A Presentation On Analysis Of Working Capital Management & Ratio Analysis For Kaira District Cooperative Milk Producers Union Ltd

. (AMUL)

AMUL

Presented by – Dave Girija Roll No. 13 Exam Seat No. 35 M.B.A. Anand Institute Of Management II Semester Affiliated to Sardar Patel University

DAIRY INDUSTRY OVERVIEW • White revolution program • Operation Flood • NDDB • GCMMF AMUL INDIA’S POSITION • second largest milk producer • average annual growth = 7% • per day milk procurement = 20 million liters • total 1.300 co-operative societies .14.

• AMUL products' mascot : "AMUL baby" (a chubby butter girl usually dressed in polka dotted dress) . • At the beginning. AMUL • Now. AMUL collects 12 lakhs of liters of milk every day.AMUL … • Kaira District Co-operative Milk Producer’s Union selected the brand name ‘AMUL’ for its product range in 1955. AMUL collected only 250 liters of milk per day. •1073 societies.

STRENGTHS • • • Optimistic demand Flexibility of product mix Availability of raw material OPPORTUNITIES • Value addition • Export opportunity • Alternative use of Milk AMUL SWOT ANALYSIS WEAKNESS • • • • Perishability of product Problematic distribution Logistics of procurement Competition THREATS • Milk vendors • Global competition .

PRODUCT RANGE BUTTER GHEE MILK AMUL PIZZA CHEESE GULAB JAMUN NUTRAMUL LASSI DAHI ICE CREAM MILK SHAKE BASUNDI .

• • • • • • Production department HR department Finance & Accounts department Marketing department Purchase & Stores department Quality Assurance department AMUL .FUNCTIONAL DEPTS.

OVERVIEW OF THE PROJECT OBJECTIVES OF THE STUDY • to study the working capital of the firm • to know the financial condition of the organization • to know the return of various investments AMUL .

OPERATING CYCLE Particulars A 03-04 3 days 26 days 39 days 36 days 04-05 5 days 23 days 121 days 50 days 05-06 5 days 34 days 118 days 37 days 06-07 6 days 32 days 78 days 28 days 07-08 6 days 32 days 192 days 30 days Raw material conversion period Work-in-progress conversion period Finished goods conversion period Debtors conversion period B AMUL C D GROSS OPERATING CYCLE GOC = A+B+C+D E 104 days 44 days 199 days 39 days 194 days 35 days 144 days 34 days 260 days 29 days Creditors conversion period NET OPERATING CYCLE NOC = A+B+C+D-E 60 days 160 days 159 days 110 days 178 days .

p.i.OPERAT ING CYCLE 300 250 DAYS 200 150 100 50 0 104 60 199 160 194 159 144 110 260 231 GOC NOC 2003-04 2004-05 2005-06 2006-07 2007-08 AMUL INTERPRETATION • Increase in capital w. conversion period • Increase in finished goods conversion period • Decrease in collection period (liberal credit policy) • An increase in overall demand of dairy products in these 5 years period .

46 311.29 59459.23 81631.49 18990.50 AMUL 2005-06 2006-07 2007-08 107187.74 411.26 6107.RISK RETURN TRADE OFF YEAR CA 2003-04 2004-05 16106.97 CA:FA 1.70 4.21 28995.47 0.05 3.69 PROFITABILITY 0.69 6122.51 PROFITABILITY NET SALES 54088.46 0.9 LIQUIDITY FA 9588.85 4968.68 3.94 19874.42 INTERPRETATION • High CA/FA ratio indicate higher liquidity • Minor fluctuations in profitability • Conservative policy .52 0.66 5371.5 451.74 NET PROFIT 252.07 70206.23 323.82 3.29 0.2 18596.

26 793.70 18596.29 4588.06 443.45 955.39 8891.33 11980.2 7662. Outstanding expenses 3.36 10718.71 11432. Cash and bank balance B CURRENT LIABILITIES 1. Stock 2.26 7130.74 7.20 10178.69 18990.8 747.31 1083.47 768.83 9115.97 3728.21 15737.49 9671.65 7588.89 163.68 1423.89 2219.9 03-04 04-05 05-06 06-07 07-08 AMUL .59 10109.29 55.04 Total (A) 16106.72 1395.59 168.88 8863.34 69. Prepaid expenses & advance 4. Deposits Total (B) C D E NET WORKING CAPITAL (A-B) ADD CONTINGENCY MARGIN (PROVISION) TOTAL WORKING CAPITAL REQUIRED 5800.54 9335.81 7933.4 9327.90 15743.29 5708.20 10663.51 15423.81 5366.08 6778.90 380.28 4543.75 347.49 3311.10 1076.11 19874.99 768.39 319.36 8228.94 9077.90 6388.54 9975.23 679.22 28995.71 8441. Creditors 2.50 673.WORKING CAPITAL REQUIREMENT Particulars A CURRENT ASSETS 1.58 230. Debtors 3.24 13572.

41 0.46 1.162 2005-06 2006-07 2007-08 AMUL .280 1.25 0.5 7.7 4.493 2.95 1.39 20.08 5.09 ACTIVITY RATIO 5.83 3.73 3.14 0.7 0.95 CAPITAL EQUITY RATIO INVENTORY TURNOVER DEBTORS TURNOVER RATIO NA TURNOVER RATIO CA TURNOVER RATIO TA TURNOVER RATIO WC TURNOVER RATIO 2.87 0.59 18.16 0.35 5.98 0.13 3.86 2.99 6.00 12.51 3.59 20.13 14.FINANCIAL RATIO SUMMARY PARTICULARS CURRENT RATIO QUICK RATIO CASH RATIO NWC RATIO DEBT EQUITY RATIO 2003-04 2.03 5.14 1.39 9.2 9.37 0.01 4.10 12.11 3.03 5.64 3.47 2.38 9.05 5.20 4.85 6.8 35.7 2.4 37.63 8.52 1.65 22.89 5.75 4.7 2.67 4.58 14.8 39.976 6.95 0.42 1.47 10.86 6.62 4.58 PROFITABILITY RATIO GROSS PROFIT RATIO NET PROFIT MARGIN NOPAT MARGIN ROE ROTA RONA 41.87 5.38 1.20 2.23 9.078 LEVERAGE RATIO 6.95 5.05 0.79 0.842 0.09 17.50 1.9 38.95 9.71 7.34 1.46 0.176 1.244 1.254 1.326 1.1 2004-05 LIQUIDITY RATIO 2.09 7.95 6.36 2.78 15.87 7.17 9.

93 8.20 37.76 5.4 0.97 2004-05 9.87 0.89 0.13 38.32 8.41 0.73 41.82 8.46 0.26 2005-06 14.36 1.9 0.95 18.01 0.07 2007-08 17.047 1.63 22.83 0.1 0.037 1.37 1.033 1.16 0.8 7.2 20.0638 2.05 AMUL Operating Leverage NOPAT Margin RONA DFL Financial Leverage ROE Retention Equity Growth PAT * 100 NW RE PAT RE * 100 NW .39 20.7 0.19 3 7.62 0.27 9.27 1.04 2006-07 15.13 11.EVALUATION OF AMUL’S EARNING POWER Particulars Net Asset turnover ratio GP Margin Formulae Sales NA GP * 100 Sales EBIT GP EBIT Sales EBIT * 100 NA PAT * 100 EBIT NA NW 2003-04 5.25 0.8 0.75 1.29 1.64 39.77 9.0413 1.33 9.51 35.5 14.

AMUL INTERPRETATION • high return on their investments • minor variation in return on equity .

high finished goods conversion period & lower payable deferral period. AMUL .p. conversion period.i.FINDINGS From working capital and operating cycle the following conclusions can be drawn• • • working capital requirement of AMUL is financed through raising the cash credit loans and the short term loans conservative policy to finance its current assets a large operating cycle due to high w.

AMUL has taken a loan so the ratio has risen. GP and NP Margin show minor fluctuations since 2003-04 to 2007-08. which indicates sound position of liquidity AMUL has sufficient net working capital in last year so it indicates good position in order to meet company’s needs Debt burden has been reducing since 2003 to 2006 and it can be noticed that lower leverage ratio in 2006-07 has been due to loan repayment. Profitability ratios do not show much variation. Again in 2007-08.FINDINGS From ratio analysis the following conclusions can be drawn• Current ratio is ideal (2:1). The speed of converting inventory to sales is increasing considerably. So AMUL is able to meet its short term obligations Quick ratio is near to ideal (1:1). AMUL • • • • • • .

especially its finished goods inventory increase its sales by different sales promotion schemes perform ABC analysis for its various raw materials and maintain its raw material inventory AMUL • • • .SUGGESTIONS • • increase its investment in current assets to improve its credit standing reduce its conservation level by the use of long term source of financing its working capital in order to increase its profitability concentrate on inventory as its demand is higher.

AMUL .

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