Fulfillment of the Award Of The

(HT NO: 84-07-135)



I hereby declare that the project report entitled “WORKING CAPITAL MANAGEMENT” of “Creamline Dairy Products Limited” is carried out under the guidance of Mr. K.MAHENDER faculty of the college and submitted in partial fulfillment for the degree of “MASTER OF BUSINESS ADMINISTRATION” or Osmania University is my original work and not submitted by any other candidate the findings in this project are collected by me.



I express my deep sense of gratitude to Mr.G.Veerabrahmam – ManagerAccounts of Creamline Dairy Products Limited for giving permission to me to take up this project work. I am thankful to staff members and finance Director of Crèamline Dairy Products Limited, for giving their valuable time by providing in completion of my project work. I express my sincere thanks to my project supervision Mr.K.MAHENDER REDDY faculty of finance, Suprabhath institute for management and computer studies for giving inspiring and expert guidance rendered to me in carrying out this project work. I would also thankful to Mr.RAMNENDER LAL principal. I would also thankful to faculty members of Suprabhath Institute for Management and Computer Studies for attending their co-operation and encouragement in this project work.


Table of Contents Chapter –I Introduction o Scope of the study o Objectives of the study o Methodology of the study o Limitations of the study Chapter –II Chapter –III Chapter –IV Chapter –V Company Profile Organization Charts Industry Scenario Working Capital Management and a theoretical framework Chapter –VI Working Capital Management Analysis • Findings & suggestions Chapter –VII Conclusions Chapter-VIII Bibliography .


. Methodology and Database used in the project and period of eth study of the project.S.INTRODUCTION This chapter deals with the introduction of study in respect of subject matter of project. 3. J. need of the study.W. C. The current liabilities and inter relationship that exist between them. Working Capital Management concerns with the problem that arise in attempting to manage the current assets. 2. Molott and file: “Working Capital means current assets”. scope of the study.Gersten Berg: “Working Capital has ordinarily been defined as the excess of current assets over current liabilities”.Mill: “The sum of the current assets is the working capital of a business”. objectives of the study. Introduction of the study: Some definitions of Working Capital: 1. Mead.

. fixed assets and current assets. Working capital management in corned with administration of these current assets. which change their form with in one year.e. Net concept refers to the difference working between the current assets and current liabilities of the firm. Both types of assets are to be managed efficiently to make maximum profits with minimum possible investments. Current assets are the assets. Two concepts of working capital now in vogue are found useful in the management of working capital. There are two types of assets i. Working Capital is essential for the smooth and successful running of any business organization. Gross working capital Net working capital Gross concept of working capital to the firm’s investment in current assets. .Finance is the lifeblood of any organization and working capital management is an integral part of the overall financial management. Decisions regarding investment in fixed assets are taken through the capital budgeting process. This study is mainly concerned with investment in current assets.

It is significant because. It is likely to become insolvent and may be even forced into bankruptcy. the management must see that an excessive investment in current assets should protect the company from the problems of stockout. The goal of working capital management is to manage the firm current assets and current liabilities in such a way that a satisfactory level of working capital is maintained. Current assets will also determine the liquidity position of the firm. If the firm cannot maintain a satisfactory level of working capital. .NEED OF THE STUDY Working capital management is one of the key areas of financial decision making.

 To analyze the financial performance of the company with reference to working capital.  To determine the flow of revenue from operations by taking into consideration on working capital related ratios.  To appraise the reason for the change in working capital position with help of statement of changes in working capital.OBJECTIVES OF THE STUDY  To study the existing system of working capital management.  To give some suggestions to the management based on the information studied. .  To examine the feasibility of present system of managing working capital.

The primary data was gathered through personal interaction with finance manager. The secondary data was collected from company’s annual reports from 20042008. various books and internet.METHODOLOGY The study of management working capital is based on primary as well as secondary data. .

 Owing to the busy schedule of the executives and the staff in the company.  Recommendations of the study are only personal opinions. . Hence judgments may not be considered as ultimate and standard solutions. exhaustive primary data could not be collected. As a result there might be changes of errors creeping in. which might affect the result of the study.LIMITATIONS  Due to time constraint a comprehensive meticulous study was not possible.

Chapter-II Company profile .

milk is India’s second most important agriculture activity in terms of value of its output ranking next to paddy but much above wheat DAIRY BUSINESS: Industry Structure and Developments . having achieved the satisfactory level of self-sufficiency in crop production. the appreciable concept of government has created necessary infrastructure in improving the performance of the dairy sector in the country. The operation Flood. Dairy development in India has been acknowledged the world over as one of the modern India’s most successful development program. livestock production in general and dairying in particular has been identified as an important tool for enhancing the income of small farmers and reducing unemployment in large rural population.INTRODUCTION INDUSTRY BACKGROUND: India’s Agriculture. Increasing awareness on nutritional diet coupled with the anticipated growth in the purchasing power in urban areas. India is the largest producer of milk in the world. In the emerging string agriculture scenario. has started spreading its wings in dairy segment to enhance the quantum of animal proteins in daily diet through milk. the demand for milk in the country is expected to go up further steeply. Dairying has been now recognized as catalyst for economic development and is today accorded the status of thrust area by the government. Today.

Forage and feed grain production is limited due to pricing incentives to grow cereals and pulses to feed India’s vast population.4 percent of the national dairy animal population and produces 8% of the country’s milk. Trends of Milk products in India and Andhra Pradesh India produced about 100 million tons of milk in 2008. Moreover. feed for dairy animals consists mainly of crop residues and byproducts.India’s Annual Milk Production is growing @ 3% per annum. at 800 kg per dairy animal per year has been increasing steadily between 2000 and 2008 at an average annual rate of 3. Buffalo yield less milk than crossbreed cows. accounting for 15 percent of total world production.5% per annum. per capita milk availability is growing only @ 1.  India has an extensive government-supported dairy co-operative structure. but are well adapted to the extreme heat and humidity of India. Andhra Pradesh (AP) accounts for 8.8 percent. Private dairy companies tend to duplicate the operating procedures of the co-operatives. Co-operatives not only market their members’ milk. but also supply feed and many dairy services. If the same trend continues. ghee consumption is growing @ 8% per annum and butter and cheese consumption is growing @ 10% per annum. The milk production in India accounts for more than 13% of the World’s total output and 57% of Asia’s total production. Average milk yield in India. The milk . Andhra Pradesh’s milk production comes mostly from farms of less than 2 hectares with 1 to 4 Dairy animals.  In India. The unique aspects of dairying in India include:  Production of milk from buffalo exceeds cow milk production. The World’s average milk yield per animal per year is 2100Kgs whereas India’s average milk per animal per year is 1000kgs. However the animal productivity in India is very low as compared to Western Counties. many Indians prefer buffalo milk over cow milk because of its higher butterfat content. demand for dairy products will soon exceed supply.

With this per capita income. Hyderabad – 500 016. Date of incorporation Constitution : : 31-10-1986. Motilal Nagar. : CREAMLINE DAIRY PRODUCTS LIMITED . Begum pet. Private. are slightly lower than the average for India. this household can afford considerably low living standards. Impacts on Household Income Current situation: The dairy activities contribute 16% of the daily per capital household income. however. Date of Commencement of Commercial production Sector : : 1st December. 1990. PROFILE OF THE COMPANY Name of the company Registered & Corporate Office : 1-11-252/11/1. The dairy development programs announced by the Central government have the potential to increase the per capita household income by 27 percent above its current situation. Incorporated as a Private Ltd October 31st 1986 And converted into Public Limited 24th April 1994. which has no yet set benchmark under Indian conditions.yield in Andhra Pradesh is slightly higher than the Indian average and is increasing at a faster rate. Farm gate milk prices.

9/1.80. Goudagere Village. Ongole Prakasam Dist. IDA. Epuru Village. Mandya Dist.547. UNIT 6: Pidathalagudipadu. 795-1 & 797. Maharashtra . UNIT 4: Survey No. Via Hanuman Junction. UNIT 3: Survey No. 21. UNIT 2: Survey No. Uppal Khalsa. Orakkadu Village. Andhra Pradesh. Madanapalle. UNIT 7: At Post Agini. Uppal. Hyderabad. West Godavari Dist . Pedapadu Mandal. Chennai. Karnataka . Kamptee Taluk. Nagpur Dist.Brand Name Present Works Packing facilities : “J E R S E Y “ : UNIT 1: Survey No. Chittoor – Dist. Malavalli. Andhra Pradesh. UNIT 5: Survey No.

000 LPD : 1.Line of Activity Products Description : Processing of milk and milk products : Toned Milk. Hyderabad. Koti Hyderabad. 000 LPD : 75.Managing Director : Sri M Gangadhar : Sri C Balraj Goud .000 LPD : 25. Installed Capacity -Uppal -H.000 LPD : 25. Butter Milk. : State Bank of India. Lassi etc. Butter. . Ghee. Skimmed Milk Powder. Doodhpeda.Finance Director .000 LPD : 70.000 LPD : Powder Plant : 1.000 LPD : Sri K Bhaskar Reddy .Marketing Director : Sri D Chandrasekhar Reddy –Technical Director Bankers : ICICI Bank. Begumpet Branch. Flavored Milk. Commercial Branch. 50. Paneer. 00.Junction -Madanpalle -Chennai -Malavalli -Kamptee -Ongole Directors : Milk Packing Unit : 2. Curd. 20. Ice Creams. Whole Milk.

 To manufacture. purchase and sell all kinds of flavored milk products  To carry on as a growing business  To conclude collaboration agreements Vision of CDPL:  To increase per capita consumption of milk  To empower the rural environment  To ensure a steady supply of milk .Main objectives of the company:  To manufacture all kinds of milk products.

credibility and stability the industry.  Strong technical competence and an ability to use that to provide high quality products to Customers.  To be recognized in the Indian business community as a model for our professional approach to the way in which manage and develop our people.e.  To have effective business processes and information systems that assists us in making the correct decisions.  Excellence in the management of the whole supplies chain in order to deliver least total cost. Standards. .X Long Term Vision  To be recognized in the dairy industry for superior customer service and ability to continuously add value to our customers requirements.  Quick response time to any type of inquiries or request.  To have a mind-set across all people within milk and milk products of continuous improvement of innovation in everything we do.  Sound knowledge of the customer's perception of value for money (i.CHAPTER .  Good reputations.  Through understanding of the consumer's needs and priority to fulfill the needs. Cost / benefit).  To be one of the leaders within the Dairy industry in Indian in regards to driving environment.

BACKGROUND OF THE COMPANY 1) HISTORY OF THE COMPANY Cream line Dairy Products Ltd. CDPL enjoys premier status in liquid milk segment by marketing 4. CDPL is managed by Dairy Technologists and professionals. Ghee. Madanapalle (Chittoor Dist). Tamilnadu. certified as ISO 22000:2005 Company for the Food Safety Standards being adopted. Kamptee (Nagpur). The project was funded through equity capital of Rs. Orakkadu (Chennai). Paneer & Milk Sweets under the brand name of “ JERSEY ”. Curd. The plant was commissioned at The promoter Directors hold functional responsibilities and are actively engaged in the day-to-day operations of the . Butter.15 lakhs from APSFC. The milk processing plants of the company are located at Uppal (Hyderabad). Motilal Nagar. The company was originally incorporated as a private limited company in 21st April 1994. Hanumanjuntion (Vijayawada) & Ongole. CDPL was originally conceived to process 1500 LPD of milk. CDPL has a well-established marketing network spread across all major districts of Andhra Pradesh. company. Hyderabad 500016.50 lakhs from Promoters. state subsidy of Rs 1. Begumpet. CDPL has been expanding its market topographically in the liquid milk segment in Karnataka and Tamilnadu. Ice Cream and other related milk products like Flavored Milk. It is an existing profit making public limited company. The project was appraised and funded by AP state Financial Corporation.93 lakh and Term Loan of Rs 28. The Registered office of the company is located at 1-11252/11/1. Lassi. Mallavalli (Bangalore). Karnataka & part of Maharashtra. CDPL is one of the largest and well-established dairy units in the organized sector in South India.9.00.000 Liters per day (LPD). (CDPL) is engaged in the business of processing and selling of liquid Milk. Buttermilk.

540 Lakhs from IDBI and equity share capital of Rs. This has. apart from buyback .Mupireddypally village Medak dist. with a capital out lay of Rs. Andhra Pradesh. Equity share capital and hire purchase funded the gradual increase of installed capacity. Ghee and Butter etc. In 1993. CDPL also has well-established network of booths for distribution of liquid milk. apart from increasing the volume of operations. and the same have been marketed in the twin Cities of Hyderabad and Secunderabad under the brand name “JERSEY”. CDPL products are well accepted by the consumers. 1990. CDPL had expanded its milk processing capacity from 44500 LPD to 74500 LPD and increased the production facility of Ghee & Butter from 365000 Kgs to 1460000 Kgs at Uppal plant.290 Lakhs. This Strategic decision has been taken after careful vendor development activity for procuring raw milk to cater to the increased volume of operations. CDPL has gradually increased its installed capacity from 74500 LPD to 220000 LPD in March 2007 at its Uppal Plant. ideally positioned the products in the market and stabilized the brand image. Tamilnadu & Karnataka for procurement of buffalo and cow milk and the details of which are enclosed in Annexure – I. CDPL has gradually increased its installed capacity from 1500 LPD to 44500 LPD in March 1996 at its Mupireddypally plant. This has enabled the consumer to have an easy and all time access to milk and milk products. CDPL has been continuously expanding its capacities in modular form. and its commercial production Commenced on 1st December. The expansion was funded through a term loan of Rs. 830 Lakhs.. CDPL had initially processed 1500 LPD of milk and manufactured Milk products like Flavoured Milk. CDPL has introduced the novel concept of ‘round the clock’ parlors covering entire strategic Locations of twin cities for exclusive marketing of company’s products. This gradual increase in installed capacity on need-basis was done only through internal accruals of the company. CDPL has established several chilling centre’s in various districts of the states of Andhra Pradesh. During the year 1992-93. CDPL decided to increase and economize its volume of operations and entered the liquid milk market with Toned and Whole Milk.

He was associated with Sangam Dairy as DGM . 3) BACKGROUND OF THE DIRECTORS: Sri K.Chandrasekhar Reddy.arrangement for procurement of buffalo milk from chilling centers.Bhaskar Reddy under the guidance of the Board of Directors. Sri D Chandrasekhar Reddy. is a Graduate in Dairy Technology from Osmania University. Mr.Finance and gained vast experience in dairy related Accounting. part of AMUL organization for two years. Director (Finance) in financial. He is a promoter Director since inception of the Company. Director (Technical) in project implementation. Sri M. Finance and Costing aspects. His vast experience in processing .aged 53 years. He has more 20 years of experience in Dairy & related Agri business.Balraj Goud. Tamilnadu & Karnataka. Director (Marketing) in marketing activities. He is involved with the Company as a promoter for the last two decades. CDPL has been expanding its market topographically and has successfully marketed its liquid milk in all major districts of Andhra Pradesh. who are associates of CDPL. is a graduate in Dairy Technology from Osmania University. aged 47 years. M. He had earlier worked as Technical Officer in “Sabarkantha District Milk Producers Union Limited”.Bhaskar Reddy aged 48 Years. Continuous plans are on the anvil to expand the aforesaid markets. The Managing Director is being supported by Mr. fellow member of institute of Chartered Accountants of India (ICAI). popularly known as SABAR DAIRY. The top management team is well assisted by team of qualified and experienced personnel. CDPL’s Board comprises of highly qualified and experienced Technocrats and professionals. D.K. has more than 25 years of experience in the field of finance and accounting. He is involved with the Company as a promoter for more than two decades. The day-to-day operations are looked after by Mr. production and technical functions and Mr. 2) MANAGEMENT: CDPL is managed by a team of qualified professionals.Gangadhar. C. administrative functions of the company.Gangadhar.

. (DairyDesignation Managing Director Qualifications B.A M.. (DairyTechnical Advisor G. 4) KEY EXECUTIVES: Name Sri K Bhaskar Reddy Tech) Sri M Gangadhar Sri C Balraj Goud Sri D Chandra Sekhar Reddy Tech) Dr.SBU-Chennai GM.V.SBU-Bangalore B.Sc.M . plant maintenance and operations are put to effective use to strengthen the technical aspects of the company Sri.MBA SBU-Nagpur GM.Balraj Goud.. SBU-Hyd M.M – Quality Assurance M.B B. (Dairy- .L.A M.Sc..Sc.A M.Sc. has vast experience in commercial activities and has considerable exposure to marketing of Milk and Dairy Products.(Dairy-Tec) Finance Director Marketing Director Technical Director F. (DairyGM.C.Srihari Rao Sri A Anand Sri.Finance G.Sc A.P.A.Sree Sree MBA Sri G Madhukhar Reddy Tech) Sri G Devanath Reddy Sri G Lakshmi Prasad Tech) Sri P Sashi Kumar GM. He is involved with the Company as a promoter for more than two decades..of various milk products and expertise in Technical.Tech(Dairy).L.C. M.K..C.Sc.B. aged 48 years.

Market Milk: • High Fat • FCM • STD • Toned • DTM • Skim • Cow Milk • Fortified Milk • Low Lactose Milk Fat Rich Products: • Low Fat Cream • Medium Fat Cream • High Fat Cream • Sour Cream • Sterilized Cream • Whipping Cream • Cooking Butter • Table Butter • Ghee

• Traditional Ghee • Cow Ghee

Milk Powders: • Milk Powder • SMP • Partly SMP • Coffee / Tea Whitener • Milk Shake Mix Powder • Banana Milk Powder • Mango Milk Powder • Ice Cream Mix Powder • Kulfi Mix Powder

Cultured Products:
• Dahi • Yoghurt • Butter Milk • Lassi • Shrikhand • Mishti Doi

Coagulated Products:
• Cheese

• Paneer • Casein

Sweets: • Peda • Burfi • Khalakand • Jamoon • Rasagulla • Rasmalai • Basundhi • Kheer • Khoa Beverages: • Sterilized Flavoured Milk • Milk Shake • Hot / Cold Milk • Coffe • Tea • Whey Drink H) Ice Creams & Novelties.

It contains 98% Fat.5% Solids-Non-Fat (SNF). 6) Flavored Milk 7) Lassi 8) Youghurt / Curd 9) Butter Milk . it contains 82% of Fat. 5) Ghee is a product obtained from butter after removing 100% SNF. 3) Whole Milk is the pasteurized milk with 6% Fat and 9% SNF 4) Table Butter is product exclusively obtained from cream after removal of moisture and SNF.PRODUCTS AND MANUFACTURING PROCESS 1.1 PRODUCT PROFILE The company has manufacturing and marketing of the following products : 1) Toned Milk: Toned milk is the pasteurized milk with 3% Fat and 8. 2) Standard Milk is the pasteurized milk with 4% Fat and 9% SNF.

During this process fat and water content in butter are separated. The standardized milk Is then packed in pouches and stored in cold storage. The granulated ghee are then sent to packing and tilting section for proper packing and kept under cold storage for onward dispatch. This added salt absorbs the water droplets left in the butter. clarified and granulated. The salted butter are then sent to packing and filling section for proper packing and kept under cold storage for onward dispatch. The water phase is being removed leaving the fat filled butter content. The cream and pasteurized skim milk will be stored in insulated storage tanks. . The milk will then be sent to separation Zone for separation in to cream and skimmed milk with the help of cream separator. Salt also prevents chemical and bacteriological actions. In this process the raw milk is heated to 81-degree Celsius for 20 seconds and then cooled suddenly to 4 degrees Celsius. The pasteurized milk is standardized to require fat level and SNF content by mixing cream and skimmed milk in appropriate quantities. the required quantity of salt is then added to the butter to form Table Butter. The ghee so produced will then be filtered.02 MILK PROCESSING The raw milk purchased and stored in milk silos are transferred to the milk processing Zone for pasteurization with the heating and cooling treatment. The heated butter is stored at 45 degree Celsius in stratification tanks for about two hours. 1.03 TABLE BUTTER The chilled cream will be fed into butter churn for conversion into butter and buttermilk. which are then transferred for cooking to the ghee boiler. 1.04 GHEE MAKING The quantity of white butter earmarked for ghee making will the melted in the melter ad then heated in the plate heater. It is then distributed and sold through refrigerated retail outlets.1.

1 05 FLAVOURED MILK The pasteurized milk with 1. We have grown. increase our returns and create greater stockholder value. harness our creative energies through a strong teamwork. Cream line Dairy Products Ltd.06 BUTTERMILK The composition and food value of buttermilk are comparable with skim milk with the exception that it may contain slightly more milk fat. our drive towards excellence in . buttermilk frequently contains from 0. The presence of lactic acid in buttermilk is not harmful and may be beneficial. We are poised to test new waters. focusing on harnessing our willingness to experiment and innovate. grow more business. a spirit of enterprise and financial acumen. We are poised to take on new challenges and move on to creating products and markets for tomorrow..5% fat content are used for flavored milk. Sugar and the required flavors are added to the pasteurized milk and homogenized. our ability to transform. The flavored milk is treated for extended shelf-life. GROWTH IN FOCUS We. Then flavored milk is filled in the bottles and sterilized and stores for onward dispatch. proven qualities that collectively determine our path of growth.2% to nearly 1% of lactic add. bringing heightened levels of confidence and satisfaction to every stakeholder. Owing to the decomposition of lactose by bacteria. 1. and intend to grow.

47 Crores in the previous year. Our Company emphasizes the regulation that will not just enable the healthy and orderly growth of dairy industry but will ensure that milk and milk products are produced. quality and food safety. During the year 2007-08 liquid milk sales was Rs. Ghee. CDPL’s presence in the market has been very quickly recognized as unique and one of the best retail business models in the Industry. manufactured.335 Crores as against the Turnover of Rs.15 Crores during 2008-09 and over 20 Crores during 2009-20. Tamilnadu. SMP and Butter were recorded at Rs. processed. hygiene. Karnataka & part of Maharastra. The sales of Milk Products including Bulk sales of Cream.249 Crores in 2006-07. Product/Market –wise Performance The total Turnover during the financial year 2007-08 was Rs. BUSINESS REVIEW Cream line Dairy Products Limited (CDPL) has been in Dairy Business successfully for about two decades and presently it is one of the leading dairies in India.241 crores against Rs. The future of the Organization rests on these enablers. which shall be the investment. Today Jersey distributes quality milk and milk products in the states of Andhra Pradesh. our people-first attitude and our strategic direction.202 crores in the previous year.quality. our Company is undertaking major expansion in Dairy Business by investing Rs. During the last financial year CDPL has ventured into a high growth. Cream line Dairy Products Limited makes for carving itself.94 Crores against Rs. As a result. . OUTLOOK The future of the dairy industry has to be built on quality. stored and sold by observing the best standards of sanitation. To achieve this object.

thus able to disinter- meiate the supply chain cost. Strategy-Rural CDPL has an established supply chain of their own dairy business. Tamilnadu. it was decided to have some retails interface that will help CDPL to connect to the consumers through their traditional buying process and then gradually work towards converting them to the home delivery model. instead of direct retail presence. The starting point will be to harness the current infrastructure to penetrate into the rural market. which procures milk from farmers in Rural Aras (mainly in Andhra Pradesh. almost 50% of the entire product of Skimmed Milk Powder will be own sourced or private label. Moreover the business aims to retain and attract new customers through quality of Fresh products. provide benefits to the rural customer and improve better penetration into the rural areas. exceptional service and convenience.Strategy –Urban The objective of the urban strategy is to address the planned food and grocery purchases of household with an element of convenience built into the model through Home deliveries. Due to high importance of touch and feel factor. milk collection agents will be mobilized for selling products. Another important element is the private label to differentiate the offerings from the competitor as well as give superior products to consumers at value pricing. It would require consistent interaction with the customer that would be facilitated through detailed business procedures. eg. It will connect to consumers through Representatives (predominantly current Milk Collection Representatives of CDPL) who will sell the goods (mainly FMCG) to . The value preposition is not to be an ELVP (Everyday Low Value Prices) Retailer but to provide value to the customer through quality. When fully deployed. training and IT initiatives. Karnataka & some parts of Maharastra). reverse logistics in the supply chain can be used to transfer of goods from the urban markets to rural markets.

RISKS AND CONCERNS All key functions and divisions are independently responsible to monitor risk associates within their respective areas of operations such as production. insurance. In production process. Based on forecasted demand. Under custom farming.the consumers. It provides the process a continuous flow of working without any interruption by any reasons. trained team from Agri division of our company prepares cropping plans and crop rotations for each cluster and accordingly crops will be grown depending upon the zone and the season. The company has taken pragmatic steps to strengthen organizational competency through involvement and development of employees as well as installing . our Company indentifies a particular zone. which is slightly easier turf for private label than the urban markets. treasury. legal and other issues like health. the Company has its own efficient Distribution Control Systems. safety and environment. procurement. which is the best for certain crops and maps each zone into different clusters after tie-up with the farmers. The value preposition for the rural customer will be the availability of the quality/genuine FMCG products mostly branded ones at a better price. The system automatically controls all the fluctuations of parameter of producing and do not give any chance to excessive losses and wastages. HUMAN RESOURCES The Company’s human resources philosophy is to establish and build a strong performance and competency driven culture with greater sense of accountability and responsibility. Under this custom farming there is no contractual obligation between the farmer and Company and the farmer is at liberty to sell his produce to any one. CUSTOM FARMING Custom farming allows a landowner who wishes to remain classified as a farmer and the ability to retain close control of the farm business but not be actively involved in performing day-to-day activities. The landowner would make all the farming decisions such as purchasing all inputs and receive all income from sales. This will also provide opportunity to CDPL to launch & strengthen their private label in rural markets. This definitely improved on productivity and profitability.

increased employment opportunities and acute talent shortage in the industry has thrown a great challenge in recruitment and retention of talent.  CDPL has been managed by experienced Dairy Technologists and professionals. continuous efforts are being made to satisfy the stakeholder. booming Indian economy as well as the industry. In the competitive world of business. to realize the same across the organization. Simultaneously your company is putting in lot of efforts at an organizational level to take a leap growth and success across the organization. . faster globalization process. All the Promoter Directors are actively involved in the functional activities of the Company. Hence compensation management is set to meet the The vibrant Compensation management policy of our industry standards and which more closely matches and monitors the business company is completely integrated with the long term and short-term business goals S W O T ANALYSIS STRENGTHS:  CDPL is an existing profit making company. your company strongly believes in developing the Human Potential to meet the growing challenges. The turnover of the company has been showing continuous increasing trend. of the organization. stake holder growth is directly proportional to the organization growth and hence. Hence “HUMAN POTENTIAL DEVELOPMENT” is obvious growth. With the changing and turbulent business scenario our basic focus is to upgrade the skill and knowledge level appropriate leadership at all levels. Our company aims at getting best out of every professional in the organization to realize the business goals. motivating them and inspiring them to stretch and take-up higher responsibility. Our Company continues to believe that.Effective systems to improve the quality and accountability at all functional levels. Changing global business scenario. The recruitment process is in complete synchronized with the organization Vision and Mission. goals and objectives.

 The products of the company have been well received by the customers. OPPORTUNITIES • The mass production of indigenous milk-based sweets. The demand for the company’s products is increasing. Artificial insemination service for breeding better cattle has still limited coverage.  CDPL has the patronage of the farming community spread over 2000 Villages in Andhra Pradesh. With 300 million NRI overseas. Tamilnadu & part of Maharastra. Further the company has a well-established procurement net work for sourcing raw milk. Karnataka. WEAKNESS:  Inability to feed cattle adequately throughout the year by the farmer remains the most widespread technical constraint to higher milk yield. • Vast scope exists to higher milk yield through better use of crop residues and by-products by upgrading them. butter and ghee in modern dairy plants can tap the growing demand for them. milk powder.  The raw milk availability is seasonal and is the governing factor for the capacity utilization.  CDPL has established marketing network through round the clock parlours & milk booths for marketing of milk and milk products. Emphasis must be on technologies that are . the scope for their exports is promising. CDPL has strong foundation for milk procurement by establishing various chilling centers spread in South India to procure required quantity of high quality milk.  Quality dairy animals are in short supply.

• Since the dairy industry is now open for private sector there bound to be competition from the new units apart from the existing Co-Operative Unions. This imposes a heavy social cost. The co-operative unions are distributing the milk through organized sectors. Some economic incentives are needed for farmers to go in for better feeding. mastitis and FMD. • De-Licensing has checked in flow of investment by Co-Operatives in procurement and related infrastructure in their milk shed districts. . paying attention to animal health care would minimize the economic losses caused by many major cattle diseases such as rinderpest. THREATS: • Large cattle population grazing on uncultivated lands. It has also affected extension services for enhanced milk production. • The demand for other dairy related products is increasing due to growing population and changing life style. • The growing demands for liquid milk and milk products in the Metropolitan Chennai city and neighboring areas is highly encouraging for the dairy industry. low-cost and easily adaptable to increase their nutritive value. • Similarly. leading to degradation and denudation of land and loss of natural resource base.simple. forest areas and common property resources.



ACCNTT JR ACCNTT SR. ACCNTT ASSET CASHIER SR. ACCNTT The Director of Finance heads the organization chart of Finance Department. There are 4 main sections: Manager (Accounts) Company Secretary Purchase Accounts Officer Cash and Bank Accounting Assistance Officer. .MANAGER ACCOUNTS COMPANY SECRETARY PURCHASE ACCNTS OFFICER CASH& BANK ACCTNG ASST OFFICER GNRL ACCNT & EDP OPERATIONS PAROLL ACCNT OFFICER ACCNT FINALISA TION ADVANCES OFFICER SALES ACCNT T JR. ACCNTT JR. ACCNTT SR.

Under the Manager (Accounts) there are 5 sub–sections: o The General Accountant and EDP Operation o The Sales Accountant Officer o The Payroll Accountant Officer o The Accounts Finalization Officer o The Advances Officer Under the purchase Accounts Officer there are 2 sub-sections: o Senior Accountant o Junior Accountant Under Cash and Bank Accounting Assistance Officer there are 2 sub-sections: o Assistant o Cashier .


has started spreading its wings in dairy segment to enhance the quantum of animal proteins in daily diet through milk. worlds on a three-tier and pattern co-operative structure providing benefits to more than seven lakhs milk producer families all over the state. Dairying has been now recognized as catalyst for economic development and is today accorded the status of thrust area by the government. ANDHRA PRADESH DAIRY SCENARIO The Andhra Pradesh Dairy Development Co-operative Federation (APDDCF) which spearheads the dairy movement in the state.INDUSTRY SCENARIO INDIA’S DAIRY SCENARIO India’s Agriculture. having achieved the satisfactory level of self-sufficiency in crop production. The operation Flood. The structure has helped the federation in building a network of 10 district diaries. 8 milk product factories and about 66 chilling . In the emerging string agriculture scenario. the appreciable concept of government has created necessary infrastructure in improving the performance of the dairy sector in the country. live stock production in general and dairying in particular has been identified as an important tool for enhancing the income of small farmers and reducing unemployment in large rural population.

association In the procurement of milk from farmers at different levels. 310 exclusive women societies and 4495. The overall labour investment in livestock farming can be as high as 73 percent compared to 27 percent in crop farming.43 lakhs small and 2. the other major group being 1. About 2.centers spteak all over the state.25 lakhs marginal farmers constitute a major part of the membership in co-operative societies. The system is aided by 3556 co-operative societies.15 lakhs large farmers CHAPTER-V Working Capital Management A Theoretical Frame Work .

The more working capital. Money that is tied up in inventory or money that customers sill owe to the company can’t be used to pay off any of its obligations. If this lifeline deteriorates. Sa’ if a company is not operating in the most efficient manner (slow collection) it will show up in the working capital. Understanding a company’s cash flow health is essential for making investment decisions. reinvest and meet capital requirements and payments also deteriorates. the less financial strain a company experiences. and used them to pay off its short term liabilities. This can be seen by comparing the working capital from one period of time to another’s slow collection may signal an underlying problem in the company’s operations. Working Capital also gives investors an idea of the company’s underlying operational efficiency. Working capital of a company reveals more about the financial condition of a business than almost any other calculation. the company’s ability to fund operations. Defination: .Introduction Working Capital: Cash is the lifeline of a company. A good way to judge a company’s cash flow prospects is to look at its working capital management (WCM). It tells you what would be left if a company raised all of its short term resources.

The term Net working capital can be defined in two ways: • The most common definition of net working capital is the difference between the current assets and the current liabilities. The better a company manages its working capital.The definition of working capital is the difference between an organization’s current assets and its current liabilities of more importance is its function which is primarly to support the day-to-day financial operations of an organization. including the purchase of stock. They are the gross working capital and the net working capital. • The net working capital. The net working capital helps in comparing the liquidity of the same firm overtime. There are two concepts of working capital. wages and other business expences. Therefore: Working Capital = Current Assets – Current liabilities A positive working capital means that the company is able to pay off its shortterm liabilities. A negative working capital means that a company currently is unable to meet its short-term liabilities with its current assets . It’s a measure of the both a company’s efficiency and its short-term financial health. • The alternative definition of NWC is that portion of current assets which is financed with long term funds. the payment of salaries. as long as current assets exceed current liabilities. as a measure of liquidity is quite useful for internal control. the less the company needs to borrow. and the financing of credit sales. The term gross working capital. the excess must be financed with long term funds. Even companies with cash surplus need to manage working capital to ensure that those surpluses are invested in wys that will generate suitable returns for investors. Since the current liabilities represent the sources of the short term funds. also reffered to as working capital means the total current assets.

If working capital dips tip low. As it is said that working capital is the difference between the current assets and the current liabilities. Too little of the working capital will result in cash flow problems highlighted by an organization exceeding its agreed overdraft limit. a business with insufficient working. Even very profitable business can run into trouble if they lose the ability to meet their short-term obligations. a business risks running out of cash. Accounts. Even when owners are meticulous in managing working capital. .(Cash. On the other hand. failing to pay suppliers on time and being unable to claim discounts for prompt payment. if an organization ties up too much of its resources in working capital it will earn a lower than expected rate of return on capital employed. In the long run. Working capital financing can be used as a fast cash option to cushion the periods when the flow is not ideal or readily available. Inventory) Management must ensure that a business has sufficient working capital. Receivables. Again this is not a desirable situation. Therefore in order to understand how the working capital is managed we need to first understand what are current assets and current liabilities of the firm. Capital will be unable to meet its current obligation and will be forced to cease trading even if it remains profitable on paper. the management of the company has to manage their current assets and current liabilities. finding the right levels to remain comfortable and competitive can be difficult. Sometimes it takes a little assistance to maintain levels of fluidity or make major purchases. Working Capital Management: Management of working capital plays a very important role in the financial management of a company because maintaining a balance of income to debt can be difficult and owners must be diligent to assure that it is kept.

thereby maximizing the interest earned. this over investment represents an unnecessary cost to the company. This includes making sure that funds are held as cash in bank deposits for as long as and in the largest amounts possible.The Important of Good Working Capital Management: Working capital constitutes part of the company’s investment in a department associated with this is an opportunity cost to the company. From a department’s point of view. If a department is operating with more working capital than is necessary. Working capital management takes place on two levels: . unnecessary working capital increases the amount of the capital charge which departments are required to meet. Explain the determinants of net working capital. such cash may more appropriately be “invested” in other assets or in reducing other liabilities. Objectives of Managing Working Capital: • • • • Describe the risk-return trade-off involved in managing a firm’s working capital. However. Describe the special problems encountered by multinational firms in managing working capital. Calculate the describe the basic sources of short-term credit. Approaches to Working Capital Management The objective of working capital management is to maintain the optimum balance of each of the working capital components. excess working capital means operating inefficiencies. In addition.

It is an integral part of the department’s overall management. departments need to recognize that each department has a unique mix of working capital components. that is the level of safety provide by the excess of current assets over current liabilities. some departments have significant inventory levels. There is no particular benchmark value or range that can be recommended as suitable for all government departments. For example. if a department tracks its own working capital ratio over a period of time. Excludes inventories from the current assets. considering only those asses most swiftly realizable. The quick ratio a derivative. The needs of efficient working capital management must be considered in relation to other aspects of the department’s financial and non-financial performance. The emphasis that needs to be placed on each component varies according to department. the trends the way in which the liquidity is changing will become apparent. Working Capital Ratio Current Assets Current Liabilities Current Ratio = The working capital ratio attempts to measure the level of liquidity.• • Ratio analysis can be used to monitor overall trends in working capital and to identify areas requiring closer management The individual components of working capital can be effectively managed by using various techniques and strategies When considering these techniques and strategies. working capital management is not an end in itself. . There are also other possible refinements. others have little if any inventory. However. Furthermore.

converted into cash within one year without undergoing any diminution in the without disrupting the operations of the firm. Accrued incomes Current Liabilities: The term current liabilities are those liabilities which are intended at the time of their inception. Cash in hand and bank balances 2. prepaid expenses and other short term investments . The basic current liabilities are accounts payable. Sundry debtors (less provision for bad debts) 4.Current Assets: The term current assets refer to those assets which in the ordinary course of business con be. Temporary investment of surplus funds 6. out of the current assets or earnings of the concern. or will be. bank overdraft and outstanding expenses and current liabilities in detail. cash equivalent. with in a year. accounts receivable. Inventories • • • • Raw Material Work in process Stores and spares Finished goods 5. inventory. . bills payable. Prepaid expenses 7. to be paid in the ordinary course of business. The major current assets are cash. Bills receivables 3. CONSTITUTES OF CURRENT ASSETS: 1. marketable securities.

advances and deposits 5. Bank over draft 7. Dividend payable (short term) 6. Accrued or out standing expenses 4. A simple working capital cycle may look something like: Working Capital Cycle . it does not amount to appropriation of profits Working Capital Cycle: This shows the cash coming into the business. Provision for taxation.CONSTITUTES OF CURRENT LIABILITIES: 1. Bills Payable 2. what happens to it while the business has it and where it goes. Secured creditors or account payable 3. Short term loans.

In other words. higher the risk lower is the cost and the lower the risk . PRINICIPLES OF WORKING CAPITAL The following are the general principles of a sound working capital management policy as follows: (A) VARIATIONS: PRINCIPLES OF RISK Risk here refers to the in ability of a firm to meet its obligations as and when they become due for payment. reduces dependence on short-term borrowing increases liquidity.term borrowings increases liquidity. reduces risk and thereby decreases the opportunity for gain or loss. c) Business Cycle: Business Cycle refers to alternate expansion and contraction in general business activity. Larger investments in current assets with less dependency on short .a) Rate of stock turnover: A firm having a high rate of stock turnover will need lower amount of working capital as compared to a firm having a low rate of turnover b) Credit Policy: Credit Policy of a concern in its dealings with debtors and creditors influence considerable the requirements of working capital. a) Principle of cost of capital: The various sources of raising working capital finance have different cost of capital and the degree of risk involved. reduces liquidity and increases profitability. On the other hand less investment in current assets greater dependence on short term loans increases risk. there is a definite inverse relationship between the degree of risk and profitability. Generally.

A sound working capital management should always try to achieve a proper balance between these two. According to this principle. the requirements of working capital depend upon the operating cycle of the business. a) Estimation of components of working capital: Since working capital is the excess of current assets over current liabilities. the amount of working capital invested in each component should be adequately justified by a firm’s equity position. The operating . According to this principle. on the basis of past experience between sales and working capital requirements a ration can be determined for estimating the working capital requirements in future. estimating the amounts of different constituents of working capital can make an assessment of the working capital requirements. c) Principle of maturity of payment: The principle is concerned with planning the total i9nvestment in current assets. (B)ESTIMATION OF WORKING CAPITAL Following is the brief explanation of the various techniques of estimating working capital requirements as follows.higher the cost. b) Principle of equity position: This principle is concerned with planning the total investment in current assets. b) Percent of sales method: This is traditional and simple method of estimating working capital requirements. According to this method. Maturity pattern of various current obligations is and important factor in risk assumptions and risk assessment. a firm should make very effort to relate maturities of payment to its flow of internally generated funds. c) Operating cycle approach: According to this approach.

The duration of the operating cycle for the purpose of estimating working capital requirements is equivalent to the sum of the duration of each of the operation cycle stages less than credit period allowed by the suppliers of the firm. (B)Variable Source :  Commercial banks  Indigenous bankers  Trade creditors  Installment credit  Advances  Accounts receivable .  Debentures  Public Deposits  Plaguing back of profits.credit/ factoring  Accrued expenses . SOURCES OF WORKING CAPITAL REQUIREMETS The source of working capital requirements is classified into two types they are fixed source and variable source they are as follows: (A) Fixed Source:  Shares.cycle begins with acquisition of raw materials and ends with collection of receivables.  Loans from financial institutions.

a company must have enough cash fund to meet its obligations. receivables and collections is maintained without any break. It refers to excess of current assets over current liabilities. In addition. it has to make arrangements for extra funds to meet seasonal demands or special orders. finished goods and for paying wages and salaries during the year. In the initial years its revenues may not be regular and adequate. so that the process of conversion of each into stock into sales. b) Regular working capital: It is the amount needed for the continuous operations of the business of the company. Permanent working capital is of two kinds. credit arrangement may not be available from banks etc. (A) Permanent working capital: It refers to the irreducible minimum reserves to be kept for maintaining a normal level of stock of raw materials. a) Initial working capital: At its inception and during the formation period of its operation. till it has established its credit standing and credit may have to be granted on sales to attract the customers. .. work–inprogress. Commercial paper TYPES OF WORKING CAPITAL: Every business enterprise must have adequate working funds for normal operations. It is permanently locked up in current assets.

b) Special working capital: All business enterprises have to be prepared to meet unforeseen eventualities that may arise in the course of their operations.(A) working capital: Variable or Circular Most of the business enterprises have to produce additional working capital to meet seasonal and special needs. variable capital is classified into two types a) Seasonal working capital: Obviously. it refers to financial requirements that crop up during the particular season. Therefore. Beyond their initial and regular circulating capital. they must have extra funds at ‘unstated periods to meet contingencies’. Chapter. On the basis.VI Data Analysis . most business will require at stated intervals a large amount of current assets to fill the demands of the seasonal busy periods.

Estimation of working capital Requirements 2004-2005 Increa se Amoun t Decreas e 1. Current liabilities: Creditors for purchases Creditors for Wages Others Amount 328163 65 82155 320 74501 0 11514 894 84560 845 10151 220 41016 300 178976 069 511675 20 262959 954 12119 745 51196 503 26301 . Packing Finished goods Receivables: Debtors Loans & Advances Gross working capital (A) 2.Current Assets Cash Balances Inventories: Raw material Work in Progress Consumables & Stores.

Current Assets Minimum cash Balances Inventories: Raw material Consumables & Stores.Creditors for Overheads Provisions Total Current Liabilities (B) 632 10881 652 23528 23 102852 355 Working Capital Gap 160107 599 400269 00 120080 699 Working Capital Margin Total Working Capital Requirement Estimation of working capital Requirements 2005-2006 1. Packing Packing materials Finished goods Increas e Amount Decreas e Amount 561667 00 121624 812 100861 71 724284 5 555007 73 194454 601 .

Current liabilities: Creditors for purchases Creditors for Wages Creditors for Overheads Provisions Others Total Current Liabilities (B) 129743 61 501613 59 631357 20 313757 021 150820 48 375942 99 187641 72 149883 3 358477 2 765241 24 237232 897 593082 24 177924 673 Working Capital Gap Working Capital Margin Total Working Capital Requirement Estimation of working capital Requirements 2006-2007 Increas e Decreas e .Debtors Loans & Advances Gross working capital (A) 2.

Current liabilities: Creditors for purchases Creditors for Wages Creditors for Overheads Provision Others Total Current Liabilities (B) Amount Amount 627262 89 191574 435 138061 29 126805 106755 81 124005 606 280085 67 646782 91 340188 556 926868 58 495601 703 191345 11 575312 02 408205 4 261868 4 248469 83 108213 434 387388 269 968470 67 290541 202 Working Capital Gap Working Capital Margin Total Working Capital Requirement .Current Assets Minimum cash Balances Inventories: Raw material Packing materials Work in progress Consumables & Stores.1. spares Finished goods Receivables: Debtors Loans & Advances Gross working capital (A) 2.

Current liabilities: Creditors for purchases Creditors for Wages Creditors for Overheads Provision Others Total Current Liabilities (B) Increas es Amount Decreas es Amount 921211 78 293662 759 135149 73 158760 70 738175 84 351574 43 104180 144 396871 386 139337 587 628330 151 119814 76 667557 68 334682 4 185713 4 293993 32 113340 534 514989 617 Working Capital Gap . Packing Packing materials Finished goods Receivables: Debtors Loans & Advances Gross working capital (A).Estimation of working capital Requirements 2007-2008 1.Current Assets Minimum cash Balances Inventories: Raw material Consumables & Stores.Total Current Assets 2.

e.  In the year 2005-06 the networking capital 177924673 which is more than the year 2004-05 because of less stock maintenance in the terms of raw materials and finished goods.  The year 2006-07 the networking capital is 290541202 which is more than 40% of increase in the previous two years i..Working Capital Margin 128747 404 386242 213 Total Working Capital Requirement Findings  As per the above analysis the working capital of year 2004-05 is increased by 120080699 because of highly changes in current assets. 2004-05 & 2005-06  The year 2007-08 the networking capital is increased to 386242213 which is almost double to the previous years .

c) The average collection period and payment period the company suggested that the average collection period and payments period generally should not be more than one and half a month. it is suggested that the company should raise its investment in Current Assets. b) In the light of the Current Assets made. So that it achieves 2:1 current ratio. a) Current Assets Management needs to be more efficient on receivable management and inventory management more attention.SUGGETIONS In the light of the above conclusion it is proposed to suggest the following for improving the performance of the Creamline Dairy products limited. . So it must be decreases the collection periods.

d) It is desirable that the company’s percentage of inventory holding to decreasing trend providing the company is able to meet the market demand keeping in view of the fluctuations in demand and availability of raw materials the company is suggested to improve their efficiency in holding the investors Chapter –VII CONCLUSION .

 The Creamline Dairy products limited.CONCLUSION Here an attempt is made to draw conclusion based on the study of Creamline Dairy products limited.Net Profit Ratio was Satisfactory .  The Creamline Dairy products limited Gross Profit Ratio was Satisfactory. The study revealed the following:  The Creamline Dairy products limited.has maintained slight standard Liquidity Ratios.

Working Capital Turnover Ratio was Satisfactory.  Over all Creamline Dairy products limited. Chapter-VIII BIBLIOGRAPHY . The Creamline Dairy products limited.Financial Performance was Positive.


com .N MAHESWARI Website: creamlinedairy. COST & MANAGEMENT ACCOUNTING – S.5.

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