A

PROJECT REPORT
ON

FINANCIAL STATEMENT ANALYSIS

WITH SPECIAL REFERENCE TO MOTHER DAIRY

Submitted by

D.MADHUSUDHAN REDDY
(Ht. No: 98-06-115)
Submitted to

OSMANIA UNIVERSITY

In partial fulfillment of the Award of

MASTERS DEGREE IN BUSINESS ADMINISTRATION

St.PAULS P.G. COLLEGE

(Affiliated to Osmania University & Approved by AICTE )
Sy.No. 603,604 & 605,Thurka Yamjal (vill), Hayath Nagar (Mdl.), R.R.
Dist.
( 2006-2008 )

DECLARATION
I here by declare

that this project

STATEMENT ANALYSISwith

report titled

special

reference

FINANCIAL
to MOTHER

DAIRY submitted by me to the dept. of business management Hyderabad is

a bonafide work under taken by me and it is submitted to any other university or
institution for the award of any degree/ diploma certificate or published any
time before.

Name and Address of the Student

Signature of the Student

ACKNOWLEDGEMENT
At the outset, I wish to thank the management of
MOTHER DAIRY for their kind gesture of allowing me to undertake this
project and its various employees who lent their helping hand towards the
completion of the study.
I am practically indebted to Mr.A.PRATHAP SENA, A.O,mother Dairy
for allowing me to carry out my project work in the origination and
Mr.VISHWANATH, faculty member for apprising me of the situation
with necessary guidance & help me to complete this project. .
I would like to thank Mrs. INDIRA , Principal of St.Pauls P.G.
College, who have given her co-operation and encouragement during the
course of the project work.

Place: Hyderabad
Date:

D.MADHUSUDHAN REDDY
(Ht. No: 98-06-115)

TABLE OF CONTENTS
PAGENO
CHAPTER-I

INTRODUCTION TO FINANCIAL STATEMENT

ANALYSIS
PURPOSE OF FINANCIAL SATEMENTS
USERS OF FINANCIAL SATEMENTS
LIMITATION OF FINANCIAL STATEMENT
TYPES OF FINANCIAL STATEMENT ANALYSIS
COMPARITATIVE STATEMENT ANALYSIS
TREND ANALYSIS
COMMON SIZE STATEMENT ANALYSIS
SCOPE OF THE STUDY
OBJECTIVES
LIMITIONS
METHODOLOGY
COMPETITORS AND MARKET SHARE
HUMAN RESOURCE

CHAPTER-II
HISTORY OF ORGANISATION

24

CHAPTER-III
COMPANY PROFILE

31

CHAPTER-IV
PRACTICAL FRAME WORK OF F.S.A.
INCOME STATEMENT
BALANCE SHEET
TREND ANALYSIS
CHAPTER-V
FINDINGS

40

69

CHAPTER-VI
SUGGESTIONS
CHAPTER-VII

71
4

BIBLIOGRAPHY

73

CHAPTER-01
INTRODUCTION
TO
FINANCIAL STATEMENTS

FINACIAL STATEMENT ANALYSIS

Financial statement as normally understood refers to a set of reports and Schedules
that an accountant prepares at the end of a period of time for a business enterprise.
According to Smith and Ashburn : Financial statement are the end products of
financial Accounting , prepared by the accountant that support to reveal the financial done
with the earnings.

THE PUROSE OF FINANCIAL STATEMENTS

The preparation of profit and loss statement and balance sheet is a very valuable exercise
for an organization. The purposes of these financial statements are as outlined below:

To inform owners about the financial position of the organization.

To inform managers the achievements/shortfalls in the performance of the business.

To secure finance and maintain finance.

To monitor performance of the business periodically.

To fulfill statutory obligations.

To assess tax liability.

To determine liquidity, solvency and profitability of business.

THE USERS OF FINANCIAL STATEMENTS

The users of financial statements include-

OWNERS: they want to know whether their investments are safe or not. They are
interested in the financial performance of the business in terms of profitability. They want to
know whether the company is in a position to pay dividends, if yes, how much, and so on.

Management: they want to plan and control the activities of business and need guidance
in forward planning. Mangers look at (a) procurement

performance against forecast

targets-sales, expenses, profit (b)ways in which they can improve their performance (c)
control of money cycle- repaying loans and collecting debts as when they become due.

Lenders: they provide finance. They use these statements to assess the ability of the
business to repay its debts on maturity. They would like to get assured that their funds are in
the safe hands.

Tax authorities: they are interested to assess the taxes payable for a five period.
Employee: they would like to whether profits have gone up as a result of their hard

work . they

would like to seek justification for their demands for increase in bonus and other perquisites.

Analysts and Advisors: This is a significant group consisting of financial analysis,

economists, researchers and stock brokers, insurance companies, and so on who would need
to research and on various issues such as profits, investments, costs, impact of Government
policies on a particular sector, and so on which are of specific or common interest to their
clients. The financial statements provide a basis for their analysis.

Other Business Contacts: This includes the suppliers, competitors and so on the
suppliers may wish to know the financial stability of the business. The competitors wish to
know their market share and the growth rates.

GENERAL PUBLIC: There may be potential investors in this group. They would like to
know whether it is safe to invest in a given company or not. They use financial analysis for
their purpose.

LIMITATIONS OF FINANCIAL STATEMENTS:

1. Personal Judgement / Discretion: the preparation of financial statements involves
degree of personal judgment or discretion, which may prevent presentation of facts in
their true nature. Take the case of allocating the costs and incomes to a given accounting
period. Income and cost transactions take place continuously through out the life of the
business and they have to be cut off at each balance sheet dates. It is very difficult to set a
uniform policy to cut off income and cost. It is true that the accounting department has
considerable discretion in this regard. The cost allocated to the period must have a logical
relationship to the income allocated to the period. The data presented in financial
statement cannot be exact thought, given theses conditions.

2.

Replacement cost is not Emphasized: The finance statements show the

assets as per the book value and these seldom have relevance to replacement costs. The
financial statements are based on the historic cost prices but not on the current prices.

3.

Current Economic Realities Ignored:

The financial statements present

the accounts on cost concept. The cost of acquisition of the assets is taken as the basis to
present the asset accounts. These may be far less than the current level of prices,
particularly when there is a market decline in the value of currency and the economy
shows up inflationary trends. In other words, an increase in sales revenue may be in
consequence to the fall in the rupee value and increase in the selling price. It may not be
the direct result of improved performance of the firm.

4.

Qualitative Factors Ignored:

The financial statements do not reflect

qualitative factors such as goodwill, credit rating, and so on. These factors have a
profound impact on the financial conditions and operating results. How ever there are a
few companies such as Reliance showing up the quality of human factor in their financial
statements.
These limitations do not limit the use of financial statements. Financial statements
continue to play a vital role in terms of their utility to different segments of the society. They
from the primary basis for interpretation of statements of the society. They from the primary
basis for interpretation of financial statements. They provide a basic understanding of the
financial position of the firm.

TYPES OF FINANCIAL
STATEMENT ANALYSIS

ANALYSIS OF FINANCIAL STATEMENTS

Analysis means examining something to know its contents in detail. It is the process of
evaluating the relationship between different variables in the financial statements. For the
purpose of analysis, it is necessary to identify the relevant data, group the data and identify
the parameters to compare the groups to highlight the strong and weak points of the business
the purpose is to identify the possible remedial measure to strengthen the weak areas of
business.

Analysis of financial statements provides an understanding of the financial

Matters of business such as the following:

How is the firm mobilizing resources

How is the firm making profits/ losses

How is the firm maintaining its assets and liabilities

How is the firm taking care of liquidity, solvency and profitability of the business, and so
on
In short, analysis facilitates decision making. Analysis of financial statements involves an

art by itself. It is always desirable that the people involved in the analysis should be
conversant with the nature and limitations of the industry. This knowledge will help to
identify the right type or approach of analysis. There are different approaches for the study of
the financial statements. The analysis of the study may range from time to time for the same
firm or one firm to the other firm. The focus of the study varies depending upon the users:
internal or external.
There are five basic financial statements of special importance. They are

The Income Statement (or Profit and Loss account)

The Position Statement (or Balance Sheet)

The Fund Flow Statement (or the statement of source and application of funds)

The Cash Flow Statement

The Statement of Retained Earnings

10

The Income Statement: The Income Statement also called the Profit and Loss account
is the accounting report that summarizes the revenues, expenses and the difference between
them for an accounting period, matching materiality and realization. There is no statutory
format in which the income statement is to be presented, except for banking and insurance
companies. However sec 211of the companies act 1956 prescribes the consents to be
disclosed in this statement.

The Position Statement:

The position statement or balance statement shows the

financial status of business at a given point of time. All the assets owned by the business and
all the liabilities and claims it owes to outsiders and owners are listed. The balance sheet must
always be in balance i.e. the total assets should always be equal to total liabilities.

The Funds Flow Statement:

The term fund from normally means working capital.

The funds flow statement reveals the sources from which are received and the uses to which
these have been put. It is a valuable tool to analyze the changes in the financial condition of
the business between two periods two and helps the management formulation and
performance appraisal.

The Cash Flow Statement:

The cash flow statement of changes in the financial

position of a firm on cash basis. It is very much similar to the funds flow statement except
that the cash flow statement lays emphasis on cash changes only.

The Statement of Retained Earnings:

The statement of retained earning also

known, as the profit and loss Appropriation account is a continuation of the income statement
. It reveals the profit freely available after deduction of all expense including tax and how it
has been appropriated. The balance after all appropriation s is shown in the liabilities side
the balance sheet. Thus the statement of retained earnings is the link between the income
statement the balance sheet.
The significance of financial statement lies not in their analysis an interpretation.
Analysis and interpretation of financial statement involves a study of relationship among
various financial factors and to judge their meaning and significance. The financial analyst
must understood the plans and policies of management determine the extent of analysis

11

reorganize data available as per requirement, establish relationship among financial figures
and make interpretations in a simple and unbiased way.

Types of Analysis:
The process of analysis may be classified based on the nature of information used and
on the basis of methodology of operation.

On the basis of Nature of Information used:

a.

External Analysis:

The information used is that which is freely available to

anybody. Published financial statements are an example of such information. There is no

access to internal records of organization with increasing emphasis on disclosures in recent
times the equality of external analysis is likely to improve in the future.

b. Internal Analysis:

The source of information is internal analysis is the internal

or unpublished records and books. Such analysis is undertaken for use of management or for
other internal needs of the organization.

12

On the basis of Methodology of Operation:

Horizontal Analysis:

It involves analysis and review of financial statement

pertaining to a number of years. An attempt is made to identify the periodical trend of

various items in the financial statements. Percentage increase/decrease is calculated for all
such items. Alternatively, a base year is fixed and figures pertaining to other years are
indexed to that of base period. It is also known as dynamic analysis of trend analysis.

Vertical Analysis:

Vertical Analysis involves analyzing a single set of financial

statement, by expressing various items of the statement as a percentage of particular items

at a particular data. It is also known a Static analysis or Structural, analysis.

Methods of Financial Statement Analysis:

The following methods of analysis are generally used:

Comparative statements.

Trend Analysis.

Common Size statements.

Ratio Analysis.

13

COMPARITIVE STEMENT ANALYSIS

Comparative Financial Statement refer to comparison of finance pertaining to two
different periods by putting them side and finding out the finding out changes with respect to
each item of the statement and overall changes absolute and relative changes. Both the
income statement and balance sheet can be prepared in to form of Comparative Financial
Statement.

Comparative Income Statement: The income statement discloses Net Profit or Net
Loss on account of operations. A comparative income statement will show the absolute
figures for two or more periods, the absolute change from one period to another and if desired
the changes in terms of percentages. Since, the figures for two or more periods are shown
side by side; the reader can quickly ascertain whether the sales have increased or decreased
etc. Thus only a reading of data included in comparative income statement will be helpful in
deriving meaningful conclusions.

Comparative Balance Sheet:

it is used for comparing assets and liabilities and

findings out any increase or decrease in those items. Thus while in a single balance sheet the
emphasis is on present position, it is on change in the Comparative Balance Sheet. Such a
balance sheet is useful in studying the trends in an enterprise.

Points to be noted:
1. The financial data, which is to be compared, should be properly defined. A particular
account head must have the same connotation for all the periods of comparison.
2. The accounting policies followed during the year of comparison should be uniform. If
there is any change in any policy, the figures should be adjusted to ensure uniformity.
3. It is preferable to present financial information in Vertical or Statement form.
4. The comparative financial statement must reveal changes in both absolute and relative
measures.

Interpretation:
14

1. A change in operating expenses might be due to change in scale of operation or on

account of change in degree of managerial efficiency

2. A change in net profit is good indicator of overall profitability of the organization.

3. A change in retained earnings can be on account of change in profitability or on account
of change in divided policy, capitalization of free reserves of changes in amounts
transferred to various funds.
4. A change in working capital is a good indicator of the change in current financial position,
or short-term solvency of the business.
5. A change is liquid assets is a better indicator of the short-term solvency of the business.
6. A change in fixed assets must be balanced by a change in long-term funds.
7. The nature of assets, which have increased or decreased, must be studied to understand its
implication in the future.
8. Relative measures provide a sharper picture than absolute measures.

15

TREND ANALYSIS

16

TREND ANALYSIS
Trend percentages are immensely helpful in making a comparative study of the
financial statement for several years. The method of calculating trend percentages
relationship that each item bears to the same item in the base year. Each item of year is taken
as 100 and in that basis the percentage for each item is calculated. These percentages can also
be taken as index numbers showing relative changes in financial data resulting with the
passage of time.
The method of trend percentage is useful analytical device for the management since by
substitution percentages for large amounts, the brevity and readability are achieved. However,
trend percentages are not calculated for all the items in the financial statements. They are
usually calculated only for major items since the purpose is to highlight important changes.
Trend analysis involves computation of index numbers of the movements of the various
financials items in the financial statement for a number of periods. It helps in understanding
the nature and rate of movement in various financial factors. However, conclusions should
not be drawn on the basis of single trend. Trends of related items should be carefully studied.
Due weight age should be given to extraneous factors such as government policy, economic
conditions etc, as they can affect the trend significantly.

Steps in computation of Trend Values:

1. Select

one

of

the

periods

for

which

financial

statement

as the base period. The selected period should be a normal period.

2. Every items is the base period is taken as100.

3. Trend value of each item for any other period.
Absolute value of the item for the Period
=

__________________________________________ x 100
Absolute value of the item for the base period

Points to be noted:
17

is

available

1. The Accounting Policies for the entire period should be uniform.

2. Trend values must be read along with absolute values.
3. Non-financial factors should be considered while interpreting the trend.
4.

The Base year should be carefully selected. It should be a normal year and is
representative of the items shown in the statement.

COMMON SIZE STATEMENT

A Common size statement facilitates comparison of financial statement of not only a singe
firm over a time period, but also comparison of financial statement of different
companies for any given time. Under this method, all the items of the statement are
presented as percentages or ratios of a

particular item. Therefore, even if the absolute

figures relate to a very different scale of operations, a common base for comparison is
created.

In case of a common size Income statement, all items are presented as a percentage
of net sales. A common size balance sheet shows each item as a percentage of total asset or
total liabilities. A common size statement helps in determining the relative efficiency and
soundness of a firm and helps in understanding its financial strategy.

18

COMPARATIVE UTILITY OF COMMON SIZE FINANCIAL

STATEMENT

The comparative common size financial statement shows the percentage of each item
to the total in each period but not variation in respective items from period to period. In other
words, common size financial statement when read horizontally does not give information
about the trend of individual items but the trend of their relationship to total. Observation of
these trends is not very useful because there are no definite norms for the proportion of each
item to total.
For example, if it were established while inventory should be 30% of total assets, the
computation of various ratios to total assets would be very useful. But since there are no such
established standards a proportion,
calculations of percentages if different items of assets of liabilities is not of much use. On
account of this reason common size statement is not of much use in financial analysis.
However, common size financial statements are useful for studying the comparative financial
position of two or more business. But to make such comparison really meaningful, it is
necessary that the financial statement of all such companies should be prepared on the same
pattern e.g. all the companies should be more or less of the same age, they should be
following of following the same accounting practices the method of depreciation on fixed
assets should be the same.

19

SCOPE OF THE STUDY

OBJECTIVES
LIMITATIONS

20

SCOPE OF THE STUDY:

The scope of the study is limited to collecting the Financial Date published in the Annual
Report of the company with reference to the objectives stated above and an analysis of the Data with a
view to suggest favorable solution to the various problems related to Financial performance.

OBJECTIVES:
The main object of the organization is procuring the milk from the formers that is Elected
societies. At present here are 358 elected Societies are under the NARMACS union.
The milk procured from the 358 societies will be dump through nearly 61 Milk routes at
18 chilling centers. There the milk will processed and Dispatch to the Mother Dairy for
further processing and also marketing.
The whole milk collected from the societies will be converted into the Production of
Ghee, Butter and Toned Milk.
The organization is having one distributors M/s Mother Dairy India Limited., Delhi for
selling milk and products in the twin cities of Hyderbad & Secunderabad. The
organization selling the milk 1.25 lakhs ltrs per day on an average.
The area of the operation of the organization is 2 Districts i.e Nalgonda & Range Reddy
for collecting the milk from the formers and selling the milk.

21

ACTIVITIES:
Milk collection from marketable surplus from rural areas.
Processing of milk and convert milk in to various milk products.
Taking up of milk fodder development activities.
Under taking various technical input activities such as artificial
Insemination, foot and mouth vaccination etc

LIMITATIONS:
As the time spent by the Research on the Project and Period of time considered for analyzing the
Financial Performance is less it is not possible to have generalization the chance of errors is more.

Only applying Ratio Analysis techniques this may not give the accurate financial
performance of organization makes the performance evaluation in the study.
As it is not researches direct observation. But, a Secondary Source of Information
provided by the company the information provided may be as exaggerate which may not
be receivable. Most the Date is based on Secondary Data.

22

METHODOLOGY

23

METHODOLGY
PERIOD OF STUDY:
The Data is restricted for 3 years i.e. 31March, 2005-2006 to 31 March 2006-2007.
The Data is restricted for 3 years due to data constraints and time constraints.

SOURCES:
Data has been collected in two ways:

PRIMARY DATA: Primary Data that is collected by personal interviews and Telephone
conversation.

Secondary Data: Secondary Data has been collected by Annual reports of the company
and other sources are Newspapers, Magazines etc.

24

COMPETITORS AND MARKET SHARE

After the declining of dairy industry from 1992-93 many private dairies have entered
there by giving threat to public sector. In the present Scenario, we have many dairy farms that
release different brands of milk in AP priority is given to VIJAYA of APDDCF, where
VIJAYA brand enjoys the greater market share followed by JERSEY and the various other
brands in AP are listed below.

JERSEY
SANGAM
HERITAGE
JYOTHI
VISAKA
BUBUMIA
TIRMALA
BRITANIA, etc.,
The milk is a released sachet of 200ml,500ml, and 100ml.it has three products of milk that
have high sales in the market.

25

HUMAN RESOURCE:
The organization is functioning under the elected body covering one chairman and 14
directors. The span of the board of directors is only one year and elections will be conducted
every year. the process of conducting the election is the general body meeting among the 370
Elected Milk producers cooperative societies.
The following officials working under this organization:
1. Managing Director.
2. DGM(Plant).
3. DGM (Procurement & input).
4. DGM (Marketing).
5. DGM (Materials).
6. Senior personnel officer.
7. Dairy manager.
8. Accounts officer.
9. Managers milk cooling & chilling centers.
10. Assistant Engineer (civil).
11. Quality control officer.
The number of employees is 246 which includes supervisor, below the supervisor
cadre, blue collars employees and white collars.
The brand MOTHER DAIRY can notes quality and quantity which make trusted name in
millions of households. The products are sold through the exiting network of Mother Dairy
parlour round the clock and a chain of retailers located throughout the state.

26

CHAPTER-02
HISTORY OF THE
ORGANIZATION

27

THE NALGONDA RANGE REDDY MILK PRODUERS

MUTUALLY AIDED
COOPERATIVE: MOTHER DAIRY: HAYATHNAGAR
(PROFILE)
The Nalgonda Ranga Reddy co-operative milk procedures union limited was
registered on 25-02-1986 to cater the needs of milk procedures of two districts Nalgonda and
Ranga Reddy . the union is having 14 milk-chilling centers in Nalgonda district and 3 in
Ranga Reddy district. A feed mixing plant at Bhongir so as to supply cattle feed to formers of
the two Districts. The Mother Dairy was started in 1987 at Hayathnager with the capacity of
2,00,000 liters per day . In 1989 the humble chief minister

N.T.RAMA RAO garu

to supply the homogenized, thick milk with high quality inaugurated an extra unit in
Hayathnager as Mother Dairy. At first this unit was started as automatic milk vending i.e.,
taking the milk from the factory and sending it to the shops where they give this milk to the
consumers by pitting the coins.
In September 1992, Mother Dairy was merged with Nalgonda- Ranga Reddy cooperative
milk producers union limited. And it has been as NARMUL
(MOTHER DAIRY) Nalgonda-Ranga Reddy mutual union limited presently this union is
renamed as NARMACs Nalgonda-Rangareddy milk producters mutually aided co-operative
union limited from 15-1-2003 and is paying highest procurement price to its members when
compared to the mother unions in the state.
At present the union is procuring milk from 370 registered milk producers,
cooperative societies and 663 milk producer association centers, through 61 milk routes,
presently there are above 70,000 milk producers supplying milk to the union, which include
6500 women members also.
The union is implementing various schemes for its members for improving milk
production, such as first aid medicine; fertility camps fodder development schemes, technical
assistance and insurance schemes for its members and their cattle.

28

PRODUCTS:
MILK:
Since 1987, millions of consumers in Hyderabad have been waking up to the goodness
and freshness of Mother Dairy milk. Mother Dairy has established itself As an integral part of
their lives, be it in terms of providing pure, wholesome milk or rich, delicious milk products.
Available at a store nearest to you-be it your local kirana store, the largest super
markets in the city or their very own exclusive milk shops. Is it any wonder that Mother
Dairy today enjoys almost 75%of the market share for branded milk in Hyderabad and more
importantly that special place in every Delhi life.
Highly nutritious, pasteurized/toned, double toned milk free from additive and
preservatives packed in poly sachets using sophisticated from, fill and seal machines.

Double toned milk:

Double Toned

The purity of Mother Dairy Doubled Toned Milk. mother Dairy

Milk tasty and nutritious, with low fat content. A dream come true,

especially for all health conscious people who Love the taste of milk complements your
daily workout perfectly.
So, to maintain complete harmony between your body and soul youve got to piyo
pure
GHEE:
Mother Dairy Ghee is pure ghee made from buffalo milk and has every quality that
you would look for purchasing ghee just the right off- white color and the typical daana
daana feel. The formulation developed delivers superior flavor and aroma to the food you
prepare making it the best choice in Ghee. Mother Dairy Ghee is available in one liter and
half litre cartons[known as ceka and having a special type of lining] and also in one liter tins.
All the packs are carefully packed to ensure that rich the flavor and aroma of Mother Dairy
Ghee gets sealed in and remains intact for you to savor and enjoy.

Complete milk fat granular and white in colour. Agmark special grade product used as
a cooking medium. Shelf like of six months at ambient temperature, Hygienically
manufactured and packed with pleasant flavor, rich source of energy.

CURD:
29

 Fat 3.0% and SNF 8.5%

Best before 2 days & refrigerated
Homogenized
Made from Toned Milk

BUTTER
Its delicious. its creamy. And its so easy to spread. Available in 100 and 500 gram packs,
Mother Dairys butter is produced under totally hygienic conditions using Mother Dairys wholesome
milk. No wonder makkhan singh loves it! In case

Youre wondering who makkhan singh is... well , hes this really cool guy who loves Mother
Dairy butter-its his favourite. Along with gang of friends, Makkhan Singh is always up to a
bunch of crazy stunts to get his hands on Mother Dairy Butter. By the way, you can interact
with makkhan sing on his website:www.makkhansingh.com and play some exciting butter
games while youre at it.

Butter milk:
Fermented milk product with added salt Natural flavoring agents, contains1% milk
fat, self of one day under refrigeration bet for quenching thirst and this product is
manufactured only in summer season.

Cooking butter:
Has 76% milk fat, while in colour can be made in a ghee as per your choice, need
refrigeration, pleasant taste, used also as a Cooking medium.

30

INDUSTRY PROFILE
Consequent to the liberalization of Indian economy during 199293, GOI
Has consciously encouraged entrepreneurship in all sectors of public service.
With the establishment of private dairies there has been a rapid progress in dairy activity
in rural areas especially in Andhra Pradesh. Prior to advent of private dairies vast stretches of
rural areas remained untapped and the farmers there had no market for their milk. Also they
were handling problems leading to unscheduled procurement holidays.
But today, both private and public dairies have brought the following changes in the
rural scene of A.P., due to stiff competition.
Establishment of at least on milk chilling center for every cluster of 50-60 Km, there by
ensuring chilling of milk in shortest possible time after milking.
Setting up milk procurement centers at every village, using latest Electronic milk testers,
ensuring rapid and reliable method of testing milk, Thus gaining the confidence of
formers.
Ensuring two times milk procurement i.e. morning and evening.
Similarly rapid progress was made in marketing of milk in urban areas. Earlier consumer
had to stand in queue early morning to get milk, even loose milk prone to adulteration which
was though bulk vending machines. The following changes have been ushered by the dairy
industry.
Organizing 24 hours parlors there by extending the hours of availability of milk. Days of
long queues are over.
Ensuring prompt delivery of milk well organized door delivery system has been setup by
most of the dairies consumer is getting milk at his door step early in the morning.
All the dairies are ensuring only pasteurized, homogenized, vitamin zed packaged milk is
sold to the consumers.

And some of the dairies have consistently co-operated with the food laboratories in
ensuring quality standards of milk being supplied with the growing awareness among the
milk consumers about the quality, the dairies are able to gain the confidence of consumers

31

by supplying good Quality milk. In the ensure good quality milk, will automatically
vanish.
And some dairies have not only established good reputation of milk and prompt serviced
of in major cities of AP, but also marketing of in other states this has ensured larger markets
for milk producers of AP.
Dairy industry being a major contributor to rural economy helps in raising The living
standards of the rural people it is learnt that airy industry contributes to more than 15%of the
agriculture income of AP.

32

PRODUCT

FAT%

SNF%

HOMOGENIZED TONED MILK

3 .1

8.5

DOUBLE TONED MILK

1.5

WHOLE MILK

6.0

8.5

The MOTHER DAIRY one of the oldest units is now merged with NARMUL and in cooperation with VIJAYA brand to compete with the private industry.
Secondly, also JERSEY like other brands product toned milk and whole milk in order to
compete with the Govt. Sectors in the markets and gives more commission to the retailers to
increase their sales.

INVENTORY/SALES:
Mother Dairy receive daily 97000 ltrs of milk from 17 chilling centers and stored in Milk
silos capacity 60000ltrs, there are 5 milk silos. The received raw Milk are filled in
1&2milk silos and pasteurized in 3,4&5. Again from this pasteurized they are send
to pre-pack. It could sale 100000 ltrs of milk on an average.
The company could sales------- ltrs of milk in 2004-05 with net profit 75,66,370, in year
2005-06 its has increased Its sales to -------- Itrs of milk with Net profit of 1,34,75,299 crores.

MARKETING:
1. In year 2000-20001 average dairy cooperative milk marketing stood at 133.63 lacks liters
annual growth has compounded over the 5years.
2. Dairy cooperative now market milk in about 200 class towns and 550 small towns.
3. During the last decades the dairy milk supply to 1000 urban Indians has increased from
17.5to 48.3liters.

33

CHAPTER-03
INTRODUCTION
OF
DAIRYING IN INDUSTRY

34

INTRODUCTION OF DAIRING IN INDIA

Every morning millions of Indians wake up to find their daily requirements of milk
waiting at their doorstep.
A common man starts a day with routine works in general and he is associated with
dairy related products, (like tea ,coffee, milk , curds etc.).Empirical study reveals that dairy
sector was initially under the control of private sector (milk vendors). Due to growth in the
population, which is resulted in demand for dairy products since the private sector was not in
a position to meet the growing demand, public sector milk procuring units in the country.
India is the second largest milk producer in the world. Milk has now emerges as the
second largest agricultural commodities next only to rice production. This shows the
importance of Milk enterprise in enterprise in Indian agriculture the world milk production
was nearly 531 million tons and that of India 52 million tons accounting for about 10% of
world after the united states. India possesses more yielding cattle
On large scale.
The Andhra Pradesh Dairy Development Co-operative Federation (APDDCF) with
one million of farmers as its members for dairy development it established in 1981 with a
three tier co-operative structure.
The proposed study is to analysis the financial performance of Mother Dairy. It is one
of the units of Nalgonda and Range Reddy Milk co-operative procedures union. It was
established in the year 1987 at Hayathnager with a capacity of 2, 00,000 Ltrs. per day the
objective is to cater the need of Milk producers of two Districts i.e. Nalgonda and Range
Reddy.
Milk is the nutritious of health and brought significant changes in the lines of the people of
A.P it as changed the way people looked at life in rural India. But most of all its renewed
their and raised their assumptions.

35

The main trust was not in just supplying milk but also in giving opportunities to
improve the quality of rural life and may be for the first time allowing them to dream.

LATEST ECONOMIC CONDITIONS OF DAIRY INDIA :

India is the second largest milk producer in the world. Milk has now emerged as
second largest agricultural commodities next only to rice production . this shows the
important of milk enterprise in Indian agriculture. The world milk production was nearly 531
million tons and that of India 52 million tons accounting for about 10%of the world
production that is the second largest production of milk in world after tee united state
possesses more yielding cattle on large scale.

A.P SMILES WITH MOTHER DAIRY :

The Name Mother Dairy denotes purity and quality which makes it trusted name in
millions of household in the state. The Nalgonda Rang Reddy Milk producers co-operative
union Ltd., has been registered during the year 1986 vide Registration No.409 M.C25-21986. Subsequently it has been converted into mutually aided cooperative union on 15 the
January 2003.

36

DIFFRENT KINDS OF SECTORS

IN
DAIRYING IN INDIA

37

DIFFRENT KINDS OF SECTORS IN DAIRYING IN INDIA

In India there are four different kinds of sectors in the field if dairying
1. PRIVATE SECTOR : - Individual persons forming his/ her dairy shop and collect milk
and sell the milk and its products to consumers directly.
2.PUBLIC SECTOR : - In this kind of sector dairying is done by government by purchasing
milk from middle men and milk producers and processing of milk is done their own plant and
ten sold to the customers.
3.TRADING SECTOR :- Production of milk products is done in wide range to deal with
surplus milk and sell to the customers through chambers of distribution
4. CO-OPERATIVE SECTOR :- Milk producers from their primary cooperatives society or
cooperative milk unions at district level by which arrangements from collection, processing
and marketing of milk is done and then it is sent to milk takers place.
CO-OPERATIVE SOCIETIES:
Co-operative means voluntary association on the basis of equality and for some common
purpose the basic principle of cooperatives is each of all and all of each. In the words of
H.CALVERT, cooperative is a from of organization where in persons voluntarily association
together as human beings on basis of equality for the promotion of their economic interest of
themselves.

DISTINGUISHED FEATURE OF CO-OPERATIVES SOCIETY/UNION

1. Its membership is voluntary
2. Its organization is democratic
3. Its functioning is based on decentralized decision making principles
4. Its aims is economic, social, and moral development of its members

38

CO-OPERATIVE MILK UNIONS:

In India cooperative milk unions structure was three-tier

structure based on
amend cooperative structure. It consists of an intermediate organization between
Primary societies (village Level) and the apex Scotties.
Dairy cooperative structure

State Level APDDCF Apex body

District Level MILK Unions Ten unions
Village Level Milk producers co-op societies 9228 societies
At national level the level the apex body is National Dairy Development Board
(NDDB)
Which coordinates and promotes supports and controls the state organization Indian dairy
sector is poised for spectacular growth ,it is growing rapidly its per capital milk
Consumption of 285 gms/ days of is still expected to growth recently according to census of
NDDB India has become the worlds largest producer and consumer of milk the tremendous
potential of the dairy industry was given major fill with the finance minister Dr.
Chithambaram move to Delhi Censing in June 1992 all though the dairy industry is
essentially a state object NDDB has taken up A project call Operation flood in year 1970.
This is an integrated program for dairy developments based on Anna model cooperative
entire process development in milk production

procurement, processing, Marketing and

production enhancement are brought about though organization owned and managed by
farmers themselves.
About NDDB: The National Dairy Development Board was created in 1965 to promote,
finance and Support producer-owned and controlled organizations NDDBs programmes and
activities seek to strengthen farmer cooperative and support national policies that are

39

favorable to the growth of such Institutions. Fundamental to NDDBs efforts are cooperative
principles and the pattern of Cooperation.
NDDB began its operations with the mission of making dairying a vehicle to a better
future for millions of grassroots milk producers. The mission achieved thrust and direction
with the launching of Operation flood, a programme extending over 26 years and which
used world bank loan to finance Indias emergence as the worlds largest milk producing
nation. Operation floods third phase was completed in 1996 and has to its credit a number of
significant achievements.
As on March 2001, Indias 96,000 dairy cooperatives integrated through a three tier
cooperative structure- the Anand pattern, owned by more than ten million farmers, procure
an average of 16.5million liters of milk every day the milk is processed and marketed by 170
milk producers cooperative unions which , in turn, own 15 state cooperative milk marketing
federations.
Since its inception, the Dairy Board has planned and spearheaded Indias dairy
programs by placing dairy development in the hands of milk producers and the professionals
they employ to manage their cooperatives. In addition, NDDB also promotes other
commodity-based cooperatives, allied veterinary biological on an intensive and nation-wide
basis.
Dr (Ms) Amrita Patel serves as the chairman of NDDB; Dr Verghese kurien was the
founder chairman.
The National Dairy Development Board (NDDB) was founded to replace exploitation
with empowerment, tradition with modernity, stagnation with growth, transforming dairying
into
An instrument for the development of Indias rural people.
NDDB supports the development of dairy cooperatives by providing them financial
assistance and technical expertise, ensuring a better future for Indias farmers.

40

Andhra pradesh dairy development cooperative federation

LTD(APDDCF)
Today APDDCF offers the widest spectrum of milk products in India, under the brand name
VIJAYA. These include ghee, Butter, processed cheddar cheese and cheese spread, UHT
Milk, powder, dairy whitener, cooking butter and ice cream several among these carry the
Agmark, an Attestation of quality by Government of India and the ISI mark of Bureau of
Indian standards.
The brand VIJAYA quality, which makes it a trusted name in millions of households
Across the country.
In addition, APDDCF also manufactures products such as sterilized flavored milk,
planner (indigenous unripend cheese), Doodh peed (dessicated milk sweet)and Buttermilk
which are marketed through a network of vijaya dairy parlours and a chain of retailers spread
across Andhra pradesh.
THE GENESIS: A state-wide enterprise of Co-operative for dairy development, The Andhra
Pradesh Dairy Development Co-operative Federation (APDDCF), as an enterprise of one
million farmers for dairy development, had its genesis in 1981, with a three-tier cooperative
Structure.

APDDCF AT GLANCE:
District milk unions are 10 nos, Milk sheds are 5 nos, Milk products factories are 7
nos, District Dairies 9 nos, Major Dairies 2 nos, Milk Chilling Centers 63 nos, and
Chilling Capacity 11.37 LLPD, Total producers capacity 24.24 LLPD. Milk collection
routes 421 nos, Milk producers co-op. Societies 4270 nos ,Milk producers associations
4958 nos, milk collection centers 92228 nos.

ACHIVEMENTS OF DAIRY COOPERATIVE:

A commitment helps rural producers to help themselves has been guided the dairy board
work for more than 30 years this commitments has been awarded with achievements made by
cooperative dairies in milk productions employment generations per capital available of milk
foreign exchange savings and also increased farmers income.

41

FACTS AT GLANCE:
REACH:
1. The dairy cooperative network
2. Includes 170 milk unions
3. Operates in over 285 districts
4. Covers nearly 96000 villages
5. Is owned by nearly 10.7mm farmer members

MILK PRODUCTIONS:
1. Indians milk productions increased from 21.2mm MT in 1967-68 to 78.1mm MT in 19992000 per capital availability 213 grams per day up to from 107 in 1967-68.
2. Indian 4% annual growth of milk production Surpasses 2% growth in population.

MARKETING:
1. In the year 2000-2001 average dairy cooperative milk marketing stood at 133.63 lacks
liters annual growth has compounded over the last 5 years.
2. Dairy cooperative now market milk in about 200 class towns and 550 small towns
3. During the last decades the dairy milk supply to 1000 urban Indians has increased from
17.5 to 48.3 liters.

MICRO IMPACT
1. The annual value of Indians milk productions amounts to about RS.780 billions
2. Dairy cooperative generates employment for at least 10.5mm farmers families.

42

CHAPTER-04

ANALYSIS OF
INTERPRETATION
PRACTICAL FRAMEWORK
OF FINANCIAL
STATEMENT ANALYSIS

43

INCOME STATEMENT OF MOTHER DAIRY FORM 2005 TO

2007
Particulars
Sales
A:
Cost of goods sold
B:
Opening stock
+purchases
Purchases of milk
Purchases of products
+consumption of :
Raw materials (feed)
Stores
Packing materials
+ other manufacturing exp.
+ transportation charges
+ selling &distribution exp.
(-) closing stock
Gross profit
C(A-B)
Operating expenses
D:
Salaries &staff expenses
Repair &maintenance
Administration expenses
Depreciation
Other expenses
Operating profit E (C-D)
Add: Non operating income
Income relating to previous
year
Other income
Less: Non operating expenses
Expenses relating to previous
year
Loss on sale of fixed asset

2007
630999687

2006
641626486

2005
555611064

40767139

38149711

37550971

407926557
25315824

376113654
53740000

342913220
15025750

20072997
3236586
17709184
40290557
19694676
9565144
66491933
518086701
112912986

19407624
2879503
17112560
36475999
18720070
8665655
40767139
530497636
111128850

13824954
3461483
14507745
38408881
17276914
3797602
38149711
448617809
10693255

50783817
15185484
6167205
13141431
4111510
89389447
23523539

51383969
11006407
6953777
11917625
5693634
86955412
24173438

60457790
13013945
13173505
11402039
98047279
8945979

914996

5475

1948407

4711807

4859125

2906922

1525691

1334723

72670

44

Interest
Profit before tax
Less: income tax
Profit after tax

64 93 291
211 31 360
7000000
14131360

7227714
20475601
7000000
13475601

6162832
7565803
7565803

COMPARATIVE INCOME STATEMENT OF

MOTHER DAIRYFOR THEYEAR
2007 & 2006

45

PARTICULARS

2007 (RS)

2006 (RS)

Absolute change

% (change)

(RS)
Sales
Less: Cost of goods sold
Gross profit
Less:Operating expenses
Operating profit
Add: Non Operating

630999687
518086701
112912986
89389447
23523539
5626803

641626486
530497636
111128850
86955412
24173438
4864600

-10626799
12410935
1784136
2434035
-649899
762203

-16.84%
-2.40%
1.58%
2.72%
-2.76%
13.55%

Incomes
Add:Non Operating

8018982

8562437

-543455

6.78%

Expenses
Profit Before Tax :
Less: Tax
Profit After Tax:

21131360
700000
14131360

20475601
7000000
13475601

655759
655759

3.10%
4.64%

INTERPRETATION:
1.In the year 2007 sales were decreased normally that is change of 16.84%

approximate comparatively last year. The increase in the sales is due to

improvement of advertisements.
2. In 2007 the gross profit was very less due to cost of goods sold. In this year
company must give more priority to improve the sales which improves the
market share in the market.

46

3. In this year the operating expenses has decreased approximately 3%. In the
year the expenses like salaries, interest and administration exp were minimized
very high comparatively last year.
4. In the current year the non-operating expenses are very high (loss of fixed
assests) comparatively last year. If company minimizes the non-operating
expenses further the company will get good profits.
5. In the current year the profit before and after taxes position was very good.

Comparative Income Statement Of Mother

Dairy For The Year
2006 to 2007

47

PARTICULARS

2007

2006

Absolute

Sales
Less: cost of goods sold
Gross profit
Less: operating expenses
Operating profit
Add: non operating incomes
Less:
non
operating

(RS)
641626486
530497636
111128850
86955412
24173438
4864600
8562437

(RS)
555611064
448617809
106993255
98047279
8945976
4855329
6235502

changes
86015422
81879827
35595
-11091867
15227462
9271
2326935

expenses
Profit Before Tax
Less: Tax
Profit After Tax

20465601
7000000
13475601

7565803
7565803

12909798
7000000
5909798

% Change
13.41%
15.43%
3.72%
-12.76%
62.99%
0.19%
27.18%
63.05%
100%
43.86%

Interpretation :
1. In the year 2007 sales were increased abnormally that is change of 13%
approximately comparatively last year. The increased in the sales is due to
improvement of advertisements.

48

2. In 2007 the gross profit is only 4% due to cost of good sold. In this year
company must give more priority to improve the sales, which improves the
market share in the market.
3. In the year the operating exp were decreased abnormally app 13%. In this
year the expenses like salaries interest and administration expenses were
minimized very high comparatively last year.
4. In the current year the non-operating exp are very high (loss of fixed assests)
compared to last year. If company minimizes the non-operating expenses
further year the company will get good profits..

Common Size Income Statement Of

Mother Dairy For The Year
2006 & 2007

49

Particulars
Sales
Less: cost of goods sold
Gross profit
Operating expenses
Operating profit
Add: non operating income
Less: non operating expenses
Profit Before Tax
Less: Tax
Profit After Tax

2007 (RS)
630999687
518086701
112912986
89389447
23523539
5626803
8018982
21131360
7000000
14131360

%
100%
82.11%
17.89%
14.12%
3.73%
0.89%
1.27%
3.35%
1.11%
2.24%

2006 (RS)
461626486
530497636
111128850
86955412
24173438
4864600
8562437
20475601
7000000
13475601

%
100%
82.68%
17.32%
13.55%
3.77%
0.76%
1.33%
3.19%
1.09%
2.10%

Interpretation :
1. I assumed that sales are 100%. Accordingly I compared other parameters of
the common size income statement of 2006&2007.
2. In the current year the cost of goods sold comparatively last year

has

increased. The major items (milk from the local producers & district unions)
and purchase of products decreased the stores expenses and selling and
distribution expenses increased.
3. In this year the operating expenses have changed abnormally. By the good
efforts of the management the items (salaries and staff expenses
Administration exp) and other items like interest depreciation has increased
comparatively to last year.
50

4. In the year 2006 the non-operating expenses has increased towards market
demand.
5. In the year 2006 the taxes were comparatively less last year.

Common Size Income Statement Of

Mother Dairy For The Year

2006 to 2007
Particular
Sales
Less: Cost of goods sold
Gross profit
Less: Operating expenses
Operating profit
Add: Non operating income
Less: Non operating expenses
Profit Before Tax

Less: Tax

2007 (RS)
641626486
530497636
111128850
86955412
24173438
4864600
8562437
20475601
7000000

%
100%
82.68%
17.32%
13.55%
3.77%
0.76%
1.33%
3.19%
1.09%

2006RS)
555611064
448617809
106993255
98047279
8945976
4855329
6235502
7565803
-

%
100%
80.74%
19.26%
17. 65%
1.61%
0.87%
1.12%
1.36%
-

Profit After Tax

13475601

2.10%

7565803

1.36%

51

Interpretation :
1. In the above sales were 100% for basis, for calculation of common size
statement I compared other parameters of the common size income statement
of 2005&2004.
2. In the current year the cost of goods sold comparatively last year increases
from 80.74% to 82.68% due to increase

items like (milk from the local

producers & district unions, purchase of products increased).

3. In the year the operating expenses are changed abnormally by making good
efforts of their management the items are (salaries & staff exp. administration
expenses and other items like as interest) last year.
4. In the year 2007 the non- operating exp is increased towards market demand
the items of (loss on sale of fixed assets )
5. In the year 2007 regarding the taxes increased comparatively last year the
items are (income tax increased 4 lakhs ,APGST increased 45lakhs and CST 11

52

lakhs) which reflects the profits after taxes. Due to government policies towards
taxation the profits after taxes are reduced accordingly.

Balance Sheet Of Mother Dairy

For 2005, 2006 & 2007

PARTICULARS
ASSETS:

2007

2006

2005

8211391
2320500
3025650
66491933
9997504

17978405
2320500
2385896
40767139
4113321

9556951
3320500
1841578
38149711
4406521

15756225
58797902
164601105

10646538
51405034
129616836

11834852
50691626
119801739

Current Assets:
Cash & Bank balances
Investment
Feed Raw Material

Closing stock
Stores, spares & packing Material
ADJUSTING HEADS DUE TO
Sundry Debtors
Advances and Deposits
TOTAL C.A
(1)

53

Fixed Assets

195265945

181577432

168997958

Less: Depreciation
Net Blocks
Profit and Loss account(loss)
TOTAL F.A
(2)

195265945
10046915
205312860

1181577432
63409516
21478277
87587793

168997958
62747967
37652376
100401543

TOTAL ASSETS

369913965

217204626

220203282

39499103
143236442
14733009
35113736
979653
233561943

28144227
8936526
3395114
13131504
916741
54523512

24604244
9687831
4300959
12900126
1082640
52575799

50240488
416605
54834941

48839300
522857
83658074

16570513
120461940

30859987
136352021
369913965

29660883
162681114
217204626

1342620801
182620801
224394971

(1)+(2)

LIABILITIES & CAPITAL:

Current Liabilities:
Sundry creditors
Provisions
Other Liabilities
Advances and Deposits
Salary Recoveries
TOTAL C.L
(3)
Long term Liabilities:
Reserves and surplus
Grants, Contribution and Subsidy
Borrowings
Capital:
Paid up share capital
TOTAL L.T.L
(4)
TOTAL LIABILITIES (3)+(4)

54

Comparative Balance Sheet Of Mother

Dairy For 2006 to 2007

particulars

2007

2006

RS

RS

Absolute change

% Change

RS

Assets
:
Current assets
Cash and bank balances
Investment
Feed raw material
Closing stock
Stores spares and packing material
Adjusting head due to
Sundry debtors
Advances and deposits
Total C.A
(1)

8211391
2320500
3025650
66491933
9997504

17978405
2320500
2385896
40767139
4113321

-9767014
639754
25724794
5884183

-54.33%
26.81%
63.10%
143.05%

15756225
58797902
164601105

10646538
51405034
129616836

5109687
7392868
34984269

47.99%
14.38%
26.99%

FIXED ASSETS
Fixed assets
Less: depreciation
Net fixed assets
Profit & loss a/c (loss)
Total F.A
TOTAL ASSETS

(2)
(1+2)

195265945
195265945
10046915
205312860
369913965

181577432
118167916
63409516
24178277
87587793
217204626

13688513
118167916
131856429
-14131362
117725067
152709339

7.54%
100%
207.45%
58.45%
134.41%
70.31%

(3)

39499103
143236442
14133009
35113736
979653
233561943

28144227
8936526
3395114
13131504
91641
54523512

11354876
134299916
14393495
21982232
888012
179038431

40.35%
477.18%
423.94%
167.40%
969.01%
328.37%

Long term liabilities

Reserves and surplus
Grants contributions subsidy
Borrowing
Paid up share Capital

50240488
416605
54834941
30859987

48839300
522857
83658074
29660883

1401188
-106252
-28823133
1199104

2.87%
20.32%
34.45%
4.04%

Liabilities and capital

Current liabilities
Sundry creditors
Provisions
Other liabilities
Advances and deposits
Salary recoveries
Total C.A

55

Total L.T.C
(4)
Total LIABILITIES (3+4)

136352021
369913965

162681114
217204626

-26329093
152709339

16.18%
70.31%

Interpration :
1. In the year 2007 cash in hand &cash at bank has decreased comparatively last year
approximately 97 lakhs. As well as investment in the year are same to the previous year no
change in this year regarding the inventories raw materials value raises approximately 6
lakhs, goods value raised by 25 lakhs and store repairs value closing increased by 58 lakhs.

2. In this year fixed assets value increases slightly .

3. In the current year the current liabilities sundry creditors increases 49 lakhs and provisions
increased by 8 lakhs and other liabilities increased by 14 lakhs &advance &deposits increased by 21
lakhs and salaries recoveries by increased by 8 lakhs.
4. On overall in the year cash in hand decreased fixed deposits receipts are increased ,inventories on
average good position as well as fixed assets are increased slightly.
5. In the current liabilities recoveries from the salaries are made capital advances are also decreased
and creditors value increased. In the long term liabilities especially the repayments are made by
NDDB are made.

Comparative Balance Sheet Of Mother

Dairy For 2006 to 2007
Particulars
Assets :
Current assets
Cash & bank balances
Investment
Feed raw material
Closing stock
Stores spares &packing material
Adjusting head due to
Sundry debtors

2007

2006

RS

RS

17978405
2320500
2385896
40767139
4113321

9556951
3320500
1841578
38149711
4406521

8421454
-1000000
544318
2617428
-293200

88.12%
-30.12%
29.56%
6.86%
-6.65%

10646538

11834852

-1188314

-10.04%

56

Absolute change

% Change

RS

Advances & deposits

Total C.A

(1)

51405034
129616833

50691626
119801739

731408
9815094

1.41%
8.19%

FIXED ASSETS
Fixed assets
Less: depreciation
Net fixed assets
Profit & loss a/c (loss)
Total F.A
(2)
TOTAL ASSETS
(1+2)

181577432
118167916
63409516
24178277
87587793
217204626

168997958
106249991
62747967
37653576
100401543
220203282

12579474
11917925
661549
-13475299
-12813750
-2998656

7.44%
11.22%
1.05%
-35.79%
-12.76%
-1.36%

Liabilities & capital

Current liabilities
Sundry creditors
Provisions
Other liabilities
Advances & deposits
Salary recoveries
Total C.A

28144227
8936526
3385114
13131504
916140
54523511

24604244
9687831
4300959
12900125
1082640
52375799

35359983
-751305
-905845
-231379
-166500
1947712

14.39%
-7.76%
-21.06%
1.79%
-15.38%
3.70%

48839300
522857
83658075
29660883
162681115
217204626

16570513
120461940
30595030
167627483
220203282

32268787
52287
-36803865
-934147
-4946368
-2998656

194.74%
100%
-30.55%
-3.05%
-2.95%
-1.36%

(3)

Long term liabilities

Reserves &surplus
Grants contributions subsidy
Borrowing
Paid up share Capital
Total L.T.C
(4)
Total LIABILITIES (3+4)

Interpretation :
1. In the year 2006 cash at in hand & cash at bank are increased drastically comparatively
last year app 80 lakhs. As well as investments in the year 2004 fixed deposits receipts
reduced comparatively last year approximately 10 lakhs. In this year regarding the
inventories raw materials value raises approximately 5 lakhs, finished goods value raises
2 lakhs and store repairs value reduced 3 lakhs approximately
2. In the year fixed assets value increase slightly approximately 20 lakhs and depreciation
reserve also increased slightly 11.22% app.
3. In the current year the current liabilities sundry creditors increases 40 lakhs and
provisions decreased by 6 lakhs other liabilities decreased by 10 lakhs and advances and
deposits increased by 2lakhs and salaries recoveries decreased by 1 lakhs.

57

4. In the year 2007 borrowings decreased by 4 crores (repayments are made NDDB term
loan) made in this year .in the reserves and surplus share capital advances decreased by
45 lakhs. Paid up share capital 2000 each increased by 40 lakhs approximately.
5. On overall in the year cash in hand increased, fixed deposits receipts are decreased,
inventories on average good position as well as fixed assets are increased slightly
6. In the current liabilities recoveries from the salaries are made capital advances are also
decreased and creditors value increased. In the long term liabilities especially the
repayments are made by NDDB are made.

Common Size Balance Sheet Of

Mother Dairy For 2006 to 2007
Particulars
ASSETS:
(1)
Current assets
Cash and bank balances
Investment
Feed raw material
Closing stock
Stores, packing material
Adjusting head due to
Sundry debtors
Advances and deposits
Total C.A
(1)
FIXED ASSETS
Fixed assets
Less : depreciation
Net fixed assets
Profit and loss a/c
Total F.A
(2)
Total assets
(1) +(2)

2007

(RS)

2006

(RS)

8211391
2320500
3025650
66491933
9997504

2.22%
0.63%
0.82%
17.97%
2.70%

17978405
2320500
2385896
40767139
4113321

8.28%
1.07%
1.10%
18.77%
1.89%

15756225
58797902
164601105

4.46%
15.90%
44.50%

10646538
51405034
129616833

4.90%
23.67%
59.67%

195265945
195265945
10046915
205312860
369913965

52.79%
52.79%
2.72%
55.50%
100%

181577432
118167916
63409516
24178277
87587793
217204626

83.60%
54.40%
29.19%
11.13%
40.33%
100%

Liabilities and capital

Current liabilities
58

Sundry creditors
Provisions
Other liabilities
Advances and deposits
Salary recoveries
Total C.L
(3)

39499103
143236442
14733009
35113736
979653
233561942

10.68%
38.72%
3.98%
9.49%
0.26%
63.14%

28144227
8936526
3395114
1313504
916140
54523511

12.96%
4.11%
1.56%
6.05%
0.42%
25.10%

Long term liabilities

Reserves and surplus
Grant
contributions

50240488
416605

13.20%
0.11%

48839300
522857

22.49%
0.24%

subsidy
Borrowing
Paid up share capital
Total L.T.C
(4)
Total liabilities (3)+(4)

54834941
30859987
136352021
369913965

14.82%
8.34%
36.86%
100%

83658075
29660883
162681115
217204626

38.52%
13.66%
74.90%
100%

Interpretation :
1. Here for analysis purpose assumed to assets will be equal to 100 %as well as
total liabilities also 100%.
2. In the current year the cash &bank increased to 20% of total assets as well as
fixed deposits will be increased by 15.90%.
3. In the year profit and loss a/c was decreased 2.70% from 11.13%due to
creation of more depreciation reserves on fixed assets.
4. In the current year the fixed assets net assets value increased from 29.19%
to 52.79%.

59

Common Size Balance Sheet Of

Mother Dairy For 2006 to 2007
Particulars
ASSETS:
(1)
Current assets
Cash &bank balances
Investment
Feed raw material
Closing stock
Stores spares &packing
material
Adjusting head due to
Sundry debtors
Advances &deposits
Total C.A
(1)
FIXED ASSETS
Fixed assets
Less : depreciation
Net fixed assets
Profit &loss a/c (loss)
Total F.A
(2)
Total assets
(1) +(2)
Liabilities & capital
Current liabilities
Sundry creditors
Provisions
Other liabilities
Advances & deposits
Salary recoveries
Total C.L
(3)
Long term liabilities
Reserves &surplus
Grants contributions subsidy

Borrowing
Paid up share capital
Total L.T.C
(4)
Total liabilities (3)+(4)

2007

(RS)

2006

(RS)

17978405
2320500
2385896
40767139
4113321

8.28%
1.07%
1.10%
18.77%
1.89%

9556951
3320500
1841578
38149711
4406521

4.34%
1.51%
0.84%
17.32%
2.00%

10646538
51405034
129616833

4.90%
23.67%
59.67%

11834852
50691626
119801739

5.37%
23.02%
54.41%

181577432
118167916
63409516
24178277
87587793
217204626

83.60%
54.40%
29.19%
11.13%
40.33%
100%

168997958
106249991
62747967
37653576
100401543
220203282

76.75%
48.25%
28.50%
17.10%
45.59%
100%

28144227
8936526
3395114
13131504
916140
54523511

12.96%
4.11%
1.56%
6.05%
0.42%
25.10%

24604244
9687831
4300959
12900125
1082640
52575799

11.17%
4.40%
1.95%
5.86%
0.49%
23.88%

48839300
522857
83658075
2966083
162681115
217204626

22.49%
0.24%
38.52%
13.66%
74.90%
100%

16570513
120461940
30595030
167627483
220203282

7.53%
54.70%
13.89%
76.12%
100%

60

Interpretation :
1. Here for analysis purposes i assumed the total assets to be equal to 100 as
well as total liabilities also 100%.
2. In the inventories stores & packing material exp declined .11%& raw
material raised
1.10%. Advances &deposits .64%.
3. In the year profit and loss a/c was reduced by on overall 5.83% due to
creation of more depreciation reserves on fixed assets.
4. In the current year the fixed assets net fixed value increased by 6.85%.

61

CALCULATIONS
OF
TREND ANALYSIS

62

CALCULATIONS OF TREND ANALYSIS

Income statement of Mother Dairy for the years from 2005 to 2007.
Particulars

2005

2006

2007

Sales

555611064

641626486

630999687

Cost of goods sold

448617809

530497636

518086701

Gross profit
Operating

106993255

111128850

112912986

expenses

98047279

86955412

89389447

Operating profit

8945976

24173438

23523539

Profit after tax

7565803

13475601

14131360

A. TREND RATIOS OF VARIOUS ITEMS

Particulars

2005

2006

2007

Sales
Cost of goods

100%

115.48

113.57

sold

100%

118.25

115.49

Gross profit
Operating

100%

103.87

105.53

expenses

100%

88.69

91.17

Operating profit

100%

207.22

262.95

Profit after tax

100%

178.11

186.78

63

1) TREND OF SALES

Year
2005
2006
2007

% of change
100
115.48
113.57

Trend
0
15.48
13.57

Trend of Sales
20
15
10
5
0

15.48

0
2005

2006

13.57

Series1

2007

years

Interpretation:
Here I assumed 2004 as a base year 100 for comparisons of further years.
Here I found that every year sales are increased as increased manner it exhibits
good sign of the company.

64

2) TREND OF COST OF GOODS SOLD :

Year

% of change

Trend

2005

100

2006

118.25

18.25

2007

115.49

15.49

% of change
20
15
10
5
0

18.25

15.49
% of change

0
2005

2006

2007

years

Interpretation:

In the year 2005 onwards the expenses of selling and distribution stores
maintenance manufacturing expenses and expenses of purchase products was
very high. In the 2006 they minimized the expenses of stores maintenance. But
other expenses like as purchase products packaging materials and transportation
charges rapidly . I advises to minimize the expenses of transportation.

3) TREND OF GROSS PROFIT:

65

Year

% of change

Trend

2005

100

2006

103.81

3.81

2007

105.53

5.53

% of change
6

5.53

3.81

% of change

2
0

0
2005

2006

2007

years

Interpretation:
In the year 2004onwards the gross profit was declined towards increases of cost
of goods sold value. At a same time the sales also increases even though the
gross profit declined the value.
In the year 2006 due to heavy overheads like as purchase product and
transportation charges . Due to these facts the gross profit was rapidly decline
the value.

4.

TREND OF OPERATING EXPENSES :

66

Year

% of change

Trend

2005

100

2006

88.69

11.31

2007

91.17

8.83

Trend
15
11.31

10

8.83

5
0

0
2005

2006

Trend

2007

years

Interpretation:
From the above table, I observed that from the year 2004 to 2006 the
operating expenses were increased every year.
In the year 2006there is a little reduction in operating expenses this shows
the good sign for the company. Due to these factors the operating profit will rise
to some extent.

5. TREND OF OPERATING PROFIT:

67

Year

% of change

Trend

2005

100

2006

270.22

170.22

2007

262.95

162.95

Trend
200
150
100
50
0

170.22

162.95
Trend

0
2005

2006

2007

years

Interpretation:
Here operating profit means gross profit minus operating expenses. Here
operating expenses means use as salaries administrative depreciation interest
income tax APST and CST Here exclusively no repairs and maintenance
expenses in the year 2006.

6. TREND OF PROFIT AFTER TAX:

68

Year

% of change

Trend

2005

100

2006

178.11

78.11

2007

186.78

86.78

Trend
100
80

86.78

78.11

60

Trend

40
20
0

0
2005

2006

2007

years

Interpretation:
Here I found that from the year 2005 to 2007 the profit after tax will be
same as before tax from 2006 to 2007 there was no tax were paid by the
company against the Government or other sources last year 2005 they paid
income tax as well other takes also highly to the government of India.

69

Chapter-05

FINDINGS

70

Findings
1. I found that every year the sales are increasing in ascending manner. It
shows good sign for the organization it fluctuates only one year due to
competition and heavy expenditure in fixed assets.
2. The gross profit has been decreasing every year. This has happened due to
increase of cost of good sold every year.
3. In this year 2006, they had spent more money towards packing material,
selling &distribution, transportation and administration expenses. This has
resulted in reduction of operating profit.
4. On overall, ever year cash & bank balance were decreasing, fixed deposits
receipts are increasing, inventories on average are in good position.
5. From the current liabilities, the recoveries from the salaries are made, capital
advances are also decreased &creditors value increased. In the long term
liabilities especially the repayments are made by

NDDB IN every year.

6. In the year 2006 they minimized the exp. of store maintenance . But other
expenses like AR packing materials &transportation charges increased
rapidly.
7. In the year 2006 three is a little increase in operating expenses. This shows
good sign for the company. Due to these factors. The operating profit will
raise to some extent.
8. Liquidity position of the company as revealed by the current ratio during the
study period on an annual average way 3.12:1 it implies that for every one
rupee of current liabilities, RS 3.12 current asset are available to meet them
.it can be conduced that Mother Dairy is having sufficient liquidity in willing
its current obligations.

71

Chapter-06

SUGGESTIONS

72

Suggestions :
1) From income statement. I found that the sales were increased every year on
an average which is a good sign for the company. Hence my advice to the
company is to maintain the same trend in future by minimizing the selling
and distribution and administration expenses of the enterprise.
2) I would like to advise to the management to minimize the expenses cost of
production in future & the profits of a company may increases.
3) In the year 2006 there is a little reduction in operating expenses. I Would like
to advise the company to maintain the same trend.
4) It seen that the cash & bank balances are increasing in the study period
( 2003-2005) which is good sign. But will be much better that it should
invest in the short term investments to earn a profit.
5) It is found from the above ratios that the debtors turnover ratio is going on
decreasing & thus the organization should see that it will be free to its credit
policy & thus try to increases it sales.

73

Chapter-07
BIBLIOGRAPHY

74

BIBLIOGRAPHY
MANAGEMENT OF INDIAN FINANCIAL INSTITUTIONS
-M. SRINIVASTAVA DIVYA NIGAM
FINANCIAL MANAGEMENT
-S.N. MAHESHWARI
FINANCIAL MANAGEMENT
-I.M. PANDEY
FINANCIAL MANAGEMENT
-PRASANNA CHANDRA
COST AND MANAGEMENT ACCOUNTING
-R.P MANOJ TRIVEDI
WEBSITES:
www.google.com
www.yahoo.com
www.apdairy.com

75