INTRODUCTION

Early morning millions of Indians wake up to find their daily requirements of milk waiting at their doorsteps. A cross the country, the Vijaya range of dairy products milk butter cheese, Gee, Spread find their way in to millions of home in the metros, cities, towns and even the teeming rural populations. Milk is the nourisher of life. And it was this elixir that brought forth-significant changes in the lives of the people of Andhra Pradesh. It changed the way of people looked at life in rural India. But most of all, it renewed their hopes and raised their aspirations. And so when the white revolution looks place, nothing could stop the flood. People from all walks of life joined the young and the old, women, men, and children and a movement had begin, Heralding a new dawn for the people, whole lives now took on a different meaning. The main thrust was not in just supplying, milk but also living opportunities to improve the quality of rural life. And may be for the first time allowing them to dream.

NEED FOR THE STUDY

Since the time milk and Milk products occupied a prominent position in your diet as well as our socio-cultural rituals, Milk is considered to be the4 important food among all the food products. It is the best source of nutrition, in fact and it is a complete food consisting of proteins and vitamins. Milk is used for different purpose in our daily life, In highly developed Countries, milk and it its products constitute and important part of daily diet of people. Therefore those people enjoy freedom from disease4s concerned with, malnutrition, which is commonly found in our country. Indian economy is dominated by agricultural sector. Dairy land animal

husbandry forms are very important activity of its farmers. Indias carry out their agriculture through out the year. Certain activities such as Dairying sheep rearing, poultry etc are to be taken up by the farmers to lear4ns their livelihood. Major part of milk is produced in rural areas where as the demand for lit is from the urban side. The urban areas have high density of pollution, which is e3ngaged in non agriculture activities, Hence the urban people have to depend upon rural areas for the supply of milk generally the urban consumers receive milk from private milk venders who come from villages to supply milk. Dairying in India remained an un-organized industry till the end of 19th century being restyricte4d to rural production centers due to lacks of chilling, processing, and transport and marketing facilities. Milk is essential product for making Milk, curd, butter, ghee etc are used everyday by everyone home, so these products should be available in a required time for the people. When these products are essentially the production concern has to produce in required time if it has to produce in a required time its business has to run smoothly.

OBJECTIVES OF THE STUDY

To evaluate the financial performance of the host organization over the last five years. To examine the efficiency in the way firm utilized its assets. To measure the operational expanses of the concern. To measure the profit generating capacity of the company. To know about the dairy industry. To know about the organization structure and various activities going in APDDCF Ltd. To draw conclusion and to suggest suitable measures to over come the problems if any to improve its performance.

METHODOLOGY OF THE STUDY

The Present projects book covers a period of five years from 2003-2008. The project work is based on the data collected from primary and secondary sources There are two type techniques 1. primary data 2. secondary data The primary data are collected by personal interviews with dealers, supervisors, managers and holding discussions with all parties concerned. The secondary data collected from published and un published manuals records Brochures files etc., of the organization and books, journals, reports etc. Managers and supervisors of the organizations have also been interviewed to elicit necessary information on the basis of on the basis of on structural schedules the secondary information was collected from the companys manuals and office records pertaining to production, marketing, personal and financial position.

LIMITATIONS OF THE STUDY

The major limitation of the project study was time right weeks it had to be completed in a very short period of time, which was not sufficient to complete the study. During the limited period of study they my not be detailed full-fledged utilization of resort in all in respects. Some information is not available for study due to confidential matter.

INDUSTRY PROFILE & COMPANY PROFILE INDUSTRY PROFILE

Dairy development in India : India is an agricultural country over 70% of the people depend on agricultural and 50% of the total income is devised from agriculture and allied activities such as Dairy farming poultry framing etc., Evolution of Dairying was largely an unorganized activity. By and large land holding farmers kept cattle mainly for bullock, production of milk was essentially la by product, the surplus after domestic consumption was either converted in to conventional products mainly ghee and sold to middleman or catering to the near by market. The origin of dairy farms under public management goes back to 1866 when the department established a few dairy forms in the year to supply milk products to the British troops. The nest step was initialed during the First World War. In 1914, the department of defense, on the advice of lthe3 board of agriculture, conducted a preliminary study to access the population of cows and buffaloes. The board of agriculture advised the government in 1916, to appoint an imperial dairy, export. The next important step was the decision to conduct a census on livestock. The livestock census was carried out in 1919 as a preparatory action for planed dairy development by the board of agriculture. In 1920 the imperial dairy expert recommended to the government the man power requirement for managing the defense dairy farms by this there were three dairy farms and until 1923. The British Governments approach to Dairying was confined to milk required of the military only. After 1923 diploma course in Dairying was started at Bangalore. Dr. N.C.Wright director, dairy Research institute, Scotland who was invited to India in 1936 for reviewing the progress of dairy in the country made few important recommendations. As India is a country of Village, of which most inhabitants are small and marginal farmers and landless laborers dairy development should be promoted only on cooperated lines to cover wide areas 6

In 1937 the Lucknow milk products cooperative union limited was established paving the way for the organization of such unions at district and state levels. In 1945 the Famine enquiry commission in its report embalmed the need for la developing and folders supply for in creasing milk production and recommended the adoption of mixed farming. The commission also made our a case for increasing the milk production and consumption in the villages as well as the need for milk supply to urbaneness. As a sequel to this, under the greater Bombay milk scheme, array milk colony has been set up. Similarly in Bengal the greater Calcutta milk scheme has been initiated two years there after. The beginning of Bombay milk scheme to procure milk from Cairo district in Gujarat through a private diary land the resultant exploitation point that led to the idea of creating an institutions structure for Dairying on cooperative lines. In 1946 the Frames integrated Dairy cooperative unit (Amul) was established at Anand District, in Gujarat. Amul and the greater Bombay milk scheme helped the dairy industry in India to develop at faster rate. There were no significant development by the government as a separate head, but it was treated only as a part of animal husbandry, however the government had taken steps in this direction from the second five-year s plan.

NATIONAL MILK GRID : In 1970, the national grid was a distant seeming concept, but the next decade how lit taking shape. The benefits from such as arrangement to both producers and consumers are clear; to consumers the gird means more level supply of milk through out the year. To producers grid brings more rational prices through lout the season in rural areas and also in urban areas. Dairy development programs In order to build a viable land self-sustaining nation dairy industry on cooperative line, nation Dairy development board launched a project called operation flood in 1970. This constitutes a significant step in promoting rural development. Operation flood 1 It was launched in 1970. The estimated outlay was Rs.1164 Millions the Indian dairy Corporation (IDC), a government of India under taking was set up at Baroda, to advance funds for the various dairy projects. Provided by Indian Dairy Corporation are usually on 70% loan cum 30% subsidy basis The national diary development board dairy schemes have four major objectives; 1. They aim at bringing about an increase in the production of milk through supply of technical inputs. 2. National dairy development board intends to develop infrastructure for marketing of milk from rural to urban areas. 3. It attempts to promote rural development by increasing the income of rural poor. 4. Build a cooperative organization for leach dairy. The milk producers must own lit them with only limited control buy the state government. The gross roof operative organization was first introduced at Amul dairy, Anand (Gujarat)

During operation flood 1 program major diaries were started in Indian in 10 states covering 1.3 million families. With in 10 years the income of milk producers had been doubled. Dairy co-operatives at village levels are expected to play a vital role in educating the milk producers and eliminating the money ender land the milk men has been witnessed over the decades in Gujarat. Operation flood II The major objectives are as follows. 1. Coverage of layout 10 million families of rural milk producers. 2. Additional 16million cross breed cows and buffaloes. 3. Development of the original milk grids, with likages to the national milk grid major urban centers. 4. Development of the processing capacity of the various dairies providing additional plants. 5. Improving the infrastructure facilities l concerned with the dairy industry. FUNDS Funds for operation flood where I initially modernized form the scale of products based on foreign food donation in the form of skim power and buffer. With its pledge to provide milk to one land all it was considered worlds largest dairy development programme. It spurred Indian dairy industry to launch white revolution. Dairy co-operatives Co-operative type of organization for development has envisaged many advantages. 1. It can consider needs of the producers and frame laws accordingly. 2. It is possible to development rural leadership to help the milk producers. 3. It is expected lt. reduce the exploitation of private middlemen besides assuring uniform price land prompt payment. 9

Federal from of co-operative system is intended to ensure unbroken link for village level to state level and safeguard interests of milk producer In our country, the co-operative movement developed due to the initiative of the government. The members of co-operative organization could not contribute fully contributing a substantial part of the share capital. It was only during the 1950`s that Tamilnadu, Gujarat, and Utter Pradesh took some important steps in organizing dairy co-operatives. Amul, the most significant and prestigious venture in the dairy cooperative sector, provided a model for the milk producers cooperative in Gujarat and other states, such co-operative played an important role in creasing milk production as well. To provide guidance and policy direction states level federation of cooperatives have been formed in different states. In the sphere of co-operation the number of Amul pattern organized societies under operation flood. The milk produced and sold through co-operatives fetched around 8.2 cores a day adding up to 2067 cores per year. Credit supply for dairy co-operation : The national co-operative Development Corporation has been providing financial assistance to dairy cooperatives for organizing medium and small sized dairy processing plants and milk chilling centers. The corporation has sanctioned a total loan assistance of Rs.633 lakh for establishment of 29 cooperative dairy units. In addition to small framers development agency (SFDA) marginal framers and agricultural labour agency (MFAL) Integrated rural development (IRD) which have are special providing incentives to lending agencies, the cooperative credit structure has provided for medium term loans for purchase of milk cattle.

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Growth of dairy development The dairy development contributed to the Indiana development also: 1. India ranks number one in milk production. 2. It achieved its target with 4.6% annual compound growth rate against 4.2% envisaged in seventh plan. 3. It has achieved the targets of l63 million tons plan. 4. The per capital availability of milk i9s anticipated to increase from 1995 to 1998 for human population 908 millions. 5. Besides this milk operations food programme has achieved success in other fronts also. Import of milk solids has been already ended and India recently exported 80,000 tons of milk. 6. India refused commodity laid of about l35 cores from European Economic Community, which gives an assuring picture of total self-reliance and near selfsufficiency in milk productions. Need for dairy development : The serous constraint is that Indian agriculture faces the problem of disguised unemployment and the resultant problem of poverty and inequality of income distribution. Hence the superman tall of planning is to train about reservoir by creating employment opportunities and by analyzing the employed and unemployed into productive works. Dairy forming is of such important in serving the purpose. Dairy forming can also absorb large number of agricultural labour and rural poor and it provides large-scale employment opportunities through out the year. The subsidiary occupation is playing a vital role in improving rural economy which is mainly agriculture, based. The advantage of dairy industry is that, gestation period is very short and the benefits of development activities can be reaped soon.

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The dairy development activities were carried on the government through the dairy development. Though dairy industry started as a service organization land recognized as development in to a commercial organization. Dairy development in Andhra Pradesh : A dairy industry program was primarily carried out with the help of united international childrens emergency fund. Food and agriculture organization and freedom from hunger champion organization of United Kingdom, besides they assisted a lot for the establishment of dairy units at Hyderabad and Vijayawada in 1969 which led to pioneer dairy development in Andhra Pradesh. Andhra Pradesh has an excellent potential for milk production with progressive farmers who are more reception to the new technology land scientific practices. The estimated milk production is 40 lakh liters per day. Today a strong wave of white revolution is sweeping crating New Hope of eliminating socioeconomic imbalance. Andhra Pradesh is poised to be the dairy land of India playing an important role in national milk gird. Genesis of Andhra Pradesh dairy industry Planning for organized dairy industry in Andhra Pradesh was conceived in 1956 and a pilot milk supply scheme was started in 1960 61 as prelude for an integrated milk project, Hyderabad and Vijayawada for which the UNICEF gifted dairy equipment valued at Rs.1 core with the main objective of linking up and supplying surplus from producing area to consuming area. Andhra Pradesh dairy development corporation was formed on 02-04-1974 as a state government understanding for the application of commercial principles with the mission of industrial rural during land extensive infrastructure was developed to procure milk from nook and corner of the state to top-hitter to untapped milk with main objective of generating la greater employment opportunity to rural people on as they are where they are and where they are basis . it provides employment to nearly 20,000 employees and organized as many as 81 dairy units including 7 milk products factories, 13 district and 61` chilling centers.

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More than 7 lakhs milk producers get Rs.58 crores per annum for supplying milk of which 78% of total beneficiaries belong to small and marginal farmer, agricultural labours and other worker sections of rural community. Every day around 10 lakh liters of milk collected. Every 10 liters of milk produced in the country comes from Andhra Pradesh. Arresting the oscillation in milk price as well as supply of toned milk for every needy are accelerating the programs of dairy development to a peak period. The turnover of milk increased by 50 percent as a result today per capital availability of cow milk is doubled. Co-operative Federation Andhra Pradesh Dairy development cooperation was constituted in October 1981 to implement operation flood-II program through active involvement of producer in organizing milk production, milk procurement. Processing and marketing on 3tier co-operative structure is as per the national policy of Government of India. The 3 types of system consists 1. Primary dairy cooperative societies at village level 2. Cooperative unions at district milk shed travels and 3. Federation at state levels The Indian Dairy co-operation offered financial assistance of Rs. 7851 crores for dairy development programs in Andhra Pradesh with 30% grant and 70% on loan basis. The National Dairy development board identified the project area for implementation of operation flood II program in 16 districts out of 23 districts in the state. The dairy federation is marching with dairy cooperatives to herald a new era of rural prosperity.

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Main Aim of Setting up a Dairy Industry in Andhra Pradesh The majority of area of Prakasam district in our state is having agriculture to be main Livelihood, Dairy industry occupies fifth place in earning livelihood next to agriculture. This is an undoubted fact. After concluding that, the cattle wealth of district is high. The surveys were conducted on this aspect and the result was the development of dairy development union. After changing under different management systems, it is new stoping into the co-operative sector, the dairy industry stepped in to the co-operative sector to help the small and backward farmer by making them the partners of the industry. The then governer of Andhra Pradesh also explained this fact. The expansion of this to meet the needs of the people and help the farmers and villages because many cattle are source of income to them who supply milk Main Aims of Dairy Industry in Cooperative Sector 1. Formation of Cooperative units of milk producers in every village. 2. To improve cattle wealth of good bread which are important for milk Production. 3. To avoid contaminated diseases by using disease distortable medicines and injections 4. Providing the availability of good breed seed o as to improve the cattle feed. 5. Introducing mobile hospitals to provide free medical facilities to the cattle of the Dairy and avoid disease. 6. To bring down the expenses of milk production. 7. As producers are maintaining the milk producers co-operative union and profits gained are used for the development of the producer, which ultimately results in development of the village. So from the above aims of the cooperative union it is crystal clear that, developing the cooperative sector would bring profits. 14

To put the above programs to action in our district with the co-operative of national dairy development board, a three tier program w3als started in 1980 in relation to it, 198 milk producers co-operative unions have been set up at village level. On 1975 Prakasam Zillah dairy industry management was given to Zillah milk produce co-operative union. Well breed seeds and disease avoidable injections were given at half rate. Required steps are taken to set up government cattle hospitals Problems of the Industry 1. Fluctuations in the supply of milk. The first problems of this industry are the securities of fluid milk, the demand for milk production in almost uniform throughout the country in all season of the years. Where as, by and large milk production is a small and seasonal. The summer months of April to July record acute shortage of milk. While in winter month of November to February supply of milk would be 200 to 300percent higher so the industry required diversification for production of milk power, condensed milk. Captain ceases cheese instant milk foods and other products, which can be preserved and sold throughout the year. 2. Lack of assistance from Government to milk producers: During the past three decades the dairy industry in India has undergone revolutionary changes in its structures. The methods of collection, marketing and utilization of milk for manufacturing a product have been considerate. Conditions of milk production in rural areas continue to the unsatisfactory. Is the one of the major advantage to the country. But the government didnt encourage to such dairy exports. It is the one of the draw to the dairy. 3. Irritation pricing policy: The price of milk is determined on the basis of price in the open market, which in turn determines the prices of milk products. Such a make soft pattern does not help to build a permanent, workable relationship between the milk schemes and the producers. Unless the producers are guaranteed a reasonable price on a long-term basis their economy was brought to be affected adversely. Thus the industry should 15

provide an incentive price for milk to the rur4al producers over and above their cost of milk production. 4. Poor means of Transportation: The inadequacy of suitable marketing structure and the absence of necessary infrastructure for its transaction is another problem of the milk. This is more in the rural areas where for want of quick transport and marketing infrastructure, milk is marketed in the form of ghee, which does not bring proper return to the farmers. 5. De-licensed The Dairy Pr4oducts: In the recent EXIM policy 717 agriculture products including dairy products are declined. The Indian dairy industry has been facing the problems of the MNCS competitions. 6. Quality control: Quality control aspect of milk and milk products has not received much attention due the general storage of milk, Prospectus of the Industry 1. Demand Of Milk: With the anticipated growth of purchasing power in urban areas. The demand for milk in estimated to rise substantially. According to on estimated it is likely to be 97.7 million tones by 2006 as against 35.81 million tone in 1982. 2. De-licensed to dairy products under new EXIM policy Because of de-licensing the dairy products the ways are op-0en to exports the products to foreign nations that make a bright future/demand.

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Dairy Development in A.P during 2007 - 2008 S.No 1 2 3 4 5 6 7 8 Particulars Milk product factori8es District dairies Milk chilling centers Milk cooling centers Milk collection centers Village milk production cooperative societies Milk collection rotes Milk producers (80%of milk producer belongs to 2007 2008 07 12 59 16 14,000 5,200 267 10,000 6,50,000 6.2 cores 06 5,000

Belongs to small and agricultural workers) 9 Village covered for collection of milk 10 Milk consumers 11 Cash paid to milk producers 12 Women members in union Source : Andhra Pradesh Year book 2007 2008

COMPANY PROFILE
The milk collection in Prakasam District started with the commissioning of the Milk chilling center of Ongole in 1975, majority of milk producers in the district are 17

from the categories of the land less agricultural labors, marginal and small farmers most of whom are from socially economically backward classes. While dairying is an essential side income to agriculture, majority of the milk producer farmers, slowly it took an important turn as a prominent contribution to the rural economy. To the economically backward community it is emerging as the dependable source of income and in turn boosts up total economy the cotton to take up dairying as a dependable source of income. The awareness to maintain better breef many cattle among the farmers has also increased. The parkas District co-operative milk producer union established in the year 1986 with the affiliation of the mild producer dairy co-operative formed. The investment from operation flood project strengthened the processing capacity built up besides introduction of technical inputs for milk production enhancement of milk producer co-operative doorsteps. Due to constant affords of this dairy and involvement of milk producers the milk collection of 500LPD in 1975 increased to 95,000LPD by 1994 on an average, in he recent years, as a result of central gov, liberalization policy, more than 25 private dairies came into existence in Prakasam district, and as such the average milk collection fell down to some extent. Salient features of milk procedures factory: Ongole Prakasam District is the native tract of the world famous Ongole breed of cattle. The district has good potentialities for milk productions, due to the irrigation facilities available from Nagarjuna Sagar and water sources from tubular wells and tanks. The milk procurement in the district was started in 1975 with 12.00Lts. Capacity milk chilling center at Ongole. The capacity has been increased to 80,000Lts. Per day by 1982 in as pan of 10 years. The procurement has increased to 1.45 lakh liter, per day in the peak of 1986 observing the trend increase of milk production it was proposed to establish a milk products factory of capacity of 3.5 lakh its. Per day under operation Flood-III with financial assistance from NDDB on 30% grant and 70% loan basis.

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The project was contemplated to handle the surplus milk from Nellore District also. The execution of the project was entrusted NDDB on turnkey Basis. 1. Products manufacture in the company i) ii) iii) iv) v) Milk Butter milk Ghee Kova Flavoured milk : : : : : : : : : : 30,000lrs. Per day 20 Mt/ Day 10 Mt/ Day 30 Mt/ Day 3.50 Lakh lts. Per day 16.09.1987 19.25 Crores 89.69 acres 16.1.1995

2. Milk handling capacity 3. Date of work capacity 4. Capital out lay 5. Extent of land 6. Date of commitment of trail runs 7. Milk products capacity a) Milk in sachets b) Butter c) Ghee d) Milk powder

Milk chilling centers in Prakasam District Milk Chilling center, Milk Chilling center, Milk Chilling center, Milk Chilling center, Kondamanjulur Kanigure Yerragondapalem Cumbum 19 0.40 Lakh lts. Cap 0.20 Lakh lts. Cap 0.12 Lakh lts. Cap 0.12 Lakh lts. Cap

Milk Chilling center,

Venkatschalempalli

0.05 Lakh lts. Cap

Dairy Co-operative societies in Prakasam District

Co-operative groups of milk producers Working of Co-operative groups of milk producers Association centers of milk producers Milk producers Milk retailing centers Dairy parlors Animal first AID centers A.I centers No. of Beneficiaries (Directly and indirectly) 11,698 3,190 22,335 69,128 1,06,351

448 269 424 27987 150 10 268 30

Framers of S.C community Framers of S.T community Framers of B.C community Framers of Others community Total Beneficiaries

Milk production Enhancement and inputs activities Milk production Enhancement inputs broadly the following: 1. Animal breed improvement: A center was started at 30 societies with societies AI workers through which AI program is being implemented. In addition to AI centers 441 breeding bulls were also supplied for natural service in the district for convenience of village, which is

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interiorly located in specific. How ever the AI activity will be taken up by ALDA in future. 2. Animal Health cares: First AID centers were started by the union through which first aid medicines and de-working drugs are being supplied free of cost. More attention is paid to foot and HS vaccinations. FMD vaccine supplied at 50% cost and HS vaccine PM free of cost. For FMD vaccination on inception on incentive of Rs.11-for each vaccination has been paid. This union has already engaged 4 members of retried veterinarians and utilized their services by keeping them each at Kondamanjulur and Yerragondapalem and two at Ongole. Further, the cattle insurance activity is also under implementation and the 3year premium will be shared by the beneficiary, society and union in the ratio of 40:30 respectively. 3. Improved powder production: Improved powder seed of different verities has been supplied to the dairy on 50% cost powder slips at free of cost. 4. Balanced Cattle Feed Supply: Cattle feed is being supplied by getting the feed from Sangam Dairy. Gadwall market- Nandyla mineral mixture is also supplied at 50% cost. 5. Supply of election milk- authorities: In the year 2003-2004 and 2005-2006 634 members of electronic milk testers are supplied to the societies at 25% subsidy in order to stabilize the producers Confidence prior to this there is about 300 EMT in the societies which were supplied by NDDS under of-II and III. 6. Former introduction Programme: Farmers from each village society were sent to visit the different societies in other District sister unions like Krishna, Guntur, Visakha, Nandyal & Kurnool, exposure programs were also conducted calmingly and separately to the society presidents and paid secretaries to improve the knowledge in the area of animal

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health, hygiene, quality of milk and accounting through regular zonal meeting. MPF tips of milk producers especially women have been arranged. 7. Gopal raksha scheme: The special insurance program has been introduced during March 2000ssViz. Gopal raksha insurance scheme 7,538 beneficiaries are covered under this scheme total premium of Rs.17, 000 lakhs. The premium will be borne by the union, society and beneficiary in the ratio 30:30:40 respectively. In this scheme in addition to buffaloes insurance the beneficiary is also benefited by the coverage of accident and dwelling shed. 8. Relief measure to the fire victims: An amount (in Rs.) of Rs.500 will be paid as relief measure to the milk producers of this union for purchase of powder where paddy straw stalks are destroyed during the fire accident. 9. Padi Prakasam: This is exclusive scheme in which only union milk producers are financed by the nationalized banks under tic-up arrangement. In this scheme beneficiary will bear the margin money of Rs.2, 500/- and bank finance id Rs.7, 500/- so for, nearly 10000/- producers are benefited. 10. Women Dairy Project: The government of India under ministry of Human resources development under Support to training and employment program for women step sanctioned women dairy Co-op societies with 25,760 women members during the project period of 3 year in AP state and 60 women dairy Co-operative societies with 2400 women members in Prakasam Dist.

Milk procurement procedure of P.D.P.M.A.C.U.LTD For the purpose of procuring raw milk. There is a separate procurement section. There are about 22 persons working in the head office to control the procurement activity to argument with the quality of milk.

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Milk is received at Prakasam Dairy through direct routes, road tankers from chilling centers. Direct routes: Milk is collected both I the morning and evening from 30 centers in the district, Vehicles used for direct route collection of milk are hired by the dairy on contract basis. The mode of collection is similar to any other collection center whether it is a co-operative society (or) not. From chilling centers: The chills milk fro the chilling centers is transferred to Ongole dairy by road milk tankers owned the sister unions. E.G: Vijayawada, Hyderabad, Guntur, by own and or hired tankers for city marketing on conversion on behalf of the union on custom hiring basis. Financial activities: The department undertakes accounting and payments of DCS bills purchase bills. Reconciliation of accounts departments undertake the statutory functioned like G.P.F, E.P.F, E.S.I, P.T, G.I.S, L.I.C, income Tax etc., Personal administration activities: The Personal administration activities a department undertake the function like maintenance of leave records, transfers, promotion, graduation, maintenance of personnel, fields. Industrious relations general administrative and functions related to contract labour. The department looks after the security of the estate through hire agency.

Marketing activities: Ongole dairy started its liquid milk sales 1984 since then up to 1999 there was no separate sale wing from in 1989 taking marketing as the main thing, Ongole dairy had divided its sales pattern as.

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1. Liquid milk sales 2. Milk bi-products sales Liquid milk sales: Ongole dairy started its liquid milk sales in 1975 in 12,000 liters. Per day and at present sales 30,000 liters. Per day. Milk bi-products sales: The company produces bi-products sales are milk powder 30Mt/day, Butter 20 Mt/day and Ghee 10 Mt/day. Distribution System of Milk in Ongole Dairy The distribution system of P.D.M.P.M.A.C.ULTD. is shown below.

Direct supply on bulk Own Parlors

indirect commiss8ion Basis agents retailers

The above chart reveals that the factory distribution system is directed as well as indirect. The factory has its own parlor through which it sells the milk to ultimate consumer who orders for milk. On bulk basis will ge4t milk directly from the company provided that minimum order in 40 liters. The factory also sells milk through indirect distribution for instance the factory has appointed number of commission agents in Ongole District who self liter sachets in the vacant part the factory has introduced U.H.T milk in sachets, which are being districted through retailers, The factory gives them reasonable margin on but milk.

ORGANIZATION CHART
Board of Director

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Chairman

Managing Director

Deputy Director

Dairy Managers

Junior engineer

AQC Supervisors

PCM

Lab assistant Driver Mechanic Boiler operator Workers Workers Skilled semi skilled unskilled Plant operator Workers

Workers

Skilled PCM: - plant charge man AQC: - Assistant quality control

semi skilled

unskilled

THEORETICAL FRAME WORK

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RATIO ANALYSIS A theoretical frame work Ratio is among the best known and most widely

used tools of financial analysis. Ratio may be expressed in any of three forms 1) As a pure ratio 2) As a rate, and 3) As a percentage. Several ratios, calculated from the accounting data, can be grouped in to various class according data, can be grouped in to various classes according to the financial activity or function to be evaluated. The parties, which generally undertaken financial analysis is short - term and long term creditors, owners and management. Short-term creditors are interested in the liquidity position or short term solvency of the firm. Long- term creditors are more interested in the long term solvency and profitability of the firm. Owners concentrated on profitability of the firm. Management is interested in evaluating every aspect of the firms performance. Ratios as tools of measuring liquidity, profitability, efficiency and financial position of a company can be classified in to four basic categories. 1. Liquidity ratios 2. Leverage ratios 3. Activity ratios 4. Profitability ratios

1. Liquidity ratios:

26

It is extremely essential for a form to be able to meet its obligations as they become due. Liquidity ratios measure the ability of the firm to cover its current obligations. Liquidity ratios by establishing a relationship between cash others current assets provide a quick measure of liquidity. A firm should ensure that it does not suffer from lack liquidity, and also that it is not too much liquid. The failure of a company to meet its obligations, due to lack of sufficient liquidity, will result in bad credit image, loss of creditors confidence, or even lawsuits resulting in the closure of the company. A very high degree of liquidity is also bad, as idle assets earn nothing. The firms funds will be unnecessarily tied up in current assets. Therefore it is necessary to strike a proper balance between liquidity and lacks of liquidity important liquidity ratios are: a) Current ratio: This ratio is to current assets to current liabilities. The current assets are those which are readily realizable with in a period of one year such as trade debtors, bills receivable, and stock of raw material securities, deposits, and advances. Similarly the current liabilities are those which are repayable on demand or that will fall due within a period of one year of the balance sheet date. The determining factor is the date of maturity and not the possible date of payment. The relation ship between current assets and current liabilities reflects the short term financial position. The current ratio of 2:1 is generally considered satisfactory. It is calculated by dividing current assets by current liabilities. b) Quick ratio: This is also called as acid test ratio o liquid ratio. The word liquidity means conversion of assets in to cash during the normal course of business and to have a regular uninterrupted flow of cash meet outside current liabilities or current obligations as and when due and payable. Moreover business also will have to ensure money for day to day operations. In computation of this ratio only liquid assets are taken in to account. Liquid assets would include cash in hand, cash at bank, sundry debtors and marketable investment and other items including stocks. Inventories are excluded from liquid assets since sale of products takes time to convert them in to cash. It is calculated by dividing the quick assets by current liabilities. 27

c) Current Ratio: Since cash in the most liquid assets, a financial analyst may examine this ratio. Trade investments or marketable securities are equivalent of cash ratio. It is calculated by dividing cash by current liabilities. 2. Leverage ratio: Financial leverage refers to the use of debt finance. While debt capital is a cheaper source of finance, it is also a riskier source of finance. Leverage ratio are generally designed to measure the contribution of the companys owners vis--vis the fund provided by its creditors. A firm can be examined by using these ratios. The important leverage ratios are: Long term debt to net worth ratio: From the leaders point of view, the financial structure should reveal a satisfactory balance of own funds and borrowed funds. Net worth means capital plus reserves plus development reserves minus fictitious assets. Debt includes all long term debts viz., term loans and debentures. It is generally desirable to have substantial state of owner in the business so that the enterprise is free from the burden of paying too much interest on borrowed funds and can absorb stocks of business. It is calculated dividing long term borrowings by equity Debt equity ratio= Long term borrowings Net worth a) Debt of total capital ratio: The relationship between creditors funds and owner capital can also be expressed in terms of another leverage ratio. This is the debt to total capital ratio. Here, the outside liabilities are related to the total capitalization of the firm and not merely to the shareholders equity. Essentially, this type of capital structure ratio is a variant of the debt equity ratio. Debt to total capital ratio = long term debt / total capital

28

Total debt to net worth and total debt to total capital This ratio establishes the relation ship between the total debt and total capital. Total debt means current liabilities plus long term debt. Too much capital should not be raised by way of debentures, because debentures dont share in business losses. It is calculated by dividing total debt by total capital Debt equity ratio = Total Debt Total capital 3. Activity ratios: The firm employs activity ratios, also referred to as turnover ratios or asset management ratios, measure how efficiently the assets. These ratios are based on the relationship between the level of activity, represented by sales or cost of goods sold, and the investment in various assets viz., inventories, receivables, fixed assets, etc. The important turnover ratios are a) Inventory turnover ratio: This ratio indicates the number of times inventory is replaced during the year. It indicates the efficiency of the firm in selling its product. There are two approaches in measuring any ratio, one measure relationship between cost of goods sold and average inventory, the other approach relates sales and inventory. It is calculated by dividing sales by inventory Inventory turnover = sales Inventory

b) Debtors turnover ratio and average collection period:

29

The second major activity ratio is the receivables or debtors turnover ratio. Allied and closely related to this is the average collection period. It shows how quickly debtors are converted into cash. In other words, the debtors turnover ratio is the test of the liquidity of the debtors of a firm. Debtors turnover ratio = sales Debtors Average collection period = days in a year Debtors turnover c) Total assets turnover ratio: The relationship between sales and total assets is called total assets turnover ratio. It is calculated by dividing sales with total assets. Total assets turnover ratio = sales Total assets d) Fixed assets turnover ratio: The numerator of this ratio is the sales for the period and the denominator is the balance in the net fixed assets account at the end of the year. This ratio is supposed to measure the efficiency with which fixed assets are employed. A high ratio indicates a high degree of efficiency in assets utilization and a low ratio reflects inefficient use of assets. It is calculated by dividing sales with fixed assets. It is used to highlight the extent of utilization of the companies plant equipment. Fixed assets turnover ratio = sales Fixed assets

4. Profitability ratio: 30

The operating efficiency of the firm and its ability to ensure adequate return to its shareholders depends ultimately on the profits earned by it. Profitability is measure of efficiency and the search for it provides an incentive to achieve efficiency. The profitability of the firm can be measured by its profitability ratio. Profitability ratios can be determined on the basis of either sales or investment. The profitability ratios in relation to sales are operating profit. Net profit, operating expense profitability in relation to investments is measured by return on investment, return on assets, and return on capital employed and return on equity. 1. Profitability as related to sales: Under this a group of profitability ratios are included a) Gpm b) Operating expenses ratio and c) Npm a) Gross profit margin: This ratio establishes the relation ship between operating profit and sales to measure the relative operating efficiency of the company. It is calculated by dividing operating profit with by sales. Operating profit margin = gross profit*100 Sales b) Net profit margin: This ratio is also known as net margin. Net profit is obtain when operating expenses, interest and taxes are subtracted from the operating profit. This ratio provides considerable insight in to overall efficiency of the business and earnings left for shareholders as a percentage of net sales. A high ratio is an indication of the higher overall efficiency of the business and better utilization of total resource. A low ratio on the contrary would mean poor financial planning and low efficiency. It is calculated by dividing net profit with sales. Net profit margin = net profit * 100 / Sales c) Operating expenses ratio: 31

Another profitability ratio related to sales is operating expenses ratio. It is the reciprocal of profit margin, gross as well as net. It is very important for analyzing the profitability of the firm. This ratio is computed by dividing operating expenses by sales. Operating expenses ratio = Operating expenses Sales d) Profitability as related to investments: This category of profitability ratio includes return on investment, return on total capital employed, and return on equity, EPS, DPS and d/p ratio. e) Return on investment: Return on investment is a measure of business performance, which is not effected by interest charges and tax payments. It abstracts away the effect of financial structure and tax rate focus on operating performance. Hence, it is eminently suited for inter firm comparison. Further internally consistent. The numerator represents a measure of pre- tax earnings after tax and before interest belonging to all sources of financial and the denominator represents total financing. It is calculated by dividing earnings before interest and taxes (ebit) with total assets. Return on investments = EBIT * 100 Total sales f) Return on Capital Employed (ROCE): It is similar to the road expect in on one respect. Here the profits are related to total capital employed. The term capital employed refers to long term funds supplied by the creditors and owners of the firm. It is calculated by dividing earnings after taxes (eat) by capital employed. Return on capital employed = Eat * 100 32

Capital employed g) Return on Equity: This ratio is called as return on net worth. This ratio reveals how the firms have utilized profitability the owner funds. The ordinary share holders equity is also referred as a net worth. It is calculated by dividing earnings after taxes (eat) with net worth. h) Earnings per Share (EPS): This ratio is computed by dividing earnings available to the common stock holders by total number of common shares outstanding. The figure reveals the amount of the periods earnings after taxes, which occurs to each share of common stock. The ratio is an important index because it indicates whether the wealth of the shareholders on a per share basis has changed over the period. A year to year comparison of earnings per share can be very informative to investors. Eps = EAT No of equity share held i) Dividend per Share (DPS): This ratio computed by dividing dividends paid to the common stock holders by the total number of common shares outstanding. This ratio is an important index because it indicates whether the dividend of each shareholders on a per share basis has changed over the period. DPS = total dividend No of shares i) Dividends pay out: This ratio gauges the portion of current earnings being paid out in the form of dividends. Investors desirous of capital gains would like this ratio to be small while those who seek dividends prefer it to be large. The layout ratios calculated by relating dividends per share to earnings per share for common stock. D/p ratio = DPS/EPS IMPORTANCE OF RATIO ANALYSIS: 33

It helps to analysis the probable casual relation among different items after analysis and scrutinizing the past result.

Then helps the management to prepare budgets, to formulate polity and to prepare the future plan of action and thus helps as guide to harmonize among different items for preparing budgets.

It helps to take time dimension into account by trend analysis and time series analysis

It throws light on the degree of efficiency of management and utilization of the assets ( and called survey of efficiency)

It helps to make inter firm comparison (cross-sectional analysis) Short-term liquidity position can be measured i.e. whether the firm is able to maintain its short terms solvency position can also be measured by the application of leverage and profitability ratios.

Comparison of current or past ratios with future ratios show the firms relative strengths & weaknesses in the past and the future ratio analysis can serve as a better tool for measurement of the financial health of an enterprise that is possible by the analysis o absolute figures.

ADVANTAGES OF RATIO ANALYSIS: 34

The importance of ratio analysis lies in the fact that it presents facts on a comparative basis and enables the drawing of inferences regarding the performance of a firm. Ratio analysis is helpful in assessing the performance of a firm in respect of the following. 1. Liquidity of the firm. 2. Long-term solvency. 3. Operating efficiency. 4. Overall profitability. 5. Inter firm comparison. 6. Trend analysis.

1. LIQUIDITY OF THE FIRM: 35

The liquidity position of a firm would be explained with the help of ratio analysis. Basing on the conclusions of ratio analysis a firm can said to have the ability to meet its short term liability. The ability can be reflected in the liquidity ratio of a firm. The liquidity ratios are particularly useful in credit analysis by banks and other suppliers of short term loans. 2. LONG TERM SOLVENCY: Ratio analysis is equally useful for assessing the long term financial viability of firm the long term solvency is measured buy leverage structure and profitability ratios which focus on earning power and operating efficiency. Ratio analysis reveals the strength and weakness of affirm in the aspect of sources of finance and adequate returns to its owners consistently. 1. OPERATING EFFECIENCY: Ratio analysis is helpful in the view point of management such as measuring the efficiency in the management and utilization of its assets activity ratios play a vital role in this context. 2. OVERALL PROFITABILITY: The management of any firm is mainly planned to maintain the long and short term obligations of the firm. Here the profitability ratios of the firm taken into consideration. 3. INTER FIRM COMPARISION: Ratio analysis provides inter firm comparison with industry averages by comparing the firms ratios. If comparison shows a variance the possible reasons of variations any be identified and if results are negative the corrective actions may be initiated immediately.

4. TREND ANALYSIS: 36

Ratio analysis facilitates the management to know whether the firm financial position is improving of deteriorating or deteriorating or constant over the years by setting a trend analysis with the help of ratios. The Frame work of financial Analysis Financial statements no doubt, contain the forms relating to the profit or loss and the financial position of a concern. But items found in the financial statements will not of much use, if the considered independently. They will be very useful only when one item is considered in the light of another item. For instance, the item of net profit will be meaningful not when it is considered in isolation but only when it is considered in the light or capital employed in the business. So if the items in the financial statements are to be added really meaningful and useful to the executives, owners, credit ions etc., they should be analyzed in such a way that one item can be compared with another item. They include Ratios worked out from the first financial statements of the organization. Ratio developed using, proforma financial statements of the concerned firm. Ratios of most progressive and successful firms at the same point of time. Ratios of the industry to which the firm belongs. Ratio analysis is one of the tools available to a financial analyst for the analysis of the financial statements.

LIMITATIONS OF RATIO ANALYSIS: 37

Comparison between two variables proves worth provided their basis of valuation is identical. But in reality, it is not possible, such as methods of valuation of stock-in-trade, or charging different methods of depreciation of fixed assets etc.

Ratio depends on the figure of the financial statements. But in most cases, the figures are window dressed.

Ratio analysis becomes more meaningful and significant if trend analysis (i.e. the analysis over a number of years) is possible, but in practice, it is difficult all the time.

Ratio is calculated join the basis of past result which may not be suited to implement to the present business policies.

It is very difficult to ascertain the normal or standard ratio in order to make proper comparison. Because, it differs from firm to firm, industry to industry.

38

DATA ANALYSIS & INTERPRETATION

Current ratio:The current ratio is calculated by dividing current assets by current liabilities. Current assets include cash and those assets, which can be converted in to cash within a year, such as marketable securities, debtors and inventories. Current liabilities include creditors, bills payable, accrued expenses, short term bank loans, income tax liability and long term debt maturing in current.

CURRENT ASSETS CURRENT RATIO: CURRENT LIABILITIES TABLE:-1 YEAR 2003-04 2004-05 2005-06 2006-07 2007-08 CURRENT ASSETS 162630266.3 144043232.6 119472334.5 87350227.24 149331000 CURRENT LIABILITIES 66086200.13 80007395.86 89258186.27 81488065.33 122846800 RATIO 2.46088088 1.800373966 1.338502825 1.071938902 1.215587219

39

Graph-1:-

CURRENT RATIO 3 2.5 2 1.5 1 0.5 0 2003-04 2004-05 2005-06 YEARS RATIO 2006-07 2007-08

Interpretation:The current ratio main purpose is to measures short-term debt paying ability of the firm. Its standard is 2:1. So the companies maintain this ratio. So in the company the position of liquidity position is some part of good in the year 2003-04 only. Another four years means 2004-05, 2005-06, 2006-07, 2007-08 these four years the liquidity position is not good. So the company concentrates in the part.

PERCENTAGE

40

2. Quick ratio:This ratio establishes a relationship between quick or liquid assets and current liabilities. An asset is liquid if it can be converted in to cash immediately or reasonably soon without a loss of value cash is the most liquid assets, other assets are bills receivables, debtors and marketable securities. Inventories are considered to be less liquid. The ratio shows that the immediately available assets, with assets are immediately converted in to cash to meet the short term solvency of the firm. CASH + GOVERNMENT SECURITYS + RECEIVABLES QUICK RATIO:CURRENT LIABILITIES TABLE: - 2

YEAR 2003-04 2004-05 2005-06 2006-07 2007-08

QUICK ASSETS 113601163.8 101406887.1 112539611.5 68417424.84 138171000

CURRENT LIABILITIES 66086200.13 80007395.86 89258186.27 81488065.33 122846800

RATIO 1.718984653 1.267468913 1.260832381 0.839600555 1.124742362

41

Graph 2:-

QUICK RATIO
2 1.5 1

PERCENTAGE

0.5 0 2003-04 2004-05 2005-06 YEARS RATIO 2006-07 2007-08

Interpretation:The normal standard of liquid ratio is 1:1 regarding quick ratio. So in the standard PDMPMACU LTD is maintains quit satisfies. Only one year the ratio is get down in 2006-07. So the quick ratio is good.

42

3. Inventory turnover:The inventory turnover ratio measures how quickly that stock is converted in to sales. It is the test of efficient inventory management. To measure the efficient, the ratio should be compared on the basis of trend analysis or with the level of other firms. The higher the ratio, the better is the performance of the company. A low ratio may indicate a slow moving inventory or none too aggressive sales jokes. A low ratio also reveals the other investment in inventory. COST OF GOODS SOLD INVENTORY TURNOVER:AVERAGE INVENTORY TABLE: - 3

YEAR 2003-04 2004-05 2005-06 2006-07 2007-08

COST OF GOOD SOLD 396924464.8 381002555 376858801.8 406896201.9 606053000

AVERAGE INVENTRE 55948432.8 45831224.04 24784534.25 12932762.7 15046401.2

RATIO 7.094469763 8.313165598 15.2054018 31.4624347 40.27893394

43

Graph 3 :-

INVENTORY TURNOVER RATIO 45 40 35 30 25 20 15 10 5 0 2003-04 2004-05 2005-06 YEARS RATIO 2006-07 2007-08

Interpretation:It is use full evaluation of the liquidity of inventory and adequacy of inventory controls. So it use how much speed the stock to convert to sales. So in the way in the ratio is growth stage. Avery year the inventory turnover ratio is increases.

PERCENTAGE

44

4. Debtors turnover ratio:Debtors constitute an important constituent of current assets and therefore the quality of debtors to a great extent determines a firms liquidity. Two ratios are used by financial analysts to judge the liquidity of the firm they are Debtors turnover ratio:The ratio indicates the extent to which the debts have beet collected in time. It gives the average debt collection period. The ratio is very helpful to the lenders because it explain to them whether their borrowers are collecting money with is a reasonable time. TOTAL SALES DEBTORS TURNOVER RATIO:DEBTORS TABLE: - 4 YEAR 2003-04 2004-05 2005-06 2006-07 2007-08 SALES 418131979.8 381649206 356485255.3 402770938.7 667778000 DEBTORS 111629315.2 97955233.89 103996126.7 59313980.84 104483000 RATIO 3.745718399 3.896159407 3.427870505 6.790489072 6.391259822

45

Graph 4 :DEBTORS TURNOVER RATIO 8 7 6 5 4 3 2 1 0 2003-04 2004-05 2005-06 YEARS RATIO 2006-07 2007-08

Interpretation:In the ratio is good. In the way the company runs the business in the further days the firm takes good sales. So firm to improved this cash business.

PERCENTAGE

46

5. Debt collection period:It is use to identify the how much day to re collect the money to the debtors. DAYS IN A YEAR (360) DEBT COLLECTION PERIOD:DEBTORS TURNOVER

TABLE: - 5 YEAR 2003-04 2004-05 2005-06 2006-07 2007-08 TOTAL DAYS IN YEAR 365 365 365 365 365 DEBTORS TURNOVER RATIO 3.74 3.9 3.43 6.79 6.4 DAYS 97.59358289 93.58974359 106.4139942 53.75552283 57.03125

47

Graph 5:-

DEBTORS COLLECTION PERIOD

120 100 80 60 40 20 0 2003-04 2004-05 2005-06 YEARS DAYS 2006-07 2007-08

Interpretation:In the ratio point of you it is not good. The debtors collection period is very high. Means the collection of the money is very long. In the way the firm to maintains the more working capital. So modify this thing also.

DAYS

48

6. Fixed assets turnover ratio:Assets are used to generate sales therefore the firm should manage its assets efficiently to maximize sales. The relationship between sales and assets is called assets turnover. The firm can compute fixed assets turnover simply by dividing sales by fixed assets. SALES FIXED ASSETS TURNOVER RATIO:NET FIXED ASSETS TABLE: - 6 YEAR 2003-04 2004-05 2005-06 2006-07 2007-08 SALES 418131979.8 381649206 356485255.3 402770938.7 667778000 FIXED ASSETS 275737672.4 277111306.4 279168799.9 281315968.4 290266000 RATIO 1.516412234 1.377241553 1.276952351 1.431738628 2.300572578

49

Graph 6:-

FIXED ASSETS TURNOVER RATIO

2.5

PERCENTAGE

2 1.5 1 0.5 0 2003-04 2004-05 2005-06 YEARS RATIO 2006-07 2007-08

Interpretation:In the fixed assets ratio is not good. To improve the sales of the firm to improve the sales automatically the firm runs in good way and gets good profits.

50

7. Total assets turnover ratio: Assets are used to generate sales. A firm should manage its assets efficiency to maximize sales. The relationship between sales and assets is called assets turn over. Assets turnover ratio is computed by dividing sales by total assets. SALES TOTAL ASSETS TURNOVER: CAPITAL

TABLE: - 7 YEAR 2003-04 2004-05 2005-06 2006-07 2007-08 SALES 418131979.8 381649206 356485255.3 402770938.7 667778000 TOTAL ASSETS 461149831.5 445340109.7 424610565.1 435103463 523479000 RATIO 0.906716107 0.85698368 0.839558138 0.925690032 1.275653847

51

Graph 7:-

ASSETS TURNOVER RATIO 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2003-04 2004-05 2005-06 YEARS RATIO 2006-07 2007-08

Interpretation:In the total five years the assets turnover ratio is very bad. More concentrates in the sales increases. This is most important point in the financial analysis.

PERCENTAGE

52

8. Working capital turnover ratio:SALES WORKING CAPITAL TURNOVER RATIO:NET WORKING CAPITAL

TABLE: - 8

YEAR 2003-04 2004-05 2005-06 2006-07 2007-08

SALES 418131979.8 381649206 356485255.3 402770938.7 667778000

NET WORKING CAPITAL 96544066.2 64035836.8 30214148.3 5862161.91 26485000

RATIO 4.330996158 5.95993158 11.79862003 68.7068943 25.21344157

53

Graph 8:-

WORKING CAPITAL TURNOVER RATIO 80 70 60 50 40 30 20 10 0 2003-04 2004-05 2005-06 YEARS RATIO 2006-07 2007-08

Interpretation:The working capital means to run the business in smooth manner in raw materials to up to finished goods how much of cost to spent the business is called working capital. So in way you will use low working capital you get the more sales. In the graph point of you the year 2006-07 the ratio is good in other years to improve the ratio.

PERCENTAGE

54

9. Debt-equity ratio:The debt equity ratio is determined to ascertain the sound ness of the long term financial policies of the company. It is also know as external internal equity ratio. It may be calculated as follow; LONG TERM DEBT DEBT- EQUITY RATIO:SHAREHOLDERS EQUITY OR NET WORTH

The term external equities refers to total outside liabilities that consists of both short term and long term liabilities and the term internal equities refer to share holders funds that consists of both equity and preference capital. In case the ratio (i.e. outsiders funds are equal to share holders funds it is considered to be quite satisfactory). TABLE: - 9 YEAR 2003-04 2004-05 2005-06 2006-07 2007-08 LONG TERM DEBT 281629148.5 292762017.2 308224894 336247096.2 410859517.5 SHARE HOLDERS EQUITY 21411620 22351609 23723326 25897199 28761978 RATIO 13.15309857 13.09802875 12.99248234 12.98391754 14.2848144

55

Graph 9:DEBT-EQUITY RATIO 14.5 14

PERCENTAGE

13.5 13 12.5 12 2003-04 2004-05 2005-06 YEARS RATIO 2006-07 2007-08

Interpretation:In the ratio main indication is the percentage of funds being financed through borrowings; a measure of the extent of trading on equity. So in the way firm based on more in long term liabilities. So the ratio is not satisfaction.

56

10. Debt ratio:Debt ratio is used to analyze the long term solvency of firm it helps in knowing the proportion of the interest bearing debt in the capital structure debt ratio is computed by dividing total debt by capital employed (CE) or net assets (NA). Total debt will include short and long -term borrowings from financial institutions, debentures/bonds, deferred payment arrangement fro buying capital equipment, bank borrowings. Public deposits other interest bearing loans. Capital employed will include total debt and set worth. TOTAL DEBT DEBT RATIO:CAPITAL EMPLOYED

TABLE: - 10

YEAR 2003-04 2004-05 2005-06 2006-07 2007-08

TOTAL DEBT 284191885.2 295236538.4 310699415.3 338721617.5 413334038.8

CAPITAL EMPLOYED 438367938.6 421154538.9 398641134.3 368666195.6 439597000

RATIO 0.648295325 0.701017112 0.779396275 0.918775905 0.940256732

57

Graph 10:-

DEBT RATIO 1 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 2003-04 2004-05 2005-06 YEARS RATIO 2006-07 2007-08

Interpretation:In the ratio of the firm is increasing but the ratio is very position. So the firm run the business in smooth manner.

PERCENTAGE

58

11. Interest coverage ratio:The interest coverage ratio or the times interest is used to test the firm debt servicing capacity. The interest coverage ratio is corrupted by dividing earning before interest and taxes (EBIT) by interest charges. The interest coverage ratio shows the numbers of times the charges are covered by funds that are ordinarily available to depreciation are also available to pay interest charges. Hence interest coverage ratios earning before depreciation interest and taxes (EBIT) divided by interest. INTEREST INTEREST COVERAGE: EBIT TABLE: - 11 YEAR 2003-04 2004-05 2005-06 2006-07 2007-08 INTEREST 1387898.72 2195337.51 2452384.11 5683743.63 5131413.49 EBIT -7334112.23 -35580384.04 -43225101.11 -28389576.13 14610586.51 RATIO -0.189238817 -0.061700782 -0.056735185 -0.200205301 0.351212012

59

Graph 11:-

INTERST COVERAGE RATIO 0.4 0.3 0.2 0.1 0 -0.1 -0.2 -0.3

PERCENTAGE

2003-04

2004-05

2005-06

2006-07

2007-08

YEARS RATIO

Interpretation:In the ratio the first four years the ratio is negative. So the company takes care about these aspects. The last one year only get profits and positive value.

60

12. Gross profit ratio:It is calculated by dividing the gross margin by sales. This ratio shows the profits relative to sales after the direct production costs are deducted. It may be used as an indicator of the efficiency of the production operation and the relation between production costs and selling price. GROSS PROFIT RATIO: GROSS PROFIT _______________ NET SALES (Gross Profit = Net Sales - Cost of Goods Sold) TABLE: - 12 YEAR 2003-04 2004-05 2005-06 2006-07 2007-08 GROSS PROFIT OR LOSS 21207515.04 646651 -20373546.51 -4125263.23 61725000 SALES 418131979.8 381649206 356485255.3 402770938.7 667778000 RATIO 5.071966762 0.169435961 -5.715116181 -1.024220676 9.24334135

61

Graph 12:-

GROSS PROFIT RATIO

10 5

PERCENTAGE

0 2003-04 -5 -10 YEARS RATIO 2004-05 2005-06 2006-07 2007-08

Interpretation:In the ratio is some part of good in year 2003-04, 2007-08 get profits. And 2004 -05 the profit is decline. And 2005-06, 2006-07 get loss. So the firm spent in more in direct expenses. So the firm controls the expenses.

62

13. Net profit ratio:This ratio is measured by dividing profit after tax by sales. It indicates managements efficiency in manufacturing, administering and selling the products. The ratio is the overall measure of the firms ability.

NET PROFIT RATIO: -

NET PROFIT BEFORE TAX _____________________ NET SALES

TABLE: - 13

YEAR 2003-04 2004-05 2005-06 2006-07 2007-08

NET PROFIT/LOSS -5946213.51 -33385046.53 -40772717 -22705832.5 19742000

SALES 418131979.8 381649206 356485255.3 402770938.7 667778000

RATIO -1.422090105 -8.747573951 -11.43742031 -5.63740586 2.956371728

63

Graph 13:-

NET PROFIT RATIO 4 2 0 -2 -4 -6 -8 -10 -12 -14

PERCENTAGE

2003-04

2004-05

2005-06

2006-07

2007-08

YEARS RATIO

Interpretation:In the ratio all the first four years company cannot get the profits. In the last year get the some amount of profits. So in the way the company spent the more indirect expenses also. Company controls the expenses.

64

14. Return on total assets:The profitability ratio is measured in terms of the relation ship between net profits and assets. The return on assets may also be called profit to assets ratio. There are various approaches possible to define profits and assets. NET PROFIT BEFORE TAX RETURN ON TOTAL ASSETS: ________________________ X 100 TOTAL ASSETS

TABLE: -14

YEAR 2003-04 2004-05 2005-06 2006-07 2007-08

PROFIT AFTER TAX -5946213.51 -33385046.53 -40772717 -22705832.5 19742000

TOTAL ASSETS 461149831.5 445340109.7 424610565.1 435103463 523479000

RATIO -1.289432003 -7.496528115 -9.602379298 -5.218490412 3.771306967

65

Graph 14:-

RETURN ON TOTAL ASSETS RATIO 6 4 2 0

PERCENTAGE

-2 -4 -6 -8 -10 -12

2003-04

2004-05

2005-06

2006-07

2007-08

YEARS RATIO

Interpretation:In the ratio point of you the company cannot get the good profits. So the return on total assets ratio is negative. In the last year 2007-08 get some part of return to the firm.

66

15. Return on equity:Return on equity is of great interest to equity shareholders. Ordinary shareholders are entitled to the residual profits. If rate of dividend is not fixed the earning may be distributed to shareholders or retained in the business. A return on shareholders equity is calculated to see the profitability of owners investments. The return on equity is net profit after taxes dividend by shareholders equity or net worth.

PROFIT AFTER TAX RETURN ON EQUITY:NET WORTH

The shareholders equity or net worth will include paid up share capital share premium and reserves and surplus less accumulated losses. Return or equity measures the profitability of equity funds invested in the firm. It is very important measure because of it reflects the productivity of the owner ship capital employed in the form. It is influenced by several factors like earning power, debt equity ratio and average cost of debt funds and tax rate. TABLE: - 15

YEAR 2003-04 2004-05 2005-06 2006-07 2007-08

PROFIT AFTER TAX -5946213.51 -33385046.53 -40772717 -22705832.5 19742000

NET WORTH 21411620 22351609 23723326 25897199 28761978

RATIO -0.277709651 -1.493630572 -1.718676251 -0.876767889 0.686392292

67

Graph 15:-

RETURN ON EQUITY 1 0.5 0

PERCENTAGE

-0.5 -1 -1.5 -2

2003-04

2004-05

2005-06

2006-07

2007-08

YERAS RATIO

Interpretation:In the return on equity is based on the profits. So the 2003-04 to 2006-07 the four year the company runs the business with loss. So the ratio is negative. After 2006-07 the firm get the profit auto metical ratio is growing.

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MARKET RATIOS:It is use full to the share holders how much of returns to earn there investment. And what is the position of the market to the investment share rate. To now the deferent types of all market information to analyze to using these ratios. 16. EARNINGS FOR SHARE:In the ratio to know the Avery year how much of amount to earning the investors means the share holders. The equity share holders to get the how much of amount to get the return on the investment. PROFIT AFTER TAX EARNING PER SHARE:NUMBER OF COMMON SHARES

TABLE: - 16

YEAR 2003-04 2004-05 2005-06 2006-07 2007-08

PROFIT AFTER TAX -5946213.51 -33385046.53 -40772717 -22705832.5 19742000

TOTAL NUMBER OF SHARES 6450 6450 6450 6450 6450

EPS -921.8935674 -5175.976206 -6321.351473 -3520.284109 3060.775194

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Graph 16:-

EARNING PER SHARE

4000 2000 0

RUPES

-2000 -4000 -6000 -8000

2003-04

2004-05

2005-06

2006-07

2007-08

YEARS EPS

Interpretation:The first four years means 2003-04 to 2006-07 firms not get profits. So share holders are not getting any returns. The last year the each share holder gets the return nearly 3000Rs get the 2007-08. So company gets the profits.

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FINDINGS
1. The Liquidity Position of the firm it not satisfactory from the financial year 2004-05 to 2006-07 as there is a declining trend in current ratio. 2. The quick ratio of the firm is satisfactory for all the years. 3. Regarding capital structure the firm is high geared i.e. it is dependent and more debt capital. 4. The Interest Coverage Ratio of the firm is very bad i.e. the firm is not in position to pay regular interest payment in future i.e. problem of financial risk. 5. The Debt Collection Period of the firm is quite satisfactory. 6. All turnover ratios of good. 7. The gross profit ratio for two years indicates negative trend the firm must try to improve. 8. The return on net worth is not satisfactory. 9. Overall the profitability of the firm is not satisfactory.

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SUGGESTIONS
1. The P.D.M.P.M.A.C.U. Limited has an efficient top management for marketing various policies and decisions enviable performance. 2. The rich quality of P.D.M.P.M.A.C.U. Limited can make sure of approval from various quality accreditations like ISO and has a success fully career in near future. 3. Inspection and quality checking must be doubled for providing quality milk. 4. The cash receivers in P.D.M.P.M.A.C.U. Limited is not standard maintaining. The cash ratio is lower for same years and very excess for same other years. So, the cash reserves must standardize. 5. The debt proportion in the financial structure of NDCMPU is rapidly increased last year. So, the debt proportion must be decreased to the standard norm. 6. The gross profit decreased comparatively than previous year. So, the gross profit must be improved. 7. The utilization of assets to be improved. 8. The net profit of the company should improve as the company. So for losses from the last 4 years. 9. The Return on Equity Capital should be improved by overcoming the losses for the last 4 years.

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CONCLUSION
The study on the Ratio Analysis of P.D.M.P.M.A.C.U. Limited was undertaken with a view to explore the scope for improvement. A number of suggestions have been made at the conclusion of the study. I am sure that a conclusion and suggestion will contribute for improving the effective-ness and efficiency of the present Ratio Analysis. The company can achieve the highest with full-fledged effort of top management and its employees with their commitment and sincerity to wards goal. The company can take a challenge with its competitiveness and high spirits to face the market

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ANNEXURE
Table 1 Financial Statement PDMPMACU Ltd. Common size Balance sheet during the year 2002-2003 Particulars Current assets Cash on hand Bank balance Due to (sun -Dr) Closing stock Pre paid expenses a) total CA Fixed assets b) total fixed assets Investments & other assets APDDCF&PDCCB Investment Feed A/C Interest due on FDRs APCS 1964 act & MACS 1995Act c)total Investment s &other assets Total assets (A+B+C) 21000.00 19078168.03 6870262.73 177986642.07 0.003 3.166 1.140 29.536 549294.53 7974859.30 103996126.70 6932723.00 19331.00 119472334.53 279168799.87 279168799.87 46.330 0.091 1.323 17.258 1.150 0.003 31-03-2003 Percentage

203956072.83

602597207.23

100

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Particulars Current liabilities Outstand liabilities Due to (sun-Cr) Recovery from milk bills a) total current liabilities Long term & other liabilities Secured loans Interest on ODs Other liabilities b) total long term & other liabilities Capital & Reserve Share capital Reserve for Items under objection Reserve for temp advance Statutory provision Depreciation reserve C)Total Capital &Reserve Total(A+B+C)

31-03-2003 34036922.89 48539033.70 6682229.68 89258186.27

Percentage 5.646 8.054 1.108

152118631.70 66833079.63 106362997.58 325314708.91

25.243 11.090 17.650

23723326.00 837197.50

3.936 0.139

140484.40 1496838.98 161826465.17 188026312.05 602597207.23

0.144 0.248 26.854

100

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Table 2 Financial Statement PDMPMACU Ltd., Common Size Balance Sheet during the year 2003 -2004.

Particulars Current Assets Cash on hand Bank Balance Due to (Sun-Dr) Closing Stock A) Total CA Fixed Assets B) Total Fixed Assets Investments & Other Assets APDDCF&PDCCB Investment Feed A/C Interest due on FDRs APCS 1964 Act & MACS 1995 Act C) Total Investment & Other Assets Total Assets (A+B+C)

31-03-2004

Percentage

924794.37 846094.99 105320689.44 62870763.07 169962341.87 273413425.37 273413425.37

0.163 0.149 18.587 11.095

48.252

21000.00 19078168.03 6282188.00 97882664.41

0.004 3.367 1.109 17.274

123264020.44 566639787.68 100

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Particulars Current Liabilities Outstanding liabilities

31-03-2004

Percentage

24203882.74

4.271

Due to (Sun-Cr) Recovery from milk bills Interest due to ODs A) Total Current Liabilities Long term and Other Liabilities Secured Loans Interest on ODs Other Liabilities b) Total long term and other liabilities Capital & reserve Share capital Reserve for items under objection Reserve for temp advance Statutory provision Depreciation reserve C) Total capital and reserved Total (A+B+C)

32029906.51 15612313.47 66369.00 71912471.72

5.653 2.755 0.012

150047812.70 66833079.63 107550857.88 324431750.21

26.480 11.795 18.980

21411620.00 837197.50 868648.64 1496838.98 145681260.63 170295565.75 566639787.68

3.779 0.148 0.153 0.264 25.710

100

Table 3 77

Financial statement PDMPMACU ltd. Common size balance sheet during the year 2003 2004 Particulars Current assets Cash on hand Bank balance Due to (Sun-Dr) Closing stock A) Total CA Fixed assets B) Total fixed assets Investments and other assets APDDCF&PDCCB Investment Feed A/C Interest due on FDRs APCS 1964 Act and MACS 1995 Act C) Total investments and other assets Total assets (A+B+C) 21000.00 19078168.03 3682724.73 103828877.92 126610770.68 564978709.45 100 0.004 3.368 0.652 18.377 1179350.57 495498.04 111929315.21 49026102.58 162630266.40 275737672.37 275737672.37 48.805 0.209 0.096 19.811 8.678 31-03-2004 Percentage

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Particulars Current liabilities Outstand liabilities Due to (Sun- Cr) Recovery from Bilk bills A) Total current liabilities Long term & other liabilities Secured loans Interest on ODs Other liabilities B) Total long term & other liabilities Capital & reserve Share capital Reserve for items under objection Reserve fort temp advance Statutory provision Depreciation reserve C) Total capital & reserve Total (A+B+C)

31-03-2005

Percentage

20360634.83 32354041.91 13371523.39 66086200.13

3.603 5.726 2.366

148694868.70 66833079.63 107550858.48 323078806.81

26.319 11.829 19.036

21411620.00 837197.50 228700.40 1496838.98 151839345.63 175813702.51 564978709.45

3.790 0.148 0.154 0.265 26.875

100

Table 4

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Financial statement PDMPMACU ltd. Common size balance sheet during the year 2005-2006

Particulars Current assets Cash on hand Bank balance Due to (Sun-Dr) Closing stock A) Total CA Fixed assets B) Total fixed assets Investments and other assets APDDCF&PDCCB Investment Feed A/C Interest due on FDRs APCS 1964 Act and MACS 1995 Act C) Total investments and other assets Total assets (A+B+C)

31-03-2006

Percentage

2989603.16 462050.05 97955233.89 42636345.51 144043232.61 277111306.37 277111306.37

0.513 0.079 16.815 7.319

47.568

21000.00 19078168.03 5086402.73 137213924.45 161399495.21 582554034.19

0.004 3.275 0.873 23.554

100

Particulars

31-03-2006

Percentage

80

Current liabilities Outstang liabilities Due to (Sun- Cr) Recovery from Bilk bills A) Total current liabilities Long term & other liabilities Secured loans Interest on ODs Other liabilities B) Total long term & other liabilities Capital & reserve Share capital Reserve for items under objection Reserve fort temp advance Statutory provision Depreciation reserve C) Total capital & reserve Total (A+B+C) 22351609.00 837197.50 140484.42 1496838.98 157686028.68 182512158.56 582554034.19 100 3.837 0.144 0.149 0.257 27.068 145906541.70 66833079.63 107294858.48 320034479.81 25.045 11.472 18.418 19902798.00 53571625.19 6532972.63 80007395.82 3.415 9.195 1.121

Table 5

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Financial Statement PDMPMACU Ltd. Common size Balance sheet during the year 2006-2007 Particulars Current assets Cash on hand Bank balance Due to (sun -Dr) Closing stock Pre paid expenses a) total CA Fixed assets b) total fixed assets Investments & other assets APDDCF&PDCCB Investment Feed A/C Interest due on FDRs APCS 1964 act & MACS 1995Act c)total Investment s &other assets Total assets (A+B+C) particulars Current liabilities Outstang liabilities Due to (sun-Cr) Recovery from milk bills a) total current liabilities Long term & other liabilities Secured loans Interest on ODs Other liabilities b) total long term & other liabilities Capital & Reserve Share capital Reserve for Items under objection Reserve for temp advance Statutory provision Depreciation reserve C)Total Capital &Reserve Total(A+B+C) 31-03-2007 549294.53 7974859.30 103996126.70 6932723.00 19331.00 119472334.53 279168799.87 279168799.87 21000.00 19078168.03 6870262.73 177986642.07 203956072.83 602597207.23 31-03-2007 34036922.89 48539033.70 6682229.68 89258186.27 152118631.70 66833079.63 106362997.58 325314708.91 23723326.00 837197.50 140484.40 1496838.98 161826465.17 188026312.05 602597207.23 Percentage 0.091 1.323 17.258 1.150 0.003 46.330 0.003 3.166 1.140 29.536 100 Percentage 5.646 8.054 1.108 25.243 11.090 17.650 3.936 0.139 0.144 0.248 26.854 100

Table 6

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Financial Statement PDMPMACU Ltd. common size balance sheet during the year 2006-2007 Particulars Current assets Cash on hand Bank balance Due to (sun-Dr) Closing stock Pre paid expenses A)Total CA Fixed Assets B) Total Fixed Assets Investments & other Assets APDDCF&PDCCB Investment Donations Feed A/C Interest due on FDRS PCS 1964 Act & MACS 1995 Act C) Total Investments & other Assets Total Assets (A+B+C) 60783.56 7797759.89 57313980.84 18932802.40 1244900.55 85350227.24 281315968.47 281315968.47 11.205 0.009 1.225 9.006 2.975 0.196 31-03-2008 Percentage

21000.00 47832752.30 19078168.03 1505347.00 201274451.33

0.003 7.52 2.997 0.236 31.628

269711718.70 636377914.37 100.00

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Particulars Current liabilities Outstang liabilities Due to (sun-Cr) Recovery from milk bills a) total current liabilities Long term & other liabilities Secured loans Intrest on ODs Other liabilities b) total long term & other liabilities Capital & Reserve Share capital Reserve for Items under objection Reserve for temp advance Statutary provision Depreciation reserve c) total capital & reserve Total(A+B+C)

31-03-2008

Percentage

27102212.00 46890712.65 7495140.68 81488065.33

4.259 7.368 1.178

187910951.30 66833079.63 106987624.34 361731655.30

29.528 10.502 16.812

25273199.00 837197.50

3.971 0.132

140484.40 1496838.98 165410873.89 193158593.80 636377914.37

0.022 0.235 25.993

100.00

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BIBLIOGRAPHY
1. FUNDAMENTALS OF FINANCIAL MANAGEMENT - JAMES C. VANCHORNE - JOHN M-W ACHOWICZ. JR 2. FINANCIAL MANAGEMENT - I.M. PANDEY 3. FINANCIAL MANAGEMENT - KHAN AND JAIN 4. FINANCIAL MANAGEMENT - S.N. MAHESWARI 5. COMPANY ANNUAL REPORTS

Web-: www.google.com www.PDMPMACO.com

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