WORKING CAPITAL MANAGEMENT

OF
VERKA MILK PLANT
MOHALI CHANDIGARH
SUMMER TRAINING REPORT
PRESENTATION

Presented To:

Presented By:

Department of MBA
School of Business
Studies
Government Post

ABHISHEK
MBA 3rd
Semester
Roll No. 14360

HISTORY OF VERKA
The Punjab state verka milk producers federation limited
popularly known as MILKFED Punjab came into existence in
1973 with a twin objective: To providing milk market to the milk producers in the state
by value addition and marketing of produce on one hand
To provide technical inputs to the milk producers for
enhancement of milk production on the other hand.
The setup of the organization in a three tier system with
6000 milk producers co-operative societies at village level,
11 milk unions at district level and federation as an apex
body at the state level.
The district are:
Ropar, Patiala, Ludhiana, Faridkot, Ferozpur, Sangrur,
Bathinda, Gurdaspur, Hoshiarpur.

COMPANY PROFILE
The Plant was established in 1980 by The Punjab Dairy
Development Corporation. The Punjab Dairy Development Corp.
and Milked are the two Government dairy organizations which
are running pay rolled to each other.
In 1982 both these organizations submerged into one which is
now named as MILKFED. In the beginning the capacity of the
plant was 1,00,000 liters per day and the number of workers
was only 700.
Milk Plant, Mohali is located at District Ropar in Punjab. It is
located on National Highway No. 21, joining Chandigarh with
Ropar, Jalandhar and Amritsar. It is situated in Phase-VI
Industrial area, Mohali at a distance of about 8km.from
Chandigarh.
Chairman:- Sh. Amarjit Singh Sidhu
Managing Director :- Sh. Manjit Singh Brar

MISSION STATEMENT

To Support the Milk Producers in uplifting their rural economy,

make all the Milk Unions viable and ebsure quality Milk & Milk
Products to consumers.

VISION STATEMENT

Increase Economies of scale in Milk Unions (Procurement/

Marketing)
Capacity expansion and modernization of the dairy plants.

SWOT ANALYSIS
STRENGTH
Top management is supportive in daily operations of milk plant
Qualified experienced and devoted work force
WEAKNESS
Illiteracy of dairy farmers.
Less supply of as compared to demand.
OPPORTUNITIES
Feasibility of home delivery systems for city supply milk to be implemented
Generic land of milk plant can be used for research and cultivation
THREATS
Non-adoption of dairy farming as a side business by farmers.
Higher cost of raw material as compared to pricing policy

RESEARCH METHODOLOGY
A research methodology is a sample frame work or a plan for study
that is used as a guide for conducting research. It is a blue print that
is followed in processing research work.
According to the need of the research for the project, both primary
and secondary data collection methods are used

Research Design
Descriptive research Design
DATA COLLETCION METHOD:

Secondary sources:
Balance sheet of the Verka milk plant, Mohali.
Record of the company.
Website of the company.

OBJECTIVES OF STUDY

To study the original growth of verka milk plant mohali

To study and analyze the working capital management of

verka

To measure the financial soundness of the company by

analyzing various
ratios.

Working Capital

Operating cycle concept

Sources of working capital

DATA ANALYSIS &

INTERPRETATION

WORKING CAPITAL
WORKING CAPITAL OF THE COMPANY FOR
THE LAST FOUR YEARS IS AS FOLLOWS:FINANCIAL 2010-2011
YEARS

2011-2012

2012-2013

2013-2014

CURRENT
ASSETS

502551937.4

600351844.9

542452646.13

541833754.63

LESS
CURRENT
LIABILITIE
S

324365864.69

388550751.95

300481279.25

383682344.51

WORKING
CAPITAL

178186072.8

211801093

241971366.9

158151410.1

700000000
600000000
500000000
current assets
400000000
current liabilities

300000000
200000000

working capital

100000000
0
2010-2011

2011-2012

2012-2013

2013-2014

Interpretation:This above figure conclude that Verka having less current

asset as compare to current liability because it take loan for
their future expenses. In this way it show decrease in
working capital

CURRENT RATIO

CURRENT RATIO =

CURRENT ASSESTS
CURRENT LIABILITIES

FINANCIAL
YEAR
CURRENT
ASSETS
CURRENT
LIABILITIES

2010-2011

2011-2012

2012-2013

2013-2014

502551937.4

600351844.9

542452646.13

541833754.63

324365864.69

388550751.95

300891279.25

38382344.51

CURRENT
RATIO

1.54

1.54

1.80

1.41

CURRENT RATIO OF VERKA:-

700000000
600000000
500000000

CURRENT
ASSETS

400000000

current
liabilities

300000000
200000000

CURRENT
RATIO

100000000
0
2010-2011

2011-2012

2012-2013

2013-2014

Interpretation:- it show the companys current

ratio is neither so high or nor so low , means the
company has maintained good liquidity position

QUICK RATIO
QUICK RATIO = QUICK/LIQUID RATIO
CURRENT LIABILITIES

QUICK RATIO OF VERKA:Quick ratio = Quick Assets/Quick Liabilities

Quick/liquid ratio= Current Assets Stock
Prepaid Expenses

FINANCIAL
2010-2011
YEAR
QUICK ASSETS 482711887.22

2011-2012

2012-2013

2013-2014

582017780.07

524244175.74

515306362.2

CURRENT
LIABILITIES
QUICK RATIO

324365864.69

388550751.95

300481279.25

383682344.51

1.48

1.49

1.74

1.34

600000000
500000000

QUICK
ASSETS

400000000
300000000

current
liabilities

200000000
100000000

quick ratio

0
2010-2011

2011-2012

2012-2013

2013-2014

Interpretation:-This figure conclude that the

company has a balanced quick ratio, which show the
good liquidity ratio of the concern means the company
has the ability to meet its current liabilities in time.

Debt equity ratio

Debt equity ratio is =debt/equity

FINANCIAL
2010-2011
2011-2012
2012-2013
2013-2014
YEAR
DEBT

325565864.69

389750751.95

339504696.25

542765676.51

EQUITY

136243697.16

149316047.16

150593647.16

191682988.2

2.61

2.25

2.83

Debt equity ratio 2.38

1200000000
1000000000
800000000
600000000
400000000
200000000
0

total
liabilities
total assets
solvency
ratio

Interpretation:
This ratio helps to ascertain the ability of the firm to
pay its long-term liabilities in time. Generally, lower
the ratio, more satisfactory or stable is the long-term
solvency position of a firm.

ON THE BASIS OF ACTIVITY RATIO

1 .
INVENTORY TURNOVER RATIO =

COST OF GOODS SOLD/AVERAGE INVENTORY

FINANCIAL
YEAR
COSTOF
GOODS
SOLD
AVERAGE
INVENTORY

2010-2011

2011-2012

2012-2013

2013-2014

617794077
.55

809896865
.62

858809361
.36

183339838
.28

250410964
.135

314162520
.465

343499030
.44
16731996.
705

INVENTORY
TURNOVER
RATIO

3.36

3.23

2.73

-2.05

1000000000
800000000
600000000
400000000
200000000
0
-200000000
-400000000

INTERPRETATION:
Inventory Turnover Ratio measures company's
efficiency in turning its inventory into sales. Its
purpose is to measure the liquidity of the
inventory.

COST OF
GOODS
SOLD
average
inventory

2 . WORKING CAPITAL TURNOVER RATIO

= COST OF GOODS SOLD/AVERAGE WORKING CAPITAL

FINANCIAL
YEAR
COST OF
GOODS
SOLD
AVERAGE
WORKING
CAPITAL
WORKING
CAPITAL
TURNOVER
RATIO

2010-2011

2011-2012

2012-2013

2013-2014

617794077.55

809896865.62

8588.9361.36

-343499030.44

178186072.71

211801092.95

241971366.88

158151410.12

3.46

3.82

3.54

-2.17

1000000000
800000000
600000000
400000000
200000000
0

cost of goods sold

average working
captial
working captial
turnover ratio

-200000000
-400000000

INTERPRETATION:
A verka milk plant with a very low working capital ratio is at 2013-2014 . A company with too high a ratio is not doing
enough to put its assets to work. The goal, then, is to find a company whose asset ratio reflects an ability to immediately
meet all current liabilities but just barely in most cases.

PROFITABILITY RATIO
GROSS PROFIT RATIO
GROSS PROFIT RATIO= GROSS PROFIT/NET SALE*100

FINANCIAL
YEAR

2010-2011

2011-2012

2012-2013

2013-2014

GROSS
PROFIT

223873759.55

2748450003.8
2

282395131.73

-343499030.44

NET SALE

617794077.55

809896865.62

858809361.36

GROSS
PROFIT
RATIO

36.2%

34.3%

32.8%

0%

3000000000
2500000000
2000000000
1500000000

gross profit

1000000000

netsale

500000000
0

gross profit
ratio

-500000000

INTERPRETATION:
The ratio can be used to test the business condition by comparing
it with past years ratio and with the ratio of other companies in
the industry. A consistent improvement in gross profit ratio over
the past years is the indication of continuous improvement

NET PROFIT RATIO

NET PROFIT/NET SALE*100

FINANCIAL
YEAR
NET PROFIT

2010-2011

2011-2012

2012-2013

2013-2014

71506032.73

78767991.39

80777634.92

-343499030.44

NET SALE

617794077.55

809896865.62

8588.9361.36

NET
PROFIT
RATIO

11.57%

9.72%

9.40%

0%

1000000000
800000000
600000000

net profit

400000000

net sale

200000000

net profit
ratio

0
-200000000
-400000000

INTREPRTATION:
There has been fall in the net profit in the year 2013-2014 of the
verka milk plant .Analysis similarly the company should controlled the
net profit is this indicates selling and distribution should be controlled

CONCLUSION

According to this project I came to know that

fromthe analysis of working capital it is clear that
verka milk plant Have been incurring
lossduring the period of study.So the firm should
focus on getting of profits in the coming years by
taking care internal as well as external factors
This project of working capital management in
the production concern is not merely a work of
the project. But a brief knowledge and experience
of that how to analyze the working captial of the
firm.

Thank you