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SUMMER TRAINING REPORT On “Working capital of verka milk plant Patiala’’
Submitted in partial fulfillment of the requirements for the degree of Master Of business administration (2011-2012) affiliated to Punjabi University, Patiala
Yesha tandon Roll no:-90372233838
GURU NANAK DEV ENGINEERING COLLEGE LUDHIANA
GNDEC Page 1
I hereby certify that the work which is being presented in the project entitled “A SURVEY ON WORK LIFE BALANCE AT NATIONAL FERTILIZERS
LIMITED, NANGAL UNIT” in partial fulfillment of requirements for the
MANAGEMENT at GURU NANAK DEV ENGINEERING COLLEGE, LUDHIANA
under Punjab Technical University, Jalandhar is an authentic record of my own work carried out during a period from 1ST JUNE 2010 to 15TH JULY
2010 under the supervision of Dr.Sukhdev singh. The matter presented in
this project has not been submitted by me in any other University / Institute for the award of M.B.A. degree. Signature of the student
This is to certify that the above statement made by the candidate is correct to the best of my knowledge.
Signature of the supervisor
DR.SUKHDEV SINGH Head of department
Department of Management GNDEC, LUDHIANA
For management careers, it is important to develop managerial skills. In order to achieve positive and concrete results, along with theoretical concepts, the exposure of real life situation existing in a corporate world is very much needed. To fulfill this need, this type of practical trainings required. I underwent summer training in VERKA MILK PLANT, located in Gurdaspur. It was my fortune to get training in a very healthy company. I got great opportunity to view the overall working of the organization. In the forthcoming pages, I have attempted to present a report covering different aspects of my training.
In a dynamic and complex industrial and marketing environment, theoretical Concepts and classroom, teaching is not enough to impart professional knowledge and skills to the future managers. In this regard, I feel quit indented to management department of GNDEC, LUDHIANA for providing me with tremendous skills and getting me exposed to the philosophies and psychologies behind the complex corporate world and marketing environment. Every venture is made success by active cooperation and the guidance of the people with it, which has forth coming in full during this project. Words cannot be justice to sort of cooperation at this study. So, I feel that this report would be incomplete without the thanking the people who helped me in completion of training and project report. First of all, I wish to express my sincere thanks to Mr.kuldeep Singh general manager for allowing me to undergo my training.
I am heartily to R.N Mahant manager of accounts for their sincere and devoted guidance during the training. I would also like to thank all employee of account department to complete this report.
NAVD EEP KAUR
CONTENTS TABLE OF CONTENTS
9.2 1.2 5.3 1. 7.5 1. 8.6 2. 5.4 1.3 6. 5.Working capital CHAPTER NO. Company profile Milk fed networks Introduction of milk plant Gurdaspur Financial working of plant Products of company Objectives of plant SWOT Analysis of plant Review of literature Objectives of study Research methodology Introduction to working capital Operating cycle of verka milk plant Sources of working capital Financial position of plant Ratio analysis Comparative analysis of balance sheet of plant Findings Recommendations Limitations of study conclusion Bibliography NAME PAGE NO. 4. 6 7 8 12 14 17 18 20 21 22 24 25 28 29 30 36 45 46 47 48 49 COMPANY PROFILE GNDEC Page 6 .1 1. 5. 6. 10. 1. 3.1 5. 1.
Working capital The Punjab state cooperation milk producer’s federation Ltd. MILK FED with its network of over 5000 village milk producer co-operative societies and three lacs milk producers from a strong network providing assured market to milk producers . MILK FED and its units have a workforce of about 5000 employees and also provide regular employment to as out 600 transporters. Milk producer co-operative societies at village level (primary cooperative societies). The organizational set up of MILK FED is based on three systems:1. Although the federation was registered a lot earlier.. Co-operative milk marketing federation as an apex body at state level (MILK FED). Were handed over to co operative sector and the entire state was covered under operation flood to give the farmer better value and customers better products. it took the center stage of Punjab diary scenario in 1983 when all the milk plants of Punjab dairy development corporation Ltd. It was backed by twin objective of providing remuneration milk to the market. GNDEC Page 7 . Popularly known as MILK FED –PUNJAB came into existence in 1973. 2. Milk co-operative union of districts levels (unions). 3.
Their district unions are:- Bathind a Amrits er Bassi pathan a Chandiga rh Ferozepu r Faridko t MILK PLANT NETWORK Sangrur Gurdas pur Hushiarpu r Patial a Ludhia na Jalandh ar Ropar GNDEC Page 8 .Working capital MILK FEDS NETWORK Milk fed has its milk union in many districts of Punjab.
santokh Singh randhawa (Dairy Development minister of Punjab .The milk plant can dry 1 lac Ltr liters of milk to milk powder and manufacture ghee @ 7 MT per day . Management is advised to make best efforts to achieve the full capacity target. It was registered under co-operative societies Act with Registration License No.Working capital MILK PLANT GURDASPUR HISTORY:Milk plant Gurdaspur. 1983.95% 2008-09 58. Gurdaspur. 31/R-MMPO/93.22nd. Year wise capacity utilization is as under:2004-05 53. There are three chilling stations working under this plant.5 Lac Liters as per installed capacity . It is two kilometer away from railway station.56% The total milk production in the milk shed is about 1439495 kg per day out of which about 863877 kg per day retained by the rural population as local consumption leaving about 575918 kg per day as marketable surplus for procurement by various parties involved in milk business in the milkfed . 1983) commissioned by Punjab dairy development corporation in Aug.82% 2006-07 45. It is spread construction of the plant was begun in 1986-87 and it started working in 1986-87. CAPACITY OF PLANT:The plant has capacity for handling of milk 100000 liters per day.30% 2005-06 46.62% 2007-08 51. whose foundation stone was laid down by Sr. LOCATION:This plant is situated on the pathankot road. The plant can handle milk procurement up 1. Gurdaspur. GNDEC Page 9 . of cream in addition to milk but the average procurement remained 49000 kg throughout the year.T. The plant has capacity to receive 100 M.
Moreover all the assets and liabilities of Punjab Government and Punjab Dairy Development co-operation at the Milk Plant Gurdaspur were transferred to union April 1.Working capital Product wise breakup of milk handled is as under:2004-05 City supply Milk transferred to other unions Ghee SFM Dahi Paneer Lassi 44% 29% 19% 5% 1% 1% 1% 2005-06 41% 28% 21% 7% 1% 1% 1% 2006-07 72% 1% 17% 6% 1% 1% 2% 2007-08 57% 2% 24% 12% 1% 1% 3% 2008-09 62% 1% 19% 11% 1% 2% 4% CONTROLLING AUTHORITIES The milk plant gurdaspur set up by Punjab government but in 1966 the controlled was passed on to Punjab Dairy Development co-operation and subsequently its management was passed to Milk Fed April 9. The Gurdaspur district cooperative Milk producer union Ltd was registered on April 28th union has started his business on July 1. Under the operation flood. tanker and other assets on loan cum grant basis. 1983. The union gets timely fund availability of working capital loan. GOVERNMENT SUPPORT:Union finally functioned with share capital of Rs 10 lacs received from government which was later on enhanced to Rs 103 lacs. milk union. 1994. 1988 with the complete control of plant to the union. The union has an elected board and managing director is on deputation from Milk Fed. GNDEC Page 10 . A loan was given by National Dairy Development Board amounting to Rs 109.49 lacs (70% loan and 39% grant) in the year loan to meet its current obligation. Gurdaspur has received plant and machinery.
CHILLING STATIONS:There are six chilling center in addition to main situated at Tugalwal. Milk procurement is made through Milk producers co-operative societies which are spread over whole of the Gurdaspur. 23 milko testers have been installed at different societies 2 milko testers at kalanour and batala MCC. Rate contract for supply of milking machine are made at head office level GNDEC Page 11 . Milk is collected twice a day. Some villages are more away from Gurdaspur plant and transportation times much higher than time. The life of the milk is only five hours after it is collected. MILKING MACHINES:During the period under audit 18 milking machines have been purchased out of which 7 (MOBILE) for Rs 294000 & (FIXED) for Rs 368000 from M/S IDMC LTD and M/S vansun technologies . The remaining three centers remained closed throughout the period under audit and have functioning for long time without machinery.But the milk was procured only through three centers namely . Up to June 30. The motive for opening these stations is to save the milk.Gho.12 from M/S Rajasthan electronics LTD. Batala and Jaurian kalan .Narot Jamil Singh. These members choose a secretary who collect milk producers and sell to the plant and earn some percentage of commission. the fat contents of milk are properly tested in order the check the quality of milk because the price is paid according to fat contents.Kalanour. Noida 3 ( FIXED ) for RS 147000.Tugalwa. While collection of milk.Working capital MILK PROCUREMENT AT MILK PLANT:The procurement system of this milk plant is well organized. there are milk producer members. So these stations are opened to chill the collected milk so that the life of milk is increased against five hours. MILKO TESTER During the previous year milk plant purchased 25 milko testers for 630460. These members are chosen by village level societies from each village.2002 milk plant Gurdaspur has 738 functional societies out which 493 are working. kalanour and Batala. Under these societies. CERBER & MILKOTESTS are the tests applied to test protein and fat contents in milk.
The treated water is used for irrigation purpose on the land of Milk plant. AIR/ WATER POLLUTION CONTROL: The pollution created by boiler’s smoke and affluent discharge is checked as per the norms of the Punjab pollution control board. Noida 50% amount of subsidy received from Punjab government through Milked Punjab vide credit note No. TARGET AND ACHIEVMENTS:The detail of target and achievements of milk procurement for the period 2004-05 to 2008-09 are given below: Year 2004-05 2005-06 2006-07 2007-08 2008-09 Target 60000 50000 41000 46000 55000 Achievement 41435 42713 34597 38880 49000 As per above table of target and achievement shows big difference to achievement the target. well within norms. necessary devices have been installed. The result of this is 17. MANAGEMENT AND MEETINGS:The board of directors comprises of 16 members out of which 10 members are elected. 00.So cost of one milking machine fixed is Rs 23000 and Mobile Rs 21000 purchased from M/S IDMC and cost of one milking machine fixed is Rs 24500 purchased from M/S VANSUN technologies. Two seats remained vacant and Four are government GNDEC Page 12 .Working capital vide letter no PSF/CTIP-Milking Mac/28458-69 dated 24/10/2008 and 50% subsidy is given on fixed & mobile Milking machine by Punjab Government procurement and balance 50 % would be recovered from the societies at time of installations as described by Dy Manager procurement .000. With the start of these equipment. the BOD of treated water (of treatment of work) being discharged into Municipal sewer is less than 30 i.89 dated 13/02/2009 for Rs 690000 and balance 50% have been deducted from milk bill by lik union. Thus there is reduction of pumping of water from earth strata.e.
PAID RS 13276100. and dairy development deptt. The due amount should be repaid to the Government.1991 and 31.5 Crore The authorized share capital of the union has been enhanced to RS 5 crore vide annual general body meeting held on 28.100 As on 31. AUTHORIZED SHARE CAPITAL RS. The detail of membership is as under:GNDEC Page 13 .48.I/ARG dt 13.08 57.00 Sr No 1 2 Name of Holder MPCSs Punjab Government Total UP SHARE CAPITAL As on 18.104.22.168.000 1.100 75.1998 in respect of Bye-laws No.2009 5776100 7500000 13276100 During the period under audit there is an increase of Rs. During the period under audit no share certificates were issued to the member societies. The enhanced amendment has been registered by assistant register of cooperative societies Gurdaspur vide letter No 786-87 R. FINANCIAL WORKING 1.32. This increased share capital belongs to 28 commercial dairy farms. dairy farms and Punjab government amount due for repayment to the government was not paid. 6 2.1997. During the period under report 4 meetings of BOD were held.2.00.48.K. NDDB. No share certificate issued to societies.3. 28000 in the share capital of societies.Working capital nominees namely Milkfed.
Air cooling Vehicles Rate depreciation provided 5% 10% of Rate as per Income Tax Act 10% 15% 3 10% 15% Reserve Rs 14790.3.N Head of Account o 1 2 Office and factory building Plant & Machinery.08 during the during the 31. MPCS’s Nominal Pb.N Name of As on Addition Decrease As on o member 31. Office equipment .Govt Farms Total 355 65 1 _ 421 _ _ _ 28 28 77 _ _ _ 77 278 65 1 28 372 RESERVES Rs.09 yr yr 1.32 AND Reserve SURPLUS Fund The fund is created by charging depreciation on fixed assets. On some of the item.Working capital Sr. 3. 4. it has not been provided/charged in accordance with the provisions of income Tax as detailed below:Sr.3. 2.37 Depreciation Rs 69975263. Electronic. 80428468.00 GNDEC fund Page 14 .
admission fee from from transporters. MILK:- GNDEC Page 15 .cheese 10. Milk 2. During the period under been received from 28 dairy commercial fees. 1.Raseela 3. Income under grant written off and balance amount stands under this fund PRODUCTS OF VERKA MILK PLANT Milkfed has formulated company specifications for its milk and milk products to Provide standard and quality of products to consumers.00 reserve fund The fund has been created by grant received from government of India Rs 5913238 has been received from GOI. Butter 7. SFM 9. Curd 6. out of this amount 1971079 is treated as Mis.Lassi 4. audit Rs 2800 has farms as admission Capital Rs 3942159.Working capital The fund is created out of the amount of MPCS’s and nominal membership fee contractors etc.Ice cream 5.Ghee Milk powder 8.
The product can be consumed as such or can be GNDEC Page 16 . Special distribution control is needed.jammu. Bulk pack in tin. 5 kgs and 15 kgs.batala areas. It is packed on 500 gms. GHEE Ghee may be defined as clarified butter fat prepared chiefly from cow or Buffalo milk. It is sold in arid around pathankot . It is sold anywhere in Punjab and abroad also. under refrigerated condition if transported to very long distance. It may be used as such or for milk based preparation. The product can be used on roti/pranthas or can or can be used as cooking other material for food.Working capital It is pouch packed milk. It is preserved at ambient temperature for one year. It packed in half ltr. Its length of shelf life is 48 hours under refrigerated conditions. Pouch. CHEESE Ice Cream may be defined as a frozen dairy product Cheese refers to the small sized soft paneer. 2 kgs. No special distribution control is needed. It shall be kept under refrigerated conditions.
MILK POWDER Dried milk or milk powder is product obtained by the removal of water from milk by heat or other suitable means to produce a solid containing 5% or less moisture. by a harmless lactic acid or other bacterial culture.Working capital fried and consumed. it should have the same percentage of fat and solids-not-fat as the milk for which it is prepared. gathering the fat into a compact mass and then working it. The product used the form of drinking milk. It can also be used as an ingredient for making Indian sweets and paneer based dishes. Bottle. with or without colour and with the incorporation of air during the frizzing process. Whole milk. There are manilt three types of verka kulfi i. CURD Dahi or curd is the product obtained from boiled milk by souring. It can be kept under refrigeration for three months this comes in packs of 10 gms. The length of shelf life product can be held for three months under ambient temperature. malai kulfi. 200 ml. It comes in packing of 200 gms . It can be stored for 1 year before use. The product obtained from cow and buffalo milk or a combination there of or from cream or curd obtained from cow or buffalo milk or a combination thereof with or without the addition of common alt and colouring matter. defatted or skim. Choco bar contained chocolate and mango bar kulfi contain mango flavor. It packed in 200 ml. in is of is GNDEC Page 17 . It is preserved under refrigerated condition for 20 days from the date of packing. choco bar and mango bar.etc. natural or otherwise. Malai kulfi made with milk. 500 gms. The product is packed in poly film bags. 100 gms and 500 gms. It sold in and around Punjab. It is preserved at ambient temperature. malai and crushed nuts. Tetra packs. milk may be used for drying. SFM It is known as sweetened flavored milk or bottle milk. together with sugar and flavor . BUTTER Butter may be defined as a fat concentrate which is obtaining by churning cream.e. ICE CREAM Ice cream may be defined as a frozen dairy product made suitable blending and processing of cream and other milk products.
It comes in two flavors . especially in Punjab. Objectives of verka milk plant If we keep our customer happy. tetra pack LASSI Lassi.Working capital RASEELA Raseela is a very popular product of Verka which was launched in 1995.i) Mango Raseela and ii) Pine apple Raseela. they will keep us in business. Mango Raseela is prepared from mango pulp and Pineapple Raseela from pineapple pulp.customer satisfaction is the basis for any successful organization. also called chhas refers to desi butter milk which is by product obtained when churning curd led whole milk with curd indigenous devices for the production of desi butter. Every organization get success through giving proper satisfaction to its customer . These are coming in 200 ml. Milk plant follows this rule and has some objective to operate its business:GNDEC Page 18 . Verka Lassi is very popular.
4. processing marketing of milk products as per direction of federation To provide better facilities to milk producer so as easily availability of milk can become possible and for their development.Working capital 1. The company had a following LOGO for consumer satisfaction:- “WE SHALL ENDEAVOR TO BE MARKET LEADERS IN DAIRY INDUSTRY” SWOT ANALYSIS STRENGTH. To establish research and quality control laboratories 5. 2. To carry out the activities to economy development of agriculturists by organizing effectively production. dairy and allied products subject to such conditions as may be decided by the board from time to time. To purchase commodities from the member and deal with non-members for marketing. 3.GNDEC Page 19 . Constant up gradation of producers and process for better product quality adopting food safety management system to ensure total safety to customer health .
VERKA. OPPORTUNITIES:- GNDEC Page 20 . Financial position of plant is very week from many years. 5. 4. 2. 3. Technical and financial guidance and support from Milk fed head office Chandigarh as well as national development dairy board. Direct contacts with milk producers. Problems in research and development. 5. 4. Less facilities for Transportation of milk. governance and socially responsible WEEKNESS:1. 3. Brand name. Qualified experienced and devoted workforce. Minimum interference from top management in day to day working.Working capital 1. 7. 6. Own cattle feed plant and folder seed grading station for supplying certified fodder seeds. Sufficient working capital is not available. Highly competitive market. Good corporate organization. 2.
Non adoption of dairy farming as a side business by farmers. Veterinary health care and breeding facilities is to be increased for improving for genetic milk yielding characters of animals. THREATS:1. Milk chilling centre fathegarh churian falling in district Gurdaspur. 4. 3. Increasing salary bills as compared to turnover. 4. Procurement can be increased. 2. Higher cost of raw materials as compared to pricing policy 3. 2. Feasibility of home delivery system for city supply milk to be applied. if handed over to Gurdaspur union milk. GNDEC Page 21 . Border tensions and river floods. General land of milk plant can be used for research and cultivation.Working capital 1.
profitability and Profit Before Tax (PBT) of Hindalco. fixed and current assets play a vital role. Introduction A successful commercial organization needs two types of assets.Working capital Review of literature Working Capital Management Impact of Working Capital Management in the Profitability of Hindalco Industries Limited J P Singh and ShishirPandey For the successful working of any business organization. Management of working capital is essential as it has a direct impact on profitability and liquidity. work-in-progress. Multiple regressions were used to check the significant impact on the profitability of Hindalco. Current assets include. The fixed GNDEC Page 22 . An attempt has been made in this paper to study the working capital components and the impact of working capital management on profitability of Hindalco Industries Limited. furniture. finished goods. but also for the purpose of earning profit for many years. building. etc. fixed assets and current assets. These are purchased for the purpose of production and sales. The paper also makes an attempt to study the correlation between liquidity. plant. bank balance. semi finished products into finished products. machinery. finished products into debtors and debtors transferred into cash or bills receivables. The ratio analysis. percentage method and coefficient of correlation have been used to analyze the data. viz. sundry debtors.. like raw material into semi finished products. bills receivables. etc. raw materials. These are not only purchased for the purpose of sale. Fixed assets include—land. The study is based on secondary data collected from annual reports of Hindalco for the study period 1990 to 2007. cash.
Working capital assets are used in increasing production of an organization and the current assets are used in using the fixed assets for day to day working. GNDEC Page 23 . To study the financial position of plant through various Working capital related ratios. The term working capital refers to the amount of capital which is readily available to an organizati OBJECTIVES OF STUDY To study the operating cycle of the company To study the working capital management of verka milk Plant To study the sources of working capital in verka milk plant To study the optimum level of current assets and current Liabilities of the company. The management of this working capital is known as working capital management.
Research design: GNDEC Page 24 . Need for research methodology: Research design is needed because it facilitates the smooth sailing of the various research operations. time and money. formulating hypothesis or solutions selecting. One can define research as a scientific and systematic search for pertinent information on specific topic. making data and reaching conclusions and at least carefully testing the conclusions and at least carefully testing the conclusions to determine whether they fit the formulating hypothesis.Working capital Meaning of methodology: Research is a common parlance to research for knowledge. research is an art of scientific investigation. In fact. “Research comprising defining an redefining problem . According to Clifford woody . collecting. thereby making research as efficient as possible yielding maximum information with minimum expenditure of effort. organizing and evaluating data.
Primary data Which is collected fresh or first hand. The design includes an outline of what the researchers will do from writing the hypothesis and its operational implications of the final analysis of data. journals. Primary data can collect through personal interview. Secondary data The secondary data are those which have been already collected and stored. and for first time which is original in nature. annual reports of the company etc. Secondary data can be easily gathered from records. Tools for analysis Current ratio Working capital turnover ratio Stock turnover GNDEC Page 25 . measurement and analysis of data.Working capital Research design constitutes the blue print for the collection.
Funds are also needed for short-term purposes for the purchase of raw material.terms funds are required to create production facilities through purchase of fixed assets such as plant and machinery. building. etc. land. etc. payment of wages and other day to day expenses. Long.Working capital WORKING CAPITAL MANAGEMENT The working capital refers to the capital required for day to day operations of a business enterprise. “Working capital is the amount of funds necessary to cover the cost of operating the enterprise “ CONCEPTS OF WORKING CAPITAL A) Balance sheet concept concept B) operating cycle A) BALANCE SHEET CONCEPT 1) Gross working capital capital 2) Net working GNDEC Page 26 . furniture.
2) Net working capital refers to the difference between liabilities which are expected to mature for payments within year.current OPERATING CYCLE CONCEPT GNDEC Page 27 .Working capital 1) Gross working capital is the capital invested in total current assets of the enterprise which are converted into cash within a year. Net working capital = liabilities) ( current assets . Net working capital may be positive or negative.
Working capital SALES CASH FINISHED GOODS RAW MATERIAL WORK IN PROCESS The operating cycle starts with the purchase of raw material and other realization sources and end with the realization of cash from the sale of finished goods. OPERATING CYCLE OF VERKA MILK PLANT GNDEC Page 28 .
20082005 2006 2007 2008 2009 2 day 2 days 1 day 1 day Raw 2 day material WIP 3 days 3 days 2 days 2 days 2 days Finished 30 days 30 days 30 days 25 days 20 days goods Receiva 14 days 14 days 10 days 7 days 7 days ble collectio ns period + Gross 49 days 49 operatin days g cycle 44 days 35 days 30 days Credit 20 days 20 days 14 days 10 days 10 days paymen t period _ Net 29 days 29 days 30 days 25 days 20 days operatin g cycle GNDEC Page 29 .2007.Working capital Year 2004.2005.2006.
Working capital OPERATING CYCLE GRAPH GNDEC Page 30 .
37 30784483 SHARE STABILIZATION FUND 154775 GNDEC Page 31 .Working capital SOURCES OF WORKING CAPITAL SOURCES AMOUNT SHARE CAPITAL 13276100 RESERVES & SURPLUS SECURED LOANS 80428468.
which show the negative position of verka milk plant GNDEC Page 32 .49 8 2005-2006 62585279.68 Hence it can be depicted from the above table that the financial position of plant is declining.Working capital FINANCIAL POSITION ON THE BASIS OF WORKING CAPITAL YEARS CURRENT ASSETS CURRENT NET LIABILTIES WORKING CAPITAL 2004-2005 53669569.8 1 187713236.4 115748065.9 5 3 205533746.99 169417635.1 1 129854611.00 192439890.88 2007-2008 91313295.00 225018666. The current liabilities are high than the current assets.27 2008-2009 110414541.11 279026531.8 1 159959795.2 315948287.11 2006-2007 65058870.
32:1 = .33:1 GNDEC Page 33 . The term accounting ratios is used to describe significant relationship which exists between figures shown on a balance sheet.48 62585279. in a profit and loss account.81 91313295.11 65058870.31:1 = . inventory.99/ 169417635.Working capital RATIO ANALYSIS Ratio is the numerical relationship between two variables which are connected with each other in some way.29:1 = . receivables) The Current Ratio formula is: CURRENT RATIO OF VERKA MILK PLANT (2004 -2005) = (2005-2006) = (2006-2007) = (2007-2008) = 53669569.38 = .93/ 225018666. CURRENT RATIO The ratio is mainly used to give an idea of the company's ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash.11/279026531.00/ 192439890. in a budgetary control system or in any other part of the accounting organization.
It indicates a company’s effectiveness in using its working capital.93 = .35:1 years 2004-05 2005-06 2006-07 2007-08 2008-09 Current Ratio .Working capital (2008-2009) = 110414541.35.25/315948287.1 CURRENT RATIO LINE WORKING CAPITAL TURN OVER RATIO The working capital turnover ratio is also referred to as net sales to working capital. The working capital turnover ratio is calculated as follows: net annual sales divided by the average amount of working capital during the same 12 month period Working capital capital turnover ratio = Net sale/working Working capital = current assets – current liabilities GNDEC Page 34 .31:1 .33:1 .32:1 .29:1 .
Working capital turnover ratio = Net sale/working capital Working capital = current assets – current liabilities WORKING CAPITAL RATIO OF VERKA MILK PLANT (2004-2005) = (2005-2006) = (2006-2007) = (2007-2008) = (2008-2009) = 280763440.91 / 187713236. The working capital turnover ratio is calculated as follows: net annual sales divided by the average amount of working capital during the same 12 month period.82 = -1.48 = -2.64 / 205533746.88 296100409.49 236924449.14 / -129854611.Working capital WORKING CAPITAL RATIO OF VERKA MILK PLANT The working capital turnover ratio is also referred to as net sales to working capital.43 = -1.63 / -115748065.58 = -1.27 368124938.11 252152167.79 GNDEC Page 35 .44 /-159959795.57 = -1. It indicates a company’s effectiveness in using its working capital.
Working capital years (2004-2005) (2005-2006) (2006-2007) (2007-2008) (2008-2009) Working capital ratio -2.This show the poor financial position of milk plant Gurdaspur. GNDEC Page 36 . Current liabilities are more than current assets of milk plant .82 -1.57 .1.58 -1.79 Ratio is depicted in negative because working capital is in negative figure.43 -1.
00 = 5.Working capital STOCK TURNOVER RATIO It indicates the velocity with which stock of finished goods is sold.82 GNDEC Page 37 .14 / 50858434 = 252152167.63 / 47147988 (2005-2006) (2006-2007) (2007-2008) (2008-2009) = 236924449.24 = 368124938.9 =4.95 = 4.64/ 76300230.66 = 6.91 / 5690267 = 5. STOCK TUROVER RATIO = Average stock Net sale / AVERAGE STOCK = opening stock + closing stock/ 2 STOCK TURNOVER RATIO OF VERKA MILK PLANT (2004-2005) = 280763440.44 / 42009345 = 296100409. Generally it is expressed as number of times the average stock has been “turned over “or “rotated “during the year.
24 4.66 6.82 GNDEC Page 38 .95 4.Working capital year (2004-2005) (2005-2006) (2006-2007) (2007-2008) (2008-2009) Stock Turnover Ratio 5.00 5.
This table shows the low turnover ratio in last two years which indicate the low turnover of verka milk plant COMPARTIVE ANALYSIS OF BALANCE SHEET OF VERKA MILK PLANT BALANCE SHEET A balance sheet is a statement of financial position of a concern at a given date.27 liabilitie s Share capital Current year 12703100 Previous year 86693646. High turnover suggests efficient inventory control. 85 12500100 Asset s Current year Fixed 87574 assets 993. It is a statement prepared with a view to measure the true financial position of a business on a certain fixed data. Balance sheet shows the financial position of the company. sound sales policies. 07 4802680. better competitive capacity and so on.06 Current 169417635 liabilitie .Working capital Inventory or stock turnover ratio signifies the liquidity of the inventory.48 s and provisio ns Share 1443909 1443909 GNDEC 96248080. trading in quality goods. Accumu 106285058 Page 39 . 99 Reserve 63370545. and reputation in the market. Balance sheet of verka milk plant in (2004-05) Previous year 12703100 64053467. 07 151111432 . 08 24657181. s & 15 surplus Secured loans 23697278.60 Investm 15500100 ent Current assets Stock in transit 53669569.5 9 87603.
11 s and provisio ns Share stabiliza tion fund 1443909 106285058 . 99 Current 192439890 liabilitie . 11 1443909 GNDEC Page 40 .1 the 9 year 270632467 .92 5430000 8606978.70 25396089. 07 169417635 . 42 BALANCE SHEET OF 2005-06 Previous year 12703100 63370545.70 . s & 21 surplus Secured loans 26041826 53669569.1 1 253969089 .42 270632467 .7 993. 15 23697278.48 liabilitie s Share capital Current year 12703100 Previous year Assets year Current 87574 Fixed 88363844.92 Accumul ated losses 113887804.Working capital stabiliza tion fund 81 lated losses Appropr iation loss Loss of 7602745.60 assets 1 15500100 Investme 15500100 nt Current assets 62585279 Reserve 66179628.
8915709 Increase /decrease 788851.70 299062441 .19 year GNDEC Page 41 .88 270632467 .37 .18 11122668 _ 7602745.Working capital Stock in 254088.56 transit 7602745.71 11 62585279 .3 the year 7 299062441.11 19 18725413. Fixed assets Current assets Investmen t Accumulat ed loss Loss of the 7602745.1 9 270632467 .9 9 15500100 106285058.01 15500100 113887804. 92 2006 88363844.70 Loss of 18725413. 88 COMPARATIVE ANALYSIS OF BALANCE SHEET 2005 OR 2006 Assets 2005 87574993.6 0 53669569.
06 2394547. 70 299062441.19 49 28429973.07 2006 12703100 66179628.37 1443909 1443909 _ 270632467.21 26041826 Increase /decrease _ 2809084.11 _ 76077745.70 198858354.9 3 Reserve 69200547.11 GNDEC liabilitie s Share capital Current year 12703100 Previous year 88363844.32 _2564388353 BALANCE SHEET OF 2006-07 Previous year 12703100 66179628.4 assets 0 Investm 15500100 ent Current assets 65058870.81 62585279 Page 42 .Working capital Total assets 270632467.15 23697278. 71 15500100 Asset s year Current Fixed 88652246. s & 57 surplus Secured loans Current liabilitie 28868167 225018666 . Liabilities & capital Share capital Reserves & surplus Secured loans Current liabilities & provisions Share stabilization Total 2005 12703100 63370545.93 169417635.48 192439890. 21 26041826 192439890 .
29 Fixed assets Current 65058870.38 299062441 .88 COMPARATIVE ANALYSIS OF BALANCE SHEET 2006 0R 2007 Assets 2006 88363844. lated 48 losses 254088. 37 Loss of 35737841.56 Stock in 327886 transit 18725413.5 the 7 year 337562276. 71 62585279 2007 88652246 Increase /decrease 288401.11 Accumu 132613217.Working capital s and provisio ns 1443909 Share stabiliza tion fund 1443909 113887804 .93 GNDEC Page 43 .88 337562276 .93 2473591. 38 299062441 .
2 38499835.3 year 7 Total assets 299062441.7 1443909 1443909 _ 198858354.81 32578776.57 337562276.06 BALANCE SHEET OF 2007-08 Previous year 12703100 GNDEC liabilitie s Share Current year 13248100 Previous year 88652246.19 Loss of the 18725413.21 26041826 2007 12703100 69200547.38 _ 18725413.32 337234390.38 138376036. 11 15500100 132613217.48 35737841.11 225018666.37 17012428.5 Page 44 .36 2823341 192439890.57 28865167 Increase /decrease _ 3020918.Working capital assets Investmen t Accumulat ed loss 15500100 113887804. 19 Liabilities & capital Share capital Reserves & surplus Secured loans Current liabilities & provisions Share stabilization Total 2006 12703100 66179628. Asset s year Current Fixed 90357190.
38 393509786 .61 337562276 .Working capital capital 69200547. 57 28868167 225018666 . s & 23 surplus Secured loans 30784483 40 15500100 assets 7 Investm 15500100 ent Current assets 91313295. 93 Current 279026531 liabilitie .80 ment stock 1443909 Accumu 168351059. 57 337562276 . lated 05 losses stock in 886931 transit Appropr 1833541 iate loss 327886 35737841.0 the 8 year 393509786.48 consign 1718023.81 Reserve 70295897. 61 GNDEC Page 45 .38 Loss of 23549646.1 1 65058870.38 s and provisio ns Share stabiliza tion fund Stock in transit 154775 132613217 .
11 15500100 168351059.23 30784483 Increase /decrease _ 1095349.Working capital COMPARATIVE ANALYSIS OF BALANCE SHEET 2007OR 2008 Assets 2007 88652246 Fixed assets Current assets Investmen t Accumulat ed loss 65058870.5 year 7 Total assets 337562276.57 28865167 2008 12703100 70295897.57 _10354654.57 Loss of the 35737841.81 279026531.57 Increase /decrease 1704944.18 _ 35737841.66 1919316 225018666.43 2008 90357190. 48 91313295.08 390904831.9 3 15500100 132613217.38 54007914.57 1443909 154775 _1289134 GNDEC Page 46 .49 53342555.05 25383187. 38 Liabilities & capital Share capital Reserves & surplus Secured loans Current liabilities & provisions Share stabilization 2007 12703100 69200547.81 26254424.
08 GNDEC Page 47 . 11 1718023. 57 15500100 Asset s year Current Fixed 99320509. lated 13 losses Appropr 3720812 iate loss Loss of 17901905.Working capital Total 337234390.8 0 Current 315948287 liabilitie .61 BALANCE SHEET OF 2007-08 Previous year 13248100 70295897.05993 1833541 Accumu 193734246. 23 30784483 279026531 .38 liabilitie s Share capital Current year 13276100 Previous year 90357190. s & 37 surplus Secured loans 30784483 91313295. 25 Reserve 80428483.38 392964786.3 assets 4 Investm 15500100 ent Current assets consign ment stock 110414541.93 s and provisio ns Share stabiliza tion fund Stock in transit 154775 154775 886931 stock in transit 168351059 .5 the 8 23549646.
61 440592114 .1 1 15500100 168351059.5 7 91313295.Working capital year 393509786 . 05 2009 99320509.34 Increase /decrease 8963348.58 year 8 Total assets 390904831.0 17901905.30 393509786 .25 15500100 193734246. 81 436871302.5 45966470.13 19101246.14 _ 25383187.3 Liabilities & capital Share capital GNDEC 2008 12703100 2009 13276100 Increase /decrease 573000 Page 48 .61 440592114.77 Fixed assets Current assets Investmen t Accumulat ed loss 110414541.08 -7481281.49 Loss of the 25383187. 30 COMPARATIVE ANALYSIS OF BALANCE SHEET 2008-2009 Assets 2008 90357190.
It shows bad liquidity position.55 154775 886931 732156 48359483. The study of working capital management of verka milk plant has revealed that the current ratio is declining Working capital of the company was decreasing and showing negative working capital per year.23 30784483 80428468. Working capital declined because of decrease in the current assets as compared to current liabilities.61 441324270.38 315948287. Stock turnover is fluctuating constantly because of variations.14 _ 279026531. Page 49 GNDEC .93 36921756.37 30784483 10132571. Negative working capital indicates that company faces the problems of payments of short terms liabilities.69 392964786.Working capital Reserves & surplus Secured loans Current liabilities & provisions Share stabilization Total 70295897.3 FINDINGS Working capital management is important aspect of financial management.
which comparatively economical as compare to long term funds.Working capital RECOMMENDATIONS Company should raise funds through short term sources for short term requirement of funds. GNDEC Page 50 . . Company has to take control on cash balance because cash is non earning assets and increasing cost of funds. Company should take control on debtor‘s collection period which is major part of current assets. Company should avoid bad debts and prepaid expenses.
it just constitutes one part of data collection i. The trend of last five year may or may not reflect the real working capital position of the company Limited area:- GNDEC Page 51 . Limited period:This project is based on five year annual reports. Conclusions and recommendations are based on such limited data. secondary.Working capital LIMITATIONS OF STUDY Limited data:This project has completed with annual reports.e. There were limitations for primary data collection because of confidentiality.
CONCLUSION It is concluded that the current assets are less than the current liabilities .Working capital Also it was difficult to collect the data regarding the competitors and their financial information. All the ratio show negative performance of the company .The financial position is very poor and hence it is a sick unit.company should try to improve the financial position with help of different resources of finance. GNDEC Page 52 . Industry figures were also difficult to get.
K.Amritser INTERNET RESOURCES http://www.com visited in the month of July. 2.Khan.google.gov. Brocher/Booklet/Magazine verka milk plant.201 http://www. .businesslink. Financial managment.2007 1. visited in the month of August. visited in the month of august 20 Page 53 GNDEC .2010.Working capital BIBLIOGRAPHY BOOKS M.jain .P. http://www. Tata McGrathCompany Limited.com .Y.uk/bdotg/action.wikipedia .
nic.in www.Working capital www.org GNDEC Page 54 .milkfed.milkfed.
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