RATIO ANALYSIS OF

VERKA MILKFED

SUMMER TRAINING REPORT PRESENTATION

Submitted to Submitted by

Prof. H.S Sidhu JYOTI

Roll No-12

INTRODUCTION

The Punjab State Cooperative Milk Producers’ Federation Limited popularly known as MILKFED Punjab,

came into existence in 1973 with a twin objective of providing remunerative milk market to

the Milk Producers in the State by value addition and marketing of produce on one hand and

to provide technical inputs to the milk producers for enhancement of milk production on the other hand.

it came to real self in the year 1983 

OBJECTIVE

To bring the ‘White Revolution’in the state of Punjab by providing necessary inputs such as improved breeding,feeding,health care and management practices.

To provide an assured market and remunerative price for every drop of surplus milk at village level through the year.

To provide more job opportunities to farmers with a better standing and confidence so that they could move ahead in life.

To provide fresh hygienic, good quality milk to urban consumers at reasonable rates.

To modernize the exiting milk plants. To set up new milk plants for converting surplus milk into products and

market these within and outside country. To implement socio economics program of Govt. to promote dairy for

generating direct employment in rural areas.

MILKFED AND ITS NETWORK

The setup of the organization in a three tier system with 6000 milk producers co-operative societies at village level,11 milk unions at district level and federation as an apex body at the state level. The district unions are:

Ropar Patiala Ludhiana Fardikot Ferozpur Sangrur Bathinda Gurdaspur Hoshiarpur

CONT..

Jalandhar Amritsar  These unions are in 11 districts of the state carry out smooth

functioning of marketing, procurement, cattle breeding programme through district co-opreative unions.

VERKA PRODUCTS

Milkfed has formulated company specifications for its milk & milk products to provide standard and quality of Products to Consumers.

Milk

Cheese & Paneer

Ghee 7 butter

Ice cream & sweets 

CONT….

LASSI:-

CURD/DAHI:-

VERKA AS BRAND

Today, verka has out stripped its own boundaries to reach our homes. Verka was there before it came to MILKFED. But then, it was the difference between being there and making it big. When we at milkfed took it on, we believed that it had potential to do a lot more. And it did. With little more of a consumer oriented approach, verka became a brand to reckon with. With its growing outlets and thus easier availability, it reached far and wide across the state and beyond. To people today, verka is a part of their daily

lives.

MARKETING

MILKFED is serving nationwide consumers through its net work of Regional Offices and very strong distribution channels. Milkfed markets a wide range variety of Verks products which include liquid milk, skimmed milk powder, whole milk powder , infant food , ghee, table butter, cheese lassi, SFM, Ice Cream, UHT milk , Dairy whitner, SFM , Raseela, Curd ,Paneer etc. the annual turnover of Milkfed has crossed Rs. 1255 crores. Verka is a premium price over powders manufactured by competitors which include multi-national as well as private trade and other Cooperative Federations. Now, Verka is known for its quality, freshness, purity and of course its home made taste

THE EXTENSION OF THE BRAND

 After winning faith of innumerable consumers, Verka did not stop. Changing items brought new trends, needs, tastes and hopes. Verka, dynamic as ever too acquired newer forms of adding values to milk and milk products. A part from introducing new variants of UHT long shelf life milk. SFM is carry away bottles, cold Coffee and long shelf life curd. We are working on developing orange, pine apple and elaichi based drinks.Verka Ice Cream in different flavors and packaging is available in the market. Many new products are in pipe line. In true sense, milk had never meant so much before.

SCHEMES BEING IMPLEMENTED

  Making community based silage pits to fulfill shortage of

green fodder in kandi areas. Providing milking machines to dairy cooperative societies

and progressive dairy farms. Induction of more than 1200 commercial dairy farms in the

fold of dairy cooperatives Women empowerment programme State dairy plan 2022

VERKA AND ITS COMPETITORS

AMUL

Amul was formally registered on Dec 14,1946. It was suggested by a quality control expert in Anand. Some cite the origin as an arcronym to (Anand Milk Producers Union Limited). The Amul revolution was started as awareness among the farmers. It grew and matured into a protest movement that was channeled towards economic prosperity.

CONTD…

NESTLE Nestle relationship with India dates back to 1912, when it

began trading as The Nestle Anglo-Swiss Condensed Milk Company (Export) Limited, importing and selling finished products in the Indian Market. Nestle has been a partner in India's growth for over nine decades now and has built a very special relationship of trust and commitment with the people of India. The company's activities in India have facilitated direct and indirect employement and provides livelihood to about one million people including farmers, suppliers of pacakaging materials, services and other goods.

 

 

CONTD…

MOTHER DAIRY Since 1974 millions of consumers in Delhi have been

walking 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. The drop logo, used by coopratives across the country is a symbol of purity and freshness, qualities which Mother Dairy over the years has come to be closely associated with.

RESEARCH METHODOLOGY

To bring the ‘White Revolution’in the state of Punjab by providing necessary inputs such as improved breeding,feeding,health care and management practices.

To provide an assured market and remunerative price for every drop of surplus milk at village level through the year.

To provide more job opportunities to farmers with a better standing and confidence so that they could move ahead in life.

To provide fresh hygienic,good quality milk to urban consumers at reasonable rates.

To modernize the exiting milk plants. To set up new milk plants for converting surplus milk into

products and market these within and outside country. To implement socio economics program of Govt. to promote

dairy for generating direct employment in rural areas

RATIO ANALYSIS

There are various methods or techniques used in analyzing financial statements, such as comparative statement, trend analysis, common- size statement, schedule of changes in working capital, fund flow analysis, cost - volume profit analysis. The ratio analysis is one of the most powerful tools of financial analysis. It is the process of establishing and interpreting various ratios (quantitative relationship between figures and groups of figures). It is with the help of ratios that the financial statements can be analyzed more clearly and decision made for such analysis.

IMPORTANCE OF RATIOS ANALYSIS

Simplifies financial statements: It simplifies the comprehension of financial statements. Ratios tell the whole story of changes in the financial condition of the business

Facilitates inter-firm comparison: It provides data for inter-firm comparison. Ratios highlight the factors associated with with successful and unsuccessful firm. They also reveal strong firms and weak firms, overvalued and undervalued firms.

Helps in planning: It helps in planning and forecasting. Ratios can assist management, in its basic functions of forecasting. Planning, co-ordination, control and communications.

Help in investment decisions: It helps in investment decisions in the case of investors and lending decisions in the case of bankers etc.

CLASSIFICATION OF RATIOS

LIQUIDITY RATIOS 

Liquidity refers to the ability of a concern to meet its current obligations and when these become due. The short-term obligations are met by realizing amounts from current, floating or circulating assets. The current assets should either be liquid or near liquidity. These should be convertible into cash for paying obligations of short-term nature. To measure liquidity of a firm, following ratios can be calculated.

  Current Ratio Quick or Acid Test or liquid Ratio Absolute Liquid Ratio or cash position Ratio

 

CURRENT RATIO

FORMULA= Current Assets

Current liabilities

YEAR CURRENTASSETS CURRENT

LIABILITIES

CURRENT RATIO

2010-11 1958572667.95 244624749.63 8.006

2011-12 1918041919.23 280057575.94 6.86

QUICK/ LIQUID/ OR ACID TEST RATIO

  FORMULA= Quick or Liquid Assets

Current Liabilities

 

YEAR LIQUID ASSETS CURRENT

LIABILITIES

CURRENT RATIO

2010-11 1855801878.19 244624749.63 7.586

2011-12 1770655553.97 280057575.94 6.304

ABSOLUTE LIQUID OR CASH RATIO

 FORMULA= Absolute Liquid Assets

Current Liabilities

Absolute Liquid Assets=Cash & Bank +Short-term Securities

YEAR ABSOLUTE

LIQUID ASSETS

CURRENT

LIABILITIES

CURRENT RATIO

2010-11 21263764.76 244624749.63 0.0869

2011-12 7239782.59 280057575.94 0.0025

ACTIVITY RATIOS

Funds are invested in various assets in business to make sales and earn profits. The efficiency with which assets are managed directly affects the volume of sales. The better the management of assets, the larger is the amount of sales and the profits. Activity ratios measure the efficiency or effectiveness with which a firm manages its resources or assets. These ratios are also called turnover ratios because they indicate the speed with which assets are converted or turned over into sales..

  Inventory/ Stock turnover Ratio Working Capital Turnover Ratio

 

INVENTORY TURNOVER RATIO

FORMULA= COGS

AVERAGE STOCK

AVERAGE STOCK =OP.STOCK+CL.STOCK

2

YEAR COGS AVERAGE STOCK ITR ( IN TIMES)

2010-11 592442191.05 244624749.63 8.575

2011-12 7239782.59 280057575.94 0.0025

WORKING CAPITAL TURNOVER RATIO

Working Capital Turnover Ratio= Cost Of Sales

Average Working Capital

Year Net Sales Average Working

Capital

Working Capital

Turnover Ratio

( Times)

2010-11 1789729431.70 1713947918.32 1.044

2011-12 1789729431.70 1643027543.82 1.089

SOLVENCY RATIOS

The term ‘solvency’ refers to the ability of a concern to meet its long term obligations. The long term indebtedness of a firm includes debenture holders, financial institutions providing medium and long term loans and other credit selling goods on installment basis. Long term solvency ratios indicate a firm’s ability to meet the fixed interest and costs and repayment schedules associated with its long term borrowing. The following ratios serve the purpose of determining the solvency of the concern.

  Debt-Equity Ratio Proprietary or Equity Ratio Solvency Ratio Fixed Assets to Proprietor’s Fund Ratio Fixed Assets to Total Long-Term Funds

 

DEBT-EQUITY RATIO

Debt-Equity Ratio= DEBT

EQUITY

DEBT= W.C.L+TERM LOAN

EQUITY= EQUITY+RESERVE & SURPLUS +PROFIT

Year DEBT EQUITY Debt-equity Ratio

2010-11 1034794874.67 820770877.41 1.26:1

2011-12 973159984 729754281.57 1.33:1

PROPRIETORY RATIO OR EQUITY RATIO

Proprietory Ratio= Shareholder’s Fund

Total Assets

 

PROPRITORS FUNDS=EQUITY+PERFRENCE+RESERVE & SURPLUS

TOTAL ASSESTS= FIXED ASSESTS + CURRENT ASSESTS

Year PROPRIETORS

FUND

Total Assets Ratio (%)

2010-11 721251090.41 2088864118.24 34.52

2011-12 729754281.57 2043249667.97 35.71

FIXED ASSETS TO TOLAL LONG TERM FUNDS

Fixed Assets Ratio= Fixed Assets

Total Long Term Funds 

Long Term Funds= Shareholder’s Fund+ Long-Term Borrowings

Year FIXED ASESSTS TOTAL LONG TERM

FUND

Ratio

2010-11 130291450.29 1855565752.08 0.070

2011-12 125207748.74 1702914265.57 0.073

PROFITABILITY RATIOS

A business needs profits not only for its existence but also for expansion and diversification. Profits are, thus, a useful measure of overall efficiency of business. The various profitability ratios are discussed below:

 

GENERAL PROFITABILITY RATIOS

GROSS PROFIT RATIO OPERATING PROFIT RATIO EXPENSES RATIO NET PROFIT RATIO

  

GROSS PROFIT RATIO

Gross Profit Ratio= Gross Profit X 100

Net Sales

YEAR GROSS PROFIT NET SALES Gross Profit Ratio (%)

2010-11 1196702099.15 1789144290.20 66.88

2011-12 332264636.4 1789729431.70 18.56

OPERATING RATIO

Operating Ratio= Operating Cost X 100

Net Sales

Operating Cost= Cost of goods sold+ operating expenses

YEAR OPERATING COST NET SALES OPERATING COST

RATO (%)

2010-11 861865672.43 1789144290.20 48.17

2011-12 827597656.57 1789729431.70 46.24

NET PROFIT RATIO

Net Profit Ratio= Net Profit after tax X 100

Net Sales

 

Net Profit Ratio=Net Operating Profit X 100

Net Sale

YEAR NET PROFIT NET SALES Ratio (%)

2010-11 102584873.31 1789144290.20 5.73

2007-08 85031391.16 1789729431.70 4.75

OVERALL PROFITABILITY RATIOS

Profits are measure of overall efficiency of a business. Overall profitability or efficiency of a business can be measured in terms of profits related to investments made in the business. Various overall profitability ratios are discussed below.

Return on Shareholder’s Investment or Net worth Ratio Return on Equity Capital Earning per Share Return on Capital Employed Capital Turnover Ratio

 

RETURN ON SHAREHOLDERS’ INVESTMENT

Return on Shareholders’ Investment= Net Profit (BEFORE interest & tax) CAPITAL EMPLOYED

CAPITAL EMPLOYED= FIXED ASSETS+CURRENT ASSEST- CURRENT LIABILTIES

 YEAR NET PROFIT

BEFORE INT & TAX

CAPITAL

EMPLOYED

Ratio (%)

2010-11 164485830.66 2333488867.87 7.048

2011-12 85031911.16 1763192092.03 4.822

RETURN ON EQUITY CAPITAL

Return on Equity Capital = Net profit after tax- preference dividend

Equity shareholder funds

YEAR NET PROFIT AFTER

INT & TAX

EQUITY

SHAREHOLDER

FUNDS

Ratio (%)

2010-11 102584873.31 656285046.75 15.63

2011-12 85031391.16 444733290.41 19.11

EARNING PER SHARE (E.P.S)

Earnings per Share= Net Profit after tax- Preference Dividend

No. of equity Shares

YEAR NET PROFIT AFTER

INT & TAX

NO.OF EQUITY

SHARES

E.P.S

2010-11 102584873.31 500000 205.16

2011-12 85031391.16 500000 1700.6

CAPITAL TURNOVER RATIO

Capital Employed= Fixed Assets +Working Capital

Capital Turnover Ratio= Cost of Goods Sold or Sales

Capital employed

Year Sales Capital Employed Ratio

2010-11 1789144290.20 2333488867.87 0.7667

2011-12 1789729431.70 1763192092.03 10.15

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