Report on

Organisation Study (18MBAOS307) at

KERALA SOLVENT EXTRACTION
LTD

BY
AKHIL S KUMAR
1IA18MBA07

Submitted to

VISVESVARAYA TECHNOLOGICAL UNIVERSITY, BELAGAVI

In partial fulfillment of the requirements for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION
Under the guidance of

INTERNAL GUIDE EXTERNAL GUIDE

MR. SUHAS PATEL MR.V V MATHEW
ASSISTANT PROFESSOR HR MANAGER
DEPARTMENT OF MBA, AIT KSE LTD

Department of MBA
Acharya Institute of Technology,
Soladevanahalli, Hesaraghatta Main Road,
Bengaluru - 107 August 2019
 ACHARYA INSTITUTE
OF TECHNOLOGY
(Affiliated to Visvesvaraya Technological U diversity, B elagavi, Approved by AICTE, New Delhi and Accredited by NBA and NAAC)

CERTIFICATE
Date: 30/08/2019

This is to certify that Mr. Akhil S Kumar bearing USN 1IA18MBA07 is a

bonafide student of Master of Business Administration course of the Institute
during 2018-20 batch, affiliated to Visvesvaraya Technological University,
Belagavi. The report on Organisation Study at “Kerala Solvent Extractlon Ltd,
Kottayam” is prepared by him under the guidance of Prof. Sulias Patel, in partial
fulfillment of the requirements for the award of the degree of Master of Business
Administration of Visvesvaraya Technological University, Belagavi, Karnataka.

Signature of Internal GuideSignature OD Signature

Head of tDspa

VIVA VOCE EXAMINATION

Name of the Signature with Date

Examiners

Acharya Dr. Sarvepalli Radhakrishnan Road, Soladevanahalli, Acharya PO., 8engaJuru 560 107, Karnataka, India • www.achary6.6c.i n / I !
• Ph:+91.80-225 55555 E m 2102 • Fax: +91-80-237 002 42 • E-mail: principalait@acharya.ac.in | admissions@acharya ac.in
 ACKNOWLEDGEMENTS

I wish to express my sincere thanks to our respected Principal, Dr Prakash M R, beloved

Dean-Academics, Dr Devarajaiah R M, and deep sense of gratitude to Dr M M Bagali,
HOD, MBA, Acharya Institute of Technology, Bengaluru for their kind support and
encouragement in completion of the Organisation Study.

I would like to thank external guide Mr.V V Mathew, HR manager, Kerala Solvent
Extraction Ltd, Kottayam, who gave me golden opportunity to do Organisation Study at
your esteemed organization, which helped me to learn various concepts and also thank
Internal guide Mr.Suhas Patel, Assistant Professor, Department of MBA, Acharya Institute
of Technology, Bengaluru for constant support throughout the Organisation Study.

Finally, I express my sincere thanks to my parents, friends and all the staff of MBA
department of AIT for their valuable suggestions in completing this Organisation Study
report.

Place: Bengaluru Akhil S Kumar

Date: 16-09-2019 USN: 1IA18MBA07
 DECLARATION

I, Akhil S Kumar, hereby declare that the Organisation Study report with reference to “Kerala
Solvent Extraction Ltd” is prepared by me under the guidance of Mr.Suhas Patel, faculty of
M.B.A Department, AIT and external assistance by Mr. V V Mathew, HR Manager and KSE Ltd.
I also declare that the Organisation Study has been carried out towards the partial fulfillment of
the university regulations for the award of degree of Master of Business Administration by
Visvesvaraya Technological University, Belagavi. I have undertaken the Organisation Study for a
period of four weeks.

Place: Bengaluru Akhil s kumar

Date: 16-09-2019
 TABLE OF CONTENTS

EXECUTIVE SUMMARY

CHAPTER TITLE Page

NO no
1 Introduction:

1.1 Introduction about the organisation 1

1.2 Industry profile 4

2.1 Organization profile:

2.1.1 Back ground of the company 9

2.1.2 Nature of business 12
2.1.3 Vision mission, quality policy 14
2.1.4 Workflow model 15
2.1.5 Product/service profile 17
2.1.6 Ownership pattern 18
2.1.7 Departmental profile 19
2.1.8 Achievements/awards 37
2.1.9 Future growth and prospects 42
3 McKinney’s 7S framework & Porters five force model:

3.1 7s framework 43
3.2 Porters five force model 47
4 SWOT Analysis:

4.1 SWOT Analysis 49

5 Financial department:

5.1 Analysis of financial statement 51

5.2 Ratio analysis 52
6 Learning experience:

6.1 Learning experience 65

Bibliography:
LIST OF TABLES

Table No. Particulars Page No.

5.2.1.1 Current Ratio 50
5.2.1.2 Quick Ratio 51
5.2.1.3 Absolute liquidity ratio 52
5.2.1.4 Net profit capital ratio 53
5.2.2.1 Inventory turnover ratio 54
5.2.2.2 Debtors turnover ratio 55
5.2.2.3 Creditors turnover ratio 56
5.2.2.4 Fixed asset turnover ratio 57
5.2.2.5 Current asset turnover ratio 58
5.2.3.1 Gross profit ratio 59
5.2.3.2 Net profit ratio 60
5.2.3.3 Operating ratio 61

LIST OF FIGURES AND CHARTS

Chart No. Particulars Page No.

5.2.1.1 Current Ratio 50
5.2.1.2 Quick Ratio 51
5.2.1.3 Absolute liquidity ratio 52
5.2.1.4 Net profit capital ratio 53
5.2.2.1 Inventory turnover ratio 54
5.2.2.2 Debtors turnover ratio 55
5.2.2.3 Creditors turnover ratio 56
5.2.2.4 Fixed asset turnover ratio 57
5.2.2.5 Current asset turnover ratio 58
5.2.3.1 Gross profit ratio 59
5.2.3.2 Net profit ratio 60
5.2.3.3 Operating ratio 61
 EXECUTIVE SUMMARY

The MBA course offered by the VISVESVARAYA TECHNOLOGICAL UNIVERSITY has

its own unique syllabus which requires its MBA students to undertake an internship with any of
the leading business houses for a period ranging from 4 weeks to 6 weeks during the second
semester.

An Organisational Study on KSE Ltd helps to understand how the organisation is working.
This study is helpful for the top level management to find the problems in the organisations
and its effective remedy.

The project was carried out as per the research. The well supportive objective was set for the
study. To meet the objectives primary research was undertaken. The data collection approach
adopted was experimental research. The target respondents where the employees of KSE Ltd.
Tables and charts were used to translate data into meaning information. Based on this
inferences have been drawn with peer supportive data.

The report deals with the introduction to the industry profile and to the company profile.
Later part of the report is concerned with specific topic covering company profile of KSE
Ltd. This report mainly consists of nature of the business and infrastructural facilities that
have been provided in the company. Its vision-mission, workflow model and its future
prospects are also covered. A separate focus has given towards the study of the organization.
The structure gives the information about the board of directors, and various functional
departments, the training methods the company follows in updating the knowledge of
employees, duties and responsibilities of executives and other are narrated. The strategy with
the company adopts to eliminate their wastes, shared values that if the company to achieve its
objectives have also been included.
 CHAPTER 1

1.1 INTRODUCTION ABOUT THE ORGANISATION

This is an organization study about the KSE ltd. KSE stands for Kerala Solvent
Extraction ltd. Company deals with the production of cattle feed products. Solvent extraction
is usually used to recover a component from either a solid or liquid. The sample is contacted
with a solvent that will dissolve the solutes of interest. Solvent extraction is of major
commercial importance to the chemical and biochemical industries, as it is often the most
efficient method of separation of valuable products from complex feed stocks or reaction
products. Some extraction techniques in involve partition between two immiscible liquids,
others involve either continuous extractions or batch extractions. Because of environmental
concerns, many common liquid/liquid processes have been modified to either utilize benign
solvents, or move to more frugal processes such as solid phase extraction. The solvent can
be a vapour, supercritical fluid, or liquid, and the sample can be a gas, liquid or solid.

The Indian feed industry is about 35 years old. It is mainly restricted to dairy and
poultry feed manufacturing; the beef and pork industry is almost non-existent. The quality
standards of Indian feeds are high and up to international levels. Raw materials for feed are
adequately available in India. The industry's production is about 3.0 million tons, which
represents only 5 percent of the total potential, and feed exports are not very high. The feed
industry has modern computerized plants and the latest equipment for analytical procedures
and least-cost ration formulation, and it employs the latest manufacturing technology. In
India, most research work on animal feeds is practical and focuses on the use of by-products,
the upgrading of ingredients and the enhancing of productivity.

The country has entered into a period of liberalization and this is bound to influence
the livestock industry. The per capita consumption of milk, eggs and broiler meat will grow.
The Indian feed industry is undergoing a very exciting phase of growth for the next decade.

IRINJALAKUDA UNIT

The pioneering plant of KSE at Irinjalakuda is unique in many ways. It was the first
solvent extraction plant in Kerala. It was the first major factory in the locality spread over 15
acres. It was hear that KSE set up its first cattle fee enterprise of a group of committed
people, who wanted to usher in an era of modernity into a traditional society and change the

1
industrial landscape of the state. Naturally, today the Irinjalakuda plant enjoys of flagship
states and commands an edge on infrastructural strength. Taking great strides technological
development, the process of computerization in plant and office was initiated way back in
1987. Micro processers have been in using in the production line since 1989.

Research and development plays an important part in the activities of the KSE,
central R & D unit is located here. The plant houses a modern laboratory. The quality control
cell here leads and guides other units and formulates stringent standards. The chief
Nutritionist and Assistant Manager of quality control are also based here.

SWAMINATHAPURAM UNIT

Sale of KS cattle feed in selected markets in Tamil Nadu was started as early as
1984. To enable the company to extend its products and services to whole of Tamil Nadu, a
new production unit was set up at Swaminathapuram in Dindigul district of Tamil Nadu. A
solvent extraction plant was started the very next year. Spread out on 22 acres of land on the
banks of river Amaravathi, this Rs.3.5 crores plant works round the clock. Keyes Forte is also
manufactured in this unit. A model Diary farm with high yielding animals is also maintained
in the unit for conducting feeding trials and other experiments.

VEDAGIRI UNIT

The third cattle feed plant of the company with a daily production capacity of
240 MTs started operation at Vedagiri in Kottayam district, in March 1996. This Rs.6 crores
project, fully financed from internal resources, was formally inaugurated on 17th August,
1996. This unit is built on a spacious area of 10 acres. Utilizing highly advanced
technological features, this unit marks a new chapter in the cattle feed manufacture.

This facility was built on a spacious area of 10 acres with the capital of outlay of
Rs60 million fully generated from internal resources, the unit commenced production in
1996. Incorporating the latest development in technology, this units has the capacity to
produce cattle feed in both mash and pellet forms, with weekly production capacity of 1680
tones. One of the sophisticated features of this unit is the computerized system using
microprocessors. A computerized control room for monitoring, homogenization, size
reduction, batching, pelletisation, pellet cooling respiratory system and also has a well
equipped modern laboratory.
With the vedagiri unit commencing production, KSE is in a position to cater
fully the demands of southern India. KSE gives importance to the needs of performance of
the customers

The main objective of this programme is to build a viable and self-sustaining

national dairy industry capable of meeting the domestic demand for fresh liquid milk and milk
products and competing in the international markets.

VEGETABLE OIL REFINING PLANT

In 1195, the company explored the possibility of refining solvent extracted oil
and marketing it in various states in India, the company commissioned a vegetable oil refining
plant in December 1995, with a capital investment of Rs.1 crore, wholly raised from internal
accruals. The company also refines sunflower expeller oil and markets it in the name KSE
supreme.

PALAKKAD UNIT

A recent addition to the KSE family is the livestock feed plant at Palakkad. With a
manufacturing capacity of 120 TPD, this plant caters predominantly to the needs of the northern
districts of Kerala such as Palakkad, Malappuram and part of Calicut.
1.2 INDUSTRY PROFILE OF KSE LTD
Growth in milk sector has occurred mainly through co-operative efforts. The
milk collection centers started through co-operative effort and collected milk from villagers in
quantities as small as liter and gradually started to provide other services to farmers, including
education, artificial insemination, veterinary health support and feeding. Small farmers
became prosperous, loan facilities were made available through banks, and member farmers
started to share the profits from co-operatives .Co-operative society also set up their own
computerized feed plant. They began to own modern computerized as well equipped milk
processing plants from which they produce and market pasteurized milk, butter oil, chocolate,
ice-cream from milk, sweets, which are very popular with Indian consumers. Today the feed
production capacity of the co-operative society is about 0.7million tones per year.

The solvent industry has achieved a phenomenal progress and at present there are
520 units having overall oil cake or oil seed processing capacity of more than 25.6 million
tons per year, which included rice bran processing capacity of more than 9.9 million per year.
The solvent extraction plays the important role in the oil economy. Solvent extraction in India
was started in 1945. It had to struggle for more than 20 years to establish it.

1.2.1 CRISIS OF COCONUT INDUSTRIES IN KERALA IN 1960’

In the 1960’s there was a crisis in coconut oil extraction industry in Kerala. After conversion
from wooden ghani’s to rotaries the cost of the production had increased considerably. By
using this new method they were able to extract more oil from the coconut cake. Earlier 20%
of the oil was retained in the coconut cake, now it has reduced to 12%. Although Kerala
produces 80% of copra produced in the country large part of it was sold to other state as copra
itself and they were earning good profit when mills in Kerala wasn’t able to get enough copra
for their daily needs. When oil industry in other parts of the country was thriving in Kerala it
was struggling. So they understood the need for modernization of their mills. At that time Dr.
P. S. Lokanathan committee set up to study the feasibility of starting new industries in
Kerala, recommended of establishment of 3 solvent plants in Kerala and it was also proposed
that ones should be located in Thrissur
1.2.2 COCONUT OIL MILLER’S CO-OPERATIVE SOCIETY

Lion share of copra went to mills in Bombay and they were able to
generate good profits. To overcome the situation a co-operative society formed by
name Coconut Oil Miller’s Co-operative Society and it was decided that this society would
act as an agent of state trading corporation for distribution of copra. By seeing the
performance of the Bombay group an investigation department was assigned to investigate
it. Then they found out that they were using expeller mills for extracting oil and was
able to reduce the oil content up to 6%. The industries in Kerala later began to follow it

1.2.3 CATTLE FEED INDUSTRY

From the beginning KSE Ltd marketed the buy product obtained from its
solvent extraction division in the brand name of Jersey Copra Cake. Most of the
progress in the cattle feed sector has come about in the past 30 years only. There are only
few cattle feed units in the country especially in Kerala. The cattle industry of the state has
been utilizing the indigenous raw material i.e. coconut cake, which is the residue left after the
extraction of oil from copra which is mainly used as cattle feed. Coconut cake contains four
to five per cent oil is generally used for industrial purpose and deoiled cakes is used to make
mixed cattle feed.

In Kerala the rotary cake was used as a cattle feed and actually this excessive oil
on cakes reduced the keeping quality of the cake and also upset the digestive system
of the cattle e. In foreign countries, the cattle is feed only with de-oiled cakes and according
to t h e dairy e x p e r t s , the milk and fact contend of milk depends solely on the protein
contend of the feed. All these factors stress the importance of having a few cattle
field industry in the state.

Thus in 1996, KSE Ltd. Entered the cattle field industry by setting up the new
plant for manufacturing ready mixed cattle feed. During the last three decades KSE has been
acting as a leader in ready mixed cattle feed industry of the country. Today, KSE Limited
commands the resources, manufacture a range of livestock feed in high volumes, driven by
the commitment to high standards of quality.
1.2.4 DIARY INDUSTRY

Most of the progress in the dairy sector has come about in the past 25 years only.
Till 1970, the country’s milk production increased merely by one per cent a year. But
after the intensification of cattle improvement programme through artificial
insemination, using sasses of exotic breeds and launch of operation flood, the production
started rising rapidly from the mid 1970’s.

Many of these producers have organized themselves into co-operative

under the umbrella if the National Dairy Development Board (NDDB) which had
been running a highly successful animal husbandry promotion programme named
Operation Flood.

The private sector has now entered into this field in a big way, capitalizing on the
availability of cheap surplus milk to produce various kinds of dairy products for
the domestic and international market. Several dairy products like skimmed milk
powder, whole milk powder, and infant milk foods of western origin are now being
produced in India. A variety of cheeses, milk drinks, ice creams, pasteurized butter
etc. which, were very common in this country till a few decades ago are now
available in abundance in department stores of big and small cities.

The main objective of this programme is to build a viable and self- sustaining
national dairy industry capable of meeting the domestic demand for fresh liquid milk and
milk products and competing in the international markets.

1.2.5 THE FUTURE OF THE INDIAN FEED INDUSTRY

At the beginning of the twenty-first century, India has a population of 1 billion

people. Although the annual growth rate has slowed from 2 to 1.8 percent, the base is so
broad that changes in population dynamics are not perceptible. The population may stabilize
by sometime between 2030 and 2040 if all sections of society support family planning
wholeheartedly. The purchasing power of the middle class is growing (the middle class
accounts for approximately 300 million people) and food habits are also changing.
 The Indian economy is growing at the rate of 6 to 8 percent per annum. The
livestock industry in India is the second largest contributor to gross domestic product (GDP),
after agriculture, and accounts for 9 percent of the total. Consumption is likely to increase as
follows: per capita milk from 240 to 450 g per year; per capita eggs from 40 to 100 per year;
and per capita broiler meat from 1000 to 2000 g per year.

A major change is occurring in India on the economic front. The country has
adopted a model that lies midway between liberal and public sector production, but growth
has been affected by the poor performance of most of the public sector units, rising
government costs and fiscal deficit, and the economy has suffered. A process of liberalization
was set in motion by the government and has been implemented for the last eight to ten years.
This has caused India to open up and invite investment from multinationals, liberalize
imports, reduce government expenditure and remove public sector businesses. It also means
that the days of nationalization, unnecessary government controls and restrictions will soon
be over thanks to progress in the country's economy.

India has entered into an agreement with its trade partners under the World
Trade Organization (WTO). The changes brought about by the liberalization process will be
slow but certain. The government is opening up imports in a phased manner, and it is
expected that this process will be completed by April 2003. In the meantime, about 930
items, including agricultural products, will be open for import under open general license
from April 2001, making it possible to import dressed chicken, milk and milk products.

Various livestock industry associations have taken issue with such imports in an
attempt to protect their members. If the livestock industry is affected, the feed industry will
also be affected. The Government of India has raised the tariff on all poultry and poultry
products from 35 percent to the WTO boundary level of 100 percent. It therefore appears that
there will be a level playing field.

In view of the expected rise in per capita consumption of chicken meat, eggs
and milk, livestock production and productivity will grow. The dairy industry, which is
cooperative-based, is growing with the increased capacities of milk processing units. The
population of cross-bred cattle and buffaloes is also growing. Milk is very popular in India.
The poultry industry is developing towards vertical integration and a few multinational
companies have already entered the Indian poultry business. Although the live bird market
currently accounts for about 90 percent of the total market, it is expected that the
consumption of dressed chicken will grow in the next five years, from the existing 10 percent
to 25 percent or more. This would mean establishing very hygienic and scientific processing
units. Cold chains, branded chicken, chicken cuts, etc. will be introduced and, depending on
the success and consistent quality, consumer preference for dressed meat will grow.

The next decade will see significant changes in restructuring, mergers,

acquisitions, amalgamations, joint ventures, diversification, integration and efficient service
chains, e-commerce and use of the latest information technology in global tenders, trading,
export/import and other commercial activities. At the root of all these developments will be the
scientific development of feed manufacturing technology. The Indian feed industry will
increasingly use biotechnology, more scientific formulations, new molecules and natural and
herbal products to improve animal productivity. Indian agriculture will also use biotechnology
and genetically modified organisms (GMOs) to support the feed industry, which is entering a
very exciting phase of growth for the next decade.
 CHAPTER 2

2.1 ORGANISATIONAL PROFILE

2.1.1 BACKGROUND OF THE ORGANISATION

Kerala Solvent Extractions Limited now known as KSE Limited was
established in 1963 by a handful of coconut millers in and around Irinjalakuda with a vision
to overcome the crisis of the coconut oil industry. Initially started as a solvent extraction
plant, the company now produces 750 to 850 MTs of coconut cake a day with four cattle feed
production units two solvent extraction plants. The company has diversified into the area of
dairying by establishing two diary plants for the production of pasteurized milk and milk
products. It has obtained ISO recognition for its commitment to quality and professionalism.

It was in 1963 that Kerala Solvent Extraction Limited, now known as KSE
Limited, entered the solvent extraction industry setting up the very first solvent extraction
plant in Kerala. The solvent extraction plant went on stream in 1972 and in 1976, a new plant
was set up to manufacture ready mixed cattle feed.

The last three decades have seen KSE emerging as a leader in solvent extraction and
ready mixed cattle feed in the country. Today KSE commands the resources, expertise and
infrastructure arrange of livestock feed in high volumes, coconut oil from coconut cake and
refined edible oil.

Driven by a commitment to high standards of quality, KSE has not only won
customer’s confidence but also national recognition through several awards and accolades.
With modern manufacturing facilities spread over three states, KSE caters vast beet stretching
across southern India and enjoys a significant presence in exports too. Since the early days,
KSE has endeavoured to supply products to customers through an extensive network of
dealers and retailers, which form a dedicated force behind the success of KSE. It is a matter
of pride that KSE is a house hold today.

With a strong commitment to customers and product quality and being cost
competitive, KSE stands poised to meet new challenges. The copra crushing industry has
been in existence in Kerala for decades and has been the most important basic industry in state
utilizing the indigenous raw materials viz., coconut. During the 60’s the oil millers in Kerala
used wooden village Ghani’s operated by bullocks which left about 80 per cent oil in the
cake. Later iron rotaries driven by electricity were used but they left about 12 to 13 per cent
oil in
the cake.

In 1960, a committee was appointed under the chairmanship of Dr.

Loganathan to study the feasibility of starting new industries in Kerala. Based on the techno-
economic survey conducted, the committee recommended for the establishment of the three
solvent extraction plants in Kerala and one of them in Thrissur district.

The oil mill owners in and around Irinjalakuda who were also thinking in
similar lines and saw the opportunity and look the initiative to establish a solvent extraction
unit and for this purpose they brought 9.6 acres of land in the name of Sri. K V Devassi and
Sri. K L Francis and also applied for the industrial undertaking license.

They decided to start it as a public limited company, issuing shares to almost all
the oil millers who were interested. For this purpose on 1st May 1963, a meeting was held
which was presided over by Sri. K V Devassi and attended 17 members. Sri. K V Devassi
was elected as the chairman and 10 others were elected as Directors. The Directors were Sri.
K L Frncis, Sri T O Paul, Sri. N P Venkittarama Ayyer, Sri. M S Menon, Sri. A P George,
Sri. E T Joseph, Sri. P L Ouseph, Sri. M C Paul, Sri. M P Kochudevassi, Sri. A Narayan
Swami.

On 25th September 1963, the Kerala Solvent Extractions got certificate of

incorporation (No.2028) from the Registrar of Companies, Kerala. The first formed meeting
was held on 20th October 1963 and in this meeting, Sri. K V Devassi was elected as the
chairman and Sri. K L Frnacis as the Managing Director.

The initial capital of the company was Rs.4,17,500 consisting of 4175 shares of
Rs.100 each subscribed by the promoters. The initial capacity of the plant was 40 tons per
day. There were 23 staffs and 28 workers initially.

On the road to success there were many hurdles in the beginning. Mobilization
of capital caused the greatest challenge. But determination and optimism paid of. The solvent
extraction plant was on stream in 1972 and in 1976 a new plant was set up at Irinjalakuda to
manufacture ready mixed cattle feed, which was a pioneering step. Thus the KSE Limited
had given Irinjalakuda an important place in the industrial map of Kerala and showed us how
to convert a waste material into national income.
PRODUCTION UNITS

KERALA

1. KSE LIMITED,

IRINJALAKUDA UNIT,

P.B.NO.20, IRINJALAKUDA -680121,

PH: 0480 2825476/2826676,

FAX: 0480 2825244

2. KSE LIMITED, VEDAGIRIUNIT,

KURUMULLUR PO,

ATHIRAMPUZHA,

KOTTAYAM DIST – 686632,

PH: 0481 2536829/2538718/2538719,

FAX: 0481 2536830

KSE LIMITED,

PALAKKAD UNIT,

OTHUNGODE, PALAKKAD – 678020,

PH: 0491 2536332/2538451/2531858

3. KSE LIMITED,

DAIRY DIVISION,

KONIKKARA, MARATHAKARA

PO, THRISSUR – 680320,

PH: 0487 2356394/2351501/2358806

4. KSE LIMITED,
(KINFRA UNIT),

KINFRA PARK, NELUKETTU ROAD,

KORATTY – 680306

5. KSE LIMITED, XXXIII/2837,

 PAROPADI, MERIKUNNU

PO, CALICUT-3

PH: 0495 2370056/2900194

TAMILNADU :

6. KSE LIMITED,

SWAMINATHAPURAM UNIT,

SWAMINATHAPURAM,

DINDIGAL DIST - 642113,

PH: 04252 252560/252561/252562/252563,

FAX: 04252 252565

7. KSE LIMITED,

DAIRY DIVISION, THALAYUTHU,

DINDIGAL DIST – 624618,

PH: 04252 252860/25286

2.1.2 NATURE OF THE BUSINESS

The company has 926 employees in its roll on 31.3.2011. the

company is an expectation to the advise labor conditions existing in Kerala. During its
working of 39 years, the company had lost few man-days by labor unrest. However, during
the year under review, the Vedagiri unit was under lock out from 30.09.2010- 14.02.2011.
Section of the employees of that unit resorted to slowing down of production to pass their
demand for an interim hike in their remuneration during the validity field of settlement and
management was forced to declare the lock out. After several round of negotiation, the
management arrived at a settlement with the employees on their agreeing to drop their
demands and the lock out was lifted. During the lockout period management had made
alternate arrangements to ensure regular supply to the dealers and the performance of the
company had in no way affected. There were no labour issues of serious nature in any other
unit of the company. The management continues to maintain cordial industrial relation with
its employees in all Units and is attending to their grievances with an open mind.
Commitment in Rural Development

KSE has taken up rural development as a major corporate task and responsibility.
The agrarian rural society is the back born of the nation’s economic structure and KSE has
always been active in supporting and promoting images in their vacation.

Today Kerala and Tamil Nadu comparison the largest market of KSE cattle feed.
The majority of their deposal over 600 KSE dealers ensure that the KS Range of cattle feed is
available to them at a lower price suggested and enforced but the company KSE has made
arrangements for the supply of cattle fed in villagers directly from dealers and through
retailers

Besides beginning range of trusted products to the villages KSE also imparts
valuable advice and instruction regarding animal has boundary and cattle to the villagers.

Progressive Management and Unique Work Culture

The management KSE rests on a eminent team of personalized from the cultural
and financial and social system of society who from the BOD. The Chairman and MD
executive director and whole time Director head the operations of the company and overseas
its smooth functioning. The day to day management of various units is carried out by
experienced professionals under a chief general manager. Who lead and motivate a dedicated
world force.

The total number of employees in various units of KSE now exceeds 1000.
Besides KSE gives endured employment to over 2000 people, through its distribution
network across Kerala and Tamil Nadu.

The work culture of KSE is an exception to the rule in the strife ridden
industrial climate of Kerala. During the quarter century of it is operation, the days lost to
industrial unrest is only 23 days. This fact illustrates the cordial work environment and speaks
of the extra ordinary relationship between the management and employees.

Periodic appraisal and renewal of agreements between the management and

workers credit a responsible attitude and productive atmosphere. The united efforts mutual
test and progressive vision of management and force is the cornerstone on which the success
of KSE is base
2.1.3 VISION AND MISSION

VISION
“We shall endeavour to maintain leadership through quality products, explore
new avenues in product development and marketing, create a stronger bond between the
management, work force, dealers and customers, contribute to social development and rural
upliftment, and constantly strive for excellence in all spheres of our activities.”

MISSION
“To provide maximum benefit to the dealers and to give good quality products
to the customers at a fair profit. T o increase the turnover and to widen their markets to all the
zones etc”

OBJECTIVES

The Memorandum of Association of the company lists out altogether 38 broader

objectives. Out of these, the important objectives for which the company is established as
follows:

1. To produce, manufacture, extract purchase refined, prepare, import, export, sell and
generally to deal in oil form seeds, oil cakes and other oil bearing materials. To carry
on business of the refining and hydrogenation of oil and the manufacturing of by-
products share from and of trades connected there with.
2. To acquire correct, construct, establish, operate and maintain oil mills, extraction
plants, ghee plants, workshops other works.
3. To purchase for the purpose of the business of the company, oil neutralizing, in
washing, tying, bleaching, filtration and hydrogen plant, boilers, tanks, engines,
electric motor shafting tin plates punch machines and other machines.
4. To plant, cultivate and purchase all kinds of food stuffs, oil seeds, vegetable and other
produce of land and to sell and deal in them.
5. To make, manufacture and prepare mixtures and fertilizers to install and run bone
mills and to buy, sell or trade in trade in any fertilizers and manures of kind.
2.1.4 WORKFLOW MODEL

RawMaterialFeeding

RawMaterial Weighing

Batch Grinding

BatchMixing

Molasses Mixing

Palletizing

Bagging

Quality Check

Despatch
1. Raw Material feeding : Various raw materials to be taken for production are listed
in the raw material feeding report on a day to day basis and fed to the conveyors. The
materials fed are taken to the top floor through the coveyor.

2. Raw Material Weighing : The raw material is weighted in the weigh hopper as per
the formulate given by the Chief Nutritionist. For each recipe, separate formulae are
entered in the computer.
3. Batch Grinding : The batch which is weighed in the weigh hopper is taken for
grinding in hammer mills, where required sleeves are used to ensure adequate particle
size for the ground material.
4. Batch Mixing : The material ground in the hammer mill is taken to the ribbon type
batch mixer for predetermined time to ensure homogeneous mixing. The minor
ingredients are directly added to the mixer.
5. Molasses Mixing : The required molasses added to the batch and mixed in molasses
mixer.
6. Palletizing : The food that is mixed with the molasses is passed through the pellet
mill feeder conditioner where required quantity of steam is added. It is then passed
through the pellet mill where pellet are produced. The hot pellets are cooled in cooler
and then bagged.
7. Bagging : After completion of production, bagging is done and appropriate
identification is done with respect to the date and shift of production.

2.1.5 PRODUCT PROFILE

KS : One of the all-time favorites in the cattle feed.

K S Super : A special cattle feed that has won immense popularity.

K S Deluxe Pellets : The choice of caring farmers for better results.
K S Supreme Pellets : A bypass protein feed with ISI marks. Specially made
for cattle with superior germ plasma and high
production potential
 Jersey : Protection rich, tasty, de-oiled coconut cake.

Keyes Forte : Keyes Forte is a feed supplement for cattle. It contains

Vitamin A, D3, E and all. The required trace minerals at
recommended quantities.
K S Supreme : Refined sunflower expeller oil. Solvent extracted
coconut oil. Refined solvent extracted coconut oil.

MILK PRODUCTS OF THE COMPANY INCLUDES:

K S Milk

K S Ghee

K S Curd

Butter Milk

Vesta Ice Cream

2.1.6 OWNERSHIP
PATTERN BOARD OF
DIRECTORS

Board of KSE Limited consists of ten Directors out of which the Chairman and
Managing Director is the Chief Executive Officer of the company. Moreover there is one
executive director who is looking after the daily transactions of the company. The Board
invariably meets in every month and evaluates the performance of the company. All major
policy and business decisions are taken after due deliberations and with mutual consensus. A
management committee with five directors as its members is functioning to assists the Board,
which is regularly meeting, twice in a month, in order to review the company and proposals
that are to be placed before the Board and mark recommendations there on.
Chairman – Dr. Jose Paul Thaliyath
Managing Director – A P George
Executive Director – M P Jackson
Director - P D Anto
Director – Joseph Xavier
Director – Paul John
Director – Paul Francis
Director – Dr. Pyanrelal KC
Director – Sathi A Menon
Director – Marykutty Varghese
Director – Danesa Raghula
2.1.7 DEPARTMENT PROFILE
O STRUCTURE
R
G
A
N BOARD OF DIRECTORS
I
S CHAIRMAN / MD
A
T
I EXECUTIVE DIRECTOR
O
N
GENERAL MANAGER

CHIEF
DGM DGM CHIEF CHIEF
FINANCIAL PURCHASE
MARKETING NUTRITIONIST PERSONNEL
OFFICER
MANAGER

WORKS MANAGER

SENIOR
EXECUTIVE EXECUTIVE PERSONNEL JUNIOR ASSISTANT
FINANCE
SALES PURCHASE OFFICER CHEMIST MANAGER
MANAGER
ELECTRICAL

JUNIOR
OFFICE SENIOR OFFICE ATTENDER MAINTANANC
OFFICER
ASSISTANT ASSISTANT E EXECUTIVE
ASSISTANT

SENIOR
CLERK EXECUTIVE
ASSISTANT (PRODUCTION

CLERK

GODOWN
SENIOR SHIFT OFFICER
SUPERVISOR

CLERK

OPERATOR BOILER GODOWN

ELECTRICIANS
OPERATOR ASSISTANT

WORKER S TALLY

WORKERS
 HUMAN RESOURSE DEPARTMENT

Human resource is of paramount importance for the success of any

organization. It is a source of strength, aid and, it is the most important asset of an
organization. Human resources are the wealth of an organization which can help it in
achieving its goals. Human resource management is the planning, organizing, directing and
controlling of procurement, development, compensation, integration, maintenance and
reproduction of human resources to the end of the individual, organizational and societal
objectives areaccomplished.

Human resourcemanagement is the qualitative improvement of human beings who

are considered the most valuable assets of an organization. It is the strategic approach to the
acquisition, motivation, development and management of the organization’s human
resources. The primary objective of HRM is to ensure the satisfactory accomplishment of the
objectives of an organization and of its employees and management. It helps workers in
accomplishing individual and organizational goals.

The HR manager organizes the HR department to carry out the functions

entrusted to him. In KSE personnel department functions are controlled by Personnel
Manager.

Department Structure

PERSONNEL OFFICER

OFFICE ASSISTANT

Functions of Human Resource Department

1.Recruitment

Recruitment is the process of searching for prospective employees and

stimulatingthemtoapplyfor jobs intheorganization.This is madeonthebaseof personal
interview. Only qualified candidates are selected. Final selection is done by the head office.
 2. Pay Fixation

It is based on the job analysis, conduct of salary survey, group similar jobs into pay
grades, price each pay grade and wage administration rules.

3. Promotion

Advancement within anorganization is ordinarily labeled as promotion. It refersto

theadvancement onanemployee to abetterjob. Promotion is a meanoffillingup vacancies
which occur in anyorganization fromtime to time. Promotion is given onthe basis of:

Seniority
Performance
Additional Qualification

There is an understanding between the workers and the management that

promotions will be made on the basis of ability and seniority.

4. Welfare

Labour welfare means anything done for the comfort and improvement
intellectual or social, of the employees over and above the wages paid which is not
necessary for the industry. KSE gives first priority to the welfare of the employees. Statutory
and non-statutory benefits are provided.

5. Performance Appraisal

Performanceappraisal is thesystematic, periodicand an impartialrating ofan

employee,excellence inmatterspertainingto hispresent jobandhispotentialfor abetter job. It is
done to ensure the efficiency of workers.

6. Statutory Requirement

Factory license and boiler license renewed every year.

Punchayathu tax and building tax, company tax, individualemployee tax, etc. are paid.
Diesellicenseandenvironmentallyacceptable licensesarerenewed everytwo years.
 PURCHASE DEPARTMENT
Department Structure

EXECUTIVE PURCHASE
MANAGER

SENIOR ASSISTANT

The purchase department consists of purchase committee, which in turn is

comprised of management officials. Purchases are normally done from reliable suppliers.

PURCHASE PROCEDURES

1. Purchase Requisition: It is a document through which the user department requests the
purchase manager to arrange for purchasing the material required. Each department
head prepares the purchase requisition and send it to the purchase manger on receipt
of purchase requisition report. The purchase manager will make necessary steps for
purchasing material that has been mentioned in the purchase requisition.

2. Plans are made by the purchase department about what to purchase, how to purchase,
when to purchase and so on.

3. Purchase manager does not invite quotation for the supply of materials from different
suppliers. Orders are placed through telephonic orders. Normally the orders are made
in bulk quantity. Maximum Economic Ordering Quantity is 250 tons per order.
4. The purchase committee selects the supplier after evaluation. The purchase manager
then discuss with the supplier about rate, quality, requirements, quantity, delivery time
and packaging. Then both parties agree that they will enter in to purchase contract
according to supply and payment.
 5. Making of purchase contract: Six copies of the purchase contract will be prepared and
it is signed by Chief Purchase Manager and Chief General/Finance Manager. The
company will send two copies of purchase contract to the supplier, one copy to the
purchase department, one copy to the finance department, one copy to the stores
department and the last one will keep it in their running file. The supplier will send
back one copy as a token of confirmation. A purchase contract will contain the details
such as, the name of the material, quantity to be supplied, agreed rate, quality
specification, time in which it is to be supplied (delivery date), place of delivery, rate
whether inclusive of tax, packing of material, mode of transportation, option if the
material is not supplied on due date and mode of payment. Generally, 90 per cent of
the payment will be made in the next day. In case the delivery is not made on due
date, this 10 per cent will be adjusted.

6. Receiving and inspection of material: When the material arrives, the drivers have to
report at the gate. The guards will inform it to the purchase department who will give
permission to enter into the company.

Before taking the material to the godown, the total weight of the truck containing
the materials will be calculated. This weight involves the weights of truck, materials, and
packing of material. Later after unloading of material, the weight of the truck, gross weight
(actual weight of material and its packing) and net weight (weight of materials only) will also
be calculated. At the time of unloading the material, actual samples of it will be taken and
send to the Lab another packet will be kept a check sample.

The Material Received Report (MRR) will be prepared and send it to the
purchase department. Full payment for the materials received will be given only after getting
the lab results. The rebate will be deducted if there is any non-fulfillment of the conditions of
the contract. If there is any dispute regarding the quality of the material, the company will
send half of the check samples to the supplier who will send the second half of the check
sample to an independent lab for re-test. Nearest result’s average will be taken for settlement.

IMPORTANT MATERIALS USED FOR THE MANUFACTURE OF CATTLE

FEED

The most needed material is de-oiled rice barn, which is purchased in bulk
from north India by rake load and also by lorry from Tamil Nadu and to a concerned extends
from Kerala. Molasses is vital ingredient as it adds taste to the cattle feed.
MAINTENANCE OF STOCK

Materials purchased are required to be delivered at the Vedagiri unit.

Specifications of the materials required are communicated to the supplier who supplies the
materials as per specifications. The load of materials entering the factory will be registered at
the factory gate. The load is then sending to the store where the store officials check the
materials for visual defects through sample test.

Once the store officials verified the load, it will be unloaded and each material
will be stocked separately in its lot and stored in a pattern. Then raw material samples will
send to the company late for content analysis. If the quality of the materials is found
inappropriate, then adjustments in the price will be made in the final settlement.

Maximum storage capacity of the store is 7500 tons. The company maintains a
minimum stock level of 15 days a minimum of one and a half months.

MATERIAL HANDLING

Once the material requisition report is made, the material is accepted and receipt
is forwarded to the accounts department. The load number is specified in the MRR. Factory
item is stored as per specified act and each issue is recorded. Issue of material is done L.I.F.O
basis. Hence stock can be verified easily whenever required.

FORMS USED

Forms used in the purchase department are ;

1. PURCHASE CONTRACT
2. MATERIAL RECEIVED REPORT (MRR)

1. PURCHASE CONTRACT
This contains information regarding the name of the dealer, order
number, date, name of the material, quantity required and rate. It also contains
specific information regarding quality duties, packaging, and mode of delivery, place
of delivery, delivery rate and payment schedule. Chief purchase manager of general
manager will sign this report. Copies of this document are prepared too are send to
the supplier out of which one will be send back by the supplier as confirmation, on
copy is send to finance department, one to godown, one is kept in the running file.

2.MATERIAL RECEIVED REPORT (MRR)

This contains details about the materials received, date, supplier
name, number of bags, voucher number, quality, freight, etc. This form should be
signed by the authorized signatory. Three copies of this form need to produce. One
will send to godown, two copies are retained by the purchase department.
 PRODUCTION DEPARTMENT

Department Structure

ASSISTANT MANAGER
ELECTRICAL

MAINTANANCE
EXECUTIVE

EXECUTIVE
(PRODUCTION)

SENIOR SHIFT
SUPERVISOR

OPERATOR BOILER OPERATOR ELECTRICIANS

WORKERS

Production is the process of conversion of inputs into outputs. It involves certain heavy
machineries and some complicated process to convert raw materials into finished products.
Cattle feed production is based on the formula given by the nutritionist. The formula will
change according to the availability and the price of raw materials. The important raw
materials used for this purpose are coconut oil cake, cotton seed cake, maize, rice, wheat
bran, etc. and nutrients.
OPERATIONS

The whole operation is automatic which is programmed to the computer placed at

the plant operator’s room. After feeding of raw materials to the hopper, the computer
automatically takes the amount of raw material needed for the batch as per the chief
nutritionist formulae. The bagging is also done automatically. The plant operator is
responsible for the change in the percentage of raw material in the batch. The raw materials
are fed to hopper which itself is a weighing machine. It allows only the appropriate amount of
raw material to enter the production.

1. PRODUCTION PLANT

In KSE Vedagiri unit, production take place in the cattle feed plant.

2. CATTLE FEED PLANT

In this plant the company uses different types of cakes according to their availability
apart from other materials of the company such as coconut cake, sunflower cake, mustard
cake, soya been, wheat, calcium, vitamins, cotton seed, phosphate, tapioca, maize, jowar and
other vitamins. Except from the coconut cake, all the other materials are purchased from
other states. It can produce 200 tons per day.

3. MMCP TECHNOLOGY

It involves mixing, milling, cooking and pelleting.

4. MILLING

This is being used for ensuring that all the granules are grinded, screened three mm
sieve. The materials feed in to the grinder and powdered as it passes. Through the screen
provided at the bottom side of grinding chamber. Two hammer mills are used.

5. MIXING

The raw material will mixed thoroughly by using a horizontal mixer.

6. COOKING

The steam for cooking is produced using a boiler. The mixer carries out a strong
mixing while the mash is moved forward and added with dry saturated steam. The cooking is
carried out at a temperature of 80 degree Celsius using a high pressure saturated steam.
7. PELLETING

The pellet mill die by rotating drags the mixture of mash and steam towards the roller,
which press it and consequently compel it to pass through the hole of the die. It increases the
density of the mixture, which together with heat generated by the saturated steam facilities
the extraction of the pellet.
 MARKETING DEPARTMENT

Department Structure

SALESEXECUTIVE

OFFICE ASSISTANT

CLERK

Functions
Marketing Department of the company concentrates on building long term
relationship with the customers, dealers, distributors and suppliers. The company also
undertakes sales promotion works. Marketing department mainly concentrate on consumer
promotion and dealers promotion.

In this company the departments by Marketing Manager and under him there are 2
Assistant Manager. One for sales Dispatch other for Customer service and Sales promotion.
The company sells its products only through the dealers, No direct sales are allowed. The
company has around 500 dealers. It delivers goods at their shop unloading changes; rent etc
will not bear by the company.
Advertisement and Sales Promotion

The company does not give much importance to advertisement but it concentrate on
sales promotion to a greater extends. However the advertising and sales promotion
expenditure for the year 2008-2009 amounts to Rs 7, 92,913: catalogues and Descriptive
leaflets are also provided to dealers. The main users of the product are farmers. So the
advertisement is given in local channels only. The company also gives dealers board to
dealers as an advertisement for their product.

Other Advertisement are Used

Radio ads

Wall paintings

Hoarding

Flexes

Tin boards to dealers

Dangles

Pamphlets

Flex banner

Cinema slides

Yearly calendar

Sales Procedure

1. Dealers can use own or rented vehicle

2. Vehicle is weighted before going to godown

3. After weighting it is loaded with required quantity

4. Vehicle is then weighed with load

5. Weight of products is verified

6. Bill clearance done

Training

Training for KS sales persons was conducted from 2001. According to the training
session the main objectives of sales management were

a) Sales volume

b) Contribution to growth

c) Continuing growth

Cattle Shows

Company sponsors cattle shows conducted by milk society, dairy departments etc.
Cattle shows neither help the company to reach many prospects nor reached their sales force.

Feedback from Customers

Marketing department encourage feedback from the customers. Labels with address for
enquiry are put each packet for feedbacks.

Obtaining sales order

Dealers are selected by proper methods. Dealers can give order either directly or
through telephone. Date of delivery is given in advance.

Pricing

The pricing of KSE is flexible. Pricing of the product varies according to the cost of
raw materials. During 1998 the company was forced to increase the price of their product.
But when the price of row materials lowered, the company decided share it with the customer.
As a result there was a reduction of Rs 13-18 per pack. According to Kerala General Sales tax
a 15% additional sales tax was imposed. So price were renewed from 23rd August 2006.

Dealers Promotion

It carried out by providing dealers with

Banners
Purchase- pointers
Dealers commission is granted at the rate of 10%

2.19.11 Marketing segmentation

Since the final consumer of cattle feed is cattle, market segmentation is done, on the
basis of milk production of cattle is segmented as
Dry animals with no milk
Animal yielding milk 5 liters
Animal yielding milk between 5-10 litters
 FINANCE DEPARTMENT

Department Structure

SECRETARY/CHIEF
FINANCE OFFICER

SENIOR FINANCE
MANAGER

JUNIOR OFFICER

CLERKS

The main function of Finance department is to have overall control over

both inflow and outflow of the financial resources. The finance department is divided into
different sectors.
The authorized share capital of the company is Rs 10crore and issues and
subscribed capital is Rs3.2crore. The par value of 1 equity share capital is Rs 10. The
company issued 6000 bonds 5% redeemable cumulative per share of Rs 100 each. The
redeemable of this allotment. The company went in for public issue of shares in 1994.
Company shares listed at stock exchange at Cochin, Chennai, and Mumbai. The present
market value of the company share is Rs 200.
FINANCIAL HIGHLIGHTS

PARTICULARS 2010- 2011- 2012- 2013- 2014-2015

2011 2012 2013 2014 (in Lakhs)
(in (in (in (in
Lakhs) Lakhs) Lakhs) Lakhs)
Sales and Other Income 45436.07 54336.28 69825.89 80720.11 90133.16
Gross Profit (Profit before 1446.98 2387.83 1401.84 2956.30 6173.90
depreciation and interest)
Profit before tax 667.31 1587.04 666.09 2343.87 6388.93
Net profit after tax 449.81 1044.93 465.30 1537.36 4363.41

Shareholders’ Equity (Net 3335.34 3971.18 4069.50 4858.09 7181.07

worth)

Capital employed 4498.23 4898.67 4958.21 5702.41 7764.13

Gross fixed assets 7194.27 7308.62 8078.29 8110.64 7975.51

Rs Rs Rs Rs Rs
Shareholders’ equity per share 127.17 151.82 224.41
104.23 124.10
Earnings per share of Rs10 14.06 32.65 14.54 48.04 136.36
each
Dividend rate 100% 110% 100% 200% 500%

YEAR NET PROFIT(in Lakhs) SALES (in Lakhs)

2010-2011
449.81 45436.07
2011-2012
1044.93 54336.28
2012-2013
465.30 69825.89
2013-2014
1537.36 80720.11
2014-2015
4363.41 90133.16

(Showing the sales comparison of last 5 year)

Source: company records

MARKET PRICE OF SHARE

Month High ( Rs) Low ( Rs)

April, 2014 239.95 221.05

May, 2014 255.75 209.25

June, 2014 375.60 268.50

July, 2014 399.00 340.50

August, 2014 412.00 360.10

September, 2014 440.00 361.00

October, 2014 402.00 351.50

November, 2014 611.85 375.00

December, 2014 620.00 541.00

January, 2015 722.30 544.95

February, 2015 730.00 544.65

March, 2015 730.00 651.00

(During the financial year 2014-2015 based on BSE data

Source: company records

Sources of Medium term Finance

Redeemable preference shares

Debentures

Bank loans

Hire purchase and installment system

Public deposits

Mortgage loans internal finance

 Capital Structure

It consists of both owned capital and borrowed capital. Owned capital

consist of funds brought in by owners, borrowed capital consist of shares debentures and
loans.

Financial policies

Accounts in KSE Ltd are prepared under historical cost convention on

accrual basis unless otherwise specially stated in notes to account

Fixed Asset

Asset put to use have been stated at cost less depreciation. Asset not put to
use have been stated at cost

Depreciation:

Depreciation on fixed assets have been provided on written down value

method at the rate prescribed in the company Act 1956,

Investments

Investments as at the aloes of the year are valued at loses cost as net
realizable Value.

Goods in transit at cost

Retirement benefit:
A. Contribution to Provident fund and employees welfare funds is
charged to Profit and Loss Account
B. Gratuity

The accruing liability towards the gratuity of employees in covered by the group
gratuity assures in scheme is charged to Profit and Loss account. Gratuity in respect of whole
time directors is provided for or gross whole time directors is provided for on gross basis for
on charged to P&L account

Grants:

Grant/ subsidies received specially related to capital assets, are credited to the carrying
cost of the respective assets other. Subsidies received are credited to capital reserve .

Sales:

Sales are stated gross of excise duty as well as net of excise duty and are stated
exclusive of VAT/ sale tax
 Claims:

Claims are accounted for as fund where finally determined/ settled.

Inventories:

Inventories as at cost of the year are valued at lower cost or net realizable
value. Cost includes cost of purchase, conversion and other cost, as the case may be, incurred
in brings the Inventories to their location/ condition, determine on the following methods.

a) Raw materials : FIFO

b) Packing materials : FIFO

c) Stores and spare

and consumables cost : At weighted average

Borrowing cost:

Borrowing cost that are attributed to the acquisition or construction or

production qualifying assets are capitalized as part of the cost of such assets. A qualifying
asset is one of that necessarily takes substantial period of the fine to get ready intended use.
All other borrowing costs are charged to revenue.

Tax on income:
Current tax is determined as the amount of tax payable in respect of taxable
income for the year. Deferred tax is the required on timing difference, being difference between
taxable income and accounting income that originate in one period and are capable of reversal in one
or more subsequent periods where there is un absorbed depreciation or carry forward losses deferred
tax assets are recognized only if there virtual certainty of realization of such assets. Other deferred tax
assets are recognized only to the extent to there is reasonable certainty or realization in future
 QUALITY CONTROL DEPARTMENT

The success of a company depends upon the quality of its product. Quality
is the totality. Quality is the totality of features and characteristics of a product and service
that bear on its ability to satisfy stated or implied needs. Total quality is the key to value
creation and customer satisfaction.

The quality control department has to play an important role in the success
of a company through innovating quality product. It aims at total quality control. It begins
right from the purchase of raw materials to after sales quality check. Uncompromising quality
is the main feature of KSE. It is with which the company maintains its reputation. The quality
control department ensures the quality of cattle feeds through testing the products at different
stages. Statistical sampling techniques are applied for quality control tests. The quality
control tests include the raw materials inspection, in process inspection, finished products
inspection and finally after sales quality control.

Department Structure

CHIEF NUTRITIONIST

SENIOR CHEMIST

JUNIOR CHEMIST

ATTENDERS
Steps in Quality Control

In order to ensure total quality, tests are conducted right from the stage of raw material
acquisition to after sales. Payment of raw material is done on the basis of thetest results.
There are four stages in the quality control:

1. Raw material quality verification

2. Quality verification during grinding and mixing

3. Product quality verification

4. After sales quality control.

1. Raw material Quality Verification

Protein fat are the required context. The main impurities are moisture and silica.
The fat content in the raw material is verified by a test known as “Crude fat test” apparatus
used is known as soxtlete apparatus. There are three such apparatus in the lab. Protein content
is verified with the help of an apparatus termed as fumes chamber. As protein is a Nitrogen
compound, protein content can be verified using this apparatus to measure nitrogen content.
Only one apparatus is there in the lab for this purpose. Moisture content of raw materials
should not be above a prescribed percentage (usually 10%) the best tube for moisture is
conducted to ensure that the raw materials are properly dried. In later concept in 5gms is
tested by using an apparatus “Hot Air Owen”. Silica content is verified using the test named
as “Acid Insoluble Test” apparatus used is “muffle furnace”.

Other Apparatus Used

Distilled water unit

Vacuum pump

Hot plate

Electric weighting machine

Quality Verification during Grinding and Mixing

In second stage there are two quality checks:

 a) Check during grinding.
Check during grinding is done at the grinding stage to ensure the proper size
recommended.

b) Check during mixing.

Check during mixing is conducted to find out whether the mixture is properly
balanced. Also the weight is checked at this stage.

2. Product Quality
It involves

a) Calcium content verification.

b) Chlorine content verification

c) Phosphorous content verification

Volumetric test is used. Product quality verification is done at 3 shifts by taking samples and
checking it at the lab. Then it is pat before the medical officer for approval.

3. After Sales Quality Control

Customers are given proper guidance and instructions. They are advised not to
store the feed in moist place, also labels put in each bag to ensure proper feedback.

Training
Quality control personnel regularly undergo in – service training at courses conducted at
control food Training and Research Institute (CFTRI), RRL, NDRI & other national research
organizations including various veterinary colleges in the southern states.

2.1.8 ACHIEVEMENTS AND

AWARDS Achievements

1972 : The company started production in Irinjalakuda with a Solvent Extraction

plant with a capacity of 40 MTs per day.

1976 : A new plant was set up in Irinjalakuda to produce 50 MTs of ready-mixed

cattle feed.

1979 : Production capacity of Cattle feed Plant in Irinjalakuda increased to 60 MTs

per day.

1980 : Solvent Extraction Plant capacity in Irinjalakuda increased to 60 MTs per

day.
 1984 : The Solvent Extraction Plant capacity of Irinjalakuda increased to 80 MTs
per day.

1987 : Cattle feed Plant at Irinjalakuda capacity increased to 180 MTs per day.

• 1988 : Cattle feed plant in Swaminathapuram, Tamil Nadu started production

Capacity 100 MTs per day.

1989 : Solvent Extraction Plant of Swaminathapuram unit with a capacity of 120

MTs per day started production.

1990 : Cattle feed production capacity at Swaminathapuram unit increased to 150

MTs per day.

1991 : Palakkad Branch started.

1994 : Keyes Forte, the new feed supplement for cattle introduced.Cattle feed production
capacity at Swaminathapuram increased to 180 MTs per day.

1995 : Calicut Branch opened.

1996 : 240 TPD cattle feed Plant at Vedagiri in Kottayam District started operation.
Company renamed as KSE Limited. (Formerly Kerala Solvent Extractions
Limited)

1998 : Company acquired its fourth manufacturing unit at Palakkad for

manufacturing Cattle feed.

1999 : A modern CHILDRENS' PARK AND INFORMATION CENTRE was

Completed at Irinjalakuda for the benefit of the Public. Company introduced
“K.S. Deluxe Plus" the Pelleted feed in HDPE bags for Kerala Market.
2000 : Company started production and marketing of Pasteurized Milk and Milk
products from Konikkara Dairy, Trichur District,Kerala and Thalayuthu
Dairy,Palani Taluk, Tamil Nadu.

2002 : Cattle feed production at Irinjalakuda unit increased to 195 MTs per day.
'VESTA' Ice Cream launched.

2003 : Started production of Cattle feed in a leased plant at Edayar, Kalamassery. Cattle feed
production at the Swaminathapuram unit increased to 195 MTs per day.

2004 : Acquired Land from KINFRA for starting the new project of 200 TPD
Solvent Plant and 100 TPD Oil Physical Refining Plant at Kinfra Park,
Koratty.ISO 9001:2008 Accreditation for Irinjalakuda.

2005 : Cattle feed Production capacity at the Irinjalakuda unit increased to 210 MTs
perday. Company acquired property at Mysore. ISO 9001:2008 accreditation for Vedagiri
and Swaminathapuram units.
 2006 : The 200 TPD Solvent Extraction Plant at Koratty commissioned.
100 TPD Physical Refining Plant at Koratty commissioned. Solvent
Plant at Irinjalakuda dismantled.

2008 : Ice cream production unit commissioned at Thalayuthu.

2009 : Cattle Feed production capacity at Swaminathapuram increased to 200 MTs

per day. Commissioned Fractionation Plant at Koratty. Commenced 500 TPD Fully State-
of-the-Art German Technology Animal Feed Plant at Irinjalakuda.

2010 : Ice cream production unit at Vedagiri commissioned.

2012 : Started production of cattle feed in a leased plant at Kochuveli.

2013 : Gorasan – feed supplement introduction

2014 : Cattle feed production capacity of the old plant at the Irinjalakuda
unit increased to 225 MTs per day.

2015 : Cattle feed production capacity of the old plant at the Swaminathapuram unit
increased to 225 MTs per day.

2017 : Cattle feed production capacity of the old plant at the Irinjalakuda unit
increased to 240 MTs per day.

2018 : Cattle feed production capacity of the old plant at the Palakkad unit increased
to 150 MTs per day.

2018 : Cattle feed production capacity of the old plant at the Vedagiri unit increased
to 240 MTs per day

2018 : Cattle feed production capacity of the old plant at the Swaminathapuram unit
increased to 240 MTs per day.

2.12 Awards and recognition

“Best Productivity Performance for cattle feed in India” award from National
Productivity Council continuously for eleven years 1996-97 to 2006-07.

The Solvent Extractors Association of India – ‘S.E.A Award’ for highest processor of
coconut cake in India continuously for 19 years including 2008-09.

Kerala State Productivity Council Award.

“Top Cattle feed Award” for aflatoxin free feed from the Indian Association of
Veterinary Pathologists (IAVP) and Kerala Agricultural University.
 Tamil Nadu Productivity Council Safety Award.

Animal Nutrition Society of India award for Company’s contributions for propagation
of balanced compound livestock feed in India.

2.1.9 FUTURE GROWTH AND PROSPECTS

KSE, having an annual turnover of Rs.1250 crores, which s the

largest manufacturer of cattle feed. It provides employment to around 1000 members directly
and another 5000 indirectly. Its share is being listed in three stock exchanges in Cochin,
Chennai and Mumbai. The company commenced its production in the year 1972.

It is marketing annually about 1.80 lakhs per tons of superior quality

cattle feed. KSE has successfully launched its Vesta Brand Ice Cream which has been well
accepted in the market for its matching international quality standards. KSE plans to add
more ice cream production units across Kerala in the coming years to serve all pockets.

KSE is in the oil extraction industry in the past 50 years. It is having

two solvent plant with processing capacity of 100 tons per day. The company has also a
chemical oil refining plant of 20 tons per day. The company has secured the National
Productivity Award for the year 2001-2002 for being first in terms of production efficiency in
the animal feed sector. This is the sixth time in a row that the company is being selected for
this most coveted award.

It is pertinent it note that in the Kerala industrial scenario, where

many companies are choosing down, either due to labour unrest or due to other economic
reasons, KSE continue to commence new venture each year and runs them successfully. The
company is having six units at different locations. The relation with the labour unions is very
warm and cordial.

KSE, with a capital base of Rs.36crores embarks on an expansion to

double its solvent extraction capacity and add a most modern ecofriendly vegetable refining
plant. The company has already identified six Acres of land in the KINFRA small industries
park, koratty fort his expansion.

39
 CHAPTER 3

3.1 MCKINSEY’S 7S FRAMEWORK

1. STRATEGY:
KSE Ltd has adopted one of the strategy’s of job based training, green
development brand value improvement etc, and it diversified its business in mash, pellet,
cattle feed, diary products etc. This business diversification strategy helped the KSE Ltd to
capture the market and diversify the business risk.

2. STRUCTURE:
In the company they have separate department for planning and
controlling the production activities. In this department they prepare production budgets for
each month to know the raw material requirements and every year the company publishes its
annual performance report of “KSE INDUSTRIES”.
The main system of running a business in SAP. The tally is replaced by
SAP in 2007. In this system separate company code, profit centers are created for recording
transactions. The each profit centers are having separate codes and the cost centres are
followed by profit center codes
The attendance register is of Biometric system every employee needs
to punch before entering the company.

40
 ORGANISATION STRUCTURE

BOARD OF DIRECTORS

CHAIRMAN / MD

EXECUTIVE DIRECTOR

GENERAL MANAGER

CHIEF DGM DGM CHIEF CHIEF

FINANCIAL PURCHASE
MARKETING NUTRITIONIST PERSONNEL
OFFICER
MANAGER

WORKS MANAGER

SENIOR
EXECUTIVE EXECUTIVE PERSONNEL JUNIOR ASSISTANT
FINANCE
SALES PURCHASE OFFICER CHEMIST MANAGER
MANAGER
ELECTRICAL

JUNIOR
OFFICE SENIOR OFFICE ATTENDER MAINTANANC
OFFICER
ASSISTANT ASSISTANT E EXECUTIVE
ASSISTANT

SENIOR
CLERK EXECUTIVE
ASSISTANT (PRODUCTION

CLERK

GODOWN
SENIOR SHIFT OFFICER
SUPERVISOR

CLERK

OPERATOR BOILER GODOWN

ELECTRICIANS
OPERATOR ASSISTANT

WORKER S TALLY

WORKERS
3. SYSTEM:

In the company they have separate department for planning and controlling the production
activities. In this department they prepare production budgets for each month to know the raw material
requirements and every year the company publishes its annual performance report of “KSE
INDUSTRIES”.

The main system of running a business in SAP. The tally is replaced by SAP in 2007. In this
system separate company code, profit centers are created for recording transactions. The each profit
centers are having separate codes and the cost centres are followed by profit center codes
The attendance register is of Biometric system every employee needs to punch before entering
the company.

4. STYLE:

The leadership styles are of participative in nature. All the team members will participate in the
decision making process. The leaders motivates the employees in their work. The decision making style in
the KSE Ltd is decentralization in nature. The top management follows formal relationship with their
subordinates.

5. STAFF:
In the MCKINSEY’s framework the term “staff” has a specific connotation. KSE Industries
has a well established system recruiting graduates from well known technical management institutions and
providing them with on the job training in number of functional areas, before deciding on the final
placement in consultancy services, campus interviews or through advertisements KSE family consisted of
1,628 permanent employees. A majority of the employees at KSE are workers, consisting 71% of the total
employee strength. The number of employees who are on probation (employees who have joined KSE
within 6 months prior to 31march, 2010) is 68. This brings the total number of employees (permanent and
probationary employees) to 1696. The number of contractual workers is 76 and these include only
contract workers in the mine area. This category accounts for 4.28% of the total employees (permanent,
temporary and contractual).
EMPLOYEE ON PERMANENT ROLE
DIRECTORS(4) MANAGERS(32) OFFICERS(136) STAFF(299) WORKERS(1158)

6. SKILLS:
In KSE Industries both skilled and semi-skilled labours are working. Here
different training and development programs are given to labours, employees, officers and
executives to specialize them in the particular discipline of work and also to cope up with
new emerging technology.

Technical skills: Fitter requires technical skills for the maintenance of machine.

Conceptual skills: Production managers and purchase department managers required

conceptual skills of the wood and chemicals.

7. SHARED VAUES:
“To meet the needs and expectations of the customers and to even delight them,
through quality of design, manufacturing systems, control of operations”. Respect for the
individuals, integrity, speed, simplicity, seamlessness, Self assuredness and 100%
commitments are all values we value. Our values are non-negotiable. A shared value means
that the employees aware the same guiding values. Values are thing that you would strive for
even if they were demonstrably not profitable. Values act as an organization’s conscience,
providing guidance in times of crisis. Identifying corporate values is also the first essential
step in defining the organizations role in the larger community in which it functions.

Progressive Management and Unique Work Culture

The management KSE rests on a eminent team of personalized from the cultural
and financial and social system of society who from the BOD. The Chairman and MD
executive
director and whole time Director head the operations of the company and overseas its smooth
functioning. The day to day management of various units is carried out by experienced
professionals under a chief general manager. Who lead and motivate a dedicated world force.

The total number of employees in various units of KSE now exceeds 1000.
Besides KSE gives endured employment to over 2000 people, through its distribution
network across Kerala and Tamil Nadu.

The work culture of KSE is an exception to the rule in the strife ridden
industrial climate of Kerala. During the quarter century of it is operation, the days lost to
industrial unrest is only 23 days. This fact illustrates the cordial work environment and speaks
of the extra ordinary relationship between the management and employees.

Periodic appraisal and renewal of agreements between the management and

workers credit a responsible attitude and productive atmosphere. The united efforts mutual
test and progressive vision of management and force is the cornerstone on which the success
of KSE is base
3.2 PORTER’S FIVE FORCE MODEL

First published in 1979, “How Competitive Forces Shape Strategy” by Michael

E. Porter, revolutionized the field of strategy. Popularly known as “Porter’s Five Forces”- not
only influenced a generation of academic research but also provided a map to rigorously
analyze the competitive forces.

Porter Five Forces model is heavily borrowed from the traditional field of micro
economics. The five forces that determine the industry structure of organization are:

3.2.1 THREAT OF SUBSTITUTE PRODUCTS AND SERVICES:

If the threat of substitute is then KSE Ltd has to either continuously invest into
Research and Development or it risks losing out to disruptors in the industry.

Hence to overcome the threat from substitutes KSE Limited has taken few steps
like, they are being service oriented rather than just product oriented, they understand the
core need of customer rather than what the customer is buying, and by increasing the
switching costs for the customers.

Some substitute diary products are Meriiboy ice creams, Amul products and the
substitutes products in the cattle feed industries are the products made by the farmers
themselves to feed their cows.
3.2.2 THREAT OF NEW ENTRANTS:

If there is strong threat of new entrants then current players will be willing to
earn low profits to reduce the threats. For KSE Limited there is low threat of new entrants as
there are strong government regulations, high brand loyalty and cost advantage.. So there is a
low level of threat of new entrants.

3.2.3 BARGAING POWER OF SUPPLIERS OF KSE:

If suppliers have strong bargaining power then they will extract higher price
from the KSE. To overcome this company is trying to build efficient supply chain with
multiple suppliers, and developing dedicated suppliers whose business depends upon the
firm.

3.2.3 BARGAINING POWER OF BUYERS OF KSE:

If the buyers have strong bargaining power then they usually tend to drive price
down thus limiting the potential of the KSE to earn sustainable profits. The company is trying
to build a large customer base, and innovating new products.

3.2.4 RIVALRY AMONG EXISTING PLAYERS:

If competition is intense then it becomes difficult for existing players such as
KSE to earn sustainable profits.

The company can build a sustainable differentiation, it can build scale to

compete better and even it can collaborate with the competitors to increase the market size
rather than just competing for small market.

Some competitors are

Ajooni Biotech Ltd.

Godrej Agrovet Ltd.
Narmada Agrobase Ltd.
Prima Agro Ltd.
 CHAPTER 4

4.1 SWOT ANALYSIS

4.1.1 Strength

Vast experience of 56 years in the cattle feed and solvent extraction industry. KSE has survived
many ups and downs in the industry

KSE is the Market leader in the cattle feed segment

KSE has won many awards and recognitions because of its outstanding quality of
products which give them an edge when comparing to others companies.
KSE has a Huge network of product dealers because of this the company need not spent
muc n the marketing.

4.1.2 Weakness

Labour unrest from 10 Feb 09 to 25 Mar 09 in KSE's Swaminathapuram unit caused a rift
between the workers and the management

KSE is finding it difficult to procure coconut oil cake domestically and has rely on
imports. Further the depreciation of the Indian Rupee against US Dollar is pushing up
KSE's import costs
Promotional activities are limited
High price in raw materials
High cost of production

4.1.3 Opportunity

With the VAT removed on sale of cattle feed, de-oiled cakes and coconut oil, KSE's
products are competitively priced
KSE is in process of establishing ice-cream production units near identified potential
markets. This will expand its sales
4.1.4 Threat

Cutthroat competition from the unorganised sector who have comparitively less labour
overhead costs

Probable entry of MNCs in the cattle feed sector

Rise in crude oil prices causing an increase in input costs

Stagnant growth in cattle population might slower growth prospects of the cattle feed
industry

Indirect control by govt. over the price of milk

Crop rotation by farmers, since oil seeds and grains are raw materials for KSE

Import of cheaper oils for industrial consumption leading to a fall in demand for
solvent extracted coconut oil
 CHAPTER 5

5.1 ANALYSIS OF FINANCIAL STATEMENTS

5.1.1 COMPARATIVE STATEMENT

COMPARATIVE BALANCE SHEET FOR THE YEARS 2014-

COMPARITIVE BALANCE SHEET OF KSE LTD VEDAGIRI UNIT
2014 2015
EQUITY AND LIABILITIES Rs in lakhs Rs in lakhs
Increase/Decrease %

Shareholder’s funds
share capital 320 320 0 0
reserves and surplus 4538.09 6861.07 2322.98 51.1884956
4858.09 7181.07 2322.98 47.81673456
Non-current liabilities
long term borrowings 649.25 528.48 -120.77 -18.6014632
deferred tax liabilities 155.32 0 -155.32 -100
long term provisions 39.75 54.58 14.83 37.3081761
844.32 583.06 -261.26 -30.9432443
Current liabilities
short term borrowings 728.9 831.6 102.7 14.08972424
trade payable 865.64 1633.16 767.52 88.66503396
other current liabilities 1475.54 2550.05 1074.51 72.82147553
short term provisions 777.8 1023.6 245.8 31.60195423
3847.88 6038.41 2190.53 56.92823061

TOTAL 9550.29 13802.54 4252.25 44.52482595

ASSETS
Non-current assets
fixed assets 3653.68 2745.31 -908.37 -24.8617832
non-current investments 7.5 2.5 -5 -66.6666667
deferred tax asset 0 24.82 24.82 0
long term loans and advances 94.8 112.37 17.57 18.53375527

Current assets
inventories 4969.9 6600.66 1630.76 32.81273265
trade receivables 16.99 28.71 11.72 68.98175397
cash and cash equivalents 314.41 3777.75 3463.34 1101.536211
short term loans and advances 483.94 496.29 12.35 2.551969252
other current assets 9.07 14.13 5.06 55.78831312
5794.31 10917.54 5123.23 88.41829312

TOTAL 9550.29 13802.54 4252.25 44.52482595

INTERPRETATION

Comparing the balance sheet of KSE limited during the year 2014-2015 the Amount of capital
collected by the company remains the same. From the comparing balance sheet we can find an
increase in reserves and Surplus. It shows that the reserve increase 51.18% during the year.

The long term borrowings have a 18.60%, decreasing during the year. The deferred tax
liabilities decreasing to 100% during the year. The provision created for the long term has
increased by 37.30%.

Under current liabilities are also showing increasing.Short term, provision shows 31.60%
increase. Other current liabilities show a 72.82 % increase. Short term borrowing and trade
payables are increasing at 14.08% and 88.66%.

Investment is decreasing 66.6%. This is a major change happened compare to last years. Fixed
assets of the company decreasing to 24.86% and the long term loans and advances also
increasing to 18.53%.

Under the current asset inventories increased from 2.81%. The companies, trade receivables are
increasing68. 98%. It shows that most of the sales are run in credit sales. The loans and
advances are increasing at 2.55%. Other current assets increasing at 55.7% during the year.

5.2 RATIO ANALYSIS

5.2.1 LIQUIDITY RATIO

5.2.1.1 CURRENT RATIO

Current ratio is defined as the ratio of current assets to current liabilities. It is calculated as follows:
Current ratio = Current assets / Current liabilities
Table No: 5.2.1.1 Table showing current ratio

CURRENT ASSETS CURRENT LIABILITIES CURRENT

YEAR
RS in lakhs RS in lakhs RATIO

2010 – 2011 3843.9 3212.23 1.19

2011 – 2012 4979.92 3738.82 1.33
2012 – 2013 5481.94 4574.09 1.19
2013 – 2014 5794.31 3847.88 1.50
2014 - 2015 10917.54 6038.41 1.80
Source : Published Annual Report of KSE Ltd for five years
 Chart No: 5.2.1.1 Chart showing current ratio

CURRENT RATIO
2

1.5

0.5

0
2010 – 2011 2011 – 2012 2012 – 2013 2013 – 20142014 - 2015
CURRENT RATIO

INTERPRETATION
The information on the current assets, current liabilities and current ratio of the company for various year is
summarized in table . it is observed from table that, current ratio of the firm is shows an increasing trend. By
rule of thumb the ideal ratio is 2:1, There is a increasing trend in the year 2010 – 2011 to 2011 – 2012 , then
there is decreasing in 2012-2013,then last two years increasing trend. last year current ratio is 1.8 thus the
company has faced some liquidity problems.

5.2.1.2 QUICK RATIO

Liquid ratio is the ratio of liquid assets to current liabilities. it is computes as follows :
Liquid ratio = Liquid assets /Current liabilities
Liquid assets = Current assets – (Inventories + Prepaid expenses )
Table No: 5.2.1.2 Table showing quick ratio

CURRENT
QUICK ASSETS
YEAR LIABILITIES RS in QUICK RATIO
RS in lakhs
lakhs
2010 – 2011 582.7 3212.23 0.18
2011 – 2012 831.59 3738.82 0.22
2012 – 2013 744.79 4574.09 0.16
2013 – 2014 824.41 3847.88 0.21
2014 - 2015 4316.88 6038.41 0.71
Source : Published Annual Report of KSE Ltd for five years
Chart No: 5.2.1.2 Chart showing quick ratio

QUICK RATIO
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0

2010 – 20112011 – 20122012 – 20132013 – 20142014 - 2015

QUICK RATIO

INTERPRETATION

The highest ratio shown by the above table is 0.71 for the year 2014 – 2015. The lowest ratio is shown for the
year 2012 – 2013 i.e. 0.16. Ratio 1:1 is considered as ideal. The graph shows fluctuating ratios for the years.

5.2.1.3 ABSOLUTE LIQUID RATIO

Absolute liquid ratio = Cash and bank balance / Current liabilities

Table No: 5.2.1.3 table showing absolute liquid ratio

CASH AND BANK CURRENT

ABSOLUTE
YEAR BALANCE RS in LIABILITIES RS in
LIQUID RATIO
lakhs lakhs
2010 – 2011 348.07 3212.23 0.10
2011 – 2012 583.33 3738.82 0.15
2012 – 2013 375.78 4574.09 0.08
2013 – 2014 314.41 3847.88 0.08
2014 - 2015 3777.75 6038.41 0.62
Source : Published Annual Report of KSE Ltd for five years
Chart No: 5.2.1.3 Chart showing absolute liquid ratio

ABSOLUTE LIQUID RATIO

0.7
0.6
0.5
0.4
0.3
0.2
0.1
0

2010 – 20112011 – 20122012 – 20132013 – 20142014 - 2015

ABSOLUTE LIQUID RATIO

INTERPRETATION

The highest ratio shown by the above table is .62 for the year 2014 – 2015. The lowest ratio is shown for the
year 2012 – 2013 and 2013 -2014. 0.08 and 0.08. When comparing previous years 2010-2011 to 2014-2015
highest ratio is came in last year. It is a huge increasing trend .08 to .62

5.2.1.4 NET WORKING CAPITAL RATIO

Net Working Capital Ratio = Net working capital / Net assets

Net working capital = Current Assets – Current liabilities

Table No: 5.2.1.4 table showing Net Working Capital Ratio

NET WORKING NET ASSETS NET WORKING
YEAR
CAPITAL RS in lakhs RS in lakhs CAPITAL RATIO
2010 – 2011 631.67 7710.46 .08
2011 – 2012 1241.1 8637.49 .14
2012 – 2013 907.85 9532.30 .09
2013 – 2014 1946.43 9550.29 .20
2014 - 2015 4879.13 13802.54 .35
Source : Published Annual Report of KSE Ltd for five years
Chart No: 5.2.1.4 Chart showing Net Working Capital Ratio

NET WORKING CAPITAL RATIO

0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0

2010 – 20112011 – 20122012 – 20132013 – 20142014 - 2015

NET WORKING CAPITAL RATIO

INTERPRETATION

The net working capital ratio of the company was started with 0.08 in the year 2010 -2011. Then It was
increased to 0.14 by 2011-2012 and slightly decreased to 0.09 by 2012- 2013. Then last two year increasing
trend .20 and .35 by the year 2013-2014, 2014-2015, The average NWC Ratio of the company is 0.172 for the
above study period.

5.2.2 ACTIVITY RATIOS

5.2.2.1 INVENTORY TURNOVER RATIO
Inventory or stock turnover ratio shows the relationship between costs of goods sold and average inventory or
stock.
Stock turnover ratio = Net sales/Inventory
Table No: 5.2.2.1 table showing inventory turnover ratio

NET INVENTORY
INVENTORIES
YEAR SALES RS TURNOVER
RS in lakhs
in lakhs RATIO
2010 – 2011 45368.03 3261.2 13.91
2011 – 2012 54222 4148.33 13.07
2012 – 2013 69717.71 4737.15 14.71
2013 – 2014 80630.33 4969.9 16.22
2014 - 2015 89970.05 6600.66 13.63
Source : Published Annual Report of KSE Ltd for five years
Chart No: 5.2.2.1 Chart showing inventory turnover ratio
INVENTORY TURNOVER RATIO
18
16
14
12
10
8
6
4
2
0
2010 – 20112011 – 20122012 – 20132013 – 20142014 - 2015
INVENTORY TURNOVER RATIO

INTERPRETATION

In the above diagram the highest turnover ratio is in the year 2012 – 2013, and lowest in the year 2011 –
2012 .stock turnover ratio for all the years were above the standard. A higher turnover ratio indicates
efficient management of inventory because more frequently the stocks are sold, the lesser the amount of
money is required to finance inventory is sold very fast.

5.2.2.2 DEBTORS TURNOVER RATIO

Debtors turnover ratio = Net Sales

Debtors

Table No: 5.2.2.2 Table showing Debtors turnover ratio

DEBTORS DEBTORS
NET SALES
YEAR RS in TURNOVER
RS in lakhs RATIO
lakhs
2010 – 2011 45368.03 22.76 1993.32
2011 – 2012 54222 16.79 3229.42
2012 – 2013 69717.71 29.26 2382.69
2013 – 2014 80630.33 16.99 4745.75
2014 – 2015 89970.05 28.71 3133.75
Source : Published Annual Report of KSE Ltd for five years
Chart No: 5.2.2.2 Chart showing Debtors turnover ratio

DEBTORS TURNOVER RATIO

5000

4000

3000

2000

1000

0
2010 – 20112011 – 20122012 – 20132013 – 20142014 - 2015
DEBTORS TURNOVER RATIO

INTERPRETATION

Debtors turnover ratio shows the relationship between sales and debtors. From the above tables showing
decreasing trend in the year 2014 – 2015 it was 3133.75

5.2.2.3 CREDITORS TURNOVER RATIO

Creditors turnover ratio = Net credit purchase

Average creditors including bills payable

Table No: 5.2.2.3 Table showing Creditors turnover ratio

CREDITORS
PURCHASES CREDITORS
YEAR TURNOVER
RS in lakhs RS in lakhs
RATIO
2010 – 2011 44251.26 1014.42 43.62
2011 – 2012 52382.5 1768.83 29.61
2012 – 2013 68421.85 2859.46 23.92
2013 – 2014 69418.72 1594.54 43.53
2014 - 2015 75659 .98 2464.76 30.69
Source : Published Annual Report of KSE Ltd for five years
Chart No: 5.2.2.3 Chart showing Creditors turnover ratio

CREDITORS TURNOVER RATIO

50

40

30

20

10

0
2010 – 20112011 – 20122012 – 20132013 – 20142014 - 2015
CREDITORS TURNOVER RATIO
INTERPRETATION:
It is clear from table figure 6.1.2.5 that the creditors turnover ratio shows the relationship between purchases
and creditors including bills payable. It reveals that creditors turnover ratio is fluctuating year after year, the
ratio is higher in 2010 -2011. It indicates that the creditors are being paid promptly, thus enhancing the credit
worthiness of the company. In the year 2012 – 2013 creditors ratio is very low (23.92). This means liberal
credit term followed by the suppliers.

5.2.2.4 FIXED ASSETS TURNOVER RATIO

It establishes the relationship between net sales and fixed assets. it is computes as follows :
Fixed assets turnover ratio = Net sales/ Net fixed assets

Table No: 5.2.2.4 Table showing fixed assets turnover ratio

NET FIXED
NET
FIXED ASSETS
YEAR SALES RS
ASSET RS TURNOVER
in lakhs
in lakhs RATIO
2010 – 2011 45368.03 3783.78 11.99
2011 – 2012 54222 3583.4 15.13
2012 – 2013 69717.71 3944.45 17.67
2013 – 2014 80630.33 3653.68 22.06
2014 - 2015 89970.05 2745.31 32.77
Source : Published Annual Report of KSE Ltd for five years
Chart No: 5.2.2.4 Chart showing fixed assets turnover ratio

FIXED ASSETS TURNOVER RATIO

35

30

25

20

15

10

0
2010 – 2011 2011 – 2012 2012 – 2013 2013 – 2014 2014 - 2015
FIXED ASSETS TURNOVER RATIO
INTERPRETATION
The information on the relation between net sales and net fixed asset is summarized in the figure 6.1.2.7.
Higher the fixed assets turnover ratio, it is good for the company. Fixed assets turnover ratio high in 2014 –
2015. Here it clear that fixed assets turnover ratio is high in the company. It means better utilization of
resources of fixed assets for better working of the firm. The high turnover ratio tells the efficiency of the
management and utilization of assets.

5.2.2.5 CURRENT ASSETS TURNOVER RATIO

The ratio which expresses the relationship between the current assets to sales. It is computes as follows:
Current assets turnover ratio = net sales/ current assets

Table No: 5.2.2.5 Table showing current assets turnover ratio

NET CURRENT CURRENT ASSETS

YEAR SALES RS ASSETS RS in TURNOVER
in lakhs lakhs RATIO
2010 – 2011 45368.03 3843.9 11.80
2011 – 2012 54222 4979.92 10.88
2012 – 2013 69717.17 5481.94 12.71
2013 – 2014 80630.33 5794.31 13.91
2014 - 2015 89970.05 10917.54 8.24
Source : Published Annual Report of KSE Ltd for five years
 Chart No: 5.2.2.5 Chart showing current assets turnover ratio

CURRENT ASSETS TURNOVER RATIO

16
14
12
10
8
6
4
2
0
2010 – 20112011 – 20122012 – 20132013 – 20142014 - 2015
CURRENT ASSETS TURNOVER RATIO

INTERPRETATION
The information on the relationship between net sales and current assets is summarized in the figure 6.1.2.8.
This ratio indicates effective utilization of current assets. It is clear that the current assets turnover ratio shows
an decreasing trend year y year, in the year 2013 – 2014 current assets turnover ratio shows a highly increase
trend.

5.2.3 PROFITABILITY RATIOS

5.2.3.1 GROSS PROFIT RATIO

Gross profit ratio = (Gross profit / Net sales)*100

Table No: 5.2.3.1 Table showing gross profit ratio

GROSS NET
GROSS
YEAR PROFIT RS in SALES RS
PROFIT RATIO
lakhs in lakhs
2010 – 2011 1359.8 45368.03 2.99
2011 – 2012 2291.78 54222 4.22
2012 – 2013 1401.84 69717.17 2.01
2013 – 2014 2956.3 80630.33 3.66
2014 - 2015 6173.9 89970.05 6.86
Source : Published Annual Report of KSE Ltd for five years

Chart No: 5.2.3.1 Chart showing gross profit ratio

GROSS PROFIT RATIO

8
7
6
5
4
3
2
1
0
2010 – 20112011 – 20122012 – 20132013 – 20142014 - 2015
GROSS PROFIT RATIO

INTERPRETATION:
It is clear from the table and figure that the gross profit of the organization is showing in fluctuating trend
during the period under the study and the net sales of the firm showing increasing trend. Even if the sales are
increasing there is no proportionate increase in the gross profit. It is observed that the gross profit ratio of the
organization is showing a fluctuating trend year after year. There is high increase in last year. High gross
profit ratio is a efficient production or purchase management.

5.2.3.2 NET PROFIT RATIO

Net profit ratio = (Net profit/ Net sales)*100

Table No: 5.2.3.2 Table showing net profit ratio

NET
NET PROFIT NET PROFIT
YEAR SALES RS
RS in lakhs RATIO
in lakhs
2010 – 2011 449.81 45368.03 0.99
2011 – 2012 1044.93 54222 1.92
2012 – 2013 465.3 69717.17 0.66
2013 – 2014 1537.36 80630.33 1.90
2014 - 2015 4363.41 89970.05 4.84
Source : Published Annual Report of KSE Ltd for five years
Chart No: 5.2.3.2 Chart showing net profit ratio

NET PROFIT RATIO

6
5
4
3
2
1
0

2010 – 20112011 – 20122012 – 20132013 – 20142014 - 2015

NET PROFIT RATIO

INTERPRETATION
The firm’s profit position was low in 2011, and then it has increased in 2012. In 2013 profit reached the
lowest position than last four year. Lower ratio shows the operational inefficiency (related to indirect
expenses and revenues) of the company. In 2014 and also in 2015 the net profit is increased which indicates
that the company has taken necessary steps to reduce its operational inefficiencies. In 2015 the net profit
increased very high, it shows the successful of the company.

5.2.3.3 OPERATING RATIO

Operating ratio = Operating Cost
X 100
Net Sales

Table No: 5.2.3.3 Table showing operating ratio

NET
OPERATING OPERATING
YEAR SALES RS
COST RS in lakhs RATIO
in lakhs
2010 – 2011 44,768.76 45368.03 98.67
2011 – 2012 52749.24 54222 97.28
2012 – 2013 69159.8 69717.17 99.20
2013 – 2014 78376.24 80630.33 97.20
2014 - 2015 84789.84 89970.05 94.24
Source : Published Annual Report of KSE Ltd for five years

Chart No: 5.2.3.3 Chart showing operating ratio

OPERATING RATIO
100
99
98
97
96
95
94
93
92
91
2010 – 20112011 – 20122012 – 20132013 – 20142014 - 2015
OPERATING RATIO

INTERPRETATION

The information on relationship between operating cost and net sales is summarized in table 6.1.3.3. It is
observed from the table that the operating ratio of the company shows the fluctuating trend every year. This
ratio shows the operating efficiency of the business was unfavorable.
 CHAPTER 6

LEARNING EXPERIENCE

It was a good experience in doing internship at Kerala Solvent

Extraction Ltd. The Supreme Food Industries has started their business to bring quality in their
products. They produce world class quality products. KSE Ltd is one of the largest producers of cattle
feed based in south India. They will keep good production techniques and comprehensive hygiene
policy for their every product. Their products were very successful in the market. The study has given
information about the manufacturing process, different products; organisational structure of the
company, departmental functions and gives a good knowledge about the market position of the
company.

Now they are diversified their product line. They also introduce
new flavours of different fruits. For this they will import raw materials from foreign places and also use
the domestic raw materials for making the cattle feed. They are very keen in maintaining quality in
their products. So they are not using any animal fat for making their products.

The employees worked in the company are very committed to their

works. The self- motivated culture is existed in the company. The human resource functions of the
company are going very perfect. Now the company is in the growing stage so they have a wide scope
for widening their business and catch the market.

I have found many things in KSE they are as follows:

The company has huge market demand for its product. Because company has created
a goodwill among customer over years.
Company has faced many they problems over the years and they have been
successfully running. Because of its good administration department.
Company has always tried to maintain a good employer-employee relation by
providing good working condition.
While other companies have put lots f money in marketing their products KSE has
limited marketing. But they have a huge demand for their products
Even though they are running 365 days but they still can’t satisfy the demands of the
customers.
In olden days their demand has been highly seasonal but now it have change.
They are manufacturing milk and ice cream but due to unavailable of raw material
they have been limited their market of those products.
Their products price is little higher when compare to competitors but they still have
demand because f its supreme quality of those products.
The debtor turnover ratio is decreasing trend in 2013-14 debtor turnover ratio is
higher . The average payment period of debtor turnover ratio is decreased.
The creditors turnover ratio is fluctuating year after year, the ratio is higher in 2010
-2011. It indicates that the creditors are being paid promptly, thus enhancing the
credit worthiness of the company. In the year 2012 – 2013 creditors ratio is very
low (23.92). This means liberal credit term followed by the suppliers. The average
payment period is increasing trend.
Fixed assets turnover ratio high in 2014 – 2015. Here it clear that fixed assets
turnover ratio is high in the company. It means better utilization of resources of
fixed assets for better working of the firm. The high turnover ratio tells the
efficiency of the management and utilization of assets.
 BIBLIOGRAPHY
Kotler Philip, ‘Marketing Management’ Eleventh edition, prentice Hall of India
Pvt Ltd, 2005.
Principles of mgt
M. PANDEY (2005), “financial management”, ninth edition vikas publishing house Pvt ltd.
S. N. MAHESWARI (2006), “financial and management accounting”, fifth edition, sultan
chand and sons, New Delhi.
R. KOTHARI, “research methodology and techniques”. Second edition, new Agency
international pvt ltd.
BAKER. R .P & HOW WELL. A.C, “the preparation of reports”, New York Ronald press.
Shashi K Gupta , R K Sharma And Anuj Gupta(2011), “ Accounthing For Management”,
Kalyani Publishers, New Delhi , reprinted 2012.
Annual report of KSE Ltd.

WEBSITES

www.kselimited.com
http://www.fao.org/DOCREP/Article/AGRIPA/X9500E01.htm
http://stason.org/TULARC/science-engineering/chemistry/24-1-What-
is-Solvent- Extraction.html
www.smbsmgu.org
www.Info.shine.com
www.indiainfoline.com
www.Investopedia.com
www.managementstudies.com
 ANNEXURE

BALANCE SHEET OF KSE LTD VEDAGIRI UNIT

2015 2014 2013 2012 2011
EQUITY AND LIABILITIES Rs in Rs in Rs in Rs in Rs in
lakhs lakhs lakhs lakhs lakhs
Shareholder’s funds
share capital 320 320 320 320 320
reserves and surplus 6861.07 4538.09 3749.5 3651.18 3015.35
7181.07 4858.09 4069.5 3971.18 3335.35
Non-current liabilities
long term borrowings 528.48 649.25 688.3 717.37 935.82
deferred tax liabilities 0 155.32 170.29 182.54 205.02
long term provisions 54.58 39.75 30.12 27.58 22.04
583.06 844.32 888.71 927.49 1162.88
Current liabilities
short term borrowings 831.6 728.9 1945.59 1413.48 1447.8
trade payable 1633.16 865.64 913.87 355.35 375.68
other current liabilities 2550.05 1475.54 1292.99 1486.22 766.85
short term provisions 1023.6 777.8 421.64 483.77 621.9
6038.41 3847.88 4574.09 3738.82 3212.23

TOTAL 13802.54 9550.29 9532.3 8637.49 7710.46

ASSETS
Non-current assets
fixed assets 2745.31 3653.68 3944.45 3583.4 3783.78
non-current investments 2.5 7.5 7.5 7.5 7.5
deferred tax asset 24.82 0 0 0
long term loans and advances 112.37 94.8 98.41 66.67 75.28
3866.56
Current assets
Inventories 6600.66 4969.9 4737.15 4148.33 3261.2
trade receivables 28.71 16.99 29.26 16.79 22.76
cash and cash equivalents 3777.75 314.41 375.78 583.33 348.07
short term loans and advances 496.29 483.94 330.63 220.43 207.99
other current assets 14.13 9.07 9.12 11.04 3.88
10917.54 5794.31 5481.94 4979.92 3843.9

TOTAL 13802.54 9550.29 9532.3 8637.49 7710.46

 PROFIT AND LOSS A/C OF KSE LTD VEDAGIRI UNIT
2015 2014 2013 2012 2011
PARTICULARS Rs in Rs in Rs in Rs in Rs in
lakhs lakhs lakhs lakhs lakhs
Revenue
Sales 89970.05 80630.33 69717.71 54222 45368.03
Other income 1208.82 89.78 108.18 114.28 68.04
91178.87 80720.11 69825.89 54336.28 45436.07

Expenses
Raw materials and finished
goods 74019.27 69121.63 60474.34 45026.54 38060.08

Manufacturing,Administrative,selling 6556.95 5784.3 5601.64 4730.89 4161.05

and other expense
Employees benefits expense 3383.04 2857.88 2348.07 2287.07 1855.14
Finance costs 194.49 236.66 313.65 245.27 236.64
Depreciation/amortisation 636.19 375.77 422.1 459.47 455.85
84789.94 78376.24 69159.8 52749.24 44768.76

Profit Before Tax(Revenue -Expenses) 6388.93 2343.87 666.09 1587.04 667.31

less: Tax Expenses 2025.52 806.51 200.79 542.11 217.5
Net Profit After Tax 4363.41 1537.36 465.3 1044.93 449.81