TABLE OF CONTENTS

Chapter No Particular Page no.

Guide Certificate

Student’s Declaration

Preface

Acknowledgement

Certificate

Chapter 1 Introduction

Company Profile

Chapter 2 Introduction of the Project

Ratio Analysis

Chapter 3 Research Methodology

 Problem Statement
 Objectives of the Study
 Database
 Limitation of the Study

Chapter 4 Data Analysis

 Liquidity Ratio
 Leverage Ratio
 Activity Ratio
 Profitability Ratio
Chapter 5 Finding & Suggestions

Bibliography

Questioner
 CHAPTER -1
INTRODUCTION
 COMPANY PROFILE

INTRODUCTION
The Sirsa District Cooperative Milk Producers Union Limited is a unit of Haryana Dairy
Development Cooperative Federation Limited, Panchkula registered under the Haryana
Cooperatives Act, commissioned in the year 1978. Initially Milk Union, Sirsa had only one
Chilling Plant. In the year 1996, National Dairy Development Board commissioned a Plant
of capacity One Lakh liters of milk per day. The key products of this plant are Ghee,
Skimmed Milk Powder, Lassi, Kaju Pinni, Dahi and Paneer. Milk Union, Sirsa has seven
chilling centers. The Union manufactures & markets milk and milk products under the Brand
name "VITA" which is registered brand name of "Haryana Dairy Development Cooperative
Federation" the apex institution at the state level. The brand is highly trusted household name
for its wide rang of milk products like Packed Milk, Ghee, Skimmed Milk Powder, Dahi,
Lassi, Paneer and Kaju Pinni. Vita Milk Plant, Sirsa has taken up the concept of total
productive maintenance (TPM) entirely. The KAIZENS are being suggested by employees
time to time. Monthly review meetings are conducted at plant and headquarter level to
review the performance parameters. The achievements are compared with the norms and
remedial action is taken immediately to improve the performance of the plants.
In Haryana there are six Dairy Development Federation Corporation, Hissar – SIRSA,
Rohtak, Bhalabgarh, Kurukshetra – Karnal, Ambala and Sirsa. And every Federation is
linked with village dairy development societies.
Every Dairy Federation and Dairy Societies is a unit itself. This is having its own Directorate.
The divisional Directorate elects its President. The village level society collects the milk
from milk producer and sale it to Dairy Federation.

ENERGY CONSERVATION
General
Consumption of energy in milk plants is usually characterized by specific energy
consumption and peak hour’s requirements, separately for each type of services. In milk
plants data are usually presented for steam, refrigeration, well water, compressed air, electric
power.
There are no common standard for service requirement for dairy industry applicable to all
plants capacities or to specific products. Such requirement depends not only on overall
capacity and the type of plant but also on source of the energy utilization. Manufacture of
milk powder consumes lot of thermal and electrical energy as compared to handling of liquid
milk the energy consumption in the years 2013-2014, 2014-2015 and 2015-16 along with the
milk handled is as follows:

201 2014 201

Description UNIT
3-14 -15 5-16
Milk Handled Metric ton
175 445
2492
I) Milk 86.7 26.8
9.32
7 3
238. 516. 846.
Ii) Milk Powder
50 95 27
 Rs.in 110. 127. 183.
Total Energy Cost
lakhs 22 11 82
43.1 39.1 38.3
Energy Cost V/s Manufacturing Expenses Percent
5 7 1
Lakh 11.4 14.6 18.0
Total Energy Consumption-Electrical
KWH 3 2 7
62.8 55.7 38.7
Specific Energy Consumption-Electrical KWH/ton
6 5 4
Million 289 5461 717
Total Energy Consumption-
kcal 5.36 .85 5.00
Million
Thermal 0.15 0.18 0.13
KCAL
Specific Energy Consumption-Thermal 72 79 99
/Ton
29.6 21.5 17.5
Specific Energy Cost-Thermal Paisa/Kg
4 1 5

ENERGY CONSERVATION ACHIEVEMENTS

From the year 2005-2006, The Sirsa District Cooperative Milk Producers Union Limited,
Milk Plant, Sirsa has implemented six energy saving projects by which we have saved energy
worth Rs.25.58 lakh with investment cost of Rs.17.20lakh. This has resulted in 31.5%
reduction in specific energy consumption-thermal and 43.90% reduction in specific electrical
energy consumption.
 COMPANY PROFILE
===========================================
INTRODUCTION
From ancient times, Haryana is known as home of milk as a famous saying tells us "Deshon
mein desh Haryana jit dooth dahi ka khana" cattle of Haryana are world famous for their high
yielding capacity for instance Haryana cows and murrah buffaloes are among the best yielder
of milk in the country.
Milk Reception:
Milk plant, Sirsa is handled by Sirsa Co-operative milk Producer's Union Limited, Sirsa.
Milk is collected from the villages through docks are used for entry of Milk from trucks. A
sample is taken from each container from testing and sample giving positive test rejected and
left of the milk is put into tub from which through pipes milk goes for the further processing
payment is made to milk producer by weighing & measuring fat percentage. After reception
two types of tests are done to judge the quality of milk.
 Platform test/ organoleptic tests
 Laboratory tests
Composition of Milk:

Contents Percentage
Fat 3.75
Water 87.34
Albumin –0.40
Casein 3.00
Lactose 4.70
Ash 0.75
Other 0.06

Sales Offices
HARYANA is one of the most progressive states of Republic of India. In the domain of dairy
development it is well known for its productive milch cattle particularly the 'Murrah'
Buffaloes and Haryana Cows. The economy of the state is predominantly based on
agriculture. People rear and breed cattle as a subsidiary occupation. Milk production in the
State was estimated around 128.18 lacs litres per day during 1999-2000.
There are five milk plants operating in the Cooperative Sector in Haryana. These are located
at Ambala, SIRSA, Rohtak, Sirsa and Ballabgarh having a handling capacity of 4, 70,000
litres per day.

At present 16 brands across 15 states and one union territory are participating in the
campaign.

HARYANA DAIRY DEVELOPMENT CO-OPERATIVE FEDERATION

HARYANA is one of the most progressive states of Republic of India. In the domain of dairy
development it is well known for its productive milk cattle particularly the ‘Murrah’ Buffaloes
and Haryana Cows. The economy of the state is predominantly based on agriculture. People rear
and breed cattle subsidiary occupation. Milk production in the state was estimated around 147
lakhs liters per day during 2006-07.

The essence of various programmes launched in the State has been to adopt the ANAND
PATTERN of Milk Co-operatives. Under this system, all the functions of dairying like milk
procurement, processing and marketing are controlled by the Milk producers themselves. It has
three tier system comprising milk Producers Societies at the village level, Milk Producers Co-
operative Union at the district level and the state Milk Federation as an apex body at the state
level.

The Haryana Dairy Development Co-operative Federation Ltd. registered under Haryana
Co-operative Societies Act came into existence on April 1, 1977. Its authorized share capital is
Rs.4000 lakhs. It was established with the primary aim to promote economic interests of the milk
producers of Haryana particularly those belonging to weaker sections of the village community
by procuring and processing milk into milk products and marketing thereof by itself or through
its unions. In furtherance of the above objects, the Federation undertakes a number of activities
such as establishment of milk plants, marketing of VITA BRAND milk products of the Milk
Unions. Its turnover during is Rs.768.00 crores. It also extends technical guidance to the Unions
in all spheres of personnel, technical, marketing and financial management as well as makes
them quality conscious, through use of modern methods of laboratory testing of various
products.

Quality –VITA the Hallmark of Quality

As part of stringent quality measures, milk required for processing VITA products is procured
from Dairy Co-operative Societies only. It is ensured that the milk is transported to chilling
canters and plants in clean and sterilized milk cans as quickly as possible. All quality measures
as per Standard of Bureau of Indian Standards/ Agmark are being applied before the products are
marketed. Well-equipped laboratories are functioning in the chilling centers and milk plants to
maintain ideal quality standards. VITA is the endorsement of quality, a commendation we are
Proud of. Milk Plant Rohtak, Ballabgarh, Ambala and SIRSA have obtained ISO-9002 and
IS-15000 certificates. Remaining Plants would also obtain ISO-9002 shortly. Each Plant has
taken steps for implementing Hazard Analysis and Critical Control Points (HACCP).

DISTRICT MILK PRODUCER’S CO-OPERATIVE UNIONS

The Primary Milk Societies (PMS) functioning at the village level join to form a Milk Union for
carrying out such activities which are conducive and essential for the socio-economic
development of milk producers, by procuring and processing of milk and marketing of milk
products. The Board of Directors comprising 8 members elected out of the Chairmen of affiliated
Primary Milk Societies run the day-to-day administration through Chief Executive officer.
These Unions either process milk at their own level or pass the same to the milk plants of other
milk unions for processing. They also organize new Primary Milk Societies at the village level. A
brief matrix of the Milk Unions is as follows:
MILK UNIONS IN HARYANA

Sr. No. Name of the Union Date of Regis.

1 The Ambala District Co-operative Milk Producer’s Union Ltd., Ambala 10.03.1973

2 The Rohtak District Co-operative Milk Producer’s Union Ltd., Rohtak 01.04.2003

3 The Hisar-Jind Co-operative Milk Producer’s Union Ltd., SIRSA 10.07.1991

4 The Kurukshetra-Karnal Co-operative Milk Producer’s Union Ltd., Kurukshetra 05.07.1991

 5 The Sirsa District Co-operative Milk Producer’s Union Ltd., Sirsa 10.01.1978

6 The Ballabgarh Co-operative Milk Producer’s Union Ltd., Ballabgarh 01.04.2003

There are five milk plants operating in the Co-operative Sector in Haryana. These are located at
Ambala, SIRSA, Rohtak, Sirsa and Ballabgarh having a handling capacity of 470000 liters per
day.

PRIMARY MILK SOCIETY

The Primary Milk Society is the foundation of the Co-operative structure. The efficiency of the
movement solely lies in the strength of these Societies. Primary Milk Societies are organized at
the rate of one society per village. The purpose of such a society is to promote the economic
interests of its members by improving quality, and increasing quantity of milk production per
buffalo or cow and to provide necessary guidance and assistance to its members and supply milk
to Milk Unions. These societies also supply cattle feed etc. to their members with a view to
enhancing milk production. The Managing Committee of the Society comprises members elected
by those members who are eligible to participate and vote in the General Body Meeting.

GROWTH AT A GLANCE
Functional 2008- 2009- 2012- 2013- 2014- 2015-
Year 2010-112011-12 2016-17
Societies 09 10 13 14 15 16
(Avg)
Nos. 2710 2885 3166 3350 3906 4127 5028 5980 6167

Status of Milk Booths under Union

As On 31-3-2017

Sr. No. Name of the Union No. of Booths

1 The Ambala District Co-operative Milk Producer’s Union Ltd., Ambala 85

2 The Rohtak District Co-operative Milk Producer’s Union Ltd., Rohtak 61

3 The Hisar-Jind Co-operative Milk Producer’s Union Ltd., SIRSA 80

4 The Kurukshetra-Karnal Co-operative Milk Producer’s Union Ltd., Kurukshetra 26

5 The Sirsa District Co-operative Milk Producer’s Union Ltd., Sirsa 17

6 The Ballabgarh Co-operative Milk Producer’s Union Ltd., Ballabgarh 99

Vita products

SWEETENED FLAVOURED
DOUBLE TONED MILK
MANGO DRINK

NAMKEEN LASSI
MITHI LASSI
TABLE BUTTER GHEE (AGMARK)

JAL JEERA
DAHI

MILK
PANEER
COW MILK GHEE
KHEER

KAJU PINNI

MILK CAKE

VITA PRODUCTS PRICE

Sr. No. Product Packing Price

1 Ghee rates 1 Ltr. MP 453.00
2 Ghee rates 1 Ltr. PP 451.00
3 Ghee rates 1 Ltr. Tin 457.00
4 Ghee rates 2 Ltr. Tin 913.00
5 Ghee rates 5 Ltr. Tin 2275.00
6 Ghee rates 15 Ltr. Tin 6761.00
7 Cow Milk Ghee rates 1 Ltr. MP 463.00
8 Cow Milk Ghee rates 15 Ltr. Tin 6911.00
9 Table Butter 100 gm 42.00
10 Table Butter 500 gm 207.00
11 Liquid Milk (500 ml) Full Cream 50.00
12 Liquid Milk (500 ml) Standard 42.00
13 Liquid Milk (500 ml) Tonned 38.00
14 Liquid Milk (500 ml) DT 36.00
15 Milk Cake 200 gm 68.00
16 Kheer 200 gm 20.00
17 Kaju Pinni 900 gm 300.00
18 Kaju Pinni 450 gm 155.00
19 Dahi 200 gm 15.00
20 Dahi 400 gm 26.00
Sweetened Flavored Milk
21 200 ml Bottle 25.00
Butter Scotch Flavor
Sweetened Flavored llaichi
22 200 ml Bottle 25.00
Flavor
23 Plain Lassi 1 Litre pouch 25.00
24 Salted Lassi 250 ml pouch 10.00
25 Mithi Lassi 200 ml cup 18.00
26 Jal Jeera 200 ml pouch 7.00
27 Plain Chhachh (BLB) 500 ml pouch 10.00
28 Mango Drink 500 ml 23.00
29 Mango Drink 1000 ml 40.00
30 Kulfi (Pista) 60 ml 15.00
31 Choco Bar 60 ml 15.00
32 Vanila Cup 100 ml 12.00
33 Butter Scotch Cup 100 ml 15.00
34 Kaju Kishmish Brick 800 ml 92.00
 35 Tutti Fruity Brick 800 ml 87.00
36 Butter Scotch Brick 800 ml 85.00
37 Vanila Brick 1000 ml 85.00
38 Strawberry Brick 1000 ml 85.00
39 Paneer 200 gm 52.00
40 Paneer 1 kg 255.00

INTRODUCTION TO PROJECT

RATIO ANALYSIS
The term “Ratio” refers to the numerical and quantitative relationship between two items or
variables. This relationship can be exposed as
• Percentages
• Fractions
• Proportion of numbers
Ratio analysis is defined as the systematic use of the ratio to interpret the financial statements. So
that the strengths and weaknesses of a firm, as well as its historical performance and current
financial condition can be determined by ratio analysis, Ratio reflects a quantitative relationship
helps to form a quantitative judgment.
Steps in Ratio Analysis
• The first task of the financial analysis is to select the information relevant to the decision
under consideration from the statements and calculates appropriate ratios.
• To compare the calculated ratios with the ratios of the same firm relating to the pas6t or
with the industry ratios. It facilitates in assessing success or failure of the firm.
• Third step is to interpretation, drawing of inferences and report writing conclusions are
drawn after comparison in the shape of report or recommended courses of action.
Basis or Standards of Comparison
Ratios are relative figures reflecting the relation between variables. They enable analyst to draw
conclusions regarding financial operations. They use of ratios as a tool of financial analysis
involves the comparison with related facts. This is the basis of ratio analysis. The basis of ratio
analysis is of four types.
• Past ratios, calculated from past financial statements of the firm.
• Competitor’s ratio, of the some most progressive and successful competitor firm at the
same point of time.
• Projected ratios, ratios of the future developed from the projected or pro forma financial
statements.

Nature of Ratio Analysis

Ratio analysis is a technique of analysis and interpretation of financial statements. It is the
process of establishing and interpreting various ratios for helping in making certain decisions. It
is only a means of understanding of financial strengths and weaknesses of a firm. There are a
number of ratios which can be calculated from the information given in the financial statements,
but the analyst has to select the appropriate data and calculate only a few appropriate ratios. The
following are the four steps involved in the ratio analysis.
• Selection of relevant data from the financial statements depending upon the objective of
the analysis.
• Calculation of appropriate ratios from the above data.
• Comparison of the calculated ratios with the ratios of the same firm in the past, or the
ratios developed from projected financial statements or the ratios of some other firms or
the comparison with ratios of the industry to which the firm belongs.
Interpretation of the Ratios
The interpretation of ratios is an important factor. The inherent limitations of ratio analysis
should be kept in mind while interpreting them. The impact of factors such as price level
changes, change in accounting policies, window dressing etc., should also be kept in mind when
attempting to interpret ratios. The interpretation of ratios can be made in the following ways.
• Single absolute ratio
• Group of ratios
• Historical comparison
 • Projected ratios
• Inter-firm comparison
Guidelines or Precautions for Use of Ratios
The calculation of ratios may not be a difficult task but their use is not easy. Following
guidelines or factors may be kept in mind while interpreting various ratios.
• Accuracy of financial statements
• Objective or purpose of analysis
• Selection of ratios
• Use of standards
• Caliber of the analysis

Importance of Ratio Analysis

• Aid to measure general efficiency
• Aid to measure financial solvency
• Aid in forecasting and planning
• Facilitate decision making
• Aid in corrective action
• Aid in intra-firm comparison
• Act as a good communication
• Evaluation of efficiency
• Effective tool
Limitations of Ratio Analysis
• Differences in definitions
• Limitations of accounting records
• Lack of proper standards
• No allowances for price level changes
• Changes in accounting procedures
• Quantitative factors are ignored
• Limited use of single ratio
• Background is over looked
• Limited use
 • Personal bias

CLASSIFICATIONS OF RATIOS
The use of ratio analysis is not confined to financial manager only. There are different parties
interested in the ratio analysis for knowing the financial position of a firm for different purposes.
Various accounting ratios can be classified as follows:
• Traditional Classification
• Functional Classification
• Significance ratios

1. Traditional Classification
• Balance sheet (or) position statement ratio: They deal with the relationship between
two balance sheet items, e.g. the ratio of current assets to current liabilities etc., both the
items must, however, pertain to the same balance sheet.
• Profit & loss account (or) revenue statement ratios: These ratios deal with the
relationship between two profit & loss account items, e.g. the ratio of gross profit to sales
etc.,
• Composite (or) inter statement ratios: These ratios exhibit the relation between a profit
& loss account or income statement item and a balance sheet items, e.g. stock turnover
ratio, or the ratio of total assets to sales.
2. Functional Classification
These include liquidity ratios, long term solvency and leverage ratios, activity ratios and
profitability ratios.
3. Significance ratios
Some ratios are important than others and the firm may classify them as primary and secondary
ratios. The primary ratio is one, which is of the prime importance to a concern. The other ratios
that support the primary ratio are called secondary ratios.
In The View of Functional Classification the Ratios Are
• Liquidity ratio
 • Leverage ratio
• Activity ratio
• Profitability ratio
1. LIQUIDITY RATIOS
Liquidity refers to the ability of a concern to meet its current obligations as & when there
becomes due. The short term obligations of a firm can be met only when there are sufficient
liquid assets. The short term obligations are met by realizing amounts from current, floating (or)
circulating assets The current assets should either be calculated liquid (or) near liquidity. They
should be convertible into cash for paying obligations of short term nature. The sufficiency (or)
insufficiency of current assets should be assessed by comparing them with short-term current
liabilities. If current assets can pay off current liabilities, then liquidity position will be
satisfactory.
To measure the liquidity of a firm the following ratios can be calculated
• Current ratio
• Quick (or) Acid-test (or) Liquid ratio
• Absolute liquid ratio (or) Cash position ratio
(a) CURRENT RATIO:
Current ratio may be defined as the relationship between current assets and current liabilities.
This ratio also known as Working capital ratio. Working capital ratio is a measure of general
liquidity and is most widely used to make the analysis of a short-term financial position (or)
liquidity of a firm.

Current Assets
Current Ratio = Current Liabilities

Components of Current Ratio

CURRENT ASSETS CURRENT LIABILITIES

Cash in hand Outstanding or accrued expenses
Cash at bank Bank over draft
Bills receivable Bills payable
Inventories Short-term advances
Work-in-progress Sundry creditors
Marketable securities Dividend payable
 Short-term investments Income-tax payable
Sundry debtors
Prepaid expenses

(b) QUICK RATIO

Quick ratio is a test of liquidity than the current ratio. The term liquidity refers to the ability of a
firm to pay its short-term obligations as & when they become due. Quick ratio may be defined as
the relationship between quick or liquid assets and current liabilities. An asset is said to be liquid
if it is converted into cash within a short period without loss of value.

Quick or Liquid Assets

Quick Ratio = Current Liabilities

Components of Quick or Liquid Ratio

QUICK ASSETS CURRENT LIABILITIES

Cash in hand Outstanding or accrued expenses
Cash at bank Bank over draft
Bills receivable Bills payable
Sundry debtors Short-term advances
Marketable securities Sundry creditors
Temporary investments Dividend payable
Income tax payable

(c) ABSOLUTE LIQUID RATIO

Although receivable, debtors and bills receivable are generally more liquid than inventories, yet
there may be doubts regarding their realization into cash immediately or in time. Hence, absolute
liquid ratio should also be calculated together with current ratio and quick ratio so as to exclude
even receivables from the current assets and find out the absolute liquid assets.

Absolute Liquid Assets

Absolute Liquid Ratio = Current Liabilities

Components of Absolute Liquid Ratio

ABSOLUTE LIQUID ASSETS CURRENT LIABILITIES

Cash in hand Outstanding or accrued expenses
Cash at bank Bank over draft
Interest on Fixed Deposit Bills payable
Short-term advances
Sundry creditors
Dividend payable
Income tax payable

2. LEVERAGE RATIOS
The leverage or solvency ratio refers to the ability of a concern to meet its long term obligations.
Accordingly, long term solvency ratios indicate firm’s ability to meet the fixed interest and costs
and repayment schedules associated with its long term borrowings.
The following ratio serves the purpose of determining the solvency of the concern.
• Debt Equity Ratio
• Debt to total Funds Ratio
• Proprietary Ratio
• Fixed Assets to Proprietor’s Fund Ratio
• Capital Gearing Ratio
• Interest Coverage Ratio
(a) DEBT EQUITY RATIO
Debt-Equity ratio, also known as ‘External – Internal Equity’ ratio is calculated to measure the
relative claims of outsiders and the owners (i.e., shareholders) against the firm’s assets. This ratio
indicates the relationship between the external equities or the outsider funds and the internal
equities or the shareholders’ funds.
Outsiders Funds
Debt-Equity Ratio = Shareholder Funds

Components of Debt-Equity Ratio

 OUTSIDERS FUND SHAREHOLDERS FUND
Debentures Share capital
Mortgage loan Reserves & Surplus
Bank loan
Loan from financial institutions
Public deposits

(b) DEBT TO TOTAL FUNDS RATIO

The ratio establishes a link between the long term funds raised from outsiders and total long term
funds available in the business.

Debt
Debt to Total Funds Ratio = Equity + Debt

Components of Debt to Total Funds Ratio

SHAREHOLDERS FUND TOTAL CAPITALISATION

Share capital Debentures
Reserves & Surplus Mortgage loan
Bank loan
Loan from financial institutions
Public deposits
Share capital
Reserves & Surplus

(c) PROPRIETARY RATIO

A variant to the debt-equity ratio is the proprietary ratio which is also known as equity ratio. This
ratio establishes relationship between shareholders funds to total assets of the firm.
Shareholder Funds
Proprietary Ratio = Total Assets

Components of Proprietary Ratio

SHAREHOLDERS FUND TOTAL ASSETS

Share capital Fixed assets
 Reserves & Surplus Current Assets
Cash in hand & at bank
Bills receivable
Inventories
Marketable securities
Short-term investments
Sundry debtors
Prepaid expenses

(d) FIXED ASSETS TO PROPRIETOR’S FUND RATIO

The ratio establishes the relationship between fixed assets and shareholder’s funds, i.e., share
capital plus reserves, surpluses and retained earnings.
Fixed Assets
Fixed Assets to Proprietor’s Ratio = Proprietor’s Funds

Components of Proprietary Ratio

FIXED ASSETS PROPRIETOR’S FUNDS

Machinery Share capital
Buildings Reserves & Surplus
Plant
Vehicles

(e) CAPITAL GEARING RATIO

The term ‘capital gearing’ is used to describe the relationship between equity share capital
including reserves and surpluses to preference share capital and other fixed interest-bearing
loans. If preference share capital and other fixed interest bearing loans exceed the equity share
capital including reserves, the firm is said to be highly geared.
Equity Share Capital + Reserves & Surplus
Capital Gearing Ratio = Fixed Cost Bearing Capital
 Components of Capital Gearing Ratio

EQUITY SHAREHLDER FUND FIXED COST BEARING CAPITAL

Equity share capital Preference capital
Reserves & Surplus Debentures
Long term loans

(f) INTEREST COVERAGE RATIO

Net income to debt service ratio or interest coverage ratio is used to test the debt-servicing
capacity of a firm. The ratio is also known as Fixed Charges Cover or Times Interest Earned.
This ratio is calculated by dividing the net profit before interest and taxes by fixed interest
charges.
Net Profit (before Interest and taxes)
Interest Coverage Ratio = Fixed Interest Charges

3. ACTIVITY RATIOS
Funds are invested in various assets in business to make sales and earn profits. The efficiency
with which assets are managed directly affects the volume of sales. Activity ratios measure the
efficiency (or) effectiveness with which a firm manages its resources (or) assets. These ratios are
also called “Turn over ratios” because they indicate the speed with which assets are converted or
turned over into sales.
• Stock Turnover Ratio
• Debtors Turnover Ratio
• Creditors Turnover Ratio
• Working capital turnover ratio
• Fixed assets turnover ratio
(A) STOCK TURNOVER RATIO
Stock turnover ratio is also known as inventory stock ratio is normally calculated as sales/
average inventory or cost of goods sold/ average inventory. It would indicate whether inventory
has been efficiently used or not. The purpose is to see whether only the required minimum funds
have been locked up in inventory. Inventory Turnover Ratio (I.T.R.) indicates the number of
times the stock has been turned over during the period and evaluates the efficiency with which a
firm is able to manage its inventory.
Cost of Goods Sold
Stock Turnover Ratio = Average Stock

Cost of Goods Sold = Net Sales – Gross Profit

Opening Stock + Closing Stock

Average Stock = 2

(b) DEBTORS TURNOVER RATIO

Debtors’ turnover ratio indicates the velocity of debt collection of firm. In simple words, it
indicates the number of times average debtors are turned over during a year.
Net Credit Sales
Debtors Turnover Ratio = Average Trade Deb.

Trade Deb. = Sundry Deb. + Bill Receivables

Opening Trade Deb. + Closing Trade Deb.

Avg. Trade Debtors = 2

(c) CREDITORS TURNOVER RATIO

A supplier of goods, i.e., creditor, is naturally interested in finding out how much time the firm is
likely to take in repaying its trade creditors. The analysis for creditors’ turnover is basically the
same as of debtors’ turnover ratio except that in place of trade debtors, the trade creditors are
taken as one of the components of the ratio and in place of average daily sales, average daily
purchases are taken as the other component of the ratio.
Net Credit Purchases
Creditors Turnover Ratio = Average Trade Cr.

Trade Creditors = Sundry Cr. + Bill Payable

Opening Trade Cr. + Closing Trade Cr. Avg. Trade

Creditors = 2

(d) WORKING CAPITAL TURNOVER RATIO

Working capital of a concern is directly related to sales. It indicates the velocity of the utilization
of net working capital. This indicates the no. of times the working capital is turned over in the
course of a year. A higher ratio indicates efficient utilization of working capital and a lower ratio
indicates inefficient utilization.
Cost of Sales
Working Capital Turnover Ratio = Working Capital
Working Capital = Current Assets - Current Liabilities

Components of Working Capital

CURRENT ASSETS CURRENT LIABILITIES

Cash in hand Outstanding or accrued expenses
Cash at bank Bank overdraft
Bills receivable Bills payable
Inventories Short-term advances
Work-in-progress Sundry creditors
Marketable securities Dividend payable
Short-term investments Income-tax payable
Sundry debtors
Prepaid expenses

(e) FIXED ASSETS TURNOVER RATIO

It is also known as sales to fixed assets ratio. This ratio measures the efficiency and profit
earning capacity of the firm. Higher the ratio, greater is the intensive utilization of fixed assets.
Lower ratio means under-utilization of fixed assets.
Cost of Sales
Fixed Assets Turnover Ratio = Net Fixed Assets

Cost of Goods Sold = Net Sales – Gross Profit

Net Fixed Assets = Fixed Assets - Depreciation

4. PROFITABILITY RATIOS
The primary objectives of business undertaking are to earn profits. Because profit is the engine,
that drives the business enterprise. Generally, profitability ratios are calculated either in relation
to sales or in relation to investment. The various profitability ratios are discussed below.
• GENERAL PROFITABILITY RATIO
• Gross Profit Ratio
• Net Profit Ratio
• Operating Ratio
• PROFITABILITY RATIO BASED ON INVESTMENT
 • Return on Capital Employed
• Return on Shareholder’s Funds
GENERAL PROFITABILITY RATIO
(a) GROSS PROFIT RATIO
Gross profit ratio measures the relationship of gross profit to net sales and is usually represented
as a percentage. Thus, it is calculated by dividing the gross profit by sales.
Gross Profit
Gross Profit Ratio = Net Sales

Net Sales = Sales – Sales Return

(b) NET PROFIT RATIO

Net profit ratio establishes a relationship between net profit (after tax) and sales and indicates the
efficiency of the management in manufacturing, selling administrative and other activities of the
firm.

Net Profit after Tax

Net Profit Ratio = Net Sales
Net Profit after Tax = Net Profit (–) Depreciation (–) Interest (–) Income Tax

Net Sales = Sales – Sales Return

(c) OPERATING PROFIT RATIO

Operating ratio establishes the relationship between cost of goods sold and other operating
expenses on the one hand and the sales on the other.

Operating Cost
Operating Ratio = Net Sales
Operating Profit
Operating Profit Ratio = Sales

Operating Profit = Net sales - Operating cost

PROFITABILITY RATIO BASED ON INVESTMENT

(d) RETURN ON CAPITAL EMPLOYED
Return on capital employed establishes the relationship between profits and the capital
employed. It is the primary ratio and is most widely used to measure the overall profitability and
efficiency of a business.
Adjusted Net Profits
Return on Capital Employed = Capital Employed

Adjusted Profits = Profits before Interest, Tax and Dividends

Capital Employed = Fixed Assets + Working Capital

(e) RETURN ON SHAREHOLDER’S FUNDS

Return on shareholder funds is the relationship between net profits (after interest & tax) and the
proprietors’ funds. The two basic components of this ratio are net profits and shareholders’ funds.
Shareholders’ funds include equity share capital, preference share capital and reserves. Net
profits are arrived at after deducting interest on long-term borrowing and income tax, because
those will be the only profits available for shareholders.
Net Profits after Int. & Tax
Return on Shareholder’s Fund= Shareholder’s Funds
 CHAPTER – 3
RESEARCH
METHODOLOGY
 RESEARCH METHODOLOGY
==========================================================
Research Methodology
Research is a voyage of discovery, a movement from unknown to known. In common parlance, it
refers to a scientific and systematic search for pertinent information on a specific topic. It is the
pursuit of truth with the help of study, observation, comparison and experiment. Research
methods may be understood as all those method / techniques that are used by the researcher
during the course of studying his research problem.
Research methodology is a way to solve the problem scientifically and systematically. In this we
study the various steps that are generally adopted by researcher in studying his research problem
along with the logic behind them. When we talk about research methodology, we not only talk of
the research methods but also the comparison of the logic behind the method we use in the
context of our research study and explain why we are using a particular method and why not
others.
Objectives of the Study
The major objectives of the resent study are to know about financial strengths and weakness of
The SIRSA Co-operative Milk Producer’s Union Ltd. Milk Plant SIRSA through. The objectives
of the study are to evaluate the performance and efficiency of the company by using ratios as a
yardstick. To understand the liquidity, profitability and efficiency positions of the company
during the study period and to evaluate and analyze various financial performance facts of the
company. Make comparisons between the ratios during different periods.
Objectives
 To study the present financial system at The SIRSA Co-operative Milk Producer’s Union
Ltd. Milk Plant SIRSA.
 To determine the Profitability, Liquidity Ratios.
 To analyze the capital structure of the company with the help of Leverage ratio.
 To offer appropriate suggestions for the better performance of the organization.

Database
The information needed for fulfilling the objective of the study is collected both from primary as
well as secondary sources of data with regard to time, cost and sources available.
Primary Sources: -
Primary data is collected through observation and direct communication with Finance Manager
and other employees of Finance department.
Secondary Sources: -
Annual Reports & Records of the company are used for the purpose of report. Number of books
for the purpose has been studied for better understanding and preparing the report in a simple,
unambiguous and precise manner. Annexure, schedules & other pertinent details from various
sources are also used. Company Journal, Company Website and Special record that is maintained
by accountants has been studied while making this report.
Limitations of the Study
The study is bound up with some limitations and constraints which made efficiency of the same
extend deviate it from its main line of thought. Though no stone was left unturned to make the
study more precise, accurate and relevant to the objectives, yet there are some limitations and
general problems, which are note worthy to make study meaningful.
1. Time Constraint
The time was the major constraint for conductive the study. The time for conducting the project
was comparatively inadequate.
2. Limited Scope
The study of me was limited only to a company.
3. Lack of Deep Knowledge
Lack of deep knowledge was another limitation. To analyze the financial statements in depth one
should possess the deep knowledge of the financial analysis.
4. Only the Partial Fulfillment of the Degree
The study is carried only for the partial fulfillment of the degree of Master of Business
Administration (Finance). Due to this the researcher did not provide the whole and sole
concentration of his on the study.
5. Results cannot be generalized

In our analysis we used the trend analysis and comparative financial statements. So the results
cannot be generalized.
 CHAPTER – 4
INTERPRETATION &
ANALYSIS
 DATA ANALYSIS AND INTERPRETATION
Data Analysis
1. LIQUIDITY RATIOS
Liquidity refers to the ability of a concern to meet its current obligations as & when there
becomes due. The short term obligations of a firm can be met only when there are sufficient
liquid assets. The short term obligations are met by realizing amounts from current, floating (or)
circulating assets The current assets should either be calculated liquid (or) near liquidity. They
should be convertible into cash for paying obligations of short term nature. The sufficiency (or)
insufficiency of current assets should be assessed by comparing them with short-term current
liabilities. If current assets can pay off current liabilities, then liquidity position will be
satisfactory.
To measure the liquidity of a firm the following ratios can be calculated
• Current ratio
• Quick (or) Acid-test (or) Liquid ratio
• Absolute liquid ratio (or) Cash position ratio
LIQUIDITY RATIO
A. CURRENT RATIO
(Amount in `)
Current Ratio
Year Current Assets Current Liabilities Ratio
2012-13 123296313.00 54330888.59 2.27
2013-14 132443503.49 50127148.94 2.64
2014-15 205860507.99 71297804.34 2.89
2015-16 305913637.70 52604159.71 5.82
2016-17 493669302.07 30760257.42 16.05

Interpretation
As a rule, the current ratio with 2:1 or more is considered as satisfactory position of the firm. As
we can see that in the year 2016-2017 current ratio is 16.05:1 which has reached very high as
compared to previous five years which shows that the company is not utilizing the liquid funds
properly and company is in a position to pay its current liabilities out of its current assets in
time.As per the rule this ratio is good. But very high ratio is not good for the company.
B. QUICK RATIO
(Amount in `)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2012-13 41284005.02 54330888.59 0.76
2013-14 65105975.12 50127148.94 1.30
2014-15 135540557.70 71297804.34 1.90
2015-16 219156085.82 52604159.71 4.17
2016-17 381937673.10 30760257.42 12.42

Interpretation
As a rule, the quick ratio with 1:1 or more is considered as satisfactory position of the firm. As
we can see that in the year 2016-2017 quick ratio is 12.42:1 which has reached very high as
compared to previous five years which shows that company is able to pay off current obligations
immediately. As per the rule this ratio is good. But very high ratio is not good for the company

C. ABSOULTE LIQUIDITY RATIO

(Amount in `)
Absolute Liquidity Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2012-13 8687164.94 54330888.59 0.16
2013-14 5538256.14 50127148.94 0.11
2014-15 6497389.09 71297804.34 0.09
2015-16 10052927.09 52604159.71 0.19
2016-17 32755145.63 30760257.42 1.06

Interpretation
Absolute Liquid Ratio of 0.5:1 or more is supposed to be an ideal ratio. As we can see that in the
year 2016-2017 current ratio is 1.06:1 which has reached very high as compared to previous five
years which shows that company’s short-term financial position is good. As per the rule this ratio
is good and it is also good for the company.
2. LEVERAGE RATIOS
The leverage or solvency ratio refers to the ability of a concern to meet its long term obligations.
Accordingly, long term solvency ratios indicate firm’s ability to meet the fixed interest and costs
and repayment schedules associated with its long term borrowings.
The following ratio serves the purpose of determining the solvency of the concern.
• Debt Equity Ratio
• Debt to total Funds Ratio
• Proprietary Ratio
• Fixed Assets to Proprietor’s Fund Ratio
• Capital Gearing Ratio
• Interest Coverage Ratio

LEVERAGE RATIOS
A. DEBT EQUITY RATIO
(Amount in `)
Debt Equity Ratio
Year Outsider Funds Shareholder Funds Ratio
2012-13 112631760.87 54450607.74 2.07
2013-14 52861168.90 63194048.10 0.84
2014-15 61744210.40 63296365.79 0.98
2015-16 71158277.79 66921073.19 1.06
2016-17 261000000.00 71813190.97 3.63

Interpretation
Debt Equity Ratio of 2:1 or less is supposed to be an ideal ratio. As we can see that from the year
2012-13 to 2014-15 the ratio is less than 2:1 but in the last year 2015-16 this ratio is 3.63:1
which is higher than ideal ratio which show that company claims of outsiders in long term
(creditors) are greater than those of owners.
As per the rule this ratio is not good and it is also not good for the company.
B. DEBT TO TOTAL FUNDS RATIO
(Amount in `)
Debt to Total Funds Ratio
Year Outsider Funds Total Capitalization Ratio
2012-13 112631760.87 167082368.61 0.67
2013-14 52861168.90 116055217.00 0.46
2014-15 61744210.40 125040576.19 0.49
2015-16 71158277.79 138079350.98 0.52
2016-17 261000000.00 332813190.97 0.78

Interpretation
Debt to total funds Ratio of 0.67:1 or less is supposed to be an ideal ratio. As we can see that
from the year 2013-14 to 2016-2017 ratio is continuously increasing which shows that company
has relied much on outside sources for raising long-term funds.
As per the rule this ratio is not good hence it is also not good for the company.

C. PROPRIETARY RATIO
(Amount in `)
Proprietary Ratio
Year Share Holders Funds Total Assets Ratio
2012-13 54450607.74 226207675.78 0.24
2013-14 63194048.10 257932727.77 0.25
2014-15 63296365.79 331894935.48 0.19
2015-16 66921073.19 433418563.96 0.15
2016-17 71813190.97 625356345.33 0.12

Interpretation
In Proprietary Ratio there are no ‘rules of thumb’ higher the ratio better it is for the company. As
we can see that from the year 2012-13 to 2016-2017 ratio is continually decreasing which shows
that company’s long-term solvency position is not better.
As per the rule this ratio is not good hence it is also not good for the company.
D. FIXED ASSETS TO PROPRIETOR’S FUNDS
(Amount in `)
Fixed Assets to Proprietor’s Ratio
Year Fixed Assets Shareholder’s Funds Percentage
2006 – 07 90848300.09 54450607.74 167%
2007 – 08 109970071.59 63194048.10 174%
2008 – 09 106193589.80 63296365.79 168%
2009 – 10 105278921.57 66921073.19 157%
2010 – 11 107153312.57 71813190.97 149%

Interpretation
Fixed Assets to proprietor’s Ratio of 65% or less is better for the company. As we can see that
from the year 2012-13 to 2016-2017 ratio is continuously decreasing which show that company
is improving this ratio but it is much higher to normal ratio this shows that owner’s funds are not
sufficient to finance the fixed assets and company has to depend upon outsiders to finance the
fixed assets.
As per the rule this ratio is not good hence it is also not good for the company.

E. CAPITAL GEARING RATIO

(Amount in `)
Capital Gearing Ratio
Fixed Cost Bearing
Year Equity Shareholder Fund Ratio
Capital
2012-13 54450607.74 112631760.87 0.48
2013-14 63194048.10 52861168.90 1.20
2014-15 63296365.79 61744210.40 1.03
2015-16 66921073.19 71158277.79 0.94
2016-17 71813190.97 261000000.00 0.28

Interpretation
In Capital Gearing Ratio there are no ‘rules of thumb’ lesser the ratio better it is for the company.
As we can see that from the year 2012-13 to 2014-15 ratio is continuously decreasing which
show that company capital gearing ratio is good.
As per the rule this ratio is good hence it is also good for the company.
F. INTEREST COVERAGE RATIO
(Amount in `)
Interest Coverage Ratio
Year EBIT Fixed Interest Charges Ratio
2012-13 7965269.89 6712032.68 1.19
2013-14 14538426.10 9958071.00 1.46
2014-15 8705714.40 4580355.10 1.90
2015-16 9554336.83 8070006.02 1.18
2016-17 11216940.37 6325295.00 1.77

Interpretation
In Interest Coverage Ratio higher the ratio better it is for the company. As we can see that from
the year 2012-2013 to 2016-2017 ratio is increasing except the year 2013-14 which shows that
company is able to meet its commitment of fixed interest charges.
As per the rule this ratio is good hence it is also good for the company.
3. ACTIVITY RATIOS
Funds are invested in various assets in business to make sales and earn profits. The efficiency
with which assets are managed directly affects the volume of sales. Activity ratios measure the
efficiency (or) effectiveness with which a firm manages its resources (or) assets. These ratios are
also called “Turn over ratios” because they indicate the speed with which assets are converted or
turned over into sales.
• Stock Turnover Ratio
• Debtors Turnover Ratio
• Creditors Turnover Ratio
• Working capital turnover ratio
• Fixed assets turnover ratio

ACTIVITY RATIOS
A. STOCK TURNOVER RATIO
(Amount in `)
Stock Turnover Ratio
Year Cost of Goods Sold Average Stock Ratio
2012-13 989246756.66 58569423.02 16.89
2013-14 1379748713.93 55985834.36 24.65
2014-15 1740902881.50 47855588.69 36.38
2015-16 2044892769.85 54447919.21 37.56
2016-17 2273758620.65 73474740.16 30.95

Interpretation
In Stock Turnover Ratio there are no ‘rules of thumb’ higher the ratio better it is for the company.
As we can see that in the year 2012-13 to 2014-15 the ratio is continuously increasing except last
year 2015-2016 ratio which show that company’s previous year trends are good but in last year
the ratio is decreasing which is not good.
As per the rule this ratio is not good hence it is also not good for the company.
B. DEBTORS TURNOVER RATIO
(Amount in `)
Debtors Turnover Ratio
Year Net Credit Sales Avg. Trade Dr. Ratio Collection Period
2012-13 1031504291.53 18586934.78 55.50 7 days
2013-14 1425577500.72 28007884.85 50.90 7 days
2014-15 1781031869.07 58293047.64 30.55 12 days
2015-16 2088598137.00 137320364.22 15.21 24 days
2016-17 2323788901.21 194850640.46 11.93 31 days

Interpretation
In Debtors Turnover Ratio there are no ‘rules of thumb’ higher the ratio better it is for the
company. But as per the company policy all the sales is done on cash basis except government
organizations. As we can see that in the year 2012-13 to 2014-2015 ratio is continuously
decreasing it is due to the credit sales given to the govt. institutions.
But it is decreasing at a higher rate which is not good for the company.

C. CREDITORS TURNOVER RATIO

(Amount in
`)
Creditors Turnover Ratio
Year Net Credit Purchase Avg. Trade Cr. Ratio Payment Period
2012-13 862304398.38 33008439.08 26.12 14 days
2013-14 1218063363.76 34102557.54 35.72 10 days
2014-15 1569377942.91 41298110.38 38.00 10 days
2015-16 1849566173.60 35204283.19 52.54 7 days
2016-17 2048746839.00 14528146.83 141.02 3 days

Interpretation
In Creditors Turnover Ratio there are no ‘rules of thumb’ lesser the ratio better it is for the
company. But as per the company policy all the purchases of raw milk will be done on 10 days
payment basis. As we can see that from the year 2012-13 to 2015-16 ratio is continuously
increasing which shows that company pays the credit amount very fast.
As per the rule this ratio is not good hence it is also not good for the company.
D. WORKING CAPITAL TURNOVER RATIO
(Amount in `)
Working Capital Turnover Ratio
Year Cost of Sales Working Capital Ratio
2012-13 989246756.66 68965424.41 14.34
2013-14 1379748713.93 82316354.55 16.76
2014-15 1740902881.50 134562703.65 12.94
2015-16 2044892769.85 253309477.99 8.07
2016-17 2273758620.65 462909044.65 4.91

Interpretation
In Working Capital Ratio there are no ‘rules of thumb’ higher the ratio better it is for the
company but a high working capital turnover ratio is not a good situation for company. This ratio
should be compared with ratios of other firms doing similar business and making a better
interpretation of the ratio. As we can see that in the year 2012-13 to 2015-16 ratio is continuously
decreasing which shows that company’s working capital ratio is not good.

E. FIXED ASSETS TURNOVER RATIO

(Amount in `)
Fixed Assets Turnover Ratio
Year Cost of Sales Net Fixed Assets Ratio
2012-13 989246756.66 51349925.28 19.26
2013-14 1379748713.93 63995092.77 21.56
2014-15 1740902881.50 62018721.87 28.07
2015-16 2044892769.85 58639581.77 34.87
2016-17 2273758620.65 57137107.77 39.79

Interpretation
In Fixed Assets Turnover Ratio there are no ‘rules of thumb’ higher the ratio better it is for the
company. As we can see that from the year 2012-13to 2015-16 ratio is continuously increasing
which show that company fixed assets turnover ratio is good.
As per the rule this ratio is good hence it is also good for the company.
4. PROFITABILITY RATIOS
The primary objectives of business undertaking are to earn profits. Because profit is the engine,
that drives the business enterprise. Generally, profitability ratios are calculated either in relation
to sales or in relation to investment. The various profitability ratios are discussed below.
• GENERAL PROFITABILITY RATIO
• Gross Profit Ratio
• Net Profit Ratio
• Operating Ratio
• PROFITABILITY RATIO BASED ON INVESTMENT
• Return on Capital Employed
• Return on Shareholder’s Funds

A. GROSS PROFIT RATIO

(Amount
in `)
Gross Profit Ratio
Year Gross Profit Net Sales Percentage
2012-13 42257534.87 1031504291.53 4.10%
2013-14 45828786.79 1425577500.72 3.22%
2014-15 40128987.57 1781031869.07 2.25%
2015-16 43705367.15 2088598137.00 2.09%
2016-17 50030280.56 2323788901.21 2.15%

Interpretation
In Gross Profit Ratio there are no ‘rules of thumb’ higher the ratio better it is for the company. As
we can see that from the year 2012-13 to 2015-16 ratio is continuously decreasing which shows
that company’s gross profit ratio is not good.
As per the rule this ratio is not good hence it is also not good for the company.
B. NET PROFIT RATIO
(Amount
in `)
Net Profit Ratio
Year Net Profit After Tax Net Sales Percentage
2012-13 1142222.89 1031504291.53 0.11%
2013-14 2029708.61 1425577500.72 0.14%
2014-15 2723149.30 1781031869.07 0.15%
2015-16 2676137.83 2088598137.00 0.13%
2016-17 3112890.69 2323788901.21 0.13%

Interpretation
In Net Profit Ratio there are no ‘rules of thumb’ higher the ratio better it is for the company. As
we can see that from the year 2012-13 to 2013-14 ratio is continuously increasing but in 2014-15
and 2015-16 the ratio has decreased which shows that company’s net profit ratio is not good.
As per the rule this ratio is not good hence it is also not good for the company.

C. OPERATING PROFIT RATIO

(Amount in `)
Operating Profit Ratio
Year Operating Profit Net Sales Percentage
2012-13 18066022.69 1031504291.53 1.75%
2013-14 19822396.49 1425577500.72 1.39%
2014-15 21065818.48 1781031869.07 1.18%
2015-16 14107379.66 2088598137.00 0.68%
2016-17 15700499.56 2323788901.21 0.68%

Interpretation
In Operating Profit Ratio there are no ‘rules of thumb’ higher the ratio better it is for the
company. As we can see that from the year 2012-13 to 2015-16 ratio is continuously decreasing
which shows that company’s operating profit ratio is not good.
As per the rule this ratio is not good hence it is also not good for the company.
D. RETURN ON CAPITAL EMPLOYED
(Amount in `)
Return on Capital Employed
Year Adjusted Profit Capital Employed Percentage
2012-13 7965269.89 159813724.50 4.98%
2013-14 13014861.61 192286426.14 6.77%
2014-15 8705714.40 240756293.45 3.62%
2015-16 9554336.83 358588399.56 2.66%
2016-17 11216940.37 570062357.22 1.97%

Interpretation
In Return on Capital Employed Ratio there are no ‘rules of thumb’ higher the ratio better it is for
the company. As we can see that from the year 2012-13 to 2015-16 ratio is continuously
decreasing which shows that company’s return on capital employed ratio is not good.
As per the rule this ratio is not good hence it is also not good for the company.

E. RETURN ON SHAREHOLER’S FUND

(Amount
in `)
Return on Shareholder’s Fund
Year Adjusted Profit Shareholder’s Funds Percentage
2012-13 7965269.89 54450607.74 14.63%
2013-14 13014861.61 63194048.10 20.60%
2014-15 8705714.40 63296365.79 13.75%
2015-16 9554336.83 66921073.19 14.28%
2016-17 11216940.37 71813190.97 15.62%

Interpretation
In Return on Shareholder’s Fund Ratio there are no ‘rules of thumb’ higher the ratio better it is
for the company. This ratio should be compared with ratio of other firms doing similar business
and making a better interpretation of the ratio. As we can see that from the year 2012-13 and
2013-14 ratio is decreasing but after that in 2014-15 and 2015-16 it is again increasing which
show that resources of company are well used.
As per the rule this ratio is good hence it is also good for the company.
 CHAPTER – 5
FINDINGS & SUGGESTIONS
FINDINGS

Like a traveler, who after completing his long and arduous journey reaches his destination and
looks back upon the area covered by him for recalling the important landmarks and experiences
he came across; similarly, it would be desirable to review the various aspects of the present
study. So prior to winding up this study, an attempt is made to summarize its major findings on
the basis of forgoing chapters which deals with the analysis and interpretation of the financial
statements.
To conclude, The SIRSA Co-operative Milk Producer’s Union Ltd. Milk Plant SIRSA short
term, long term and solvency financial position can be regarded as not good which is shown
through under mentioned facts and figures:-
• Liquidity position of Milk Plant SIRSA is not good because Quick ratio and Current ratio
is very high in previous year as compared to the last years which is due to the idle funds.
• Gross Profit Ratio also shows the declining trend from year to year.
• Net profit of Milk Plant SIRSA is very low because Milk Plant SIRSA is a co-operative
society.
• Operating Profit Ratio is also showing a declining trend from year to year.
• Return on Capital employed shows decreasing trend which is not good for the company.
It shows the weaker position of the company.
• Return on shareholders’ fund shows increasing trend which is good for the company.
• Proprietary Ratio of the Milk Plant SIRSA shows decreasing trend, which is again not
good for the company.
• Receivable ratio show decreasing trend which has negative effect on liquidity position of
the company.
• Payable ratio shows that Milk Plant SIRSA gets less days in previous year for payment
to its creditors.
SUGGESTIONS

A company’s performance is reflected through its turnover, profitability and long term & short
term financial position. From the above analysis it is clear that the financial position of the plant
is not sound. There is a need to apply long term as well as immediate stern steps. To improve the
financial position of the company, following measures are suggested:
• Efforts should be made to improve internal equity over external equity.
• Proper utilization of fixed assets is required.
• Current assets management should be checked & its level should be decreased to
overcome the problem of idle funds.
• To control the cost of goods sold, the purchase policy should be revised and purchases
should be made on favorable basis.
• To reduce administration expenses. Proper utilization of employees and workforce should
be made. There is a need to recruit and retain more efficient employees in the plant.
• To control operating cost, cost of goods sold & administration expenses should be
reduced.
• There is also a need of better inventory management, effective steps should be taken to
control inventory conversion period.
• To improve the sales, the plant should move along with the advanced technology by
modifying its sales policies, so that stock can be easily converted into sales.
• Receivable and payable ratio is also to control by extending the payment period and
receive the payment as fast as possible.
• Profitability can be increased by reduction in cost of power and fuel, higher utilization of
labor, use of higher skilled labor etc.
• The company has idle funds which can be utilized by improving the management system.
CONCLUSION

The overall conclusion of study is that the overall position of Milk Plant SIRSA is not good. This
is due to the taking of long term unsecured loan which also effect the bank balance of the current
asset that effect the overall ratios of the study. Hence, we can say that the short term, long term
and solvency positions of Milk Plant SIRSA are not good as compared to the previous years.
CHAPTER – 6
ANNEXURES
 BALANCE SHEET

The Sirsa Co-operative Milk Producer’s Union Ltd.

BALANCE SHEET AS AT 31ST MARCH 2012, 2013, 2014, 2015, 2016 & 2017

BALANCE SHEET OF LAST FIVE YEARS

2012-13 2013-14 2014-15 2015-16 2016-17
LIABILITIES
Share Capital 1338487.21 14764221.84 15973199.73 17180431.73 18258876.65
Reserves &
39923513.64 46400117.65 44600016.76 47064503.63 50441423.63
Surplus
Grant &
10522791.53 96336511.89 138112996.40 242568345.42 258940051.26
Subsidies
Unsecured Loans 112631760.87 52861168.90 61744210.40 71158277.79 261000000.00
Current
Liabilities & 54330888.59 50127148.94 71297804.34 52604159.71 30760257.42
Provisions
TOTAL 230793825.84 260489169.22 331728227.63 430575718.28 619400608.96

ASSETS
Fixed Assets 90848300.09 109970071.59 106193589.80 105278921.57 107153312.57

Investments 12063062.69 15519152.69 19840837.69 22226004.69 24533730.69

Current Assets 123296313.00 132443503.49 205860507.99 305913637.70 493669302.07

Losses
Upto Last Year
5728372.95 4586150.06 2556441.45 -166707.85 -2842845.68
Profit/Loss A/C
During the Year
-1142222.89 -2029708.61 -2723149.30 -2676137.83 -3112890.69
Profit/Loss A/C
TOTAL 230793825.84 260489169.22 331728227.63 430575718.28 619400608.96
 PROFIT & LOSS ACCOUNT

The Sirsa Co-operative Milk Producer’s Union Ltd.

PROFIT & LOSS FOR THE YEAR ENDING 31ST MARCH 2012, 2013,2014,2015,2016 &
2017

P&L ACCOUNT OF LAST FIVE YEARS

2012-13 2013-14 2014-15 2015-16 2016-17
REVENUE INCOME (` In Thousands)
Sale of Milk & Milk
980536.32 1336611.83 1650720818.33 1933704108.79 2182890.26
Prod
Sale of Trading
49750.59 87824.78 129134919.55 153455194.24 139477.80
Goods
Sale of Scrap 1217.37 1140.88 1176131.19 1438833.97 1420.82

Closing Stock
Finished Goods 61121.15 45626.77 46996890.46 58079612.47 84402.19

Trading Goods 3461.56 1762.18 1325328.52 2494006.98 1973.66

SUB TOTAL 1096087.00 47388.95 48322218.98 60573619.45 86375.86

Misc Income 793.78 1364.40 1729965.42 1962865.04 1682.34

Income From TIP 13.53 26.62 6050.00 0.00 0.00

By Gross Profit 42257.53 45828.78 40128987.57 43705367.15 50030.28

TOTAL 43064.85 1474357.48 1831090103.47 2151134621.49 2411847.11

REVENUE EXPENSES (` In Thousands)

O-Stock Finished
51406.93 61121.15 4562.67 46996.89 58079.61
Good
O-Stock Trading
1149.20 3461.56 1762.18 1325.32 2494.00
Goods
R-Material
814172.43 1128694.51 1434723.76 1703316.02 1895842.39
Consumed
Manufacturing Exp. 99081.12 124271.56 132558.35 153400.95 175994.79

Procurement Exp. 30173.59 35714.41 38529.72 43094.31 48496.64

Purchase of Tar.
57846.17 73874.46 136024.29 157332.87 179227.03
Good
Gross Profit 42257.53 45828.78 40128.98 43705.36 50030.28

SUB TOTAL 1096087.00 2900104.13 3618579.18 2149171.75 2410164.76

Administrative Exp. 14049.98 18250.36 17498.80 20564.63 25545.32

Selling Exp. 10092.36 7756.02 10140.27 9033.35 8784.45

Prior Period Exp. 49.15 0.00 -1564.36 0.00 0.00

NON OPERATING
EXP.
Royalty Paid 551.00 500.00 500.00 500.00 551.50

Lease Money 4438.28 1221.96 1221.96 1221.96 1221.96

Depreciation 5918.79 6476.60 5362.60 4793.94 4392.44

Int. on Loan HDDC 187.80 9958.07 4580.35 5500.19 307.78

Int. on Cash Cr.
6137.49 0.00 0.00 0.00 6404.24
Limit
Net Profit Before I.
1639.97 3056.79 4125.35 4054.14 4504.90
Tax
Income Tax on
-497.75 -1027.08 -1402.21 -1378.00 -1392.01
Profits
Add Back I. Tax of
0.00 0.00 0.00 306.60 0.00
Pre. Year
Net Profit after I. Tax 1142.22 2029.70 2723.14 2676.13 3112.89

TOTAL 43064.85 1474357.48 1831090.10 2151134.62 2411847.11

BIBLIOGRAPHY

In completing this project report many books, annual reports of The Sirsa Co-operative Milk
Producer’s Union Ltd. Milk Plant SIRSA and many websites are being used. I pay my respect
and thanks to them.

• Annual report of The SIRSA Co-operative Milk Producer’s Union Ltd. Milk Plant
Rohtak for the last 5 years.

• GUPTA, Arun gupta, and Sharma, R.K., Management Accounting, 11nt ed., New Delhi,
Kalyani Publishers, 2009

• Kothari, C.R., Research Methodology Methods & Techniques, 2nd ed., New Delhi, New
Age International (P) Limited Publishers, 2008

• Pandey, I.M., Financial Management, 9th ed., Vikas Publishing House Pvt. Ltd., 2007

• Websites referred

• www.vitaindia.com

• www.google.com

• www.wikipedia.com

• www.nddb.org