SYNOPSIS PROJECT ON ANALYSIS OF WORKING CAPITAL MANAGEMENT at Dharwad Milk Union Ltd,

INDUSTRIAL PROFILE Dairy Industry in India:

Dairy enterprise is an important occupation of farmer. In India nearly 70% of the people depend on agriculture. It is the backbone of India. Dairy is linked with agriculture industry to a large extent. Animal husbandry in India is an essential part of agriculture. It is mainly a rural occupation closely associated with agriculture.

Development of Dairy Industry in India:

During the Pre-independence year there was no serious stress given to dairy industry. In 1886 the Department of Defense of the British Government established the dairy farms for the supply of milk to the British troops in Allahabad. Later, in 1920 serious steps were taken by Mr. William Smith, an expert in dairy forming to improve the milk production There was discrimination done to the Indians hence this led to the rise of the first milk union in India. In Lucknow in 1937 called the Lucknow milk producers Co operative union Ltd. In 1946 AMUL (Anand Milk Udyog Ltd) was started in Gujarat to bring up the economic stability of villagers. When the farmer Prime Minister Lal Bahaddur Shastri visited the functioning as it was rendering a social service to the society, which helped the villagers to come in the national economic stream. The dairy and Animal Husbandry received serious attention after the independence. There were lots many of progressive steps taken by the government through five year plans. This led to the formation of National Dairy Development Board in 1965 & thus in 1970 he decided to Bring a White Revolution through out the country, Initially 10 states were selected were for this purpose excluding Karnataka. In Karnataka in 1974 an integrated project was launched to restructure and reorganize the dairy industry on Co-operative principle of AMUL and to lay foundation for new direction in dairy industry.

DHARWAD MILK UNION:

Dharwad District Co-operative Milk Producers' Societies' Union Ltd

Dharwad Co-operative milk producers Union Lte., (DAMUL) has been registered under Karnataka Cooperative Act in March 1986 covering Dharwad, Haveri, Gadag and Uttara Kannada Districts. DAMUL has 741 number of Functional Dairy Co-operative covering 28 taluks. Societies (DCS) which include 191 Nos. of exclusive women Dairy Co-operative societies. Cuttently DAMUL is procuring and marketing 1 lakh kgs of milk per day. Emphasis has been given to procure good quality milk through Clean Milk production programme. Apart from having a main dairy at Dharwad and 5 Chilling Centers, it has installed 17 Bulk Milk Coolers at the village level DCS. Installation of 70 AMCUs, 553 Electornic Milk Testers and 438 nos, of Electronic weighing scales have further strengthened Clean Milk Production programme. DAMUL has infrastructure to handle 2.10 lakh ltrs. of milk,produce 12.0 tons of milk powder,8 tons of Butter and 6 tons of ghee per day. Apart from producing toned milk, Homogenised cow milk and high fatmilk (Shubam) DAMUL has forged a significant name in production of Peda,Curds,Lassi,Panner and Khova. Dharwad Milk Union is committed to welfare of Milk Producers and Consumers through adoption of several innovative programmes. 1. Producers have been provided technical inputs in form of subsidized fodder seeds,root slips, timely payment of remunerative milk rates. 2. The commission structure to Dairy Co-operative Societies have been enhanced in order to strengthen them. 3. Health programmes for cattle have been taken care of through conduction of regular health camps,

4. A trust has been formed to take care of eventualities that crop up due to accidents to producers and DCS Staff. 5. Cross breeding programme through Artificial Insemination has reached farmers doorstep through cluster Artificial Insemination(A.I) centres, about 300 A.I workers are involved in this activity.

It has chilling centers at Haveri-20 TLPD, Hirekerur-20 TLPD, Gadag(Mallasandra)-20 TLPD, Sirsi-10 TLPD, Ron-10 TLPD with total capacity of 80 TLPD. There are 17 Bulk Milk Collers and 70 Automatic Milk Collection units in the union The union procures on an AVG of 1.16 lakh kgs/day of milk and sells 0.88 lakh litres/day
DAMUL was producing energy through coal for the propose of processing. However,keeping public health in view,it has switched over to LPG based boiler and in contrinuation towards its efforts towards clean environment DAMUL has embarked on developing green fodder farm by utillizing the treated water from effluent treatment plant. Well established laboratory ensures only good quality milk and products reaches the consumers through a well established network of dealers and ATM outlets. In the year of celebrating silver jubilee DAMUL continues to serve producers and consumers.

Functions of Dharwad Milk Union:

The main function of is to procure milk from villagers and pay them the right price. To educate the villagers about milk and its quality. To make Nandini as a part of daily life. To provide good quality of cattle feed, fodder, veterinary properly and in an efficient manner.

Objectives of Dharwad Milk Union:

Providing hygienic and good quality of milk to the consumers. To build the economic strength of the milk products in villages. To eliminate middlemens in the business so that the milk products receive there appropriate share of bread.

To educate the villages about the adulteration of milk and its harmful effect on the body. To see that every citizen becomes healthy by consuming good quality of milk. To make villagers self-viable and build self image.

Process at Dharwad Milk Union:

The milk collected at DCSs is brought to the center thought carries trucks etc. the quality and quantity of milk bought is checked at the Reception center by a supervisor. A sample of milk is taken and is tested in a laboratory for fat content, Solid Not fat (SNF) acidity etc. As the milk is at room temperature is to be brought down to 40 c to 50 c. so that it may check the growth of bacteria. To ensure this milk is passed through a chilling chamber where the milk is chilled. Its temperature is bought down and then the milk is stored in a tank called as Raw Milk Tank.

Mission Statement Dharwad Milk Union:

Dharwad Milk Union is commuted to provide maximum possible price for the milk supplied by its members and provided necessary inputs for the milk production while ensuring economic viability of the union and also committed to provide quality milk products to consumer and image as one of the top most milk union of the co-operative dairy industry in the country.

VISION DHARWAD MILK UNION:

Total quality Honesty Discipline Cleanliness Transparency Sincerity and deduction Co-operative free of politics Sovereignty Respective each other opinion ideas and feelings

PRODUCT PROFILE;
Nandini Toned: Fresh and Pure milk containing 3.0% fat and 8.5% SNF. Available in 500ml and 1litre packs.

Nandini Homogenized Milk: is pure milk which is homogenized and pasteurized. Consistent right through,

it gives you more cups of tea or coffee and is easily digestible.

Full Cream milk: Containing 6% Fat and 9 % SNF.A rich, creamier and tastier milk, Ideal for preparing homesweets & savories. made

Cow's pure milk: UHT processed bacteria free in a proof tetra-fino pack which keeps this milk fresh for 60 without refrigeration until opened. Available in 500ml and in 200ml Bricks

tamperdays Fino

Nandini Ghee: A taste of purity. Nandini Ghee, made pure butter. It is fresh and pure with a delicious flavor. Hygienically manufactured and packed in a special pack retain the goodness of pure ghee. Shelf life of 6 months ambient temperatures. Available in 200ml, 500ml, 1000ml sachets, 5lts tins and 15.0 kg tins

from

to at

Nandini Curd: made from pure milk. It's thick and delicious. Giving you all the goodness of homemade curds. Available in 200gms and 500gms sachet.

Nandini Peda: No matter what you are celebrating! Made pure milk, Nandini Peda is a delicious treat for the family. at room temperature approximately 7 days Available in 250gms pack containing 10 pieces each.

from Store

Nandini Gulab Jamoon Mix: Great way to those soft and jamoon treats at home! Nandini Gulab Jamoon Mix is made Nandini skimmed milk powder, maida, soji and Nandini Special Grade Ghee. Available in 100gms and 200gms standy pouch with a five layer foil lamination. Shelf life of 6 months.

juicy from

Nandini spiced Butter Milk: is a refreshing health drink. It is made from quality curds and is blended with fresh green chilies, green coriander leaves, asafoetida and fresh ginger. Nandini spiced butter promotes health and easy digestion. It is available in 200 ml packs and is priced at most competitive rates, so that it is affordable to all sections of people.

Flavored milk: Sterilized flavored milk, a nutritious and healthy drink and an all-season wholesome drink available in different flavors - pineapple, rose, badam, pista. five

Nandini Butter: Rich, smooth and delicious. Nandini Butter is made out of fresh pasteurized cream. Rich taste, smooth texture and the rich purity of cow's milk makes any preparation a delicious treat. Available in 100gms (salted), 200gms and 500gms cartons both salted and unsalted,

WORKING CAPITAL MANAGEMENT INTRODUCTION:

Management of the working capital is nothing but the management of current assets. The management of the current assets includes Inventory, Received, Debtors, Book debts, Short-term

assets cash and bank balances. The management of fixed and current assets, however differs in three important ways. 1. In managing fixed assets time is a very important factor, consequently, discounting and compounding techniques play a significant role in capital budgeting and minor one in the management of current assets. 2. The large holding of current assets, especially cash, strengthens, the firms liquidity position (reduces riskiness), but also reduces the overall profitability. Thus a risk returns trade off is involved in holding current assets, 3. Level of fixed as well as current assets depends upon expected sales, but it is only current assets, which can be adjusted with sales fluctuations in the short run. Thus the firm has a greater degree of flexibility in managing current assets. Working Capital refers to the amount of capital which is readily available to an organization that is, working capital is the difference between resources in cash and readily convertible into cash (current assets) and organizational commitments for which cash will soon be required (current liabilities). Thus, working capital involves activities such as arranging the short-term finance, negotiating favorable credit terms, controlling the movement of cash, administrating accounts receivables and monitoring the investments also a great deal of time.

TYPES OF WORKING CAPITAL:

A) On the Bases of Concepts: There are two concepts of working capital

1. Gross Working Capital:

It refers to the firms investment in current assets. Current assets are the assets which can be converted into cash within an accounting year and include cash, short-term securities, debtors, bills receivables and stock (inventory).

2. Net Working Capital: It refers to the difference between current assets and current liabilities. Current liabilities are those claims of outsiders which are expected to mature for payment within an accounting year and include creditors, bills payable, and outstanding expenses. Net working capital can be positive or negative. A positive net working capital will arise when current assets exceed current liabilities. A negative net working capital occurs when current liabilities are in excess of current assets. The gross working capital concept focuses attention on two aspects of current assets management: (a) How to optimum investment in current assets. (b) How should be current assets financed.
The level of investment in current assets should avoid two danger points- excessive and inadequate investment in current assets. Investment in current assets should be just adequate, not more, not less, to the needs of the business firm. Excessive investment in current assets should be avoided because it impairs firms profitability, as idle investment earns nothing. On the other hand, inadequate amount of working capital can threaten solvency of the firm because of its inability to meet its current obligations. The working capital needs of the firm may be fluctuating with changing business activity.

B) On the Basis of Time:

1. Permanent Working Capital: Permanent Working Capital is permanently locked up in the circulation of current assets. It covers the minimum amount requested for maintaining the circulation of current assets. (a) Initial Working Capital: At its inception and during the formative period of its operations a company must have enough cash fund to meet its obligations. The need for initial working capital is for every company to consolidate its position. (b) Regular Working Capital: It refers to the minimum amount of liquid capital required to keep up the circulation of the capital from the cash inventories to account receivable and from account receivables to back again cash. It consists of adequate cash balance on hand and at bank, adequate stock of raw materials and finished goods and amount of receivables.

2. Variable Working Capital: It refers to the past of the Working Capital that changes with the volume of business, it may be divided into two classes. (a) Seasonal Working Capital: There is many line of business where the volumes of operations are different and hence the amount of working capital varies with seasons. The capital required to meet the seasonal needs of the enterprise knows as Seasonal Working Capital. (b) Special Working Capital:

The capital required to meet any special operations such as experiments with new products or new techniques of production and making interior advertising campaign etc, is also know as Special Working Capital.
Needs of Working Capital:
The need for working capital to run the day-to-day business activities cannot be overemphasized. We will hardly find a business firm which does not required any amount of working capital. Indeed, firms differ in their requirements of the working capital.

The firms aim is that maximizing the wealth of shareholders. Earning a steady amount of profit requires successful sales activity. The firm has to invest enough funds in current assets for generating of sales activity. Current assets are needed because sales do not convert into cash instantaneously. There is always an operating cycle involved in the conversion of sales into cash. Therefore Working Capital required for:

1) To meet the cost of inventories including total of raw materials purchased parts, operating Supplies, work in progress, finished goods. 2) To pay wages, salaries, for indirect labor, clerical staff, managerial and supervision staff. 3) To meet overhead costs, including those of maintenance services activities, fuel, power charges, taxes and general expense administration. 4) To bear the expansion (with regard to promotion of sales) e.g. expenses on packing, advertisement, salesmanship, Sales Servicing, After requires, Credit Facilities, Delivery Services, etc.

IMPORTANCE OF WORKING CAPITAL MANAGEMENT:

Adequate working capital created certainty, security and confidence in the minds of the persons in the management as well as in the minds of creditors and workers.

1) It creates a good credit standing for the firm because credit standing depends upon the ability to pay promptly. A Company with adequate working capital is always able to meet current liabilities. 2) It ensures solvency and stability of the enterprises. It also ensures continuity in production and sales. 3) It enables the company to take advantage of cash discount offered by the suppliers of raw materials or merchandise. 4) It enhances the prestige of the company and moral of its workers because a company with adequate working capital is always able to pay wages and salaries promptly and regularly. 5) It enables the company to procure loans from banks on easy and competitive terms.

Components of Working Capital

There are two components of Working Capital A. Current Assets B. Current Liabilities

A) Current Assets: Components of Current Assets are as follows: 1. Cash & Bank Balance 2. Stock of Raw Material at cost- work in process and Finished Goods. 3. Advanced Recoverable in Cash or kind or kind or for value to be received. 4. Deposits under the company scheme. 5. Advanced payment of income takes credit certificates.. 6. Outstanding debts for a period exceeding six months. 7. Balance with central excise authorities. B) Current Liabilities: Components of Current Liabilities are as follows: 1. Sundry Creditors for the goods and expenses. 2. Income tax deducted at sources from contractors. 3. Expenses Payable. 4. Unclaimed Dividend. 5. Security Deposits. 6. Liabilities for bills discounted. 7. Bank Overdraft Acceptance.

Objectives of the Study

 To study the management of inventories, account receivables and cash in the firm. To study the liquidity position of the firm . To Comparison of present and last four years Working capital. To know the current position Conclusion of the company.

Statement of the Problem:

The study has been taken in the organization for the purpose to know the Working Capital Management of the company for five years.

Design of the Study:

The study is conducted at Dharwad Milk Union. The study was about the studying the company profile, Annual Reports of last five years of the firm & operating cycle,

Need for the Study:

This study is undertaken to know the present liquidity position of the Dharwad Milk Union, Dharwad. This project will throw light on firms competitiveness with other firms and it also throw light on the financial position and adequate working capital, which the firm possesses. This study carried out to know whether DMU has properly utilized its resources and assets are not and also ascertain the liquidity position of the firm.

Data Collection:
The present study is carried out working capital position of the Dharwad Milk Union, which attempts to analyze and interpretation by using ratio analysis technique & concepts of working capital. Tabular formats are also used wherever necessary to show the data calculations with necessary theoretical explanations.

Sources of Data:
Sources of data are can be classified into two categories: 1. Primary Data 2. Secondary Data

Primary Data:

The

information

is

collected

from

the

personal

interaction

with

the

financial managers of DMU.

Secondary Data:
This is been is collected through DMU Annual Reports of last five years i.e. 2004-05 to 2008-09 & also through;
1. Information form the internet sources 2. Information from the materials provided by the concern magazine, newspapers

Brouchers.

BIBLIOGRAPHY

I.M. Pandey Financial Management. Vikas Publishing House Pvt. Ltd. M.Y. Khan and P. K. Jain Financial Management. Tata Mcgraw Hill publishing company Ltd. New Delhi. Prasanna Chandra Fundamentals of Financial Management. Tata Mcgraw Hill Publishing Company Ltd. New Delhi.

Web Site:. www.KMF Nandini.com