1. INTRODUCTION
Accounting is the process of identifying, measuring and communicating
economic information to permit summarizing various business transactions. The
end products of business transactions are the financial statements comprising
primarily the position statement or the balance sheet and the income statement or
the profit and loss account. These statements are the outcome of summarizing
process of accounting and are; therefore the sources of information on the basis of
which conclusions are drawn about the profitability and the financial position of a
concern. Financial statements are the basis for decision making by the management
as well as all other outsiders who are interested in the affairs of the firm such as
investors, government and the general public. The analysis and interpretation of
financial statements depend upon the nature and type of information available in
these statements.
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and capital as on a certain date and the income statement showing the results of
operations during a certain period".
These statements are used to convey to management and other interested outsiders
the profitability and financial position of a firm.
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BALANCE SHEET
The balance sheet is one of the important statements depicting the financial
strength of the concern. One hand it shows the properties that it utilizes and on the
other hand the sources of these properties. The balance sheet shows all the assets
owned by the concern, and all the liabilities and claims, it owes to owner and
outsiders. The balance sheet is prepared on a particular data. The right hand side
shows properties and assets. Normally there is no particular sequence for showing
various assets and liabilities. The companies Act, 1956 has prescribed a particular
form for showing assets and liabilities in the balance sheet for companies
registered under this act.
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point of time. The objective of this statement is to show the movement of funds
(working capital or cash) during a particular period. The statement of changes in
financial position may take any of the following two forms.
Trend analysis
The financial statements may be analysed by computing trends of series of
information. This method determines the direction upwards or downwards and
computation of percentages relationship that each statement item bears to the same
item in the base year. The information for a number of years is taken up and one
year, generally the first year, is taken as a base year. The figures of the base year
are taken as 100 and trend ratios for other years are calculated on the basis of base
year.
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much similar to the statement of changes in working capital, i.e. funds flow
statement.
FINANCIAL ANALYSIS
The term 'financial analysis', also known as analysis and interpretation of
financial statements", refers to the process of determining the financial strengths
and weakness of the firm by establishing strategic relationship between the items
of the balance sheet, profit and loss account and other operative data.
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The term analysis can take to mean the splitting or breaking down the facts or
data found in the financial statement into simple component parts of elements (i.e.,
the methodical classification of the facts or data given in the financial statement
into simple elements).
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Various users of financial statements study them from different angles for
different purposes. However, we can classify various types of financial analysis
into different categories depending upon, (1) the material used, and (2) the method
of operation followed in the analysis or the modus operandi of analysis.
ON THE BASIS OF
MATERIAL USED
EXTERNAL
ANALYSIS
ON THE BASIS OF
MODUS OPERANDI
INTERNAL
ANALYSIS
HORIZONTAL
ANALYSIS
VERTICAL
ANALYSIS
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different items for various years are calculated, the trend percentages or trend ratio
are shown in comparative financial statements.
Cost-Volume-Profit Analysis
Cost- Volume -Profit analysis is a technique for studying the relationship
between cost, volume and profit. Profits of an undertaking depend upon a large
number of factors. But the most important of these factors are the cost of
manufacture, volume of sales and the selling prices of the products. In the words
Vijaya college, R.V road Bangalore
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of Herman C. Heiser, "the most significant single factor in profit planning of the
average business is the relationship between the volume of business, costs and
profits".
Ratio Analysis
Ratio analysis is a technique of analysis, interpretation of financial statements.
It is the process of establishing and interpreting various ratios for helping in
making certain decisions. However, ratio analysis is not an end itself. It is only a
means of better understanding of financial strengths and weaknesses of firm.
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2. INDUSTRY PROFILE
A dairy is a business enterprise established for the harvesting of animal milk
mostly from cows or goats, but also from buffalo, sheep, horses or camels for
human consumption. A dairy is typically located on a dedicated dairy farm or
section of a multi-purpose farm that is concerned with the harvesting of milk.
Terminology differs between countries. For example, in the United States, a farm
building where milk is harvested is often called a "milking parlor". In New
Zealand such a building is historically known as a "milking shed" or "milking
parlour". Sometimes milking sheds are referred to by their type, such as "herring
bone shed" or "pit parlour".
In some countries, especially those with small numbers of animals being milked, as
well as harvesting the milk from an animal, the dairy may also process the milk
into butter, cheese and yogurt, for example. This is a traditional method of
Vijaya college, R.V road Bangalore
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India is the highest milk producer in the entire globe. India is well known as the
'Oyster' of the global dairy industry, with opportunities galore for the entrepreneurs
globally. It might be dream for any nation in the world to capitalize on the largest
and fastest growing milk and milk products' market. The dairy industry in India has
been witnessing rapid growth with liberalization. As the economy provides good
opportunities for MNCs and foreign investors to release the full potential of this
industry. The main objective of the Indian Dairy Industry is to manage the national
resources in a manner to enhance milk production and upgrade milk processing
using innovative technologies.
The crossbred technology in the Indian Dairy Industry has further augmented with
the viability of the dairy units by increasing the milk production per animal. Then
subsequently milk production has also increased at an exponential rate while the
benefits of an increase in milk production also reached the consumers from a
relatively lower increase in the price of milk. The favorable price environment for
milk producers for the Dairy Industry in India however appeared to have weakened
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during the 90's, a decline in the real price of milk being noticed after the year 1992.
And then slowly regained it is glory after 1992 to till now.
In India dairying from very much earlier is regarded as an instrument for social and
economic development. The country's milk supply comes from millions of small
producers, who are dispersed throughout the rural areas. All these farmers maintain
an average herd of one or two milk animals, comprising cows and/or buffaloes.
Mostly ample labour and a small land base encourage farmers to practice dairying
as an occupation subsidiary to agriculture. As income from crop production is
seasonal instead dairying provides a stable which is a year-round income and also
an important economic incentive for the small farmer.
India had tremendous milk production in 40 years and has become the world's
largest milk-producing nation with a gross output of 84.6 million tons in 2001. The
Indian Dairy Industry has achieved this strength of a producer-owned and
professionally-managed cooperative system, despite the facts that a majority of
dairy farmers are illiterate and run small, marginal operations and for many
farmers, selling milk is their sole source of income. More than 10 million dairy
farmers belong to 96,000 local dairy cooperatives, who sell their products to one of
170 milk producers' cooperative unions who in turn are supported by 15 state
cooperative milk marketing federations.
In India dairy business has been practiced as rural cottage industry over the years.
Semi-commercial dairy started with the establishment of military dairy farms and
co-operative milk unions throughout the country towards the end of the 19th
century. Since Independence this Industry has made rapid progress. A large number
of modern milk and milk product factories have since been established. The
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development. Programmes like this, with similar policy orientations, may prove to
be appropriate to dairy development in in India.
India in the early 1950's was commercially importing around 55000 tonnes of milk
powder annually to meet the urban milk demand. Most of the significant
developments in dairying have taken place in India in this century only.
The Indian Dairy Industry engages in the production and processing of milk &
cream. This industry is involved in the manufacture of various dairy products like
cheese, curd, yoghurt etc. The Indian Dairy Industry specializes in the
procurement, production, processing, storage and distribution of dairy products.
India as nation stands first in its share of dairy production in the international
scenario. The industry contributes about Rs 1,15,970 to the national economy.
Employment opportunities
The Indian Diary industry which is in the developing stage provides gainful
employment to a vast majority of the rural households. It employs about 8.47
million people on yearly basis out of which 71% are women.
Jobs in Indian dairy industry are mainly in the fields of production and processing
of dairy products. An individual with minimum of 60% marks who has bachelor's
degree course in the dairy technology can easily be availing an opportunity to work
in this industry. For the graduation course in Dairy technology one has to qualify
Vijaya college, R.V road Bangalore
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the All India Entrance Test that is affiliated to the Indian Council of Agricultural
Research. After that the person can continue with his masters in dairy technology.
Jobs would be for the following positions.
Dairy Scientists: The main job of the dairy scientists is to deal with
collection of milk and taking care of the high yielding variety of animals.
Dairy Technologists: the work of Dairy technology requires procurement
officers who take the responsibility of collecting milk from farmers, milk
booths and cattle-rearers. This particular procurement officer should well
understand the latest technology that is applicable in maintaining the quality
of milk of the process of transporting it to the desired location.
Dairy Engineers: dairy engineers are usually appointed is to set up and
maintain dairy plants.
Marketing Personnel: These individuals deal with the sale and marketing
of milk together with milk products.
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Latest developments
Indian Dairy Industry is the largest milk producer all over the world, around
100 million MT Indian Dairy Industries value of output amounted to Rs.
1179 billion in 2004-05 which approximately equals combined output of
paddy and wheat. With 1/5th of the worlds bovine population
In India the Milk animals constitutes45% indigenous cattle, 55 % buffaloes,
and 10% cross bred cows
Intensive Dairy Development Programmed (IDDP): The Schemes, modified
under this programmes are on the basis of the recommendation of the evaluation
studies which were launched during Eighth Plan period and is being continued
throughout the Eleventh Plan with an outlay of Rs. 32.49 core for 2009-10.
Strengthening Infrastructure for Quality and Clean Milk Production
(CMP): this is a centrally sponsored scheme which was launched in October 2003,
which had the main objective of improving the quality of raw milk produced at the
every village level in the India.
Dairy Venture Capital Fund- this is introduced in the Tenth Fiver Year Plan to
bring about structural changes in unorganized sector, which would measure like
milk processing at village level, marketing of pasteurized milk in a cost effective
manner, quality or the up gradation of traditional technology to handle commercial
scale using modern equipments and management skills.
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2. RESEARCH DESIGN
It refers to the arrangements of conditions of the study and collection of data in
a manner that aims to continue to combine relevance to the study purpose. It
constitutes the blue print for the collection, measurement and analysis of data. A
research design is a basic plan, which guides the data collection and analysis of the
phases of the project.
TOPIC
Profitability and Financial status of BAMUL
Purpose of study
BAMUL is one which is financially sound not only the present but also would
be in the future. To know the financial position of the bank, systematic financial
analysis has to be done to assess its profitability and solvency position, this project
deals with the financial performance of BAMUL.
Vijaya college, R.V road Bangalore
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METHODOLOGY OF STUDY
Place of study: The Bangalore Urban & Rural District Milk Producers CoOperative Societies Union Limited (Bamul)
Dr.M.H.Marigowda Road, Dharmaram College Post BANGALORE-560 029.
Karnataka.
Title of the study: A study on Profitability and Financial status of, BAMUL for
the period of 2010, 2011 and 2012.
Method of study:
1. Discussion with the management of the co-operative limited to get general
information about their activities.
2. Study of classification of items adopted in profit and loss account and
balance sheet and the accounting policies of the concern.
3. Study of annual reports for collecting data for 3 years.
4. Analysis of their techniques and methods available.
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Primary data
Primary data may be described as those data that have been observed by the
researches for the first time. Primary data re-collected from the field for the
specific purpose of the research.
Interview: a structured and free personnel interview was conducted with
high officials of the co-operative limited.
Secondary data
Secondary data are collected those data that have been complied already before
conducting the research. Secondary data may be internal as well as external.
Internal data are collected from the Banks records. External data are collected
from outside the Bank like print materials, internet and newspapers.
Co-operative Limiteds previous records.
Various publications and manuals of BAMUL.
Annual reports of BAMUL.
SAMPLING SIZE
Sampling size used in this project study relates to financial figures, covering
the period from 2010-2012. Each data was already checked and verified by CA;
hence data is straightaway taken for analysis.
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RESEARCH INSTRUMENTS
The analysis interpretation of the financial statement is used to determine the
financial position and result and operation as well. A number of methods and
devices are used to study the relationship between different statements.
The statistical tools adopted for the study is:
Financial ratio
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3. COMPANY PROFILE
INTRODUCTION
The Bangalore Milk Union Ltd., (Bamul) was established during 1975 under
Operation Flood II by keeping Amul as its Roll Model. At present Bamul has
Bangalore Urban, Bangalore Rural & Ramanagaram Districts of Karnataka State as
its area of operation for Milk Procurement and selling Milk in part of Bruhath
Bangalore Mahanagara Palika (BBMP) area.
constantly striving further for dairy development and marketing activities in its
milk shed area.
OBJECTIVES
To organize Dairy Co-operative Societies at Village level and
dissemination of information like good dairy animal husbandry and
breeding practices & Clean Milk Production through Extension Services.
To provide assured market & remunerative price for the milk produced
by the farmer members of the co-operative societies.
To provide technical input services like veterinary services, artificial
insemination, supply of balanced cattle feed & Fodder seed materials
etc., to milk producers.
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To facilitate rural development by providing opportunities for selfemployment at village level, thereby preventing migration to urban areas,
introducing cash economy & opportunity for steady income.
To provide quality Milk and milk products to urban consumers at
competitive prices.
BACKGROUND
On January 1st 1958 a pilot scheme to cater the Bangalore Milk Market,
Department of Animal Husbandry, Government of Karnataka was started Milk
processing facilities & Veterinary Hospitals at National Dairy Research Institute
(NDRI). Later in 1962, The Bangalore Milk Supply Scheme came into existence
as an independent body. With the great efforts by the then Honble Minister for
Revenue & Dairying, Government of Mysore Sri M V Krishnappa, A joint venture
of UNICEF, Government of India & Government of Mysore was dedicated
Bangalore Dairy to the people of Karnataka State on 23 rd January 1965 by the
then Honble Prime Minister Late Sri Lal Bahadhur Shastriji. The Bangalore
Dairy scattering over an area of 52 Acres of land, the Dairy had an initial capacity
to process 50,000 liters of milk per day. Bangalore Dairy underwent a structural
change in December 1975, handed over to Karnataka Dairy Development
Corporation (KDDC). Rural Milk Scheme of Mysore, Hassan & Kudige Districts
was started under Operation Flood-II and then transferred to Karnataka Milk
Federation (KMF) in May 1984 as a successor of KDDC. To cater to the growing
demand for milk by the consumers of Bangalore City, the capacity was increased
to 1.5 lakh liters per day under the Operation Flood-II during 1981 and later
increased to 3.5 lakh liters per day under Operation Flood-III during 1994.
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As per the policies of the National Dairy Development Board (NDDB), Bangalore
Dairy was handed over to Bangalore Milk Union Ltd., (Bamul) on 1 st September
1988. The Union is capable of processing the entire milk procured, by timely
implementation of several infrastructure projects like commissioning of New Mega
Dairy state-of-the-art technology with a processing Capacity of 6.0 Lakh liters per
day, new chilling centers, renovation of product block etc.,
The milk shed area of Bamul comprises of 2611 revenue villages. As of now the
Union has organized 1884 Dairy Co-operative Societies (DCS) in 2,257 villages,
thereby covering 86 % of the total villages in these three districts. In these DCSs,
there are 3,35,458 milk producer members. Among them 109843 members are
women and 60,024 members belong to Schedule Caste and Schedule Tribes.
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Bamul has been certified for ISO 22000:2005 & ISO 9001-2000 for quality
management and Food Safety Systems.
The member producers and their Dairy Co-operative Societies (DCS) are the vital
constituents of the Union and their progress is the judging yardstick on the
efficiency of the Unions operation. Hence the maximum importance has been
given to their development. The Union is making intensive efforts over the years
to organize DCSs in more and more villages of the three districts in the milk-shed
area.
1607
1657
2005-06
2006-07
2007-08
1761
1805
1853
1877
1708
2008-09
2009-10
2010-11
2011-12
2012-13
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Importance has been given to enroll more and more milk producers in the villages
as members of these DCSs. While enrolling these members, more emphasis is
being accorded to enroll more number of women members and to organize more
women managed DCSs under STEP (Support to Training and Employment
Program for Women). It is heartening to note that there is an active participation of
women/ weaker sections of the society in all the dairy development activities of the
Union. They have become mainstay of all the developmental programs of the
Union.
309597
91746
2005-06
321238
96653
2006-07
327176
99603
2007-08
331544
325854
102842
2008-09
105804
2009-10
MILK PROCUREMENT
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340307
109834
2010-11
337419
110357
2011-12
339676
111460
2012-13
The Milk produced by 102995 farmers at village level will be collected every
day morning and Evening at DCS. Under Clean Milk Production programme,
to maintain the freshness & quality of the milk 121 Bulk Milk Coolers
covering 344 DCS of Total Capacity 215000 Lts were installed at DCS
level. During the year the Unions daily average milk procurement is 10.13
Lakh Kgs, which works out to be 563 kgs per day per DCS. The milk
procurement has increased by 7.65 % when compared to the last year.
758021
710082
729564
2005-06
2006-07
2007-08
2008-09
828684
2009-10
932572
940976
2010-11
2011-12
1012769
2012-13
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Milk collected at DCS will be transported to Chilling Centers, through 107 Milk
Procurement Can Routes, by traveling 17,929 KMs every day. 23 Bulk Milk
Cooler (BMC) Routes are also in operation, which collects milk from 121 BMC
centers of 344 DCS directly transported to Bangalore Dairy through insulated
tankers.
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696942
620000
448689
2003-04
484707
502000
2004-05
2005-06
570000
531000
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
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nan
Nandini Homogenised Cow Milk is pure milk containing 3.5% Fat & 8.5% SNF.
Which is homogenised and pasteurised. Consistent right through, it gives you
more cups of tea or coffee and is easily digestible. Available in 500 ml
packets.
dini Subham
Nandini Subham Milk. Containing 4.5% Fat and 8.5 % SNF.
A rich, creamier and tastier milk, Ideal for preparing homemade sweets & savouries.
Available in 500ml and 1ltr
packs. Apart from the Milk, the different Milk Products are
Curds, Butter, Ghee, Peda, Paneer, Set Curds & Spiced
Butter Milk are also sold.
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nandini Curd
Nandini Curd made from pure milk. It's thick and delicious. Giving you all the
goodness of homemade curds. Available in 200 gms and 500 grms & 1 Kg packs.
Nandini Butter Rich, smooth and delicious. Nandini Butter is made out of fresh
pasturised cream. Rich taste, smooth texture and the rich purity of cow's milk,
makes any preparation a delicious treat. Available in 100 gms, 200 gms and 500gms
cartons both salted and unsalted.
73369
75127
2007-08
2008-09
82081
86441
92317
61696
49265
32825
8208
1999-2000
11139
2000-01
14490
16054
2001-02
2002-03
2003-04
38312
2004-05
2005-06
2006-07
nandini Ghee
A taste of purity. Nandini Ghee, made from pure
butter. It is fresh and pure with a delicious
flavour. Hygienically manufactured and packed
in a special pack to retain the goodness of pure
ghee. Shelf life of 6 months at ambient
temperatures.
Available in 200ml, 500ml,
1000ml sachets & 15.0 kg tins.
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2009-10
2010-11
2011-12
nandini Butter
Rich, smooth and delicious. Nandini Butter is made out of fresh
pasturised cream. Rich taste, smooth texture and the rich purity of cow's
milk, makes any preparation a delicious treat. Available in 100 gms
(salted), 200 gms and 500gms cartons both salted and unsalted.
nandini Peda
No matter what you are celebrating! Made from pure
milk, Nandini Peda is a delicious treat for the family.
Store at room temperature approximately 7 days.
Available in 250gms pack containing 10 pieces each.
INFRASTRUCTURE DEVELOPMENT:
Vijaya college, R.V road Bangalore
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The strategy of Bangalore Milk Union is Procure More, Sell More & Serve More
and reaping the benefits of economies of scale. In order to realize this strategy, the
Union has implemented the following projects so that more and more milk can be
procured and processed. This will help us to serve our producer members by
passing on the maximum benefits, we are consciously adopting the growthoriented strategy of helping our producers to grow by ourselves growing
constantly.
state-of-the-art
facilities
in
dairy processing and the Union will have the ability to manufacture milk and milk
products to world class standards.
Although Bamul sets standards for its products for better serve to customers, it was
not possible to keep the standards stability due to manual operations. In designing
mega dairy, Bamul looked towards an automated system that would allow it to
achieve consistent quality parameters for each product. Energy and manpower
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would also be more effectively optimised and controlled and all plant equipment
would be integrated.
NEW Projects:
Bamul has planned to convert Hosakote Chilling Center into a 2.0.LLPD Capacity
Dairy with an investment of Rs.2427.00 Lakh and a New Product Block at
Bangalore Dairy Premises with an investment of Rs. 2033.00 Lakhs .
Bamul has SEVEN Chilling Centers geographically located around Bangalore and
85 Bulk Milk Coolers at DCS Level. Milk Product Block within the campus to
manufacture Butter, Ghee, Peda, Flavoured Milk, Spiced Butter Milk, Paneer, Set
Curds etc.,
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FINANCE:
The Union had an approximate turnover of Rs. 882.16 crores in the year 2011-12
as
against
Rs.
692.82
Crores
for
the
year
2010-11.
1728.02
1800
1487.17
1600
1400
1200
1157.11
1158.39
1158.17
1175
2005-06
2006-07
2007-08
2008-09
1278.94
1000
800
600
400
200
0
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2009-10
2010-11
2011-12
40374.00
39589.00
2005-06
2006-07
45206.00
2007-08
50935.00
2008-09
56633.00
2009-10
2010-11
357.3
343.79
327.48
279.32
216.89
185.27
2005-06
2006-07
2006-07
2007-08
2008-09
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2009-10
2010-11
2011-12
2011-12
Bangalore Milk Union is providing various Technical Input & Extension Services
to the milk producer members & their Dairy animals through ELEVEN Camp
Offices situated in each Taluk i.e., Anekal, Bangalore Head Office (Bangalore
South),
Yelahanka
(Bangalore
North),
Channapattana,
Devanahalli,
Mobile
Particulars
2008-09
166198
2009-10
2010-11
2011-12
2012-13
43761
171613
251925
147478
118307
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70420
74773
88440
96617
55371
F& M Vaccination
373107
528259
506479
757432
529845
Rakshavac
18094
26227
22176
21548
15439
ARTIFICIAL INSEMINATION
Artificial Insemination (AI) has been the main functional tool in dictating this
upsurge of development of Dairying in Bamul. Farmers have taken up crossbreeding from way back in 1962. The Union has surveyed and appropriately
located AI centers based on cattle population. It is also popularized the idea of
cluster AI centers and replace the Single AI centers in a phased manner. The use of
progeny tested semen from Nandini Sperm Station is also giving a further boost
to the breeding activities.
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Particulars
No. of Single AI
Centers
No. of AI Done
Single
No. of Cluster
AI Centers
No. of AI Done
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
251
259
259
242
241
238
1,11,536
1,12,740
1,16,002
113300
113302
54728
94
96
101
111
114
118
1,69,185
1,92,207
1,97,645
227761
268439
141566
2,80,721
3,04,947
313647
341061
381741
196294
Clusters
Total AI Done
During 1999-2000, a Vertical Silo of 10,000 liter capacity for storing Liquid
Nitrogen has been installed under TMDD program in collaboration with National
Dairy Development Board and Karnataka Milk Federation. In addition this facility
is being used for supplying liquid nitrogen to neighboring Unions and also to
Department of Animal Husbandry. This has helped in protecting the quality of
semen straws, thereby considerably increasing the probability of conception during
artificial insemination of cattle.
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Particulars
CF Sales
MTs)
(in
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
33359
37691
40529
45233
45870
24809
Page 45
department, Members of Co-operative Societies and their family members are the
beneficiaries of this scheme. The annual premium is Rs. 120/- per beneficiary.
All major hospitals are adopted for this scheme, all types of surgery will be
covered under this health scheme. Bangalore Milk union has covered 1.50 Lakh
beneficiaries under this scheme by contributing Rs 30/- towards premium per
beneficiary.
CATTLE INSURANCE:
Bangalore Milk Union is providing Insurance Coverage to the Dairy animals in
collaboration with United India Insurance Ltd., 40,238 animals are covered under
this Insurance. The annual premium is 2.22% of the value of the animal. 50% of
the annual premium of Rs. 122.99 Lakh was borne by bamul.
IN THIS MILLENNIUM:
We want to become not only the largest Union, but also become one amongst the
best-run milk unions in the country. The Union is aware of the challenges of the
new private entrants, who are mainly thriving on unfair trade practices. They
procure milk at least cost, without bothering about 1the welfare of the producers
and without extending any technical inputs for improving milk production. They
market milk by resorting to unhealthy and unethical practices deceiving the
unsuspecting consumers. The Union wants to counter this in a positive manner by
Vijaya college, R.V road Bangalore
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Milk Processing capacity was 60,000 Liters per day (LPD) at the time of
establishment of the dairy on 23rd January 1965.
Milk Processing capacity was expanded to 1.5 lakh LPD on 1st February
ii.
1981.
iii.
Milk Processing capacity was expanded to 3.5 lakh LPD during 1994.
iv.
v.
vi.
Milk Processing capacity of 6,00,000 Liters per day (LPD) fully automated
Mega Dairy started functioning from 17th December 2000.
vii.
b.
i.
ii.
February 1999.
c.
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i.
i.
i.
f.
i.
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Page 50
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The ratio analysis is one the most powerful analysis. It is used as a device to
analyze and interpret financial health of enterprise. Thus, ratios have wide
applications and are of immense use today.
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D. Use to employees:
Employees are also interested in the financial position of the concern to
know the profitability, wages, salaries and fringe benefits are depends upon
the profitability of the company.
E. Use to government:
Government interested to know the financial strength of the industry.
Various financial statement published by the units are to calculate ratios for
determining short-term, long-term and overall financial position of the
concerns. Based on the industrial information, government can prepare the
future policies.
interpretation of ratios.
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3. Personal bias:
Ratios are the only means of financial analysis and not an end in itself.
Same ratios have to be interpreted by different way.
Classification of ratios
The use of ratio analysis is not confirmed to financial manager only. There are
different parties interested in the ratio analysis for knowing the financial position
of a firm for different purposes. In view of various users of ratios, there are many
types of ratios which can be calculated from the information given in the financial
statement. The particular purpose of the user determines the particular ratios that
might be used for financial analysis.
Liquidity ratios
These are the ratios which measure the short term solvency or financial position
of a firm. These ratios are calculated to comment upon the short term paying
capacity of a concern or the firms ability to meet its current obligations. The
various liquidity ratios are: current ratio, liquid ratio and absolute liquid ratio.
Vijaya college, R.V road Bangalore
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Further to see the efficiency with which the liquid resources have been employed
by a firm, debtors turnover and creditors turnover ratios are calculated.
Activity ratios
Activity ratios are calculated to measure the efficiency with which the resources
of a firm have been employed. These ratios are also called turnover ratios because
they indicate the speed with which assets are being turned over into sales, for
example debtors turnover ratio. The various activity or turnover ratios have been
named in the chart classifying the ratios.
Profitability ratios
These ratios measure the results of business operations or overall performance
and effectiveness of the firm, for example gross profit ratio, operating ratio or
return on capital employed.
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2009-10
2010-11
2011-12
Net profit
17393300
21689589
35142717
Equity shares
127894000
148717000
1728023000
Ratios
0.13
0.14
0.20
Ratios
0.2
0.15
Ratios
0.1
0.05
0
2009-10
2010-11
2011-12
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Analysis:
From the table in the year 2009-10 the EPS was 0.13, in the year 2010-11was
0.14 and in the year 2011-12 was 0.20. So we conclude that EPS is gradually
increases from 0.20 to 0.13.
Interpretation:
From the graph we conclude earning per share is gradually increasing from
year to year. Due to the increase in the profit, but decrease in the share capital
increase the profit ratios.
Gross Profit
Vijaya college, R.V road Bangalore
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x 100
Sales
2009-10
2010-11
2011-12
Gross Profit
545566605
600557582
638277808
Net Sales
5663362902
6984479869
8821734373
Ratios
9.63%
8.59%
7.23%
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Ratios
10.00%
8.00%
Ratios
6.00%
4.00%
2.00%
0.00%
2009-10
2010-11
2011-12
Graph showing
GP Ratio:
Analysis:
From the table in the year 2009-10 the GP Ratio was 9.63%, in the year
2010-11 was 8.59% and in the year 2011-12 was 7.23%. So we conclude that GP
Ratio is gradually decreasing from 9.63% to 7.23%.
Vijaya college, R.V road Bangalore
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Interpretation:
From the graph we conclude that the GP ratio is gradually decreasing year by
year. This indicates poor results. The Company needs to take necessary actions
regarding sales for better results
x 100
Net Sales
2009-10
2010-11
2011-12
Net Profit
17393300
21689589
35142747
Net Sales
5663362902
6984479869
8821734373
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Ratios
0.307%
0.31%
0.398%
Ratios
0.45%
0.40%
0.35%
0.30%
Ratios
0.25%
0.20%
0.15%
0.10%
0.05%
0.00%
2009-10
2010-11
2011-12
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Analysis:
In the year 2009-10 the Net Profit Ratio was 0.307%, in the year 2010-11 it was
0.31% and in the year 2011-12 Net Profit Ratio was 0.398%.
Interpretation:
From the graph we conclude that net profit of the company is increasing year by
year. This indicates that the profitability of the company is good
OPERATING RATIO:
A ratio that shows the efficiency of a company's management by comparing
operating expense to net sales. It is expressed as percentage
Operating Cost
Operating Ratio =
x 100
Net Sales
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2009-10
2010-11
2011-12
Operating cost
546418050
499655303
452193699
Net Sales
5663362902
6984479869
8821734373
Ratios
9.64%
7.15%
5.12%
Ratios
10.00%
8.00%
Ratios
6.00%
4.00%
2.00%
0.00%
2009-10
2010-11
2011-12
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Analysis:
In the year 2009-10 the Operating Ratio was 0.305%, in the year 2010-11
it was 0.304% and in the year 2011-12 Operating Ratio was 0.38%.
Interpretation:
From the graph we can conclude that Operating ratio is decreasing, lower the
Operating ratio higher the Net profit and Operating profit. This ratio shows that the
companys profit is satisfactory.
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from firms in which the company has partial interest) and the effects of interest and
taxes.
Operating Profit
Operating profit Ratio =
x 100
Net Sales
2009-10
2010-11
2011-12
Operating Profit
93372906
100902279
91859758
Net Sales
5663362902
6984479869
8821734373
Ratios
1.64%
1.44%
1.04%
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Ratios
1.80%
1.60%
1.40%
1.20%
Ratios
1.00%
0.80%
0.60%
0.40%
0.20%
0.00%
2009-10
2010-11
2011-12
Graph showing
Operating Profit Ratio:
Analysis:
Vijaya college, R.V road Bangalore
Page 67
In the year 2009-10 the Operating Profit Ratio was 1.64%, in the year
2010-11 it was 1.44% and in the year 2011-12 Operating Profit Ratio was
1.04%. Decreasing in Operating profit ratio effect the company
Interpretation:
From the graph we conclude that the Gross Profit ratio is gradually decreasing
year by year. Decrease in the Ratio affects the company. The company has to take
necessary steps and need to overcome the problem.
CURRENT RATIO:
Current ratio may be defined as the relationship between current assets and
current liabilities. Current assets refers to all those assets can be easily converted
into cash within a period of 12 months. Current liabilities are those obligations
which are payable within a short period generally one year. This ratio indicates the
ability of a concern to meet its current liabilities. A current asset includes cash in
hand, cash at bank, sundry debtors, short term loans and advance and inventories.
A current liability includes sundry creditors, bills payable, provision for tax, etc.
Current Assets
Current Ratio =
Current Liabilities
Vijaya college, R.V road Bangalore
Page 68
2009-10
2010-11
2011-12
Current assets
520640303
507409614
652980027
Current liabilities
448753260
459053915
524442417
Ratio
1.16
1.1
1.24
Ratio
1.25
1.2
Ratio
1.15
1.1
1.05
1
2009-10
2010-11
2011-12
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Analysis:
From the table we can see that the current ratio in the year 2009-10 was
1.16 times, in the year 2010-11 was 1.1 times and in the year 2011-12 was 1.24
times.
Interpretation:
From the graph we conclude the current ratio has been increasing from
2010-11 to 2011-12. This is because of the increase in the current assets.
Therefore it is very good working capital for the company.
LIQUIDITY RATIO:
A class of financial metrics that is used to determine a company's ability to
pay off its short-terms debts obligations. Generally, the higher the value of the
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ratio, the larger the margin of safety that the company possesses to cover shortterm debts.
Liquid Assets
Liquidity Ratio =
Liquid Liabilities
2009-10
2010-11
2011-12
Liquid assets
487215741
358031343
421754156
388939710
459053915
524442417
1.25
0.77
0.8
Liquid liabilities
Ratio
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Ratio
1.4
1.2
1
Ratio
0.8
0.6
0.4
0.2
0
2009-10
2010-11
2011-12
Analysis:
From the table we can see that the Liquidity ratio in the year 2009-10 was
1.25 times, in the year 2010-11 was 0.77 times and in the year 2011-12 was 0.8
times.
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Interpretation:
A Liquidity ratio higher than 1:1 indicates that the business can meet its
current financial obligations with the available quick funds on hand. A Liquidity
ratio lower than 1:1 may indicate that the company relies too much on inventory or
other assets to pay its short-term liabilities.
2009-10
2010-11
2011-12
71887043
48355699
128537609
Net assets
520640303
507409614
652980027
Ratio
0.13
0.09
0.19
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Ratio
0.2
0.15
Ratio
0.1
0.05
0
2009-10
2010-11
2011-12
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Analysis:
From the table we can see that the Net working capital ratio in the year
2009-10 was 0.13 times, in the year 2010-11 was 0.09 times and in the year
2011-12 was 0.19 times.
Interpretation:
From the graph we can conclude that the net working capital ratio is
fluctuating every year. It is because, due to the changes in the overall current
assets of the company. But the ratio has been increased in current previous
year this shows increase in working capital.
Current assets
Current assets to net worth ratio =
Net worth
Vijaya college, R.V road Bangalore
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2009-10
2010-11
2011-12
Current assets
520640303
507409614
652980027
Net worth
424343915
472406096
588667870
Ratio
1.22
1.07
1.1
Ratio
1.25
1.2
Ratio
1.15
1.1
1.05
1
0.95
2009-10
2010-11
2011-12
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Analysis:
From the table we can analyze that the companys current assets to net
worth ratio was 1.22 in the year 2009-10, 1.07 in the year 2010-11 and 1.1 in
the year 2011-12.
Interpretation:
From the graph it shows that the companys current asset to net worth ratio
is increased from 2010-11 to 2011-12. So we conclude that the companys
return on current assets is getting better as the ratio is increasing. The increase
in ratio shows they are working on it.
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fixed assets and shareholders fund. The ratio indicates the extent to which
shareholders funds are sunk in the fixed assets. Net worth includes owners
equity or paid up capital and reserves and surplus. Generally, the purchase of
fixed assets should be financed by the shareholders equity which includes
reserves, surplus and retained earnings.
Fixed assets
Fixed assets to net worth ratio =
Net worth
2009-10
2010-11
2011-12
Fixed assets
547850047
526931180
522387743
Net worth
424343915
472406096
588667870
Ratio
1.29
1.11
0.88
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Ratio
1.4
1.2
1
Ratio
0.8
0.6
0.4
0.2
0
2009-10
2010-11
2011-12
Analysis:
It is analyzed that the fixed assets to net worth are 1.29, 1.11 and 0.88 in
the year 2009-10, 2010-11 and 2011-12 respectively.
Interpretation:
Vijaya college, R.V road Bangalore
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Net profit
Net profit to net worth ratio =
x100
Net worth
2009-10
2010-11
2011-12
Net profit
17393300
21689589
35142747
Net worth
424343915
472406096
588667870
Ratio
4.09%
4.5%
5.96%
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Ratio
6.00%
5.00%
Ratio
4.00%
3.00%
2.00%
1.00%
0.00%
2009-10
2010-11
2011-12
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Analysis:
From the table in the year 2009-10 the net profit to net worth ratio was 4.09%,
in the year 2010-11 was 4.5% and in the year 2011-12 was 5.96%.
Interpretation:
The increase in ratio shows the profitability of the company. The net profit of
the company is increasing. The net profit to net worth ratio is doing well to the
company.
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Page 83
The company has to encounter the problems which are faced and has to
find solution.
Even
Page 84
As earning per share is decreasing, the equity shares which are issued by
the company should be increased. This may leads to increase in EPS.
The company has to conduct more public related programme, this gains
more goodwill to the company.
The
used unnecessarily.
More number of branches can be opened all over the Karnataka for the
benefit of customer across the state.
6. CONCLUSION
The study had undertaken on the topic Profitability and financial status to
know the financial status and interpret the companys performance. The
Page 85
analysis of the co-operative limited was undertaken with the help of ratios,
which are important tools of financial analysis.
The co-operative limited has achieved tremendous progress over the recent
year. The co-operative limited has a healthy financial performance; the cooperative limited has been able to achieve growth across the multiple
parameters, including customers acquisition, geographical spread, business
volumes and revenues.
It is found that the current assets are more than the current liability and we
can conclude that the co-operative limited will be able to meet all its
immediate, all its financial commitments, without succumbing to pressure.
Therefore the short-term solvency position of the BAMUL remains healthy.
After having solved the ratio and analyzing the financial data, we can
conclude that the co-operative limited has gradually excelled over the years.
Thus ratio analysis has been a very useful technique which has highlighted the
performance of BAMUL in key-areas and also has in the avocation of certain
strategies to be followed by BAMUL which is indispensable to its future
growth.
To conclude the co-operative Limiteds financial position is satisfactory.
The analysis of the co-operative Limited was made using tools techniques like
ratio analysis.
7. ANNEXURES
Balance sheets (as on 31-03-2010, 31-03-2011, 31-032012)
Vijaya college, R.V road Bangalore
Page 86
SL
N
O
1
A
B
C
31-03-2012
31-03-2010
31-03-2011
SOURCE OF FUND
PAID UP CAPITAL
NOMINAL MEMBERSHIP
SHARE SUSPENSE
172802000
21400
2346422
148717000
0
2281680
127894000
320900
838030
TOTAL(A+B+C)
175169822
150998680
129052930
5225348
2882166
231567781
106451462
27853117
2605895
195609600
45716960
27853117
2605895
180651555
37893421
TOTAL(A+B+C+D)
346126757
271785572
248831988
LOANS
158742333
146705048
231655460
4
A
B
C
D
E
F
G
CURRENT LIABILITIES
DUES PAYABLE
AUDIT OBJECTIONS
INTER DAIRY CREDITORS
OTHER CREDITORS
SCHEMES
DUTIES AND TAXES
SALARY RECOVERIES
TOTAL(A+B+C+D+E+F+G)
220807272
1169746
32972604
217987213
13383860
38109554
12168
524442417
161408350
1169745
16934964
192465898
77496997
9563820
14141
459053915
233469968
1169744
46584528
148204326
19280483
44208
0
448753260
67371291
49621844
46458997
2
A
B
C
D
Liabilities
LOAN LIABILITY
GRAND TOTAL
Page 87
SL
N
O
1
A
B
C
D
2
A
B
C
D
E
F
Assets
31-03-2012
31-03-2011
31-03-2010
522387743
58400201
6517499
526931180
1082115
11174997
54785047
2796794
15236340
31567152
31567152
18229152
TOTAL(A+B+C+D)
618872594
570755445
584112332
CURRENT ASSETS-LOANSADVANCES
INVENTORY
SUNDRY DEBTORS
CASH AND BANK BALANCES
LOANS AND ADVANCES
SERVICE DEPOSITS
OTHERS
260131301
64768886
261305225
16016622
19126831
31631161
177463614
80679442
186892996
28170751
19010726
15192086
63377705
105826408
301776956
13374223
18901028
17383982
TOTAL(A+B+C+D+E+F)
652980027
507409614
520640303
APPLICATION OF FUNDS
FIXED ASSETS
WORK IN PROGRESS
DEFERRED REVENUE
EXPENDITURE
INVESTMENTS
GRAND TOTAL
127185262
1
Page 88
1078165059 1104752635
8. BIBLIOGRAPHY
COST AND FINANCIAL ANALYSIS:
S.P.JAIN
K.L.NARANG
JAWAHAR LAL
MANAGEMENT ACCOUNTING:
M.N.ARORA
I.M.PANDEY
SHASHI K.GUPTA
R.K.SHARMA
ANNUAL REPORT:
The Bangalore Urban & Rural District Milk Producers Co-Operative Societies
Union Limited (Bamul)
WEBSITE:
www.accountingformanagement.org
www.investopedia.com
www.wikipedia.org
www.indianmirror.com
Vijaya college, R.V road Bangalore
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