, but also from other like
foods. Though changing, consumers still consider ice cream as a dessert and a side item.
Sharing his experience, Sidharth Jaiswal of Juices, a juice bar chain, says, "We had
introduced ice creams on an experimental basis in our juice outlets in Ahmadabad. We
observed that consumers ordered ice creams as a side item or only when they were
accompanied by children. We eventually decided not to move ahead with it.Moreover, of
the ice cream consumption in India, nearly 60% is accounted to by three flavors of vanilla,
strawberry and chocolate. And to be on the safer side, major players tend play around these
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flavors only. For big players, regional competition from smaller players is another major
issue.
Another major problem faced by the industry players, especially while expansion, is poor
infrastructure such lack of cold storage and in case of rural penetration, even erratic power
supply becomes an issue. This is especially true for big players. Manish Vithalani says,
"Besides the presence of other players, another hurdle is the the high rent charged for floor
space, especially in malls. This also becomes a problem when we try to expand.
2.2 COMPANY PROFILE

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Gamu Dairy Foods situated at industrial estate Gokul road Hubli. Manufacturing waves
brand ice cream since 10 years even though they have started at 1998 with collaboration joy
ice cream Bangalore started their own brand ''WAVES.
In 1988 the company took help from KSFC [Karnataka state financial corporation] for their
plant and machinery. The company started commercial production march 13, 1988 and they
took working capital from Karnataka bank.
The manufacturing of waves brand ice cream since from 10 years even though they started
at 1988 with collaboration of joy ice cream Bangalore WAVES later started their own brand
by taking loan from KSFC, for the purchase of Plant and Machinery.
The inflow and out flow of the company in such they have to minimize official and other
expenses like power bill , Labours, transportation , and within 2 to 3 year they reach
breakeven point.
COMPANY PROFILE
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Name of the organization
: Gamu Dairy Foods
Type of organization
: Partnership firm
Location of work and registered
: Gamu Dairy Foods

2nd gate industrial estate
Gokul Road
Hubli
Phone. No.
: 0836-2332592/4252592
Mobile no.
: +91-9844128949
E-mail
: shetty33@yahoo.co.in
Year of establishment
: 1988
Product details
Product marketing
: Marketing through distributers
Partners
: Dinesh shetty
Name of the bankers
: Karnataka bank
Manufacturers of ice creams
2.3 OBJECTIVES OF THE COMPANY

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2.3.1. Provide a convenient and comfortable environment.
2.3.2. Be professional and well groomed.
2.3.3. Welcome customer like guest.
2.3.4. Identify and anticipate needs.
2.3.5. Provide efficient purchase consultation.
2.3.6. Deliver on time with respect.
2.3.7. Ensure religious post sales follow up and take corrective action as required.
2.3.8. Maintain friendly relationship with customers .
2.4 MISSION AND VISSION

The value describes the approach and the manner in which it want to work to achieve its
goals. Together vision and values from the frame work for its decisions and activities .these
serve as both an orientation and guideline for leadership.
Its purpose is to be a source for its customers. Provide the best quality and strive hard to
attain goodwill of customers, employee of the organization.
2.4.1. To provide a challenging professional experience for its employee.
2.4.2. To be the most desired suppliers in the country.
2.4.3. To be a respected citizen of community and country.
The company strives for the sustainable development. They accept change as an opportunity
and make high returns on assets. The main vision is to ensure success.
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2.5 IMPACT OF GLOBALISATION
2.5.1. Social and Environment responsibility
2.5.2. Growth to global scale
2.5.3. Encourage and research and team work
2.5.4. Making profit by Ethical business
2.5.5. Product quality and reliability
2.5.6. Customer Focus
2.6 FUTURE PLAN OF THE COMPANY

2.6.1. Expansion of the company.
2.6.2 Providing more employment opportunities.
2.6.3 To increase market strategy.
2.6.4 Giving technical training to employees.
2.6.5 Provident fund to employees.
2.7 PRINCIPALS
2.7.1. Performance
It has driven and strives to be better. A strong desire for the high
2.7.2. Value of customers
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Activities are concerned on the customer development and individual solutions to make
more successful
2.7.3 Team
Growing complexity of work demands co operation of talents. An open minded attitude and
individual commitment inspires team work
2.7.4 Employees
Appreciates its employee as the creativity and progress. Its culture lives through motivated
employees. They make things happen it strive to create an environment in which each
employee can achieve his or her best.
2.7.5. Focus and discipline
It focused approach leads to clear objectives and priorities once agreed, Ensure disciplined
execution.
2.8 ORGANISATION CHART

Organizing is one of the important function of management. mere planning does not mean
managing a business because it includes bringing together the workers, capital ,
machineries , materials , and physical facilities etc to execute the plans. when these resources
are assembled then the organization comes to life.
Company
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Sales executive
Distributor
Managingdirector

Gina managing
partner
Finance manager
Supervisor production
Sales
Supervisor
Representation
Retailer
Consumer
2.8 The Various Departments of the Company are:

2.8.1. Accounts and Finance Department
2.8.2. Production Department.
2.8.3. Stores Department.
2.8.4. Human resource Department.
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Labours

2.8.5. Marketing Department.
2.8.1 ACCOUNTS AND FINANCE DEPARTMENTS

Accounts department is one of the most important departments in any organization. Finance
is the blood of any of the organization. It is one of the factors of production. Finance is
termed as master providing success to all sources required to run the business activities.
Only processing adequate finance can discharge all marginal functions such as planning,
selecting, coordinating, controlling etc.,
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ACCOUNTING YEAR
The accounting year followed by this firm is from 1 st April to 31st of March of every
year the accounts are closed on 31stmarch.All transactions are done through cheques accept
those less than Rs.500.The discount allowed by the company mainly depends on the
customers.
Functions of Finance Department:
1. To control expenses like:
a. Postage
b. Telephone charges
c. Travelling expenses
d. Electricity charges putting off the refrigerators
2. To transfer part of profit to respective funds like:
a. Reserves and surplus
3. Controlling and moderating the debtors
4. Collection of pay on time without fail.
2.8.2 PRODUCTION DEPARTMENT

Production department is basically concerned with transformation of raw material that is the
inputs to finished goods Production department involves organized utilization of resources
made available to produce finished goods.
Production is very vital component in an organization
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Organization Structure of Production Department
Production
manager
Production
assistance
workers
OBJECTIVES
1. Plan for daily activities for production.
2. Control the production aids to support the production
3. Maintain machineries and equipments in good condition through preventive
Measures.
PRODUCTION PROCEDURE
The materials used for the production of ice creams are;
1. Fresh milk
2. Milk powder
3. Butter
4. Liquid glucose
5. Sugar
6. Stabilizing agent(Emulsifier)
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PROCESS OF PRODUCTION:
STEAMBOILER
PASTEURISER
PUMP
HOMOGENISUR
PULLING
AGEINGTANK
PROCEDURE FOR UNIT PRODUCTION

Firstly the required amount of milk has to pasteurized and should be heated to 80 degree
centigrade. Add milk powder, diary fat, sugar and stabilizing agent according the formula.
After mixing all this, mixture has to be passed through another machine called homogenizer.
The work of the homogenizer machine is to break the atoms of the ingredients into atoms of
very small microns. This provides softness to the mixture. Then the mixture should be
cooled to zero degree centigrade. Now the mixture is ready
Preparation of ice cream
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Now the amount of the above mixture is taken, to this the required essence or the Flavors is
added and put into the ice cream making machine which is called as the Continuous
freezer .now this mixture would be converted into soft sweet ice cream just within 20
minutes. During this time the temperature would be -6 degree Centigrade. Now this can be
called as '' softie ice cream'' also.
Later comes the filling process where this mixture will be filled in 50 ml-100 ml or any
required quantity.
Later this ice cream which is put into the hardener for freezing.hardner is a freezer which
hardens the ice cream immediately. Now the ice cream is completely ready and can be sold
as per the demand.
SOME OF THE ICE CREAMS PREPARED HERE ARE;
1. CHOCOBARS
2. MANGO DUETS
3. PISTA ICE CRAMS
4. BUTTER SCOTCH
5. VANILA
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6. CHOCO CONES
7. CHOCOLATE ICE CREAMS
8. CONE ICE CREAMS
MILK SALES
The company also sells milk. Fresh milk which is the raw material for the
preparation of ice cream a part of its pasteurized and sold as milk it self. The pasteurizing
machine is the same for both preparation of ice cream and milk. Since most of time the
machine stays idle so fresh milk is pasteurized and sold.This in turn adds to the profit of the
company
PLACES FROM WHERE THE RAW MATERIALS COMES

1.LIDS OF ICE CREAM CUPS - SHIV KASHI ( TAMIL NADU)
2.ICE CREAM STICKS AND SPOONS -WEST BANGAL
3.ICE CREAM CUPS - KUNDAPUR,DAKSHAN KANNADA,BANGLORE
4.UNIT BOXES BANGALORE AND GOA
5.CONES - MUMBAI
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6.ESSENCE - AHEMDABAD AND MUMBAI
7.MILK - NANDINI- KARNATAKA
2.8.3 STORES DEPARTMENT

Organization Structure of Stores Department
CHIEF
EXECUTIVE
STORES
MANAGER
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STORES
KEEPER
OPERATOR
Storage is the key activities in every organization where all the materials like raw
materials, Packing materials, and finished goods are store to protect them from being
damaged and meet the timely demand from the customer
FUNCTIONS
1. Issue and dispatching of the materials
2. Stock materials for packing
3. Maintaining zero damage
4. Control of inventory
5. Careful handling of the materials while dispatching
6. Protection of materials from being damaged or theft
2.8.4 HUMAN RESOURCE DEPARTMENT

Human resource department is the backbone of an organization. Without the existence of
human resource the growth of company is difficult.
AIMS OF HUMAN RESOURCE
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1. The human resource department aims to provide high quality and timely personal pay all
and pension service.
2. Integrate service so that the department and the institute receive support and advice most
appropriate wag.
3. Maintain quality of treatment and equality services as guiding principal at all time.
4. Develop improved awareness of customers needs and business requirements.
OBJECTIVES OF THE DEPARTMENT

1. To ensure optimum use of existing human resource.
2. Recruit people to match the competitiveness.
3. To motivate employees and increase their standards.
4. To increase the productivity of employees through effective training.
5. To forecast man power requirement.
RECRUITMENT:
There are three types of workers:
1. Skilled workers.
2. Semi-skilled workers.
3. Unskilled workers.
When the company is in need of skilled and semi-skilled Labours, company gives
advertisement in news-paper or in agencies and for the unskilled Labours to the market.
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They recruit dairy technicians, diploma holders for production and MBA & BBA for
financial aspects. And for unskilled Labours are trained efficiently in the factory itself.
MAINTAINANCE OF MACHINES
Maintenance of all machines is taken care by adopting proper planning so that no problem is
caused while the production procedure. The planning consist monthly preservation
Maintenance schedule that is preventive Maintenance is done as per the schedule which
depends upon usage and accuracy.
MANAGEMENT OF FINISHED GOODS
The company is particular about accurate management of finished goods. So that they do not
meet with any unsatisfied customer.
The following activities are performed on the finished goods:
1. Handling.
2. Storage.
3. Packing.
4. Preservation.
5. Delivery.
1.HANDLING: All products in process of such contracts and completed in all respect
awaiting dispatch, will handled by suitable methods and means of handling, that prevent
damage or deterioration.
2. Storage: All products in process at sub-contract and completed in all aspects awaiting
dispatch are stored in bins. A secured area is provided to prevent damage, deterioration or
mix up of products in stock are assessed at a appropriate intervals authorized persons issue
or receives the product at storage area.
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3. PACKING: All the products are packed and marketed to the extent necessary the quality
of the product. The packing which are used contractually agreed ensure the quality of
product until it reaches the premises.
4. PRESERVATION: The Company applies appropriate methods for Preservation and
segregation of products when the product is under their control.
5.DELIEVERY: Necessary agreements are made to protect the quality of product after final
inspection and appropriate logistics are chosen to ensure the quality of product till they reach
their destination. Shipper boxes contain cooling packs which prevents ice-cream from
melting. Since ice-cream is perishable goods so it needs to be taken more care. These
cooling pads contain Glycol
2.8.4 MARKETING DEPARTMENT

Marketing is the integral part which acts as a link between the organization and customers.
The marketing terms of the company are dynamic and strong so as to attract the customers as
well as to retain them. It has a good customer base.
ORGANISATIONAL STRUCTURE FOR THE MARKETING DEPARTMENT
MARKETING
MANAGER Page 24
DISTRIBUTORS
SELLERS
The products are mainly supplied in the following cities :Goa

Dandeli
Gadag
Hubli Dharwad
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Other Suppliers Are:The products are also supplied to hotel, caterers, bakeries, stationary, departmental
Stores and also directly to the consumer. Since the product is perishable it is delivered very
fast compared to other products.
Functions The Marketing Department :1. The main function of marketing department is to get as many clients and customers to the
increase in total profit.
2. For this increase in profits marketing department must function well to overcome the
competition
3. The approach to the clients should be such that the company becomes the leader
3.RESEARCH AND METHODOLOGY
3.1 TITLE OF THE PROJECT:A Project on Financial Productivity in Gamu Dairy Foods Hubli.
3.2 OBJECTIVES:Page 26

3.2.1To evaluate the liquidity position.
3.2.2 To analyze the variations in operating profits.
3.2.3 To analyze the profitability to sales turnover.
3.2.4To study the overall financial performance.
4.DATA COLLECTION
4.1 PRIMARY DATA:Meaning :

Primary data is the data which is collected for the first time it is the fresh
data collected for research purpose. The data collected is very accurate.
Compared to secondary collecting primary data is very expensive in
preparing and carrying out the research. Various means of collecting
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primary data or personnel interview, questionnaire, group discussion,
telephone interview and direct observation.
Primary Data: The information is collected from the personal interaction with the financial
managers of Gamu Dairy Foods.
4.2 SECONDARY DATA:Meaning :

Secondary data is the data which is collected already and ready to use.
The collected may not be accurate as the data collected is historic in
nature and the data collected need not fulfill your needs. Collection of
secondary data is not so expensive because it is already available.
Different sources of secondary data are newspaper, text books,
magazines and reports etc.
Secondary Data: This is collected through Gamu Dairy Foods annual reports.
5.TOOLS OF ANALYSIS
5.1 Measurement Technique/Statistical Tools:
5.1.1 Accounting Ratios.
5.1.2Financial Statement of the Company.
5.1.3 Analytical Technique
Statistical techniques used for calculation of ratios are in term of percentage.
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5.1.1.Accounting Ratio
An attempt to present the financial statements in simplified, systematised and summerized
form is known as Accounting Ratios.
Activity/ Performance/Turnover Ratios:

Turnover means sales, so turnover ratios are related to sales. It is an accepted contact that
sales has direct relationship with the performance of the business. Higher sales means better
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performance, better efficiency and productivity of the business. Higher sales also means
more production, which is undoubtedly the result of the best possible utilization of physical
resources i.e., material, machine and active participation of human resource.
Lesser sale shows inactivity of the business, poor performance and lesser productivity and
lesser productivity. Every company should try to multiply its sales, because it is an indicator
of all round development of the business.
Performance ratios also show, whether the total capital, working capital, fixed assets and
stock of the business are profitability used.
Kinds of Turnover Ratios concerned

1.Stock turnover ratio
2.Working capital ratio
3.Debtors turnover ratio
4.Creditors turnover ratio
5.1.1.a.Stock/ Inventory Turnover Ratio:

1. Stock turnover ratio establishes relationship between cost of goods sold and average
stock and reflects the speed of turning over the stock into sales.
2.Stock turnover ratio measures how many times the average stock is sold during the year.
3.Lower inventory turnover ratio shows that the stock is blocked an not immediately sold.
4.Stock turnover ratio establishes relationship between cost of goods sold and average
stock.
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Stock Turnover Ratio is formulated as under:
Stock turnover ratio = Cost of goods sold/ Average stock
Cost of goods sold = Opening stock+ Purchases + Direct expenses Closing stock
Or
= Net sales Gross Profit
Average stock = Opening stock + Closing stock

2
Significance :1.This ratio indicates whether stock has been used or not. It shows the speed with which
the stock is rotated into sales or the number of times the stock is turned into sales during
the year.
2.The higher the ratio, the better it is, since it indicates that stock is selling quickly. In a
business where stock turnover ratio is high, goods can be sold at a low margin of profit and
even than the profitability may be quite high.
5.1.1.b.Working Capital Turnover Ratio:

This ratio measures the relationship between working capital and sales. The ratio shows the
number of times the working capital results, in sales. Working capital as usual is the excess
of current assets over current liabilities. The following formula is used to measure this ratio.
Working capital turnover ratio = Net Sales or Cost of Sales

Working Capital
Working Capital = Current Assets Current Liabilities

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This ratio is very significant for non-manufacturing concerns where working

capital is more than the fixed assets. It reflects the efficiency in the utilization of working
capital. This ratio must be normal. Excessive ratio shows overtrading and lower ratio shows
undertaking. Both the situations of overtrading and undertrading show the weaknesses of the
enterprises.
Significance :1.This ratio is of particular importance in non-manufacturing concerns where current assets
play a major role in generating sales. It shows the number of times working capital has been
rotated in producing sales.
2.A high working capital turnover ratio shows efficient use of working capital and quick
turnover of current assets like stock and debtors.
3.A low working capital turnover ratio indicates under-utilisation of working capital.
5.1.1.c. Debtors Turnover Ratio:

It is also known as receivable turnover ratio. It establishes relationship between credit sales
and average debtors. This ratio is calculated on the basis of the formula:
Net credit sales
Debtors turnover ratio = ________________
Average debtors
Credit sales are separately given or it may be the difference between total sales and cash
sales. Credit sales may also be calculated by preparing debtors Account. In other words,
excess of the total of cash received from debtors, Sales Return, Bad debts and bills drawn
over the opening balance of debtors balance of balance of debtors is credit sales.
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Opening Debtors + Closing Debtors
Average Debtors = _________________________________
2
In case of receivable turnover ratio Debtors and Bills Receivables are added together to
determine the receivable.
Significance:1.This ratio indicates the speed with which the amount is collected from debtors. The higher
the ratio, the better it is, since it indicates that amount from debtors is being collected more
quickly.
2.The more quickly the debtors pay, the less the risk from bad- debts, and so the lower the
expenses of collection and increase in the liquidity of the firm.
3.By comparing the debtors turnover ratio of the current year with the previous year, it may
be assessed whether the sales policy of the management is efficient or not.
5.1.1.d.Creditors Turnover Ratio:

Meaning:
The ratio explains the velocity with creditors are paid and establishes relationship between
creditors and amount paid to them. Accounts payable includes creditors and bills payable.
The following formula is used to calculate,

Net Credit Purchases
Creditors turnover ratio =
_________________
Accounts Payable
Page 33
Significance :1.This ratio indicates the speed with which the amount is being paid to creditors.
2.The higher the ratio, the better it is, since it will indicate that the creditors are being paid
more quickly which increases the credit worthiness of the firm.
5.1.2Financial Statement:
A financial statement is an organized collection of data according to logical and
consistent accounting procedures. Its purpose is pose is to convey understanding of some
financial aspects of business firm. It may show a position at a moment in time as in the case
B/S or may reveal a series of activities over a given period of time as in case if an income
statement. Financial statement are prepared for the management to deal with
1. Status of investments.
2.Results achieved during a given period under review of a financial statement generally
refers to the following
Page 34

1. Income Statement: The income statement also termed as (profit or loss account) is generally
considered to be the most useful of all statements. It explains what has happened to a
business as a result of operation between two balance sheet dates. It discloses the revenue
realized from sale of goods and the costs incurred in the process of producing the scheme. It
tells the story of progress or decline over given period and why & how an indicated results
achieved.
2. Balance Sheet: It is a statement showing the financial position of a business of a particular

moment of time and claims of the owners and outsider against those assets at time.
3. Statement of Changes in Financial Position: The balance sheet shows the financial
condition of the business at a particulars moment of time while the income statement
discloses the results of operation of business over a period of time. However for a better
understanding of the affairs of the business, it is essential to identify the moment of working
capital or cash in & out business. This information is available in the changes of the in
financial position of the business.
5.1.1.a. STOCK TURNOVER RATIO :-
Cost of goods sold

stock turnover ratio =____________________
Average stock
Year
2009-2010
2010-2011
2011-2012
2012-2013
Cost of goods sold

1825705.14
1662401.05
1794030.54
3234665.22
Average stock
STR
211625.885
209957.30
347813.585
434340
8.63
7.92
5.16
7.45
Page 35

2013-2014
2731197.60
365933.5
7.46
STR
10
9
8
7
6
STR
5
4
3
2
1
0
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
Interpretation:
For the above graph, it is clear that in the year 2009-2010 Stock turnover
ratio is 9 times and in 2013-2014 is 7 times.
5.1.1.b.Working Capital Turnover Ratio:
Working capital turnover ratio = Net Sales or Cost of Sales

Working Capital
Year
Cost of sales
2410171.80
Working Capital
164370.43
2009-2010
Page 36
WCTR
14.66

2194589.50
252077.38
8.71
2360566.50
328947.42
7.18
2012-2013
3234665.22
164674.79
19.64
2013-2014
2731197.60
218878.04
12.48
2010-2011
2011-2012
WCTR
25
20
15
WCTR
10
5
0
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
Interpretation:
Working turnover ratio is from 14.66 times in 2009-2010 to 7.18 times.
it increases 19.64 times in 2013-2014 and decreases 12.48times in 2013-2014
5.1.1.c. Creditors Turnover Ratio:
Net Credit Purchases

Creditors turnover ratio =
_________________
Page 37

Accounts Payable
Year
NCP
Accounts Payable
CTR
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
1767956.91
1716812.61
2015332.05
2439035.93
2101842.66
135556.77
228514.39
202364.50
323786.34
278685.80
13.04
7.51
9.96
7.53
7.54
CTR
14
12
10
CTR
8
6
4
2
0
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
Interpretation:
Credit turnover ratio decreases 13.42 times in 2009-2010 to 7.91 times in
2010-2011. and it again decreases 9.96 times in 2011-2012 to 7.54 times in 2013-2014.
5.1.1.d.Average Payment Period :Annual days

Average Payment Period= ___________________
CTR
Page 38

Year
CTR
APP
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
13.04
7.51
9.96
7.53
7.54
27.99
48.60
36.65
48.47
48.41
APP
60
50
40
APP
30
20
10
0
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
Interpretation:
Average payment period varies from 28 days in 2009-2010 to 49 days
and varies from 36 days in 2011-2012 to 48 days in 2013-2014.
6.FINDINGS
6.1. Stock turnover ratio in the year 2009-2010 is 9 times and in 2013-2014 is 7
times.
6.2. Working turnover ratio is from 14.66 times in 2009-2010 to 7.18 times. It increases
19.64 times in 2013-2014 and decreases 12.48times in 2013-2014
6.3. Credit turnover ratio decreases 13.42 times in 2009-2010 to 7.91 times in 2010-2011.
and it again decreases 9.96 times in 2011-2012 to 7.54 times in 2013-2014.
Page 39

6.4. Average payment period varies from 28 days in 2009-2010 to 49 days and varies
from 36 days in 2011-2012 to 48 days in 2013-2014.
7.CONCLUSION
Based on the financial details provided by the company the conclusions are made.
7.1. The working capital requirement of the company is fluctuating year by year.
7.2.Cash in hand is more as compared to previous year.
7.3.Average Payment Period is more as compared to previous year. More Payment Period is
better to the company.
Page 40

Now coming to the department part of the company. The company's this successful position
is mainly because of the smooth working of all the departments, they co-ordinate with each
other and hence provides in the major part in the success.
Its very difficult for a small scale industry to survive in the present world, because they
have strong competitors and they are the already established large scale industries therefore
its very difficult to manage and also to sell the product to some extinct.
Even though waves is a small brand, its doing well presently and also getting profit.
8.REFERENCES
8.1. Book:Management Accounting
8.2. Website :shetty33@yahoo.co.in
Page 41
9. TABLE OF CHART
5.1.1.a
STR
5.1.1.b
WCTR
5.1.1.c
CTR
5.1.1.d
APP
Page 42
STR
:- Stock Turnover Ratio
WCTR :- Working Capital Turnover Ratio
CTR :- Credit Turnover Ratio

APP
:- Average Payment Period
Page 43

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B.TITLE OF THE PROJECT

1.2. INDUSTRY PROFILE

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2. BACKGROUND OF THE COMPANY

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2.1 The Challenges

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: Gamu Dairy Foods

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Manufacturers of ice creams

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2.8.1 ACCOUNTS AND FINANCE DEPARTMENTS

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2.8.2 PRODUCTION DEPARTMENT

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PROCEDURE FOR UNIT PRODUCTION

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The products are mainly supplied in the following cities :Goa

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5.1.1.a.Stock/ Inventory Turnover Ratio: