“A STUDY ON

INVENTORY MANAGEMENT PRACTICES”

WITH REFFERENCE TO
THE KRISHNA DISTRICT MILK PRODUCER’S MUTUALLY
AIDED CO-OPERATIVE
OPERATIVE UNION LTD., VIJAYAWADA

A Project report submitted to

School of Management Studies, JNTUK

In partial fulfillment for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by
P. L. VISHAL
(Regd No. 19021E0058)
Under the Esteemed Guidance of
SMT. P. DEVIMBA, M.Com, LLB (Ph.D)
ASSISTANT PROFESSOR

School of Management Studies

JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY KAKINADA
Kakinada – 533003(A.P) INDIA
2019-2021

1
 “A STUDY ON
INVENTORY MANAGEMENT PRACTICES”
WITH REFFERENCE TO
THE KRISHNA DISTRICT MILK PRODUCER’S MUTUALLY
AIDED CO-OPERATIVE UNION LTD., VIJAYAWADA

A Project report submitted to

School of Management Studies, JNTUK

In partial fulfillment for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by
P. L. VISHAL
(Regd No. 19021E0058)
Under the Esteemed Guidance of
SMT. P. DEVIMBA, M.Com, LLB (Ph.D)
ASSISTANT PROFESSOR

School of Management Studies

JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY KAKINADA
Kakinada – 533003(A.P) INDIA
2019-2021

2
 DECLARATION

I, LAKSHMI VISHAL PALUKURI student of School of Management Studies,

JNTUK hereby declare that the project report entitled “A Study on INVENTORY

MANAGEMENT PRACTICES with reference to THE KRISHNA DISTRICT MILK

PRODUCER’S MUTUALLY AIDED CO-OPERATIVE UNION LTD.,

VIJAYAWADA” has been submitted by me in partial fulfilment for the award of the degree

of MASTER OF BUSINESS ADMINISTRATION by Jawaharlal Nehru Technological

University Kakinada, Kakinada.

This project work is of original and has not been submitted to any other university for

the award of any degree or diploma.

PLACE: KAKINADA P.L. VISHAL

DATE: REGD NO. 19021E0058

3
PLAGARISM REPORT

4
5
 School of Management Studies

JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY KAKINADA

Kakinada – 533003(A.P) INDIA

Certificate

This is to certify that the project work entitled “A Study on

INVENTORY MANAGEMENT PRACTICES with reference to THE
KRISHNA DISTRICT MILK PRODUCER’S MUTUALLY AIDED CO-
OPERATIVE UNION LTD., VIJAYAWADA” is a bonafide work of
PALUKURI LAKSHMI VISHAL submitted in partial fulfillment of the
requirement for the award of the Degree Master of Business Administration by
Jawaharlal Nehru Technological University Kakinada, Kakinada.

Project Guide Director, SMS

External Examiner

6
 ACKNOWLEDGEMENTS

I feel to render my thankful acknowledgement to the following distinguished personalities

who stretched their helping hand to me in completing my project work successfully.
I would like to express my sincere thanks to Dr. A. KRISHNA MOHAN, M Tech, MBA,
Ph.D., Director of School of Management Studies for giving me an opportunity to take up
this project.

I take this opportunity to place on record my grateful thanks to my project guide SMT. P.
DEVI MBA, M.Com, LLB (PhD) Assistant Professor for his timely guidance and support
throughout the preparation of the project.

Finally, I would like to express my deep sense of gratitude to my entire respected faculty and
my beloved parents without whose support and encouragement I would not have finished this
work. I also express my sincere thanks to friends and well-wishers, who helped me in
preparing the project work and made me to present it within time.

P. L. Vishal
Regd.No: 19021E0058

7
S.NO CONTENTS PAGE
NUMBER
1. CHAPTER 1
INTRODUCTION 1-4
NEED FOR THE STUDY 5
OBJECTIVES OF THE STUDY 6
SCOPE OF THE STUDY 7
LIMITATIONS 8
2 CHAPTER 2
REVIEW OF LITERATURE 9-13
RESEARCH GAP 14
STATEMENT OF THE PROBLEM 15
METHODOLOGY 16
3 CHAPTER 3
INDUSTRY PROFILE 17-21
COMPANY PROFILE 22-37
4 CHAPTER 4
DATA ANALYSIS AND INTERPRETATION 38-64
5 CHAPTER 5
FINDINGS 65
SUGGESTIONS 66
CONCLUSION 67
6 BIBLIOGRAPHY

8
CHAPTER - 1
Introduction
Need for the study
Objectives of the study
Scope of the study
Limitations

9
 INTRODUCTION

FINANCIAL MANAGEMENT

Financial management is a managerial activity dedicated to financial resources planning and

control. That is to say the wisest way to manage the company's funds in order to optimize
shareholders' wealth. It concerns the effective use of the business company's important
economic resources.

Financial management deals with the overall objective of procurement, financing and asset
management. Financial managers need to forecast and note their financial consequences for
the business events they expect.

There are several functions in modern financial management. The functional fields of
modern financial management are difficult to identify. They are essentially three kinds.

● Investment decision

● Financial decision

● Dividend decision

INVESTMENT DECISION

● Company investment choices involve the cost of capital.

● Accordingly, the capital budget decision is referred to them.

FINANCIAL DECISIONS

● The financial manager shall carry out the second important decision or function.

● It decides how funds should be acquired and how investment needs of the company
should be met.

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DIVIDEND DECISION

● A dividend decision is called the share of profits distributing as dividends.

● The optimum dividend policies are to maximize the market value of the company's
shares.

INVENTORY MANAGEMENT

The backbone of all activities is inventory and supply chain management. Inventory
management has undergone revolutionary changes with the development of technology and
availability of process-driven software applications. All functions are interconnected and
interlinked and often overlap in any company or organisation. Some important aspects, such
as management of supply chain, logistics and inventory, are the backbone of the company
function. Therefore, both marketing managers and financial controllers consider these roles
very important.

Inventory management is a very important role that affects supply chain health and balance
sheet financial health. In order to meet your needs and avoid the inventories that can
influence financial figures, each company is always working towards preserving the best
stock. The inventory is dynamic always. In inventory management it is important to
continuously evaluate external and internal factors as well as monitor planning and
assessment. Most organisations have a separate department or job function known as
inventory planners, which constantly monitor, monitor and review manufacturers, acquisition
and finance inventories and interfaces.

11
INVENTORY MANAGEMENT TECHNIQUES

The management of inventories can be an awful task, and it could cost companies billions of
dollars if they are not done properly. With the increase of sales volume and diversification of
the product assortment, inventory management becomes increasingly complicated.

1. REVIEW STOCK

The inventory review is an ongoing inventory analysis against future expectations. You can
do this through a manual inventory review or via inventory software. You can set up regular
inspections and supply reorder to set your minimum inventory level. Make sure that certain
situations, such as providers that take longer than average to fill up stocks, are taken into
account. This helps you to order just in time for the inventory to be stored for at least a few
days before moving into the next stage of the supply chain.

Primary inventory control methods include:

• Visual control

• Click-sheet

• Tickler control.

2. ABC ANALYSIS

This is a popular method for analysing your stock. In this method, the inventory is divided
into three categories: A, B and C. These categories are based on the value and importance of
inventories. Furthermore, a percentage of each category's total number of items and values.

- High value and low number items are referred to as "A"

- Moderate and moderate items in number shall be called "B"

- Small- and large-scale articles are called "C"

12
Management of individual categories: Group C is good to handle, while group A requires
special care. Group C can be quite easy. In combination with the just-in-time technology, you
can use ABC analyses to help you achieve a correct reorder.

3. VED ANALYSIS:

The analyses divide the items into three categories: life, essential and desirable. The category
Vital includes those items that would be stopped by production. The main group comprises
items which are very expensive on stock. A group of goods that do not lead to production
loss or inventory immediately involves nominal expenses and causes minor disturbances over
a short period of time.

4. ECONOMIC ORDER QUANTITY:

This item calculates the cost of purchase and transport, known as 'normal order volumes,'
'economic lot size' or 'economic order volume.' Orders essentially include costs to acquire
storage items, property insurance, physical deterioration loss of value and obsolescence costs.
Both of these costs have a negative impact on the company's profits and management tries to
compensate for these two costs. Economic quantity is referred to as the balance or
reconciliation point. And EOQ applies in lots covering several periods to articles which are
periodically replanted in inventory.

Formulae for calculation of EOQ:

Whereas,

A =Annual Consumption

O = Ordering Cost

C = Carrying Cost

13
 NEED FOR THE STUDY

This project is on "A STUDY ON INVENTORY MANAGEMENT PRACTICES with

reference to KRISHNA DISTRICT MILK PRODUCER’S MUTUALLY AIDED CO-
OPERATIVE UNION LTD, VIJAYAWADA." It monitors the inventory and provides a
centralised stock view. It monitors costs by producing inventory analysis inventory reports.
Improves delivery through inventory management and customer satisfaction. Manages
planning and forecasting by analysing data trends. Inventory management is done by using
techniques of inventory management like Economic order quantity (EOQ) and ratios like
turnover ratios for proper management of inventory.

14
 OBJECTIVES OF THE STUDY

● To study the inventory management maintenance in KRISHNA DISTRICT MILK

PRODUCER’S MUTUALLY AIDED CO-OPERATIVE UNION LTD, VIJAYAWADA.

● To study the optimum level of inventory management and Economic order quantity (EOQ).

● To analyze the inventory turnover ratios of different materials.

15
 SCOPE OF THE STUDY

This study is based on inventory of THE KRISHNA DISTRICT MILK PRODUCERS

MUTUALLY AIDED CO-OPERATIVE UNION LTD. The scope of the study consigned to
EOQ and inventory turnover ratio of Raw materials, Work in progress and finished goods of last
5 years from 2015-16 to 2019-2020.

16
 LIMITATIONS OF THE STUDY

1. This study do not include the primary data

2. In this study the stock valuation methods are not followed.

3. The study is restricted to five years.

4. Since milk has to be destroyed and converted in 24 hours, this industry will not have an
operating cycle.

5. The results on the study based on annual data of the company “KRISHNA DISTRICT MILK
PRODUCER’S MUTUALLY AIDED CO-OPERATIVE UNION LTD, VIJAYAWADA”.

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CHAPTER – 2
Review of Literature

Research Gap

Statement of the Problem

Methodology of study

18
 REVIEW OF LITERATURE

ARTICLES:

A LITERATURE REVIEW OF INDIAN DAIRY INDUSTRY

- Prof. Sanjay Patankar ISSN: 2249-7196 IJMRR (June 2015)

Article 1:

INTRODUCTION:

The main objective of the study is to understand the current milk industry scenario in India and
several issues faced by industry stakeholders. This is a review of research papers on the dairy
sector. The main problems were the lack of fodder and concentrates, a lack of veterinary and
diagnostic services, information lacking and technological awareness. Dairy farmers in most
parts of India faced these common problems.

OBJECTIVE OF THE STUDY:

The study is conducted to understand the magnitude of research in the field and the output, if
any, that can pave the way for further field research.

RESEARCH METHODOLOGY:

The articles are collected from various databases such as J-gate Plus, Ebsco host.com and
Google.

CONCLUSION:

24 research papers are studied to understand different problems in the dairy industry in India.
Each of these documents has to do with a particular geographical region in India. The papers are
for six regions of India viz. the Southern, the West, the Northern, the Northeast, the North-
Central and the East. 14 of 24 studies were based on primary dairy farmer data The main
problems in those studies related to the lack of coordination between the various government
agencies and high cost of fodder and diagnostic services.

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Article 2:

A REVIEW ON SNAPSHOT OF INDIAN MILK INDUSTRY

- NIHA KHAN October, 2017

INTRODUCTION:

The willful endeavors of individuals and government, reflected through fruitful usage of projects
like “Operation Flood”, changed India from its shortfall state in milk generation to the world’s
biggest milk creating nation which paved the necessity of proper inventory management for
diary industry.

Horticulture and unified segments like dairy are not popularized in India. They are as yet
considered as wellspring of business for a huge number of little farmers.

OBJECTIVES OF THE STUDY:

Because of the destructive nature of milk products, managing the dairy supply chain effectively
is a challenge. In addition, these products require quick-response supply chain support
throughout the supply chain network through effective coordination.

RESEARCH METHODOLOGY:

The review depended on optional information. The writer discovered moderate development of
domesticated animals’ division in north east district. In any case they recognized a few
components affecting the family units’ choice to back animals like accessibility of work,
occupation, station, cultivate measure, accessibility of water system, and access to data sources.

CONCLUSION:

The Common discoveries of the above expanded literature review depicted that the group
measure on a normal is observed to be beneath 35-40 dairy animals. Organized and well
managed dairy cultivating is still as a wellspring of employment and not marketed. Fodder and
concentrates together contributes the most astounding extent of the aggregate expenses.

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Article 3:

A STRUCTURED-LITERATURE-REVIEW OF THE SUPPLY CHAIN PRACTICES IN

MILK INDUSTRY

- Babua, D. and Verma, N.K. (2010)

INTRODUCTION:

In enriching rural India's socio-economic status, the milk industry plays a vital role. In general,
the literature discusses either a structure or subcomponents of the dairy supply chain. In the
current world market, the success factors like economic trends, competitive position,
technological progress and operations and SCM activities cannot be ignored by industries.
Competitiveness in the supply chain has been a crucial issue for organisations, and 'mapping an
organization's competitiveness helps to form the basis for the development of a business strategy.

OBJECTIVES OF THE STUDY:

⮚ A literature discusses to study the structure of the subcomponent components of the milk
supply chain.
⮚ The literature discusses the sub-components of the milk supply chain.

RESEARCH METHODOLOGY:

The target group are recently published articles in different databases. The articles have been
searched by using the title abstract field on a variety of scientific databases such as GS, Open-
access Journal, Science Web, Scopus, etc. The reviewed articles were classified by year of
publication, name/type of journal, subject matter and field of study.

CONCLUSIONS:

In summary, the strategies discussed here can help to increase competitiveness and leanliness in
the dairy industry.

21
Article 4:

A review on Inventory Management Control Techniques: ABC - XYZ analysis

- Bijal Pandya ( March, 2016)

INTRODUCTION:

Management of inventories is important to make an organisation efficient and effective. The

organisation encounters a different inventory of costs including cost of ownership, purchase
costs and shortage costs. Each of these increases will have an adverse effect on organisational
profitability as a result of lack of an inventory control system. Thus, by appropriate inventory
control, the organisation can save much of its total investment in inventories.

OBJECTIVES OF THE STUDY:

⮚ To maintain the optimum inventory size in an efficient, smooth operation of production

and sales;
⮚ To maintain the optimum inventory size in an efficient, smooth operation of production
and sales;
⮚ Proper and efficient inventory management also minimises risk and obsolescence
uncertainty.
⮚ Reduce material costs that can increase a company's profit.

RESEARCH METHODOLOGY:

The ABC and XYZ analysis methods of inventory control have been used in different application
areas to cut the cost of inventory, improve inventory management for goods also helpful for the
storage of finished goods. The management of inventory is the precise monitoring of the material
in the inventory of the company. Different types of inventory testing techniques exist.
Techniques are developed from ABC and XYZ.

CONCLUSION:

Inventory management for manufacturing organisations is an important technique. The

examination of the research papers shows that the timely flow of inventory is essential for every
organisation's success and growth.

22
Article 5:

A study on Inventory Control and Management Techniques

- Manthan Pagare (1 January, 2016)

INTRODUCTION:

The word inventory refers to goods or resources that are used to manufacture and sell by a
company. It also includes the subject which is used to facilitate production as helpful materials.

Three basic types of raw, progressive inventory and finished goods exist. Raw materials are the
products bought by companies for use in the production of finished goods. All items currently in
the production process are part of the work-in-progress. In fact, they are partly manufactured
products. The finished products are those that have been shaped but have not been sold yet.
Inventory management is important in that it allows the following major issues to be dealt with.

OBJECTIVES:

⮚ To study inventory management management tools and techniques adopted to investigate

inventory controls in inventory management.
⮚ To study inventory management demand forecast.
⮚ To study how in inventory management ABC analysis and ageing scheduling are
implemented.

METHODOLOGY:

The articles have been searched by using the title abstract field on a variety of scientific
databases such as GS, Open-access Journal, Science Web, Scopus, etc. The reviewed articles
were classified by year of publication, name/type of journal, subject matter and field of study.

CONCLUSION:

We must understand in any company that is large or small that it is very important to take good
care of our inventory. We can start from here, and there are several ways to fight failure. New
technologies can assist us in maintaining and monitoring our inventory.

23
 RESEARCH GAP

Finance is the underlying pillar of all forms of economic activities in the modern-oriented
economy. Financial statements are prepared primary for decisions making. So, every
company will be interested in knowing its inventory performance. In the above articles the
first three articles focuses on dairy industry.

Therefore, the study focuses on crucial research gap and the study is concerned to fill gap
of inventory management using EOQ and inventory turnover ratio in THE KRISHNA
DISTRICT MILK PRODUCERS MUTUALLY AIDED CO-OPERATIVE UNION LTD.

24
 STATEMENT OF THE PROBLEM

The management of inventories in any organization is crucial, the management of

inventories involves the development and management of raw materials stock levels,
inventory and finished products. As to ensure adequate supplies and minimize stock costs.

Inventory management is important for making the business efficient and effective, but
the inventory management was slightly neglected by the KRISHNA DISTRICT MILK
PRODUCER’S MUTUALLY AIDED CO-OPERATIVE UNION LTD

25
 METHODOLOGY OF THE STUDY

The source of necessary information for the tenacity of the study was collected from

• Secondary Source

SECONDARY DATA:

The information that someone else has previously collected. The secondary data includes
data from books of financial management reviews, the Internet, publications and past
research papers.

1. For this study the source of data is secondary data.

2. The secondary data includes the information from the annual reports of the KRISHNA
DISTRICT MILK PRODUCER’S MUTUALLY AIDED CO-OPERATIVE UNION LTD

This type of analysis supports management in the external environment in developing its
future policies. Any comprehensive research needs to be designed according to the essential
task, and this study is built on descriptive design.

26
CHAPTER – 3
Industry Profile

Company Profile

27
 INDUSTRY PROFILE

Industry Scenario:

Since ancient Vedic years, milking has been living in India. The modern dairy industry
began selling bottled milk from a range of milk colonies in Mumbai in 1950. A
cooperative enterprise for milk powder, table butter and ghee production, supported by
UNICEF, was launched in 1945 in Anand's first large-scale factory. These are buffalo
milk products. The operational flood was the world's largest development programme,
designed and deliberately delivered by the NDDB and the Indian dairy company to carry
out the enormous task of modernising production, procurement, processing and marketing.
In July of 1970, the project was started. Its fundamental idea compromises the creation of
the Anand pattern as a cooperative structure.

OPERATION FLOOD-1:

Initially, operation flood-2 was to be concluded in 1975 with a total cost of about Rs.l16
crores. In the course of the flood 1 operation, the establishment of the free metric tonnes
of bottled oil from EU surpluses was fully financed.

ANAND PATTERN-1:

The Flood-1 programme was implemented on the Anand pattern and loudly proclaimed
with the trampling of the ice hindlands with a variety of breeding tracks. This cooperative
was initially set up in 18 Indian districts, and later on I was added a total of 27 milk shed
areas in 10 countries of the country, including Maharashtra, Tamil Nadu, Andhra Pradesh,
West Bengal, Bihar, Haryana, Punjab, Uttar Pradesh & Rajasthan. Such milk cooperatives
are based on a model of a milk cooperative known as Anand's pattern. In the village, dairy
farmers constructed and maintained their cattle in the rural cooperative infrastructure
concept of Anand patterns. In each participating village milk producers had to establish
their own village dairy cooperative. In relation to cooperation, INST 60753 showed a year
ago that in the area of cooperation there were 631.21 operational flooding societies
organised by Anand, with the formation of 2.368 new cooperative milk companies, on 1
April 1991.

28
OPERATION FLOOD-2:

The first flood of July 1978, at the cost of 483 crores, is expected to end in 1985. The
performance of operating flood-1 in some areas has been modestly evaluated. In
particular, the Anand pattern of milk co-operatives is the basis for operational floods. as
with all this achievement. At the beginning, their unions have to act. Cluster co-operative
nuclei federation. This huge food-2 project is the main tool. As the average nuclear cluster
federation, six district unions would be registered and unregistered. Indian milk co-
operatives, which may be nationally possible, do not need to base government wise
allocations for flood 2 operations until 11,979. The shares of the lion were held by the
State of Gujarat in 1666 alone. The total disbursement for its case was only 1732 lakhs,
composed of Haryana, Bihar, Rajasthan and Andhras Pradesh. In operation flood-2 this
trend will be continued.

OPERATION FLOOD-3:

The Indian milk industry grows quickly and could be a major powder competitor
worldwide. As a result of operational flood programmes in the National Air Development
Board, milk industry is the second biggest contributor to the agricultural economy in terms
of output phenomenal growth. Flood 2 now allowed only procurement to strengthen
production in its closing phase. The production of milk for 200 AD is forecast to grow by
5% by almost 90 tonnes. Today it is 5 to 8 per cent operating dairy facilities with a daily
capacity of 14.3 million litres, covering 170 milk halls. The drying capacity is around 696
tonnes per day. With milk powder imports except a rapid growth in dairy production
(26400 tones).

NATIONAL DAIRY DEVELOPMENT BOARD:

In October 1964 the cattle feeding factory of Kanjari was manufactured. The Indian Prime
Minister Late Shri LALBAHADUR SHASTRY visited cooperative producers' companies
in due time and said so over the night. He was impressed by the social economic change in
the Krishna region that gained milk cooperatives and wanted a national organization to
replicate animism in other regions of the country by cooperative dairy producers. In
September 1965 a National Dairy Development Board, headed by the Ministry of

29
Agriculture and Irrigation, was established under the company registration act of 1860 and
the Bombay Trust Act 1950. The Indian President shall appoint the Chairman or Secretary
to the Board of Directors; the Chief Organization shall be the National Dairy
Development Board.

ANAND PATTERN DAIRY DEVELOPMENT:

Milk procurement function in this pattern is controlled by the milk farmers themselves,
processing and marketing.

PLANNING INVESTMENT:

1. 33.43 Crores 4. 349.00 Crores

2. 247.53 Crores 5. 116.00 Crores

3. 187.00 Crores 6. 600.00 Crores

DAIRY INDUSTRY IN ANDHRA PRADESH

The programme for dairy production was mooted on the basis of commendable support of
the United National University of Vijayawada and Vijydria in 1967 and 1969, the
International Children's Emergency Fund (IUF), the Food and Farm organisations, and
free from the hungary company campaign Organization of the UK. These two gigantic
units were later supplied with cooling and chilling centres. In the interest of dairy
producers, the government of Andhra Pradesh established the milk development company
and provided the urban consumers as A.P.D.D.C.. with a sufficient fresh milk supply at a
reasonable cost on 2 April 1974. Include seven dairy factories, 13 local dairy farms, 22
chilling centres and 18 refrigeration centres and 15 mini refreshment centres, and provides
jobs for almost 20 employees and an organism that easily employs 87 milk unit. In
addition the private units have helped develop Hindustan milk foods from the dairy
industry, which have launched a maltted milk product factory in Rajamundry. On the basis
of a recommendation measuring milk production and mass harvest, the government has
established a self-employed dairy development company, which will also improve labour
efficiency and sales.

30
Dairy Development: Its capacity was 100 litres per day on departure. Now, there have
been 11 lakhs per day.

DEVELOPMENT DAIRY A.P. FEDERATION CO-OPERTIVE (A.P.D.D.C.F):

In October 1981, in order to implement the operational programme FLOOD 2, the

A.P.D.D.C.F. was established by the active participation of producers in the organisation
and procurement of milk products and the commercialisation of town products. It serves to
provide farmers with reasonable prices for a stable market as an alien between farmers in
the municipalities. Co-operative structure in line with the national government of India.
There are 13 level villages, district and state cooperative unions on three levels of the
primary cooperative enterprises.

OPERATION FLOOD:

In our state operation flood was divided in three types "Anand level".

1. Village level - D.C.S

2. District level - M.P.C.V

3. State level - A.P.D.D.C.F

OPERATION FLOOD PROGRAMME:

Indian Dairy Development Corporation shall be responsible for implementing

operational flood programmes, providing money for loans 70% and for subsidies 30%.
National Dairy Development Corporation selected state district for operational flood
implementation. The districts were divided into ten mandals for milk collection.

31
DISTRICT SELECTED UNDER OPERATION

District Milk sheds/unions

Krishna Krishna

Srikakulam Vishaka

Vijayanagaram Vishaka

Visakhapatnam Vishaka

East Godavari Godavari

West Godavari Godavari

Chittoor Chittoor

Kurnool Kurnool

Cuddapah Cuddapah

Nalgonda Nalgonda

Rangareddy Rangareddy

Medak Medak

Nizamabad Nizamabad

32
 COMPANY PROFILE

ORIGIN & HISTORY:

In 1965, an Integrated Milk Project, supported by UNICEF, began milking in Krishna. In

April 1969 a first-ever plan of milk conversation was launched in Southern India. It is
integrated into a project (1960), milk development (1991), A.P. cooperation for
development development (1974), A.P. cooperation for dairy development and A.P.
cooperative cooperation for development (1981).In 1983, the cooperative union of
Krishna district milk producers registered 450 cooperative dairy companies with 67,000
producers. There are 340 association centres for producers.

COMPANY'S MISSION:

Prosperity of Farmer through technological innovations and customer guidance focused on

quality and cost.

COMPANY'S VISION: the local milking industry is the main tool to boost the rural
economy and make secure milk and milk products available.

SAILENT FEATURES:

1. Business turnover in 2018-19 reached Rs.712 Crores

2. Average daily milk supply: 1.66 LLPD daily (2018-2019)

3. Superior supply of milk

4. Average daily sales of milk have reached LLPD 2.76 per day (2018-2019)

4. ISO 9001:2015 and FSSAI certificates obtained and ISO 22000: 2005

6. Profits earned and price differential distributed are equivalent to its members.

7. Paying farmers Rs. 63 crores at the cost of milk they have obtained.

8. Enhancing the rural economy, preventing intermediaries and providing consumers with
safe milk and milk products.

9. Rural women have been self-employed.

33
10. Rural societies provide funds to roads, schools, communities, buildings, hospitals, etc.

34
COMPANY PRIDE:

● South India's first powder plant.

● The district serving the farming community was the biggest democratic officer.

● It has a production base of more than RS. 1000 crores.

● Providing people with direct and indirect jobs Introduce five types of liquid milk
for first milk.

● Introduce fist milk in tetra brick pack for liquid ice cream.

● Curds are introduced in South India by the first milk cooperative

● First milk in the packet of tetra brick to insert butter milk and lasse

● More than RS.121 annual turnover falls at a continuous rate of growth.

● In cups and cake, the first dairy to insert Basundi.

MILK – PROCUREMENT:

Around 55 km around Vijayawada, the factory is supplied with milk twice a day from
around 830 villages in the area arranged by a total of 29 route and 6 chill centres. Some
431 registered companies are under the pattern of Anand among 480 centres.

MILK PRODUCT FACTORY-VIJAYAWADA

DATA SPECIFICATION

Area occupied by the factory 27.3 acres

Value of factory building 400 lakhs

Money given by UNICEF 53 lakhs

Machinery

35
 Investment on equipment 600 lakhs

Buildings

Opened on 11-4-1969

Workers 1538

Date of formation of union 6-7-1983

Date of transfer of management 8-2-1985

Of the union Annual turnover 60 crore

Production power:

Milk 500001ts/day

Ghee 5 tonnes

Butter 7 tonnes

Milk powder 4 tonnes

Packet filling 160000 packets/day

Refrigeration capacity 1.5 tonnes

Contracted maximum demand 900

Chilling Processing 150000

UNIQUE ACHIEVEMENTS:

⮚ For its milk quality, the company has ISO 9001 and ISO 14000.

The company recently made record sales of 1.64 lakh a day when its previous turnover
stood at 1.45 lakh a day.

S.W.O.T ANALYSIS

STRENGTHS:

1. Significant potential of milk production in Krishna district.

36
2. Capacity of processing highly pereced milk.

3. Suitable facilities available for infrastructure.

4. Access to well-experienced experts.

5. Ability to satisfy all demands on milk and milk products from consumers.

6. Capability to offer high-profit quality aseptic products.

7. Bondage to farmers has been established.

8. Access to and granting of development funds.

9. Other cooperatives access.

WEAKNESSES:

1 High fixed cost of 15% of corporate turnover.

2. The use of competitive edge is high prices for milk and milk products.

3. Product manufacturing installations are outdated because modern installations are

lacking.

4. Culture of work not compatible with customer service growth.

5. The skills of the employee at different levels need upgrade.

6. There is still room for adoption of business and modern management systems.

7. Managers are not experienced in business.

OPPORTUNITIES:

1. Capacity increase.

2. Quick development.

3. The food service industry is growing.

4. State government responsive.

37
5. Aseptic milk long-term export opportunities

6. Responsive milk base manufacturer.

THREATS:

1. The market for liquid milk is heavy competition.

2. Private sector organised entry.

3. Increased competition in rural areas for marketed excess milk.

4. Resistance to change by the employee.

SUCCESS STORY:

Krishna District is a butting bay of Bengal, on the Krishna River Track. The district of
Krishna is famous for its cattle quality. It ranks second in the state in the milk livestock
population. An integrated milk product with UNICEF help, a milk conservation plant 1.25
L P/d was started in April 1969 at VIJAYAWADA. Organized milk production at Krishne
started in 1965 in April 1969. The district's dairy industry began as part of animal
husbandry activity under the state government. It was integrated with the Milk Project
(1960), the Department of Milk Development (1971), the Dairy Development Corporation
of Andhra Pradesh (1974), as well as with A.P. (1981). Around one lakh of milk
producers from 800 towns organised through 20 routes collects milk from the Union. Each
district union has six milk chilling centres at Pamarru, Hanuman Junction, Veerankilock,
Gudlavalleru, Chillakollu and Tiruvuru with a total processing capacity for 1,22 lakh of its
own per day.

It has a dairy factory with facilities for the production of various dairy products.

Milk Processing 2.5 lakhs Its/day

Milk Drying 22 MT/day

Butter 22 MT/day

Ghee 18 MT/day

38
 In the Vijayawada dairy factory, excess milk is handled from all coastal communities.
Approximately 1.73 lakh kg per day with a peak of 3.18 lake kg/day. The fat factory
mainly conserves 1000 MT per year in the form of white butter. The Milk Products
Factory has established an Aseptic Packing Station (APS) for packaging 50,000 litres
(UHT-MILK) of daily milk. Union also has 2 mixing plants for cattle feed with an overall
capacity of 50 Mt per day.

RANKING OF THE DISTRICT IN ANDHRA PRADESH:

Milk production 3rd

Processing 4th

Marketing 3rd

Day supplies range between 45000 and 105000 kg in Krishna District between 1969 and
1998. The concentrated district of buffalo has wide fluctuations in procurement. The
Cooperative Milk Union of the District provides farmers with the following input to
increase milk production.

• Premixed feed for bovine animals.

• 2/3 subsidies for cattle insurance.

• Sub-supported forage seeds.

• Subvention prices for animal vaccines & medicines.

• Installations for AI.

• Bulls of reproduction

• Services of expansion.

GROWTH OF THE FACTORY:

Vijayawada was commissioned on 11-4-1969, as an integral part of the above project.

Initial handling capacity at the factory was 125,000 litres in the first phase and 250,00
litres of milk were supplied in the second phase. In the very first year of its operation the
UNICEF officers crossed the 100 000 litre mark with admiration. In rural dairy products,

39
 women have played a more important role: animal feeding, washing and milking etc. In
order to promote this activity in an organised way, Nalgonda, Krishna and Chittoor are
organising eight women co-operative societies already, with over 1000 women in other
societies participating as a share of 200 new members.

❖ CHILLING CENTERS:

The Vijayawada dairy factory established 10 refreshing centres, where cooled milk
was produced to make up the individual consumer segments. Chilling centres are of
great use to the factory of dairy products following the centres of the dairy factory
Vijayawada, Krishna District.
1. Pamarru
2. Hanuman Junction
3. Veerankilock
4. Gudlavalleru
5. ChillakoJdu
6. Tiruvuru
7. Gannavaram
8. Vuyyuru
9. Kaikaluru
10. Kankipadu

Town No of selling booths Daily sales(in liters)

Vijayawada 185 68000
Machilipatnam 42 4000
Gudivada 25 1200
Total 252 73200

40
 INFRASTRUCTURE AND FACILITIES:

The Vijayawada Milk Products Factory are the Aseptic Packaging Station, the administrative
bureau, the effluent plant, the electric substation and the residential area.

Facilities and field sites are next available at the Vijayawada Milk Products Factory.

A. Milk products factory Vijayawada:

S.NO Name of the Facility Unit Capacity

1 Milk processing Lakh lts/day 3.5
2 Milk drying MTs/day 14.0
3 Ghee manufacturing MTs/day 18.0
4 Butter manufacturing MTs/day 22.0
5 Milk packing lts/day 200000
6 Go down space MTs 2000
7 Butter cold store MTs 450

B. FIELD:

S.NO Name of the Centre Unit Capacity

1 MCC Pamarru Lts/day 50000
2 MCC Gudlavalleru Lts/day 18000
3 MCC Hanuman Junction Lts/day 18000
4 MCC Chillakallu Lts/day 12000
5 MCC Tiruvuru Lts/day 12000
6 No. AMCUs and DPMCUs 599
7 No. of bulk milk coolers 20
8 DCS having electronic milk testers 498
9 No. of A.I centers 36
10 No. of V.F.A centers 133
11 No. of DCS Organized 498

41
 12 No. women DCSs 133
13 Farmer members 48560
14 Women members 19632
15 No. of milk routes 120
16 No of DCS having its own buildings 800

CATTLE FEED:

S.NO Name of the plant Unit Capacity

1 FMP Buddavaram M.T.s/day 48.0
2 FMP Gudlavalleru M.T.s/day 18.0

❖ MILK PROCESSING AND PRODUCTION:

Dairy management (in/w manufacture) heads the production line with the support of four
managers in the dairy field, 11 Asst. Dairy managers and other manufacturers in milks, butter
and ghee processing, powder production, bi-production of the manufacture and manufacture
of finished goods. Production starts at the dairy dock with milk reception and continues 24
hours a day.

MILK RECEPTION:
The laboratory authorities perform all platform/Bacteriological/Chemical testing and are sent
to the storage by milk via cannabis or petrol tankers after their qualitative confirmation.

RAW MILK:
Vijayawada Milk Products plant connects approximately 175 villages with an approximately
50 km radius in Vijayawada. Milk is collected directly from the Vijayawada Milk Products
Manufacturer for which it has a can conveyor, an electric weighing machine, a tank dump,
and direct washing machine with a cleaning capacity of 600 in./h..

42
MARKET PRODUCTION FLOW CHART

43
❖ Chilled Milk :

Chilled milk is received by milk tankers from chill centres and other stations and is
sent for storage in the laboratory on quality confirmation.

MILK PROCESSING SECTION:

12 storage tanks of 15,000 litres each. There are four creams each with a capacity of
5000 litres. It has 3 pasteurizers of 20000 litres of milk. 15,000 litres per hour capacity
and 10000 liters/hour capacity per hour. It also has 5000 liters/hour of cream
pasteurizers. In total, four lakh litres of milk are stored.

OPERATIONS
❖ The division among required quantities of full milk and the amount of demand is

standardised and shipped to packaging and production departments according to its

composition and with the addition of whole milk/cream and skim milk in needed
measurements.

❖ THE BUTTER SEQUART: Three butter churns with 1500 litres of drum capacity are

present. After the cream is washed and chilled water removes solids, the cream loaded into
the drums is picked out for about three hours. While solids are returned to the processing
section as liquid butter milk, the formed butter is collected and returned to it.

❖ The ghee is then pumped to ghee-setting tanks for an eight-hour period after a good flavour,

colour and so on, so that it can sediment the bottom tank. Two 8,000-liter tanks and two
3,000-liter storage tanks. The ghee is then thoroughly filtered and clarified. The final filtered
ghee is packed into 51t, 21t, lit and 54 according to a satisfactory report by laboratory
authorities. Ghee packing's total daily volume is 18.0 M.T.

❖ BI-PRODUCTS SECTION:

All new products such as sweet lazie and butter. Under strict aseptic and hygienic conditions
khova, pan, yoghurt and milk cake are manufactured and packed here.

44
❖ POWDER SECTION:

There are two plants with powder. An alias level produces an evaporation plant
with a flow rate of 8. M.T.s daily drying and a new valcan level with a double effect
flow rate of 14. M.T.S daily drying capacity. ISI grade SMP is packed in 25 kg, 1 kg
and 6 Kg packs with fine and superior quality.

❖ MILK PACKING:

There are two hundred thousand litres of different types of milk a day. Eight
packaging machines are equipped with a capacity of 150 bowls per hour. In 6 it is made
for direct consumers of five different varieties of milk. Cans are packed for institutions.

❖ ASEPTIC PACKAGING STATION (APS):

The APS unit is headed by the Special Officer. In 1988, the APS was established in
Vijayawada, a campus with a total cost of 22 crores, through the financial assistance of
NDDB. In a high-temperature plant milk is treated at about 1400 °C for 2-3 seconds
with low pressure and rapid cooling. This makes milk free of micro-organisms that are
susceptible to storage. Tetra Brick is a compact, sterile, pilfer-resistant, unbreakable
and sustainable package with a period of 3 to 4 months.

❖ SALES AND MARKETING:

The Sales and Marketing Wing is headed by a sales manager and 2 sales managers Asst, with
520 stands, 300 cold-chain round the clock. The union's sales and marketing wing works 24
hours a day to distribute and market milk and milk goods.

45
 DISTRIBUTION NETWORK:

1) LIQUID MILK DISTRIBUTION:

There are 24 zones in the city of Vijayawada. Each area is connected by a separate
dairy route which operates morning and evening to the commissioning agents and cold
chain points.
2) PRODUCT DISTRIBUTION:
a) Local distribution to: distributors, inventors, and retailers in the district. These
distributors /stockiest / retailers are supplied with products.
b) Distribution to external districts: direct sales across the country via the stockiest and
the EX factory.

❖ PERSONNEL AND HRD:

Head of staff department is staff officer. For the benefit of the employees, HRD
activities are carried out. In addition to implementing the following acts to protect
them, it looks after the service/administration of the employees of this union.
1. Industrial Dispute Act 1947
2. Payment of wages Act 1936
3. Minimum Wage Act 1948
4. Equal Remuneration Act
5. Gratuity 1972
6. Workmen Compensation Act
7. ESI Act 1948
8. Trade Union Act 1926 etc.,

46
 FINANCE:
A financial manager, Sr. Accounts officer, is assisted by four Asst account managers and
financing staff. On that date, independent from 8-02-1985, the union began operations in
wards when it took fixed assets at book values from the national federation
SHARE CAPITAL:

Approved shares of Rs.500 lakhs. At present, the Rs. 106.24 and Rs. 31.87 lakhs
are paid for converting.
LONG TERM LOANS:

For various union project loan schemes under 70:30 loaning times cum grant, the
National Milk Development Board granted loans in the O.F.2/3 programme to the
Union for capital projects in the union total R.S707.20.00 Lakhs.
ORGANIZATION STRUCTURE:
Managing Director
Deputy Director 2
Sr. Accounts officer 1
Dairy Managers 6
Asst. Dairy Engineers 2
Quality Control Officers 1
Asst. Dairy Manager 15
Fodder Development Officers 1
Junior Engineers 4
Technical Staff 58
Transport 30
Finance 20
Administration 70
Field Staff 55
Others (Non-Technical) 304
TOTAL 570

47
 CHAPTER – 4
Data Analysis & Interpretation

48
PROCEDURE FOLLOWED IN KRISHNA DISTRICT MILK PRODUCERS
MUTUALLY AIDED CO-OPERATIVE UNION LIMITED FOR TO
PERFORM 'ABC ANALYSIS FOR STOCK

Whenever items can be replaced, they should be considered preferably as an item.

The value of consumption rather than the cost per unit of items should be given more
emphasis.
CLASS OF ITEMS

S.No A B C
1 Polythene Film Ghee items Powder items
2 Ammonia Gas Nitric Acid SFM Stickers
3 Curd Cups, Lids, Basundi cups & spoons SFM Bottles

Boxes
4 Maintain receipt and use records Keep records of There's no records

Receipt and use

5 Smaller efforts Moderate work Effort minimum
6 Close checks on Schedule Some checks on ghee No checks need more
revision For in need upto 2-3 than 3 months
less than 2 weeks months
7 Host of orders Less common purchase Mass purchase

8 Continuous shift Future shortage Do not speed up

acceleration

9 Precise predictions Unprecise predictions Approximate projections

10 For less than 2 weeks, low safety Wide security inventory Wide stock of safety for
up to 2-3 months over 3 months

49
 DATA ANALYSIS AND INTERPRETATION

ECONOMIC ORDER QUANTITY (EOQ)

A = Annual consumption

O = Orderings cost

C = Carrying cost

CALCULATION OF ECONOMIC ORDER QUANTITY OF CATTLE FEED AND

SEEDS:

ANNUAL ORDERING CARRYING EOQ (in kg’s)

YEAR CONSUMPTION COST (in Rs.) COST (in Rs.)
(in kg’s)

2015-16
78,037 326.16 0.55 9,620.54

2016-17
67,242 303.66 0.50 9,037.41

2017-18
62,170 360.92 0.62 8,507.76

2018-19
62,977 337.43 0.58 8,560.20
65,969 329.80 0.56 8,814.88
2019-20

50
 EOQ, 2015-2016,
9620.54 ECONOMIC ORDER QUANTITY

EOQ, 2016-2017,
9037.41
EOQ, 2019-2020,
QUANTITY

8814.88

EOQ, 2018-2019,
EOQ, 2017-2018,
8560.2
8507.76

AxisEOQ
Title

INTERPRETATION: In the year 2015-2016 the economic order quantity in the company is
9620.54 and in the year 2016-2017 it is decreased to 9037.41 and later in 2017-2018 it is
decreased to 8507.76 and in the year 2018-2019 EOQ is increased to 8560.20 and again
increased to 8814.88 in the year 2019-2020. The EOQ of the company is reduced because of
the changes in annual consumption of material in the company.

51
CALCULATION OF ECONOMIC ORDER QUANTITY OF STORES AND
PACKING MATERIAL

ANNUAL ORDERING CARRYING EOQ (in kg’s)

YEAR CONSUMPTION COST (in Rs.) COST (in Rs.)
(in kg’s)

2015-16
8,80,576 326.16 0.55 32317.1

2016-17
9,60,676 303.66 0.50 34159.56

2017-18
11,62,170 360.92 0.62 22806.11

2018-19
11,62,977 337.43 0.58 36785.65

2019-20
12,00,969 329.80 0.56 37610.77

52
 ECONOMIC ORDER QUANTITY OF STORES AND
PACKING MATERIAL
EOQ, 2018-2019, EOQ, 2019-2020,
EOQ, 2016-2017, 36785.65 37610.77
EOQ, 2015-2016, 34159.56
32317.1

EOQ, 2017-2018,
22806.11
QUANTITY

EOQ

INTERPRETATION: The economic order quantity of the stores and packaging materials is
32317.1 in 2015–16 and is up to 34159.56 in 2016–2017; and decreased to 22806.11 in
2017–2018 and up to 36785.65 in 2019–2020, again to 37610.77 in 2017–2018. The EOQ of
stores and packing material for the company is increased and decreased because of the
changes in ordering costs.

53
CALCULATION OF ECONOMIC ORDER QUANTITY OF MACHINE SPARES

ANNUAL ORDERING CARRYING EOQ (in kg’s)

YEAR CONSUMPTION COST (in Rs.) COST (in Rs.)
(in kg’s)
5,80,584 326.16 0.55 26241.07
2015-16

5,60,684 303.66 0.50 26096.54

2016-17

6,62,895 360.92 0.62 27780.94

2017-18

7,62,789 337.43 0.58 29791.68

2018-19

8,00,652 329.80 0.56 30709.18

2019-20

54
 ECONOMIC ORDER QUANTITY OF MACHINE
EOQ, 2019-2020,
SPARES 30709.18
EOQ, 2018-2019,
29791.68

EOQ, 2017-2018,
QUANTITY

27780.94

EOQ, 2015-2016, EOQ, 2016-2017,

26241.07 26096.54

AxisEOQ
Title

INTERPRETATION: In the year 2015-2016 the economic order quantity of mechanical

and garage spares for the company is 26241.07 and it is decreased to 26096.54 in 2016-2017
and again it is increased to 27780.94 and later it is increased to 29791.68 and in the year
2019-2020 it is increased to 30709.18. We can see the increase in EOQ from the year 2017-
2018 because of the low ordering costs and carrying costs.

55
CALCULATION OF ECONOMIC ORDER QUANTITY OF FEED RAW
MATERIAL

ANNUAL ORDERING CARRYING EOQ (in kg’s)

YEAR CONSUMPTION COST (in Rs.) COST (in Rs.)
(in kg’s)
5,90,446 326.16 0.55 26463
2015-16

6,50,586 303.66 0.50 28111

2016-17

6,70,182 360.92 0.62 27933.22

2017-18

7,62,800 337.43 0.58 29791.90

2018-19

7,91,669 329.80 0.56 30536.42

2019-20

56
 EOQ, 2019-20,
ECONOMIC ORDER QUANTITY OF FEED RAW- 30536.42
MATERIAL EOQ, 2018-19,
29791.9

EOQ, 2016-17,
EOQ, 2017-18,
28111
27933.22
QUANTITY

EOQ, 2015-16,
26463

EOQ

INTERPRETATION: In the year 2015-2016 the economic order quantity of feed raw
material for the company is 26463 and in the year 2016-2017 it is increased to 28111 later it
is decreased to 27933.22 in 2017-2018 an in the year 2018-2019 it is again increased to
29791.9 and later it is increased to 30536.42 in the year 2019-2020. We can see fluctuations
in EOQ of feed raw-material because of the changes in the annual consumptions of the
company’s feed raw-material.

57
SIZE OF INVENTORY:

Stock size depends on several factors, including sales volumes, plant volume, raw
materials availability, variations in raw and finished products, cycle length of
production, etc. Overall, the level of inventory increases steadily as sales and
production increase. The main goal of inventory management, as already stated, is to
optimise the inventory size so that production and sales perform smoothly. In addition
to adversaries in profitability and liquidity, the size of inventories is increased. The
network capital size is measured by the following ratio.
Inventory

Size of Inventory = ........................................

Total Current Assets

INVENTORY 2015-16

S.NO PRODUCTS AMOUNT

1 Milk & Milk Products 11,64,15,812.95
2 Cattle Feed and Seeds 6,50,880.70
3 Stores & Packing Materials 1,58,50,112.04
4 Mechanical & Garage Spares 65,46,601.92
5 Feed Raw Materials 47,63,876.31
Total 14,42,27,283.90

58
CURRENT ASSETS 2015-16
S.NO PRODUCTS AMOUNT

1 Milk & Milk Products 11,64,15,812.95

2 Cattle Feed and Seeds 6,50,880.70

3 Stores & Packing Materials 1,58,50,112.04

4 Mechanical & Garage Spares 65,46,601.92

5 Feed Raw Materials 47,63,876.31

6 Cash in Hand 14,15,525.25

7 Cash/ Cheque 26,04,025.70

8 Balance with Seheduled Banks 4,92,45,465.57

9 In Fixed Deposits 45,81,849.00

10 Sundry debtors 6,87,09,698.73

11 Advances to Employees 11,01,701.39

12 Advantages to Purchases 48,26,009.91

13 Pre-Paid Expenses/Taxes 10,64,891.00

Total 27,77,73,454.45

59
INVENTORY 2016-17
S.NO PRODUCTS AMOUNT
1 Milk & Milk Products 9,57,12,921.63
2 Cattle Feed and Seeds 4,40,075.00
3 Stores & Packing Materials 2,33,09,360.60
4 Mechanical & Garage Spares 52,39,362.62
5 Feed Raw Materials 50,29,186.62
Total 12,97,30,906.50

CURRENT ASSETS 2016-17

S.NO PRODUCTS AMOUNT

1 Milk & Milk Products 9,57,12,921.63

2 Cattle Feed and Seeds 4,40,075.00

3 Stores & Packing Materials 2,33,09,360.60

4 Mechanical & Garage Spares 52,39,362.62

5 Feed Raw Materials 50,29,186.62

6 Cash in Hand 20,69,031.75

7 Cash/ Cheque 32,51,051.55

8 Balance with Seheduled Banks 9,98,84,590

9 In Fixed Deposits 1,13,77,867.00

10 Sundry debtors 4,42,01,029.07

11 Advances to Employees 8,82,840.45

12 Advantages to Purchases 41,38,886.93

13 Pre-Paid Expenses/Taxes 14,08,424.00

Total 29,69,44,628.10

60
INVENTORY 2017-18
S.NO PRODUCTS AMOUNT
1 Milk & Milk Products 13,01,41,326.23
2 Cattle Feed and Seeds 4,91,944.00
3 Stores & Packing Materials 1,44,03,819.59
4 Mechanical & garage spares 37,97,118.86
5 Feed raw materials 47,90,586.09
Total 15,36,24,794.70

CURRENT ASSETS 2017-18

S.NO PRODUCTS AMOUNT

1 Milk & Milk Products 13,01,41,326.23

2 Cattle Feed and Seeds 4,91,944.00

3 Stores & Packing Materials 1,44,03,819.59

4 Mechanical & Garage Spares 37,97,118.86

5 Feed Raw Materials 47,90,586.09

6 Cash in Hand 14,36,332.25

7 Cash/ Cheque 77,11,542.90

8 Balance with Seheduled Banks 12,46,40,643.05

9 In Fixed Deposits 89,23,153.00

10 Sundry debtors 3,99,00,770.98

11 Workforce Advances 6,31,743.95

12 Progress in buying 80,32,029.72

13 Pre-Paid Expenses/Taxes 14,19,470.00

Total 34,63,20,480.10

61
INVENTORY 2018-19

S.NO PRODUCTS AMOUNT

1 Milk & Milk Products 11,28,39,476.42
2 Cattle Feed and Seeds 13,55,364.00
3 Stores & Packing Materials 1,32,24,600.32
4 Mechanical & Garage Spares 42,00,291.38
5 Feed Raw Materials 37,35,576.19
Total 13,53,55,308.30

CURRENT ASSETS 2018-19

S.NO PRODUCTS AMOUNT

1 Milk & Milk Products 11,28,39,476.42

2 Cattle Feed and Seeds 13,55,364.00

3 Stores & Packing Materials 1,32,24,600.32

4 Mechanical & Garage Spares 42,00,291.38

5 Feed Raw Materials 37,35,576.19

6 Cash in Hand 16,67,725.50

7 Cash/ Cheque 8,25,790.04

8 Balance with Seheduled Banks 6,87,25,312.00

9 In Fixed Deposits 5,99,58,670.00

10 Sundry debtors 5,57,10,699.98

11 Advances to Employees 5,25,992.80

12 Advantages to Purchases 37,60,327.22

13 Pre-Paid Expenses/Taxes 2,69,743.00

Total 32,67,99,568.80

62
INVENTORY 2019-20
S.NO PRODUCTS AMOUNT
1 Products Milk & Milk 15,22,23,908.00
2 Feed and seeds for livestock 10,42,833.00
3 Materials for stores and packaging 1,78,07,488.78
4 Spares for Mechanical & Garage 33,14,434.20
5 Feed Raw Materials 38,75,404.75
Total 17,82,64,068.70

CURRENT ASSETS 2019-20

S.NO PRODUCTS AMOUNT

1 Products Milk & Milk 15,22,23,908.00

2 Stores and packaging of cattle feed and seed 10,42,833.00

3 Feeding raw materials for mechanical & garage savings 1,78,07,488.78

4 Products Milk & Milk 33,14,434.20

5 Stores and packaging of cattle feed and seed 38,75,404.75

6 Cash in Hand 1,07,160.25

7 Cash/ Cheque 14,52,536.51

8 Balance with Scheduled Banks 8,88,55,874.69

9 In Fixed Deposits 8,98,32,804.00

10 Sundry debtors 4,91,66,473.49

11 Advances to Employees 6,82,578.80

12 Advantages to Purchases 30,59,910.56

13 Pre-Paid Expenses/Taxes 6,62,527.00

Total 41,20,83,934.00

63
SIZE OF INVENTORY = INVETORY / TOTAL CURRENT ASSETS * 100

Results for stock size as applicable to the KRISHNA DISTRICT MILK

PRODUCERS MUTUALLY AIDED CO-OPERATIVE UNION
LIMITED:

YEAR INVENTORY CURRENT ASSETS SIZE

2015-16 14,42,27,283,9 27,77,73,454,45 51.92%
2016-17 12,97,30,906,5 29,69,44,628,1 43.68%
2017-18 15,36,24,794,7 34,63,20,480,1 44.35%
2018-19 13,53,55,308,3 32,67,99,568,8 41.41%
2019-20 17,82,64,068,7 41,20,83,934,0 43.25%

size of inventory, SIZE OF INVENTORY

2015-16, 51.92%

size of inventory, size of inventory, size of inventory,

2016-17, 43.68% 2017-18, 44.35% size of inventory, 2019-20, 43.25%
2018-19, 41.41%

size of inventory

64
 INTERPRETATION:

In the period 2015-2020, the table shows the inventory dimensions of the selected
company. The table shows that in this study the inventory was the main element of the
total current assets, because an average of about 52 percent of the current assets. The
table shows that stock sizes have decreased gradually, rising from 48.21% to 44.27% in
2015-2016, and increasing in 2017-08 from 44.27% to 51.92% in the study period,
from 51.92% to 43.68 percent in 2017-2019, and from 2022% to 42.68% in 2029, and
from 32.2% in 2014 to 43.7% in 2016.

• REASON:
This is because the prices and the monopoly provider are fluctuating.

• SUGGESTION:

Start your own production unit or select an alternative provider

65
INVENTORY TURNOVER RATIO:

Inventories for the company are considered lists of all kinds of inventories. This
relationship reflects the transmission frequency of the average inventory through
operations. The stock is converted to short-term sales when the ratio is high. This gives
the company good profits. When stocks move quickly, the company's short-term
solvency is also excellent. As a precious measure of sales efficiency and inventory
quality, the inventory return ratio can be used. The sales ratio of the following
measures:

Results for stock size as applicable to the KRISHNA DISTRICT MILK

PRODUCERS MUTUALLY AIDED CO-OPERATIVE UNION
LIMITED:

YEAR INVENTORY CURRENT ASSETS SIZE

2015-16 14,42,27,283,9 27,77,73,454,45 51.92%
2016-17 12,97,30,906,5 29,69,44,628,1 43.68%
2017-18 15,36,24,794,7 34,63,20,480,1 44.35%
2018-19 13,53,55,308,3 32,67,99,568,8 41.41%
2019-20 17,82,64,068,7 41,20,83,934,0 43.25%

66
size of inventory, SIZE OF INVENTORY
2015-16, 51.92%

size of inventory, size of inventory, size of inventory,

2016-17, 43.68% 2017-18, 44.35% size of inventory, 2019-20, 43.25%
2018-19, 41.41%

size of inventory

67
 INTERPRETATION:

In the period 2015-2020, the table shows the inventory dimensions of the selected company. The
table shows that in this study the inventory was the main element of the total current assets,
because an average of about 52 percent of the current assets. The table shows that stock sizes
have decreased gradually, rising from 48.21% to 44.27% in 2015-2016, and increasing in 2017-
08 from 44.27% to 51.92% in the study period, from 51.92% to 43.68 percent in 2017-2019, and
from 2022% to 42.68% in 2029, and from 32.2% in 2014 to 43.7% in 2016.

• REASON:
This is because the current assets of the company have increased in 2019-2020 when compared
to 2015-2016.
• SUGGESTION:

Start your own production unit or select an alternative provider

INVENTORY TURNOVER RATIO:

Inventories for the company are considered lists of all kinds of inventories. This relationship
reflects the transmission frequency of the average inventory through operations. The stock is
converted to short-term sales when the ratio is high. This gives the company good profits. When
stocks move quickly, the company's short-term solvency is also excellent. As a precious measure
of sales efficiency and inventory quality, the inventory return ratio can be used. The sales ratio of
the following measures:

INVENTORY TURNOVER RATIO= COST OF GOODS SOLD / AVERAGE

INVENTORY

68
The result is applied for this proportion of MUTUAL AIDS CO-OPERATIVE UNION
LIMITED KRISHNA DISTRICT MALK PRODUCERs

COST OF GOODS 2015-16

S.NO PARTICULARS AMOUNT
1 Sale of Pasteurized Milk 83,03,28,496.55
2 Sale of UHT Milk 8,46,24,637.92
3 Sale of Bi-Products 45,25,27,825.15
4 By Sale of Cattle Feed 5,97,30,709.00
5 By Conversion Charges 80,11,555.00
Total 143,52,23,223.62

COST OF GOODS SOLD = SALES - GROSS PROFIT

= 1435223223.62 - 263510297.46

= 1171712926.24

COST OF GOODS 2016-17

S.NO PARTICULARS AMOUNT

1 Sale of Pasteurized Milk 101,96,33,984.00
2 Sale of UHT Milk 6,87,74,625.50
3 Sale of Bi-Products 48,55,22,323.45
4 By Sale of Cattle Feed 6,03,38,522.25
5 By Conversion Charges 31,77,292.00
Total 163,74,46,747.00

COST OF GOODS SOLD = SALES - GROSS PROFIT

= 163,74,46,747.00- 29,10,57,211.96
69
 = 134,63,89,524.00

COST OF GOODS 2017-18

S.NO PARTICULARS AMOUNT

1 Sale of Pasteurized Milk 118,22,48,093.25
2 Sale of UHT Milk 3,56,32,842.00
3 Sale of Bi-Products 41,04,05,763.00
4 By Sale of Cattle Feed 7,46,38,750.50
5 By Conversion Charges 1,66,60,011.50
Total 171,95,85,460.00

COST OF GOODS SOLD = SALES-GROSS PROFIT

=171,95,85,460.00 - 32,65,51,326.36
= 139,30,34,134.19

70
COST OF GOODS 2018-19

S.NO PARTICULARS AMOUNT

1 Sale of Pasteurized Milk 142,66,04,822.25
2 Sale of UHT Milk 7,34,75,439.00
3 Sale of Bi-Products 49,80,01,850.83
4 By Sale of Cattle Feed 8,97,79,087.00
5 By Conversion Charges 80,92,315.00
Total 209,59,53,514.00

COST OF GOODS SOLD = SALES - GROSS PROFIT

= 209,59,53,514.00 - 33,67,96,345.76
= 175,91,57,168.0

COST OF GOODS 2019-20

S.NO PARTICULARS AMOUNT

1 Sale of Pasteurized Milk 170,22,53,004.77
2 Sale of UHT Milk 4,91,60,591.50
3 Sale of Bi-Products 55,96,05,494.25
4 By Sale of Cattle Feed 9,07,58,323.50
5 By Conversion Charges 1,17,95,410.00
Total 241,35,72,823.00

COST OF GOODS SOLD = SALES - GROSS PROFIT

= 241,35,72,823.00 - 37,66,54,533.43
= 203,69,18,290.00

71
Average Inventory 2015-16

Particulars Amount
Opening Stock
Finished Stock of Milk 7,71,65,529.12
Cattle Feed and Seeds 16,62,391.25
Purchase of Milk Products 1,02,000.00
Total 789,29,920.37
Closing Stock
Finished Stock of Milk 11,55,04,647.65
Cattle Feed and Seeds 6,50,880.75
Total 116,155,528.40

AVERAGE INVENTORY = Opening Stock + Closing Stock /2

= 9749124.38

Average Inventory 2016-17

Particulars Amount
Opening Stock
Finished Stock of Milk 11,55,04,647.65
Cattle Feed and Seeds 6,50,880.75
Purchase of Milk Products 2,04,97,875.00
Total 136,653,403.40
Closing Stock
Finished Stock of Milk 9,49,88,087.13
Cattle Feed and Seeds 4,40,075.00
Total 954,28,162.13

AVERAGE INVENTORY = Opening Stock + Closing Stock /2

= 105,791,845.26

72
Average Inventory 2017-18
Particulars Amount
Opening Stock
Finished Stock of Milk 9,49,88,087.13
Cattle Feed and Seeds 4,40,075.00
Purchase of Milk Products 2,64,08,847.00
Total 121,837,009.13
Closing Stock
Finished Stock of Milk 12,95,52,418.23
Cattle Feed and Seeds 4,91,944.00
Total 130,044,362.12

AVERAGE INVENTORY =Opening Stock + Closing Stock /2

=1127362.18

Average Inventory 2018-19

Particulars Amount
Opening Stock
Finished Stock of Milk 12,95,52,418.23
Cattle Feed and Seeds 4,91,944.00
Purchase of Milk Products 5,66,74,464.00
Total 186,718,826.23
Closing Stock
Finished Stock of Milk 11,18,43,938.42
Cattle Feed and Seeds 13,55,364.00
Total 113,199,302.42

AVERAGE INVENTORY = Opening Stock + Closing Stock /2

= 149,959,064.3

73
Average Inventory 2019-20

Particulars Amount
Opening Stock
Finished Stock of Milk 11,18,43,938.42
Cattle Feed and Seeds 13,55,364.00
Purchase of Milk Products 9,25,53,546.00
Total 205,752,848.42
Closing Stock
Finished Stock of Milk 15,16,03,116.00
Cattle Feed and Seeds 10,42,833.00
Total 152,645,949.00

AVERAGE INVENTORY = Opening Stock + Closing Stock /2

= 179,199,398.7

74
YEARS COST OF GOODS AVG INVENTORY RATIO(TIMES)

SOLD
2015-16 1171712926.24 97491724.38 12.01

2016-17 1346389535.24 105791845.26 12.72

2017-18 1393034134.19 112736262.18 12.35

2018-19 1759157168 149959,064.3 11.73

2019-20 2036918290 179199398.7 11.36

Table 5.2

RATIO (TIMES)

13
12.72

12.5 12.35

12.01
12
11.73
RATIO(TIMES)
11.5 11.36

11

2015-16 2016-17 2017-18 2018-19 2019-20

INTERPRETATION:-

The above table shows an annual decline in the inventory turnover ratio. It rose 9.56 times from
2015-16 to 2019-20 to 12.72 times. It is a test for efficient management of inventories. The
better the company's performance, if the ratio is higher. If the turnover ratio of inventories are
higher, the business cycle is faster, and the company will ultimately make better profits.

75
DAYS OF INVENTORY HOLDING:

Average inventory holdings occur on a percentage term in reciprocal inventory turnover ratio.
When we are divided by the number of days per year by the inventory turnover (say 365), we are
allowed holding days for the inventory. The holding days are measured by the following ratio:
365

Days of Inventory Holding = ----------------------------

Inventory Turnover Ratio

Research results of the above ratio: MUTUALLY AIDED CO-OPERATION

DISTRICT PRODUCTS MUTUALLY:

Table 5.3

Year No of Days in Year Inventory Turnover Period(Days)

Ratio

2015-16 366 12.01 30.47

2016-17 365 12.72 28.69

2017-18 365 12.35 29.55

2018-19 365 11.73 31.11

2019-20 366 11.36 32.21

76
 Period(Days)

33
32.21
32
31.11
31
30.47
29.55
30
Period(Days)
29 28.69

28

27

26
2015-16 2016-17 2017- 2018- 2019-

INTERPRETATION:
The inventory holding trend in the company is out of the table. Inventory holdings days
are understood to have slowly decreased between 38 days and 30, with the interconnection
of stock sales ratio and stock holding time. As the stock holding days increase, the
inventory sales ratio declines and vice versa. When its stocks are converted, it
demonstrates the improved management efficiency of the firm.

77
CHAPTER – 5
Findings

Suggestions

Conclusion

78
 FINDINGS:

● The inventory turnover ratio of the company is decreased because of the increase in
average inventory of the company over the cost of goods sold.

● Some inventories are ordered according to the minimum stock or level of the reorder.

● No specific method for valuing the specific kind of inventory has been followed.

● From the above data analysis we can observe that the ordering cost, carrying cost and
annual consumption of materials influences the ECONOMIC ORDER QUANTITY
(EOQ).

79
 SUGGESTIONS

● The company has to control the annual consumption of materials in order to maintain
economic order quantity.

● Ongoing inventory verification of all materials should be introduced by the company.

● In this respect, the Company is recommended that it balance the composition of its
current assets between its various components of the present assets, its inventory and
other assets.

● In order to reduce the costs and transport costs and produce material in time the
company has to follow proper inventory management techniques.

80
 CONCLUSION

⮚ In this context the study by KDMPMACU Ltd is an attempt to draw conclusions. The
following was found in the study:

⮚ Have a low standard inventory level KDMPMACU Ltd.

⮚ The EOQ levels of KDMPMACU Ltd. were good.

⮚ The analysis by KDMPMACU Ltd. ABC was successful

⮚ The material turnover for KDMPMACU Ltd. RAW was successful.

⮚ The financial performance of all of KDMPMACU Ltd. has been positive

81
BIBLIOGRAPHY

82
 BIBILOGRAPHY

S.NO TITLE AUTHOR PUBLISHER YEAR

1. Financial Prasanna TMH New Delhi 2001
Management Chandra
2. Financial Khan & Jain TMH New Delhi 2001
Management
3. Financial V.K.Bhalla ANMOL, New 1998
Management Delhi
4. Production & S.N.Charry TMH New Delhi 2000
operation
Management
5. Production & B.L.Goel Pragathi, New 2001
operation Delhi
Management

OTHER REFERENCE:
1. Krishna Milk Union at a Glance.

83