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EXECUTIVE
SUMMARY
EXECUTIVE SUMMARY
Financial statements provide summarized view of the financial position and Operation of the
company. Therefore, now a day it is necessary to all companies to know as well as to show the
financial soundness i.e. position and operation of Company to their stakeholders. It is also
necessary to company to know their financial position and operation of the company.
In this report I made an effort to analyse the financial position of Dharwad Milk Producers Union
Limited, by using the Annual Reports & Financial Statements of the firm.
The Financial analysis of this report will show the Strength and weakness of the Dharwad
Milk Union Limited. Financial analysis will help the firm to take decision. Thus, we can say that,
Financial Analysis is a starting point for making plans before using any sophisticated forecasting
and planning.
OBJECTIVES OF STUDY:
INDUSTRY PROFILE
INTRODUCTION
India has the highest livestock population in the world with 50% of the buffaloes and 20% of the
world’s cattle population, most of which are milk of cows and buffaloes. Dairy development in
India has been acknowledged the world over as one of modern India’s most successful
developmental programme. Today, India is the largest milk producing country in the world.
Late DR.Verghese Kurien, the man who brought milk revolution in the country, was a renowned
Indian social entrepreneur and also known as "Father of the White Revolution", for his
'Billion-Litre Idea' the world's biggest agricultural development programme.
Late DR. Verghese Kurien was instrumental in laying the foundation of democratic enterprises
at the remote villages and far flung hamlets which ensured economic justice. The operation took
India from being a milk-deficient nation, to the largest milk producer in the world. One of the
greatest proponents of the cooperative movement in the world, his work has alleviated millions out
of poverty not only in India but also outside. Hailed as the "Milkman of India"
Dairy Cooperatives account for the major share of processed liquid milk marketed in the India.
Milk is processed and marketed by 170 Milk Producers’ Cooperative Unions, which federate into
15 State Cooperative Milk Marketing Federations. Over the years, several brands have been created
by cooperatives like Amul (GCMMF), Vijaya (AP), Verka (Punjab), Saras (Rajasthan). Nandini
(Karnataka), Milma (Kerala) and Gokul (Kolhapur).
The market for dairy whiteners and creamers is around Rs 3,000 mn. Apart from MNCs like
Nestle and companies like Britannia, the Indian enterprises have also made perceptible progress.
Names like Amul, Sapan, Vijaya, Mohan, Parag and several others have been seen in the
marketplace with their whiteners. These are available mostly in pouches, tetrapacks, and in the near
future, may be in mini portion cups.
Amul
Amul is an Indian dairy cooperative, based at Anand in the state of Gujarat, India. The word Amul
(अअअअ) is derived from the Sanskrit word Amulya (अअअअअअ), meaning invaluable. Anand
Milk Union Limited was formed in 1946, which is a brand managed by a cooperative body, the
Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF). Today Amul is the Largest
MILK PRODUCER in the World.
Dr Verghese Kurien, founder-chairman of the Gujarat Co-operative Milk Marketing Federation Ltd.
(GCMMF), is credited with the success of Amul. The idea behind the White Revolution which led
to the birth of AMUL [Anand Milk Union Ltd] was “the power in the idea of co-operating all milk
producers and pooling their resources to build a better life and achieving what they could never
achieve alone”.
Amul is located in the town Anand which is in Gujarat and it has setup itself a model for
development in the rural areas. Amul has around 2.9 million producer members covering 15,322
village societies and the total capacity of handling milk is around 13.07 million liters every day.
The brand capacity of milk drying is around 647 Mts each day and its capacity for cattle field
manufacturing is about 3740 Mts each day.
Collection of surplus milk from the milk producers of the village, and payment based on quality
and quantity,
Providing support services to the members like veterinary first aid, artificial insemination
services, cattle-feed sales, mineral mixture sales, fodder and fodder seed sales, conducting
training on animal husbandry and dairying.
Selling liquid milk for local consumers of the village,
Supplying milk to the District Milk Union.
GCMMF (AMUL) has the largest distribution network for any FMCG company. It has nearly 50
sales offices spread all over the country, more than 5000 wholesale dealers and more than 700000
retailers.
Amul became the world's largest vegetarian cheese and the largest pouched-milk brand.
AMUL is also the largest exporter of dairy products in the country. AMUL is available today in
over 40 countries of the world. AMUL is exporting a wide variety of products which include whole
and skimmed milk powder, cottage cheese (Paneer), UHT milk, clarified butter (Ghee) and
indigenous sweets.
The major markets are USA, West Indies, and countries in Africa, the Gulf Region,
and SAARC neighbours, Singapore, The Philippines, Thailand, Japan and China, and others such
as Mauritius, Australia, Hong Kong and a few South African countries
This Act is the basic statute that is intended to protect the common consumer against the supply of
adulterated food. This specifies different standards for various food articles. The standards are in
terms of minimum quality levels intended for ensuring safety in the consumption of these food
items and for safeguarding against harmful impurities and adulteration. The Central Committee for
Food Standards, under the Directorate General of Health Services, Ministry of Health and Family
Welfare, is responsible for the operation of this Act. The provisions of the Act are mandatory and
contravention of the rules can lead to both fines and imprisonment.
The Milk and Milk Product Order (MMPO), 1992, issued on June 9, 1992 seeks to ensure the
supply of liquid milk, an essential commodity, to consumers by regulating its processing and
distribution. Within eight years of its operation, the Central/State Registering Authorities have till
December 2000 registered 666 units with a total processing capacity of 65.8 million litres per day
(mlpd).
– The Certificate also specifies the milkshed area, which, under the order is defined as a
geographical area demarcated by the Registering Authority for the collection of milk by the
registered unit.
– Maintenance of specified hygienic conditions in the premises where milk and milk products are
handled, processed, manufactured or stored. The collection, transportation and processing of milk
normally centres around the operations of a processing plant.
-The region from which the marketable surplus of milk production finds its way to a processing
plant is called a ‘milkshed’. The concept of milkshed areas is pivotal to the MMPO. For an orderly
development of the dairy industry, a proper assignment/allocation of milkshed is critical.
These Rules lay down certain obligatory conditions for all commodities that are packed form, with
respect to declarations on quantities contained. These Rules are operated by the Directorate of
Weights and Measures, under the Ministry of Food and Civil Supplies.
a) Voluntary Standards
There are two organizations that deal with voluntary standardization and certification systems in the
food sector. The Bureau of Indian Standards looks after standardization of processed foods and
standardization of raw agricultural produce is under the purview of the Directorate of Marketing
and Inspection.
The activities of BIS are twofold, the formulation of Indian standards in the processed foods sector
and the implementation of standards through promotion and through voluntary and third party
certification systems. BIS has on record, standards for most of processed foods. In general, these
standards cover raw materials permitted and their quality parameters, hygienic conditions under
which products are manufactured and packaging and labeling requirements. Manufacturers
complying with standards laid down by the BIS can obtain and “ISI” mark that can be exhibited on
product packages. BIS has identified certain items like food colors/additives, vanaspati, containers
for packing, milk powder and condensed milk, for compulsory certification.
The DMI enforces the Agricultural Products (Grading and Marketing) Act, 1937. Under this Act,
Grade Standards are prescribed for agricultural and allied commodities. These are known as
“Agmark” Standards. Grading under the provisions of this Act is voluntary. Manufacturers who
comply with standard the laid down by DMI are allowed to use “Agmark” labels on their products.
1) Industrial License:
No license is required for setting up a Dairy Project in India. Only a Memorandum has to be
submitted to the Secretariat for Industrial Approvals (SIA) and an acknowledgment is to be
obtained. However Certificate of Registration is required under the Milk and Milk Products Control
Order (MMPO) 1992.
2) Foreign Investment:
Foreign Investment in dairying requires prior approval from the Secretariat of Industrial Approvals,
Ministry of Industry, as dairying has not been included in the list of High Priority Industries.
Automatic approval will be given upto 51% Foreign Investment in High Priority Industries. In case
of other Industries, proposals will be cleared on case to case basis. Government may allow 51%
without enforcing the old limit of 40% applicable under Foreign Exchange Regulations Act at its
discretion.
In 1973, Dr. Kurien set up GCMMF (Gujarat Cooperative Milk Marketing Federation) to market
the products produced by the dairies which was jointly owned by 3.03 million milk producers in
Gujarat. After the key invention of milk powder from buffalo milk there was no stopping to the
growth in dairy sector because in India most of the milk came from buffalo unlike other countries
which primarily depended on milk. It focused on low pricing strategy with superior quality in order
to attract consumers by guaranteeing the value for their money.
Milma (Kerala)
The Kerala Co-operative Milk Marketing Federation (KCMMF) or Milma started its operation in
1980 with its head office at Thiruvananthapuram. It is managed by the Kerala Livestock
Development and Milk Marketing Board. It main motive was to implement the Operation
Flood programme started by the National Dairy Development Board (NDDB) in Kerala. The name
MILMA has been derived from the cumbersome predecessor, Kerala Livestock Development Board
and Milk Marketing Board (KLD&MMB).
Milk distribution in Kerala was available at only a few locations in Kerala. The consumers had to
purchase coupon booklets in advance and exchange the coupons in exchange for milk. Mr.
Nagarajan bought about a change in this system by making the consumer pay for milk at the time of
purchase instead of the coupon booklet system. Moreover at that time milk was being sold in bottles
and for the first time in India he introduced milk in ½ liter sachets. He had a prototype machine for
packaging milk in sachets installed in Thiruvananthapuram. From 1981 onwards under the advice
of Dr. V. Kurien, by forming cooperative societies Prayar Gopalakrishnan and others were able to
introduce MILMA to the whole of Kerala.
Verka (Punjab)
The Punjab State Cooperative Milk Producers Federation Limited popularly known as MILKFED
Punjab with brand name Verka came into existence in 1973 with a twin objective of providing
remunerative milk market to the Milk Producers in the State by value addition and marketing of
produce on one hand and to provide technical inputs to the milk producers for enhancement of milk
production on the other hand. Punjab is the second largest milk producing state in India,
producing around 10% of the country’s Milk Production i.e. 8 million tones annually.
COMPANY PROFILE
NANDINI (Karnataka)
Karnataka Milk Federation (KMF) sells products by the brand name of Nandini. Karnataka Cooperative
Milk Producers' Federation Limited (KMF) is the Apex Body in Karnataka representing Dairy Farmers' Co-
operatives. It is the second largest dairy co-operative amongst the dairy cooperatives in the country. In South
owned and managed by milk
India it stands first in terms of procurement as well as sales which is
producers of Karnataka State. The first dairy in Karnataka was started in Kudige in Kodagu district
in 1955.
KMF has over 2.23 million milk producers in over 12066 Dairy Cooperative Societies at village
level, functioning under 13 District Cooperative Milk Unions in Karnataka State. During the last
four decades of Cooperative Dairy Development by KMF, the dairy industry in Karnataka has
progressed from a situation of milk-scarcity to that of milk-surplus.
Vision
To march forward with a missionary zeal which will make KMF a trailblazer of exemplary
performance and achievements beckoning other Milk Federations in the country in pursuit of total
emulation of its good deeds?
To ensure prosperity of the rural Milk producers who are ultimate owners of the Federation.
To promote producer oriented viable cooperative society to impart an impetus to the rural income,
dairy productivity and rural employment.
To bridge the gap between price of milk procurement and sale price.
To develop business acumen in marketing and trading disciplines so as to serve consumers with
quality milk, give a fillip to the income of milk producers.
To compete with MNCs and Private Dairies with better quality of milk and milk products and in
the process sustain invincibility of cooperatives.
Mission
“Heralding economic, social and cultural prosperity in the lives of our milk producer members
by promoting vibrant, self-sustaining and holistic cooperative dairy development in Karnataka
State...”
Objectives
To ensure assured and remunerative market round the year for the milk produced by the farmer
members.
To make available quality milk and other premier dairy products to urban consumers.
To build & develop village level institutions as cooperative model units to manage the dairy
activities.
UNITS OF KMF
KMF has the following Units functioning directly under its control:
Nandini Sperm Station (formerly known as Bull Breeding Farm & Frozen Semen Bank) at
Hessaraghatta.
The garden city turned into the silicon capital of India has made rapid strides in dairy activity.
From 50,000 Liters a day 4 decades back under UNICEF, today it is a 12 Lakh Litres/ Day, State-
of- the- art plant expandable to 10 Lakh Litres/ Day. It is fully computerized Dairy with no human
handling of milk with the distinction of having highest procurement and highest sale of milk by any
dairy in Karnataka.
The Union was established in the year 1989 under the Operation Flood II covering three districts
viz. Raichur, Bellary & Koppal with more than 502 DCSs It has a dairy plant at Bellary with a
capacity of 1.00 lakh Litres per day and a 40,000 liters per day plant at Raichur.
It has Chilling Centres at Gangavati 19 TLPD, Dadesagur-30 TLPD, Ittigi-10 TLPD, Kustagi-05
TLPD and Kudligi-05 with total chilling capacity of 75 TLPD. There are 15 Bulk Milk Coolers and
23 Automatic Milk Collection Units in the Union.
The ‘Mini Punjab of Karnataka’, the city of Rani Chennamma the freedom fighter. City famous
for tobacco is one of the two Milk Unions specializing in processing & marketing of ‘Shubham’,
high Fat mixed Milk. It has more than 423 functioning DCSs covering 10 taluks. Union markets
substantial quantities of Nandini Milk in the neighbouring State of Goa also. It produces ‘Kunda’
which also finds market in Bangalore, also known for delicious buffalo milk.
It covers 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. Currently 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 553 Electronic Milk
Testers and 438 no’s, of Electronic weighing scales have further strengthened Clean Milk
Production programme.
The main purpose of establishing this unit is to encourage milk producers inhabited in rural areas. It
has 6 chilling plants spread over the 4 districts and production plant in Dharwad, the turnover is on
an average of 4 Crores per year.
“To Enhance Milk Production And Procurment And Maximizereturns To Milk Producers By
Finding Lucrative Market For Milk And Thereby Towards Viability Of Milk Union.”
OBJECTIVES
HISTORY
A group of experience officers, appointed by the Karnataka Milk Federation surveyed the whole of
Dharwad Districts. Further they found out there is need for a milk dairy. They surveyed the
surrounding villages educated. The villages about milk and milk products and the benefits they
would get from the milk dairy.
The overwhelming response received and untapped resources and the huge market. The federation
decided to set up the milk union in 1984, known as the dharwad district.
Further in 1988, the Raipur diary and chilling center setup in 1968, also came under the union. In
1989 the training center which was controlled by Karnataka Milk Federation came under Dharwad
Milk Union. Dharwad Milk Union was Rs. 7 crores of the projects of which Government has Rs. 2
crores o f share capital and authorized capital of DMU is Rs. 5 crores.
Dharwad Milk Union formed 551 Milk Producers Co-operative societies in Dharwad, Gadag,
Haveri and Uttar Kannada Districts production capacity of Dharwad Milk Union is 2 lakhs liters
Milk per day and also has the capacity to produce 12 tons of Milk Powder, 10 tones of butter, 6
tones of Ghee per day. DMU collecting 80-85 thousand liters of milk per day from its societies and
sells above 65 thousand liters per day and the remaining milk is used for produce milk products.
DMU builds and runs under the co-operative institutions such as:
EMPLOYEES: 270
Naragunda 8000LPD.
DEPARTMENTS IN DMU:
Administrative Department
Finance & Accounts Department
Procurement & Input Department
Quality Control Department
Production Department
Engineering & Civil Department
Marketing Department
Finished Goods Department
Purchase Department
Store Department
Security Department
Canteen Department
Time Office Department
COMPETITORS
The Nandini milk is facing lot of competition in the milk market. The prime Competitors are
private players like,
1. Bharat
2. Siddhi Vinayak
3. Mayour
4. Gopal
5. Aditya
6. Datta
WELFARE FACILITIES
I. Statutory Facilities
Canteen facility
Restroom sittings
Leave facilities.
I. Casual Leave 15 days
II. Sick Leaves 10days.
III. Earned Leaves 30days
Medical benefits
Factory arranges cultural programs at the time of Ganesh Chaturthi, workers day and Deepavali.
Factory often conducts demonstration through social workers in respect of family planning, AIDS
awareness, etc.
Staff member’s children will be provided with gift for scoring in SSLC, PUC.
Milk subsidy for i. 10 months ¼ ltr free (Jan-Oct)ii. 2 months ½ ltr free (Nov-Dec)
15%discuount on purchase of 1kh Ghee (Only staff)
Yearly 1kg Ghee free for festivals i.e. Deepavali and Ganesh Chaturthi.
SWOT ANALYSIS
STRENGTH
Competitive price.
WEAKNESS
More manpower.
Lowest paying brand i.e. commission given by the company is less compare to other brands
Inadequate sales promotional activity. Due to bad smell that persists low sale
OPPORTUNITIES:
Step should be taken to introduce value added products like srikhands, ice-cream
THREATS
Increase of competitors.
PRODUCTS
CONCEPTUAL
FRAME WORK
Despite of tough competition from various manufacturers of milk and milk products, Dharwad Milk
Union still stand to be one of the most reputed companies in Karnataka. The Dharwad Milk Union
aims at providing health and toned milk to its customers at a better and reasonable price. Every
company has to maintain good management for smooth running of its activities. This study is
undertaken to observe the DMU performance through ratio analysis technique because ratio
analysis is the important tool used to obtain a quick indication of a firm's financial performance in
several key areas.
RATIO ANALYSIS
It refers to the systematic use of ratios to interpret the financial statements in terms of the
operating performance and financial position of a firm. It involves comparison for a meaningful
interpretation of the financial statements.
In view of the needs of various uses of ratios the ratios, which can be calculated from the
accounting data are classified into the following broad categories
Yet another factor which influences the usefulness of ratios is that there is difference of
opinion regarding the various concepts used to compute the ratios. There is always room for
diversity of opinion as to what constitutes shareholders equity, debt, assets, and profit and so on.
Different firms may use these terms in different senses or the same firm may use them to mean
different things at different times.
Reliance on a single ratio, for a particular purpose may not be a conclusive indicator.
For instance, the current ratio alone is not as a adequate measure of short term financial strength; it
should be supplemented by the acid test ratio, debtors turnover ratio and inventory turnover ratio to
have real insight into the liquidity aspect.
Finally, ratios are only a post mortem analysis of what has happened between
two balance sheet dates. For one thing, the position in the interim period us bit revealed by ratio
analysis. Moreover, they give no clue about the future.
In brief, ratio analysis suffers from some serious limitations. The analyst should not be
carried away by its oversimplified nature, easy computation with a high degree of precision. The
reliability and significance attached to ratios will largely depend upon the quality of data on which
they are based. They are as good as the data itself. Nevertheless, they are an important tool of
financial analysis.
DATA ANALYSIS
AND
INTERPRETATION
LIQUIDITY RATIOS
1. Current Ratio
The current ratio measures the short-term solvency of the firm i.e. ability to meet short
term obligations. It establishes the relationship between current assets and current
liabilities. Current Ratio = Current Asset/Current Liabilities
Graph No: - 1.
Current Ratios
1.5 1.29 1.3
1.13
1.05 1
1
Current Ratios
0.5
0
2008-09 2009-10 2010-11 2011-12
2012-13
Interpretation
As per industry norm a Current Ratio of 2:1 is considered satisfactory. In the 2008-10 firm
has fair ratio of 1.29:1 & 1.3:1. But in further years ratios are diluted slightly i.e. 1.13, 1.05, 1. It
indicates firm delays in payments of operating expenses.
2. Quick Ratio
It has been an important indicator of the firm’s liquidity position and is used as a
complementary ratio to the current ratio. It establishes the relationship between quick
assets and current liabilities.
Graph No:-2
Quick Ratios
1.2
1.02
1
0.83
0.8
0.61 0.61
0.6
0.46
0.4 Quick Ratios
0.2
0
2008-09 2009-10 2010-11 2011-12 2012-13
Interpretation
Graph No:-3
19,336,756
20,000,000 17,290,538
15,000,000
10,000,000
7,547,248
5,000,000
543,842
0
2008-2009 2009-2010
2010-2011 2011-2012 2012-2013
Interpretation
From the above analysis the Net working Capital was fluctuating from year 2007-08 to
2010-11. So here current asset is more than current liabilities. Firm had ability to meet its
obligation. In 2011-13 amount of working capital has decreased drastically comparing to
previous years. It indicates that firm struggles to meets it current obligation.
Graph No:-4
Inventory TurnoverRatio
24.58
25
21.01
20 17.24
15
15
11.2
Inventory
10 TurnoverRatio
0
2008-09 2009-10 2010-11 2011-12
2012-13
Interpretation
As per industry norm an Inventory Turnover Ratio is 8 times which indicates healthy
performance. In the year 2007-08 ratio was 17.24 times which indicates that company performance
was healthier. In the year 2008-09 ratio was 24.58 times where company was converting its inventory
into sales very fast. Further in the years of 2009-10, 2010-11 & 2011-12 ratios were fluctuating (i.e.
11.20, 20.01 & 15 times) which reveals that company was efficient managing its inventory.
Asset turnover ratios, also called efficiency ratios. The relationship between assets
and sales is known as assets turnover ratio. This ratio shows the firm’s ability to generate
sales from all financial resources committed to total assets.
Graph No:-5
4 3.75
3.39 3.35
3
1
0.46
0
2008-09 2009-10 2010-11
2011-12 2012-13
Interpretation
From the above it is a clear evident that in years of 2008-11 ratios were 3.39, 3.75, 3.35
times which indicates that firm was using its asset efficiently and effectively to generate
adequate sales. But in year 2011-12 ratio was 0.46 times which indicates that the company
has generated very low sales & in 2012-13 it was vice-versa i.e. 4.45 times.
This indicates the number of times average debtors have been converted into
cash during a year.
Graph No:-6
Interpretation
From above it portrays that in year 2008-09 firm was collecting its debts slowly
compared to 2009-10 (30.93 times & 55.91 times). In year 2010-11, 20011-12, 2012-13 ratios are
48.5 times, 72.09 times 60.08 times. In the above graph shows 72.09 times in 2011-12 is very high.
Graph No:-7
11.64
12
10
7.43
8
6.44
5.99
6 4.99 ACP
0
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
Interpretation
The above graph reveals that in year 2007-08 the collection period was 11.64 days which
was too slow. Further years 2008-09,2009-10,2010-11,2011-12 periods were 6.44 days, 7.43
days,4.99 days & 5.99 days respectively. It indicates that company is more efficient in the
management of credit.
A creditor's turnover ratio is a reflection of how quickly a company pays its creditors. This is also
known as a payable turnover ratio. It is calculated to judge the requirements of cash for paying
sundry creditors.
Graph No:- 8
Interpretation
The graph shows ups & downs in the ratio of Creditors Turnover. The ratios for 5
years were 45.38 times, 53.94 times, 42.04 times, 37.53 times, 37.81 times. By observing these
ratios, it may be interpreted that company is taking longer time to repay its creditors.
A higher ratio is an indicator of better utilization of current assets and working capital and vice-
versa (a lower ratio is an indicator of poor utilization of current assets & working capital).
Net working capital turnover ratio = Net Sales / Net Working Capital
Net Working Capital = Current Assets - Current Liabilities.
Graph No:-9
2500
2000
500 163
35.16 32.23 50.09
0
2008-09 2009-10 2010-11 2011-12 2012-13
Interpretation
This ratio shows how many times firms working capital turned over to produce the sales
volume for the given period. The ratios for the 5 years were 35.16 times, 32.23times, 50.09times,
163times, 2644.42 times. In the years 2010-12 the working capital turnover ratio was higher, which
was more efficient in using working capital to generate sales compared to 2008-10.
But in year 2012-13 there is drastic increase in working capital turnover ratio which show
that a company does not have enough capital to support its sales growth.
FINDINGS
The current ratio is below the industry norm 2:1 which discloses that company’s position is
not good to meet its short term obligations.
The firm does not maintain the ideal quick ratio 1:1. Its 0.46:1 in the year 2012-13
Amount of working capital has decreased drastically which indicates that firm struggles to
meets it current obligation.
The inventory turnover ratio is 15 times which is above the industry norm 8 times which
shows that firm is efficient in managing its inventory.
The debtor’s turnover ratios are increasing drastically from year to year which shows how
efficiently a company is collecting its credit sales.
Average collection period is increased in 2012-13 which shows that company is improving
in collecting debt.
The company is taking longer time to repay its creditors which is the result of poor liquidity.
The study reveals that there is drastic increase in working capital turnover ratio which shows
that a company does not have enough capital to support its sales growth.
Firm should use its asset efficiently and effectively to generate adequate sales.
SUGGESTIONS
It is examine that company should improve its current ratio in order to meet its obligation &
increase the Margin of Safety for creditors.
The firm should generate cash in order to repay its creditors as possible as possible.
It is suggest that the firm has to maintain ideal quick ratio 1:1.
The study reveals that Working Capital is Over-Leveraged. So it advised to DMU to adopt
Scientific Inventory Management to improve “Working Capital.”
DMU should appoint skilled labours in order to increase the efficiency of firm.
CONCLUSION
The study on Short-term Finance in the DMU is satisfactory. The study of 5 years reveals
that liquidity position of the DMU is fair.
Firm is facing financial crisis & less quantity of milk supply in the previous years. It shows
that firm is facing difficulties to meet its current obligation. Company should generate cash to meet
its current obligations.
DMU should improve its financial conditions by increasing its working capital to earn more
profits.
The activity position of the DMU is good as the company is efficient in managing its
inventory 15 times which is more than industry norm 8 times. Firm is also collecting its debt quickly
in 6 days.
ANNEXTURE
BIBLIOGRAPHY
Reference Books
Author I.M.Pandey.
Websites
www.kmf.nandini.coop
www.nddb.org
http://smallbusiness.chron.com/effects-liquidity-ratios-57308.html