Sanchi milk project report

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A
PROJECT REPORT
ON
“FINANCIAL RATIO ANALYSIS OF SAHKARI DUGDH SANGH
MARYADIT JABALPUR”
Submitted in partial fulfillment of Degree of
MASTER OF BUSINESS ADMINISTRATION
RANI DURGAVATI VISHWAVIDYALAYA
JABALPUR
Under the Supervision of
Dr.Ashish Sharma
(Faculty Guide)
Prof. Shailesh Choubey
(HOD)
UNIVERSITY INSTITUTE OF MANAGEMENT &
COMMERCE RDVV JABALPUR
Submitted By
SHUBHAM TIWARI
MBA 3RD
SEMESTER
ROLL NO: 15148034 ENROLL NO: BD4862
SESSION 2015-17

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UNIVERSITY INSTITUTE OF MANAGEMENT &
COMMERCE RDVV, JABALPUR
DEPARTMENT OF MANGEMENT
STUDENT DECLARATION
I Shubham Tiwari (MBA 3rd semester) hereby
declare that the Project Report entitled “Financial Ratio Analysis
Sahkari Dugdh Sangh Maryadit Jabalpur” submitted in partial
fulfillment of the requirement for the degree of Masters of Business
Administration to Rani Durgavati Vishwavidyalaya, Jabalpur.
This is my Original work and that no part of this
report has been submitted for the award of any other Degree,
Diploma, Fellowship or other similar titles or prizes and that the work
has not been published in any journals or magazines.
Name: Shubham Tiwari
ROLL NO: 15148034
EN. NO: BD4862

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ACKNOWLEDGEMENT
I would like to express my thanks to god for always having his blessings upon me to
complete this project report.
Words fail to express adequately my feeling of deep sense of gratitude from the core of my
heart which I owe to Dr.Ashish Sharma and Dr.Rajini Sharma for their valuable counsel,
abounding and able guidance, constant help, continuous encouragement and kind treatment at
every step of the work its present form. I am greatly obliged to all our professor and staff
member of the M.B.A. department for their needful cooperation, timely help and suggestion
during the course of the study. I am highly thankful to all the staff member’s of SAANCHI
DUGDH SANGH MARYADIT JABALPUR & special thanks to R.K. Pandya Sir for their
great co-operation and support without which I would not able to accomplish my survey
successfully. I would like to express my sincere thanks to Prof.Shailesh Choubey (HOD OF
M.B.A. UIMC RDVV JABALPUR) for giving me the opportunity to be a part of esteemed
institutions and without whose support this project would not have been possible.
And last but not the least : I would like to thank god, for making the interaction possible
between the required members and my parents for being with me.
Shubham Tiwari
MBA III Sem

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CONTENT
Subject Page
Sno.
No .
1 EXECUTIVE SUMMARY
INTRODUTION FINANCIAL
RATIO ANALYSIS
INDUSRTY PROFILE
ORGANIZATION PROFILE
NEED OF STUADIES
OBJECTIVES OF STUDY
METHODOLOGY
FINDINGS ,CONCLUSTION &
RECOMMENDATION
LIMITATION OF STUDY
6-26
2 INTRODUCTION TO THE STUDY
&COMPANY PROFILE
27-30
3 ORGANIZATION PROFILE 31-44
4 RESEARCH METHODOLOGY 45-48
5 DATA PROCESSING & ANALYSIS 49-69
6 FINDINGS SUGGESTION CONCLUSION
RECOMMENDATION
70-73

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Financial statements provide summarized view of the financial position and Operation of the
company. Therefore, now a day it is necessary to all companies to know as well as to show
the financial soundness i.e. position and operation of Company to their stakeholders. It is also
necessary to company to know their financial position and operation of the company. In this
report I made an effort to know the financial position of Saanchi Dugdh Sangh Maryadit
Jabalpur, by using the Annual Reports & Financial Statements of the firm. The Financial
analysis of this report will show the Strength and weakness of the Saanchi Dugdh Sangh
Jabalpur. Financial analysis will help the firm to take decision. Thus, we can say that,
Financial Analysis is a starting point for making plans before using any sophisticated
forecasting and planning. “Study the FINANCIAL RATIO AND ANALYSIS” at Saanchi
Dugdh Sangh Maryadit Jabalpur.
EXECUTIVE SUMMARY

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List of Financial Ratios
Here is a list of various financial ratios. Take note that most of the ratios can also be expressed
in percentage by multiplying the decimal number by 100%. Each ratio is briefly described.
Financial ratio analysis is performed by comparing two items in the financial statements. The resulting
ratio can be interpreted in a way that is not possible when interpreting the items separately.
Financial ratios can be classified into ratios that measure: profitability, liquidity, management
efficiency, leverage, and valuation & growth.
Profitability Ratios
1. Gross Profit Rate = Gross Profit / Net Sales
Evaluates how much gross profit is generated from sales. Gross profit is equal to net sales (sales
minus sales returns, discounts, and allowances) minus cost of sales.
2. Return on Sales= Net Income / Net Sales
Also, known as "net profit margin" or "net profit rate", it measures the percentage of income
derived from dollar sales. Generally, the higher the ROS the better.
3. Return on Assets = Net Income / Average Total Assets
In financial analysis, it is the measure of the return on investment. ROA is used in evaluating
management's efficiency in using assets to generate income.
4. Return on Stockholders' Equity = Net Income / Average Stockholders' Equity
Measures the percentage of income derived for every dollar of owners' equity.

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5. Gross Profit Rate = Gross Profit / Net Sales
Evaluates how much gross profit is generated from sales. Gross profit is equal to net sales (sales
minus sales returns, discounts, and allowances) minus cost of sales.
6. Return on Sales= Net Income / Net Sales
Also, known as "net profit margin" or "net profit rate", it measures the percentage of income derived
from dollar sales. Generally, the higher the ROS the better.
7. Return on Assets = Net Income / Average Total Assets
In financial analysis, it is the measure of the return on investment. ROA is used in evaluating
management's efficiency in using assets to generate income.
8. Return on Stockholders' Equity = Net Income / Average Stockholders' Equity
Measures the percentage of income derived for every dollar of owners' equity.
Liquidity Ratios
1. Current Ratio = Current Assets / Current Liabilities
Evaluates the ability of a company to pay short-term obligations using current assets (cash,
marketable securities, current receivables, inventory, and prepayments).
2. Acid Test Ratio = Quick Assets / Current Liabilities
Also, known as "quick ratio", it measures the ability of a company to pay short-term obligations using
the more liquid types of current assets or "quick assets" (cash, marketable securities, and current
receivables).
3. Cash Ratio = (Cash + Marketable Securities) / Current Liabilities
Measures the ability of a company to pay its current liabilities using cash and marketable securities.
Marketable securities are short-term debt instruments that are as good as cash.
4. Net Working Capital = Current Assets - Current Liabilities
Determines if a company can meet its current obligations with its current assets; and how much
excess or deficiency there is.
Management Efficiency Ratios
1. Receivable Turnover = Net Credit Sales/ Average Accounts Receivable
Measures the efficiency of extending credit and collecting the same. It indicates the average number
of times in a year a company collects its open accounts. A high ratio implies efficient credit and
collection process.
2. Days SalesOutstanding = 360 Days / Receivable Turnover
Also, known as "receivable turnover in days", "collection period". It measures the average number of
days it takes a company to collect a receivable. The shorter the DSO, the better. Take note that some
use 365 days instead of 360.

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3. Inventory Turnover = Cost of Sales / Average Inventory
Represents the number of times inventory is sold and replaced. Take note that some authors use
Sales in lieu of Cost of Sales in the above formula. A high ratio indicates that the company is
efficient in managing its inventories.
4. Days Inventory Outstanding = 360 Days / Inventory Turnover
Also, known as "inventory turnover in days". It represents the number of days inventory sits in the
warehouse. In other words, it measures the number of days from purchase of inventory to the sale of
the same. Like DSO, the shorter the DIO the better.
5. Accounts Payable Turnover = Net Credit Purchases / Ave. Accounts Payable
Represents the number of times a company pays its accounts payable during a period. A low ratio is
favored because it is better to delay payments as much as possible so that the money can be used
for more productive purposes.
6. Days Payable Outstanding = 360 Days / Accounts Payable Turnover
Also known as "accounts payable turnover in days", "payment period". It measures the average
number of days spent before paying obligations to suppliers. Unlike DSO and DIO, the longer the
DPO the better (as explained above).
7. Operating Cycle = Days Inventory Outstanding + Days Sales Outstanding
Measures the number of days a company makes 1 complete operating cycle, i.e. purchase
merchandise, sell them, and collect the amount due. A shorter operating cycle means that the
company generates sales and collects cash faster.
8. Cash Conversion Cycle = Operating Cycle - Days Payable Outstanding
CCC measures how fast a company converts cash into more cash. It represents the number of days a
company pays for purchases, sells them, and collects the amount due. Generally, like operating cycle,
the shorter the CCC the better.
9. Total Asset Turnover = Net Sales/ Average Total Assets
Measures overall efficiency of a company in generating sales using its assets. The formula is similar
to ROA, except that net sales is used instead of net income.
Leverage Ratios
1. Debt Ratio = Total Liabilities / Total Assets
Measures the portion of company assets that is financed by debt (obligations to third parties). Debt
ratio can also be computed using the formula: 1 minus Equity Ratio.
2. Equity Ratio = Total Equity / Total Assets
Determines the portion of total assets provided by equity (i.e. owners' contributions and the
company's accumulated profits). Equity ratio can also be computed using the formula: 1 minus Debt
Ratio.
The reciprocal of equity ratio is known as equity multiplier, which is equal to total assets divided by
total equity.
3. Debt-Equity Ratio = Total Liabilities/ Total Equity
Evaluates the capital structure of a company. A D/E ratio of more than 1 implies that the company is a
leveraged firm; less than 1 implies that it is a conservative one.
4. Times Interest Earned = EBIT / Interest Expense

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Measures the number of times interest expense is converted to income, and if the company can pay
its interest expense using the profits generated. EBIT is earnings before interest and taxes.
Valuation and Growth Ratios
1. Earnings per Share = (Net Income - Preferred Dividends) / Average Common Shares
Outstanding
EPS shows the rate of earnings per share of common stock. Preferred dividends deducted from net
income to get the earnings available to common stockholders.
2. Price-Earnings Ratio = Market Price per Share / Earnings per Share
Used to evaluate if a stock is over- or under-priced. A relatively low P/E ratio could indicate that the
company is under-priced. Conversely, investors expect high growth rate from companies with high
P/E ratio.
3. Dividend Pay-out Ratio = Dividend per Share / Earnings per Share
Determines the portion of net income that is distributed to owners. Not all income is distributed since a
significant portion is retained for the next year's operations.
4. Dividend Yield Ratio = Dividend per Share / Market Price per Share
Measures the percentage of return through dividends when compared to the price paid for the stock.
A high yield is attractive to investors who are after dividends rather than long-term capital
appreciation.
5. Book Value per Share = Common SHE / Average Common Shares
Indicates the value of stock based on historical cost. The value of common shareholders' equity in the
books of the company is divided by the average common shares outstanding.
Conclusion
Here's a tip. When computing for a ratio that involves an income statement item and a balance sheet
item, make sure to average the balance sheet item. This is because the income statement item
pertains to a whole period's activity. The balance sheet item should then reflect the whole period as
well; that's why we average.
There are other financial ratios in addition those listed above. The ones listed here are the most
common ratios used in evaluating a business. In interpreting the ratios, it is better to have a basis for
comparison, such as historical ratios and industry standards.

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Jabalpur Sanchi Dugdh Sangh a dairy plant unit under cooperative union of MP federation
ltd. It is located at Imaliya about 15 km from Jabalpur formed by the sangh comprising of
many village.It covers 17 districts of the state and Jabalpur Sanchi Dugdh Sangh started in
1980 and is the largest Dugdh sangh by area covered in the State. The milk comes from the
cooperative society formed by the Sangh comprising of many village. Dugdh Sangh use their
own transport facilities in receiving the milk from these village to milk products is distributed
through the distribute of various routes to the retail over lets booths. Saanchi is located near
Vidisha. Saanchi stoop is the trademark of sanchi milk.Saanchi is located near Vidisha.
Saanchi stoop is the trademark of sanchi milk.The main plant of sanchi are in Bhopal, Indore,
Gwalior, Ujjain andJabalpur city. Powder plant is located in Gwalior and Indore.
COMPANY PROFILE

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ADDRESS DAIRY PLANT IMALIYA, JABALPUR
OPERATIONCENTRE JABALPUR,BALAGHAT,NARSINGHPUR,
REWA,SATNA,MANDLA,DINDORI,KATNI,
CHINDWADA,SHADOL,UMARIYA,SEEDHI,
SINGHROLI,ANUPUR,PANNA,DAMOH
OPERATIONCAPACITY MAIN MILK PLANT 1 LAKH LTRE & MINI
DAIRY PLANT 0.25 LAKH LITRE
DAIRY PLANT WITH MILK
CENTRE
JABALPUR,BALAGHAT,NARSINGHPUR,
PRODUCTION MILK PRODUCTS
ORGANIZATION PROFILE

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Field operation:
The Field Operation activities begin with organization of Dairy Co- operative Societies in
the rural areas and end with milk transportation to the dairy dock. The basic Field
Operations include:-
 Organization of Dairy Co-operative Societies on 'Anand' pattern.
 Organizing milk producer farmers' training programs for formation of co-operatives,
awareness to co-operative principles & milk production enhancement techniques etc.
 Procurement and transportation for arrangement of milk.
 Providing Technical Input services to the milk producer farmers for milk production
enhancement such as Animal Health Care (First Aid & Emergency), Artificial
Insemination, Balanced Cattle feed and improved fodder seed etc.
 Preference to economically weaker sections, small & marginal farmers, scheduled
caste / tribe categories in various activities.
operation:
 The plant operationactivitiesbeginwithreceiptof milkatthe ChillingCentre /DairyDock
and endwithdispatchof milk& milkproductsfordistribution.
 The basic activities of Plant Operations include:
Reception of milk at Chilling Centre / Dairy
Dock.Testing of milk,Pasteurization, Chilling, Packing,
Manufacturing & packing of Main products like
 Ghee, SMP, White Butter & Table Butter. Manufacturing & packing of indigenous
products like Shrikhand, Lassi, Peda, Salted & Plain Butter Milk, Flavored Milk etc.
 Storage of products
ACTIVITIES

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Marketing:
 Marketing of different types of milk in different pack sizes (Full Cream Milk,
Standard Milk, Toned Milk, Double Toned Milk, Skimmed Milk etc.) under the
brand name "Sanchi".
 Marketingof Indigenousfreshmilkproducts(Ghee,Flavored Milk,ButterMilk,Shreekhand,
SweetCurd,Mattha, Dahi,Lassi,Peda,Chakka,Mawa,Paneeretc.) underthe brandname
"Sanchi"withinthe state.
 Sales Promotion and advertising Sale of surplus milk to the other cooperative Milk
Unions under the State Milk Grid (SMG) and to other Cooperative Organizations /
Milk Unions outside the state under the National Milk Grid (NMG).
MISSION –
To safeguard the interest of the villagers in terms of profitability
and to achive the fully self-dependency in the district of Jabalpur, Seoni,
Chindwada, Balaghat, Narsingpur, Rewa, Sidhi,Satna, Sehdol, Umaria, Katni,
Dindori, Mandala, Damoh. Commercial production of high quality milk anddevelopment of
milk products with reasonable price.
Collection Process of Raw Milk from the Villages:
Milk collected from the various societies formed in the
village. Raw milk is brought in cans in which name of the society or samitti is
written these are bought through vehicles to the plant and tome is fixed for
reaching the plant and when loading in village is to be done which helps in
making payment decision both to the transporters and the society
Reception of Milk
Process ofreception:
Reception of milk to process of making the decision the acceptance of
milk for further processing whether the milk is milk is acceptable or not, has to
decided by the person in change of the the reception section. The place
where this person in change of the reception dock, receiving platform or raw
milk receiving dock (RMRD). Since the future processing of milk mainly
depends upon its quality, the decision of accepting the milk must be made
very carefully. The process operation includes following operation
Weighing or Measuring and Recording
A. Uploading or emptying: Milk is generally brought either in milk can
or in tankers. The first operation in the reception dock is unloading
of milk can or emptying of milk tankers. As soon as vehicle arrives

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at the reception dock all the efforts should be made to get the milk
properly emptied. The milk cans can are unloaded from the vehicle
and are generally placed or the conveyers. The lids are removed
and each can is subjected to rapid sensory evolution. In case of
milk tanker milk is pumped out with the help of milk pump which
normally passes through a floe meter where the volume of milk
pumped is automatically recorded. Milk is tank to the dump tank
from where sample is taken for quality evaluation.
B. Sampling: Samplings of milk are of the most important aspect of
entire operation. The validity of correct decision will be based on the
sampling procedure only representative samples should used for
evaluating the quality of milk received. Any fault committed during
the process of sampling will have its repercussions on the entire
operation. The technique of sampling and volume milk taken for
individual sample should be taken after thorough mixing of milk with
the help of plunger or milk sampler.
C. Testing: These tests which are conducted on the reception dock are
called platform tests. These tests must be easy to perform, must
give quick and reliable result and should not require complicated
and elaborated equipment. The time taken to perform these test
must be very short. The accuracy of these tests mainly depend
upon the experience and sincerity of individual who is conducting
the testing. The following tests an included under platform tests:
D. Weighing or measuring and recording: When milk is received from
the individual producer either at the collection centre or in the dairy,
it is generally measured by the approved measures. In case the
milk is received at dairy from the individual societies or collection
centers, its weight is recorded before it is dumped into the dump
tank milk is poured in the weighing thank and its weight is known
from the dial balance. When milk is bought in the tankers to the
dairy, then either the volume of milk is known through the marks
provided in the tanker or from the floe meter through which it is
passed. It is required that the records of the receipts should be
carefully maintained. The important point to be recorded for each
supply should include data, time, source from where received,
volume/weight of milk received, fed and specific gravity quality of
milk and signature of receiver.
Need For Study:
The financial performance of the company is known by calculating financial
statement and ratio.
To know the organizational activity.

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To know the societies contribution to build the industry and also organization
Objectives of Study:
To study the organization activity of each department.
To find out the financial performance of the organization for last 5 years through
ratioanalysis.
To know how the ratio analysis helps the organization to improve profits
To know the Utilization of financial resources.
Location:-
Jabalpur , formerly known as Jubbulpore, is one of the major cities
of MadhyaPradesh state in India. It is the third largest urban
agglomeration in MadhyaPradesh and the agglomeration in India as per the
2011 census statistics. Its old name was thought to be Jabalipuram but, in
actuality,. Jabalpur city is located in the northern part of M.P. the city extends
from 23”10‟N 79”56‟E.and height from sea level is 412m.
Population
As per the census of 2011 the population of Jabalpur district was 2460714. it
wasis the 40th most populous city in India. The literacy percentage of Jabalpur
district is 82.5% out of which 89.1% are male and 75.3% are female. 73.7%
literate population belongs from urban areas and 88.5 % from rural areas.
The distribution of total population is shown in given table.
Table 2.1: population of Jabalpur district on the basis of census of 2011
POPULATION URBAN RURAL TOTAL
MALE 758190 526558 1278448
FEMALE 686887 495379 1182266
LITERACY RATE(7+YRS) 88.5 73.7 82.5
MALE (7+YRS) 92.8 83.7 89
FEMALE(7+YRS) 83.8 63.1 75
TOTAL NO OF HOUSEHOLD 279006 236023 515029

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Figure 2.1: Jabalpur map
Table 2.2: Animal census of Jabalpur District
Livestock Total (No.) („000)
Non descriptive Cattle (local low
yielding)
366.6
Crossbred cattle 127.6
Non descriptive Buffaloes (local
low yielding)
96.3
Graded Buffaloes 51.6
Goat 116
Sheep 3.9
Others (Pig and horse 15.9
Commercial dairy farms
(Number)
156
Sources: Agriculture Contingency Plan for District Jabalpur
Table 2.3: Private Dairy and their milk production
S.No Number of private Dairies in
Jabalpur
Milk production (MT)
1 30 193.8

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MAJOR COMPETITORS
 Narendra Dairy
 Narmada Dairy
 Sales Agencies
 Local Vendors
Research:
Research is nothing but systematic investigation and study of sources & materials. it establish
facts and it reach conclusions.
Methodology:
Methodology is nothing but a body of methods used in a particular activity.
1. The methodology includes the personal interaction with the finance manager.
2. .Selection of data: From the Financial Statements of the firm for last five years; i.e.
from
Financial Statements for the year 2004-05
FINDINGS:-
Firm is more dependent Internal funds Its Good sign
The firm is not utilizing assets efficiently.
Profit of the firm is increasing but not satisfactory.
RESEARCH METHODOLOGY

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RECUMENDATION
Have to concentrate on short term loans to improve liquidity position
Management of manufacturing, administrative and selling expenses is necessary
CONCLUSION
The profit Of the Company Is not in a good Position For That company has to
Take Alternative Actions such As Increasing in Procurement of milk, Production, and
Control in Fixed Expenses Like, Administrative, selling Etc.
LIMITATION OF THE STUDY:
The accuracy of the ratios is subject to the validity of information provided through
Balance sheet, Profit and Loss A/c and interactions with Management.
The standard for the ratios are suitably modified to prudently reflect the financial
position keeping in mind the peculiarities of the industry / company.

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The study paper on the topic “a study financial Ratio Analysis at JSMS” ispartial fulfillment
of requirement of MBA course in finance under the banner of UIMC RDVV JABALPUR. It
was an opportunity to learn practical aspects of industries. I have chosen this topic because
“ratios are use to interpret the financial statements so that strengths and weakness of a firm as
well as to know its historical performance and current financial condition can be determined.”
RATIO ANALYSIS
When we observed the financial statements comprising the balance sheet and profit or loss
account is that they do not give all the information related to financial operations of a firm,
they can provide some extremely useful information to the extent that the balance sheetshows
the financial position on a particular date in terms of structure of assets, liabilities and owners
equity and profit or loss account shows the results of operation during the year. Thus the
financial statements will provide a summarized view of the firm. There fore in order to learnt
about the firm the careful examination of in valuable reports and statements through financial
analysis or ratios is required.
Meaning and Definition:-
Ratio analysis is one of the powerful techniques which is widely used for interpreting
financial statements. This technique serves as a tool for assessing the financial soundness of
the business.The idea of ratio analysis was introduced by Alexander wall for the first time in
1919. Ratios are quantitative relationship between two or more variables taken from financial
statements.
Ratio analysis is defined as, “The systematic use of ratio to interpret the financial statement
so that the strength and weakness of the firm as well as its historical performance and current
financial condition can be determined. In the financial statements we can find many items are
co-related with each other For example current assets and current liabilities, capital and long
term debt, gross profit and net profit purchase and sales etc.
To take managerial decision the ratio of such items reveals the soundness of financial
position. Such information will be useful for creditors, shareholders management and all
other people who deal with company.
Importance;
As a tool of financial management ratio are of crucial significance. The importance of ratio
analysis lies in the fact that it presents facts on a comparative basis andenables the drawing
inferences regarding the performance of a firm. Ratio analysis is relevant in assessing the
performance of a firm in respect of the following aspects:
Liquidity position
Long term solvency
INTRODUCTION TO THE STUDY

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Operating efficiency
Overall profitability
Inter firm comparison
Trend analysis.
Liquidity Position
With the help of ratio analysis conclusions can be drawn regarding the liquidity position of a
firm would be satisfactory if it is able to meet its current obligations when it become due. A
firm can be said to have the ability to meet its short term liabilities if it has sufficient liquid
funds to pay the interest on its short maturing debt usually within a year as well as to repay
the principal. This ability is reflected in the liquidity ratios of a firm. The liquidity ratios are
particularly useful in credit analysis by banks and other suppliers of short term loans.
Long term solvency:
Ratio analysis is equally useful for assessing the long term financial viability of a firm. This
aspect of the financial position of a borrower is of concern to the long term
creditors, security analysts and the present and potential owners of a business. The long term
solvency is measured by the leverage/capital structure and profitability ratios which focus on
earning power and operating efficiency. Ratio analysis reveals the strengths and weakness of
a firm in this respect. The leverage ratio for instance, will indicate whether a firm has
reasonable proportion of various sources of finance or if it is heavily loaded with debt in
which case its solvency is exposed to serious strain. Similarly the various profitability ratios
would reveal whether or not the firm is able to offer adequate return to its owners consistent
with the risk involved.
Operating efficiency:
Yet another dimension of the usefulness of the ratio analysis, relevant from the viewpoint of
management, is that it throws light on the degree of efficiency in the management and
utilization of its assets. The various activity ratios measure this kind of operational efficiency.
In fact, the solvency of a firm is, in the ultimate analysis, dependent upon the sales revenues
generated by the use of its assets total as well as its components
Overall profitability:
Unlike the outside parties which are interested in one aspect of the financial position of a
firm, the management is constantly concerned about the overall profitability of the
enterprise. That is, they are concerned about the ability of the firm to meet its short term as
well as long term obligations to its creditors, to ensure a reasonable return to its owners
and secure optimum utilization of the assets of the firm. This is possible if an integrated
view is taken and all the ratios are considered together.

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Inter firm comparison
Ratio analysis not only throws light on the financial position of a firm but also serves as a
stepping stone to remedial measures. This is made possible due to inter firm comparison and
comparison with industry averages. A single figure of a particular ratio is meaningless unless
it is related to some standard or norm. one of the popular techniques is to compare the ratios
of a firm with the industry average. It should be reasonably expected that the performance of
a firm should be in broad conformity with that of the industry to which it belongs. An
interfere comparison would demonstrate the firm‟s position vis-à-vis its competitors. If the
results are at variance either with the industry average or with those of the competitors, the
firm can seek to identify the probable reasons and, in that light, take remedial measures.
Trend Analysis
Finally, ratio analysis enables a firmto take the time dimension into account. In other
words, whether the financial position of a firm is improving or deteriorating over the years.
This is made possible by the use of trend analysis. The significance of a trend analysis of
ratios lies in the fact that the analysts can know the direction of movement, that is, whether
the movement is favorable or unfavorable. For example, the ratio may be low as compared
to the norm but the trend may be upward. On the other hand, though the present level may
be satisfactory but the trend may be a declining one
Limitations
Ratio analysis is a widely used tool of financial analysis. Yet, it suffers from
various limitations.The operational implication of this is that while using ratios, the
conclusions should not be taken on their face value. Some of the limitations which
22haracterize ratio analysis are
i) Difficulty in comparison
ii) Impact of inflation, and
iii) Conceptual diversity.
Difficulty in comparison
One serious limitation of ratio analysis arises out of the difficulty associated with their
comparisons are vitiated by different procedures adopted by various firms. The differences
may relate to:

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Differencesinthe basisof inventoryvaluation(e.g.lastinfirstout,firstinfirstout,average cost and
cost);
Different depreciation methods (i.e. straight line vs. written down basis);
Estimated working life of assets, particularly of plant and equipment;
Amortization of intangible assets like good will, patents and so on;
Amortization of deferred revenue expenditure such as preliminary expenditure and
discount on issue of shares;
Capitalization of lease;
Treatment of extraordinary items of income and expenditure; and so on.
Secondly, apart from different accounting procedures, companies may have different
accounting periods, implying differences in the composition of the assets, particularly current
assets. For these reasons, the ratios of two firms may not be strictly comparable.
Another basis of comparison is the industry average. This presupposes the availability, on a
comprehensive scale, of various ratios for each industry group over a period of time. If,
however as is likely such information is not compiled and available, the utility of ratio
analysis would be limited.
Impact of inflation
The second major limitation of the ratio analysis as a tool of financial analysis is associated
with price level changes. This, in fact, is a weakness of the traditional financial statements
which are based on historical costs. An implication of this feature of the financial statements
as regards ratio analysis is that assets acquired at different periods are, in effect, shown at
different prices in the balance sheet, as they are not adjusted for changes in the price level. As
a result, ratio analysis will not yield strictly comparable and, therefore, dependable results. To
illustrate, there are two firms which have identical rates of returns on investments, say 15%.
But one of these had acquired its fixed assets when prices were relatively low,
While the other one had purchased them when prices were high. As a result, the book value
of the fixed assets of the former type of firm would be lower, while that of the latter higher.
From the point of view of profitability, the return on the investment of the firm with a lower
book value would be overstated. Obviously, identical rates of returns on investment are not
indicative of equal profitability of the two firms. This is a limitation of ratios
Conceptual Diversity
Yet another factor which influences the usefulness of ratios is that there is difference of opinion
regarding the various concepts used to compute the ratios. There is always room for diversity of
opinion as to what constitutes shareholders equity, debt, assets, and profit and so on. Different firms
may use these terms in different senses or the same firm may use them to mean different things at
different times.

24
Reliance on a single ratio, for a particular purpose may not be a conclusive indicator. For
instance, the current ratio alone is not a as adequate measure of short term financial strength;
it should be supplemented by the acid test ratio, debtors turnover ratio and inventory turnover
ratio to have real insight into the liquidity aspect.
Finally, ratios are only a post mortem analysis of what has happened between two balance
sheet dates. For one thing, the position in the interim period us bit revealed by ratio analysis.
Moreover, they give no clue about the future.
Some Ratio are helpful to know the financial condition of the organonization,thare are
1. Liquidity ratio:
Current ratio
Quick ratio
2.Long- term solvency Ratio
Debt-equity ratio
Proprietor Ratio
Int.Coverage ratio
3. Activity/Efficiency 0r Current Assets Movement Ratio
Inventory turnover ratio
Debtors turnover ratio
Debtors collection period ratio
Creditors turnover ratio
4. Profitability Ratios:
Gross profit ratio
Net profit ratio
Operating expenses ratio

25
5. Earning Ratios – Overall Profitability Ratios
Return on asset
Return on capital employed
Liquidity Ratios:
The importance of adequate liquidity in the sense of the ability of a firm to meet current/short
term obligations when they become due for payment can hardly be overstressed. In fact,
liquidity is a prerequisite for the very survival of a firm. The short term creditors of the firm
are interested in the short term solvency or liquidity of a firm. But liquidity implies, from the
viewpoint of utilization of the funds of the firm that funds are idle or they earn very little. A
proper balance between the two contradictory requirements, that is, liquidity and profitability
is required for efficient financial management. The liquidity ratios measure the ability of firm
to meet its short term obligations and reflect the short term financial solvency of a firm.
Long –term Solvency Ratio:
The second category of financial ratios is leverage or capital structure ratios. The long term
creditors would judge the soundness of a firm on the basis of the long term financial strength
measured in terms of its ability to pay the interest regularly as well as repay the installment of
the principal on due dates or in one lump sum at the time of maturity. The long term solvency
ratio of a firm can be examined by using leverage or capital structure ratios. The leverage or
capital structure ratios may be defined as financial ratios which throw light on the long term
solvency of a firm as reflected in its ability to assure the long term creditors with regard to:
(1) Periodic payment of interest During the period of the loan and (2) Repayment of principal
on maturity or in pre determined installments at due dates
Activity Ratios:
Activity ratios are concerned with measuring the efficiency in asset management. These
ratios are also called efficiency ratios or assets utilization ratios. The efficiency with which
the assets are used would be reflected in the speed and rapidity with which assets are
converted into sales. The greater is the rate of turnover or conversion, the more efficient is the
utilization/management, other things being equal. For this reason, such ratios are also
designated as turnover ratios. Turnover is the primary mode for measuring the extent of
efficient employment of assets by relating the assets to sales. An activity ratio may, therefore,
be defined as a test of the relationship between sales and the various assets of a firm
Profitability Ratios:
Apart from the creditors, both short term and long term, also interested in the financial
soundness of a firm are the owners and management or the company itself. The Management
of the firm is naturally eager to measure its operating efficiency of a firm and its ability to
ensure adequate return to its shareholders depends ultimately on the profits earned by it. The
profitability of a firm can be measured by its profitability ratios.

26
In other words, the profitability ratios are designed to provide answers to questions such as:
(1) Is the profit earned by the firm adequate?
(2) What rate of return does it represent?
(3) What is the rate of profit for various divisions and segments of the firm?
(4) What is the rate of return to equity holders?
DIARYING IN INDIA
The association of Indian with Animal Husbandry and Dairying is deep-rooted in history.
Since time immemorial, milk and milk products have been accepted in the diet of people of
India as items of choice. It is said in Indian mythology that lord „Krishna‟ the god of
righteousness grew up by drinking milk and eating butter and ghee. He was nicknamed as
„butter Krishna‟ as he used to steal the butter in his neighborhood. The sage hashish
possessed a sacred cow, donated by Lord Brahma, the god of knowledge, which was named
as Nandini says Indian mythology. The word Nandini is the family brand of the Jabalpur
sahkari dugdh sangh, in short, JSDSM, which is engaged in marketing of milk and milk
products.
BACKGROUND
Towards the end of 1950‟s a development in the kaira district of Gujarat state, paved the way
for co-operative dairy in India. The milk producers of this district decided to come together
and form a Co-operative as a protection against the exploitation by the private dairy owners
and middlemen in the form of unremunerative prices. Sardar vallabhai patel, a great Indian
freedom fighter and the first Deputy Prime Minister of independent India, provided main
impetus to the farmers. He heard the formers tale of woe and was touched to the quick. The
man of action took no time to find a solution; Co-operative the dairy. Thus, came the era of
co-operative dairying in Indian dairying. A meeting called on January 4, 1946 in samarkha
village decided to set up a milk producers Co-operative it culminated in the establishment of
the kaira district Co-operative producers union limited and the establishment of worldwide
renowned Amul dairy plant at Anand. Later on, the kaira District union was identified as
Anand Milk Union Limited.The Anand pattern is a three- tier structure consisting of the
producers societies at the village level, which collect the milk from producers daily and pay
them; the district level producers unions (a representative body of the village societies) which
provide the inputs required by the farmers including artificial insemination, veterinary
services and the supply of feeds; and a federation of the unions of the state level, which
manages the dairy with the help of elected representative of the districts unions. On behalf of
the unions, the federation undertakes the collecting marketing of milk and milk products
attending to quality control. The role of the government is to supervise, guide and encourage
the co-operatives. The Anand pattern, their establishes a direct link between the producers and
consumers. To achieve this objective of replicating Anand or Amul pattern dairy co-operative
society, the national dairy development board was set up under the chairmanship of Dr. V. Kurien
in the year 1965. The NDDB was asked to draw up plans and policies to realize the objective of
percolating the Anand pattern in rural India.

27
INDUSTRIAL PROFILE
ADDRESS DAIRY PLANT IMALIYA, JABALPUR
OPERATIONCENTRE JABALPUR,BALAGHAT,NARSINGHPUR,
OPERATIONCAPACITY MAIN MILK PLANT 1 LAKH LTRE & MINI
DAIRY PLANT 0.25 LAKH LITRE
DAIRY PLANT WITH MILK
CENTRE
JABALPUR,BALAGHAT,NARSINGHPUR,
PRODUCTION MILK PRODUCTS
Jabalpur Sanchi Dugdh Sangh a dairy plant unit under cooperative
union of MP federation ltd. Bhopal is located at Imaliya about 15 km from
Jabalpur formed by the Sangh comprising of many village.
It covers 17 districts of the state and Jabalpur Sanchi Dugdh
Sangh started in 1980 and is the largest Dugdh Sangh by area covered in the
State. The milk comes from the cooperative society formed by the Sangh
comprising of many village. Dugdh Sangh use their own transport facilities in
receiving the milk from these village to milk products is distributed through the
distribute of various routes to the retail over lets booths.
Sanchi is located near Vidisha. Sanchi stoop is the trademark of sanchi milk.
The main plant of sanchi are in Bhopal, Indore, Gwalior, Ujjain and
Jabalpur city. Powder plant is located in Gwalior and Indore.

28
Coordination of activities among the Unions and developingmarket for Milk and Milk products
is the responsibilityof JSDS. Marketing Milk in the respective jurisdiction is organized by the
respective Milk Unions. Surplus/deficit of liquidmilk among the member Milk Unions is
monitored by the Federation. While the marketing of all the Milk Products is organized by JSDS,
both within and outside the State, all the Milk and Milk products are sold under a common
brand name SAANCHI.

29
OPRATIVE SUPPLIMENT QTY 976-77 2007-2008
Dairy Co-operatives
Nos
416 11063
Membership
Nos
37000 1956163
Milk Procurement
Kgs/day
50000 3025940
Milk Sales
Lts/day
95050 2129790/curd:1.77LKPD
Cattle Feed Consumed
Kgs/DCS
220 3010
Daily Payment to Farmers
Rs.Lakhs
0.90 342
The Corporate Office of the MP Cooperative Milk Federation is locatedon
Bhopal. The Federation has a Board consisting representatives of
Milk Producers and the Government nominees. The day to day functions of the Federation is
managed by a group of professional managers headed by the CEO

30
Jabalpur Sanchi Dugdh Sangh a dairy plant unit under cooperative union of MP federation
ltd. Bhopal is located at Imaliya about 15 km fromJabalpur formed by the Sangh comprising
of many village.It covers 17 districts of the state and Jabalpur Sanchi Dugdh
Sangh started in 1980 and is the largest Dugdh Sangh by area covered in the
State. The milk comes from the cooperative society formed by the Sangh
comprising of many village. Dugdh Sangh use their own transport facilities in
receiving the milk from these village to milk products is distributed through the
distribute of various routes to the retail over lets booths.
MISSION –
To safeguard the interest of the villagers in terms of profitability
and to achive the fully self-dependency in the district of Jabalpur, Seoni,
Chindwada, Balaghat, Narsingpur, Rewa, Sidhi,Satna, Sehdol, Umaria, Katni,
Dindori, Mandala, Damoh. Commercial production of high quality milk anddevelopment of
milk products with reasonable price.
STATUS:
A Co-operative Society registered under the Co-operative act 1959
NATURE OF BUSINESS:
Procuring and marketing of milk production and sale of milk products
ORANIZATION PROFILE

31
MAJOR COMPETITORS
 Narendra Dairy
 Narmada Dairy
 Sales Agencies
 Local Vendors
WELFARE FACLITIES
I. Statutory Facilities
canteen facilities
payment to provident fund contribution
Provision of toilets, Restroom sittings.
Leave facilities.
i. casual leave 15days
ii. sick leave 10days
iii. Earned leaves 30days
Uniforms are provided.
Provision of wash basins.
Medical benefits

32
II. Non Statutory Facilities
Factory arranges cultural programs at the time of Ganesh chaturthi, workers day and
deepavali.
Factory often conducts demonstration through social workers in respect of family
planning, AIDS awareness, etc.
Staff member‟s children will be provided with gift for scoring in SSLC, PUC.
Milk subsidy for
i. 10 months ¼ ltr free (Jan-Oct)
ii. 2 months ½ ltr free (Nov-Dec)
15%discuount on purchase of 1kh Ghee (Only staff)
Yearly 1kg Ghee free for festivals i.e. Deepavali and Ganesh Chaturthi
III. Financial Scheme
Employee gratuity scheme.
Employee‟s group savings linked insurance scheme.
Employee‟s death cum gratuity scheme.
Employees provided fund and pension scheme
ORGANIZATION CHART
.

33
DEPARTMENTAL STUDY
PRODUCTION DEPARTMENT
It is one of the major departments in JSDS. Production is basic operating function of every
industrial enterprises around which other activitiesof an organization such as financial,
marketing, storing personnel,research and developmentinvolve production department deal
with decision making resulting in production of goods of specification.
The structure of production department
PRODUCTCTION
DY.MANAGER
Q.OFFICER
ASISTANT

34
FINANCE DEPARTMENT
The main activity of the finance department is to keep all the account of the financial
transactions. It is responsible for maintaining up to date account. The various activities are
collected to different sections.
The structure of finance department:
FINANCE DEPARTMENT
DY.MANAGER
A/C OFFICER
ASISTANT HELPER

35
PURCHASE DEPARTMENT
There is a separate department for purchasing of products in JSDS.
Factors to be considered during purchase decision:
1. Tenders
2. Enquiries
3. Performance analysis
The structure of the purchase department
DY.MANAGER
EXTENSION OFFICER
HELPER

36
QUALITY CONTROL DEPARTMENT
A qualified Q.C officer is in charge of this section which works in all the three shifts. The
main of this department is to see and check the quality of milk and milk products produced in
the plant. The activities of this section in brief are as listed below
DHARWAD MILK UNINION
Babasabpatilfreepptmba.com Page 44
A qualified q.c officer is in charge of this section which works in all the three shifts. The main of
this department is to see and check the quality of milk and milk products produced in the plant.
The activities of this section in brief are as listed below:
1. 1Tanker milk - Fat, Snf, Temperature, acidity, cob, and
2. Adulterants
3. Can milk: - organoleptic, fat & snf of society samples
4. and cob Of doubtful cases
5. Raw milk silo - stock check at beginning and end of shift.
6. Temperature, fat, snf, clr, and acidity
7. pasteurized milk silo- fat , snf, mbrt, phosphates, temperature and
8. Keeping quality
9. Butter---- fat, curd, moisture, salt, yeast & mould, coli
10. Form count.
11. ghee moisture and free fatty acid
12. peda moisture and total solids
13. powder snf, moisture, burnt particles etc
14. Material testing chemicals and packing materials.
15. Water- hardness, ph, alkalinity, total dissolved solids
16. Of raw, soft and boiler blow down water
There are various tests conducted by the officer in charge as well as the assistants to meet this
requirement. If any product does not pass through the quality standard then the product is
rejected. Even before dispatching the Products undergo testing and it is only after the
approval of the quality department that the goods are dispatched

37
Test conducted at JSDS:
When the milk arrives at JSDS, at the reception center a panel of well-qualified persons in a
laboratory tests the quality and quantity of milk. There are number of tests carried, some of
them are as follows:
Clot on boiling (COB) test
Alcohol test
Taste
Flavor
Acidity
Corrected lactometer reading (CLR)
Gerber method for fat test.
Milk-tested method
Moisture test
Solid not fat (SNF) test
Test for SNF:
SNF is tested using lactometer at 27oc because at this temperature the SNF and fat contact
will be equally distributed in the milk.
TESTS FOR FAT:
Gerber method:
This is the most accurate scientific method of checking the fat content in the milk. In this method
10% of H2SO4 (90%dilute) + 10.75ml of milk is taken in a test tube with appropriate marketing.
To this 1ml of Amyl alcohol is added. Shake well and centrifuge it at 1200 RPM (revolutions per
minute) for 3 minutes. This gives the amount of fat content in the milk.
Out of these some tests are carried out for milk products such as moisture test etc and the
remaining are carried for milk.
Other tests conducted in laboratory
Phosphates test:
This test is carried out to see that whether the milk is pasteurized or not. If the test shows
yellow color it is raw milk and if it shows white color it is pasteurized milk. For this test 5ml
of Disodium-4 para nitro phenyl di-sodium salt =1 of milk. Keep it in water incubator at 37o

38
Methelene Blue Reduction Test (MBRT):
This test is carried to test the life of the Pasteurized milk. For this test 10ml pasteurized of
milk +1ml of MBR solution. This mixture is kept for one hour and if the color is reduced to
blue in color in 1 hour, it extends the life of the milk to 3hours.
Alcoholic Test:
This test is done to check the acidity of the milk. For this test 65% of alcohol is mixed with
equal volume of milk. If any precipitate in the test tube then it shows that it is positive
meaning it contains alcohol which gives higher acidity
Acidity Test:
This test is also carried out to check the acidity of the milk. For this test 10ml of milk +10ml
of distilled water +1 or 2 drops of phenolphthalein is added as an indicator. This mixture is
titrated till the color changes from, white to light pink in color. This shows the percentage of
lactic acid content in the milk.
The other tests like taste, flavor etc…., are conducted at the reception center by the person in
charge. These all tests are conducted to ensure that right quality of milk and milk products are
produced.
PRODUCT PROFILE
SAANCHI GOLD

39
SAANCHI SHAKTI
SAANCHI FLAVOURED MILK
SAANCHI TAZA
SAANCHI SMART

40
BUTTER MILK
PLAIN BUTTER MILK
SAANCHI SHRIKAND
SWEET CURD

41
PLAIN CURD
PRO BIOTIC CURD
SAANCHI LASSI
GHEE

42
SKIMMED MILK POWDER
TABLE BUTTER
CHEENA KHEER
CHEENA RABDI

43
PEDA
PANEER
SWOT ANALYSES
STRENGTH
Many products are marked
Major market share 70%
Market leader in milk products
Competitive price
The best quality products
Excellent distribution channels
Excellent brand image
Consisatnancy in demand for product thought out the Year
Wide distribution network leads regular and timely supply
Reduce the transportation cost

44
WEAKNESS
More man power
All the products are perishable products
Poor retail serving and consumer grievance handling
Recurring quality problem
Lowest paying brand i.e. commission given by the company is less compare to other
brands
Inadequate sales promotional activity. Due to bad smell that persists low sale
OPPORTUNITIES:
There is scope for developing in new area
Predominant of loose milk segment – divide appropriate strategies
Phenomenal scope for innovation in product development packaging and presentation.
Step should be taken to introduce value added products like Srikhands ice-cream
THREATS:
No entry barriers for private players
Low level of consumer awareness
Persuade benefits of competing brand
Increase in tax and service rate
Increase of competitors.

45
Research Methodology:
Research:
Research is nothing but systematic investigation and study of sources & materials. it establish
facts and it reach conclusions
Methodology:
Methodology is nothing but a body of methods used in a particular activity.
The methodology includes the personal interaction with the finance manager.
Selection of data: From the Financial Statements of the firm for last five years; i.e.
from
Period: The Study covers a period of five years data from 2004-05, 2005-06, 2006-07, 2007-
08 & 2008-09 mean an Accounting year of the company consisting of 365 working days.
MEASUREMENT TECHNIQUE / STATISTICAL TOOLS:
Accounting Ratios.
Financial Statements of the Company.
ANALYTICAL TECHNIQUE:
Statistical technique used for calculation of ratios is in terms of percentage
RESEARCH METHODOLOGY

46
DATA COLLECTION METHOD:
The present chapter gives the methodological details regarding the selection
of area for study, collection of data and analysis to attain the objectives of the
study. The details are as under
1. Selection of study area
2. Selection of respondents
3. Data collection method
4. Period of study
5. Method of data collection
6. Method of analysis
Selection of area
Jabalpur Dugdh Sangh Cooperative Society has assigned Zone 2 of
Jabalpur for the project entitled sales promotion of Sanchi Sahkari Dugdh
Sangh Maryadit Jabalpur
Selection of respondent
Respondents consist of dealers and consumer from whom primary
relevant data was collected.Lists of authorized dealers were obtain from the Jabalpur Dugdh
Dangh(Sanchi) out of which 10 dealers (Sanchi parlour ) were randomly selected
covering Jabalpur, were as 40 kirana shop, and 40 consumer were randomly
selected for the further study. The list of respondent given in table.
SNO RESPONDENT TOTAL NUMBER
1 Dealers (Sanchi parlour ) 10
2 Consumer 30
3 Kirana shop 40
Data collection method
As per the objectives of study, primary and secondary data were
collected to project successful. Personal interview- The respondent
Questioned by using questionnaire.
Primary data
Primary data were collected through survey method involving dealers,
consumers and kirana shop who were interview with the scheduled
questionnaire.

47
Secondary data
Secondary data were collected from the following sources.
References from college library, JNKVV, Jabalpur.
Internet Jabalpur Sahkari Dugdh Sangh Maryadit
Period of study
45 days (30-11- 2016 13-1- 2016) in plant training
Method of data collection
Survey method was used to collect the relevant information from
dealers, consumers and kirana shop through prepared question.
The data collected was organized on table and appropriate statistical
tools were applied for its analysis.
Method of analysis
The data collected were presented in suitable table and were analyzed by
adding, multiply, average, percentage, divisionand interpreted
FINANCIAL STATEMENT
A financial statement is a organized collection of data according to logical and consistent
accounting procedures. Its purpose is pose is to convey understanding of some financial
aspects of business firm. It may show a position at a moment in time as in the case of b/s or
may reveal a series of activities over a given period of time as in case of income statement.
Financial statement are prepared for the management to deal with,
Financial statement are prepared for the management to deal with,
a. Status of investments.
b. Results achieved during a given period under review a financial statement generally refers to
the following;
1. Income Statement: The income statement also termed as (profit or loss account) is
generally considered to be the most useful of all financial statements. It explains what has
happened to a business as a result of operations between two balance sheet dates. It discloses
the revenue realized from the sale of goods and the costs incurred in the process of producing
the scheme. It tells the story of Progress or decline over given period and why and how an
indicated result was achieved.

48
2. Balance Sheet: It is statement of financial position of a business at particular moment of time
and the claims of the owners and outside against those assets at that time.
3. Statement of Retained Earnings: The term retained earnings means the accumulated excess
of earnings over losses and dividends. The balance shown income statement is transferred to the
balance through this statement. After making necessary appropriations. It is thus a connecting
link between the B/s and income statement. This statement is also termed as project and loss
appropriation account in case of companies
Statement of Changes in Financial Position:The balance sheet shows the financial condition
of the business at a particulars moment of time while the income statement discloses the
result of operations of business over a period of time. However for a better understanding of
the affairs of the business, it is essential to identify the movement of working capital or cash
in and out of the business. This information is available in the statement of changes in
financial position of the business

49
Analysis and Interpretation of Ratio
1) Current ratio:
This ratio indicates the rupees of current assets available for each rupee of current Liability.
By this ratio we can see the stability of the firm or short term financial position of the firm.
The ratio is calculated as fallows;
TABLE – 1 Current ratio
SNO YEARS CURRENT
ASSET
CURRENT
LIABILITIES
RATIO
1 2004-05 60717987.34 32656240.05 1.85930736
2 2005-06 71181058.76 43576691.74 1.63346633
3 2006-07 63658413.39 35978861.25 1.76932819
4 2007-08 86244063.79 53736056.45 1.60495707
5 2008-09 72128952.41 50741016.54 1.42151177
DATA ANALYSIS AND INTERPRETAION
Current ratio= current assets/current liabilities

50
Interpretation:
According to the standards the Current Ratio of the firm should be 2:1, but the ratios of the
company are less than 1.It tells the business can not pay debts due within one year from assets
which it expects to turn into cash within the year. In 2004-05 it was 1.86. but in the year 2005-06
it is decreased ,&It has gradually increased, it indicates improvements in the year 2006-07
financial poison of the company; again it has decreased in 2007-08&2008-09.
2) Quick /Liquid/Acid Test Ratio:
It show the relationship between quick assets & quick liabilities. It shows the business
solvency or strength of liquidity.
That are calculated as follows:
TABLE – 2 Quick ratio
0
10000000
20000000
30000000
40000000
50000000
60000000
70000000
80000000
90000000
100000000
2004-05 2005-06 2006-07 2007-08 2008-09
1 2 3 4 5
CURRENT ASSET
CURRENT LIABILITIES
RATIO
Quick ratio= Quick assets/ Current

51
SNO YEARS QUICK
ASSET
CURRENT
LIABILITIES
RATIO
1 2004-05 30921237.16 32656240.05 0.94687071
2 2005-06 49441660.56 43576691.74 1.13458958
3 2006-07 39499292.65 35978861.25 1.09784722
4 2007-08 56085341.26 53736056.45 1.04371897
5 2008-09 48710020.15 50741016.54 0.95997328
Interpretation:
The ideal ratio of the firm should be 1:1, but the ratios of the company are less than 1 in2004-
05 It tells the business can not pay debts due within one year from assets that it expects to
turn into cash within the year. but in 2005-06 it raised up to 1.13 ,but in 2006-07,2007-08 &
2008-09 It is go on reducing, it is bad sign for Organization
0
10000000
20000000
30000000
40000000
50000000
60000000
2004-05 2005-06 2006-07 2007-08 2008-09
1 2 3 4 5
QUICK ASSET
CURRENT LIABILITIES
RATIO

52
3) DEBT-EQUITY RATIO:
It measures the relation between debt and equity in the capital structure of the firm. In other
words, this ratio shows the relationship between the borrowed capital and owner‟s capital,
this ratio shows relative claim of the creditors and shareholders against the assets of the
company.
This ratio is calculated as follows
Generally higher the ratio greater is the possibility of increasing the ROR to equity & vice
versa. A high debt equity ratio may be adopted to take advantage of cheaper debt capital. The
ratio indicates the extent to which the firm depends upon out side for its existence. The ratio
provides margin of safety to the creditors. It tells owners the extent to which they can gain
benefits of maintaining control with a limit investment.
TABLE – 3 Debt equity ratio
SNO YEARS LONG-TERM
DEBT
SHAREHOLDER
FUNDS
RATIO
1 2004-05 112719511.00 83507980.03 1.34980526
2 2005-06 106042793.00 86473535.94 1.22630342
3 2006-07 97383678.00 100072068.45 0.97313546
4 2007-08 88459946.00 102364616.29 0.86416527
5 2008-09 82363231.00 86063160.54 0.95700914
Debt equity ratio=long term debt/share holders equity

53
Interpretation:
General Standard of Debt Equity ratio is 2:1.Since the company is using more borrowings.
But compare to 2006-07 to 2007-08 it has decreased little more it good sign. Even though it
has to improve. High ratios un favorable to the firm & High debt company is called leveraged
or geared & low debt equity ratio indicates grater claim of owners than creditors
4) PROPRITORY RATIO:
It establishes relationship between the propitiator or shareholders funds & total tangible
assets. It may be expressed as:
The ratio indicates properties stake in total assets. Higher the ratio lowers the risk and lower
the ratio higher the risk. Debt –equity ratio & current ratio affects the proprietary ratio.
0
20000000
40000000
60000000
80000000
100000000
120000000
2004-05
2005-06
2006-07
2007-08
2008-09
1 2 3 4 5
LONG-TERM DEBT
SHAREHOLDR EQUITY
RATIO
Proprietary ratio= proprietory funds/total assets*100

54
TABLE – 4 Proprietary Ratios
SNO YEARS PROPRIETOR
FUNDS
TOTAL
ASSET
RATIO
1 2004-05 83507980.03 158600052.8 0.52653186
2 2005-06 86473535.94 164460270.8 0.52580198
3 2006-07 100072068.5 163314054.9 0.61275846
4 2007-08 102364616.3 194820880.9 0.52542939
5 2008-09 86063160.54 195465307.6 0.4402989
Interpretation:
Since company property Ratio is high in 2004-05 at 52.65,but later it goes on reduced in 2005-06
was 52.58 & in 2006-07 was 60.68 & in 2007-08 it was 52.050. & 2008-09 was 43.54 its shows
the little Dangers to creditors & above 50% is Satisfactory.
0
50000000
100000000
150000000
200000000
250000000
2004-052005-062006-072007-082008-09
1 2 3 4 5
PROPERITOR FUNDS
TOTAL ASSET
RATIO

55
5) INTEREST COVERAGE RATIO:
This is a measure of the protection available to creditors for payment of interest charges by
the company. The ratio shows whether the company has sufficient income to cover its interest
requirements by a wide margin. The interest coverage ratio is computed by dividing profit
before interest and tax by the interest expenses. A high ratio implies adequate safety for
payment of interest even if there were to be a drop in the company’s earnings
The interest coverage ratio is as follows
6) INVENTORY / STOCK TURNOVER RATIO (ITR/STR).
It indicates the efficiency of firm in producing and selling its products. High Ratio is good
from the view point of liquidity and vice versa. A low ratio would signify that inventory does
not sell fast and stably in the warehouse for a longtime.
It is calculated as follows:
Hence Avg. Inventory = Opening Stock + Closing Stock/2
Avg. Inventory is calculated by taking stock levels of raw materials, working process and
finished goods at the beginning of year & at the end of the year & that is divided by 2
TABLE - 5 Inventory/Stock Turnover Ratio
Interest coverage ratio=EBIT/interest
Inventory turn ratio=cost of goods sold/average inventory

56
SNO YEARS COST OF GOOD
SOLD
AVERAGE
INVENTORY
RATIO
1 2004-05 346684069.60 28794258.73 12.04
2 2005-06 446321775.02 25768074.19 17.32
3 2006-07 397561561.55 22949259.47 17.32
4 2007-08 439826074.98 27158921.63 16.19
5 2008-09 495708694.15 26788827.39 18.50
Interpretation:
In 2004-05, 2005-06 & 2006-07 there is development shows management of inventory is high but
in 2007-08 in this period reduce and again in 2008-09 it increased. It shows efficient management
of inventory. Higher ratio says efficient business activities
0
2
4
6
8
10
12
14
Category 1 Category 2 Category 3 Category 4
Series 3
Series 2
Series 1

57
7) DEBTORS TURNOVER RATIO
Debtors constitute an important constituent of current assets and therefore the quality of
debtors to great extent determines that firms liquidity. There are two ratios. They are:
1. Debtors turnover Ratio
2. Debtors collection period Ratio
Debtor’s turnover can be calculated by dividing total sales by balance of debtors
Higher the ratio is better, since it indicate that debts are being collected more promptly
TABLE - 6 Debtors turnover ratio
SNO YEARS SALES AVERAGE
DEBTORS
RATIO
1 2004-05 390565567.88 11152086.00 35.03
2 2005-06 489014707.98 15577528.55 31.39
3 2006-07 468283461.32 14783343.38 31.68
4 2007-08 511817606.31 14105823.74 36.28
5 2008-09 573720167.78 19426089.69 29.53
Debtors turnover ratio=sales/average debtors

58
Interpretation:
It shows number of times the receivables rotate in a year in times of sales. It shows how
quickly debtors are converted in to cash.
8) DEBTORS COLLECTION PERIOD
This ratio indicates the extent to which the debts have been collected in time. It gives the
average debt collection period. The higher is the turnover ratio and shorter is the average
collection period the better is the trade credit management and the better is the liquidity of
debtors, as short collection period and high turnover ratio imply prompt payment on the part
of debtors. On the other hand, low turnover ratio and long collection period reflects that
payments by debtors are delayed.
That is calculated as follows:
Sales
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
Debtors collectionperiod=noof days in a year/debtors turnover ratio

59
TABLE – 7 Debtor’s collection period
SNO YEARS NO OF DAYS DR.TURNOVER
RATIO
PERIOD
1 2004-05 365 35.03 10.42
2 2005-06 365 31.39 11.63
3 2006-07 365 31.68 11.52
4 2007-08 365 36.28 10.06
5 2008-09 365 29.53 12.36
Interpretation:
The ratios Indicates the debtors collection. In 2004-05 10.42, 2005-06 it was 11.63 & but in
the year 2006-07 11.52, & 2007-08 10.06 its decreasing the debtors collection days but again
increases to 12.36 in the year 2008-09 . Collection period of WCPM is improving i.e. days
Series 1
Series 2
Series 3
0
1
2
3
4
5
Category 1
Category 2
Category 3
Category 4
Series 1
Series 2
Series 3

60
are decreasing, i.e. from 11 days to only 10 days. It shows the payments of debtors are very
prompt. but last financial year it meets at 12 days
9) CREDITOR’S TURNOVER RATIO:
It indicates the speed with which the payment for credit purchases is made to creditors. This
ratio is calculated as follows:
TABLE – 8 Creditors turnover ratio
SNO YEARS TOTAL PURCHASE AVERAGE
CREDITORS
RATIO
1 2004-05 303770822.77 10363756.00 29.31
2 2005-06 371288996.58 10219771.08 36.33
3 2006-07 340907385.66 12199222.63 27.95
4 2007-08 383026045.84 10177882.56 37.63
5 2008-09 422383354.32 6784716.21 62.25
Creditors turnover ratio=total purchases/ average creditors

61
Interpretation :
The ratios are increasing. In 2004-05 29.31 times and now it increase to in 2008 35.77 times.
The creditor‟s payment period is decreasing i.e. in 2005-06 27.95 times; it is continuously
and in 2008-09 become days. It signifies the creditors are being paid promptly. It shows
company is having credit worthiness.
PROFITABILITY RATIO:
A company should earn profit to survive and grow over a long period of time. Profit is the
ultimate output of company and company will have no future if it fails to make sufficient
profits. Therefore company should continuously evaluate the efficiency of the company in
terms of profits.
0
1
2
3
4
5
6
Category 1 Category 2 Category 3 Category 4
Series 1
Series 2
Series 3

62
OBJECTIVES
Profitability ratios are calculated to measures the operating efficiency of the company. Poor
operational performance may indicate poor sales and hence poor profits. Lower profitability
may arise due to lack of control over the expenses etc.
INTRESTED PARTIES IN PROFITABILITY RATIOS:
MANAGEMENT
CREDITORS
OWNERS
Generally two major types of profitability ratios are calculated:
Profitability in relation to sales
Profitability in relation to investment
PROFITABILITY RATIOS INVOLVE:
GROSS PROFIT RATIO
NET PROFIT RATIO
OPERATING EXPENSES RATIO
OPERATING PROFIT RATIO
RETURN ON INVESTMENT / OVERALL PROFITABILITY RATIO
RETURN ON EQUITY
RETURN ON TOTAL ASSETS

63
10) GROSS PROFIT MARGIN RATIO
Gross profit is the difference between sales and the manufacturing cost of goods sold. And
gross profit is compared with the sales. Gross profit margin ratio reflects the efficiency with
which management produces each unit of product. This ratio indicates the average spread
between the cost of goods sold and sales revenue. A high gross profit ratio is sign of goods
management and implies that the firm is able to produce at relatively lower cost. A low gross
profit margin reflects higher cost of goods sold due to

Reduction in selling price
Inefficie
nt utilization of
plant and
machinery etc.
It is calculated as follows
TABLE - 9 Gross profit ratio:
SNO YEARS GROSS PROFIT NET SALES RATIO
1 2004-05 43881498.28 390565567.88 11.24
2 2005-06 42692932.96 489014707.98 8.73
3 2006-07 70721889.77 468283461.32 15.10
4 2007-08 71991531.33 511817606.31 14.07
5 2008-09 78011473.63 573720167.78 13.59
0
100000000
200000000
300000000
400000000
500000000
600000000
700000000
2004-05 2005-06 2006-07 2007-08 2008-09
1 2 3 4 5
GROSS PROFIT
NET SALES
RATIO
Gross profit ratio=gross profit/net sales*100

64
Interpretation:
The gross profit ratio is not satisfactory its fluctuating in 2004-05 11.24, 2005-06 8.73,
2006 – 07 15.1, 2007-08 14.07 & 2008-09 13.59 its not good because the expenses are more
11) NET PROFIT MARGIN RATIO.
This ratio is also known as net margin. This measures the relationship between net profit and
sales of a firm. Depending on the concept of net profit employed, it is calculated as follows
This ratio indicates company’s capacity to withstand adverse economic conditions.
A company with high net margin ratio would ensure adequate return to the owners as well as
enable a firm to withstand adverse economic condition when selling price is declining, cost of
production is rising and demand for the product is falling. It would really be difficult for a
low net margin ratio company to withstand these advantageous.
TABLE - 10 NET PROFIT MARGIN RATIO
SNO YEARS NET PROFIT NET SALES RATIO
1 2004-05 7624062.22 390565567.88 1.95
2 2005-06 -1353071.58 489014707.98 -1.52
3 2006-07 1512197.06 468283461.32 1.59
4 2007-08 20380815.01 511817606.31 3.98
5 2008-09 7014282.39 573720167.78 1.22
Net profit ratio=Net Profit/net sales *100

65
Interpretation:
Since the net profit ratio of company in 2005-06 come negative because increasing in
expenses and later it has recover the profit ratio in the year 2006-07 again in
2007-08 it incries, but in the last financial year its reduced in 2008-09 1.22 but it will show
the organizations financial efficiency.
12) RETURN ON TOTAL ASSETS (ROTA)
This ratio is compared to know the „Productivity of the total assets‟. There are two methods
of computing Return on Total Assets
-50000000
0
50000000
100000000
150000000
200000000
250000000
2004-05 2005-06 2006-07 2007-08 2008-09
1 2 3 4 5
RATIO
NET SALES
NET PROFIT
Return on asset=net profit /total asset*100

66
TABLE -11 RETURN ON TOTALASSETS (ROTA)
SNO YEARS NET PROFIT TOTAL ASSET RATIO
1 2004-05 7624062.22 158600052.76 4.81
2 2005-06 -1353071.58 164460270.78 -0.822
3 2006-07 1512197.06 163314054.86 0.93
4 2007-08 20380815.01 194820880.91 10.46
5 2008-09 7014282.39 195465307.64 3.59
NET PROFIT
1 2004-05
2 2005-06
3 2006-07
4 2007-08
5 2008-09

67
Interpretation:
In period 20005-06 here is net loss no return in 20006 – 07. Again in 2007-08 it is recovered
& in 2008-09 it reduce comparing last year 2007-08 so there is fluctuation in return on total
asset ratio. There is no proper utilization of total assets in the company
14) RETURN ON INVESTMENT (ROI) :
It is also called as overall profitability ratio or Return on capital employed (ROCE) Ratio.
This ratio is the broadest measure of the overall performance of business firm. It indicates the
percentage of return on the total capital employed in the business. The higher ratio, the more
efficient use of the capital employed. It is calculated on the bases of the following
15) Fixed Asset – Turnover Ratio:
This ratio measures the efficiency and profit earning capacity of the organization. Higher
ratio indicates intensive utilization of fixed asset. Lower ratio indicates under utilization of
assets
16) Fixed Asset to Proprietor’s Ratio
It indicates the percentage of owners fund invested in fixed asset. if ratio is greater than 1,it
means that creditors obligation have been used to acquire a part of the fixed assets.
Return on Investment= Net Profit/total capital employed*100
Fixed Asset – Turnover Ratio: Cost Of sales/Fixed asset
Fixed Asset to Proprietor’s Ratio=Fixed asset/Shareholders funds

68
SNO YEARS FIXED ASSET SHAREHOLDER
FUNDS
RATIO
1 2004-05 90571545.42 83507980.03 1.08
2 2005-06 88854612.02 86473535.94 1.03
3 2006-07 95147041.47 100072068.45 1.01
4 2007-08 104041217.21 102364616.29 1.18
Interpretation:
Hear in 2004-05, 2006-07 & 2007-08 in this year the under utilization of fixed asset. In 2005-06
& 2008-09 the firm intensive utilization of fixed assets
FINDINGS: -
1. The Current ratio is below the standard ratio and it is not good from company’s point of view.
It shows that it is not good position to meet the short term liabilities.
2. The liquidity ratio is according to standard ratio (1:1) and it is good from company’s point of
view. it shows the company is able to meet its liabilities is short period.
3. The Debt equity ratio is showing decreasing trend in year by years. It indicates that the
company is depending more on internal sources, a more internal funds means the shareholders
fund, it shows that the company is financially strong (i.e., a low debt company).
4. The debtor turnover ratio is good. It shows the collection of debtors is very prompt.
5. The return on total assets is also fluctuating It indicates that, the assets had not been
utilized properly by the firm.
6. The firm is slowly recovering loss from past five financial years. For that reason the firm
unable to pay the returns to the share holders.
0
50000000
100000000
150000000
200000000
250000000
2004-05
2005-06
2006-07
2007-08
2008-09
1 2 3 4 5
RATIO
SHAREHOLDER FUNDS
FIXED ASSET

69
In spite of having competition between just few brands and mostly with
khula milk (raw milk) still the selling of the products of Sanchi is low
because of unawareness among the people regarding hygienic quality of
the milk or milk product produce by Sanchi . It is clear from the data analysis that the sale of
sanchi milk is increasing continuously but at slow rate. Unawareness among the people about
the benefits of pasteurized milk which was main reason for cause of decreased sales of
Sanchi. More efforts have to be made in field of marketing and sales promotion
schemes like Advertisement (print or electronic), Demonstration to the
customer, etc. should be done. .Mostly people refuse to buy product because it has no home
delivery facility which was one of the finding of my survey. So efforts should be
made in this direction .Some promotional programs are stared like “Doodh ka Doodh and
Panika Pani ” in which lab. Testing of milk sold by the local vendors is not done.
Requirement of the market was unable to be fulfilled in the lean season
i.e. summer season due to low procurement of milk.

70
SUGGESTIONS
1. The profit Of the Company Is not in a good Position For That company has to Take
Alternative Actions such As
i. Increasing in Procurement of milk ,
ii. Production, and Control in Fixed Expenses Like, Administrative, selling Etc.
2. The organization should increase its current assets to meet the current obligations through
making credit sales, and also improve the liquidity position through increasing cash in hand
and at Bank.
3. The organization can think to increase the Debt equity which is profitable to the company
its helps in expansion of business or investing in some mutual funds and other market
securities. Investment is again subject to market risk, hence a special funds managers can be
appointed or a broker who will take care of such aspects
4. The existing capacity of Saanchi Dugdh Sangh Maryadit Jabalpur is 1,00,000 lacs lts of
milk per day on main diary plant and 0.25 on mini dairy plant. Hence it has to increase milk
procurement routes by encourage village people to increase the cooperative milk societies
and add to their existing list of suppliers to Saanchi Dugdh Sangh Maryadit Jabalpur.
5. The organization should make some rules and regulation, which is should apply the all the
department employee – worker to effort to meet the stated organization goals & objects.
6. Proper training should give to all employees – workers to take use of available resource in
organization.

71
CONCLUSION
A study conducted by me through survey in Jabalpur reveals that
freshness, thickness, taste and absence of adulteration are the important
attributes that consumers look for in milk. Although at the top of mind recall of
the Sanchi milk is good as 61% respondents in Jabalpur city are aware and
like Sanchi as a brand. But according to the market study, this has not
resulted in the sales of Sanchi milk and milk products, mainly on account of
lack of reliability and credibility on the brand as the consumer is not aware
about the quality of the packed milk manufactured by the Sanchi and lastly the
consumer still prefer local vendors for purchasing the milk for their daily
requirement as it is more convenient and most the consumer are price
conscious too.
When we analyze its financial performance through ratios there the Saanchi Dugdh Sangh
Maryadit Jabalpur is recovering from loss since in the year 2015-16 they had a turnover
around 11crore. It is an one of the milk production industry which is established in Jabalpur
in the year of 1984. There is an increment in its financial performance but it is not enough,
because the firm has 25 years experience. And it has great potential to increase its profit. By
calculating Financial Ratio we see the financial performance of Saanchi Dugdh Sangh
Maryadit Jabalpur is recovering.

72
RECOMMENDATION
1. Brand awareness was lacking especially among the illiterate
population.
2. The main influencing factors for customer to make purchasing decision
are based on product features like better service (home delivery),
better taste, better quality and availability of the product.
3. Print media (newspaper, magazine), Broadcast media (television,
radio) web related advertisement, hoarding, banner, are great
influencing factors for purchasing decision made by customers but
publicity factor is also required by the brand .
4. After sales service are weak that is complaints of the customer should
be given priority and problems should be resolved.
5. Products range should be increased.
6. Market structure should be developed for marketing

73
BIBLIOGRAPHY: -
TEXT BOOKS
Financial Management I.M. Pandey –
VIKAS PUBLISHING HOUSE PVT LTD 12th EDITION (
Financial Management G.B.Balgar –
ASHOK PRAKASHAN 8st EDITION
Entrepreneurships Development. - S.Anilkumar & S.C.Pornima -
NEW INTARNATIONAL PUBLICATION LTD DELHI
WEBSITE:
www.google .com
http://www. mpcdf.nic.in/

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