COMPANY INFORMATION

Name: Kaira District Co-operative Milk Producers Union Limited Widely known as AMUL. Form: Co-operative sector registered under the Co-operative Society act. Location: Amul Dairy, Nr. Railway Station, Amul Dairy road, Anand, Gujarat, India. Registration: 14th December 1946. Registered Office: Kaira District Co-operative Milk Producers Union Limited, Anand-388001. Size: Production of different products on large scale, collecting 9 to 15 lakes liters milk everyday and producing milk products. Board of Directors: Ramsingh P. Parmar Gordhanbhai A. Patel Shivabhai M. Parmar Maganbhai G. Zala Navinbhai R. Patel Pravinbhai F. Solanki Pravinbhai M. Patel Bhaijibhia A. Zala Somabhai R. Solanki Raijibhai D. Patel Madhuben D. Parmar Suryaben B. Patel Ranjitbhai K. Patel Shri B. M. Vyas Shri Rahulkumar Shrivastav Shri M. N. Buch District Registrar Chairman Vice Chairman Member Member Member Member Member Member Member Member Member Member Individual Member MD (GCMMF) MD (KDCMPU) NDDB Govt. of Gujarat

The brand name Amul means AMULYA. This word is derived form the Sanskrit word AMULYA which means priceless. A quality control expert in Anand suggested it. The very concept of Kaira Union system of cooperative dairying was to become priceless for millions of farmers all over India. Another and the original name of the AMUL is: Anand Milk Union Limited In the early 40's, the main sources of earning for the farmers of kaira district were farming and selling of milk. That time there was high demand for milk in Bombay. The main supplier of the milk was Poison dairy limited, which was a privately owned company and held monopoly over the supply of milk at Bombay from the kaira district. This system leads to exploitation of poor and illiterates' farmers by the private traders. The traders used to beside the prices of milk and the fanners were forced to accept it without uttering a single word. However, when the exploitation became intolerable, the farmers were frustrated. They collectively appealed to Sardar Vallabhbhai Patel, who was a leading activist in the freedom movement. Sardar Patel advised the farmers to sell the milk on their own by establishing a co-operative union, Instead of supplying milk to private traders. Sardar Patel sent the farmers to Shri Morarji Desai in order to gain his cooperation and help. Shri Desai held a meeting at Samarkha village near Anand, on 4th January 1946. He advised the farmers to form a society for collection of the milk. These village societies would collect the milk themselves and would decide the prices at which they can sell the milk. The district union was also form to collect the milk from such village co-operative societies and to sell them. It was also resolved that the Government should be asked to buy milk from the union. However, the govt. did not seem to help farmers by any means. It gave the negative response by turning down the demand for the milk. To respond to this action of govt., the farmers of kaira district went on a milk strike. For 15 whole days not a single drop of milk was sold to the traders. As a result the Bombay milk scheme was severely affected. The milk commissioner of Bombay then visited Anand to assess the situation. Having seemed the condition, he decided to fulfill the farmers demand. Thus their cooperative unions were forced at the village and district level to collect and sell milk on a cooperative basis, without the intervention of
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Government. Mr. Vergish kurian showed main interest in establishing union who was supported by Shri Tribhovandas Patel who lead the farmers in forming the Co-operative unions at the village level. The kaira district milk producers union was thus established in ANAND and was registered formally on 14th December 1946. Since farmers sold all the milk in Anand through a co-operative union, it was commonly resolved to sell the milk under the brand name AMUL. At the initial stage only 250 liters of milk was collected everyday. But with the growing awareness of the benefits of the cooperativeness, the collection of milk increased. Today Amul collect 11 lakhs liters of milk everyday. Since milk was a perishable commodity it becomes difficult to preserve milk flora longer period. Besides when the milk was to be collected from the far places, there was a fear of spoiling of milk. To overcome this problem the union thought out to develop the chilling unit at various junctions, which would collect the milk and could chill it, so as to preserve it for a longer period. Thus, today Amul has more than 150 chilling centers in various villages. Milk is collected from almost 1073 societies. With the financial help from UNICEF, assistance from the govt. of Newzeland under the Colombo plan, of Rs. 50 millions for factory to manufacture milk powder and butter s planned. Dr.Rajendra Prasad, the president of India laid the foundation on November 15, 1954. Shri Pundit Jawaharlal Nehru, the prime minister of India declared it open at Amul dairy on November 20, 1955. The Journey The Amul is the co-operative union which successes with the slow and steady growth. The Amul has start with one society and now it is converted into a union with 1073 societies. At the beginning Amul collect only 250 liters of milk per day. Now, Amul collect 11 lakhs of liters of milk every day. The excess of milk leads the Amul to develop the milk products. The Amul developed step by step. The main stages of development are as follows:

THE 50s IN 1954 In the year 1954 UNICEF provide the financial help worth of Rs. 50 million to the Amul. This financial help lead Amul to established fully automatic plant for producing milk and milk powder. IN 1958 In this year Amul expand the plant and started to produce sweetened condensed milk. THE 60s IN 1960 The excess supply of milk in the winter season and huge amount of profit make possible the expansion of Amul. The Amul established new units for producing cheese and baby food. This creates history in the dairy products, because it was the first time where cheese and baby food is produced from the buffalo milk. THE 80s IN 1981 The new cattle feed plant was established at Kanjari.

New Beginnings THE 90s IN 1992 For getting the benefits of excess supply of milk, Amul established another plant named Amul-3. This plant has capacity of producing 14 lakhs litters of milk everyday. IN 1994 The new cheese plant was established at Khatraj and Chocolates plant established at Mogar. These two plants started with help of NDDB. .
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THE NEW MILLENIUM The Journey continues . . . IN 2001 For providing the quality milk at any time, Amul launch the new flavored milk. This flavored milk available in four different tastes. : IN 2003 For expanding the market share Amul launch the "SNOWBALL" pizza and flavored lassie. This gives the new market share to Amul in the area of fast food. IN 2004 The Amul keeps on achieving new highs in this competitive world. It has launch CHOCOZOO [Chocolate], MUNCHTIME [Ganthiya]. Amul also started the new Satellite dairy at PUNE and COLCUTTA. This will help Amul in expanding milk marketing in other state.

ORGANIZATION HIERARCHY

BOARD OF DIRECTORS MANAGING DIRECTOR GENERAL MANAGER ASSISTANT GENERAL MANAGER MANAGER DEPUTY MANAGER ASSISTANT MANAGER SUPERINTENDENT DEPUTY SUPERINTENDENT SENIOR OFFICER ASSISTANT JUNIOR ASSISTANT WORKERS

VISION, OBJECTIVE, LOGO

As we know every company have their own characteristics and to prove that the company decides its own vision, objective and try its level best to achieve the decided characteristics, at my training period I gone through the various departments and collect some information of the company which are as follows. VISION The main Motto of Amul is to help farmer. Amul system works under objective of highest possible price to the milk producers and lowest possible price to consumer. Farmers are paid money in cash payment for the milk. Milk gives them money for daily necessities. Amul is the one who started using their profit for the milk producer common good. OBJECTIVE Amul union is one of the pioneers, which started using their profit for the milk suppliers welfare. The main goal of AMUL is to improve the economic condition of milk procedure especially that of weaker sections in rural areas by providing them on ensured and producer oriented market for their surplus milk. The main objectives of AMUL are as below. One of the major objectives is to exceed an activity in cooperative way that enables the maximum participation of the numbers of society. The second other objective is to help producers of milk to increase their yields and profits and to obtain for producers a greater share of the prices paid by consumers of the milk. To provide good market for all the milk producers. To provide fresh milk to the people at the reasonable price..

LOGO

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
.First hand is for the Farmer (Producers), without whom the

organization would does not existed Second hand is for the Representative of processor by whom the raw milk processed into different finished products Third hand is for Marketer without whom the product would have not be able to reached 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 By co-ordination of this four people the Union runs successfully.

SERVICES OFFERED BY AMUL:

Amul, being Co-operative union offers variety of services to the members of village and district level Co-operative societies. The main services offered by Amul -are:

Medical facilities for the cattle of farmer: Amul provide medical facility to cattle of farmers at a confessional rate of Rs. 35/- including medicines, treat met it charges-and A mill bears same services at around Rs. 100 to 150 Cattle feeding: Amul provide the "Dan" to the cattle of member farmers. Amul produces the "by pass protein Dan" and "Purk Dan" for the cattle of farmers. Artificial Insemination (cattle breeding): Amul has established "Artificial insemination Center" at Ode village near Anand. Free animal vaccination: often animal are caught up in unknown diseases. To protect the animal form such diseases periodical vaccination program are arranged by Amul. Farmer education programmes: generally farmers believe in superstitions. Further, they are often not aware about how the animal should be taken care of ad which things should be given prime concern while milking the animal. Amul provide guidance and education through arranging seminar on periodic basis. Amul also provides scholarship to children of member of society.

PLANTS
Mogar Plant It is situated on Anand -Vadodara Highway No. 8. Its Production is Chocolates, Nutramul, Amul Lite and Amul Ganthia. This Plant establish in 1973. Anand Plant The products are Milk, Buttermilk, Milk Powder, Butter, Ghee, Flavored Milk etc,. It is establish in 1973. Kanjari Plant The product is cattle feed. Old plant establish in 1964 & new plant in 1980. Khatraj Plant It is situated between Nadiad-Mahemdabad. The product is Cheese. Chilling Center Kapadvanj, Undel and Balasinor Satellite Dairy Balasinor, Undel

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PRODUCT PROFILE
Gujarat Co-operative Milk Marketing Federation (GCMMF) is Indias largest food products marketing organization. It is a state apex body of milk co-operatives in Gujarat, which aims to provide remunerative returns to the farmers and serve the interest of consumers by providing quality products. The following is a list of products that are made and marketed by GCMMF in cooperation with Amul. (A). Bread spreads ~ Amul Butter ~ Amul light low fat bread spread ~ Amul Cooking Butter (B). Cheese Range ~ Amul Pasteurized processed Cheddar cheese ~ Amul processed cheese spread ~ Amul pizza (Mozzarella) cheese ~ Amul Shredded pizza cheese ~ Amul malai paneer ~ Utterly delicious pizza (C). Sweets Range ~ Amul Shrikhand ~ Amul Amrakhand ~ Amul mithaee Gulabjamun ~ Amul mithaee Gulabjamun mix ~ Amul mithaee Kulfi mix ~ Avsar ladoos. (D). UHT Milk Range ~ Amul Shakti (3% fat milk) ~ Amul Taaza (1.5% fat milk) ~ Amul Gold (4.5% fat milk) ~ Amul lite slim n trim milk (9% fat milk) ~ Amul Shakti Tones milk ~ Amul fresh cream
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~ Amul snow cup softy mix (E). Pure Ghee ~ Amul pure Ghee ~ Sagar pure Ghee ~ Amul cow Ghee (F). Infant milk Range ~ Amul infant milk formula 1 (for 0-6 months infants) ~ Amul infant milk formula 2 (for infants of 6 months and above) ~ Amul spray infant milk food (G). Milk Powders ~ Amul full cream milk powder ~ Amulya dairy whitener ~ Sagar skimmed milk powder ~ Sagar tea and coffee whitener ~ Sweetened condensed milk ~ Amul Mithaimate sweetened condensed milk (H). Fresh Milk ~ Amul Taaza toned milk (3% fat) ~ Amul Shakti standardized milk (4.5% fat) ~ Amul slim and trim double toned milk (1.5% fat) ~ Amul toned full cream milk (6% fat) ~ Amul cow milk (I). Curd Products ~ Amul masti Dahi ~ Amul masti spiced Buttermilk ~ Amul lassi (J). Amul Ice-creams ~ Royal treats range ~ Nut O Mania range ~ Nature treat ~ Sundae range ~ Assorted treat ~ Utterly delicious

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(K). Chocolate and Confectionaries ~ Amul milk chocolate ~ Amul fruit and nut chocolate (L). Brown Beverages ~ Nutramul Malted Milk food ~ Amul kool flavored milk ~ Amul kool caf (M). Health Beverages ~ Amul Shakti white milk food Amul has three main plants in Anand itself, which are known as Amul 1, 2 and 3. Amul 1 - Presently it is used as a Godown for storing raw materials. Amul 2 - Currently the production process is carried out in this plant. Amul 3 - This unit is used for producing Amul Spray powder. In Amul there are different products produced and has 20 warehouses for storing these products. The production capacity of each of these products per day is: 1. Butter 50 to 60 tones 70 tones 60 tones 30 tones 40000 bottles

2. Powder Plant (L & T) 3. Powder Plant (F 60) 4. Powder Plant (F 30) 5. Flavored Milk

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6. Milk

2260 to 2500

crates Product transfer storage and disposal: The finished product is counted and transferred to designed store in consultation with the charge FPS. Dispatch instruction is issued by GCMMF for products sold to GCMMF. Based on DI the finished products section issues products and the product is located in the tracks. Repairs and Maintenance of Machines: In Amul, the maintenance of all the machines is done on a regular basis at specific time gap. It is done in the following manner:
Every 6 months to 1 year, all the necessary changes are

made. Filter changing is done every 15 days to 1-month period. Belt replacement is done every one and half year.

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PRODUCTION DEPARTMENT
MILK RECEPTION This is very first department of nay dairy where tankers loaded with milk are unloaded and simultaneously the milk is tested and processed further in other departments. Raw milk at Amul 3, is received through road tankers and in cans from AMUL 2. There are three reception lines are unloading milk tankers. Each reception lines are equipped with the following: Centrifugal pumps each of capacity of 30000 liters/ hours. Deaerator tank to remove air from the milk. Filters - filter the milk. Pre heat exchanger (chiller) one PHE after each filter. Raw milk silo used for storage of raw milk.

Milk pasteurizing is having six sections:

1. Regeneration 1st milk first enters in this section, here

the heat of outgoing milk is utilized to heat the incoming chilled milk and incoming chilled milk cools down the outgoing milk. 2. Preheating section here the milk is heated to 60 degree Celsius.
3. Regeneration 2nd here the standardized milk is further

heated before going to heating section by milk coming from holding tubes.
4. Heating section here milk from regeneration section 2nd

is heated to pasteurization temperature by hot water.

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5. Holding tubes pasteurized milk is hold in the holding tubes, which is 42 m long and 72 mm in diameter. 6. Chilling section milk is chilled here by chiller water. PROCESS FLOW CHART

Raw chilled milk in tankers Tested for acidity and temperature (also for fat & SNF) Filter (Deaerator tank) Chiller (temperature up to 2 degree Celsius) Raw milk buffer tank Milk clarifier Raw milk silos (tanks) Balance tank of pasteurize st 1 regeneration section of milk pasteurize Cream separator (60 65 degree Celsius) Skimmed Milk Cream separated Pasteurize (75 deg. C. Sent to cream buffer tanks for 16 seconds) Cream pasteurized (at 90 deg. C.) Milk storage tank Cream balance tank Issued to other sections Sent to butter or ghee section

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POUCH PACKING SECTION Pouch packing section deals with packing of milk into pouches. There are three packing machines. Each machine consists of two identical heads for packing and each head draws heat sealable polyethylene sheet from a separate roll, which is fed with milk to be packed from the overhead tank by gravity. The material moved continuously downwards in a strip, the film is folded longitudinally. First vertical sealing occurs, as continuous cylinder moves downwards transverse heat seals are made by jaws, which have the effect of closing the bottom of pouch, so that measure volume of milk is filled into the space above a seal. Milk Pouch Specification Two types of milk are packed in this section: A). Cows milk having fat - 4% and SNF 9% B). Standardized milk having fat 4.55% and SNF 8.5% Liquid milk pouch packing standards Net Volume Max. Permissible limit 500 ml +/-10 ml 1000 ml +/-10 ml 5000 ml +/-10 ml For buttermilk 500 ml +/-10 ml

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BUTTER PROCESS Prior to start of production, the CBMM (continuous butter making machine) is to be pasteurized with cold water for 10 15 minutes. After the cold-water rinse, the CBMM startup is initiated. The first stage in the CBMM is churning of the cream. The churning speed is 800 1200 rpm at 12 degree Celsius. However, it is appropriate to decide on the correct speed depending on the properties of cream and the type of final product desired. The properties of cream, which influence churning speed, are ripening, viscosity and whether cream is sweet or acidified. The butter grains formed in the churning cylinder enter the working cannon along with buttermilk. The working cannon are divided into following section: A). The buttermilk separation section the buttermilk is separated while churning. The buttermilk outlet piping has a siphon, which helps in control of moisture in butter. When siphon is lowered and buttermilk is drained effectively it results in less moisture being retained in final product. On raising the siphon, buttermilk is retained longer in the separation section due to which carry over of moisture in butter increases. The separation section is equipped with screens for clarification of buttermilk. Chilled buttermilk is reinjected into separation section to reduce average temperature of buttermilk and to cool butter grains. The buttermilk generated by CBMM is taken to a buffer tank and recirculated to plate heat exchanger for maintaining correct temperature. The buttermilk is dispatched to buttermilk silos for storage through a plate heat exchanger after cooling it to 4 degree Celsius. The further control the temperature of butter the separation section is jacketed for circulation of chilled water to keep working temperature of butter low. The chilled water is returned to same balance tank as in the churning cylinder.
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B). Squeeze drying section this section is equipped with perforated plates to squeeze dry butter. Plates with small holes should be used if more dry butter is desired and vice versa. C). Vacuum section air entrapped in butter is removed by application of vacuum. D). Final working the butter is worked in this section after salt and color. The final moisture content of butter is adjusted here. However, in AMUL 3s butter section, the salt and color addition and moisture content correction are carried out in separate equipments.

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PROCESS FLOW CHART Raw Cream Pasteurized (at 90 deg. Celsius) Cooled Ripening (at 9 deg. Celsius for 20 hrs.) Cream balance tank Heat Exchangers Churning Butter Grains st 1 washing with buttermilk Working Chiller nd 2 wash with buttermilk Working under vacuum Unsalted butter Salting White Butter Grinding Used for ghee manufacturing Brine and color addition Salt doser Blender
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 Packing

GHEE PRODUCTION PROCESS Sour milk is used for the production of ghee. This milk is sent to the cream machine for collecting cream. Cream is converted into butter and butter is heated to make ghee. Ghee is then packed in tins or plastic bags.

Melting Cream / White Butter Sour Butter

Butter Boiling For Making Ghee

Clarification

Setting Tank

Testing

Packing

Storage

Dispatch

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CHOCOLATE MANUFACTURING AND PACKING The department purchases the fermented and dried cocoa beans. A). Fermentation and drying a good flavor in the final cocoa or chocolate is related closely to good fermentation and drying. During the fermentation and drying process, the unfermented wet beans taken form the pod lose about 65% of their weight assuming the final optimum moisture content of 6% is attained. B). Cleaning first cocoa beans are cleaned to remove foreign matters to remove adhesive, stones etc. Cleaner cleans it. In this cleaner air blows forcefully to remove light materials which are collected separately, also there is vibrating action so adhesive matter can be separated. C). Roasting After cleaning, the cocoa beans transfer to roasting through conveyor. Roasting is done to eliminate the moisture to produce the special chocolate flavor and aroma. Steam is used for heating. There is a fan inside to circulate the hot air. Cocoa beans are filled up to control level in rotating machine. After roasting cocoa beans are allowed to cool for ten minutes. D). Winnowing After this cocoa beans are transferred to winnower through conveyor. Winnowing machine-crushes beans into small pieces and separates the shells from the bibs. Shells or husks are separated form the nibs due to shaking and vibrating action and husk are collected into the bags and transferred to cattle feed factory. The separated nibs are transferred to cocoa mass making machine through conveyor. E). Pressing (cocoa mass making machine) In this machine, there are three rollers. There is hopper, which is fitted with special level device. Cocoa nibs are fed in hopper axially. The bins are pressed when passed in between the rollers. The mass is collected in collecting tanks. It is heated and agitated liquor obtained and is collected in storage tank. Liquor is stored at 100 degree Celsius. Magnet is present in this machine so any remaining metal pieces can be removed. F). Hydraulic Pressing Pressing is done to separate cocoa butter from the cocoa liquor and to get the cocoa cake which produces cocoa powder used in chocolate and malted milk food manufacturing. The hydraulic pressure is
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given to the cocoa liquor. This whole process takes around one hour and at the end of which we get cocoa butter and 5 cocoa cakes. G). Grinding The cocoa cake is then ground to make cocoa butter. Firstly, cocoa cake is broken into small pieces, which is done manually, and then put into cake breaker to get small pieces. Cocoa powder is collected in drums and is packed. H). Mixing For milk chocolate mass, cocoa liquor is to be taken first and then icing sugar or milk powder and finally cocoa butter is mixed into the mixer. For dark chocolate mass, first cocoa liquor then icing sugar is used. For compound coating mass, first vegetable fat and then icing sugar, milk powder, cocoa powder and lecithin is used. For chocolate paste, first vegetable fat then icing sugar and cocoa powder is mixed into the mixer. I). Refining After proper mixing, the mixed mass is allowed to refine. Refining is done to reduce the particle size up to 20 microns and so we get smooth and homogenous mass. Temperature and pressure of rolls are adjusted for the fineness of the refined mass. The rollers rotate in the opposite direction. There is hydro pneumatic system to control roller pressure. At the 5th roller, scrapping knife is situated so that refined chocolate mass is continuously scrapped and conveyed into the conch through conveyor. J). Conching There are three conches having different capacities. The refined mass is than subjected to the conching operation for flavor development, mixing of ingredients occurs, to attain the required moisture content and to get smooth rector and body of chocolate. First dry conching is done without adding flavor and emulsifiers. After dry conching the required amount of flavors and emulsifiers are added and the remaining amount of cocoa butter is added. This is called wet conching and is carried out for about 24 hours. K).Tempering Tempering is important operation in chocolate manufacturing and is done for attaining the proper or stable crystallization. It imparts the characteristic shinning property of the chocolate. L). Molding After tempering chocolate is poured through depositor into suitable moulds to get the desired shape and structure.

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M). Vibrating Moulds are vibrated while passing through the conveyors so that uniform distribution of chocolate mass take place in the vibration. N). Cooling Chocolate is cooled at temperature 8 to 10 degree Celsius for 20 to 22 minutes. O). Remolding After cooling moulds will come out from the cooling box and demoded so chocolate can come out from the mould. P). Packing and storage Chocolate is wrapped in aluminum foil and then by paper. The packets are sealed and chocolates are packed in paper boxes. Then chocolates boxes are then packed in big cartons and stored in cold storage. Chocolate has one-year shelf life when it is stored at 200 degree Celsius.

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PROCESS FLOW CHART Raw Materials Cocoa Liquor Weighing Silo Ground Sugar And Cocoa Butter Mixing Refining Conching (addition of lecithin, vegetable fat or cocoa butter) Stored in Tanks Tempering Moulding Vibrator Cooling (at 8 10 deg. C. for 20 min) Demoulding Packing

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MATERIALS MANAGEMENT
This heading partially covers the procedures for Procurement of Materials, Stores Inventory Management and Payment Procedures. It gives the guidelines to be followed for Procurement of Materials from Indent to Payment Cycle. The entire Materials Management Activity of Kaira Union is divided in to the following four categories: Indenting Purchasing Materials Receipt, Issues and Stores Inventory Management Bill Processing and Payment INDENTING Any department/section requiring any material is supposed to requisition the material by filling up an indent for the same. The Purchase Department cannot initiate any purchase without the receipt of an indent duly approved by an appropriate authority. In case the indent is received from two or more departments for similar items, the Purchase Department will have to combine the quantities of all such indents and then initiate the Purchase Procedure. All the indents for Capital Item Purchases are to be submitted in the form of a Proposal for Capital Item Purchase. Once the proposal for Capital Item is approved by the Managing Director/Board, it is to be routed to Purchase Department through AGM (Accounts). The AGM (Accounts) will verify budgetary provisions for such capital purchase and forward it to the Purchase Department for initiation the Purchase Procedure. The indents for Packaging Materials and ingredients used in production of various products is to be normally prepared on monthly basis, based on Production Plan received from GCMMF in 1st week of each month. However, in view of long delivery schedule, next month production plan is

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used for preparing this indent in the form of enclosed format which is to be directly submitted to the Purchase department. The indents for other revenue items, engineering items, spare-parts etc. are supposed to be prepared in the proper format and are to be submitted to the Purchase Department through stores. Cattle Feed Raw Materials: No indents are required to be raised for Cattle feed plant raw materials. The cattle feed plant is required to forward their daily position of stocks to Purchase Department. The Purchase Department will evaluate daily stock position, makes purchases of various raw materials, depending upon market prices and availability, and will have to ensure that stock out position does not arise. However, the indent for Packaging Materials such as Jute Bags, HDPE Bags, etc. will be raised as usual. Emergency purchases: In highly emergencies, user departments are allowed to issue purchase orders directly on the suppliers in the form of Indent Cum Purchase Order (ICPO). In such cases, no indents are required to be raised, but ICPO itself will serve as Indent as well as Purchase Order. However, no material should be purchased on oral orders. PURCHASING On receipt of a duly approved indent, the purchase department will initiate enquiries for various items covered in an indent. The purchase department will endeavor to float such enquiries to maximum number of suppliers/vendors in order to get most competitive rates for each item. Moreover, a reasonable amount period is given to the vendors for proper responses. The purchase department develops a list of vendors/ suppliers for various groups of items, over a period and it can float inquiries only to the approved list of vendors /suppliers. All the vendors /suppliers are needed to be evaluated at least once in a year about their performance/ services etc. and the list has to be updated from time to time. On receipt of quotations, purchase department has to prepare comparative statements, to put all the quotations on likewise like comparison and submit
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such comparative statements to the approving authority. Wherever possible, purchase department will always ask for deliveries at the stores on freight paid basis. The due date for receipt of quotation shall also be mentioned on the comparative statement. Wherever possible, purchase department tries to negotiate with the suppliers and tries to arrive at lowest possible rates. The comparative statement has to indicate the originally quoted rates, revised offers received etc. All things being equal purchase department recommends placement of order to the lowest party. In case of proprietary items, quotations are invited form single supplier, OEM etc. However, proper negotiations about the rates etc. are made by the purchase department and such mention will always be made in the comparative statement. The purchase department also develops a list of such proprietary items and gets it approved in advance. The comparative statements are to be routed through the approval cycle and once the comparative statements are approved by the appropriate authority, purchase department will issue Purchase orders on approved parties. For RAL (Rate Approval Letters) items, where rates, delivery terms etc. have been finalized by GCMMF, Purchase Orders are to be straightaway issued by the purchase department. However, purchase department has to ensure that the business ratio between various suppliers is strictly maintained as per RAL issued by GCMMF. For items, which are regularly consumed like Bearings, V-Belts, O Rings, GI and MS Fittings etc. purchase department finalizes Annul Rate Contracts (ARCs) for such items to save the time consumed in floating enquiries, receiving quotations, preparation of comparative statements, taking approvals etc. However, ARC rates are first approved by an appropriate authority. It is necessary that a proper purchase order is issued for rate-contracted items also in unions pre-printed stationary giving description of items as per rate contract, quantity, rates, discounts, taxes, delivery terms etc. However, no purchase order can be issued on a date expired ARC.

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It is the sole responsibility of the purchase department to follow-up with the suppliers for timely delivery of goods and as per the stores specifications. The indenting department will have to follow up with the purchase department, if the goods are not received within the stipulated time. No other department needs to follow up with the suppliers. MATERIAL RECEIPT, ISSUES AND STORES INVENTORY MANAGEMENT The store receives copies of all the purchase orders placed on the suppliers for which the goods are to be delivered in stores. For all the goods, which are received in the factory premises an entry is always made at the main gate of the factory. This captures the basic information about the goods entering the factory premises for future tracking. Once the goods are received at the stores, the store thoroughly verifies the documents and ensures that the goods have been received against a valid purchase order and as per the specification and quantity as mentioned in the purchase order. Under the normal circumstances, excess quantity up to 10% of total order quantity is acceptable. If the goods are found to be as per stores purchase order, stores department arranges for taking delivery of goods and stores it at appropriate place. The stores department needs to prepare a Goods Receipt Cum Test Report (GR/TR). This can be either prepared manually or generated through the system, if a computerized inventory management program is in existence. The copies of this (GR/TR) should be distributed as under: (a). User/Indenting department: for their information about the arrival of goods. (b). QA/Engineering department: Where goods are to be tested/inspected before being used. (c). Purchase department: For their information to track the delivery of goods in case of partial delivery. (d). Stores department: For their records. Whenever any material which has been once rejected but later on accepted on rechecking/retesting or because of exigencies of production, QA/
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Engineering department/indenter submits a fresh report of acceptance, giving references of earlier GR/TR duly approved by the departmental head. The stores carry out the necessary corrections in their records. A). Gate Pass: No material can be taken out of the factory premises without a properly authorized gate pass. Stores/ concerned department issues a gate pass. B). Returnable Gate Pass: This gate is issued when the material is expected to be received back after repairing, modifications etc. BILL PROCESSING AND PAYMENT All the invoices from the suppliers are received in the Purchase bill section. The Purchase bill section enters all the invoices as and when received in a computerized bill tracking system. The invoices, which are received in the Stores, KSD Khatraj, FCM Mogar and CFF Kanjari along with consignments, are also redirected to the Bill passing section. The Purchase department can advise all the suppliers to mention purchase order nos. and date in their delivery documents, invoices against which the goods are being supplied. This helps in easy tracking of invoices vis--vis purchase orders and GR/TRs etc. The Stores sends Goods Receipt Cum Test Reports (GR/TRs) to the Purchase billing section once the Testing/ Inspection formalities are complete. The Purchase billing section verifies the invoices with the corresponding Purchase orders, Goods Receipt Cum Test Reports and processes the suppliers invoices for payment. It is the responsibility of the Purchase billing section to ensure that only correct payments are made to the suppliers. The advance payment if any is also recovered/ adjusted fully so that no excess payment is ever madder to any party. The Purchase billing section also ensures that timely payment is made to all the suppliers as per PO Terms and no payments are delayed for reasons of delay in processing of payment documents etc.
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FINANCE
INTRODUCTION Financial Management is activity, which is concerned with the acquisition and conservation of capital funds in meeting financial needs and overall objectives of a business enterprise. In Financial Management process following points are consider: Financial Analysis Financial Decision-Making Financial Planning Financial Control

Finance department is that managerial activity concerned with the planning and controlling of the firm's financial resources. Among all the 5 Ms, i.e. man, money, machine, material and market. Money plays a vital role ion the organization. Finance is the lifeblood for the success of an organization. For the organization to grow and develop an even basis, availability or finance on adequate basis is the prime requirement. The financial management involves critical decisions on which the very survival of the organization depends. The main financial decisions are as follows: Investment Decision. Financing Decision. Dividend Decision. Financial decisions are thus very crucial and important, decisions for the firm. The main function of finance department is to tackle The day to day financial requirement and other short term and long term expenses, which an organization incur quite often. All the other department of the organization strongly depends upon the finance department to carry on their departmental activity efficiently. Hence it is the responsibility of the finance manager to manage the finance
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function with proper care. Adequate financial availability in time in the organization would lead to organizational success and the failure to manage finance will thus lead to inefficiency. IMPORTANCE OF FINANCIAL MANAGEMENT Proper finance is the real key to the success of any business enterprise. Without proper finance a business neither survives nor expands and modernizes. It is the finance, which works like a lubricant, which keeps the organization dynamic. Keeps men and machine at work. The following are the points highlight the importance of finance. Finance for business promotion. Finance management for optimum use of firm. Use for co-operation in business activities. Useful in decision-making. Determinant of business success. Measurement of performance. Basis of planning, co-operation and control. Useful to shareholders and investors. .

OBJECTIVES OF FINANACIAL MANAGEMENT Objectives provide a framework for optimum financial decision-making and they are concerned with designing a method of operating the internal investment and financing of a firm. The term objective is used in the sense of a goal or decision criterion. It implies that what is relevant is not the overall objective or goal of a business but an operationally useful criterion by which to judge a specific set of mutually interrelated business decisions, namely, investment, financing and dividend policy. Moreover, the focus in financial literature is on what a firm should try to achieve and on policies that should be followed if certain goals are to be achieved. Objectives are employed to serve as a basis for theoretical analysis and do not reflect contemporary empirical industry practices.

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ORGANIZATION STRUCTURE Finance management is vital as well as crucial part of management as whole and involves planning, allocation of resources and their control. The ultimate responsibility of finance decisions lies with the top management. The nature of finance organization differs however from firm to firm. Top management takes the complex and important financial decisions and middle level personnel take other decisions. The account department is divided in to various other sections like. 1. Account Division The Function Of this Division is preparing voucher, bills. It also issue Check for the payment. 2. ESTA Division The Function of this Division is to prepare payroll of employee. 3. Purchase Bill Division The Function of this division is issue Check or Draft to party from whom they purchase raw material. 4. MIS Division The Function of this division is handle Data related Account. They have a data base system for that. They have Accounting software system Tally 6.3. In which they input all information related Accounting.

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FINANCE STRUCTURE Managing Director General Manager Assistant General Manager A/C Sales Finance Manager Superintendent Manager Officer Clerks Peons Gujarat co-operative milk marketing federation (GCMMF) is Indias largest food products marketing organization. It is a state level apex body of milk co-operatives in Gujarat which aims to provide Remunerative we lurns to the farmers and also serve the interest of consumers by providing quality products which are good value for money. They produced many thinks like milk, cheese, powder, butter etc. They take help from state bank of India, Bank of Baroda, Corporation bank, and Bank of Maharastra Corporation.

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INVENTORY MANAGEMENT
Inventory generally refers to the stock of raw material, which have some economical value. In this sense inventory management would refer to the management of current assets and other materials inside the organization. Inventory management is very necessary for the firm because if the firm has lesser investment in inventory, this would lead to unavailability of materials when required. This would ultimately lead to interruption in production process. However, if the firm has higher investment in inventory this would lead to unnecessary locking up of funds in inventory, thus reducing the working capital. Hence the inventory should be managed properly in every organization. Inventory together with receivable and cash and bank balance constitute around 30% of the total current assets in effective control of all these factors can increase the profitability of the organization. At all the plants of Amul and KAIRA DISTRICT CO-OPERATIVE SOCIETY inventory is classified mainly in five heads. 1. Raw Milk Stock 2. Raw Materials: it is major input in the organization which is used in the production activity. Its quantity will be determined by rate of consumption and the time required getting the supplies. 3. Work in Progress: in this stage the stock are in between materials and finish goods form. The quantum of work-in-progress depends upon the time taken in manufacturing process. 4. Finished Goods: it means that goods are ready to consume its stock provide buffer between production and market. 5. Scraps 6. Stock in Progress Since all is working on continuous basis, it is bound to have enough amount of inventory in stock to ensure smoothness in production without any interruption. To ensure timely availability of milk, Amul brings milk every day from the 1073 villages surrounding the Kaira district. To store the raw milk, Amul has already provided chilling centers at the village co-operative unions. And to store the processed milk, Amul has developed eight milk storing towers, each having the capacity of storing 1.5 lacs liters of milk. The processed milk is sold out in the Kaira and Anand district and the

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remaining stock of milk is used to produce other milk products. Thus inventory management is very sound at Amul. The prime objective of inventory management is 1) To minimize the possibility of disruption in the production schedule of a firm. 2) To keep down capital investment in inventory Although it is essential to have necessary idea resources of the firm. Inventory management therefore should strike a balance between too much inventories and to little inventory. The efficient management and effective control of inventories help in achieving better operation results and to eliminate duplication in ordering cost. And reduce investment in working capital. TYPES OF INVENTORY Raw Materials: These are goods, which have not yet been committed to production in a manufacturing firm. They may consist of basic raw materials or finished components. WIP: This includes those materials, which have been committed to production process but have not yet been completed. Finished Goods: These are completed products awaiting sale. They are the final output of the production process in a manufacturing firm. Supplies: These materials are of low value and they do not enter the production process directly. Component Parts: When two or more parts are to be joined to prepare final product, component parts are either bought from outside or manufactured in the factory. Scrap: The waste of materials arising during manufacturing process is also a part of inventory. Even defective pieces to be disposed of are a part of inventory.

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MOVITES FOR HOLDING INVENTORY Transaction Motives: This refers to the need of maintaining inventory to facilitate smooth production and sales operations. The transaction motive for holding inventory is to satisfy expected level of operations in the firm. Precautionary Motives: It is to provide safeguard or cushion in case the actual level of activity is different from anticipated. This inventory serves as a reserve when there are unpredictable changes in the demand and supply forces. Speculative Motives: This refers to the desire of the firm to take advantage of opportunities of rising prices which present themselves at unexpected moments and which are typically outside the normal course of business. The speculative motive represents an aggressive approach to exploit profitable opportunities.

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BENEFITES OF INVENTORY MANAGEMENT Efficient And Economical Production. Inventory control minimizes or removes the possibility of delay in production. If control over inventory becomes slack, there will be mismanagement in respect of materials and production plan would be upset. It helps reduce ordering cost when order for a large quantity is placed at a time. These leads to economical production. Maintenance of large inventories helps a firm in reducing setup costs associated with each production run. Protection Against Too Little Or Excessive Stock. Just as too much inventory is dangerous, too small is also harmful. Both have their disadvantages. Excessive inventory results in looking unnecessary capital, high inventory carrying charges, possible losses due to price decline and deterioration. Too little inventory will interrupt production, making machines and man ideal and will cause sales losses. Inventory control strikes a balance between the two and saves the company from the disadvantages of both. Protection Of Stock. Inventory control protects the stock from losses and damage due to improper handling and stealing of goods by workers. There is an ample possibility of thefts in case of those goods which can be easily sold in the market or used in workers home. There are instance in which the relatives of workers employed by electricity boards have opened electric stores when all goods are supplied by the workers employed by stealing them from boards Godown. Less Wastage If inventory control system is efficient, there will be no surplus produce and spare parts, etc waiting for the order in production department. There is a possibility of surplus getting deteriorated by dust or weather conditions. Avoiding Loss Of Sales And Customer Satisfaction Production finished in time due to efficient inventory control and timely delivery to customer is made possible. Besides, it leads to efficient purchasing which helps maintaining quality of finished goods. All these will lead to customer satisfaction.
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Optimum Use Of Finance Various levels of materials are fixed under inventory control, due to which unnecessary investment of working capital is avoided. In addition due to reduction in wastes also, less working capital is needed. Efficient Stock-taking The efficient inventory taking is a part of inventory control. It is necessary to fix various quantity levels in any systems of inventory control postop this is helpful in effective production planning economical purchasing, preparing cost accounting and timely reports for managerial control.

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OBJECTIVE OF INVENTORY MANAGEMENT A fundamental objective of a good system of inventory control is to be able to place an order at the right time from the right source to acquire the right quantity at right price and of right quality. (1) To Ensure Adequate Stock An endeavor is made by inventory control to see that any department will get the raw materials or other necessary items as and when required. Hence an effective system of purchasing, storage, and maintenance is effectively arranged so that enough stock is available on hand. (2) To Minimize Inventory On Hand The next objective of inventory control is to minimize inventories on hand. It has to be ensured that excessive stock is not kept and unnecessary capital is not locked up, but it must be consistent with adequate stock, so that production is not disrupted. (3) To Maintain Continuity In Production The suppliers of materials, spare parts, consumable stores etc. must be stocked to the optimum level, so that continuity of operation is maintained. The inventory control system should ensure that production is completed as per scheduled. (4) Minimize The Cost Of Purchasing And Storage It is essential that there is economy in cost of purchasing, cost of receiving and inspection, storage and issue of materials etc. The expenses to be reduced to minimum are interest on capital locked, insurance, maintenance, inspection, and transportation costs. (5) Minimizes The Wastage And Loss In every manufacturing organization, there is a risk of wastage and theft from stores, wastage and losses are likely to occur during movements and during the production process. Inventory control ensures that the risk of theft, wastage, and losses are minimized. (6) To Reduce The Risk Of Deterioration If a considerable time elapses in the storage of goods, there arise two types of risk (i) the deterioration of goods stored and (ii) the goods becoming
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obsolete and outdated. Hence, inventory control ensures that such risk is minimized. (7) Effective Use Of Available Capital Various levels likely maximum level, minimum level, reordering level etc. are fixed in a system of inventor control, which ensures that unnecessary capital is not locked up in inventory. Order is placed at right time and in right quantity, taking into account the reorder level. This will make efficient purchasing possible. (8) To Be Helpful In Efficient Purchasing Maintenance of optimum stock is closely connected with a system of inventory control. One of the major objectives of inventory control is to assist in efficient purchasing. (9) To Give Maximum Satisfaction To Customer The customer satisfaction is a sign of the progressive enterprise. Inventory control assists in supplying goods at proper prize and at right time. Inventory control leads to economical purchase, makes possible continuity of production and maintaining enough stock. All these leads to consumer satisfaction. (10) To Minimize Loss Due To Prize Decline When considerable investment is made in inventory, the prize decreased on a large scale may involve the firm in considerable loss. This is reduced to a great extent by proper inventory control. (11) Maximum Use Of Storage Capacity One of the objectives of inventory control is to make maximum use of storage capacity available. This will reduce storage costs. (12) Proper Storage Of Materials Inventory control function includes supervision and control of storage of materials, tools, etc. where thousands of items are stored, it is necessary that material of particular type required is immediately available. Efficient storage is made possible due to inventory control.

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MANAGEMENT OF RECEIVABLES
Management of receivables is also the most important segment of working capital. In any organization the main objective of purpose is, to attain maximum sales with minimum cost of credit and collection, of management of receivables. Trade credit is the most prominent force of the modern business. It is considered as an essential marketing tool, acting as a bridge for the movement of goods through production and distribution stages to customers. Trade Creditors are granted to push up sales but the funds locked up in credit sales have opportunities costs, as such fund can earn return by alternative employment. To prevent over investment in trade credits, control is to be exercised over the quality as well as the quantity of trade credit. Trade credit creates receivables as book debit, which the firm is expected to collect in the near future. CREDIT POLICY VARIABLES 1. Credit standard. 2. Credit terms. (Credit period & Cash discount) 3. Collection policy. Credit Standards A firm has a wide range of choice about what standard it wants to apply in accepting or rejecting an account for credit granting. Either it may decide not to extend credit to any customer, however strong his credit rating may be or it may decide to grand credit to all customers irrespective of their credit rating. Liberal credit standards tend to push sales up but they are accompanied by a higher incidence of bad debt loss, larger investment in receivables and higher cost of collection. Stiff credit standards have the opposite effects by depressing sales, reducing the incidence of bad debt loss, decreasing the investment in receivables and lowering the collection cost. Trade credit creates receivables as book debit, which the firm is expected to collect in the near future. The main receipts for Amul come from two sources that are:

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 GCMMF ARMY Amul does not have to keep a strict vigilance on its credit standards since most of its products are sold by following on the spot cash payment method. It only gives credit to the Indian Army and here since government is involved somewhat liberal standards have to be kept. There exists some debtors for Amul but they are quite small as compared to the companys overall business activity. Credit Period The credit period refers to the length of time customers are allowed to pay for their purchases. Lengthening of the credit period pushes sales up by inducing existing customers to purchase more and attracting additional customers. However, this accompanied by a larger investment in debtors and a higher incidence of bad debt loss. Shortening of the credit period would have opposite influences: it tends to lower sales, decrease investment in debtors and reduce the incidence of bad debt loss. In Amul, since most of the items are sold on cash payment basis there is generally no need to go for maintaining any fixed or liberal credit period. However, in case of the Indian Army Amul does have to maintain a credit period. In this case, since the payments made by the government usually take a lot of time and energy to be passed a very liberal credit period has to be kept so that all the concerned parties are satisfied. Cash Discount Providing credit to the customers and distributors is one of the most important techniques, which each company needs to follow in order to push the sales of the company. This includes providing cash discount and credit payment to attract maximum number of customers. Each firm needs to do this if it wants to survive in this tough, competitive world of business. Nevertheless, in case of Amul, these tools are generally not used since majority of the transactions and sales are made on basis of cash.

Collection Efforts at Amul

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The collection programme of the firm, aimed at timely collection of receivables, may consist of the following: Monitoring the state of receivables Dispatch of letters to customers whose due date is approaching Electronic and telephonic advice to the customers around the due date Threat of legal action to overdue accounts Legal action against overdue accounts

A rigorous collection programme tends to decrease sales, shorten the average collection period, reduce bad debt percentage and increase the collection expense. A lax collection programme, on the other hand, would push sales up, lengthen the average collection period, increase the bad debt percentage and perhaps reduce the collection expense. Generally, firms have a tough time collecting the outstanding amount from the customers because customers invent new arguments and excuses in order to delay the payments. Hence, it is very important for the company to remain efficient in collecting various amounts from its customers. However, in case of Amul it generally does not have to carry out too much effort for collecting the outstanding amounts except in cases where it has made supplies to the Army, the latter being a government organization, due to which decisions regarding payments are generally delayed.

OBJECTIVES OF MAINTAINING RECEIVABLES In competitive market no business can without selling goods or services on credit. There is bound to be some level of permanent receivables. 1. To achieve growth in sales. 2. To increase profits. 3. To meet competition.

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ACTIVITY RATIOS
Activity ratios are concerned with measuring the efficiency in asset management and are called efficiency ratios or asset utilization ratios. The efficiency with which the assets are used would be reflected in the speed and rapidity with which assets are converted into sales. The greater is the rate of turnover or conversion, the more efficient is the utilization, others things being equal. An activity ratio may be defined as a test of the relationship between sales and the various assets of a firm. Depending upon the various types of assets, there are various types of activity ratios as follows:
1.

2. 3.
4.

5.
6.

Inventory turnover ratio Debtor turnover ratio Collection period Debtor/ sales ratio Creditor turnover ratio Average Creditor Collection Period

Inventory Turnover Ratio It shoes how fast inventory sold in a year. Higher the ratio found, better for the company. It is also known as inventory turn over ratio. This ratio indicates the efficiency of the firm in selling its product. It is calculated by dividing the cost of good sold by the average inventory. I.e. stock. It is computed by dividing cost of goods sold by the average stock in the business. This ratio measures how many times the average stock is sold during the year.

Equation:
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Cost of good Sold Inventory turnover = ----------------------------------Average Inventory Where, Cost of good sold = Opening stock + Purchase +Purchase expenses -Closing stock Opening Stock + Closing Stock Average Inventory = ----------------------------------------2

2004-05 Opening Stock = 3392.48 Closing Stock = 6408.39 --------------Total Stock = 9800.78 Total Stock Average inventory = -----------------2 9800.78 = ----------------2 = 4900.39

47221.13 Inventory Turnover ratio = --------------- = 9.64 times 4900.39 2005-06

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Opening Stock = 6408.39 Closing Stock = 7989.62 ------------Total Stock =14398.01 Total Stock Average inventory = -----------------2 14398.01 = ----------------2 = 7199.005

56259.48 Inventory Turnover ratio = -------------- = 7.81 times 7199.005

2006-07 Opening Stock = 7989.62 Closing Stock = 6952.79 ------------Total Stock = 14942.41 Total Stock Average inventory = -----------------2 14942.41 = ----------------2 = 7471.205 65762.2
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Inventory Turnover ratio = --------------- = 8.802 times 7471.205 2007-08 Opening Stock = 6952.79 Closing Stock = 13476.86 ------------Total Stock = 20429.65

Total Stock Average inventory = -----------------2 20429.65 = ----------------2 = 10214.825

88181.97 Inventory Turnover ratio = --------------- = 8.63 times 10214.825

Inventory Turnover Ratio

12 10 Times 8 6 4 2 0 2004-05 2005-06 2006-07 Year 2007-08

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Interpretation: As clearly seen from the graph, the Inventory Turnover Ratio has been quite erratic in nature and has decreased from its peak of 2004-05. Though it has then increased in subsequent years, it would be better for Amul to try to achieve and maybe precede its earlier peak. The ratios show that excessive inventories are being maintained which is not at all good for the company. Increase in the ratio is the result of higher cost of goods sold and not due to decrease in inventory. The investments made in the inventories can be utilized in a more efficient manner.

Inventory Turnover Ratio also includes

1.

Raw material inventory to Raw material consumed in days i.e. Raw material ---------------------------- * 300 Raw material consumed

2. Semi Finished goods / work in progress to cost of goods sold i.e. Semi Finished goods --------------------------------- * 300 Cost of goods sold 3. Finished goods to cost of goods sold i.e. Finished goods ----------------------- * 300 Cost of goods sold 2004-05 Raw material ----------------------------- * 300 Raw material consumed 126.26 = ------------ * 300 10040.21 = 3.77 days

Semi Finished goods 1290.75 ------------------------------ * 300 = ------------- * 300 Cost of goods sold 47221.13

= 8.2 days

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Finished goods ------------------------- * 300 Cost of goods sold 2005-06 Raw material ---------------------------- * 300 Raw material consumed Semi Finished goods ------------------------------ * 300 Cost of goods sold Finished goods ------------------------- * 300 Cost of goods sold

4990.73 = ------------- * 300 47221.13

= 31.7 days

154.85 = ------------ * 300 = 4.27 days 10872.93 2091.82 = ------------- * 300 = 11.15 days 56259.48 5741.55 = ------------ * 300 = 30.62 days 56259.48

2006-07 Raw material ---------------------------- * 300 Raw material consumed Semi Finished goods ------------------------------ * 300 Cost of goods sold Finished goods ------------------------- * 300 Cost of goods sold 207.39 = ------------ * 300 = 5.31 days 11718 2045.15 = ------------- * 300 = 9.33 days 65762.2 4699.15 = ------------ * 300 = 21.44 days 65762.2

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2007-08 Raw material ---------------------------- * 300 Raw material consumed Semi Finished goods ------------------------------ * 300 Cost of goods sold Finished goods ------------------------- * 300 Cost of goods sold 266.58 = ------------ * 300 = 5.09 days 15725.31 3003.12 = ------------- * 300 = 10.22 days 88181.97 10204.15 = ------------ * 300 = 34.72 days 88181.97

InventoryT urnover Ratio

40 30
D ys a

20 10 0 200405 200506 200607 200708

R Material aw S i-finis em hed g oods F hed g inis oods

Yea r

Interpretation: As far as raw materials are concerned, the ratio is showing an increasing trend, which is very good for the company. It means that the raw materials are being consumed in a satisfactory manner and excessive stocking of raw materials is not occurring. Semi finished goods are showing an erratic trend suggesting that the goods in transit or half-finished are not being immediately converted into finished products and so investment made in semi finished goods is quite inefficient. The company should see to it that the semi finished goods are
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immediately converted into finished goods. Moreover, the cost of goods sold might also be playing a role in this and should be checked out. In case of finished goods, the trend is also quite erratic in nature. It has been on an increasing and decreasing path. This is not good for the company since it shows that most of the investment is being blocked in finished goods only. Moreover, lower ratio is also indicating that cost of the goods being sold is much more than which can be affordable. However, in the current year company has managed to increase this ratio to quite an acceptable limit.

Debtors Turnover Ratio and Average Collection Period The ratio shows how fast debts are collected from debtors. It shows the efficiently of the collection department if the company has of receivables. In indicates the credit grunting policies of the company. The ratio shows in how many days debtors are turned over. It shows the efficiently of the collection department if the company has of receivables. In indicates the credit grunting policies of the company. Equation: Credit Sales Debtors Turnover Ratio = ----------------------------------------------------Average Debtors + Average bills receivable Where, Credit Sales = Net Sales of Milk and Milk products Debtors = Trade Debtors + Sundry debtors + Dues from societies Months/days in a year (300) Average Collection Period = -------------------------------------52

Debtors turnover

2004-05 59459.07 Debtors Turnover Ratio = -------------- = 7.22 times 8229.12 300 Average Collection Period = ---------- = 42 days 7.22

2005-06 70206.23 Debtors Turnover Ratio = ------------- = 9.85 times 7130.27 300 Average Collection Period = ---------- = 31 days 9.85 2006-07 81631.69 Debtors Turnover Ratio = ------------- = 12.77 times 6388.29 300 Average Collection Period = ---------- = 24 days 12.77

2007-08 107187.29
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Debtors Turnover Ratio = ------------- = 12.09 times 8863.42 300 Average Collection Period = --------- = 25 days 12.09

Debtors Turnover Ratio

14 12 10 8 Times 6 4 2 0 2004-05 2005-06 2006-07 2007-08 Year

Averag Collection Period e

60 50 40 D ays 30 20 10 0 2004-05 2005-06 Y ear 2006-07 2007-08

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Interpretation: As seen from the graph the Debtors Turnover Ratio has been steadily increasing for last three years though this year it has fallen slightly from the previous year. It means that the company has succeeded in decreasing the number of debtors as well collection of dues from the societies. Nevertheless, this trend also suggests the possibility that many previous debtors might have defaulted and so they might have been removed from the debtors list and their debts included in the bad debts. This increasing trend might also be due to higher quantity of milk that the company has been able to sell in the market through GCMMF.

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Debtors / Sales Ratio Equation: Average Debtors + Average bills receivable Debtors / Sales = ----------------------------------------------------- * 100 Ratio Credit Sales 2004-05 8229.12 Debtors / Sales Ratio = ------------- * 100 = 13.83% 59459.07 2005-06 7130.27 Debtors / Sales Ratio = ------------- * 100 = 10.15% 70206.23 2006-07 6388.29 Debtors / Sales Ratio = ------------- * 100 = 7.825% 81631.69 2007-08 8863.42 Debtors / Sales Ratio = ------------- * 100 = 8.26% 107187.29

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D ebtor S alesRatio
16 14 12 10 8 6 4 2 0 20 04-05 20 05-0 6 Y ear 2006-0 7 200 8 7-0

Interpretation The decreasing trend suggests that the sale of milk has been good in the past four years and/or that the number of debtors has been decreasing steadily. In a way, this is good for the company because it shows that the companys policy of giving credit is either liberal or acceptable to the debtors and its sales are not being affected by the credit period policy accepted by the company.

Percentag e

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Creditor Turnover Ratio and Average Creditor Collection Period It measures the number of times the ratio ions of creditor cycle are down during a year. This ratio shows the average credit period allowed from the creditors. It indicates the efficiency of finance department for plying off the creditors. It shows that the number of days within which the firm make the payment to their creditor for credit purchase is obtain from creditor velocity ratio. It is measure in days. Net Credit Purchase Creditor Turnover Ratio = ---------------------------Average Creditors Where, Creditors = Outstanding against purchases + Due to Societies + Outstanding against expenses + Sundry Creditors Credit Purchase = Milk Purchases Months/days in a year (300) Average Collection Period = ------------------------------------Creditor turnover 2004-05 39890.82 Creditor Turnover Ratio = ------------- = 5.21 times 7647.74 300 Average Collection Period = ---------- = 58 days 5.21

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2005-06 46502.01 Creditor Turnover Ratio = ------------- = 5.44 times 8544.2 300 Average Collection Period = ---------- = 56 days 5.44 2006-07 52312.16 Creditor Turnover Ratio = ------------- = 4.73 times 11052 300 Average Collection Period = ---------- = 64 days 4.73 2007-08 77965.56 Creditor Turnover Ratio = ------------- = 5.81 times 13404.27 300 Average Collection Period = ---------- = 52 days 5.81

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Creditor Turnover Ratio

7 6 5 Times 4 3 2 1 0 2004-05 2005-06 Year 2006-07 2007-08

Avera e C g reditor C ollection P eriod

70 60 50 D ays 40 30 20 10 0 2004-05 2005-06 2006-07 Y ear 2007-08

Interpretation: The ratio has been showing an increasing trend except for the year 2006-07. This shows that the company has been able to ward off its creditors successfully. This is good for the company since one of the main aims of the finance department is to delay the payments to be made to their creditors so that they can have more liquidity and money on their hands. However, the Amul should take care that it does not exceed beyond a certain limit otherwise, its reputation may be tarnished among its suppliers and other creditors. Moreover, it is seen from the calculations that in the last year more
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amount of purchase was made on credit, which again should be properly monitored. The trend showed by Average Creditor collection period is erratic in nature. The number of days taken by Amul to payoff its creditors shows an increasing/decreasing trend. The payment people should see that this ratio is kept high, up to a certain limit, and that prompt payments are not made. However, if certain benefits are being offered by the creditor than the payment should be made accordingly.

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CONCLUSION
Amul is a highly successful co-operative sector in India and also in all over the world in the food business which is work for milk procedure as well as consumer. Amul has a competitively established system. The four hands of Amul are working successfully with the corporation. Amul is famous for its Anand pattern of co-operative organization in world. It is therefore a matter of great pride of Anand as well as India. According to my view summer training which I have taken at Amul gave me an actual experience of corporate world. A real life feel of the management of a professional firm was made possible for me because of this training. Most importantly, I came to know how a large firm like Amul maintains its funds and inventory and what further steps it needs to take in order to achieve efficiency.

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SUGGESTIONS AND RECOMMENDATIONS

Amul has to maintain EOQ (Economic Order Quantity), minimum stock level & safety stock. They have also gone for ABC classification of items (row material, packaging material). Amul has to maintain separate statements regarding expenses incurred on communication, transportation, electricity etc. Amul should take some steps to reduce the wastage of material during the production. Amul should try to increase its quality of products according to the food policy other countries specially the European Union. Amul should try to bring in more societies under its administration. More Bulk Milk Coolers should be provided to the societies so that milk quality is not deteriorated.

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BIBILIOGRAPHY
1.
2.

Stores Handbook www.amul.com Financial Management B.S. Shah Prakashan Financial Management Khan & Jain Previous Years Reports

3.
4.

5.

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